SECURITIES AND EXCHANGE COMMISSION

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, 2000 
Commission file number 1 - 6784

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

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

Japan
(Jurisdiction of incorporation or organization)

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

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

| |                             |  |                                             
| | --------------------------- |  | --------------------------------------------
| | Title of each class         |  | Name of each exchange on which registered   
| |                             |  |                                             
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| | 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 ten shares of Common Stock.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|  
|** |  | Par value 50 Japanese yen per share.                                                                                                       

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

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|----------------
|None            
|                
|(Title of Class)

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



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|----------------
|None            
|                
|(Title of Class)

This form contains 87 pages.





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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.

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|----------------------------------------- |  | ----------------- | ------------- | --------------- |  |  | --------- | 
|                                          |  | Outstanding as of
|                                          |  |                  
|Title of Class                            |  | March 31, 2000    |               | March 30, 2000 
|                                          |  | (Japan Time)      |               | (New York Time)
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|Common Stock - 50 yen par value per share |  |                   | 2,062,671,309 |                
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|American Depositary Shares, each          |  |                   |               |                 |  |  |           | 
|representing 10 shares of common stock    |  |                   |               |                 |  |  | 3,995,618 | 

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, 2000 or for the
year ended March 31, 2000 (fiscal 2000) 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 17, 2000 was
108.53 yen = U.S.$1.

Cautionary Statement Regarding Forward-Looking Statements

Any       statements with respect to Matsushitas current plans, estimates,
strategies and beliefs in this Annual Report, other than those of historical
fact, are forward-looking statements about the future performance of Matsushita
and its Group companies, which are based on managements assumptions and
beliefs in light of information currently available, and involve known and
unknown risks and uncertainties. Actual events and results may differ
materially from those anticipated in these statements.

Potential risks and uncertainties include, but are not limited to, economic
conditions, such as consumer spending and private capital expenditures; trends
in major economies in the world, including Japan, the United States, Europe and
other Asian countries; currency exchange rate fluctuations, notably between the
yen, the U.S. dollar, the euro, Asian currencies and other currencies, in which
Matsushita operates its business or in which Matsushitas assets and
liabilities are denominated; direct and indirect restrictions imposed by other
countries; fluctuations in market prices of securities in which Matsushita has
holdings; and Matsushitas ability to maintain its strength in many product and
geographical areas, and Matsushitas ability to respond to rapid technological
changes through such means as new product introductions, in a market that is
highly competitive in terms of both price and technology, which is
characteristic of the industry to which the Company primarily belongs.



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PART I

Item 1. Description of Business

GENERAL

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) is one of
the worlds leading producers of electronic and electric products.

The Company was incorporated in Japan on December 15, 1935 under the laws of
Japan as Matsushita Denki Sangyo Kabushiki Kaisha 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 goods. The Companys business expanded rapidly with the recovery and
growth of the Japanese economy after World War II, as it met rising demand for
consumer electric and electronic products, starting with washing machines,
black-and-white television sets (TVs) and refrigerators. Matsushita continued
to grow during the following decades by expanding its product range to include
color TVs, hi-fi components, air conditioners, video tape recorders, industrial
equipment and information and communications equipment, as well as electronic
components. Overseas sales and production expansion were also significant
factors for the growth in these decades.

Matsushita 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 Panasonic, National and Technics brand names, with some of
its subsidiaries using brand names such as Quasar, Victor and JVC.

In the 1990s, Matsushita placed increasing emphasis on technological
development and the use of advanced electronics technology in every phase of
life, thus steering the Company to achieve further growth in the next century.
In particular, the Company has been expanding its development activities in
such areas as next-generation audiovisual (AV) equipment, multimedia products,
and advanced electronic components and devices, many items of which incorporate
digital technology. Its current priority product areas include digital
television systems, semiconductors, mobile communications equipment, optical
discs and display devices, all of which form the basis for growth in the
evolving digital networking age.

In December 1990, the Company acquired MCA INC. (MCA), a leading U.S.
entertainment company, for approximately U.S.$6.1 billion.

In May 1993, the Company and N.V. Philips Gloeilampenfabrieken, now
Koninklijke Philips Electronics N.V. (Philips), terminated their joint venture
company, Matsushita Electronics Corporation (MEC), and the Company acquired
Philips 35% equity share in MEC for 185 billion yen, thus making MEC a
wholly-owned subsidiary.

In June 1995, the Company sold an 80% equity interest in MCA, now named
Universal Studios, Inc., to The Seagram Company Ltd. for approximately U.S.$5.7
billion, leaving the Company with a minority interest.



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In April 1997, the Matsushita parent company established a new organizational
structure, setting up four internal divisional companies  responsible for AVC
(audiovisual and computer products), home appliances and household equipment,
air conditioners, and electric motors  by grouping a majority of its some 50
product divisions. This step was taken in order to facilitate strategic
planning, effective decision making and more efficient allocation of resources
across a broader range than that afforded by each single product division.

In March 1998, the Company announced a package of new management initiatives
aimed at better sharing interests with shareholders. As part of this package,
management implemented with approval at the annual shareholders meeting in
late June 1998, repurchase of 50 million shares of the parent companys common
stock from the stock market for retirement, spending approximately 99 billion
yen of retained earnings during fiscal 1999. At the same time, as an incentive
to Board members and employees toward the enhancement of corporate value, the
parent company introduced stock option plans for Board members and select
senior executives, granting them rights to purchase 2,000 to 10,000 common
shares each (similar option plans have been implemented in fiscal 2000 and
2001), and established a stock-price-linked remuneration plan, under which
modest cash payments are to be offered once a year in addition to ordinary
salary and bonus payments to employees manager-level or above (effective
through fiscal 2001).

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.

On April 1, 2000, the Company made Matsushita Refrigeration Company and
Wakayama Precision Company wholly-owned subsidiaries, by means of share
exchanges. As a result of the share exchanges, the Company issued a total of
16,321,187 shares of its common stock to shareholders of the respective
companies.



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SALES CATEGORIES

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

|                    |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |    |     |  
|------------------- | ------------------------- | -------- | ----- | --------------------------- | ----- | ---- | -- | ---- | --- | - | ----- | ----- | ----- |  | -- | -- | --- | - | ----- | ----- | ----- |  | -- | -- | --- | -
|                    |                           |          |       | Yen (billions)             
|                    |                           |          |       |                            
|                    |                           |          |       | Fiscal year ended March 31,
|                    |                           |          |       |                            
|                    |                           |          |       | 2000                        |       | 1999 |    | 1998
|                    |                           |          |       |                             |       |      |    |     
|Consumer products   |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                    | Video and audio equipment |          |       | 1,706                       |       |      |    | 23   | %   |   |       | 1,895 |       |  |    | 25 | %   |   |       | 1,885 |       |  |    | 24 | %  
|                   
|                   
|                   
|                   
|                    | Home appliances and       |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |    |    
|                    | household equipment       |          |       | 1,306                       |       |      |    | 18   |     |   |       | 1,394 |       |  |    | 18 |     |   |       | 1,474 |       |  |    | 18 |    
|                    |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                    |                           | Subtotal |       |                             | 3,012 |      |    |      | 41  |   |       |       | 3,289 |  |    |    | 43  |   |       |       | 3,359 |  |    |    | 42  |  
|                   
|                   
|                   
|                   
|Industrial products |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                    | Information and           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |    |    
|                    | communications equipment  |          |       | 2,022                       |       |      |    | 28   |     |   |       | 2,150 |       |  |    | 28 |     |   |       | 2,264 |       |  |    | 29 |    
|                   
|                   
|                   
|                   
|                    | Industrial equipment      |          |       | 735                         |       |      |    | 10   |     |   |       | 717   |       |  |    | 10 |     |   |       | 701   |       |  |    | 9  |    
|                    |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                    |                           | Subtotal |       |                             | 2,757 |      |    |      | 38  |   |       |       | 2,867 |  |    |    | 38  |   |       |       | 2,965 |  |    |    | 38  |  
|                   
|                   
|                   
|                   
|Components          |                           |          | 1,530 |                             |       |      | 21 |      |     |   | 1,484 |       |       |  | 19 |    |     |   | 1,567 |       |       |  | 20 |   
|                    |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                    |                           | Total    |       |                             | 7,299 |      |    |      | 100 | % |       |       | 7,640 |  |    |    | 100 | % |       |       | 7,891 |  |    |    | 100 | %
|                    |                           |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   

Consumer Products

Consumer products is Matsushitas traditional business area and the Company
maintains a high competitive edge in Japan and overseas markets. Sales in this
category, consisting of video and audio equipment and home appliances and
household equipment, totaled 3,012 billion yen and represented 41% of total
Company sales in fiscal 2000. Details of major products are as follows:

Video and Audio Equipment

This category includes home-use videocassette recorders (VCRs), camcorders,
TVs, audio equipment and newly expanding digital versatile disc (DVD) players.
An established global leader in VCRs, Matsushita has a broad range of home VCRs
including the S-VHS series with 5-times recording mode and the D-VHS, digital
VHS VCR. In camcorders, the Company produces the VHS-C, compatible with VHS
video players, and digital camcorder models, along with hard disk editors for
video editing, and video printers.



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Matsushitas broad range of TVs is designed to meet demand in all segments of
the Japanese and international markets. The Company is currently expanding its
TVs and set-top boxes (STBs), by concentrating on flat-screen TVs with high
picture quality, such as the progressive-scanning flat-surface T(tau)-series
compatible with Broadcast Satellite (BS) digital TV broadcasting, set to begin
in December 2000 in Japan. Overseas, the Company supplies TVs and STBs for
U.S. digital terrestrial TV broadcasting and, in Europe supplies interactive
STBs to British Interactive Broadcasting Ltd. (BiB). The Company is also
jointly developing, with OpenTV Corporation, multimedia hardware and software
compatible with European interactive digital TV standards. Matsushita also
produces liquid crystal display (LCD) TVs and plasma display TVs.

In DVD players, Matsushita, a pioneer in this industry, boasts a product line
ranging from standard to high-end progressive-scanning models, and expanded its
portable LCD-equipped models by introducing a wide-screen LCD TV/DVD
combination unit with enhanced picture quality. The Company will also launch
DVD video recorders and DVD-Audio players this summer. Leading the DVD disc
production industry, Matsushita continues to expand its facilities and has
established joint ventures with Universal Music Group and Eastman Kodak
Company.

In the area of audio equipment, Matsushita produces a large variety of
products, such as compact disc (CD) and Mini Disc (MD) players, radio
receivers, CD radio cassette recorders, tape recorders and portable headphone
players, as well as stereo hi-fi equipment and electronic musical instruments.

The Secure Digital (SD) Memory Card, an ultracompact mobile data storage
device, was developed in cooperation with Toshiba Corporation and SanDisk
Corporation. Matsushita is currently marketing the wristwatch-shaped SD audio
headphone player as the first SD application and plans to introduce an array of
diverse products incorporating the SD Memory Card.

This category also includes prerecorded video and audio tapes and discs in such
formats as VHS, DVD and CD.

Matsushita intends to further strengthen its line of digital networkable
consumer products to create home networks interconnecting them with each other
and with external public information and communications networks. The role of
Digital TVs and STBs together with DVD and SD products as home gateways and
servers is expected to increase, forming a strong basis for future growth.

Home Appliances and Household Equipment

Matsushitas vast array of home appliance products includes refrigerators, air
conditioners, home laundry equipment (such as washing machines and dryers),
vacuum cleaners, electric irons, dishwashers, microwave ovens, rice cookers and
other cooking appliances, electric fans, air purifiers, electric and kerosene
heaters and electrically-heated rugs. The line of household equipment mainly
comprises kitchen fixture systems, electric, gas and kerosene hot-water supply
systems, and bath and sanitary equipment. This category also includes electric
lamps, bicycles, cameras and flash units, and fire extinguishers.

Matsushita continues to lead the Japanese home appliance industry, launching
new technologically innovative models. The latest examples include a series of
new floor space-saving refrigerators that do not sacrifice inner capacity.
Such models feature high energy-efficiency levels and are a perfect fit in
Japanese kitchen fixture systems. The Company also strengthened its line of
centrifugal force washing machines by adding a new series equipped with an
automatic detergent feeding system.



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Other recent product innovations include the Companys compact
rechargeable-battery-powered cordless vacuum cleaner employing a centrifugal
force dust collection system and a new space-saving compact dishwasher that
fits even on a small Japanese kitchen countertop.

In the household equipment area, the Company is meeting market needs by
providing user-friendly products. Successful examples include easy-to-operate
pull-down cabinet shelves, pull-out dishwashers and flame-free induction
heating cookers, as well as Matsushitas energy-efficient air conditioners.

From April 2000, Matsushita is further concentrating on the development of the
following solution-oriented areas: living environments, healthcare, energy and
food-related equipment and systems businesses. The Company is intent on
creating new business models, such as automated electric and gas consumption
inspection systems and home healthcare services.

Industrial Products

Industrial products is comprised of information and communications equipment
and industrial equipment. This has been the Companys fastest growth category
in the last decade, led by mobile communications equipment and personal
computer (PC) related equipment. However, in the last two years growth has
slowed due mainly to the significant worldwide price declines in PC
peripherals. Sales in fiscal 2000 totaled 2,757 billion yen for this category,
representing 38% of total Company sales. Details of major products are as
follows:

Information and Communications Equipment

The line of information and communications equipment includes information
equipment, such as PCs, word processors, printers, copying machines, PC
displays, hard disk drives, CD-ROM, DVD-ROM and DVD-RAM drives; communications
equipment, such as facsimile equipment, telephones, cellular telephones, other
mobile communications equipment and digital private branch exchanges; and other
systems equipment, such as CATV systems, broadcast- and business-use AV systems
and equipment, large-screen visual equipment, communications network equipment,
and traffic-related systems and equipment. Of these, Matsushita maintains a
high competitive edge worldwide in particular lines of products, such as hard
disk and optical disc drives, facsimile equipment, broadcast-use digital VCR
equipment and airline in-flight AV systems, while also enjoying a leading
position in the Japanese cellular phone industry.

In the PC and related equipment field, Matsushita continued to improve its
notebook PCs introducing ultraslim mobile models and adding features such as
wireless communication. The Company strengthened its CD-ROM, DVD-ROM and
DVD-RAM drives and hard disk drive lineup, developing upgraded models to meet
the need for greater data storage capacity and faster processing speed.

In the mobile communications field, Matsushita continued to maintain its
leading share in the domestic cellular phone market with success in new lines
including its NTT DoCoMo i-mode handsets equipped with E-mail and Internet
browsing capabilities. Currently, Matsushita and NTT DoCoMo, Inc. are
developing a service that will eventually allow users to download music to a SD
Memory Card using mobile communications devices in Japan. Expanding its scope
of operations, the Company has also begun preparations in both handsets and
base stations for W-CDMA, the next-generation mobile communications system that
will commence in the spring of 2001 in Japan.



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In the broadcasting equipment field, Matsushita maintains a substantial share
of the digital news gathering equipment market as it continues to launch
innovative video camera recording and editing systems such as the DVCPRO HD
(high-definition) series. The Company is currently exploring future business
expansion with the launch of Japans BS digital TV broadcasting in December
2000, developing various new digital broadcast equipment centered on the
Companys advanced conditional access systems and electronic programming guide
technologies and establishing ventures for creation of new digital TV contents
services with leading Japanese broadcasting companies. In business-use AV
systems, the Company holds a large share of the in-flight AV systems global
market and is continually increasing its surveillance cameras and Closed
Circuit Video Equipment (CCVE) systems presence.

Industrial Equipment

Matsushitas product range of industrial equipment encompasses factory
automation (FA) equipment, welding machines, electric power distribution
equipment, commercial air conditioning equipment, vending machines and medical
equipment. This category also includes car AV equipment, such as car audio and
car navigation equipment.

In FA equipment, Matsushita is an industry leader in electronic-parts-mounting
machines, and major producer of industrial robots and electronic measuring
instruments. The Company reinforced its lineup in fiscal 2000 by concentrating
on smaller, lighter high-precision machines and introduced a new high-speed
multifunctional chip mounter as well as an innovative laser processing machine
to satisfy demand for ultrafine, high-integration circuit boards. The Company
also holds a competitive position in DVD disc mastering and replication
equipment, utilizing its advanced authoring and disc bonding technologies.

Car AV equipment such as the car navigation system are taking on an
increasingly expanding role. To meet market needs, Matsushita continues to
introduce more advanced car navigation systems, such as DVD-equipped models
that feature networking capabilities including E-mail and Internet browsing as
well as interact with various new services such as map and traffic information
and Electronic Toll Collection systems. All the above are an integral part of
the development of the Intelligent Transport Systems (ITS) currently under way
in Japan.

Components

Matsushita produces a wide range of electronic and electric components and
devices. Major products included in this category are semiconductors, general
electronic components, display devices, electric motors, compressors and
batteries, to support the Companys finished products and for sale to other
manufacturers. Sales of components as a whole in fiscal 2000, excluding
in-house consumption, totaled 1,530 billion yen, accounting for 21% of the
Companys overall sales.

Recognizing that components and devices hold the key to innovation and
advancement, as well as competitiveness, of finished products and systems in
the digital networking age, Matsushita places significant priority on the
development of electronic components technology and business, with special
emphasis on semiconductors and display devices.



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The Companys range of semiconductors is primarily made up of integrated
circuits (ICs), such as MOS LSIs and bipolar ICs, discrete devices and CCDs.
The Company has been strengthening development of single-chip multifunctional
LSIs, called System LSIs, which form the basis of digital-network related
equipment. Successful results included Media Core Processors, MPEG-2 encoder
chips, 32-bit microcontrollers with embedded DRAMs, single-chip decoder LSIs
for digital TV receivers, and system LSI chip sets for DVD-ROM drives.
Matsushita is at the forefront in optical pickup semiconductors for DVDs, CCDs
for video camcorders, and gallium-arsenide power modules for cellular phones.
The Company is currently working to develop 0.13 micron process technology in
an alliance with Mitsubishi Electric Corporation for future system LSIs for use
in digital networkable products.

The Company maintains a broad spectrum of general components, encompassing
electronic circuit components, printed circuit boards, transformers, power
supply components, coils, capacitors, resistors, tuners, speakers, ceramic
components, and various sensors. In fiscal 2000, the Company continued to
introduce smaller, more advanced components for equipment downsizing and
performance improvement as well as developing a surface-mounted circuit module
for Bluetooth, a short-range wireless networking protocol, for digital home
networking.

In display devices, Matsushita expanded its flat-surface CRT product range to
include a model with a brightness level 20% higher than conventional models.
Strategically, Matsushita is concentrating production of flat-surface CRTs in
Japan, while shifting production of traditional CRTs overseas. The Company
also focused efforts on developing high-picture quality LCD devices with faster
picture response and wider viewing angles. The Company is further boosting its
plasma display panel (PDP) lineup, with the development of 50- and 60-inch
units to add to its current 37- and 42-inch models.

In electric motors, Matsushita augmented its FA equipment motor lineup with the
MINAS-A, a series of smaller, high-speed servomotors with greater energy
efficiency compared to conventional models. AV and information and
communications equipment motors lineups were also augmented with compact
spindle motors for use in PC peripherals and DVD players and vibration motors
for cellular phones. Furthermore in compressors, Matsushita is a world leader
offering those primarily for air conditioners and refrigerators.

Matsushita is one of the worlds largest battery manufacturers, producing a
comprehensive range of batteries, ranging from manganese, alkaline, lithium,
silver oxide and zinc air cells, to rechargeable batteries, such as
lithium-ion, nickel metal-hydride, nickel-cadmium and sealed lead-acid
batteries and storage batteries for automotive use, as well as various battery
powered appliances. Among these, production of compact, high-performance
batteries, such as the Companys long life alkaline batteries and lithium-ion
batteries, has been expanding in recent years, as they are increasingly used in
compact electronic equipment. Matsushita is at the forefront of nickel
metal-hydride batteries for electric and hybrid electric vehicles. In fiscal
2000, Matsushita launched the worlds thinnest (0.4 mm) manganese
dioxide-lithium battery, known as the Paper Coin for use in IC cards for
E-commerce.



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SALES AND DISTRIBUTION

Set forth below is a sales breakdown by geographical markets:

|                        |       |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |     |  
|----------------------- | ----- |  | --------------------------- | ----- | ---- |  | ---- | --- | - |  | ----- | ----- |  |  | -- | --- | - |  | ----- | ----- |  |  | -- | --- | -
|                        |       |  | Yen (billions)             
|                        |       |  |                            
|                        |       |  | Fiscal year ended March 31,
|                        |       |  |                            
|                        |       |  | 2000                        |       | 1999 |  | 1998
|                        |       |  |                             |       |      |  |     
|Japan                   |       |  | 3,698                       |       |      |  | 51   | %   |   |  | 3,752 |       |  |  | 49 | %   |   |  | 3,891 |       |  |  | 49 | %  
|                       
|                       
|                       
|                       
|North and South America |       |  | 1,384                       |       |      |  | 19   |     |   |  | 1,513 |       |  |  | 20 |     |   |  | 1,458 |       |  |  | 19 |    
|                       
|                       
|                       
|                       
|Europe                  |       |  | 906                         |       |      |  | 12   |     |   |  | 1,019 |       |  |  | 13 |     |   |  | 949   |       |  |  | 12 |    
|                       
|                       
|                       
|                       
|Asia and Others         |       |  | 1,311                       |       |      |  | 18   |     |   |  | 1,356 |       |  |  | 18 |     |   |  | 1,593 |       |  |  | 20 |    
|                        |       |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |    
|                        |       |  |                            
|                        | Total |  |                             | 7,299 |      |  |      | 100 | % |  |       | 7,640 |  |  |    | 100 | % |  |       | 7,891 |  |  |    | 100 | %
|                        |       |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |    

Sales and Distribution in Japan

Domestic sales are handled primarily by 12 sales divisions organized according
to the type of customer, i.e., 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 a large number of consumer electronics and appliance
retailers throughout Japan, and has also expanded to mass scale retailers. In
addition, the Company is currently attempting on a limited scale an Internet
based sales system, in which the Company will cooperate with retailers who
handle product delivery, installations and after-sale services.

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.

With the exception of light bulbs and other inexpensive products, substantially
all of Matsushitas consumer products carry warranties which vary in duration
from one to five years, in line with the normal practice of the industry.
Service is provided by Matsushita and by approved service companies which
obtain replacement parts from Matsushita and other suppliers.

Overseas Activities

Matsushita operates 222 companies in 44 countries outside of Japan, including
five regional headquarters, 43 manufacturing/sales companies, 98 manufacturing
companies, 46 sales companies, 12 research organizations and five finance
subsidiaries. International marketing of Matsushitas products is conducted
through the Companys sales subsidiaries and affiliates and also through
independent distributors. In addition, certain products are sold in foreign
markets on an OEM basis and marketed under the brand names of third parties.
The Company has been gradually strengthening overseas sales channels for
industrial products and components, aside from existing consumer products sales
networks in many countries and regions. The Company also implemented supply
chain management (SCM), working with several overseas mass-scale retailers to
raise global operational efficiency.

Overseas sales, including products manufactured outside Japan and those
exported from Japan represented approximately 49% of the Companys total
consolidated sales in fiscal 2000.



---



- 11 -

In order to promote global business development and counter currency
fluctuations, Matsushita has expanded and continues to expand its overseas
production covering not only major consumer products, but also industrial
products and components. In recent years, the Company placed emphasis on
building and expanding manufacturing facilities in newly developing areas, such
as China, India and Eastern Europe, as well as Southeast Asia and Mexico.

Matsushitas current emphasis is placed on advancing localization of
development of products and technologies to enhance competitiveness of
individual overseas manufacturing sites, as well as that of the entire Group
regionally. The Company is also reviewing the functions of its R&D, production
and sales bases worldwide by respective product categories to achieve optimum
efficiency of Matsushitas global operations.

Customers

The largest markets for Matsushitas products have traditionally been consumers
and households. However, since the 1980s, the proportion of sales to
non-consumer customers, such as governments, commercial and industrial
corporations and other institutions, including large customers such as electric
and electronic equipment manufacturers, automotive manufacturers and various
other machinery makers, has been rising as Matsushita places increasing
emphasis on industrial and commercial products and electronic components. In
the year ended March 31, 2000, sales of industrial products and components
accounted for approximately 59% of Matsushitas total sales, rising from 48% of
the total (52% of total excluding MCA) in fiscal 1995. Matsushitas business
is not materially dependent upon any single customer.

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 utmost
satisfaction to customers throughout the world through distinguished products
and services and to contribute to the progress and happiness of mankind. Under
this theme, the Company has been committed to R&D that creates next generation
businesses, while at the same time supporting todays and tomorrows products
and businesses. As part of this task, focus is directed towards the five
priority areas: digital TV systems, semiconductors, mobile communications
equipment, optical discs and display devices.

Building on combined strength in these areas, Matsushita emphasizes the
development of networkable consumer products that can be linked inside the home
and with external public networks. Matsushita will also target a variety of
mid-term growth areas, including broadband communications, Intelligent
Transport Systems (ITS), education, healthcare, energy-related fields,
Internet-related business and software. To make networkable consumer products
and the Companys mid-term growth areas a reality, Matsushita will aggressively
pursue its research and development by closely coordinating programs and
efforts at the corporate R&D centers and at each divisional research center.

Principal corporate R&D centers include; the Advanced Technology Research
Laboratories, which engages primarily in basic research aimed at developing
advanced technologies to create new businesses looking toward the year 2010,
the Multimedia Development Center, the Digital Network Development Center, the
Optical Disk Systems Development Center, the Display Device Development Center,
the Human Environment Development Center and the Corporate Semiconductor
Development Division. The Corporate Production Engineering Division, which
engages in development of new manufacturing technology, supports production
activities at Matsushitas domestic and overseas operating facilities.



---



- 12 -

The Overseas R&D Promotion Center supports and augments the Companys global
R&D activities, such as development of a common global platform for digital TV
systems, strengthening the collaboration between corporate laboratories in
Japan and overseas R&D centers such as those based in North America and Europe.

At the divisional level, internal divisional companies and principal
subsidiaries maintain their own research facilities and/or departments, engaged
in specific R&D projects or engineering and design improvement in close
cooperation with the above corporate R&D centers, as mentioned above.

Total expenditures for research and development amounted to 481 billion yen,
500 billion yen and 526 billion yen for the three fiscal years ended March 31,
1998, 1999 and 2000, respectively, representing 6.1%, 6.5% and 7.2% of
Matsushitas total net sales for each of those periods.

The most significant recent results from Matsushitas R&D efforts include; DVD
products including DVD-Audio and video recorders, portable players, ROM and RAM
drives with large data storage or recording capacity and high speed
performance; a single-chip digital TV System LSI, which processes a large array
of digital signals received in radio waves and is compatible with most of the
worlds digital TV services; System LSI chip sets incorporated in DVD-ROM and
RAM drives; an ultracompact mobile storage device called the Secure Digital
(SD) Memory Card, jointly developed with SanDisk Corporation and Toshiba
Corporation, for various use including electronic music distribution and AV
data storage; Internet-compatible cellular phones and PHS-linked terminals,
equipped with E-mail and Internet browsing capabilities; a compact home
co-generation system using fuel cells; large printed circuit boards using
environment-friendly lead-free solders, used in the Companys VCRs.

