20-F

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

FORM 20-F

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

For the fiscal year ended March 31, 2002
Commission file number 1-6784

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

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

Japan
(Jurisdiction of incorporation or organization)

1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan
(Address of principal executive offices)

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

Title of each class Name of each exchange on which registered

American Depositary Shares*	New York Stock Exchange and Pacific Exchange
Common Stock	New York Stock Exchange and Pacific Exchange
*              American Depositary Shares evidenced by American Depositary Receipts.                 Each American Depositary Share represents one share of Common Stock.

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

None

(Title of Class)

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

None

(Title of Class)

This form contains 125 pages.

TABLE OF CONTENTS

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

CONTENTS

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

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

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

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

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

Indicate by check mark which financial statement item the Company has elected to follow.

Item 17. [X] Item 18. [  ].

All information contained in this Report is as of March 31, 2002 or for the year ended March 31, 2002 (fiscal 2002) unless the context otherwise indicates.

The noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York on July 8, 2002 was 118.66 yen = U.S.$1.

Cautionary Statement Regarding Forward-Looking Statements

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

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The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the Euro, Asian currencies and other currencies in which the Matsushita Group operates businesses, or in which assets and liabilities of the Matsushita Group are denominated; the ability of the Matsushita Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the ability of the Matsushita Group to realize expected benefits of various restructuring activities in its business and organization, including the share exchanges with five subsidiaries currently in progress; the ability of the Matsushita Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita Group to maintain competitive strength in many product and geographical areas; any changes in the Matsushita Group’s financial and operational position or business environment due to its business restructuring; current and potential, direct and indirect trade restrictions imposed by other countries; and fluctuations in market prices of securities and other assets in which the Matsushita Group has holdings, as well as future changes or revisions to accounting policies, or accounting rules.

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PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable

Item 2. Offer Statistics and Expected Timetable

Not applicable

Item 3. Key Information

A. Selected Financial Data

	Yen (billions), except per share amounts and yen exchange rates
	Fiscal year ended March 31,
	2002			2001			2000			1999			1998
Income Statement Data:
Net sales		6,877			7,682			7,299			7,640			7,891
Income (loss) before income taxes		(548	)		101			219			202			356
Net income (loss)		(431	)		42			100			24			99
Per common share:
Net income (loss):
Basic		(207.65	)		19.96			48.35			11.60			47.04
Diluted		(207.65	)		19.56			46.36			11.58			44.01
Dividends		12.50			12.50			14.00			12.50			13.00
		($0.100	)		($0.116	)		($0.125	)		($0.097	)		($0.107	)
Balance Sheet Data:
Total assets		7,627			8,156			7,955			8,055			8,661
Long-term debt		692			542			644			709			690
Stockholders’ equity		3,243			3,773			3,684			3,642			3,854
Common stock		259			211			210			209			209
Number of shares
issued at year-end (thousands)		2,138,515			2,079,573			2,062,671			2,062,345			2,112,318
Yen exchange rates per U.S. dollar:
Year-end		132.70			125.54			102.73			118.43			133.29
Average		125.05			110.60			111.35			128.19			122.78
High		115.89			104.19			101.53			108.83			111.42
Low		134.77			125.54			124.45			147.14			133.99

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

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

B.	Capitalization and Indebtedness
	Not applicable

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

D.	Risk Factors
	Matsushita Electric Industrial Co., Ltd. (hereinafter, unless the context otherwise requires, “Matsushita” or the “Company” refers to Matsushita Electric Industrial Co., Ltd. and its consolidated subsidiaries as a group), best known for its brand names, such as “Panasonic” and “National,” is one of the world’s leading manufacturers of electronic and electric products for a wide range of consumer, business and industrial uses, as well as a wide variety of components. Based in Osaka, Japan, the Company recorded consolidated net sales of approximately 6,877 billion yen for the fiscal year ended March 31, 2002 (“fiscal 2002”). Over the past eight decades, the Company has grown from a small domestic household electrical equipment manufacturer into a comprehensive electronic and electric equipment, systems and components manufacturer operating internationally. Of the fiscal 2002 net sales, approximately one-half was represented by sales in Japan, with the rest by overseas sales.
	Primarily because of the business areas and geographical areas where it operates and the highly competitive nature of the industry to which it belongs, Matsushita is exposed to a variety of risks and uncertainties in carrying out its businesses, including, but not limited to, the following:

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Weakness in the Japanese and global economies has significantly reduced demand for the products of Matsushita, which trend may continue in the future

The Japanese economy has experienced a prolonged recession since the early 1990s, which has become increasingly serious. In addition, the global economy has taken a downturn, concurrently with setbacks in the global information technology industry. These recessionary conditions have resulted in sluggish consumer spending and weakened corporate capital expenditures in many industries. For example, the markets for mobile communications equipment and components and devices for the information technology industry, on which Matsushita is substantially dependent for its growth, have been particularly hard hit. Due to these conditions and restructuring expenses under the Value Creation 21 plan, Matsushita incurred a significant net loss for the year ended March 31, 2002. Matsushita currently does not foresee a rapid turnaround in the Japanese or global economy in the near term. These conditions may continue in the short- to mid-term, thereby further negatively affecting Matsushita’s businesses.