CAPITAL EXPENDITURES

Recognizing that building advanced technologies, equipment and processes is
essential to the cost-efficient manufacturing of sophisticated electronic
products and devices, the Company has been attentive in planning plant and
equipment investment to achieve higher competitiveness and investment
efficiency. Besides constant investment in production automation and
energy-saving facilities, increasing emphasis has been placed on expansion of
such business areas ranging from digital AV equipment and mobile communications
equipment to components and devices.

Total capital expenditures were 474 billion yen, 352 billion yen and 338
billion yen for fiscal 1998, fiscal 1999 and fiscal 2000, respectively.

Capital expenditures have declined over the past three years as the Company
concentrates and focuses its resources on such strategically important areas as
key components and devices including semiconductors and LCD devices, while
implementing selective investment in other operating areas.

COMPETITION

The markets in which the Company sells its products are highly competitive in
Japan, as well as abroad. Matsushitas principal competitors, across the full
range of its products, consist of several large Japanese manufacturers and a
large number of smaller and more specialized companies. In particular
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.



---



- 13 -

In addition, the recent advancement towards a borderless economy, has applied
pressure to Japanese manufacturers, including Matsushita, in terms of price
competition globally. To minimize the effects of these negative factors, the
Company is devising various cost-reduction and efficiency measures to enhance
competitiveness from a global perspective, such as increasing overseas
production and shortening production and logistics lead time through the
introduction of SCM, and also developing joint ventures and other cooperative
agreements with overseas partners.

TRADEMARKS

Most of Matsushitas products are distributed throughout the world under the
Panasonic and National trademarks. Matsushita also sells a number of hi-fi
products under the Technics trademark. Some of the subsidiaries products
are sold under other trademarks, including Quasar, Victor and JVC.

PATENT LICENSE AGREEMENTS

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

Matsushita is a licensee under various license agreements which cover a wide
range of products, including audiovisual products, computers, communications
equipment, semiconductors and other components. Matsushita has non-exclusive
patent license agreements, among others, with Thomson Multimedia Licensing Inc.
and Thomson 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, among others, with Texas Instruments Incorporated and
International Business Machines Corporation, both covering semiconductors,
information equipment and certain other related products. Matsushita
Electronics Corporation (MEC), a consolidated subsidiary of the Company, has
non-exclusive patent license agreements with Koninklijke Philips Electronics
N.V. covering most of the items manufactured by MEC, including semiconductor
devices, various lamps, cathode-ray and electron tubes and certain other
products.

Most of Matsushitas license and technical assistance agreements are for
three- to ten-year periods, unless the agreements cover specific patents to be
licensed therein, in which case they are normally for the life of the patent.

The Company considers all its technical exchange and license agreements
beneficial to its operations.

RAW MATERIALS AND SOURCES 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 best qualified suppliers from all over the world
and buying the most competitive parts and materials. Furthermore, to improve
its operational efficiency, the Company is currently establishing an
Internet-based parts and materials procurement system on a nation-wide scale.
Since suppliers are selected on the basis of a fair and comprehensive
evaluation, the Company enjoys good business relationships with them and the
sourcing is properly assured.



---



- 14 -

ENVIRONMENTAL PROTECTION

The Company actively promotes diverse environmental initiatives and harmonious
coexistence with the global environment in every aspect of its business
practices. Since establishing the Matsushita Environmental Charter in 1991,
the Company has emphasized the development of eco-friendly products, such as
audio equipment and VCRs with industry-first lead-free solders, reduced the
environmental impact from its manufacturing activities, and is establishing
recycling systems.

As part of Matsushitas strong commitment to environmental protection, the
Company attained ISO14001 certification at more than 200 production sites
globally. Accordingly, Matsushita not only observes relevant environmental
laws and regulations throughout the world, but also established its own
stricter guidelines for the reduction and proper management of chemical
substances. Additionally, in fiscal 2000 the Company commenced a Green
Procurement Campaign, in which Matsushita gives priority to eco-friendly
suppliers and materials.

In fiscal 1999, the Company spent approximately 2 billion yen in appropriate
remedial actions for sites with any signs of contamination, including removal
and purification of water and soil. Currently, the Company is not aware of any
operational sites with serious environmental problems that may have a material
adverse effect on its results of operations or financial position.

The Company is taking steps for compliance with proposed Japanese used electric
appliance recycling legislation, set to begin in the spring of 2001. However,
it is difficult to estimate related expenditures, due to uncertainties involved
including the future status of the proposed legislation. Matsushita believes
that capital expenditures and expenses incurred in complying with the new
legislation will not have a material adverse effect upon its results of
operations or financial position. Nevertheless, the Company is aware that
costs associated with more stringent future environmental regulations will
increase and is therefore placing a high priority on effective environmental
cost management to achieve sustainable growth.

EMPLOYEE RELATIONS

As of March 31, 2000, Matsushita had approximately 290,000 employees. Of the
total, approximately 146,000 employees are in Japan and approximately 144,000
outside of Japan, with a trend of overseas employees constantly increasing.
Most regular employees in Japan, except management personnel, are union
members, principally of the Matsushita Electric Industrial Workers Union, which
is affiliated with the Japanese Electrical Electronic & Information Union.

As is customary in Japan, the Company negotiates annually with the unions and
grants annual wage increases and semiannual bonuses. Matsushita also renews
the terms and conditions of labor contracts, other than those relating to wages
and bonuses, every other year. In recent years, the Company has been
introducing in Japan new comprehensive employment and personnel systems which
satisfy diversified needs of employees. Such systems include an individual
performance-oriented annual salary system and an alternative payment system
under which employees can receive retirement and fringe benefits up front as an
addition to their monthly salary.

In fiscal 1999, Matsushita also introduced a stock-price-linked remuneration
system (effective through fiscal 2001) for its employees manager level or above
whereby a modest amount linked to the Companys stock price is paid once a year
to these employees.

For a quarter century, Matsushita has experienced no major labor strikes or
disputes. The Company considers its labor relations to be excellent.



---



- 15 -

Item 2. Description of Property

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 of Asia, North and South America and Europe. The Company considers
all its factories well maintained and suitable for their current production
requirements.

The following table sets forth information as of March 31, 2000 with respect to
manufacturing facilities:

|                 |  |               |        |                                 |  |                                                                                                                                                                                                        
|---------------- |  | ------------- | ------ | ------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                 |  | Floor Space  
|                 |  | (thousands of
|Location         |  | square feet)  |        | Principal Products Manufactured
|Osaka            |  |               | 9,848  |                                 |  | VCRs, TVs, DVD products, audio equipment, washing machines,
other home appliances, information equipment, industrial
equipment, components, batteries, kitchen fixtures.                               
|                
|                
|                
|                
|Kanagawa         |  |               | 4,392  |                                 |  | 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          |  |               | 2,056  |                                 |  | TVs, TV picture tubes, information equipment.                                                                                                                                                          
|                
|                
|                
|                
|Nara             |  |               | 2,027  |                                 |  | Home appliances, gas and kerosene equipment, compact
discs and DVD discs.                                                                                                                              
|                
|                
|                
|                
|Okayama          |  |               | 1,864  |                                 |  | VCRs, components, magnetic tapes and discs.                                                                                                                                                            
|                
|                
|                
|                
|Kyoto            |  |               | 1,608  |                                 |  | Semiconductors, components.                                                                                                                                                                            
|                
|                
|                
|                
|Ibaraki          |  |               | 1,059  |                                 |  | TVs, magnetic tapes.                                                                                                                                                                                   
|                
|                
|                
|                
|Shikoku          |  |               | 3,683  |                                 |  | VCRs, information equipment, audio equipment, home appliances.                                                                                                                                         
|                
|                
|                
|                
|Kyushu           |  |               | 2,350  |                                 |  | Information and communications equipment, components, industrial equipment.                                                                                                                            
|                
|                
|                
|                
|North    America |  |               | 7,402  |                                 |  | TVs, home appliances, VCRs, DVD discs, car audio equipment,
communications equipment, compressors, components, batteries.                                                                              
|                
|                
|                
|                
|Europe           |  |               | 3,977  |                                 |  | VCRs, TVs, audio equipment, car audio equipment, home
appliances, components, information and communications equipment.                                                                                
|                
|                
|                
|                
|Asia             |  |               | 18,138 |                                 |  | TVs, VCRs, audio equipment, air conditioners, refrigerators,
other home appliances, components, semiconductors,
information and communications equipment, industrial
equipment, compressors, batteries.
|                
|                
|                
|                
|Other            |  |               | 20,068 |                                 |  | Home appliances, industrial equipment, components,
semiconductors, video and audio equipment, batteries,
information and communications equipment.                                                     
|                 |  |               |        |                                
|Total            |  |               | 82,036 |                                
|                 |  |               |        |                                



---



- 16 -

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 11.4 million square feet, and administrative offices with an
aggregate floor space of approximately 17.0 million square feet.

As of March 31, 2000, Matsushita leased approximately 12.2 million square feet
of floor space, most of which was for sales office space.

Item 3. Legal Proceedings

In November 1991, Loral Fairchild Corporation, a Delaware corporation, filed
two lawsuits in the United States District Court for the District of Virginia
against the Company, Matsushita Electric Corporation of America and 36 other
defendants. The suits were consolidated. All defendants were charged with
infringement of two U.S. patents by virtue of the production abroad and sale in
the United States of certain charge coupled devices (CCDs), which are used in
products such as video cameras and facsimile machines. In December 1991, this
action was transferred to the United States District Court for the Eastern
District of New York. The action seeks damages, attorneys fees and a
permanent injunction. The Company has asserted that the patents are invalid
and not infringed upon by its products incorporating CCDs. This litigation has
been bifurcated between liability and damages and has been stayed as to all
defendants except one defendant. In a first liability trial involving this
defendant, a jury held that it infringed the two U.S. patents at issue. In
July 1996, the court granted, among other things, its subsequent motion for
judgment as a matter of law, overturning the verdict. Loral Fairchild
Corporation appealed this decision to the Court of Appeals for the Federal
Circuit and oral argument was held in June 1997. In June 1999, the Federal
Circuit affirmed the district courts claim construction and its
non-infringement decision.

In July 1992, Matsushita Electronics Corporation (MEC), which manufactures
CCDs, commenced a suit in the United States District Court for the Southern
District of New York seeking a declaration that MECs CCDs and all end products
incorporating MECs CCDs (collectively products) are licensed under the two
U.S. patents at issue. In April 1993, the district court granted MECs motion
for summary judgment and ruled that the products were licensed. The Court of
Appeals for the Federal Circuit affirmed the decision in September 1994, and
denied Loral Fairchilds petition for rehearing in November 1994. MECs tort
claim against Loral Fairchild and its parent, Loral Corporation, concerning
certain liability issues was denied by the District Court in August 1997. The
decision has not been appealed.



---



- 17 -

Matsushita is a co-defendant in a class-action lawsuit relating to the
acquisition of MCA in 1990. Certain former stockholders of MCA who tendered
their shares to Matsushita in such acquisition brought actions in the United
States District Court for the Central District of California claiming, in part,
that the Company violated Securities and Exchange Commission Rule 14d-10 by
treating the then chairman and chief executive officer of MCA differently than
other MCA stockholders in such acquisition. The district court denied
plaintiffs motion for summary judgment and subsequently granted Matsushitas
motion for summary judgment in 1992. The United States Court of Appeals, Ninth
Circuit, reversed, in part, finding that the Company violated Rule 14d-10 and
remanded for further proceedings to determine damages. The Company has filed a
petition for a writ of certiorari with the United States Supreme Court. In
February 1996, the Court reversed, finding that the separate class-action
settlement judgment rendered by the Delaware Supreme Court is entitled to full
faith and credit even though it released claims within the exclusive
jurisdiction of the federal courts, and remanded for proceedings consistent
with the Courts opinion. In October 1997, the Ninth Circuit further reversed,
holding that it should withhold full faith and credit from the Delaware
judgment, because, as a matter of law, plaintiffs were not adequately
represented in Delaware. The Ninth Circuit reheard the case and, in June 1999,
withdrew its 1997 opinion and affirmed the district courts 1992 decision
dismissing the action. In November 1999, the United States Supreme Court
denied plaintiffs petition for a writ of certiorari. In December 1999, the
Ninth Circuit issued its decision and mandate affirming the district courts
1992 decision. Certain of the plaintiffs who opted out of the Delaware
settlement have asked the Ninth Circuit to clarify that its decision and
mandate do not purport to terminate the federal claims of the 19 former MCA
stockholders who opted out of the Delaware settlement.

In December 1999, certain plaintiffs in the federal action moved to intervene
and reopen the final settlement judgement entered by the Delaware Court of
Chancery in February 1993 and affirmed by the Delaware Supreme Court in
September 1993. Oral argument on this motion was held in May 2000.

Management is of the opinion that any outcome of these actions against
Matsushita will not have a material adverse effect on Matsushitas operations
or financial position.

There are a number of other legal actions and administrative investigations
against the Company and subsidiaries. Management is of the opinion that
damages, if any, resulting from these actions will not have a material effect
on Matsushitas results of operations or financial position.

|        |  |  |                                                                                                                                               |  |  |                                                                                                                                                              
|------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 4. |  |  | Control of Registrant                                                                                                                         |  |  |                                                                                                                                                              
|        |  |  |                                                                                                                                               |  |  |                                                                                                                                                              
|(a)     |  |  | Matsushita is not, directly or indirectly, owned or controlled by other
corporations or by the Japanese government or any foreign government.
|        |  |  |                                                                                                                                               |  |  |                                                                                                                                                              
|       
|       
|       
|       
|(b)     |  |  | (1)                                                                                                                                           |  |  | To the knowledge of the Company, no person owns more than ten percent
of any class of the Companys common stock.                                            
|        |  |  |                                                                                                                                               |  |  |                                                                                                                                                              
|       
|       
|       
|       
|        |  |  | (2)                                                                                                                                           |  |  | The total number of the Companys voting securities
beneficially owned by the Directors and Corporate Auditors as a group
as of March 31, 2000 is as follows:

|               |  |                         |  |              |  |          |  | 
|-------------- |  | ----------------------- |  | ------------ |  | -------- |  | 
|               |  | Identity of             |  | Number of    |  | Percent 
|Title of class |  | person or group         |  | shares owned |  | of class
|               |  |                         |  |              |  |         
|               |  |                         |  |              |  |         
|Common Stock   |  | Directors and Corporate |  | 18,437,953   |  | 0.89%   
|               |  | Auditors  36 persons   |  | shares       |  |          |  | 



---



- 18 -



|    |  |                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) |  | 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.

|        |  |                         
|------- |  | ------------------------
|Item 5. |  | Nature of Trading Market

Common Stock, American Depositary Receipts

The primary market for the Companys Common Stock is the Tokyo Stock Exchange
(the TSE). The Common Stock is traded on the First Section of the TSE and is
also listed on five other stock exchanges in Japan. In addition, the Companys
Common Stock is listed on the Amsterdam Stock Exchange in the form of original
Common Stock under the ASAS system, on the Frankfurt Stock Exchange and
Duesseldorf Stock Exchange in the form of co-ownership shares in a Global
Bearer Certificate and on the Paris Stock Exchange in the form of original
Common Stock of the Company. In the United States, the Companys American
Depositary Shares have been listed on and traded in the New York Stock Exchange
(the 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 the American Depositary Shares in the United States.

ADRs are issuable pursuant to a Deposit Agreement dated as of April 28, 1970,
as amended and restated as of November 20, 1975 and as further amended as of
October 1, 1982 (the Deposit Agreement), among the Company, Morgan Guaranty
Trust Company of New York as Depositary (the Depositary), and the holders of
ADRs. ADRs evidence American Depositary Shares, each representing 10 shares of
Common Stock deposited under the Deposit Agreement with The Sumitomo Bank,
Limited, as agent of the Depositary, or any successor or successors to such
agent or agents.

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 prices of the Companys American Depositary Shares on the
NYSE:

|                |                                                                                                                                                                                                      |  |  |      |       |                      |  |                             |       |     |  |  |        |  |  |  |        |  |  | 
|--------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | ----- | -------------------- |  | --------------------------- | ----- | --- |  |  | ------ |  |  |  | ------ |  |  | 
|                |                                                                                                                                                                                                      |  |  |      |       | Tokyo Stock Exchange |  | New York Stock Exchange    
|                |                                                                                                                                                                                                      |  |  |      |       |                      |  |                            
|                |                                                                                                                                                                                                      |  |  |      |       | Price per Share of   |  | Price per American         
|                |                                                                                                                                                                                                      |  |  |      |       | Common Stock (yen)   |  | Depositary Share (dollars)*
|                |                                                                                                                                                                                                      |  |  |      |       |                      |  |                            
|Calendar Period |                                                                                                                                                                                                      |  |  | High |       | Low                  |  | High                        |       | Low
|                |                                                                                                                                                                                                      |  |  |      |       |                      |  |                             |       |    
|                |                                                                                                                                                                                                      |  |  |      |       |                      |  |                            
|1998           
|               
|               
|               
|               
|                | 1st quarter                                                                                                                                                                                          |  |  |      | 2,140 |                      |  |                             | 1,820 |     |  |  | 163.94 |  |  |  | 143.06 | 
|               
|               
|               
|               
|                | 2nd quarter                                                                                                                                                                                          |  |  |      | 2,280 |                      |  |                             | 2,025 |     |  |  | 171.00 |  |  |  | 147.88 | 
|               
|               
|               
|               
|                | 3rd quarter                                                                                                                                                                                          |  |  |      | 2,375 |                      |  |                             | 1,800 |     |  |  | 170.00 |  |  |  | 130.50 | 
|               
|               
|               
|               
|                | 4th quarter                                                                                                                                                                                          |  |  |      | 2,155 |                      |  |                             | 1,640 |     |  |  | 182.25 |  |  |  | 128.00 | 
|               
|               
|               
|               
|1999           
|               
|               
|               
|               
|                | 1st quarter                                                                                                                                                                                          |  |  |      | 2,355 |                      |  |                             | 1,878 |     |  |  | 195.00 |  |  |  | 157.50 | 
|               
|               
|               
|               
|                | 2nd quarter                                                                                                                                                                                          |  |  |      | 2,520 |                      |  |                             | 2,135 |     |  |  | 207.00 |  |  |  | 173.50 | 
|               
|               
|               
|               
|                | 3rd quarter                                                                                                                                                                                          |  |  |      | 2,980 |                      |  |                             | 2,050 |     |  |  | 239.00 |  |  |  | 198.00 | 
|               
|               
|               
|               
|                | 4th quarter                                                                                                                                                                                          |  |  |      | 2,915 |                      |  |                             | 2,050 |     |  |  | 299.63 |  |  |  | 191.00 | 
|               
|               
|               
|               
|2000           
|               
|               
|               
|               
|                | 1st quarter                                                                                                                                                                                          |  |  |      | 3,320 |                      |  |                             | 2,640 |     |  |  | 303.00 |  |  |  | 249.00 | 
|                |                                                                                                                                                                                                      |  |  |      |       |                      |  |                            
|*               | The prices of American Depositary Shares, each representing 10
shares of Common Stock, are based upon reports by the NYSE, with all
fractional figures rounded up to the nearest two decimal points.



---



- 19 -

As of March 31, 2000, approximately 8.63% of the Companys Common Stock was
owned of record by a total of 227 United States shareholders including the
Depositarys nominee, considered as one shareholder of record, owning
approximately 1.93% of the total Common Stock.



|        |                                                                   
|------- | ------------------------------------------------------------------
|Item 6. | Exchange Controls and Other Limitations Affecting Security Holders



|    |                                   
|--- | ----------------------------------
|(a) | Japanese Foreign Exchange Controls



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective April 1, 1998 the Foreign Exchange and Foreign Trade Control Law
was amended and the title of the statute was changed to the Foreign
Exchange and Foreign Trade Law. Under the amended Law all aspects of
regulations on foreign exchange and foreign trade transactions which were
subject to licensing or other approval or prior notification requirements
are, with minor exceptions relating to inward direct investments (which
are not generally applicable to the Companys shares), now subject to post
transaction reporting requirements. Acquisitions and dispositions of
shares of Common Stock or American Depository Shares by non-residents of
Japan (including foreign corporations not resident in Japan) are generally
not subject to this reporting requirement. However, the Minister of
Finance has the power to impose a licensing requirement for certain
transactions in limited circumstances. Under the Foreign Exchange Law as
currently in effect, dividends paid on, and the proceeds of sales in Japan
of, shares held by non-residents of Japan may in general be converted into
any foreign currency and repatriated abroad.

|    |                            
|--- | ---------------------------
|    |                            
|(b) | Description of Common Stock



| |                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Set forth below is certain information relating to the Common Stock of the
Company, including brief summaries of certain provisions of the Companys
Articles of Incorporation and Share Handling Regulations, as currently in
effect, and of the Commercial Code of Japan relating to a joint stock
company (Kabushiki Kaisha) and certain related legislation.



| |        
| | -------
| | General



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The presently authorized capital stock of the Company is 4,950,000,000
shares, which may be issued with a par value or without a par value. The
Commercial Code requires that shares be in registered form. Under the
Commercial Code shares are transferable by delivery of share certificates,
but in order to assert shareholders rights against the Company, the
transferee must have his name registered in the Companys register of
shareholders. All of the presently outstanding shares of the Company are
of a par value of 50 yen per share. The Company may, by a resolution of
the Board of Directors, convert par value shares into non-par value shares
or vice versa. Shareholders are required to file their names, addresses
and seals with The Chuo Mitsui Trust and Banking Company, Limited, the
transfer agent for the Companys Common Stock, and shareholders not
resident in Japan are required to file a mailing address in Japan or
appoint a resident proxy in Japan. These requirements do not apply to the
holders of ADRs.



---



- 20 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The central clearing system of share certificates under the Law Concerning
Central Clearing of Share Certificates and Other Securities of Japan
applies to the shares of Common Stock of the Company. Pursuant to this
system a holder of shares of Common Stock is able to choose, at his
discretion, to participate in this system by depositing shares of Common
Stock with the Japan Securities Depository Center (JASDEC), the sole
depositary under the system (through a participating institution, such as
a securities company or bank, having a clearing account with the clearing
house, if the holder is not a participating institution), and all such
shares are registered in the name of JASDEC in the Companys register of
shareholders. Each participating shareholder is in turn registered in the
register of beneficial shareholders and treated the same way as
shareholders registered in the Companys register of shareholders. For
the purpose of transferring the deposited shares, delivery of share
certificates is not required. In general, beneficial owners of deposited
shares registered in the register of beneficial owners are entitled to the
same rights and benefits as the holders of shares registered in the
register of shareholders. The registered beneficial owners may exercise
the rights attached to the shares, such as voting rights, and will receive
dividends (if any) and notices to shareholders directly from the Company.
The shares held by a person as a registered shareholder and those held by
the same person as a registered beneficial owner are aggregated for these
purposes. New shares issued with respect to deposited shares, including
those issued upon a stock split, automatically become deposited shares.
The beneficial owners are required to file with the Companys transfer
agent, principally through the relevant participating institution, the
same information as is required from the registered shareholders.
Beneficial owners may at any time withdraw their shares from deposit and
receive share certificates.



| |          
| | ---------
| | 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 the shareholders, beneficial shareholders and pledgees of
record as of the end of such fiscal period. After the close of the fiscal
period, the Board of Directors prepares, among other things, a proposed
allocation of profits for dividends and other purposes; this proposal is
submitted to the Corporate Auditors of the Company and to independent
certified public accountants and then submitted for approval to the
ordinary general meeting of shareholders, which is normally held in June
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
annual dividends, the Board of Directors of the Company 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 who are registered in the Companys register of
shareholders or beneficial shareholders at the end of each September 30,
without prior shareholder approval, but subject to the limitations
described below.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Commercial Code provides that a company may not make any distribution
of profits by way of dividends or interim dividends for any fiscal period
unless it has set aside in its legal reserve an amount equal to at least
one-tenth of the amount paid by way of appropriation of retained earnings
for such fiscal period until the legal reserve is one-quarter of its
stated capital. Under the Commercial Code the Company is permitted to
distribute profits by way of year-end or interim dividends out of the
excess of its net assets over the aggregate of:

| |       |                                                                             
| | ----- | ----------------------------------------------------------------------------
| | (i)   | its stated capital;                                                         
|
|
|
| | (ii)  | its capital surplus;                                                        
|
|
|
|
| | (iii) | its accumulated legal reserve;                                              
|
|
|
|
| | (iv)  | the legal reserve to be set aside in respect of the fiscal period concerned;



---



- 21 -

| |       |                                                                                                                                                                                                                                                                          
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v)   | the excess, if any, of unamortized expenses incurred in
preparation for commencement of business and in connection with
research and development over the aggregate of amounts referred to in
(ii), (iii) and (iv) above;                                                
|
|
|
|
| | (vi)  | if the Company has on its balance sheet a number of shares of
its Common Stock which the Company has acquired for the purpose of
transferring the same to its Directors and/or employees but such
shares are yet to be so transferred, the book value of such shares;
and
|
|
|
|
| | (vii) | if certain assets of the Company are stated at market value
pursuant to the provisions of the Commercial Code, the aggregate
amount of the unrealized gains in cases when the market value exceeds
the acquisition cost.                                                 



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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Commercial Code, currently in effect, does not provide for stock
dividends. However, under the Commercial Code, the shareholders may by
resolution transfer any amount which is distributable as dividends to
stated capital and the Board of Directors may by resolution issue
additional shares by way of a stock split up to the aggregate par value
equal to the amount so transferred; thus, the same effect as a stock
dividend can be achieved.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | In Japan the ex-dividend date and the record date for dividends precede
the date of determination of the amount of the dividend 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Transfer of capital surplus and legal reserve to stated capital and stock
splits (free share distributions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | When the Company issues new shares of Common Stock, the entire amount of
the issue price of such new shares is required to be accounted for as
stated capital, although the Company may account for an amount not
exceeding one-half of such issue price as capital surplus (subject to the
remainder being not less than the total par value of the new shares being
issued). The Board of Directors may transfer the whole or any part of
capital surplus and legal reserve to stated capital and grant to
shareholders additional shares of Common Stock free of charge by way of a
stock split, without affecting the par value thereof, with reference to
the whole or any part of the amount of capital surplus and legal reserve
so transferred to stated capital; such additional shares may also be
granted by reference to the amount representing the portion of the issue
price of shares of Common Stock in excess of the par value thereof which
has been accounted for as stated capital.



---



- 22 -



| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Commercial Code permits the Company to make a partially free
distribution to shareholders by way of a rights issue at a subscription
price per share which is less than the par value thereof if:

| |     |                                                                                                                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) | the difference between the subscription price and the par value
does not exceed the amount of the stated capital minus the aggregate
par value of all outstanding shares, divided by the number of new
shares to be issued pursuant to such rights issue;



| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In order to satisfy the requirement mentioned in (i) above, the Board of
Directors may transfer the whole or any part of capital surplus or legal
reserve to stated capital.



| |                                
| | -------------------------------
| | General meeting of shareholders



| |                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The ordinary general meeting of shareholders to settle accounts of the
Company for each fiscal period is normally held in June each year in
Kadoma, Osaka, Japan. In addition, the Company may hold an extraordinary
general meeting of shareholders whenever necessary by giving at least two
weeks advance notice to shareholders.
|
| | Notice of a shareholders meeting setting forth the place, time and
purpose thereof, must be mailed to each shareholder having voting rights
(or, in the case of a non-resident shareholder, to his resident proxy or
mailing address in Japan) at least two weeks prior to the date set for the
meeting.                            
|
| | Any shareholder holding at least 300 units of shares or 1% of the total
number of outstanding shares for 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



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



---



- 23 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 Corporate Auditor,
dissolution, merger or consolidation of the Company requiring shareholders
resolutions, the transfer of the whole or an important part of the
business, the taking over of the whole of the business of any other
corporation, share exchange or share transfer requiring shareholders
resolutions for the purpose of establishing 100% parent-subsidiary
relationships, any offering of new shares at a specially favorable price
(or any offering of convertible bonds or debentures with specially
favorable conversion conditions or of bonds or debentures with warrants
or rights to subscribe for new shares with specially favorable
conditions) to persons other than shareholders, or granting to Directors
and/or employees rights to subscribe for new shares if the Articles of
Incorporation so permit the quorum shall be a majority of the total number
of shares having voting rights outstanding and the approval of the holders
of at least two-thirds of the shares having voting rights represented at
the meeting is required (the special shareholders resolution).



| |                    
| | -------------------
| | Subscription rights



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Holders of the Companys 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 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 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.
|
| | The Commercial Code permits a company to provide in its articles of
incorporation that it may, by a special shareholders resolution, grant to
its directors and/or employees rights to subscribe for new shares if there
exists a justifiable reason. The Companys Articles of Incorporation do
not so provide.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



---



- 24 -



| |         
| | --------
| | Dilution



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the future it is possible that market conditions and other factors
might make a rights offering to shareholders at par or substantially below
the market price of shares of Common Stock desirable. If the number of
shares offered in a rights offering is substantial in relation to the
number of shares outstanding and the market price exceeds the subscription
price at the time of the offering, a shareholder who does not exercise and
is unable otherwise to realize the full value of his subscription rights
would suffer economic dilution of his equity interest in the Company. If
a substantial amount of stock option rights for new shares are granted to
the Companys Directors and/or employees with the exercise price below the
market price of the shares, existing shareholders equity interest in the
Company will be diluted.



| |                   
| | ------------------
| | 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 the shareholders in proportion to the respective numbers
of shares held.



| |                                          
| | -----------------------------------------
| | Liability to further calls or assessments



| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All the Companys presently outstanding shares of Common Stock including
shares represented by the American Depository Shares are fully paid and
non-assessable.



| |               
| | --------------
| | Transfer agent



| |                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Chuo Mitsui Trust and Banking Company, Limited is the transfer agent
for the Companys Common Stock; as such transfer agent, it keeps the
Companys registers of shareholders and beneficial shareholders in its
office at 2-21, Kitahama 2-chome, Chuo-ku, Osaka, Japan, and makes
transfer of record ownership upon presentation of the certificates
representing the transferred shares.



| |            
| | -----------
| | Record date



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | March 31 is the record date for the Companys year-end dividends. The
shareholders and beneficial shareholders who are registered as the holders
of 1,000 shares or more in the Companys register 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 period 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
beneficial shareholders entitled to other rights and for other purposes by
giving at least two weeks public notice.



| |                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The price of the shares generally goes ex-dividend 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.



---



- 25 -



| |                                              
| | ---------------------------------------------
| | Repurchase by the Company of its Common Stock



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Except as otherwise permitted by the Commercial Code and the Law of
Special Exception to the Commercial Code Concerning Retirement of Shares
(the Special Retirement Law) as set out below, the Company or any of its
subsidiaries cannot acquire the Companys Common Stock except by means of
a reduction of capital in the manner provided in the Commercial Code. The
Company may acquire its Common Stock in response to a shareholders
request for purchase of his shares representing less than one unit. See 
Unit share system  Rights of a holder of shares representing less than
one unit to require the Company to purchase such shares below. Shares so
purchased must be sold or otherwise transferred to a third party within a
reasonable period thereafter.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under the Commercial Code and the Special Retirement Law the Company may
acquire its Common Stock for the following purposes, subject to the
authorization of shareholders at an ordinary general meeting (if the
Articles of Incorporation provide that the shares may be purchased for the
purpose of retirement by resolution of the Board of Directors if the Board
deems it especially necessary to do so in view of general economic
conditions, the business and financial condition of the Company and other
factors, by the resolution of the Board of Directors):

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



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

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the number of shares to be acquired does not exceed 10% of all
issued and outstanding shares (except in the case of purchase of
shares for retirement pursuant to shareholders authorization);                                                                                                                                                                                                                                                        
| | (ii)  | total amount of purchase price does not exceed the amount of
the retained earnings available for dividend payment minus the amount
to be paid by way of appropriation of retained earnings for the
fiscal year and, if any amount of retained earnings is to be
capitalized, such amount (if the purchase is made pursuant to the
resolution of the Board of Directors as referred to in the
parentheses above, one-half of such permitted amount); and
| | (iii) | acquisition shall be made through a stock exchange transaction
or by way of tender offer.                                                                                                                                                                                                                                                                                                                                                              



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys shareholders gave, at the ordinary general meeting of
shareholders held in June 1998, an authorization for the acquisition of
not exceeding 120,000 shares of Common Stock for the purpose of
transferring the same to all its Directors then in office and certain
executive employees. Pursuant to such authorization in June 1998, 113,000
shares of Common Stock were purchased for such purpose. Further, the
Companys shareholders gave, at the ordinary general meeting of
shareholders held in June 1999, an authorization for the acquisition of
not exceeding 120,000 shares of Common Stock for the same purpose.
Pursuant to such authorization in June 1999, 116,000 shares of Common
Stock were purchased for such purpose. In addition, the Companys
shareholders have, at the general meeting of shareholders held in June
2000, given an authorization for the acquisition of not exceeding 120,000
shares of Common Stock for the same purpose. Pursuant to such
authorization in June 2000, 109,000 shares of Common Stock were purchased
for such purpose in early July 2000.



---



- 26 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys shareholders gave, at the ordinary general meeting of
shareholders held in June 1998, an authorization for the acquisition,
during the period not later than the next ordinary general meeting of
shareholders, of 50,000,000 shares of Common Stock for the purpose of
retirement thereof with retained earnings. Pursuant to such
authorization, 50,000,000 shares of Common Stock were purchased and
retired with retained earnings during such period.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 1998 the Company provided in its Articles of Incorporation to
purchase not exceeding 200,000,000 shares by resolution of the Board of
Directors for the purpose of retirement thereof with retained earnings.
No such purchase pursuant to a resolution of the Board of Directors may be
made after the conclusion of the ordinary general meeting of shareholders
for the fiscal year ending immediately after the Board resolution. No
Board resolution has been made for this purpose.              
|
| | The Special Retirement Law was amended in March 1998 enabling the Company
to acquire its own shares for the purpose of retiring the same with
capital surplus by resolution of the Board of Directors if the Articles of
Incorporation so provide and if the Board deems it especially necessary to
do so in view of general economic conditions, the business and financial
condition of the Company and other factors. The acquisition of shares
under this authorization is subject to the restriction that:

| |     |                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (x) | the total amount of the purchase price does not exceed the
total amount of capital surplus and accumulated legal reserve minus
the amount equal to one-fourth of stated capital; and                                                                                                                  
| | (y) | if the aggregate of the amounts of (i) through (vii) referred
to under Dividends above and the amount of interim dividend
distributed exceeds the net assets appearing on the balance sheets as
at the latest closing of the Companys accounts, no purchase of
shares for this purpose can be made.



| |                                                           
| | ----------------------------------------------------------
| | The Companys Articles of Incorporation do not so provide.



| |                    
| | -------------------
| | Unit share system



| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Pursuant to the Commercial Code the Company has adopted 1,000 shares as
one unit of shares.



| |                                                          
| | ---------------------------------------------------------
| | Transferability of shares representing less than one unit



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certificates for shares representing less than one unit may only be issued
in certain limited circumstances. Since the transfer of shares normally
requires delivery of the certificates therefor, fractions of a unit for
which no share certificates are issued are not transferable. Shares
representing less than one unit for which share certificates have been
issued continue to be transferable, but the transfer may be registered in
the Companys register of shareholders only if the transferee is already a
registered shareholder (whether in respect of units or of shares
representing less than one unit).



---



- 27 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A holder who owns ADRs evidencing less than 100 American Depository Shares
will indirectly own less than a whole unit. Because transfer of ADRs does
not require changes in the ownership of the underlying shares of Common
Stock, holders of ADRs evidencing American Depository Shares that
constitute less than one unit of Common Stock are not affected by such
restrictions in their ability to transfer such ADRs. However, because
transfers of less than one unit of the underlying shares of Common Stock
are normally prohibited under the unit share system, under the Deposit
Agreement relating to the ADRs, the right of ADR holders to surrender
their ADRs and withdraw the underlying shares of Common Stock for sale in
Japan may only be exercised as to whole units of Common Stock. Although,
as discussed below, 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 American Depository Shares that represent other
than integral multiples of whole units are unable to withdraw the
underlying shares of Common Stock representing less than one unit and,
therefore, are unable, as a practical matter, to exercise the right to
require the Company to purchase such underlying shares. As a result,
access to the Japanese markets by holders of ADRs through the withdrawal
mechanism will not be available for dispositions of shares in lots of less
than one unit.



| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | Rights of a holder of shares representing less than one unit to require the Company to purchase such shares



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A holder of shares representing less than one unit may at any time require
the Company to purchase such shares at their last reported sale price on
the Osaka Securities Exchange on the day when such request is made or, if
no sale takes place on the Osaka Securities Exchange on such day, the last
reported sale price on the Tokyo Stock Exchange on such day, and if a sale
takes place on neither of such exchanges on such day, the price at which
the first sale of the shares is effected on the Osaka Securities Exchange
thereafter, less applicable brokerage commission.



| |                                                                   
| | ------------------------------------------------------------------
| | Other rights of a holder of shares representing less than one unit



| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | A holder of shares representing less than one unit has the following
rights in respect of such shares:

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



| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | All other rights, including voting rights, cannot be exercised with
respect to shares representing less than one unit.



---



- 28 -



| |                                                                    
| | -------------------------------------------------------------------
| | Voting rights of a holder of shares representing less than one unit



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



| |                                                                                 
| | --------------------------------------------------------------------------------
| | Consolidation by operation of law of shares constituting one unit into one share



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The unit share system is intended to be an interim measure with a view
ultimately to achieve shares of a much higher denomination than at
present. On a date to be specified by separate legislation, the shares
comprising one unit will be deemed to be consolidated into one share.
Presently it is not known when the bill specifying such date will be
submitted to the Japanese parliament. If the consolidation takes place,
the holder of any fractional share constituting one-hundredth of one share
or any integral multiple thereof, which may result from such
consideration, will be registered as the holder thereof in the register of
fractional shares and the holder of any fraction representing less than a
whole hundredth of one share will be entitled to receive a cash payment.
A registered holder of fractional shares may request that a company issue
certificates therefor, unless its articles of incorporation provide
otherwise, in which case such holder may request that the company purchase
such fractional shares. Fractional shares will not carry voting rights
and, unless such companys articles of incorporation provide otherwise,
the entitlement thereof will be limited and will not include the right to
receive dividends.

|    |                                       
|--- | --------------------------------------
|(c) | Reporting of Substantial Shareholdings



| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Securities and Exchange Law of Japan, as amended, requires any person
who has become, beneficially and solely or jointly, a holder of more than
5% of the total issued shares 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 Financial Reconstruction Commission within five
business days a report concerning such shareholdings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A similar report must also be made in respect of any subsequent change of
1% or more in any such holding with certain exceptions. For this purpose,
shares issuable to such person upon conversion of convertible securities
or exercise of share subscription warrants are taken into account in
determining both the number of shares held by such holder and the issuers
total issued share capital. Copies of each 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.



---



- 29 -

Item 7. Taxation

For purposes of the Income Tax Convention between the U.S. and Japan (the
Convention) and the U.S. Internal Revenue Code of 1986, as amended (the
Code), U.S. holders of ADRs will be treated as the owners of the Common Stock
underlying the American Depositary Shares evidenced by the ADRs. For purposes
of this discussion, a U.S. holder is a holder that (i) is a resident of the
United States for purposes of the Convention, (ii) a citizen of the United
States, (iii) does not maintain a permanent establishment or fixed base in
Japan to which ADRs or Common Stock are attributable and through which the
beneficial owner carries on or has carried on business (or in the case of an
individual, performs or has performed independent personal services) and (iv)
is not otherwise ineligible for benefits under the Convention with respect to
income and gain derived in connection with the ADRs or Common Stock.

Japanese taxation of Common Stock or ADRs

Generally, a non-resident of Japan or a non-Japanese corporation is subject to
Japanese withholding tax on dividends paid by a Japanese corporation. Stock
splits (whether for the purpose of making a free distribution or dividend in
shares), subject as set out below, are not subject to Japanese income tax.
However, a transfer of retained earnings or legal reserve (but not capital
surplus) to stated capital is treated as a dividend payment to shareholders for
Japanese tax purposes and is, in general, 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 on
dividends paid by Japanese corporations to non-residents of Japan or
non-Japanese corporations is 20%.

Under the Convention, the maximum rate of Japanese withholding tax that may be
imposed on dividends paid to a U.S. resident or corporation not having a
permanent establishment (as defined therein) in Japan is generally 15%.

A non-resident holder who is entitled to a reduced rate of Japanese withholding
tax on payment of dividends by the Company is required to submit an Application
Form for Income Tax Convention regarding Relief from Japanese Income Tax on
Dividends in advance through the Company to the relevant tax authority before
payment of dividends. A standing proxy for a non-resident holder may provide
this application service. With respect to American Depositary Shares, this
reduced rate is applicable if the depositary or its agent submits two
Application Forms for Income Tax Convention (one before payment of dividends,
the other within eight months after the Companys fiscal year-end). To claim
this reduced rate, a non-resident holder of American Depositary Shares will be
required to file proof of taxpayer status, residence and beneficial ownership
(as applicable) and to provide other information or documents as may be
required by the depositary. A non-resident holder who does not submit an
application in advance will be entitled to claim the refund of withholding
taxes withheld in excess of the rate of an applicable tax treaty from the
relevant Japanese tax authority.



---



- 30 -

Gains derived by a non-resident of Japan or a non-Japanese corporation from the
sale of Common Stock or ADRs outside Japan, or from the sale of Common Stock
within Japan by a non-resident of Japan or by a non-Japanese corporation not
having a 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 an individual who has acquired Common Stock
or ADRs as a legatee, heir or donee even though neither the individual nor the
deceased nor donor is a Japanese resident. Holders of shares of Common Stock
or ADRs should consult their tax advisors regarding the effect of these taxes
and, in the case of U.S. holders, the possible application of the Estate and
Gift Tax Treaty between the United States and Japan.

If the Company purchases shares of its Common Stock by way of a tender offer
for the purpose of retirement with retained earnings as described under Item
6. Exchange Controls and Other Limitations Affecting Security Holders (b)
Description of Common Stock  Repurchase by the Company of
its Common Stock
and so retires such shares, the selling shareholders (both individuals and
corporations) are in general deemed to have received a dividend in an amount
equal to the selling price less the aggregate of the stated capital and the
capital surplus attributable to the shares so sold, provided however that if
such retirement is made on or before March 31, 2002, no such dividend is deemed
to have been received by any selling shareholders who are individuals but gains
realized by such sales are in general subject to Japanese income tax. In
addition, when shares acquired by the Company (whether by way of a tender offer
or otherwise) for the purpose of retirement with retained earnings are retired
by the Company, the shareholders (both individuals and corporations) whose
shares were not retired are deemed to have received a dividend in an amount
equal to the amount of the stated capital attributable to the retired shares
(if such amount exceeds the amount of retained earnings used for the
retirement, the amount of such retained earnings) and calculated in proportion
to each shareholders remaining shares, except that if such retirement is made
on or before March 31, 2002, no income tax is payable with respect to such
portion deemed as a dividend. However, corporate shareholders have an option
for such amount to be treated as dividend received for the purpose of
corporation tax.

United States taxation of Common Stock or ADRs

The following is a summary of certain United States federal income tax
consequences of the ownership of Common Stock or ADRs by a U.S. holder. This
summary is based on United States tax laws, including the Code, and on the
Convention all of which are subject to change possibly with retroactive effect.

Taxation of dividends

Subject to the passive foreign investment company (PFIC) rules discussed
below, U.S. holders will include in gross income the gross amount of any
dividends received (before reduction for Japanese withholding taxes) to the
extent paid out of the Companys current or accumulated earnings and profits
(as determined for United States federal income tax purposes) as ordinary
income. The dividend will not be eligible for the dividends-received deduction
allowed to United States corporations in respect of dividends received from
other United States corporations. The amount of the dividend will be the U.S.
dollar value of the Japanese yen payments made, determined at the spot Japanese
yen /U.S. dollar rate on the date the dividend is includible in the U.S.
holders income.

Subject to certain limitations, the Japanese tax withheld in accordance with
the Convention will be creditable against the U.S. holders United States
federal income tax liability. For foreign tax credit limitation purposes, the
dividend will be income from sources without the United States, but generally
will be treated separately, together with other items of passive income.



---



- 31 -

Taxation of capital gains

Subject to the PFIC rules discussed below, upon a sale or other disposition of
Common Stock or ADRs, a U.S. holder will recognize gain or loss in an amount
equal to the difference between the U.S. dollar value of the amount realized
and the U.S. holders tax basis (determined in U.S. dollars) in such Common
Stock or ADRs. Generally, such gain or loss will be capital gain or loss and
will be long-term capital gain or loss if the U.S. holders holding period for
such Common Stock or ADRs exceeds one year. Any such gain will be income from
sources within the United States for foreign tax credit limitation purposes.

Passive foreign investment company considerations

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



---



- 32 -

Item 8. Selected Financial Data

|                                    |  |                                                                 |         |      |  |      |         |      |  |      |         |   |  |  |         |   |  |  |         |  
|----------------------------------- |  | --------------------------------------------------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | - |  |  | ------- | -
|                                    |  | Yen (billions), except per share amounts and yen exchange rates
|                                    |  |                                                                
|                                    |  | Fiscal year ended March 31,                                    
|                                    |  |                                                                
|                                    |  | 2000                                                            |         | 1999 |  | 1998 |         | 1997 |  | 1996
|                                    |  |                                                                 |         |      |  |      |         |      |  |     
|Income Statement Data:             
|                                   
|                                   
|                                   
|                                   
|Net sales                           |  |                                                                 | 7,299   |      |  |      | 7,640   |      |  |      | 7,891   |   |  |  | 7,676   |   |  |  | 6,795   |  
|                                   
|                                   
|                                   
|                                   
|Income before income taxes          |  |                                                                 | 219     |      |  |      | 202     |      |  |      | 356     |   |  |  | 332     |   |  |  | 77      |  
|                                   
|                                   
|                                   
|                                   
|Net income (loss)                   |  |                                                                 | 100     |      |  |      | 14      |      |  |      | 94      |   |  |  | 138     |   |  |  | (57     | )
|                                   
|                                   
|                                   
|                                   
|Per common share:                  
|                                   
|                                   
|                                   
|                                   
|Net income (loss):                 
|                                   
|                                   
|                                   
|                                   
|Basic                               |  |                                                                 | 48.35   |      |  |      | 6.48    |      |  |      | 44.32   |   |  |  | 65.39   |   |  |  | (27.12  | )
|                                   
|                                   
|                                   
|                                   
|Diluted                             |  |                                                                 | 46.36   |      |  |      | 6.48    |      |  |      | 41.53   |   |  |  | 60.64   |   |  |  | (27.12  | )
|                                   
|                                   
|                                   
|                                   
|Dividends                           |  |                                                                 | 14.00   |      |  |      | 12.50   |      |  |      | 13.00   |   |  |  | 12.50   |   |  |  | 12.50   |  
|                                   
|                                   
|                                   
|                                   
|                                    |  |                                                                 | ($0.125 | )    |  |      | ($0.097 | )    |  |      | ($0.107 | ) |  |  | ($0.112 | ) |  |  | ($0.136 | )
|                                   
|                                   
|                                   
|                                   
|Balance Sheet Data:                
|                                   
|                                   
|                                   
|                                   
|Total assets                        |  |                                                                 | 7,687   |      |  |      | 7,938   |      |  |      | 8,564   |   |  |  | 8,696   |   |  |  | 8,012   |  
|                                   
|                                   
|                                   
|                                   
|Long-term debt                      |  |                                                                 | 644     |      |  |      | 709     |      |  |      | 690     |   |  |  | 923     |   |  |  | 1,019   |  
|                                   
|                                   
|                                   
|                                   
|Minority interests                  |  |                                                                 | 589     |      |  |      | 609     |      |  |      | 618     |   |  |  | 611     |   |  |  | 560     |  
|                                   
|                                   
|                                   
|                                   
|Stockholders equity                |  |                                                                 | 3,467   |      |  |      | 3,533   |      |  |      | 3,770   |   |  |  | 3,696   |   |  |  | 3,398   |  
|                                   
|                                   
|                                   
|                                   
|Yen exchange rates per
U.S. dollar:
|                                   
|                                   
|                                   
|                                   
|Year-end                            |  |                                                                 | 102.73  |      |  |      | 118.43  |      |  |      | 133.29  |   |  |  | 123.72  |   |  |  | 107.00  |  
|                                   
|                                   
|                                   
|                                   
|Average                             |  |                                                                 | 111.35  |      |  |      | 128.19  |      |  |      | 122.78  |   |  |  | 113.19  |   |  |  | 97.09   |  
|                                   
|                                   
|                                   
|                                   
|High                                |  |                                                                 | 101.53  |      |  |      | 108.83  |      |  |      | 111.42  |   |  |  | 104.49  |   |  |  | 81.12   |  
|                                   
|                                   
|                                   
|                                   
|Low                                 |  |                                                                 | 124.45  |      |  |      | 147.14  |      |  |      | 133.99  |   |  |  | 124.54  |   |  |  | 107.29  |  

|       |  |    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------ |  | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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. |  | In June 1995, the Company sold an 80% equity
interest in MCA INC. (MCA). Accordingly, beginning in fiscal
1996, MCA, now named Universal Studios, Inc., is no longer
treated as a consolidated subsidiary. The Company registered a
one-time, non-operating loss on the sale of its investment in
MCA of approximately 164 billion yen in fiscal 1996, primarily
stemming from the realization of foreign currency translation
adjustments, which led to a substantial decrease in income
before income taxes and a net loss.
|      
|      
|      
|      
|       |  | 3. |  | Fiscal 1999 and 1998 net income represent amounts
after subtracting the impact of approximately 53 billion yen
and 33 billion yen, respectively, attributable to adjustments
of net deferred tax assets to reflect reductions in Japans
corporate income tax rate.                                                                                                                                                                                                                                                          



---



- 33 -

Item 9. Managements Discussion and Analysis of Financial Condition and Results of Operations



|(a) |  | Results of Operations
|--- |  | ---------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the three-year period ended March 31, 2000 (fiscal 1998, fiscal
1999, and fiscal 2000), the Japanese economy moved from a slowdown in
fiscal 1998 to the beginning signs of recovery in fiscal 2000. In fiscal
1998, the Japanese economy experienced a setback, triggered by an increase
in the consumption tax rate and the failure of several financial
institutions, which collectively led to a decline in private business
sector demand and diminished consumer confidence. In fiscal 1999, the
sluggishness of the domestic economy deepened further, as seen in lower
corporate capital investment and consumer spending. In fiscal 2000,
although Japan continued to be hampered by the absence of a full recovery,
reflected in continued lower consumer and corporate spending, the Japanese
economy, benefiting from the governments economic stimulus packages and a
surge in demand for information technologies, began to show moderate signs
of recovery.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Outside Japan, economic conditions in North America and Western Europe
were generally favorable throughout this three-year period. Asian
economies, however, experienced a downturn in fiscal 1998 following an
outbreak of currency-related turmoil in Southeast Asia in the summer of
1997. In fiscal 1999, that turmoil spread to the Commonwealth of
Independent States (CIS) and Latin America. This, together with the
lingering recession in Asia, increased uncertainty in the global economy
in fiscal 1999. In fiscal 2000, the North American economy continued to
prosper, while the economies of Europe and the majority of Asia
strengthened over the previous fiscal year. In contrast, economic
conditions in Central and South America and the CIS continued to remain
depressed.



| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Reflecting the aforementioned factors, Japans Gross Domestic Product in
real terms showed a moderate rebound in the last fiscal year, recording a
0.1% decrease in fiscal 1998, a 1.9% decrease in fiscal 1999 and a 0.5%
increase in fiscal 2000.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Inflation rates in Japan for the three-year period were low in terms of
the consumer price index with the wholesale price index showing a
deflationary trend in fiscal 1999 and 2000. This trend, combined with
intensified worldwide price competition, caused price declines in
electronic products. This had a negative impact on the Companys
earnings, as mentioned later. A large portion of the Companys overseas
business is conducted in low inflation areas, and operations in highly
inflationary environments were not material.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because of the size of Matsushitas international business operations, the
Company is exposed to both translation and transaction risk stemming from
currency exchange rate fluctuations. Translation risk is a risk with
regard to consolidation of foreign currency denominated financial
statements of overseas subsidiaries. Depending on the fluctuation of the
exchange rate, the value of overseas subsidiaries can differ from period
to period when translated into yen. This is a reporting consideration and
does not affect business operations. Transaction risk is a risk that
occurs in export, import and other transactions when two or more different
currencies are involved. This is a risk that the currency structure of
the Companys sales and assets deviates from the currency structure of
expenses and liabilities during the transaction period.



---



- 34 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys business was favorably affected by the yens depreciation
during the first two years of the three-year period. However, in fiscal
2000 yen appreciation negatively affected the Companys overseas
operations, specifically when translated into yen for consolidation. 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 recently implemented matching of
exports and imports exchange contracts. As a basic countermeasure against
currency exchange risk, the Company has been strengthening production
operations outside Japan to meet overseas demand, while reducing
dependence on exports. The Company does not have any material unhedged
monetary assets, liabilities, or commitments denominated in currencies
other than the operations functional currency.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During this period, Matsushita focused its management efforts on mid-term
growth. In fiscal 1998 following the previous three-year business plan,
the Company implemented the four-year Progress 2000 Plan, ending March
2001. Matsushita is currently entering the fourth and final year of the
Progress 2000 Plan. The purpose of this plan is to create and develop a
strong managerial and operational structure enabling Matsushita to
continue to meet consumer needs and contribute to society in the rapidly
changing digital networking age. As part of this plan, Matsushita has
focused its efforts on strategic business restructuring by prioritizing
business areas and concentrating resources through emphasis on its five
key business areas: digital television systems, semiconductors, mobile
communications equipment, optical discs and display devices. As a result,
businesses in most of these key areas moved ahead favorably. Building on
and combining strengths in the five priority areas, from fiscal 2001 the
Company is emphasizing the development of networkable consumer products
that can be linked inside the home and with external public networks.



| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Matsushitas consolidated sales and earnings results during the last three
fiscal years, reflecting all the aforementioned external and internal
conditions, can be summarized as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In fiscal 1998, net sales increased 2.8% to 7,891 billion yen, helped
mainly by growth in overseas sales, notably in North America and Europe.
Net income decreased 32.1% to 94 billion yen, due mainly to slowed demand
in Japan and Asia and intensified price competition. The Company also
incurred a 33 billion yen negative impact from adjustments of net deferred
tax assets to reflect a reduction in Japans corporate income tax rate.
Without the effects of these adjustments, net income for fiscal 1998 would
have decreased 8.0%.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In fiscal 1999, net sales decreased 3.2% to 7,640 billion yen, mainly
reflecting the sluggish Japanese economy and worsened overseas economic
conditions, especially in Southeast Asia and the CIS. Net income dropped
85.5% to 14 billion yen, primarily because of decreased sales and price
declines due to intensified worldwide competition. The net income
reduction was further exacerbated by the negative effect of 53 billion yen
adjustments of net deferred tax assets reflecting a further reduction in
Japans corporate income tax rate. Without the effects of these
adjustments, net income for fiscal 1999 would have decreased 47.7%.



---



- 35 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In fiscal 2000, net sales decreased 4.5% to 7,299 billion yen, mainly
attributable to sluggish demand in Japan due to continued weak spending,
intense global price competition and yen appreciation. Net income totaled
100 billion yen increasing 636.3% over the previous year. Increased
profitability in Components and improved overall efficiency could not
fully offset the negative effects of price declines and yen appreciation
on earnings. However, the significant net income increase was realized
largely due to a one-time non-operating gain of 59 billion yen from the
sale of shares of EPCOS AG, a German electronic component manufacturing
joint venture, held by a subsidiary. The net income increase was also
magnified by previous year adjustments in net deferred tax assets totaling
53 billion yen, to reflect reductions in Japans corporate income tax
rate.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is considering the possibility of restructuring labor terms
and conditions to better match employee remuneration with each particular
business area or region in Japan, and is currently reviewing the
possibility of incurring an expense during fiscal 2001 associated with
compensation to employees affected by the restructuring activities. It is
uncertain at this time how and to what extent labor terms and conditions
will change or whether the compensation provided will have a material
effect on the Companys financial results.



| |                                             
| | --------------------------------------------
| | Year ended March 31, 2000 compared with 1999



| |     |      
| | --- | -----
| | (1) | Sales



| |                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Consolidated net sales for the fiscal year decreased 4.5% to 7,299 billion
yen, from 7,640 billion yen in the previous year. The decrease was mainly
attributable to sluggish demand in Japan, intense global price
competition, and yen appreciation, which negatively affected overseas
sales when translated into yen.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Domestic sales were 3,698 billion yen, down 1.4% from the previous year.
Although domestic sales of consumer products continued to be impacted by
sluggish consumer spending in Japan, sales of industrial products and
components increased year on year. Overseas sales on a local currency
basis increased 3.4% as local-currency based sales grew in all major
markets. However, due to the appreciation of the yen, sales when
translated into yen dropped 7.4% to 3,601 billion yen.



| |                                                 
| | ------------------------------------------------
| | Sales by major product category were as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of consumer products totaled 3,012 billion yen, down 8.4% from the
previous year. Within the consumer products category, sales of video and
audio equipment fell 9.9%, to 1,706 billion yen. The drop in domestic
sales was mainly due to setbacks in sales of VCRs and TVs; however, MD and
DVD players continued to robustly grow. Overseas, sales of video and
audio equipment declined over the previous year, due mainly to the strong
yen negatively affecting sales when translated into yen. Meanwhile, sales
of home appliances and household equipment decreased 6.3%, to 1,306
billion yen. Domestic sales in this category were down, despite increases
in vacuum cleaners and small cooking appliances. Overseas sales in all
regions were generally slow.



---



- 36 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of industrial products slipped 3.8%, to 2,757 billion yen. In this
category, sales of information and communications equipment declined 6.0%,
to 2,022 billion yen. This decrease was mainly attributable to global
price declines in computer peripherals such as CRT displays and hard disk
drives, along with the negative effect of yen appreciation. However,
sales of mobile communications equipment, such as cellular phones, and
personal computers increased over the previous year. Furthermore, sales
of industrial equipment increased 2.6%, to 735 billion yen. FA equipment,
such as electronic-parts-mounting machines rebounded from last years
drop, owing mainly to signs of recovery in capital investment in Japan and
Southeast Asia. Gains in this category were also driven by solid growth
in sales of car AV equipment.



| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of components advanced to 1,530 billion yen, up 3.1% from the
previous year. The sales increase in this category was driven by
favorable growth in semiconductors, high frequency components, LCD devices
and electric motors, for use in information and communications equipment.



| |     |                                             
| | --- | --------------------------------------------
| | (2) | Other Revenues (Revenue excluding Net Sales)



| |                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other revenues includes interest income, dividends received and other
income. Interest income decreased 21.1% to 43 billion yen and dividends
received increased 48.7% to 15 billion yen. Other income increased 157.9%
to 136 billion yen, mainly attributable to a gain of 59 billion yen from
the sale of shares of EPCOS AG.



| |     |                   
| | --- | ------------------
| | (3) | Costs and Expenses



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Companywide efforts to reduce manufacturing costs and raise overall
efficiency resulted in decreases in cost of sales and selling, general and
administrative expenses, which, however, did not fully offset the negative
effects of price declines and yen appreciation. Cost of sales totaled
5,191 billion yen, down 2.9%, while selling general and administrative
expenses decreased 7.1% to 1,950 billion yen. Interest expense also
decreased 25.5% to 46 billion yen as the Company reduced borrowings.
However, other deductions increased 89.4% to 88 billion yen, due mainly to
an impairment loss of 20 billion yen related to the write-down of
machinery and equipment to manufacture CRTs and other components. As a
result overall costs and expenses decreased 3.7% to 7,274 billion yen.



| |     |                           
| | --- | --------------------------
| | (4) | Income before Income Taxes



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | As a result of the above factors, income before income taxes increased
8.1% to 219 billion yen, compared with 202 billion yen in fiscal 1999.



| |     |                           
| | --- | --------------------------
| | (5) | Provision for Income Taxes



| |                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provision for income taxes amounted to 137 billion yen, versus 175 billion
yen a year ago. Its ratio to income before income taxes declined to 62.7%
from 86.7% a year ago, mainly attributable to previous year adjustments in
net deferred tax assets and a decline in the normal tax rate in fiscal
2000.



| |     |                   
| | --- | ------------------
| | (6) | Minority Interests



| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Minority interests decreased to negative 1 billion yen, compared to 8
billion yen in fiscal 1999, mainly reflecting depressed earnings results
in several subsidiaries.



---



- 37 -



| |     |                                                    
| | --- | ---------------------------------------------------
| | (7) | Equity in Earnings (Losses) of Associated Companies



| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Equity in earnings (losses) of associated companies rebounded to 17
billion yen from a loss of 6 billion yen in the prior year, due to
earnings improvements in associated companies.



| |     |           
| | --- | ----------
| | (8) | Net Income



| |                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Due to the factors stated in the preceding paragraphs, net income for
fiscal 2000 grew 636.3% to 100 billion yen, compared with 14 billion yen
in the prior year. Net income as a percentage of sales was 1.4%, compared
with 0.2% in the previous year.



| |                                             
| | --------------------------------------------
| | Year ended March 31, 1999 compared with 1998



| |     |      
| | --- | -----
| | (1) | Sales



| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Consolidated net sales in fiscal 1999 decreased 3.2% to 7,640 billion yen,
from 7,891 billion yen in the previous year. This decrease was attributed
primarily to lower demand in Japan and worsened overseas market
conditions, especially in Southeast Asia and the CIS.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Domestic sales declined 3.6% to 3,752 billion yen, reflecting sluggish
demand in product areas such as industrial products and components due to
slow corporate capital investments and price declines. Domestic sales
declined despite successful sales increases in the video and audio
equipment field and contributions from certain new home appliance
products. Despite solid sales growth in North America and Europe, led by
video and audio equipment, overseas sales fell 2.8% to 3,888 billion yen,
due mainly to depressed demand in Southeast Asia, the CIS, and Latin
America.



| |                                                   
| | --------------------------------------------------
| | Sales by major product categories were as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of consumer products decreased 2.1% to 3,289 billion yen. In this
category, sales of video and audio equipment edged up 0.5% to 1,895
billion yen. Domestic sales of consumer products showed favorable growth,
led by digital AV products such as digital camcorders and DVD players.
Overseas, sales in North America and Western Europe marked strong gains,
with TVs and VCRs leading the way. However, this growth was offset by a
decline in sales in Southeast Asia and the CIS. Meanwhile, sales of home
appliances and household equipment fell 5.4% to 1,394 billion yen. This
decline was mainly due to sluggish demand in the primary market, Japan,
and decreased sales in overseas markets such as Southeast Asia. This
decline occurred despite favorable market acceptance of industry-first
products such as the centrifugal force washing machine.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of industrial products totaled 2,867 billion yen, down 3.3% from the
previous year. Of this, sales of information and communications equipment
decreased 5.1% to 2,150 billion yen, principally because of worldwide
price declines in computer peripherals, notably PC displays and hard disk
drives. Helped by overseas growth, sales of mobile communications
equipment, broadcast- and business-use video systems, and printers
expanded. Industrial equipment sales rose 2.3% to 717 billion yen, as
robust sales of car AV equipment in and outside Japan more than offset a
fall in sales of FA equipment.



---



- 38 -



| |                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of components decreased 5.2% to 1,484 billion yen, reflecting
sluggish sales of semiconductors and general electronic components due to
slow demand in Japan and other Asian markets, as well as global price
declines. However sales of compact batteries and electric motors, chiefly
for the information and communications industry, were favorable especially
in overseas markets.



| |     |               
| | --- | --------------
| | (2) | Other Revenues



| |                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In other revenues, other income declined 66.8% to 53 billion yen mainly
due to a reduction in realized gains on available for sale securities.
Interest income amounted to 54 billion yen, a 6.5% decrease, and dividends
received remained relatively unchanged at 10 billion yen.



| |     |                   
| | --- | ------------------
| | (3) | Costs and Expenses



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cost of sales decreased 2.7% over fiscal 1998 to 5,347 billion yen,
however selling, general and administrative expenses increased 2.0% to
2,100 billion yen, mainly due to an increase in fixed costs, including R&D
expenditures and depreciation. Interest expense increased 0.8% to 62
billion yen compared with fiscal 1998. Other deductions decreased to 46
billion yen, down 68.6% compared with fiscal 1998, in which impairment
losses of 57 billion yen with regard to semiconductor, mainly DRAM,
manufacturing machinery and equipment and 31 billion yen related to a
decline in the value of land held were incurred. Consequently, costs and
expenses decreased 2.7% over the previous year to 7,555 billion yen.



| |     |                           
| | --- | --------------------------
| | (4) | Income before Income Taxes



| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | All the above factors resulted in income before income taxes decreasing
43.1% to 202 billion yen, compared with 356 billion yen a year ago.



| |     |                           
| | --- | --------------------------
| | (5) | Provision for Income Taxes



| |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provision for income taxes amounted to 175 billion yen compared to 235
billion yen in the previous year. Its ratio to income before income taxes
climbed to 86.7% from 66.0% a year ago, primarily owing to adjustments of
net deferred tax assets at the end of fiscal 1999. This reflects a
reduction for the second consecutive year in Japans corporate income tax
rate. (See Note 9 of the Notes to Consolidated Financial Statements.)



| |     |                   
| | --- | ------------------
| | (6) | Minority Interests



| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Minority interests decreased to 8 billion yen, from 26 billion yen in
fiscal 1998, reflecting the earnings decrease of subsidiaries in adverse
economic conditions.



| |     |                                                    
| | --- | ---------------------------------------------------
| | (7) | Equity in Earnings (Losses) of Associated Companies



| |                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Equity in earnings (losses) of associated companies was a loss of 6
billion yen, compared with a loss of 1 billion yen in the prior year.
This aggravation was caused by increased losses of certain associated
companies, including a U.S. joint venture for computer peripherals
components.



---



- 39 -



| |     |           
| | --- | ----------
| | (8) | Net Income



| |                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As a result of all the factors stated in the preceding paragraphs, net
income for fiscal 1999 decreased 85.5% to 14 billion yen, compared with 94
billion yen in fiscal 1998. Its ratio to sales declined to 0.2%, compared
with 1.2% in the prior year.



|(b) |  | Financial Position and Liquidity
|--- |  | --------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys consolidated total assets at the end of fiscal 2000
decreased to 7,687 billion yen, compared with 7,938 billion yen a year
ago. This decrease was largely attributable to reductions in inventories,
owing to shortened lead times, and reduced cash and cash equivalents.
Stockholders equity at the end of fiscal 2000 also decreased to 3,467
billion yen, from 3,533 billion yen in the previous year, caused mainly by
the negative effect of the yens year-end exchange rate on accumulated
other comprehensive loss (translation adjustments), in spite of an
increase in retained earnings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys capital investment during fiscal 2000 totaled 338 billion
yen, a slight fall from the previous years figure of 352 billion yen.
This decline was primarily due to selective investment in Consumer and
Industrial products, despite expanded investment in Components, such as
semiconductors and LCD devices. Depreciation during the year also
decreased to 343 billion yen, compared with 359 billion yen in fiscal
1999.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net cash provided by operating activities in fiscal 2000 amounted to 476
billion yen, compared with 499 billion yen in the previous fiscal year.
This decrease was primarily attributable to increases in net gain on sale
of investments and deferred income taxes, a non-cash item, which were
greater than the increase in net income. Net cash used in investing
activities amounted to 604 billion yen, compared with 378 billion yen in
fiscal 1999, primarily owing to an increase in time deposits. Net cash
used in financing activities fell to 216 billion yen, from 434 billion yen
a year ago, reflecting a decline in cash outflows, mainly owing to
reductions in repayments of long-term debt and the amount of the Companys
common stock repurchased.



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All these activities, compounded by the effect of exchange rate changes,
resulted in a net decrease of 418 billion yen in cash and cash equivalents
during fiscal 2000. Cash and cash equivalents at the end of fiscal 2000
totaled 1,116 billion yen, compared with 1,534 billion yen a year ago.



|(c) |  | Market Risk Management (Item 9A)
|--- |  | --------------------------------



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



---



- 40 -



| |                   
| | ------------------
| | 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 and fair values of available-for-sale securities were as
follows at March 31, 2000 and 1999:

|                                      |  |                |         |       |  |          |           |       |  |  |         |  |  |  |         | 
|------------------------------------- |  | -------------- | ------- | ----- |  | -------- | --------- | ----- |  |  | ------- |  |  |  | ------- | 
|                                      |  | Yen (millions)
|                                      |  |               
|                                      |  | 2000           |         | 1999 
|                                      |  |                |         |      
|                                      |  | Carrying       |         | Fair  |  | Carrying |           | Fair 
|                                      |  | amount         |         | value |  | amount   |           | value
|                                      |  |                |         |       |  |          |           |      
|Due within one year                   |  |                | 132,238 |       |  |          | 132,314   |       |  |  | 122,666 |  |  |  | 122,676 | 
|                                     
|                                     
|                                     
|                                     
|Due after one year through five years |  |                | 113,426 |       |  |          | 112,517   |       |  |  | 94,793  |  |  |  | 94,554  | 
|                                     
|                                     
|                                     
|                                     
|Due after five years                  |  |                | 2,000   |       |  |          | 2,000     |       |  |  | 2       |  |  |  | 3       | 
|                                     
|                                     
|                                     
|                                     
|Equity securities                     |  |                | 377,069 |       |  |          | 756,820   |       |  |  | 386,024 |  |  |  | 580,487 | 
|                                      |  |                |         |       |  |          |           |       |  |  |         |  |  |  |         | 
|                                      |  |                | 624,733 |       |  |          | 1,003,651 |       |  |  | 603,485 |  |  |  | 797,720 | 
|                                      |  |                |         |       |  |          |           |       |  |  |         |  |  |  |         | 



| |                       
| | ----------------------
| | 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 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, 2000 and 1999. 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)
|                                             |                            |  |               
|                                             |                            |  | 2000           |         | 1999 
|                                             |                            |  |                |         |      
|                                             |                            |  | Contract       |         | Fair  |  | Contract |       | Fair 
|                                             |                            |  | amount         |         | value |  | amount   |       | value
|                                             |                            |  |                |         |       |  |          |       |      
|Forward:                                    
|                                            
|                                            
|                                            
|                                            
|                                             | To sell foreign currencies |  |                | 373,417 |       |  |          | 3,439 |       |  |       | 312,453 |  |  |     | (2,065 | )
|                                            
|                                            
|                                            
|                                            
|                                             | To buy foreign currencies  |  |                | 82,444  |       |  |          | 171   |       |  |       | 62,371  |  |  |     | 596    |  
|                                            
|                                            
|                                            
|                                            
|Options purchased to sell foreign currencies |                            |  | 26,711         |         |       |  | 119      |       |       |  | 3,670 |         |  |  | (15 | )     
|                                            
|                                            
|                                            
|                                            
|Options purchased to buy foreign currencies  |                            |  | 1,260          |         |       |  | 11       |       |       |  |      |         |  |  |    |       
|                                            
|                                            
|                                            
|                                            
|Options written to buy foreign currencies    |                            |  | 24,820         |         |       |  | (74      | )     |       |  | 3,873 |         |  |  | 36  |       
|                                            
|                                            
|                                            
|                                            
|Options written to sell foreign currencies   |                            |  | 4,734          |         |       |  | (89      | )     |       |  |      |         |  |  |    |       



---



- 41 -



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2000 and 1999 were not material.
|
| | The following tables provide information about the Companys financial
instruments that are sensitive to changes in interest rates at March 31,
2000 and 1999. 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, 2000)
|                                               |                                                                                   |          |  | Average  |   |      
|                                               |                                                                                   |          |  | interest |   |       |        |                                                          |         |      |  |         |         |      |  |         |         |       |        |         |         |  |  |        |         |  |  |        |        | There- |  | Fair  
|                                               |                                                                                   |          |  | rate     |   | Total |        | 2001                                                     |         | 2002 |  | 2003    |         | 2004 |  | 2005    |         | after |        | value  
|                                               |                                                                                   |          |  |          |   |       |        |                                                          |         |      |  |         |         |      |  |         |         |       |        |        
|Long-term debt,
  including current
  portion:
|                                              
|                                              
|                                              
|                                              
|                                               | Japanese yen                                                                      |          |  |          |   |       |        |                                                          |         |      |  |         |         |      |  |         |         |       |        |         |         |  |  |        |         |  |  |        |        |        |  |        |        |  |        |         |        
|                                               | convertible bonds                                                                 |          |  | 1.5      | % |       |        | 263,874                                                  |         |      |  | 21,000  |         |      |  | 98,893  |         |       |        | 16,999  |         |  |  | 98,499 |         |  |  | 11,483 |        |        |  | 17,000 |        |  |        | 446,953 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Straight bonds
    issued by a
    subsidiary                                     |          |  | 1.9      | % |       |        | 20,000                                                   |         |      |  |         |         |      |  | 5,000   |         |       |        |         |         |  |  | 5,000  |         |  |  |        |        |        |  | 10,000 |        |  |        | 20,250  |        
|                                              
|                                              
|                                              
|                                              
|                                               | U.S. dollar
    unsecured bonds                                                   |          |  | 5.8      | % |       |        | 105,950                                                  |         |      |  |         |         |      |  |         |         |       |        | 105,950 |         |  |  |        |         |  |  |        |        |        |  |        |        |  |        | 106,086 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Unsecured yen
    loans from banks
    and insurance
    companies and
    others |          |  | 1.7      | % |       |        | 402,978                                                  |         |      |  | 147,079 |         |      |  | 128,186 |         |       |        | 75,027  |         |  |  | 40,228 |         |  |  | 11,759 |        |        |  | 699    |        |  |        | 402,328 |        
|                                              
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   | Subtotal |  |          |   |       |        |                                                          | 792,802 |      |  |         | 168,079 |      |  |         | 232,079 |       |        |         | 197,976 |  |  |        | 143,727 |  |  |        | 23,242 |        |  |        | 27,699 |  |        |         | 975,617 | 
|                                              
|                                              
|                                              
|                                              
|Foreign exchange
  contracts                   |                                                                                   |          |  |          |   |       | 19,117 |                                                          |         |      |  |         |         |      |  |         |         |       | 19,117 |         |         |  |  |        |         |  |  |        |        |        |  |        |        |  | 19,106 |        
|                                              
|                                               |                                                                                   | Total    |  |          |   |       |        |                                                          | 811,919 |      |  |         | 168,079 |      |  |         | 232,079 |       |        |         | 217,093 |  |  |        | 143,727 |  |  |        | 23,242 |        |  |        | 27,699 |  |        |         | 994,723 | 
|                                              



---



- 42 -

|                                               |                                                                                   |          |  |          |   |       |       |                                                          |         |      |  |         |         |      |  |         |         |       |  |        |         |  |       |         |         |  |  |        |         |        |  |        |        |  |       |         |         | 
|---------------------------------------------- | --------------------------------------------------------------------------------- | -------- |  | -------- | - | ----- | ----- | -------------------------------------------------------- | ------- | ---- |  | ------- | ------- | ---- |  | ------- | ------- | ----- |  | ------ | ------- |  | ----- | ------- | ------- |  |  | ------ | ------- | ------ |  | ------ | ------ |  | ----- | ------- | ------- | 
|                                               |                                                                                   |          |  |          |   |       |       | Yen (millions)                                          
|                                               |                                                                                   |          |  |          |   |      
|                                               |                                                                                   |          |  |          |   |       |       | Carrying amount and maturity date (as of March 31, 1999)
|                                               |                                                                                   |          |  | Average  |   |      
|                                               |                                                                                   |          |  | interest |   |       |       |                                                          |         |      |  |         |         |      |  |         |         |       |  |        |         |  |       |         |         |  |  |        |         | There- |  | Fair  
|                                               |                                                                                   |          |  | rate     |   | Total |       | 2000                                                     |         | 2001 |  | 2002    |         | 2003 |  | 2004    |         | after |  | value 
|                                               |                                                                                   |          |  |          |   |       |       |                                                          |         |      |  |         |         |      |  |         |         |       |  |       
|Long-term debt,
  including current
  portion:
|                                              
|                                              
|                                              
|                                              
|                                               | Japanese yen
    convertible
bonds                                                |          |  | 1.5      | % |       |       | 264,403                                                  |         |      |  |         |         |      |  | 21,000  |         |       |  | 99,010 |         |  |       | 16,999  |         |  |  | 98,911 |         |        |  | 28,483 |        |  |       | 361,963 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Straight bonds
    issued by a
    subsidiary                                     |          |  | 1.9      | % |       |       | 20,000                                                   |         |      |  |         |         |      |  |         |         |       |  | 5,000  |         |  |       |         |         |  |  | 5,000  |         |        |  | 10,000 |        |  |       | 19,795  |        
|                                              
|                                              
|                                              
|                                              
|                                               | U.S. dollar
    unsecured bonds                                                   |          |  | 5.8      | % |       |       | 120,265                                                  |         |      |  |         |         |      |  |         |         |       |  |        |         |  |       | 120,265 |         |  |  |        |         |        |  |        |        |  |       | 124,926 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Unsecured yen
    loans from banks
    and insurance
    companies and
    others |          |  | 1.9      | % |       |       | 434,211                                                  |         |      |  | 134,512 |         |      |  | 127,548 |         |       |  | 97,413 |         |  |       | 53,316  |         |  |  | 17,359 |         |        |  | 4,063  |        |  |       | 430,952 |        
|                                              
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   | Subtotal |  |          |   |       |       |                                                          | 838,879 |      |  |         | 134,512 |      |  |         | 148,548 |       |  |        | 201,423 |  |       |         | 190,580 |  |  |        | 121,270 |        |  |        | 42,546 |  |       |         | 937,636 | 
|                                              
|                                              
|                                              
|                                              
|Foreign exchange
  contracts                   |                                                                                   |          |  |          |   |       | 4,717 |                                                          |         |      |  |         |         |      |  |         |         |       |  |        |         |  | 4,717 |         |         |  |  |        |         |        |  |        |        |  | 4,888 |        
|                                              
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   | Total    |  |          |   |       |       |                                                          | 843,596 |      |  |         | 134,512 |      |  |         | 148,548 |       |  |        | 201,423 |  |       |         | 195,297 |  |  |        | 121,270 |        |  |        | 42,546 |  |       |         | 942,524 | 
|                                              

|    |                              
|--- | -----------------------------
|(d) | New Accounting Pronouncements



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 1998, FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, applicable for the fiscal
year beginning April 1, 2001. This Statement establishes accounting and
reporting standards for derivative instruments and for hedging activities.
SFAS No. 133 requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments
at fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income (loss), depending
on whether a derivative is designated as part of a hedge transaction and
the type of hedge transaction. The ineffective portion of all hedges will
be recognized in earnings. The Company has not yet determined the impact
that the adoption of SFAS No. 133 will have on the results of operations
or financial position.

|    |                       
|--- | ----------------------
|(e) | Information by Segment



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



---



- 43 -



| |                                                                              
| | -----------------------------------------------------------------------------
| | Information by segment for fiscal 2000 and 1999 is shown in the tables below:



| |                     
| | --------------------
| | By Business Segment:

|                                                                 |                            |              |  |                    |   |                |       |       |   |       |       | 
|---------------------------------------------------------------- | -------------------------- | ------------ |  | ------------------ | - | -------------- | ----- | ----- | - | ----- | ----- | 
|                                                                 |                            |              |  |                    |   | Yen (billions)
|                                                                 |                            |              |  |                    |   |               
|                                                                 |                            |              |  |                    |   | 2000           |       | 1999 
|                                                                 |                            |              |  |                    |   |                |       |      
|Sales:                                                          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer products:        
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            | Customers    |  |                    |   | 3,012          |       |       |   | 3,289 |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            | Intersegment |  |                    |   | 7              |       |       |   | 7     |      
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                 |                            |              |  | Total              |   |                | 3,019 |       |   |       | 3,296 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Industrial products:      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            | Customers    |  |                    |   | 2,757          |       |       |   | 2,867 |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            | Intersegment |  |                    |   | 9              |       |       |   | 8     |      
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                 |                            |              |  | Total              |   |                | 2,766 |       |   |       | 2,875 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Components:               
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            | Customers    |  |                    |   | 1,530          |       |       |   | 1,484 |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            | Intersegment |  |                    |   | 828            |       |       |   | 761   |      
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                 |                            |              |  | Total              |   |                | 2,358 |       |   |       | 2,245 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Eliminations               |              |  | (844               | ) |                |       | (776  | )
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            |              |  | Consolidated total |   |                | 7,299 |       |   |       | 7,640 | 
|                                                                 |                            |              |  |                    |   |                |       |      
|Operating profit:                                               
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer products          |              |  | 34                 |   |                |       | 91    |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Industrial products        |              |  | 130                |   |                |       | 154   |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Components                 |              |  | 66                 |   |                |       | 18    |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Corporate and eliminations |              |  | (71                | ) |                |       | (69   | )
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            |              |  | Consolidated total |   |                | 159   |       |   |       | 194   | 
|                                                                 |                            |              |  |                    |   |                |       |      
|Identifiable assets:                                            
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer products          |              |  | 2,221              |   |                |       | 2,346 |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Industrial products        |              |  | 1,942              |   |                |       | 2,034 |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Components                 |              |  | 1,681              |   |                |       | 1,681 |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Corporate and eliminations |              |  | 1,843              |   |                |       | 1,877 |  
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            |              |  | Consolidated total |   |                | 7,687 |       |   |       | 7,938 | 
|                                                                 |                            |              |  |                    |   |                |       |      
|Depreciation (including intangibles other than goodwill)*:      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer products          |              |  | 76                 |   |                |       | 82    |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Industrial products        |              |  | 86                 |   |                |       | 90    |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Components                 |              |  | 177                |   |                |       | 185   |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Corporate and eliminations |              |  | 10                 |   |                |       | 9     |  
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            |              |  | Consolidated total |   |                | 349   |       |   |       | 366   | 
|                                                                 |                            |              |  |                    |   |                |       |      
|Capital investment (including intangibles other than
goodwill)*:
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer products          |              |  | 72                 |   |                |       | 84    |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Industrial products        |              |  | 92                 |   |                |       | 97    |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Components                 |              |  | 179                |   |                |       | 168   |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Corporate and eliminations |              |  | 12                 |   |                |       | 8     |  
|                                                                 |                            |              |  |                    |   |                |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                            |              |  | Consolidated total |   |                | 355   |       |   |       | 357   | 
|                                                                 |                            |              |  |                    |   |                |       |      



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



---



- 44 -



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

|                     |                            |              |  |                    |   |                |       |        |   |       |       | 
|-------------------- | -------------------------- | ------------ |  | ------------------ | - | -------------- | ----- | ------ | - | ----- | ----- | 
|                     |                            |              |  |                    |   | Yen (billions)
|                     |                            |              |  |                    |   |               
|                     |                            |              |  |                    |   | 2000           |       | 1999  
|                     |                            |              |  |                    |   |                |       |       
|Sales:               |                           
|                    
|                    
|                    
|                    
|                     | Japan:                    
|                    
|                    
|                    
|                    
|                     |                            | Customers    |  |                    |   | 4,706          |       |        |   | 4,920 |      
|                    
|                    
|                    
|                    
|                     |                            | Intersegment |  |                    |   | 1,058          |       |        |   | 1,046 |      
|                     |                            |              |  |                    |   |                |       |        |  
|                     |                            |              |  | Total              |   |                | 5,764 |        |   |       | 5,966 | 
|                    
|                    
|                    
|                    
|                     | North and South America:  
|                    
|                    
|                    
|                    
|                     |                            | Customers    |  |                    |   | 1,084          |       |        |   | 1,125 |      
|                    
|                    
|                    
|                    
|                     |                            | Intersegment |  |                    |   | 31             |       |        |   | 35    |      
|                     |                            |              |  |                    |   |                |       |        |  
|                     |                            |              |  | Total              |   |                | 1,115 |        |   |       | 1,160 | 
|                    
|                    
|                    
|                    
|                     | Europe:                   
|                    
|                    
|                    
|                    
|                     |                            | Customers    |  |                    |   | 670            |       |        |   | 736   |      
|                    
|                    
|                    
|                    
|                     |                            | Intersegment |  |                    |   | 26             |       |        |   | 31    |      
|                     |                            |              |  |                    |   |                |       |        |  
|                     |                            |              |  | Total              |   |                | 696   |        |   |       | 767   | 
|                    
|                    
|                    
|                    
|                     | Asia and Others:          
|                    
|                    
|                    
|                    
|                     |                            | Customers    |  |                    |   | 839            |       |        |   | 859   |      
|                    
|                    
|                    
|                    
|                     |                            | Intersegment |  |                    |   | 462            |       |        |   | 474   |      
|                     |                            |              |  |                    |   |                |       |        |  
|                     |                            |              |  | Total              |   |                | 1,301 |        |   |       | 1,333 | 
|                    
|                    
|                    
|                    
|                     | Eliminations               |              |  | (1,577             | ) |                |       | (1,586 | )
|                     |                            |              |  |                    |   |                |       |        |  
|                    
|                    
|                    
|                    
|                     |                            |              |  | Consolidated total |   |                | 7,299 |        |   |       | 7,640 | 
|                     |                            |              |  |                    |   |                |       |        |  
|Operating profit:   
|                    
|                    
|                    
|                    
|                     | Japan                      |              |  | 166                |   |                |       | 194    |  
|                    
|                    
|                    
|                    
|                     | North and South America    |              |  | 15                 |   |                |       | 7      |  
|                    
|                    
|                    
|                    
|                     | Europe                     |              |  | (2                 | ) |                |       | 11     |  
|                    
|                    
|                    
|                    
|                     | Asia and Others            |              |  | 44                 |   |                |       | 51     |  
|                    
|                    
|                    
|                    
|                     | Corporate and eliminations |              |  | (64                | ) |                |       | (69    | )
|                     |                            |              |  |                    |   |                |       |        |  
|                    
|                    
|                    
|                    
|                     |                            |              |  | Consolidated total |   |                | 159   |        |   |       | 194   | 
|                     |                            |              |  |                    |   |                |       |        |  
|Identifiable assets:
|                    
|                    
|                    
|                    
|                     | Japan                      |              |  | 4,633              |   |                |       | 4,703  |  
|                    
|                    
|                    
|                    
|                     | North and South America    |              |  | 479                |   |                |       | 488    |  
|                    
|                    
|                    
|                    
|                     | Europe                     |              |  | 292                |   |                |       | 356    |  
|                    
|                    
|                    
|                    
|                     | Asia and Others            |              |  | 639                |   |                |       | 681    |  
|                    
|                    
|                    
|                    
|                     | Corporate and eliminations |              |  | 1,644              |   |                |       | 1,710  |  
|                     |                            |              |  |                    |   |                |       |        |  
|                    
|                    
|                    
|                    
|                     |                            |              |  | Consolidated total |   |                | 7,687 |        |   |       | 7,938 | 
|                     |                            |              |  |                    |   |                |       |        |  

| |        |  |  |    |  |  |                                                                                                                                                                                                  
| | ------ |  |  | -- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notes: |  |  | 1. |  |  | Corporate expenses include certain corporate R&D expenditures
and general corporate expenses.                                                                                                    
|
|
|
|
| |        |  |  | 2. |  |  | Corporate assets consist of cash and cash
equivalents, time deposits, marketable securities in short-term
investments, investments and advances and other assets related
to unallocated expenses.



---



- 45 -

Item 10. Directors and Officers of Registrant



|(a) |  | The Articles of Incorporation of the Company provide that the number of
Directors of the Company shall be three or more and that of Corporate
Auditors shall be three or more. Directors and Corporate Auditors shall
be elected by the general meeting of shareholders. The Board of Directors
has ultimate responsibility for administration of the Companys affairs.
Directors may, by resolution of the Board of Directors, appoint a Chairman
of the Board of Directors, a Vice Chairman of the Board of Directors, a
President and Director, and one or more Executive Vice Presidents and
Directors, Senior Managing Directors, and Managing Directors. The
Chairman of the Board of Directors, Vice Chairman of the Board of
Directors, President and Director, Executive Vice Presidents and
Directors, Senior Managing Directors, and Managing Directors are
Representative Directors and severally represent the Company. The term of
office of Directors shall expire at the conclusion of the ordinary general
meeting of shareholders with respect to the last closing of accounts
within two years from their assumption of office, and in the case of
Corporate Auditors, within three years from their assumption of office.
However, they may serve any number of consecutive terms.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Corporate Auditors of the Company are not required to be and are not
certified public accountants. However, at least one of the Corporate
Auditors should be a person who has not been a director, general manager
or employee of the Company or any of its subsidiaries during the five-year
period prior to his election as a Corporate Auditor. Each Corporate
Auditor has the statutory duty to examine the financial statements and
business reports to be submitted by the Board of Directors at the general
meeting of shareholders and also to supervise the administration by the
Directors of the Companys affairs. They are entitled to participate in
meetings of the Board of Directors but are not entitled to vote.
|
| | The Corporate Auditors constitute the Board of Corporate Auditors. The
Board of Corporate Auditors has a statutory duty to prepare and submit its
audit report to the Board of Directors each year. A Corporate Auditor may
note his opinion in the audit report if his opinion is different from the
opinion expressed in the audit report. The Board of Corporate Auditors is
empowered to establish audit principles, method of examination by
Corporate Auditors of the Companys affairs and financial position and
other matters concerning the performance of the Corporate Auditors
duties.                                                                                                                                   
|
| | The Corporate Auditors may not at the same time be Directors, managers or
employees of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Set forth below are the names of Directors and Corporate Auditors after
the ordinary general meeting of shareholders held on June 29, 2000, their
positions and offices with Matsushita Electric Industrial Co., Ltd., and
the periods during which they have served as Director or Corporate
Auditor.                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                    |  |                                         |  |                    |      | 
|------------------- |  | --------------------------------------- |  | ------------------ | ---- | 
|                    |  |                                         |  | Director/Corporate
|Name                |  | Positions with registrant               |  | Auditor since     
|                    |  |                                         |  |                   
|Yoichi Morishita    |  | Chairman of the Board of Directors      |  |                    | 1987 | 
|                   
|                   
|                   
|                   
|Masayuki Matsushita |  | Vice Chairman of the Board of
Directors |  |                    | 1986 | 
|                   
|                   
|                   
|                   
|Kunio Nakamura      |  | President and Director                  |  |                    | 1993 | 
|                   
|                   
|                   
|                   
|Kazuhiko Sugiyama   |  | Executive Vice President and Director   |  |                    | 1996 | 
|                   
|                   
|                   
|                   
|Atsushi Murayama    |  | Executive Vice President and Director   |  |                    | 1995 | 
|                   
|                   
|                   
|                   
|Kazuo Toda          |  | Senior Managing Director                |  |                    | 1994 | 



---



- 46 -

|                    |  |                                                                      |  |                    |      | 
|------------------- |  | -------------------------------------------------------------------- |  | ------------------ | ---- | 
|                    |  |                                                                      |  | Director/Corporate
|Name                |  | Positions with registrant                                            |  | Auditor since     
|                    |  |                                                                      |  |                   
|                   
|                   
|                   
|                   
|Osamu Tanaka        |  | Senior Managing Director                                             |  |                    | 1995 | 
|                   
|                   
|                   
|                   
|Kazuhiro Mori       |  | Managing Director                                                    |  |                    | 1999 | 
|                   
|                   
|                   
|                   
|Yukio Shohtoku      |  | Managing Director                                                    |  |                    | 1994 | 
|                   
|                   
|                   
|                   
|Sukeichi Miki       |  | Managing Director                                                    |  |                    | 1997 | 
|                   
|                   
|                   
|                   
|Takami Sano         |  | Managing Director                                                    |  |                    | 1998 | 
|                   
|                   
|                   
|                   
|Susumu Koike        |  | Managing Director                                                    |  |                    | 1998 | 
|                   
|                   
|                   
|                   
|Fumio Ohtsubo       |  | Managing Director                                                    |  |                    | 1998 | 
|                   
|                   
|                   
|                   
|Josei Ito           |  | Director                                                             |  |                    | 1994 | 
|                   
|                   
|                   
|                   
|Toshio Morikawa     |  | Director                                                             |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Yoshitomi Nagaoka   |  | Director                                                             |  |                    | 1996 | 
|                   
|                   
|                   
|                   
|Hiroaki Enomoto     |  | Director                                                             |  |                    | 1996 | 
|                   
|                   
|                   
|                   
|Yoshio Hino         |  | Director                                                             |  |                    | 1997 | 
|                   
|                   
|                   
|                   
|Toshio Sugiura      |  | Director                                                             |  |                    | 1997 | 
|                   
|                   
|                   
|                   
|Haruo Ueno          |  | Director                                                             |  |                    | 1998 | 
|                   
|                   
|                   
|                   
|Toru Ishida         |  | Director                                                             |  |                    | 1999 | 
|                   
|                   
|                   
|                   
|Yoshiaki Kushiki    |  | Director                                                             |  |                    | 1999 | 
|                   
|                   
|                   
|                   
|Tameshige Hirata    |  | Director                                                             |  |                    | 1999 | 
|                   
|                   
|                   
|                   
|Tetsuya Kawakami    |  | Director                                                             |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Hideaki Iwatani     |  | Director                                                             |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Yoshitaka Hayashi   |  | Director                                                             |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Toshihiro Sakamoto  |  | Director                                                             |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Masaharu Matsushita |  | Honorary Chairman of the Board of
   Directors and Executive Advisor |  |                    | 1947 | 
|                   
|                   
|                   
|                   
|Kazuo Ichikawa      |  | Senior Corporate Auditor                                             |  |                    | 1998 | 
|                   
|                   
|                   
|                   
|Motoi Matsuda       |  | Senior Corporate Auditor                                             |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Toshiomi Uragami    |  | Corporate Auditor                                                    |  |                    | 2000 | 
|                   
|                   
|                   
|                   
|Kiyosuke Imai       |  | Corporate Auditor                                                    |  |                    | 2000 | 

| |       |  |                                                                                                                                                                                                                        
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Note: |  | When a former director is elected as a corporate auditor, the
year in which he became a corporate auditor is shown in the table
above. This also applies when former corporate auditors are newly
elected as directors.



|(b) |  | 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.



---



- 47 -

Item 11. Remuneration of Directors and Officers



|(a) |  | The aggregate amount of remuneration, including bonuses, paid by the
Company during fiscal 2000 to all Directors and Corporate Auditors as a
group (40 persons) for services in all capacities was 1,297 million yen.                                                                                                           
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | 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 2000 amounted to 257 million yen.

Item 12. Options to Purchase Securities from Registrant or Subsidiaries



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In May 1998, the Board of Directors decided to implement the Companys first
stock option plan for Board members and select senior executives, and to
purchase the Companys own shares for transfer to them under the plan, pursuant
to Article 210-2 of the Japanese Commercial Code. Upon approval at the
ordinary general meeting of shareholders held in June 1998 and subsequent Board
of Directors resolutions, stock options (rights to purchase common shares)
were provided to the then 32 Directors on the Board and four select senior
executives in amounts ranging from 2,000 to 10,000 common shares each,
exercisable from July 1, 2000 to June 30, 2004, at an exercise price of 2,291
yen, which was calculated by a formula approved by shareholders at the said
annual shareholders meeting. To cover these options the Company in early July
1998 purchased on the Tokyo Stock Exchange (TSE) a total of 113,000 common
shares with an aggregate purchase price of approximately 252 million yen.
|
| | At the ordinary general meeting of shareholders held in June 1999, the
shareholders again approved a stock option plan for Board members and select
senior executives. The then 32 Directors on the Board and four select senior
executives were granted stock options at a price of 2,476 yen per common share,
exercisable from July 1, 2001 to June 30, 2005, in amounts ranging from 2,000
to 10,000 shares each. For this purpose, the Company in early August 1999
purchased on the TSE a total of 116,000 common shares with an aggregate
purchase price of approximately 287 million yen.                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | In June 2000, another stock option plan for Board members and select senior
executives was approved at the ordinary general meeting of shareholders. The
current 28 Directors on the Board and five select senior executives were
granted stock options ranging from 2,000 to 10,000 shares each, at a price of
2,815 yen per common share, exercisable from July 1, 2002 through June 30,
2006. For the stock option plan, the Company in early July 2000 purchased on
the TSE a total of 109,000 common shares with an aggregate purchase price of
approximately 306 million yen.                                                                                                                                                                                                                                                                                                                                                                                                                                    

Item 13. Interest of Management in Certain Transactions

None



---



- 48 -

PART II

Item 14. Description of Securities to be Registered

Not applicable

PART III

Item 15. Defaults upon Senior Securities

None

Item 16. Changes in Securities and Changes in Security for Registered Securities

None



---



- 49 -

PART IV

Item 17. Financial Statements

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

|                                                            |                                                                                                       |                                                                                                     |  |    |    |  |        |  | 
|----------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- |  | -- | -- |  | ------ |  | 
|                                                            |                                                                                                       |                                                                                                     |  |    |    |  | Page  
|                                                            |                                                                                                       |                                                                                                     |  |    |    |  | number
|                                                            |                                                                                                       |                                                                                                     |  |    |    |  |       
|                                                            | Independent Auditors Report                                                                          |                                                                                                     |  | 50 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                            | Consolidated Balance Sheets
as of March 31, 2000 and 1999                                             |                                                                                                     |  | 51 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of
Income for the years ended
March 31, 2000, 1999 and 1998                   |                                                                                                     |  | 53 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of
Stockholders Equity for the years ended March 31, 2000, 
   1999 and 1998 |                                                                                                     |  | 54 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of Cash
Flows for the years ended
March 31, 2000, 1999 and 1998               |                                                                                                     |  | 56 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Notes to Consolidated Financial
Statements                                                            |                                                                                                     |  | 58 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|Schedule for the years ended March 31,
2000, 1999 and 1998:
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Schedule VIII                                                                                         | Valuation and Qualifying Accounts and Reserves for
   the years ended March 31, 2000, 1999 and 1998 |  |    | 85 | 

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

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



---



- 50 -

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.

Matsushita Electric Industrial Co., Ltd. and subsidiaries have not applied
Statement of Financial Accounting Standards (SFAS) No. 115 in accounting for
certain investments in debt and equity securities but have provided the
disclosures required by SFAS No. 115 as of March 31, 2000 and 1999, and for
each of the years in the three-year period ended March 31, 2000. The effects
on the consolidated financial statements of not adopting SFAS No. 115 are
summarized in Note 4 of the notes to consolidated financial statements.

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

In our opinion, except for the effects of the departure from SFAS No. 115 in
accounting for certain investments in debt and equity securities discussed in
the third paragraph of this report, and except for the omission of the segment
information discussed in the preceding paragraph, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Matsushita Electric Industrial Co., Ltd. and subsidiaries
as of March 31, 2000 and 1999, and the results of their operations and their
cash flows for each of the years in the three-year period ended March 31, 2000,
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
May 10, 2000, except as to Note 10,
which is as of July 3, 2000



---



- 51 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Consolidated Balance Sheets

March 31, 2000 and 1999

|                                           |                                         |                                    |                                   |           |                |           |           |           |           |           | 
|------------------------------------------ | --------------------------------------- | ---------------------------------- | --------------------------------- | --------- | -------------- | --------- | --------- | --------- | --------- | --------- | 
|                                           |                                         |                                    |                                   |           | Yen (millions)
|                                           |                                         |                                    |                                   |           |               
|Assets                                     |                                         | 2000                               |                                   | 1999     
|                                           |                                         |                                    |                                   |          
|Current assets:                           
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents (Note 7)      |                                    |                                   | 1,116,262 |                |           |           | 1,533,585 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Time deposits (Note 7)                  |                                    |                                   | 340,000   |                |           |           |          |          
|                                          
|                                          
|                                          
|                                          
|                                           | Short-term investments (Notes 4 and 14) |                                    |                                   | 134,716   |                |           |           | 124,327   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Trade receivables (Note 7):            
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Related companies (Note 3)         |                                   |           | 20,731         |           |           |           | 22,364    |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Notes                              |                                   |           | 92,939         |           |           |           | 98,513    |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Accounts                           |                                   |           | 1,226,043      |           |           |           | 1,264,075 |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Allowance for doubtful receivables |                                   |           | (42,098        | )         |           |           | (63,649   | )        
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         |                                    | Net trade receivables             |           |                | 1,297,615 |           |           |           | 1,321,303 | 
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                           | Inventories (Notes 2 and 7)             |                                    |                                   | 942,205   |                |           |           | 1,018,663 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other current assets (Notes 4 and 9)    |                                    |                                   | 418,562   |                |           |           | 411,428   |          
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         |                                    | Total current assets              |           |                | 4,249,360 |           |           |           | 4,409,306 | 
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|Noncurrent receivables (Note 5)            |                                         |                                    | 268,288                           |           |                |           | 276,311   |          
|                                          
|                                          
|                                          
|                                          
|Investments and advances (Notes 4 and 14):
|                                          
|                                          
|                                          
|                                          
|                                           | Associated companies (Note 3)           |                                    |                                   | 325,859   |                |           |           | 325,658   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other investments and advances          |                                    |                                   | 939,863   |                |           |           | 954,170   |          
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         |                                    | Total investments and advances    |           |                | 1,265,722 |           |           |           | 1,279,828 | 
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|Property, plant and equipment (Note 6):   
|                                          
|                                          
|                                          
|                                          
|                                           | Land                                    |                                    |                                   | 220,971   |                |           |           | 223,040   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Buildings                               |                                    |                                   | 1,212,634 |                |           |           | 1,215,986 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Machinery and equipment                 |                                    |                                   | 3,021,725 |                |           |           | 3,053,600 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Construction in progress                |                                    |                                   | 89,512    |                |           |           | 70,222    |          
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         |                                    | 4,544,842                         |           |                |           | 4,562,848 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Less accumulated depreciation           |                                    |                                   | 3,144,157 |                |           |           | 3,069,297 |          
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         |                                    | Net property, plant and equipment |           |                | 1,400,685 |           |           |           | 1,493,551 | 
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|Other assets (Notes 4 and 9)               |                                         |                                    | 502,828                           |           |                |           | 479,252   |          
|                                           |                                         |                                    |                                   |           |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         |                                    | 7,686,883                         |           |                |           | 7,938,248 |          
|                                           |                                         |                                    |                                   |           |                |           |           |          

See accompanying Notes to Consolidated Financial Statements.



---



- 52 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Consolidated Balance Sheets

March 31, 2000 and 1999

|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |           |         |         |           | 
|------------------------------------------------ | -------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------------------- | ---------------------------- | ------- | -------------- | --------- | --------- | ------- | ------- | --------- | 
|                                                 |                                                                                        |                                                                      |                                         |                              |         | Yen (millions)
|                                                 |                                                                                        |                                                                      |                                         |                              |         |               
|Liabilities and Stockholders' Equity             |                                                                                        | 2000                                                                 |                                         | 1999                        
|                                                 |                                                                                        |                                                                      |                                         |                             
|Current liabilities:                            
|                                                
|                                                
|                                                
|                                                
|                                                 | Short-term borrowings, including current portion of long-term debt
   (Notes 7 and 14) |                                                                      |                                         | 424,461                      |         |                |           | 577,321   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Commercial paper                                                                       |                                                                      |                                         | 42,408                       |         |                |           | 72,826    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Trade payables:                                                                       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                        |                                                                      | Related companies (Note 3)              |                              |         | 19,094         |           |           |         | 16,330  |          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                        |                                                                      | Notes                                   |                              |         | 56,724         |           |           |         | 48,668  |          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                        |                                                                      | Accounts                                |                              |         | 581,132        |           |           |         | 570,353 |          
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                 |                                                                                        |                                                                      |                                         | Total trade payables         |         |                | 656,950   |           |         |         | 635,351   | 
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                 | Accrued income taxes (Note 9)                                                          |                                                                      |                                         | 81,964                       |         |                |           | 84,688    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Accrued payroll                                                                        |                                                                      |                                         | 153,441                      |         |                |           | 160,568   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Other accrued expenses                                                                 |                                                                      |                                         | 551,426                      |         |                |           | 563,370   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Deposits and advances from customers                                                   |                                                                      |                                         | 109,563                      |         |                |           | 102,242   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Employees deposits                                                                    |                                                                      |                                         | 150,109                      |         |                |           | 151,679   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Other current liabilities                                                              |                                                                      |                                         | 287,000                      |         |                |           | 242,894   |        
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                 |                                                                                        |                                                                      |                                         | Total current liabilities    |         |                | 2,457,322 |           |         |         | 2,590,939 | 
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|Noncurrent liabilities:                         
|                                                
|                                                
|                                                
|                                                
|                                                 | Long-term debt (Notes 7 and 14)                                                        |                                                                      |                                         | 643,840                      |         |                |           | 709,084   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Retirement and severance benefits (Note 8)                                             |                                                                      |                                         | 528,878                      |         |                |           | 495,175   |        
|                                                 | Other liabilities (Notes 4 and 9)                                                      |                                                                      |                                         | 852                          |         |                |           | 915       |        
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                 |                                                                                        |                                                                      |                                         | Total noncurrent liabilities |         |                | 1,173,570 |           |         |         | 1,205,174 | 
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                
|                                                
|                                                
|                                                
|Minority interests (Note 4)                      |                                                                                        |                                                                      | 588,800                                 |                              |         |                | 609,080   |          
|                                                
|                                                
|                                                
|                                                
|Stockholders equity (Note 4):                  
|                                                
|                                                
|                                                
|                                                
|                                                 | Common stock of 50 yen par value (Notes 7 and 10):                                    
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                        | Authorized - 4,950,000,000 shares (5,000,000,000 shares in
1999)    
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                        | Issued -         2,062,671,309 shares (2,062,344,774 shares in 1999) |                                         |                              | 209,708 |                |           |           | 209,444 |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Capital surplus (Notes 7 and 10)                                                       |                                                                      |                                         | 570,964                      |         |                |           | 567,696   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Legal reserve (Note 10)                                                                |                                                                      |                                         | 86,553                       |         |                |           | 86,112    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Retained earnings (Note 10)                                                            |                                                                      |                                         | 2,895,217                    |         |                |           | 2,824,820 |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Accumulated other comprehensive income (loss)                                          |                                                                      |                                         | (294,711                     | )       |                |           | (154,765  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Treasury stock, at cost (Note 10):                                                    
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                        |                                                                      | 229,000 shares (113,000 shares in 1999) |                              |         | (540           | )         |           |         | (252    | )        
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                 |                                                                                        |                                                                      |                                         | Total stockholders equity   |         |                | 3,467,191 |           |         |         | 3,533,055 | 
|                                                
|                                                
|                                                
|                                                
|Commitments and contingent liabilities (Note 15)
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          
|                                                 |                                                                                        |                                                                      | 7,686,883                               |                              |         |                | 7,938,248 |          
|                                                 |                                                                                        |                                                                      |                                         |                              |         |                |           |          

See accompanying Notes to Consolidated Financial Statements.



---



- 53 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Consolidated Statements of Income

Years ended March 31, 2000, 1999 and 1998

|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |           |           |           | 
|------------------------------------------------------------------------------------------------------ | ------------------------------------------------------ | -------------------------- | ----------------------------------------------------------------------------------------------- | --------- | -------------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | 
|                                                                                                       |                                                        |                            |                                                                                                 |           | Yen (millions)
|                                                                                                       |                                                        |                            |                                                                                                 |           |               
|                                                                                                       |                                                        |                            |                                                                                                 |           | 2000           |           | 1999    |           | 1998     
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |          
|Revenues:                                                                                             
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Net sales:                                            
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       |                                                        | Related companies (Note 3) |                                                                                                 |           | 168,774        |           |         |           | 204,339   |           |         |           | 257,366   |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       |                                                        | Other                      |                                                                                                 |           | 7,130,613      |           |         |           | 7,435,780 |           |         |           | 7,633,296 |          
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | Total net sales                                                                                 |           |                | 7,299,387 |         |           |           | 7,640,119 |         |           |           | 7,890,662 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Interest income                                        |                            |                                                                                                 | 42,949    |                |           |         | 54,430    |           |           |         | 58,211    |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Dividends received                                     |                            |                                                                                                 | 14,674    |                |           |         | 9,865     |           |           |         | 9,953     |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Other income (Notes 4 and 12)                          |                            |                                                                                                 | 135,746   |                |           |         | 52,638    |           |           |         | 158,523   |          
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | Total revenues                                                                                  |           |                | 7,492,756 |         |           |           | 7,757,052 |         |           |           | 8,117,349 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Costs and expenses:                                                                                   
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Cost of sales (Notes 3 and 12)                         |                            |                                                                                                 | 5,190,791 |                |           |         | 5,346,914 |           |           |         | 5,494,746 |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Selling, general and administrative expenses (Note 12) |                            |                                                                                                 | 1,949,542 |                |           |         | 2,099,521 |           |           |         | 2,058,358 |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Interest expense                                       |                            |                                                                                                 | 46,237    |                |           |         | 62,083    |           |           |         | 61,573    |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Other deductions (Notes 4, 5, 6 and 12)                |                            |                                                                                                 | 87,581    |                |           |         | 46,241    |           |           |         | 147,048   |          
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | Total costs and expenses                                                                        |           |                | 7,274,151 |         |           |           | 7,554,759 |         |           |           | 7,761,725 | 
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | Income before income taxes                                                                      |           |                | 218,605   |         |           |           | 202,293   |         |           |           | 355,624   | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Provision for income taxes (Note 9):                                                                  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Current                                                |                            |                                                                                                 | 178,445   |                |           |         | 152,303   |           |           |         | 195,948   |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Deferred                                               |                            |                                                                                                 | (41,430   | )              |           |         | 23,147    |           |           |         | 38,901    |          
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | 137,015                                                                                         |           |                |           | 175,450 |           |           |           | 234,849 |          
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | Income before minority interests
and equity    in earnings (losses) of
associated companies |           |                | 81,590    |         |           |           | 26,843    |         |           |           | 120,775   | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Minority interests                                                                                     |                                                        |                            | (941                                                                                            | )         |                |           | 7,632   |           |           |           | 25,777  |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Equity in earnings (losses) of associated
companies    (Note 3)                                    |                                                        |                            | 17,178                                                                                          |           |                |           | (5,670  | )         |           |           | (1,394  | )        
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                       |                                                        |                            | Net income                                                                                      |           |                | 99,709    |         |           |           | 13,541    |         |           |           | 93,604    | 
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |           |         |           |           |           |         |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       |                                                        |                            |                                                                                                 |           |                | Yen      
|                                                                                                       |                                                        |                            |                                                                                                 |           |                |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net income per depositary share, each representing 
          10 shares of common stock (Note 11):
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Basic                                                  |                            |                                                                                                 | 484       |                |           |         | 65        |           |           |         | 443       |          
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Diluted                                                |                            |                                                                                                 | 464       |                |           |         | 65        |           |           |         | 415       |          

See accompanying Notes to Consolidated Financial Statements.



---



- 54 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity

Years ended March 31, 2000, 1999 and 1998

|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |           |        | 
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ----------------------- |  | -------------- | -------- | ---- |  | --------- | -------- | - |  | --------- | ------ | 
|                                                        |                                                                                                              |                         |  | Yen (millions)
|                                                        |                                                                                                              |                         |  |               
|                                                        |                                                                                                              |                         |  | 2000           |          | 1999 |  | 1998     
|                                                        |                                                                                                              |                         |  |                |          |      |  |          
|Common stock:                                          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Balance at beginning of year                                                                                 |                         |  | 209,444        |          |      |  | 209,416   |          |   |  | 208,473   |       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Conversion of bonds (Notes 10 and 12)                                                                        |                         |  | 264            |          |      |  | 28        |          |   |  | 943       |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|                                                        | Balance at end of year                                                                                       |                         |  | 209,708        |          |      |  | 209,444   |          |   |  | 209,416   |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|Capital surplus:                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Balance at beginning of year                                                                                 |                         |  | 567,696        |          |      |  | 570,628   |          |   |  | 573,780   |       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Conversion of bonds (Notes 10 and 12)                                                                        |                         |  | 264            |          |      |  | 28        |          |   |  | 944       |       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Transfer of ownership arising on capital
transactions by 
   consolidated and associated
companies (Note 12) |                         |  | 3,004          |          |      |  | (2,960    | )        |   |  | (4,096    | )     
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|                                                        | Balance at end of year                                                                                       |                         |  | 570,964        |          |      |  | 567,696   |          |   |  | 570,628   |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|Legal reserve:                                         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Balance at beginning of year                                                                                 |                         |  | 86,112         |          |      |  | 84,039    |          |   |  | 81,663    |       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Transfer from retained earnings (Note 10)                                                                    |                         |  | 441            |          |      |  | 2,073     |          |   |  | 2,376     |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|                                                        | Balance at end of year                                                                                       |                         |  | 86,553         |          |      |  | 86,112    |          |   |  | 84,039    |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|Retained earnings:                                     
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Balance at beginning of year                                                                                 |                         |  | 2,824,820      |          |      |  | 2,938,539 |          |   |  | 2,874,763 |       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Net income                                                                                                   |                         |  | 99,709         |          |      |  | 13,541    |          |   |  | 93,604    |       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Cash dividends (Note 10)                                                                                     |                         |  | (28,871        | )        |      |  | (26,304   | )        |   |  | (27,452   | )     
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Transfer to legal reserve (Note 10)                                                                          |                         |  | (441           | )        |      |  | (2,073    | )        |   |  | (2,376    | )     
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Retirement of treasury stock (Note 10)                                                                       |                         |  |               |          |      |  | (98,883   | )        |   |  |          |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|                                                        | Balance at end of year                                                                                       |                         |  | 2,895,217      |          |      |  | 2,824,820 |          |   |  | 2,938,539 |       
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|Accumulated other comprehensive income (loss) (Note 4):
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Balance at beginning of year                                                                                 |                         |  | (154,765       | )        |      |  | (32,508   | )        |   |  | (42,970   | )     
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other comprehensive income (loss), net of tax:                                                              
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                              | Translation adjustments |  |                | (139,946 | )    |  |           | (122,257 | ) |  |           | 10,462 | 
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          
|                                                        | Balance at end of year                                                                                       |                         |  | (294,711       | )        |      |  | (154,765  | )        |   |  | (32,508   | )     
|                                                        |                                                                                                              |                         |  |                |          |      |  |           |          |   |  |          

(Continued)



---



- 55 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Years ended March 31, 2000, 1999 and 1998

|                                           |                                                |                         |  |                |          |      |  |          |          |   |  |         |        | 
|------------------------------------------ | ---------------------------------------------- | ----------------------- |  | -------------- | -------- | ---- |  | -------- | -------- | - |  | ------- | ------ | 
|                                           |                                                |                         |  | Yen (millions)
|                                           |                                                |                         |  |               
|                                           |                                                |                         |  | 2000           |          | 1999 |  | 1998    
|                                           |                                                |                         |  |                |          |      |  |         
|Treasury stock (Note 10):                 
|                                          
|                                          
|                                          
|                                          
|                                           | Balance at beginning of year                   |                         |  | (252           | )        |      |  |         |          |   |  |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Repurchase of common stock                     |                         |  | (288           | )        |      |  | (99,135  | )        |   |  |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Retirement of treasury stock                   |                         |  |               |          |      |  | 98,883   |          |   |  |        |       
|                                           |                                                |                         |  |                |          |      |  |          |          |   |  |        
|                                          
|                                          
|                                          
|                                          
|                                           | Balance at end of year                         |                         |  | (540           | )        |      |  | (252     | )        |   |  |        |       
|                                           |                                                |                         |  |                |          |      |  |          |          |   |  |        
|Disclosure of comprehensive income (loss):
|                                          
|                                          
|                                          
|                                          
|                                           | Net income                                     |                         |  | 99,709         |          |      |  | 13,541   |          |   |  | 93,604  |       
|                                          
|                                          
|                                          
|                                          
|                                           | Other comprehensive income (loss), net of tax:
|                                          
|                                          
|                                          
|                                          
|                                           |                                                | Translation adjustments |  |                | (139,946 | )    |  |          | (122,257 | ) |  |         | 10,462 | 
|                                          
|                                          
|                                          
|                                          
|                                           |                                                |                         |  |                |          |      |  |          |          |   |  |        
|                                           | Total comprehensive income (loss) (Note 4)     |                         |  | (40,237        | )        |      |  | (108,716 | )        |   |  | 104,066 |       
|                                           |                                                |                         |  |                |          |      |  |          |          |   |  |        

See accompanying Notes to Consolidated Financial Statements.



---



- 56 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Years ended March 31, 2000, 1999 and 1998

|                                                |                                                                                      |                                                                          |                                           |          |                |          |      |          |         |          |   |          |          |          |  
|----------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ----------------------------------------- | -------- | -------------- | -------- | ---- | -------- | ------- | -------- | - | -------- | -------- | -------- | -
|                                                |                                                                                      |                                                                          |                                           |          | Yen (millions)
|                                                |                                                                                      |                                                                          |                                           |          |               
|                                                |                                                                                      |                                                                          |                                           |          | 2000           |          | 1999 |          | 1998   
|                                                |                                                                                      |                                                                          |                                           |          |                |          |      |          |        
|Cash flows from operating activities (Note 12):
|                                               
|                                               
|                                               
|                                               
|                                                | Net income                                                                           |                                                                          |                                           | 99,709   |                |          |      | 13,541   |         |          |   | 93,604   |         
|                                               
|                                               
|                                               
|                                               
|                                                | Adjustments to reconcile net income to net cash
   provided by operating activities:
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Depreciation and amortization                                            |                                           |          | 364,966        |          |      |          | 373,155 |          |   |          | 365,129  |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Net gain on sale of investments                                          |                                           |          | (98,278        | )        |      |          | (14,198 | )        |   |          | (113,234 | )       
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Provision for doubtful receivables                                       |                                           |          | 11,980         |          |      |          | 13,505  |          |   |          | 20,565   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Deferred income taxes                                                    |                                           |          | (41,430        | )        |      |          | 23,147  |          |   |          | 38,901   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Impairment loss on long-lived assets (Note 6)                            |                                           |          | 19,565         |          |      |          |        |          |   |          | 88,662   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Minority interests                                                       |                                           |          | (941           | )        |      |          | 7,632   |          |   |          | 25,777   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | (Increase) decrease in trade receivables                                 |                                           |          | (28,889        | )        |      |          | (37,724 | )        |   |          | 43,046   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | (Increase) decrease in inventories                                       |                                           |          | 17,564         |          |      |          | 36,587  |          |   |          | (49,299  | )       
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | (Increase) decrease in other current assets                              |                                           |          | (14,274        | )        |      |          | (21,951 | )        |   |          | (24,041  | )       
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | (Increase) decrease in noncurrent receivables                            |                                           |          | 6,387          |          |      |          | 6,527   |          |   |          | (26,413  | )       
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Increase (decrease) in trade payables                                    |                                           |          | 30,042         |          |      |          | 2,213   |          |   |          | 1,175    |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Increase (decrease) in accrued income taxes                              |                                           |          | 261            |          |      |          | (7,743  | )        |   |          | (77,003  | )       
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Increase (decrease) in accrued expenses and
other    current liabilities |                                           |          | 65,995         |          |      |          | 29,994  |          |   |          | 84,834   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Increase (decrease) in retirement and severance
benefits                 |                                           |          | 34,625         |          |      |          | 42,231  |          |   |          | 29,178   |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                      | Other                                                                    |                                           |          | 8,854          |          |      |          | 32,235  |          |   |          | 28,398   |         
|                                                |                                                                                      |                                                                          |                                           |          |                |          |      |          |         |          |   |         
|                                                |                                                                                      |                                                                          | Net cash provided by operating
activities |          |                | 476,136  |      |          |         | 499,151  |   |          |          | 529,279  |  
|                                                |                                                                                      |                                                                          |                                           |          |                |          |      |          |         |          |   |         
|Cash flows from investing activities (Note 12):
|                                               
|                                               
|                                               
|                                               
|                                                | Proceeds from sale of short-term investments                                         |                                                                          |                                           | 259,485  |                |          |      | 376,174  |         |          |   | 488,887  |         
|                                               
|                                               
|                                               
|                                               
|                                                | Purchase of short-term investments                                                   |                                                                          |                                           | (278,243 | )              |          |      | (362,062 | )       |          |   | (348,350 | )       
|                                               
|                                               
|                                               
|                                               
|                                                | Proceeds from disposition of investments and advances                                |                                                                          |                                           | 146,885  |                |          |      | 84,014   |         |          |   | 203,644  |         
|                                               
|                                               
|                                               
|                                               
|                                                | Increase in investments and advances                                                 |                                                                          |                                           | (71,186  | )              |          |      | (137,456 | )       |          |   | (322,790 | )       
|                                               
|                                               
|                                               
|                                               
|                                                | Capital expenditures                                                                 |                                                                          |                                           | (331,475 | )              |          |      | (359,037 | )       |          |   | (475,906 | )       
|                                               
|                                               
|                                               
|                                               
|                                                | Increase in time deposits                                                            |                                                                          |                                           | (340,000 | )              |          |      |         |         |          |   |         |         
|                                               
|                                               
|                                               
|                                               
|                                                | Other                                                                                |                                                                          |                                           | 10,180   |                |          |      | 20,612   |         |          |   | 23,166   |         
|                                                |                                                                                      |                                                                          |                                           |          |                |          |      |          |         |          |   |         
|                                                |                                                                                      |                                                                          | Net cash used in investing activities     |          |                | (604,354 | )    |          |         | (377,755 | ) |          |          | (431,349 | )
|                                                |                                                                                      |                                                                          |                                           |          |                |          |      |          |         |          |   |         

(Continued)



---



- 57 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2000, 1999 and 1998

|                                                             |                                                                   |                                       |           |                |          |      |           |          |          |   |           |          |          |  
|------------------------------------------------------------ | ----------------------------------------------------------------- | ------------------------------------- | --------- | -------------- | -------- | ---- | --------- | -------- | -------- | - | --------- | -------- | -------- | -
|                                                             |                                                                   |                                       |           | Yen (millions)
|                                                             |                                                                   |                                       |           |               
|                                                             |                                                                   |                                       |           | 2000           |          | 1999 |           | 1998    
|                                                             |                                                                   |                                       |           |                |          |      |           |         
|Cash flows from financing activities (Note 12):             
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Decrease in short-term borrowings                                 |                                       |           | (156,619       | )        |      |           | (100,202 | )        |   |           | (85,660  | )       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in deposits and advances
from customers    and employees |                                       |           | 7,576          |          |      |           | 3,441    |          |   |           | 7,545    |         
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from long-term debt                                      |                                       |           | 240,485        |          |      |           | 186,717  |          |   |           | 129,109  |         
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repayments of long-term debt                                      |                                       |           | (269,915       | )        |      |           | (388,233 | )        |   |           | (238,029 | )       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Dividends paid                                                    |                                       |           | (28,871        | )        |      |           | (26,304  | )        |   |           | (27,452  | )       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Dividends paid to minority interests                              |                                       |           | (8,377         | )        |      |           | (9,998   | )        |   |           | (9,232   | )       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repurchase of common stock (Note 10)                              |                                       |           | (288           | )        |      |           | (99,135  | )        |   |           |         |         
|                                                             |                                                                   |                                       |           |                |          |      |           |          |          |   |           |         
|                                                             |                                                                   | Net cash used in financing activities |           |                | (216,009 | )    |           |          | (433,714 | ) |           |          | (223,719 | )
|                                                             |                                                                   |                                       |           |                |          |      |           |          |          |   |           |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                   |                                       | (73,096   | )              |          |      | (60,323   | )        |          |   | 7,185     |         
|                                                             |                                                                   |                                       |           |                |          |      |           |          |          |   |           |         
|Net increase (decrease) in cash and cash equivalents         |                                                                   |                                       | (417,323  | )              |          |      | (372,641  | )        |          |   | (118,604  | )       
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents at beginning of year               |                                                                   |                                       | 1,533,585 |                |          |      | 1,906,226 |          |          |   | 2,024,830 |         
|                                                             |                                                                   |                                       |           |                |          |      |           |          |          |   |           |         
|Cash and cash equivalents at end of year                     |                                                                   |                                       | 1,116,262 |                |          |      | 1,533,585 |          |          |   | 1,906,226 |         
|                                                             |                                                                   |                                       |           |                |          |      |           |          |          |   |           |         

See accompanying Notes to Consolidated Financial Statements.



---



- 58 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2000, 1999 and 1998



|(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 2000 were categorized as follows: video and audio
equipment  23%, home appliances and household equipment  18%,
information and communications equipment  28%, industrial
equipment  10%, and components  21%. A sales breakdown in fiscal 2000
by geographical market was as follows: Japan  51%, North and South
America  19%, Europe  12%, and Asia and Others  18%.



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The Company is not dependent on a single supplier, and has no
significant difficulty in obtaining raw materials from suppliers.

| |     |  |                                                           
| | --- |  | ----------------------------------------------------------
| | (b) |  | Basis of Presentation of Consolidated Financial Statements



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company and its domestic subsidiaries maintain their books of
account in conformity with financial accounting standards of Japan,
and its foreign subsidiaries in conformity with those of the countries
of their domicile.



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The consolidated financial statements presented herein have been
prepared in a manner and reflect the adjustments which are necessary
to conform with accounting principles generally accepted in the United
States of America.

| |     |  |                                         
| | --- |  | ----------------------------------------
| | (c) |  | Principles of Consolidation (See Note 3)



| |                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The consolidated financial statements include the accounts of the
Company and its subsidiaries. Significant intercompany accounts and
transactions have been eliminated on consolidation.



| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investments in certain associated companies in which the Companys
ownership is 20% to 50% are stated at their underlying net equity
value after elimination of intercompany profits.



---



- 59 -

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



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Revenues from sales are principally recognized when products are
shipped to customers.

| |     |  |       
| | --- |  | ------
| | (e) |  | Leases



| |                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain subsidiaries of the Company lease machinery and equipment.
Leases of such assets are principally accounted for as direct
financing leases and included in Trade receivablesAccounts and
Noncurrent receivables in the accompanying balance sheets.

| |     |  |                         
| | --- |  | ------------------------
| | (f) |  | Inventories
(See Note 2)



| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Finished goods and work in process are stated at the lower of cost
(average) or market. Raw materials are stated at cost, principally on
a first-in, first-out basis, not in excess of current replacement
cost.

| |     |  |                             
| | --- |  | ----------------------------
| | (g) |  | Foreign Currency Translation



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



---



- 60 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

| |     |  |                                                                 
| | --- |  | ----------------------------------------------------------------
| | (i) |  | Short-term Investments and Investments and Advances (See Note 4)



| |                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Marketable equity securities included in short-term investments and in
investments and advances are carried at the lower of cost or market,
cost being determined by the average method. Other items included in
short-term investments, primarily marketable securities classified as
current assets and those included in investments and advances, are
carried at cost or less.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In May 1993, the Financial Accounting Standards Board (FASB) issued
SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, applicable for the fiscal year beginning April 1, 1994.
This Statement addresses the accounting and reporting for investments
in equity securities that have readily determinable fair values and
for all investments in debt securities. The Company decided not to
apply SFAS No. 115 in the body of its consolidated financial
statements in order to maintain comparability to consolidated
financial statements prepared in accordance with accounting principles
generally accepted in Japan where such debt and equity securities are
reported at historical cost. The effects on the consolidated
financial statements of not adopting SFAS No. 115 are summarized in
Note 4. This treatment was approved by the United States Securities
and Exchange Commission.

| |     |  |                                    
| | --- |  | -----------------------------------
| | (j) |  | Noncurrent Receivables (See Note 5)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Noncurrent receivables are recorded at cost, less the related
allowance for impaired receivables. A loan is considered to be
impaired when, based on current information and events, it is probable
that a creditor will be unable to collect all amounts due according to
the contractual terms of the loan agreement. When a loan is
considered to be impaired, the amount of impairment is measured based
on the present value of expected future cash flows or the fair value
of the collateral. Cash receipts on impaired receivables are applied
to reduce the principal amount of such receivables until the principal
has been recovered and are recognized as interest income, thereafter.

| |     |  |                          
| | --- |  | -------------------------
| | (k) |  | Income Taxes (See Note 9)



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards.



| |                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Income taxes have not been accrued for undistributed earnings of
foreign subsidiaries and associated companies, as these amounts are
considered to be reinvested indefinitely. Calculation of the
unrecognized deferred tax liability related to these earnings is not
practicable.



---



- 61 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

| |     |  |                          
| | --- |  | -------------------------
| | (l) |  | Advertising (See Note 12)



| |                                            
| | -------------------------------------------
| | Advertising costs are expensed as incurred.

| |     |  |                                                         
| | --- |  | --------------------------------------------------------
| | (m) |  | Net Income per Depositary Share (See Notes 7, 10 and 11)



| |                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company accounts for net income per share in accordance with SFAS
No. 128, Earnings per Share. This Statement establishes standards
for computing net income per share and requires dual presentation of
basic and diluted net income per share on the face of the income
statement for all entities with complex capital structures.



| |                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under SFAS No. 128, basic net income per share is computed based on
the weighted average number of common shares outstanding during each
period, and diluted net income per share assumes the dilution that
could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the
issuance of common stock.

| |     |  |                 
| | --- |  | ----------------
| | (n) |  | Cash Equivalents



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Cash equivalents include all highly liquid debt instruments purchased
with a maturity of three months or less.

| |     |  |                                                       
| | --- |  | ------------------------------------------------------
| | (o) |  | Derivative Financial Instruments (See Notes 13 and 14)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Derivative financial instruments utilized by the Company and its
subsidiaries are comprised principally of foreign exchange contracts
used to hedge currency risk. Gains and losses on derivatives used to
hedge existing assets or liabilities denominated in foreign currencies
are recognized in income currently, as are the offsetting foreign
exchange gains and losses on the items hedged. Gains and losses
related to qualifying hedges of firm commitments denominated in
foreign currencies are deferred and recognized in income when the
transaction occurs. Derivative financial instruments that do not meet
the criteria for hedge accounting are marked to market.



---



- 62 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

| |     |  |                                                                                     
| | --- |  | ------------------------------------------------------------------------------------
| | (p) |  | Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of (See Note 6)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This
Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash
flows (undiscounted and without interest charges) expected to be
generated by the asset. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of carrying amount
or fair value less cost to sell.

| |     |  |                            
| | --- |  | ---------------------------
| | (q) |  | Comprehensive Income (Loss)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company adopted SFAS No. 130, Reporting Comprehensive Income, in
the fiscal year beginning April 1, 1998, except for the effects on
comprehensive income (loss) of the Companys departure from the
provisions of SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities (See Note 4). Comprehensive income (loss)
consists of net income and change in foreign currency translation
adjustments, and is presented in the consolidated statements of
stockholders equity.

| |     |  |                 
| | --- |  | ----------------
| | (r) |  | 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.

| |     |  |                              
| | --- |  | -----------------------------
| | (s) |  | New Accounting Pronouncements



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 1998, FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, applicable for the
fiscal year beginning April 1, 2001. This Statement establishes
accounting and reporting standards for derivative instruments and for
hedging activities. SFAS No. 133 requires that an entity recognize
all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. Changes in the fair
value of derivatives are recorded each period in current earnings or
other comprehensive income (loss), depending on whether a derivative
is designated as part of a hedge transaction and the type of hedge
transaction. The ineffective portion of all hedges will be recognized
in earnings. The Company has not yet determined the impact that the
adoption of SFAS No. 133 will have on the results of operations or
financial position.



---



- 63 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

| |     |  |                  
| | --- |  | -----------------
| | (t) |  | Reclassifications



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain reclassifications of the consolidated statements of income for
the years ended March 31, 1999 and 1998 have been made to conform with
the presentation for the year ended March 31, 2000.

|    |  |                                                                  
|--- |  | -----------------------------------------------------------------
|(2) |  | Inventories                                                      
|    |  |                                                                  
|    |  | Inventories at March 31, 2000 and 1999 are summarized as follows:



|                |  |                |         |      |  |         |           | 
|--------------- |  | -------------- | ------- | ---- |  | ------- | --------- | 
|                |  | Yen (millions)
|                |  |               
|                |  | 2000           |         | 1999
|                |  |                |         |     
|Finished goods  |  | 479,439        |         |      |  | 540,173 |          
|               
|               
|               
|               
|Work in process |  | 168,066        |         |      |  | 176,793 |          
|               
|               
|               
|               
|Raw materials   |  | 294,700        |         |      |  | 301,697 |          
|                |  |                |         |      |  |         |           | 
|                |  |                | 942,205 |      |  |         | 1,018,663 | 
|                |  |                |         |      |  |         |           | 

|    |  |                                                          
|--- |  | ---------------------------------------------------------
|(3) |  | Investments in and Transactions with Associated Companies

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain financial information in respect of associated companies at
March 31, 2000 and 1999 and for the three years ended March 31, 2000
is shown below. The most significant of these associated companies is
Matsushita Electric Works, Ltd. (MEW). At March 31, 2000, the Company
has a 32.1% equity ownership in MEW. On December 8, 1997, Universal
Studios, Inc. (Universal) issued new shares to the Seagram Company
Ltd. As a result, the Companys ownership interest in Universal fell
below 20%. The financial information of Universal for fiscal 1998 and
thereafter is not included in the following.

|                               |            |                |         |      |  |           |         | 
|------------------------------ | ---------- | -------------- | ------- | ---- |  | --------- | ------- | 
|                               |            | Yen (millions)
|                               |            |               
|                               |            | 2000           |         | 1999
|                               |            |                |         |     
|Current assets                 |            | 952,770        |         |      |  | 945,218   |        
|                              
|                              
|                              
|                              
|Other assets                   |            | 1,413,939      |         |      |  | 1,458,959 |        
|                               |            |                |         |      |  |           |        
|                               |            | 2,366,709      |         |      |  | 2,404,177 |        
|                              
|                              
|                              
|                              
|Current liabilities            |            | 631,560        |         |      |  | 610,683   |        
|                              
|                              
|                              
|                              
|Other liabilities              |            | 808,922        |         |      |  | 858,707   |        
|                               |            |                |         |      |  |           |        
|                               | Net assets |                | 926,227 |      |  |           | 934,787 | 
|                               |            |                |         |      |  |           |        
|Companys equity in net assets |            | 267,454        |         |      |  | 262,488   |        
|                               |            |                |         |      |  |           |        



---



- 64 -

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

|                  |  |                |           |      |  |      |           |   |  |  |           | 
|----------------- |  | -------------- | --------- | ---- |  | ---- | --------- | - |  |  | --------- | 
|                  |  | Yen (millions)
|                  |  |               
|                  |  | 2000           |           | 1999 |  | 1998
|                  |  |                |           |      |  |     
|Net sales         |  |                | 1,835,138 |      |  |      | 2,175,672 |   |  |  | 2,306,649 | 
|                 
|                 
|                 
|                 
|Gross profit      |  |                | 500,373   |      |  |      | 502,972   |   |  |  | 553,459   | 
|                 
|                 
|                 
|                 
|Net income (loss) |  |                | 47,651    |      |  |      | (12,807   | ) |  |  | 23,690    | 



| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | Purchases and dividends received from associated companies for the three
years ended March 31, 2000 are as follows:

|                   |  |                |         |      |  |      |         |  |  |  |         | 
|------------------ |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                   |  | Yen (millions)
|                   |  |               
|                   |  | 2000           |         | 1999 |  | 1998
|                   |  |                |         |      |  |     
|Purchases from     |  |                | 235,599 |      |  |      | 258,881 |  |  |  | 259,451 | 
|                  
|                  
|                  
|                  
|Dividends received |  |                | 7,935   |      |  |      | 10,995  |  |  |  | 9,875   | 



| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Retained earnings include undistributed earnings of associated companies
in the amount of 81,660 million yen and 85,206 million yen, respectively,
as of March 31, 2000 and 1999.
|
| | Investments in associated companies include equity securities which have
quoted market values at March 31, 2000 and 1999 compared with related
carrying amounts as follows:      

|                |  |                |         |      |  |  |         | 
|--------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                |  | Yen (millions)
|                |  |               
|                |  | 2000           |         | 1999
|                |  |                |         |     
|Carrying amount |  |                | 272,343 |      |  |  | 257,924 | 
|               
|               
|               
|               
|Market value    |  |                | 310,311 |      |  |  | 343,236 | 

|    |  |                                                    
|--- |  | ---------------------------------------------------
|(4) |  | Short-term Investments and Investments and Advances



| |                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As discussed in Note 1(i), the Company does not apply SFAS No. 115 in
the body of its consolidated financial statements. The effects on the
consolidated financial statements of not adopting SFAS No. 115 are
disclosed in this note.



| |                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 short-term investments and
investments and advances of the Company consist of available-for-sale
securities. The consolidated statements of income for the three years
ended March 31, 2000 were not materially affected by SFAS No. 115.



---



- 65 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | The effects on balance sheet items of the Companys departure from SFAS
No. 115 as of March 31, 2000 and 1999 are summarized as follows:

|                                                                                         |                                                |                                           |           |                |         |      |           |         |         | 
|---------------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | --------- | -------------- | ------- | ---- | --------- | ------- | ------- | 
|                                                                                         |                                                |                                           |           | Yen (millions)
|                                                                                         |                                                |                                           |           |               
|                                                                                         |                                                |                                           |           | 2000           |         | 1999
|                                                                                         |                                                |                                           |           |                |         |     
|Stockholders equity as reported                                                         |                                                |                                           | 3,467,191 |                |         |      | 3,533,055 |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net increase in the carrying amount of:                                                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Short-term investments                         |                                           |           | 2,167          |         |      |           | 6,596   |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Investments and advances                       |                                           |           | 376,751        |         |      |           | 187,639 |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net decrease in deferred tax assets and increase in
   deferred tax liabilities:        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Current deferred tax assets (decrease)         |                                           |           | (912           | )       |      |           | (2,791  | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Noncurrent deferred tax assets (decrease)      |                                           |           | (112,771       | )       |      |           | (78,545 | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Noncurrent deferred tax liabilities (increase) |                                           |           | (45,440        | )       |      |           | (69     | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net unrealized gain on securities held by associated
   companies                        |                                                |                                           | 2,957     |                |         |      | 3,382     |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net increase in minority interests                                                       |                                                |                                           | (5,614    | )              |         |      | (7,116    | )      
|                                                                                         |                                                |                                           |           |                |         |      |           |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                | Total adjustments to stockholders equity |           |                | 217,138 |      |           |         | 109,096 | 
|                                                                                         |                                                |                                           |           |                |         |      |           |        
|Stockholders equity in accordance with U.S. generally
   accepted accounting principles |                                                |                                           | 3,684,329 |                |         |      | 3,642,151 |        
|                                                                                         |                                                |                                           |           |                |         |      |           |        



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | As a result of the above adjustments, total assets at March 31, 2000 and
1999 would increase by 268,192 million yen and 116,281 million yen,
respectively.



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If the provisions of SFAS No. 115 had been applied, comprehensive income
for the year ended March 31, 2000 would amount to 67,805 million yen,
compared with comprehensive loss of 83,188 million yen and comprehensive
income of 41,581 million yen for the years ended March 31, 1999 and 1998,
respectively.



---



- 66 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The carrying amount, 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, 2000 and
1999 are as follows:

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



---



- 67 -

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

|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |     |     | 
|----------- | ------------------------------------- |  | -------------- | ------- | ----- |  | ------- | ------- | ------- |  | ---------- | ------- | ---------- |  | --- | --- | 
|            |                                       |  | Yen (millions)
|            |                                       |  |               
|            |                                       |  | 1999          
|            |                                       |  |               
|            |                                       |  |                |         |       |  |         |         |         |  | Gross      |         | Gross     
|            |                                       |  |                |         |       |  |         |         |         |  | unrealized |         | unrealized
|            |                                       |  | Carrying       |         | Fair  |  | holding |         | holding
|            |                                       |  | amount         |         | value |  | gains   |         | losses 
|            |                                       |  |                |         |       |  |         |         |        
|Current:   
|           
|           
|           
|           
|            | Equity securities                     |  |                | 1,607   |       |  |         | 8,185   |         |  |            | 6,578   |            |  |     |    | 
|           
|           
|           
|           
|            | Japanese and foreign government bonds |  |                | 80,767  |       |  |         | 81,002  |         |  |            | 235     |            |  |     |    | 
|           
|           
|           
|           
|            | Convertible and straight bonds        |  |                | 20,870  |       |  |         | 20,751  |         |  |            | 43      |            |  |     | 162 | 
|           
|           
|           
|           
|            | Investment trust                      |  |                | 76      |       |  |         | 76      |         |  |            |        |            |  |     |    | 
|           
|           
|           
|           
|            | Other debt securities                 |  |                | 21,007  |       |  |         | 20,909  |         |  |            | 15      |            |  |     | 113 | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |     |    
|            |                                       |  | 124,327        |         |       |  | 130,923 |         |         |  | 6,871      |         |            |  | 275 |    
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |     |    
|Noncurrent:
|           
|           
|           
|           
|            | Equity securities                     |  |                | 384,417 |       |  |         | 572,302 |         |  |            | 187,885 |            |  |     |    | 
|           
|           
|           
|           
|            | Japanese and foreign government bonds |  |                | 5,144   |       |  |         | 5,159   |         |  |            | 15      |            |  |     |    | 
|           
|           
|           
|           
|            | Convertible and straight bonds        |  |                | 1,351   |       |  |         | 1,367   |         |  |            | 16      |            |  |     |    | 
|           
|           
|           
|           
|            | Investment trust                      |  |                | 85,116  |       |  |         | 84,830  |         |  |            | 29      |            |  |     | 315 | 
|           
|           
|           
|           
|            | Other debt securities                 |  |                | 3,130   |       |  |         | 3,139   |         |  |            | 9       |            |  |     |    | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |     |    
|            |                                       |  | 479,158        |         |       |  | 666,797 |         |         |  | 187,954    |         |            |  | 315 |    
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |     |    



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | Maturities of short-term investments and investments and advances
classified as available-for-sale at March 31, 2000 and 1999 are as
follows:

|                                      |  |                |         |       |  |          |           |       |  |  |         |  |  |  |         | 
|------------------------------------- |  | -------------- | ------- | ----- |  | -------- | --------- | ----- |  |  | ------- |  |  |  | ------- | 
|                                      |  | Yen (millions)
|                                      |  |               
|                                      |  | 2000           |         | 1999 
|                                      |  |                |         |      
|                                      |  | Carrying       |         | Fair  |  | Carrying |           | Fair 
|                                      |  | amount         |         | value |  | amount   |           | value
|                                      |  |                |         |       |  |          |           |      
|Due within one year                   |  |                | 132,238 |       |  |          | 132,314   |       |  |  | 122,666 |  |  |  | 122,676 | 
|                                     
|                                     
|                                     
|                                     
|Due after one year through five years |  |                | 113,426 |       |  |          | 112,517   |       |  |  | 94,793  |  |  |  | 94,554  | 
|                                     
|                                     
|                                     
|                                     
|Due after five years                  |  |                | 2,000   |       |  |          | 2,000     |       |  |  | 2       |  |  |  | 3       | 
|                                     
|                                     
|                                     
|                                     
|Equity securities                     |  |                | 377,069 |       |  |          | 756,820   |       |  |  | 386,024 |  |  |  | 580,487 | 
|                                      |  |                |         |       |  |          |           |       |  |  |         |  |  |  |         | 
|                                      |  |                | 624,733 |       |  |          | 1,003,651 |       |  |  | 603,485 |  |  |  | 797,720 | 
|                                      |  |                |         |       |  |          |           |       |  |  |         |  |  |  |         | 



---



- 68 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The change in net unrealized holding gain on available-for-sale
securities, net of related taxes and minority interests, for the years
ended March 31, 2000, 1999 and 1998 was an increase of 108,042 million
yen, an increase of 25,528 million yen and a decrease of 62,485 million
yen, respectively.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Proceeds from sale of available-for-sale securities for the years ended
March 31, 2000, 1999 and 1998 were 326,811 million yen, 434,082 million
yen and 657,449 million yen, respectively. The gross realized gains for
the years ended March 31, 2000, 1999 and 1998 were 40,590 million yen,
14,594 million yen and 118,370 million yen, respectively. The gross
realized losses for the years ended March 31, 2000, 1999 and 1998 were 878
million yen, 396 million yen and 5,136 million yen, respectively. The
cost of securities sold in computing gross realized gains and losses is
determined by the average cost method.

|    |  |                       
|--- |  | ----------------------
|(5) |  | Noncurrent Receivables



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The recorded investment in noncurrent receivables for which impairment
has been recognized at March 31, 2000 and 1999 was 4,903 million yen
and 6,829 million yen, respectively. Related allowance for doubtful
receivables was not significant at March 31, 2000 and 1999. The
average recorded investment in impaired receivables during the years
ended March 31, 2000, 1999 and 1998 was 6,462 million yen, 13,126
million yen and 73,954 million yen, respectively. Additions charged
to bad debt expenses were not significant for the years ended March
31, 2000 and 1999, and were 12,249 million yen for the year ended
March 31, 1998. Write-downs charged against the allowance were not
significant for the years ended March 31, 2000 and 1999, and were
74,897 million yen for the year ended March 31, 1998.

|    |  |                  
|--- |  | -----------------
|(6) |  | Long-Lived Assets



| |                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company periodically reviews the recorded value of its long-lived
assets to determine if the future cash flows to be derived from these
properties will be sufficient to recover the remaining recorded asset
values. As discussed in Note 1(p), the Company accounts for
impairment of long-lived assets in accordance with SFAS No. 121.



| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company recognized an impairment loss of 19,565 million yen during
fiscal 2000 related to the write-down of the machinery and equipment
to manufacture CRTs and other components.



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company recognized an impairment loss of 57,290 million yen during
fiscal 1998 related to the write-down of the machinery and equipment
to manufacture semiconductors, mainly DRAMs.



| |                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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
subsidiaries manufacturing those products would result in a net
operating loss.



---



- 69 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | The Company recognized an impairment loss of 31,372 million yen during
fiscal 1998 related to the decline in value of land held.



| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | Impairment losses recorded in fiscal 2000 and 1998 are included in other
deductions of costs and expenses in the consolidated statements of income.

|    |  |                                         
|--- |  | ----------------------------------------
|(7) |  | Long-term Debt and Short-term Borrowings



| |                                                              
| | -------------------------------------------------------------
| | Long-term debt at March 31, 2000 and 1999 is set forth below:

|                                                                                                                                                                      |  |                |         |      |  |  |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                                                                                                                                                                      |  | Yen (millions)
|                                                                                                                                                                      |  |               
|                                                                                                                                                                      |  | 2000           |         | 1999
|                                                                                                                                                                      |  |                |         |     
|Convertible bonds, due 2002, interest 1.3%                                                                                                                            |  |                | 98,893  |      |  |  | 99,010  | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Convertible bonds, due 2004, interest 1.4%                                                                                                                            |  |                | 98,499  |      |  |  | 98,911  | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Convertible bonds issued by subsidiaries,
due 2000, 2002 and    2005, interest
0.35%  4.3%                                                                           |  |                | 66,482  |      |  |  | 66,482  | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|U.S. dollar unsecured bonds, due 2002,
effective interest 5.8%                                                                                                        |  |                | 125,067 |      |  |  | 124,982 | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Straight bonds issued by a subsidiary, due
2001  2005,    interest 1.38%  2.15%                                                                                     |  |                | 20,000  |      |  |  | 20,000  | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Unsecured yen loans from banks and
insurance companies,    principally by
financial subsidiaries, due 1999  2005,   effective interest 1.7% in 2000 and 1.9%
in 1999 |  |                | 402,930 |      |  |  | 434,158 | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Other long-term debt                                                                                                                                                  |  |                | 48      |      |  |  | 53      | 
|                                                                                                                                                                      |  |                |         |      |  |  |         | 
|                                                                                                                                                                      |  |                | 811,919 |      |  |  | 843,596 | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Less current portion                                                                                                                                                  |  |                | 168,079 |      |  |  | 134,512 | 
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      |  |                |         |      |  |  |         | 
|                                                                                                                                                                      |  |                | 643,840 |      |  |  | 709,084 | 
|                                                                                                                                                                      |  |                |         |      |  |  |         | 



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | The aggregate annual maturities of long-term debt after March 31, 2000 are
as follows:

|                      |      |  |                |         | 
|--------------------- | ---- |  | -------------- | ------- | 
|                      |      |  | Yen (millions)
|                      |      |  |               
|Year ending March 31:
|                     
|                     
|                     
|                     
|                      | 2001 |  |                | 168,079 | 
|                     
|                     
|                     
|                     
|                      | 2002 |  |                | 232,079 | 
|                     
|                     
|                     
|                     
|                      | 2003 |  |                | 217,093 | 
|                     
|                     
|                     
|                     
|                      | 2004 |  |                | 143,727 | 
|                     
|                     
|                     
|                     
|                      | 2005 |  |                | 23,242  | 



---



- 70 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                         
|
| | Each of the loan agreements grants the lender the right to request
additional security or mortgages on property, plant and equipment. At
March 31, 2000 and 1999, short-term loans subject to such general
agreements amounted to 151,970 million yen and 298,942 million yen,
respectively. The balance of short-term loans represents borrowings under
commercial paper, acceptances and short-term loans of foreign
subsidiaries. The weighted average interest rates on short-term
borrowings outstanding at March 31, 2000 and 1999 were 3.1% and 4.3%,
respectively.
|
| | Acceptances payable by foreign subsidiaries, in the amount of 242 million
yen and 794 million yen at March 31, 2000 and 1999, respectively, are
secured by a portion of the cash, accounts receivable and inventories of
such subsidiaries. The amount of assets pledged is not calculable.                                                                                                                                                                                                                                                                               
|
| | The 1.3% convertible bonds maturing in 2002 are currently redeemable at
the option of the Company at prices ranging from 102% of principal to 100%
of principal, and are currently convertible into approximately 61,045,000
shares of common stock at 1,620 yen per share.                                                                                                                                                                                                                                                                                               
|
| | The 1.4% convertible bonds maturing in 2004 are redeemable from 2000 at
the option of the Company at prices ranging from 103% of principal to 100%
of principal, and are currently convertible into approximately 60,802,000
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 105%
of principal to 100% of principal near maturity.                                                                                                                                                                                                                                                                                                                                                                          

|    |  |                                  
|--- |  | ---------------------------------
|(8) |  | Retirement and Severance Benefits



| |                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company and certain subsidiaries have contributory, funded benefit
pension plans covering substantially all employees who meet
eligibility requirements. Benefits under the plans are primarily
based on the combination of years of service and compensation.                                                                            
|
| | The contributory, funded benefit pension plans include a portion of
social security tax calculated in accordance with the Welfare Pension
Insurance Law. The Company and certain subsidiaries contribute to the
pension funds as well as to the social security tax portion. The
employees contribute only to the social security tax portion.



---



- 71 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



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

|                                               |  |                |         |  
|---------------------------------------------- |  | -------------- | ------- | -
|                                               |  | Yen (millions)
|                                               |  |               
|                                               |  | 2000          
|                                               |  |               
|Service cost  benefits earned during the year |  |                | 86,391  |  
|                                              
|                                              
|                                              
|                                              
|Interest cost on projected benefit obligation  |  |                | 84,619  |  
|                                              
|                                              
|                                              
|                                              
|Expected return on plan assets                 |  |                | (49,389 | )
|                                              
|                                              
|                                              
|                                              
|Amortization of net transition obligation      |  |                | 9,972   |  
|Recognized actuarial loss                      |  |                | 15,561  |  
|                                               |  |                |         |  
|Net periodic benefit cost                      |  |                | 147,154 |  
|                                               |  |                |         |  



---



- 72 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



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

|                                                                                         |                                                |  |                |           |  
|---------------------------------------------------------------------------------------- | ---------------------------------------------- |  | -------------- | --------- | -
|                                                                                         |                                                |  | Yen (millions)
|                                                                                         |                                                |  |               
|                                                                                         |                                                |  | 2000          
|                                                                                         |                                                |  |               
|Change in benefit obligations:                                                          
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Benefit obligations at beginning of year       |  |                | 1,951,275 |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Service cost                                   |  |                | 86,391    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Interest cost                                  |  |                | 84,619    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Plan participants contributions               |  |                | 13,714    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Actuarial loss                                 |  |                | 64,649    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Benefits paid                                  |  |                | (60,399   | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Foreign currency exchange impact               |  |                | (4,026    | )
|                                                                                         |                                                |  |                |          
|                                                                                         | Benefit obligations at end of year             |  |                | 2,136,223 |  
|                                                                                         |                                                |  |                |          
|Change in plan assets:                                                                  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Fair value of plan assets at beginning of year |  |                | 1,191,545 |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Actual return on plan assets                   |  |                | 164,084   |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Employer contributions                         |  |                | 67,797    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Plan participants contributions               |  |                | 13,714    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Benefits paid                                  |  |                | (23,652   | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Foreign currency exchange impact               |  |                | (2,616    | )
|                                                                                         |                                                |  |                |          
|                                                                                         | Fair value of plan assets at end of year       |  |                | 1,410,872 |  
|                                                                                         |                                                |  |                |          
|Funded status                                                                            |                                                |  | (725,351       | )        
|                                                                                         |                                                |  |                |          
|Unrecognized net transition obligation                                                   |                                                |  | 23,242         |          
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Unrecognized actuarial loss                                                              |                                                |  | 173,231        |          
|                                                                                         |                                                |  |                |          
|Accrued retirement and severance benefits
recognized in the   consolidated balance sheet |                                                |  | (528,878       | )        
|                                                                                         |                                                |  |                |          
|Actuarial assumptions:                                                                  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Discount rate                                  |  |                | 4.0%      |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Expected return on plan assets                 |  |                | 4.0%      |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Rate of compensation increase                  |  |                | 2.6%      |  



---



- 73 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Prior to April 1, 1999, the Company did not adopt SFAS No. 87 for the
contributory, funded benefit pension plans of the Company as the effects
on the consolidated financial statements of the implementation of SFAS No.
87 were immaterial. However, the following table summarizes the available
information related to the funded status based on the actuarial funding
method for the contributory, funded benefit pension plans of the Company
at March 31, 1998:

|                                                                     |  |                |           | 
|-------------------------------------------------------------------- |  | -------------- | --------- | 
|                                                                     |  | Yen (millions)
|                                                                     |  |               
|                                                                     |  | 1998          
|                                                                     |  |               
|Liability reserve                                                    |  |                | 1,051,132 | 
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Fair value of plan assets, primarily marketable securities and loans |  |                | 1,058,554 | 
|                                                                     |  |                |           | 
|Fair value of plan assets greater than the liability reserve         |  |                | 7,422     | 
|                                                                     |  |                |           | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The assumed rates of salary increase, expected long-term rate of return
and discount rate for the above pension plans were 2.7% ~ 3.9%, 5.5% and
5.5%, respectively. Pension costs, excluding the social security tax
portion, for the years ended March 31, 1999 and 1998 amounted to 79,570
million yen and 60,071 million yen, respectively. The contributions to
the plans for the years ended March 31, 1999 and 1998 for the portion of
social security tax were 28,197 million yen and 26,623 million yen,
respectively. Approximately half of the portion of social security tax
was contributed by the employees and half was contributed by the
companies. 
|
| | In addition, prior to April 1, 1999, retirement and severance benefit
liabilities in the consolidated balance sheet were stated at the amount of
the vested benefit obligation under the unfunded lump-sum payment plans,
which would exist if all employees voluntarily terminated their employment
at that date. Such liability exceeded the projected benefit obligation
under the lump-sum payment plans. Benefit costs of the lump-sum payment
plans represented benefit payments plus or minus the change in the vested
benefit obligation and amounted to 49,306 million yen and 50,522 million
yen for the years ended March 31, 1999 and 1998, respectively.
|
| | At March 31, 2000, the benefit obligation under the lump-sum payment plans
is stated at the amount of the projected benefit obligation since the
projected benefit obligation exceeded the vested benefit obligation.                                                                                                                                                                                                                                                                                                                                                                                                                                                



---



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

|    |  |             
|--- |  | ------------
|(9) |  | Income Taxes



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | Income before income taxes and income taxes for the three years ended
March 31, 2000 are summarized as follows:

|      |                            |          |                    |         |                |         |         |         |        |        |  |         |         |         | 
|----- | -------------------------- | -------- | ------------------ | ------- | -------------- | ------- | ------- | ------- | ------ | ------ |  | ------- | ------- | ------- | 
|      |                            |          |                    |         | Yen (millions)
|      |                            |          |                    |         |               
|      |                            |          |                    |         | Domestic       |         | Foreign |         | Total 
|      |                            |          |                    |         |                |         |         |         |       
|2000:
|     
|     
|     
|     
|      | Income before income taxes |          |                    | 99,538  |                |         |         | 119,067 |        |        |  | 218,605 |        
|     
|     
|     
|     
|      | Income taxes:             
|     
|     
|     
|     
|      |                            | Current  |                    |         | 125,155        |         |         |         | 53,290 |        |  |         | 178,445 |        
|     
|     
|     
|     
|      |                            | Deferred |                    |         | (33,251        | )       |         |         | (8,179 | )      |  |         | (41,430 | )      
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|      |                            |          | Total income taxes |         |                | 91,904  |         |         |        | 45,111 |  |         |         | 137,015 | 
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|1999:
|     
|     
|     
|     
|      | Income before income taxes |          |                    | 153,047 |                |         |         | 49,246  |        |        |  | 202,293 |        
|     
|     
|     
|     
|      | Income taxes:             
|     
|     
|     
|     
|      |                            | Current  |                    |         | 117,925        |         |         |         | 34,378 |        |  |         | 152,303 |        
|     
|     
|     
|     
|      |                            | Deferred |                    |         | 26,881         |         |         |         | (3,734 | )      |  |         | 23,147  |        
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|      |                            |          | Total income taxes |         |                | 144,806 |         |         |        | 30,644 |  |         |         | 175,450 | 
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|1998:
|     
|     
|     
|     
|      | Income before income taxes |          |                    | 258,582 |                |         |         | 97,042  |        |        |  | 355,624 |        
|     
|     
|     
|     
|      | Income taxes:             
|     
|     
|     
|     
|      |                            | Current  |                    |         | 160,275        |         |         |         | 35,673 |        |  |         | 195,948 |        
|     
|     
|     
|     
|      |                            | Deferred |                    |         | 43,252         |         |         |         | (4,351 | )      |  |         | 38,901  |        
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|      |                            |          | Total income taxes |         |                | 203,527 |         |         |        | 31,322 |  |         |         | 234,849 | 
|      |                            |          |                    |         |                |         |         |         |        |        |  |        



| |                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the years ended March 31, 1999 and 1998, domestic income taxes,
deferred include the impact of 61,123 million yen and 37,423 million
yen, respectively, attributable to adjustments of net deferred tax
assets to reflect reductions in Japans corporate income tax rate.



---



- 75 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company and its subsidiaries are subject to a number of taxes based on
earnings which, in aggregate, resulted in an average normal tax rate of
approximately 41.9% for the year ended March 31, 2000, 47.6% for the year
ended March 31, 1999 and 51.2% for the year ended March 31, 1998.
|
| | The effective rates for the years differ from the normal tax rates for the
following reasons:                                                                                                                                                                                                 

|                   |                                                                                                |  |      |      |      |  |      |      |   |  |      |      |  
|------------------ | ---------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                   |                                                                                                |  | 2000 |      | 1999 |  | 1998
|                   |                                                                                                |  |      |      |      |  |     
|Normal tax rate    |                                                                                                |  | 41.9 | %    |      |  | 47.6 | %    |   |  | 51.2 | %   
|                  
|                  
|                  
|                  
|                   | Tax credit for increased research expenses                                                     |  |      | (1.3 | )    |  |      | (0.9 | ) |  |      | (1.0 | )
|                  
|                  
|                  
|                  
|                   | Lower tax rates of overseas subsidiaries                                                       |  |      | (3.2 | )    |  |      | (9.6 | ) |  |      | (1.3 | )
|                  
|                  
|                  
|                  
|                   | Expenses not deductible for tax purposes                                                       |  |      | 6.6  |      |  |      | 7.6  |   |  |      | 4.3  |  
|                  
|                  
|                  
|                  
|                   | Change in valuation allowance allocated
to   income tax expenses                               |  |      | 18.7 |      |  |      | 6.8  |   |  |      | (1.7 | )
|                  
|                  
|                  
|                  
|                   | Adjustments of deferred tax assets and
liabilities   for enacted changes in tax
laws and rates |  |      |     |      |  |      | 30.2 |   |  |      | 10.5 |  
|                  
|                  
|                  
|                  
|                   | Other                                                                                          |  |      |     |      |  |      | 5.0  |   |  |      | 4.0  |  
|                   |                                                                                                |  |      |      |      |  |      |      |   |  |      |     
|Effective tax rate |                                                                                                |  | 62.7 | %    |      |  | 86.7 | %    |   |  | 66.0 | %   
|                   |                                                                                                |  |      |      |      |  |      |      |   |  |      |     



| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | The significant components of deferred income tax expenses for the three
years ended March 31, 2000 are as follows:

|                                                                                                   |  |                |         |      |  |      |         |   |  |  |        |  
|-------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------ | -
|                                                                                                   |  | Yen (millions)
|                                                                                                   |  |               
|                                                                                                   |  | 2000           |         | 1999 |  | 1998
|                                                                                                   |  |                |         |      |  |     
|Deferred tax
expense (exclusive of the
   effects of
other components
   listed below)             |  |                | (82,267 | )    |  |      | (51,821 | ) |  |  | 7,342  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Adjustments of
deferred tax assets and
   liabilities for
enacted changes in tax
   laws and rates |  |                |        |      |  |      | 61,123  |   |  |  | 37,423 |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Increase (decrease)
in the balance of 
   valuation allowance
for deferred
   tax assets           |  |                | 40,837  |      |  |      | 13,845  |   |  |  | (5,864 | )
|                                                                                                   |  |                |         |      |  |      |         |   |  |  |        |  
|                                                                                                   |  |                | (41,430 | )    |  |      | 23,147  |   |  |  | 38,901 |  
|                                                                                                   |  |                |         |      |  |      |         |   |  |  |        |  



---



- 76 -

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, 2000 and 1999 are presented below:

|                          |                                                                                                   |                                      |  |                |         |      |  |         |         |  
|------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------ |  | -------------- | ------- | ---- |  | ------- | ------- | -
|                          |                                                                                                   |                                      |  | Yen (millions)
|                          |                                                                                                   |                                      |  |               
|                          |                                                                                                   |                                      |  | 2000           |         | 1999
|                          |                                                                                                   |                                      |  |                |         |     
|Deferred tax assets:     
|                         
|                         
|                         
|                         
|                          | Inventory valuation                                                                               |                                      |  | 87,229         |         |      |  | 83,516  |        
|                         
|                         
|                         
|                         
|                          | Expenses accrued for financial statement purposes
   but not currently included in taxable income |                                      |  | 145,235        |         |      |  | 132,477 |        
|                         
|                         
|                         
|                         
|                          | Depreciation                                                                                      |                                      |  | 130,556        |         |      |  | 121,689 |        
|                         
|                         
|                         
|                         
|                          | Retirement and severance benefits                                                                 |                                      |  | 124,979        |         |      |  | 108,194 |        
|                         
|                         
|                         
|                         
|                          | Tax loss carryforwards                                                                            |                                      |  | 73,709         |         |      |  | 62,864  |        
|                         
|                         
|                         
|                         
|                          | Other                                                                                             |                                      |  | 99,644         |         |      |  | 85,502  |        
|                          |                                                                                                   |                                      |  |                |         |      |  |        
|                          |                                                                                                   | Total gross deferred tax assets      |  |                | 661,352 |      |  |         | 594,242 |  
|                         
|                         
|                         
|                         
|                          |                                                                                                   | Less valuation allowance             |  |                | 75,720  |      |  |         | 38,275  |  
|                          |                                                                                                   |                                      |  |                |         |      |  |        
|                          |                                                                                                   | Net deferred tax assets              |  |                | 585,632 |      |  |         | 555,967 |  
|                         
|                         
|                         
|                         
|Deferred tax liabilities:
|                         
|                         
|                         
|                         
|                          | Purchase accounting step-up of identifiable assets                                                |                                      |  | (2,723         | )       |      |  | (2,761  | )      
|                         
|                         
|                         
|                         
|                          | Other                                                                                             |                                      |  | (25,809        | )       |      |  | (29,316 | )      
|                          |                                                                                                   |                                      |  |                |         |      |  |        
|                          |                                                                                                   | Total gross deferred tax liabilities |  |                | (28,532 | )    |  |         | (32,077 | )
|                          |                                                                                                   |                                      |  |                |         |      |  |        
|                          |                                                                                                   | Net deferred tax assets              |  |                | 557,100 |      |  |         | 523,890 |  
|                          |                                                                                                   |                                      |  |                |         |      |  |        



| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The net change in total valuation allowance for the years ended March 31,
2000 and 1999 were an increase of 37,445 million yen and a decrease of
1,337 million yen, respectively.                 
|
| | At March 31, 2000, certain subsidiaries had, for tax reporting purposes,
net operating loss carryforwards of approximately 188,334 million yen,
which will generally expire between 2001 and 2020.



---



- 77 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net deferred tax assets and liabilities at March 31, 2000 and 1999 are
reflected in the accompanying consolidated balance sheets under the
following captions:

|                        |  |                |         |      |  |  |         |  
|----------------------- |  | -------------- | ------- | ---- |  |  | ------- | -
|                        |  | Yen (millions)
|                        |  |               
|                        |  | 2000           |         | 1999
|                        |  |                |         |     
|Other current assets    |  |                | 253,080 |      |  |  | 251,189 |  
|                       
|                       
|                       
|                       
|Other assets            |  |                | 304,872 |      |  |  | 273,616 |  
|                       
|                       
|                       
|                       
|Other liabilities       |  |                | (852    | )    |  |  | (915    | )
|                        |  |                |         |      |  |  |         |  
|Net deferred tax assets |  |                | 557,100 |      |  |  | 523,890 |  
|                        |  |                |         |      |  |  |         |  



|(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 326,535 shares, 26,464 shares and 1,161,459 shares in
connection with the conversion of bonds for the years ended March 31,
2000, 1999 and 1998, respectively.                                                                                                                                                                  
|
| | For the year ended March 31, 1999, 50,000,000 shares of the Companys
common stock were repurchased from the market and retired for an aggregate
cost of 98,883 million yen. The entire repurchase cost of retired shares
was charged to retained earnings in accordance with the Japanese
Commercial Code.                                                                                                                                                                                    
|
| | The Japanese Commercial Code provides that an amount equal to at least 10%
of appropriations paid in cash be appropriated as a legal reserve until
such reserve equals 25% of stated capital. This reserve is not available
for dividends but may be used to reduce a deficit or may be transferred to
stated capital.                                                                                                                                                                         
|
| | Cash dividends and transfers to the legal reserve charged to retained
earnings during the three years ended March 31, 2000 represent dividends
paid out during the periods and related appropriation to the legal
reserve. The accompanying consolidated financial statements do not
include any provision for the semi-annual dividend of 6.25 yen per share,
totaling 12,890 million yen, proposed in June 2000 in respect of the year
ended March 31, 2000 or for the related appropriation.



---



- 78 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



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

|                                                                           |         |  |           |         |                  |  |       |       | 
|-------------------------------------------------------------------------- | ------- |  | --------- | ------- | ---------------- |  | ----- | ----- | 
|                                                                           |         |  |           |         | Weighted
average
|                                                                           |         |  | Number    |         | exercise price  
|                                                                           |         |  | of
shares |         | Yen             
|                                                                           |         |  |           |         |                  |  |       |      
|Balance at March 31, 1998                                                  |         |  |          |         |                  |  |      |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Granted |  |           | 113,000 |                  |  |       | 2,291 | 
|                                                                           |         |  |           |         |                  |  |       |      
|Balance at March 31, 1999                                                  |         |  | 113,000   |         |                  |  | 2,291 |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Granted |  |           | 116,000 |                  |  |       | 2,476 | 
|                                                                           |         |  |           |         |                  |  |       |      
|Balance at March 31, 2000,
   weighted average remaining life  4.76 years |         |  | 229,000   |         |                  |  | 2,385 |      
|                                                                           |         |  |           |         |                  |  |       |      



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company applies Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for its stock option plans described above. Accordingly, as
the option price at the date of grant exceeded the fair market value of
common shares, no compensation costs have been recognized in connection
with the plans. If the accounting provision of SFAS No. 123, Accounting
for Stock Based Compensation had been adopted, the impact on the
Companys net income for the year ended March 31, 2000 would not be
material.
|
| | Treasury stock reserved for options at March 31, 2000 and 1999 was 229,000
shares and 113,000 shares, respectively. In accordance with the Japanese
Commercial Code, there are certain restrictions on payment of dividends in
connection with the treasury stock repurchased for stock options. As a
result of restrictions on the treasury stock repurchased for stock
options, retained earnings of approximately 540 million yen at March 31,
2000 are restricted as to the payment of cash dividends.                                                                                      
|
| | On June 29, 2000, the annual shareholders meeting approved that the
Companys stock option rights would be allotted to 28 directors and 5
senior executives at amounts ranging from 2,000 to 10,000 common shares
each. These stock option rights are exercisable from July 1, 2002 to June
30, 2006. Pursuant to such authorization in June 2000, 109,000 common
shares were repurchased on July 3, 2000.                                                                                                                                                                                     



---



- 79 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(11) |  | Net Income per Depositary Share
|---- |  | -------------------------------



| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A reconciliation of the numerators and denominators of the basic and
diluted net income per depositary share computation for the three years
ended March 31, 2000 is as follows:

|                                            |                                            |  |                |     |      |  |        |   |  |  |        |       | 
|------------------------------------------- | ------------------------------------------ |  | -------------- | --- | ---- |  | ------ | - |  |  | ------ | ----- | 
|                                            |                                            |  | Yen (millions)
|                                            |                                            |  |               
|                                            |                                            |  | 2000           |     | 1999 |  | 1998  
|                                            |                                            |  |                |     |      |  |       
|Net income available to common stockholders |                                            |  | 99,709         |     |      |  | 13,541 |   |  |  | 93,604 |      
|                                           
|                                           
|                                           
|                                           
|Effect of assumed conversions:             
|                                           
|                                           
|                                           
|                                           
|                                            | Convertible bonds, due 1999, interest 1.3% |  |                |    |      |  |        |  |  |  |        | 1,259 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Convertible bonds, due 2002, interest 1.3% |  |                | 747 |      |  |        |  |  |  |        | 629   | 
|                                           
|                                           
|                                           
|                                           
|                                            | Convertible bonds, due 2004, interest 1.4% |  |                | 802 |      |  |        |  |  |  |        | 676   | 
|                                            |                                            |  |                |     |      |  |        |   |  |  |        |      
|Diluted net income                          |                                            |  | 101,258        |     |      |  | 13,541 |   |  |  | 96,168 |      
|                                            |                                            |  |                |     |      |  |        |   |  |  |        |      

|                                        |                                                   |  |                  |            |      |  |               |   |  |  |               |            | 
|--------------------------------------- | ------------------------------------------------- |  | ---------------- | ---------- | ---- |  | ------------- | - |  |  | ------------- | ---------- | 
|                                        |                                                   |  | Number of shares
|                                        |                                                   |  |                 
|                                        |                                                   |  | 2000             |            | 1999 |  | 1998         
|                                        |                                                   |  |                  |            |      |  |              
|Average common shares outstanding       |                                                   |  | 2,062,295,743    |            |      |  | 2,089,988,449 |   |  |  | 2,112,052,091 |           
|                                       
|                                       
|                                       
|                                       
|Dilutive effect of assumed conversions:
|                                       
|                                       
|                                       
|                                       
|                                        | Convertible bonds,        due 1999, interest 1.3% |  |                  |           |      |  |               |  |  |  |               | 81,285,840 | 
|                                       
|                                       
|                                       
|                                       
|                                        | Convertible bonds,        due 2002, interest 1.3% |  |                  | 61,090,690 |      |  |               |  |  |  |               | 61,267,028 | 
|                                       
|                                       
|                                       
|                                       
|                                        | Convertible bonds,        due 2004, interest 1.4% |  |                  | 60,941,462 |      |  |               |  |  |  |               | 61,181,174 | 
|                                       
|                                       
|                                       
|                                       
|                                        | Stock options                                     |  |                  | 15,403     |      |  |               |  |  |  |               |           | 
|                                        |                                                   |  |                  |            |      |  |               |   |  |  |               |           
|Diluted common shares outstanding       |                                                   |  | 2,184,343,298    |            |      |  | 2,089,988,449 |   |  |  | 2,315,786,133 |           
|                                        |                                                   |  |                  |            |      |  |               |   |  |  |               |           

|                                 |         |  |      |     |      |  |      |    |  |  |  |     | 
|-------------------------------- | ------- |  | ---- | --- | ---- |  | ---- | -- |  |  |  | --- | 
|                                 |         |  | Yen 
|                                 |         |  |     
|                                 |         |  | 2000 |     | 1999 |  | 1998
|                                 |         |  |      |     |      |  |     
|Net income per depositary share:
|                                
|                                
|                                
|                                
|                                 | Basic   |  |      | 484 |      |  |      | 65 |  |  |  | 443 | 
|                                
|                                
|                                
|                                
|                                 | Diluted |  |      | 464 |      |  |      | 65 |  |  |  | 415 | 



| |                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Approximately 197 million of the potential common shares were excluded
from the computation of diluted net income per share for the year ended
March 31, 1999, because their inclusion would have had an antidilutive
effect on net income per share.



---



- 80 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

|     |  |                                                                     
|---- |  | --------------------------------------------------------------------
|(12) |  | Supplementary Information to the Statements of Income and Cash Flows



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | Research and development costs and advertising costs charged to income for
the three years ended March 31, 2000 are as follows:

|                               |  |                |         |      |  |      |         |  |  |  |         | 
|------------------------------ |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                               |  | Yen (millions)
|                               |  |               
|                               |  | 2000           |         | 1999 |  | 1998
|                               |  |                |         |      |  |     
|Research and development costs |  |                | 525,557 |      |  |      | 499,986 |  |  |  | 480,539 | 
|                              
|                              
|                              
|                              
|Advertising costs              |  |                | 114,587 |      |  |      | 128,285 |  |  |  | 125,774 | 



| |                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Included in other income of revenues for the year ended March 31, 2000 is
a gain of 58,566 million yen from the sale of EPCOS AG shares, a German
electronic components manufacturing joint venture, held by a subsidiary,
upon its initial public offering.                                 
|
| | Included in other deductions of costs and expenses for the year ended
March 31, 1999 is a loss of 11,277 million yen related to liquidation of a
U.S. joint venture for production of computer peripherals components.                                                                       
|
| | Included in other deductions of costs and expenses for the year ended
March 31, 1998 are foreign exchange losses of 25,086 million yen. Foreign
exchange gains and losses included in the consolidated statements of
income for the years ended March 31, 2000 and 1999 were not significant.
|
| | Income taxes and interest expenses paid and noncash investing and
financing activities for the three years ended March 31, 2000 are as
follows:                                                                                                                                              

|   |  |                                             |                                                                                                      |  |                |         |      |  |      |         |  |  |  |         | 
|-- |  | ------------------------------------------- | ---------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|   |  |                                             |                                                                                                      |  | Yen (millions)
|   |  |                                             |                                                                                                      |  |               
|   |  |                                             |                                                                                                      |  | 2000           |         | 1999 |  | 1998
|   |  |                                             |                                                                                                      |  |                |         |      |  |     
|a) |  | Cash paid:                                 
|  
|  
|  
|  
|   |  |                                             | Interest                                                                                             |  |                | 47,729  |      |  |      | 70,672  |  |  |  | 77,254  | 
|  
|  
|  
|  
|   |  |                                             | Income taxes                                                                                         |  |                | 178,184 |      |  |      | 160,046 |  |  |  | 272,951 | 
|  
|  
|  
|  
|b) |  | Noncash investing and financing
activities:
|  
|  
|  
|  
|   |  |                                             | Conversion of bonds                                                                                  |  |                | 528     |      |  |      | 56      |  |  |  | 1,887   | 
|  
|  
|  
|  
|   |  |                                             | Transfer of ownership arising on capital
   transactions by consolidated and
   associated companies |  |                | 3,004   |      |  |      | 2,960   |  |  |  | 4,096   | 



---



- 81 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(13) |  | Foreign Exchange Contracts
|---- |  | --------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company and its subsidiaries operate internationally, giving rise to
significant exposure to market risks arising from changes in foreign
exchange rates. Derivative financial instruments are comprised
principally of foreign exchange contracts utilized by the Company and some
of its subsidiaries to hedge these risks. The Company and its
subsidiaries do not hold or issue financial instruments for trading
purposes.
|
| | The Company and its subsidiaries are exposed to credit risk in the event
of nonperformance by counterparties to foreign exchange contracts, but
such risk is considered minor because of the high credit rating of the
counterparties.                                                                                                                                                                                             



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | The contract amounts of foreign exchange contracts at March 31, 2000 and
1999 are as follows:

|                                             |                            |  |                |         |      |  |       |         | 
|-------------------------------------------- | -------------------------- |  | -------------- | ------- | ---- |  | ----- | ------- | 
|                                             |                            |  | Yen (millions)
|                                             |                            |  |               
|                                             |                            |  | 2000           |         | 1999
|                                             |                            |  |                |         |     
|Forward:                                    
|                                            
|                                            
|                                            
|                                            
|                                             | To sell foreign currencies |  |                | 373,417 |      |  |       | 312,453 | 
|                                            
|                                            
|                                            
|                                            
|                                             | To buy foreign currencies  |  |                | 82,444  |      |  |       | 62,371  | 
|                                            
|                                            
|                                            
|                                            
|Options purchased to sell foreign currencies |                            |  | 26,711         |         |      |  | 3,670 |        
|                                            
|                                            
|                                            
|                                            
|Options purchased to buy foreign currencies  |                            |  | 1,260          |         |      |  |      |        
|                                            
|                                            
|                                            
|                                            
|Options written to buy foreign currencies    |                            |  | 24,820         |         |      |  | 3,873 |        
|                                            
|                                            
|                                            
|                                            
|Options written to sell foreign currencies   |                            |  | 4,734          |         |      |  |      |        



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



|(14) |  | Fair Value of Financial Instruments
|---- |  | -----------------------------------



| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value:
|
| | Cash and cash equivalents, Time deposits, Trade receivables, Short-term
borrowings, Trade payables and Accrued expenses                                              
|
| | The carrying amount approximates fair value because of the short maturity
of these instruments.                                                                      
|
| | Short-term investments                                                                                                                                               
|
| | The fair value of short-term investments is estimated based on quoted
market prices.                                                                                 



---



- 82 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |                       
| | ----------------------
| | Noncurrent receivables



| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | The carrying amount which is generally stated at the net realizable value
approximates fair value.



| |                         
| | ------------------------
| | Investments and advances



| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of investments and advances is estimated based on the
quoted market prices or the present value of future cash flows using
appropriate current discount rates.



| |               
| | --------------
| | Long-term debt



| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of long-term debt is estimated based on the quoted market
prices or the present value of future cash flows using appropriate current
discount rates.



| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Derivative financial instruments                                                                                                                                                                     
|
| | The fair value of derivative financial instruments, consisting principally
of foreign exchange contracts, all of which are used for hedging purposes,
are estimated by obtaining quotes from brokers.
|
| | The estimated fair values of financial instruments, all of which are held
or issued for purposes other than trading, at March 31, 2000 and 1999 are
as follows:                                      

|                                                                     |              |                                               |         |                |          |       |         |          |           |       |        |   |          |   |        |   |          |  
|-------------------------------------------------------------------- | ------------ | --------------------------------------------- | ------- | -------------- | -------- | ----- | ------- | -------- | --------- | ----- | ------ | - | -------- | - | ------ | - | -------- | -
|                                                                     |              |                                               |         | Yen (millions)
|                                                                     |              |                                               |         |               
|                                                                     |              |                                               |         | 2000           |          | 1999 
|                                                                     |              |                                               |         |                |          |      
|                                                                     |              |                                               |         | Carrying       |          | Fair  |         | Carrying |           | Fair 
|                                                                     |              |                                               |         | amount         |          | value |         | amount   |           | value
|                                                                     |              |                                               |         |                |          |       |         |          |           |      
|Non-derivatives:                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Assets:     
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |              | Short-term investments                        |         |                | 134,716  |       |         |          | 136,883   |       |        |   | 124,327  |   |        |   | 130,923  |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |              | Investments and advances                      |         |                | 785,006  |       |         |          | 1,164,740 |       |        |   | 799,937  |   |        |   | 988,304  |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Liabilities:
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |              | Long-term debt, including 
   current portion |         |                | (792,802 | )     |         |          | (975,617  | )     |        |   | (838,879 | ) |        |   | (937,636 | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Derivatives relating to long-term
   debt, including current portion |              |                                               | (19,117 | )              |          |       | (19,106 | )        |           |       | (4,717 | ) |          |   | (4,888 | )



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



---



- 83 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(15) |  | Commitments and Contingent Liabilities
|---- |  | --------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At March 31, 2000, commitments outstanding for the purchase of property,
plant and equipment approximated 76,608 million yen. Contingent
liabilities at March 31, 2000 for discounted export bills of exchange and
guarantees of loans amounted to approximately 88,094 million yen,
including 72,659 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.                                                                                                                                              



|(16) |  | Subsequent Events
|---- |  | -----------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On April 1, 2000, the Company acquired approximately 48% of the
outstanding shares of Matsushita Refrigeration Company (MRC) and
approximately 53% of the outstanding shares of Wakayama Precision Co.,
Ltd. (WPC) pursuant to the Share Exchange Agreements dated November 22,
1999. As a result of such share acquisitions, MRC and WPC became
wholly-owned subsidiaries of the Company.                                                                                                                                            
|
| | The shareholders of MRC were allotted new shares of the Companys common
stock at the ratio of 0.186 shares for each share of MRC held, while the
shareholders of WPC were allotted new shares of the Companys common stock
at the ratio of 0.093 shares for each share of WPC held. As a result of
the share exchanges, the Company newly issued 16,321,187 shares of common
stock at a market price of 3,070 yen per share as of March 31, 2000. The
share exchanges will be accounted for using the purchase method of
accounting.



---



- 84 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(17) |  | Quarterly Financial Data (Unaudited)
|---- |  | ------------------------------------



| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Quarterly net sales, net income (loss) and net income (loss) per
depositary share for the two years ended March 31, 2000 are set forth
in the following table:

|                                  |  |                                                      |           |        |  |                   |        |                   |  |                |     |                |  |  |     | 
|--------------------------------- |  | ---------------------------------------------------- | --------- | ------ |  | ----------------- | ------ | ----------------- |  | -------------- | --- | -------------- |  |  | --- | 
|                                  |  | Yen (millions), except
        per share information
|                                  |  |                                                     
|                                  |  | 2000                                                
|                                  |  |                                                     
|                                  |  |                                                      |           |        |  |                   |        |                   |  | Net income per |     | Net income per
|                                  |  | Net                                                  |           | Net    |  | depositary share: |        | depositary share:
|                                  |  | sales                                                |           | income |  | basic (yen)       |        | diluted (yen)    
|                                  |  |                                                      |           |        |  |                   |        |                  
|Quarter ended
            June 30 |  |                                                      | 1,755,406 |        |  |                   | 9,552  |                   |  |                | 46  |                |  |  | 46  | 
|                                 
|                                 
|                                 
|                                 
|September 30                      |  |                                                      | 1,837,286 |        |  |                   | 24,514 |                   |  |                | 119 |                |  |  | 114 | 
|                                 
|                                 
|                                 
|                                 
|December 31                       |  |                                                      | 1,866,736 |        |  |                   | 60,656 |                   |  |                | 294 |                |  |  | 280 | 
|                                 
|                                 
|                                 
|                                 
|March 31                          |  |                                                      | 1,839,959 |        |  |                   | 4,987  |                   |  |                | 24  |                |  |  | 24  | 

|                                  |  |                                                      |           |        |  |                   |         |                   |  |            |     |            |  |  |     |  
|--------------------------------- |  | ---------------------------------------------------- | --------- | ------ |  | ----------------- | ------- | ----------------- |  | ---------- | --- | ---------- |  |  | --- | -
|                                  |  | Yen (millions), except
        per share information
|                                  |  |                                                     
|                                  |  | 1999                                                
|                                  |  |                                                     
|                                  |  |                                                      |           |        |  |                   |         |                   |  | Net income |     | Net income
|                                  |  |                                                      |           |        |  | Net               |         | (loss) per        |  | (loss) per
|                                  |  | Net                                                  |           | income |  | depositary share: |         | depositary share:
|                                  |  | sales                                                |           | (loss) |  | basic (yen)       |         | diluted (yen)    
|                                  |  |                                                      |           |        |  |                   |         |                  
|Quarter ended
            June 30 |  |                                                      | 1,875,846 |        |  |                   | 11,116  |                   |  |            | 53  |            |  |  | 51  |  
|                                 
|                                 
|                                 
|                                 
|September 30                      |  |                                                      | 2,015,996 |        |  |                   | (1,608  | )                 |  |            | (8  | )          |  |  | (8  | )
|                                 
|                                 
|                                 
|                                 
|December 31                       |  |                                                      | 1,938,354 |        |  |                   | 20,295  |                   |  |            | 98  |            |  |  | 92  |  
|                                 
|                                 
|                                 
|                                 
|March 31                          |  |                                                      | 1,809,923 |        |  |                   | (16,262 | )                 |  |            | (79 | )          |  |  | (79 | )



| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the quarter ended March 31, 1999, net loss includes the impact of
approximately 52,768 million yen, attributable to adjustments of net
deferred tax assets to reflect reductions in Japans corporate income tax
rate.



---



- 85 -

Schedule VIII

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Valuation and Qualifying Accounts and Reserves

(In millions of yen)

Years ended March 31, 2000, 1999 and 1998

|                                                  |  |      |  |           |        |         |  |         |        |          |  |             |        |             |  |         |       |  |  |  |        |   |  |  |        | 
|------------------------------------------------- |  | ---- |  | --------- | ------ | ------- |  | ------- | ------ | -------- |  | ----------- | ------ | ----------- |  | ------- | ----- |  |  |  | ------ | - |  |  | ------ | 
|                                                  |  |      |  |           |        |         |  |         |        |          |  | Deduct     
|                                                  |  |      |  | Balance   |        |         |  |         |        |          |  | Add        
|                                                  |  |      |  | at        |        | Add-    |  | Bad     |        |          |  |             |        | (deduct)-   |  | Balance
|                                                  |  |      |  | beginning |        | charged |  | debts   |        |          |  |             |        | cumulative  |  | at end 
|                                                  |  |      |  | of        |        | to      |  | written |        |          |  |             |        | translation |  | of     
|                                                  |  |      |  | period    |        | income  |  | off     |        | Reversal |  | adjustments |        | period     
|                                                  |  |      |  |           |        |         |  |         |        |          |  |             |        |            
|Allowance for doubtful
   trade receivables:     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |  | 2000 |  |           | 63,649 |         |  |         | 10,252 |          |  |             | 28,670 |             |  |         | 1,473 |  |  |  | (1,660 | ) |  |  | 42,098 | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |  | 1999 |  |           | 62,742 |         |  |         | 13,505 |          |  |             | 8,781  |             |  |         | 2,454 |  |  |  | (1,363 | ) |  |  | 63,649 | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |  | 1998 |  |           | 60,810 |         |  |         | 8,316  |          |  |             | 4,824  |             |  |         | 1,240 |  |  |  | (320   | ) |  |  | 62,742 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Allowance for doubtful
   noncurrent receivables:
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |  | 2000 |  |           | 304    |         |  |         | 1,728  |          |  |             | 1,888  |             |  |         |      |  |  |  |       |   |  |  | 144    | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |  | 1999 |  |           | 523    |         |  |         |       |          |  |             | 219    |             |  |         |      |  |  |  |       |   |  |  | 304    | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |  | 1998 |  |           | 63,171 |         |  |         | 12,249 |          |  |             | 74,897 |             |  |         |      |  |  |  |       |   |  |  | 523    | 



---



- 86 -

Item 19. Financial Statements and Exhibits



|(a) |  | Financial Statements
|--- |  | --------------------



| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | The following financial statements and schedules are filed in Part IV,
Item 17 of this report:



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

|                                                            |                                                                                                       |                                                                                                     |  |    |    |  |        |  | 
|----------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- |  | -- | -- |  | ------ |  | 
|                                                            |                                                                                                       |                                                                                                     |  |    |    |  | Page  
|                                                            |                                                                                                       |                                                                                                     |  |    |    |  | number
|                                                            |                                                                                                       |                                                                                                     |  |    |    |  |       
|                                                            | Independent Auditors Report                                                                          |                                                                                                     |  | 50 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                            | Consolidated Balance Sheets
as of March 31, 2000 and 1999                                             |                                                                                                     |  | 51 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of
Income for the years ended
March 31, 2000, 1999 and 1998                   |                                                                                                     |  | 53 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of
Stockholders Equity for the years ended March 31, 2000, 
   1999 and 1998 |                                                                                                     |  | 54 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of Cash
Flows for the years ended
March 31, 2000, 1999 and 1998               |                                                                                                     |  | 56 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Notes to Consolidated Financial
Statements                                                            |                                                                                                     |  | 58 |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|Schedule for the years ended March 31,
2000, 1999 and 1998:
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            |                                                                                                       |                                                                                                     |  |    |   
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Schedule VIII                                                                                         | Valuation and Qualifying Accounts and Reserves for
   the years ended March 31, 2000, 1999 and 1998 |  |    | 85 | 



|(b) |  | Exhibits
|--- |  | --------



| |                                                                             
| | ----------------------------------------------------------------------------
| | SHARE HANDLING REGULATIONS as amended on April 1, 2000
(English translation)



---



- 87 -

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 31, 2000 |  | By                                                                                                   | /s/     Shigeru Nakatani
|                    |  | Shigeru Nakatani
President of
Panasonic Finance (America), Inc.
375 Park Avenue
New York, N.Y. 10152



---



Exhibit

(TRANSLATION)

SHARE HANDLING REGULATIONS

(Amended on April 1, 2000)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.