Matsushita’s mid-term business plan may not produce the expected results

Largely as a result of the recessionary conditions in the Japanese and global economies described above, Matsushita incurred substantial losses in fiscal 2002. Furthermore, the business environment in which Matsushita operates has evolved so dramatically in recent years that Matsushita’s traditional business model, namely having each product division and subsidiary operate autonomously in each product area, does not necessarily provide as many advantages as it once did. In response to these problems, starting in April 2001, Matsushita has been implementing its mid-term business plan called Value Creation 21. The plan consists of two key elements: structural reforms with an emphasis on the pursuit of higher management efficiency for customer satisfaction, and the pursuit of a new growth strategy. Matsushita, however, may not be successful in achieving all of the goals set out in the plan or in realizing the benefits that it expects from implementing the plan because of external and internal factors as further mentioned below.

The restructuring of Matsushita’s businesses may not bring the improved efficiency, cost reduction and growth that Matsushita aims for

Under the plan, Matsushita has been restructuring its traditional, decentralized product division set-up by establishing several centers that provide manufacturing services commonly used by different product divisions; restructuring its organizations for semiconductors and display devices; integrating some of its manufacturing units in Japan and overseas; reforming its consumer sales and distribution structure in Japan; and implementing employment restructuring initiatives. As an additional business restructuring measure, Matsushita is implementing share exchanges with five of its majority-owned subsidiaries to transform them into wholly-owned subsidiaries of Matsushita, effective on October 1, 2002, followed by a major Groupwide reorganization (see Section A of Item 4 – Information on the Company). By integrating their management, Matsushita seeks to create a corporate structure in which it will be able to conduct its consolidated Groupwide businesses speedily and efficiently, and to achieve synergies excepted from such restructuring. Matsushita may not, however, be able to improve efficiency and reduce costs and realize growth through these measures, due to unexpected additional reorganization expenses, improper allocation of operational resources or other unpredictable factors.

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Matsushita may not succeed in executing its growth strategies outside of Japan

The Value Creation 21 plan includes expanding Matsushita’s businesses in markets outside of Japan. In many of these markets, Matsushita may face risks such as political instability, economic uncertainty, cultural and religious differences and labor relations, as well as foreign exchange risks. Matsushita may also face barriers in commercial and business customs in foreign countries, including difficulties in timely collection of accounts receivable or in building and expanding relationships with potential customers, subcontractors or parts suppliers. Matsushita may also experience various political, legal on other restrictions, including restrictions on foreign investment or the repatriation of profits on invested capital, nationalization of local industry, changes in export or import restrictions or foreign exchange controls, and changes in the tax system or rate of taxation in countries where Matsushita operates business. With respect to the products exported overseas, tariffs, other barriers or shipping costs may make Matsushita’s products less competitive. Finally, expanding its overseas business may require significant investments long before Matsushita realizes returns on such investments, and increased investments may result in expenses growing at a faster rate than revenues.

Matsushita is subject to intense competition in areas in which it operates, and this may adversely affect its ability to maintain its gross margins

Matsushita produces a broad range of products and therefore faces many different types of competitors, from large international companies to relatively small, rapidly growing, and highly specialized organizations. Matsushita may choose not to fund or invest in one or more of its businesses to the same degree as its competitors in those businesses do, or it may not be able to do so in a timely manner or at all. These competitors may have greater financial, technical, and marketing resources available to them than Matsushita has in the respective businesses in which they compete.

Rapid declines in product prices may adversely affect Matsushita’s financial results

While some of the factors that drive competition vary by product area, price is a factor relevant in substantially all of Matsushita’s businesses. For the year ending March 31, 2003, Matsushita expects prices in many product areas in which it deals to decline significantly or more rapidly than in recent fiscal years. Matsushita believes that this trend will affect its businesses especially those of its AVC Networks category, which contributed approximately 59% of Matsushita’s net sales for the year ended March 31, 2002, and in the area of Matsushita’s Components and Devices category, which contributed approximately 20% of its net sales during the same period.

Matsushita may not be able to keep pace with technological changes and develop new products and services in a timely manner to remain competitive

Matsushita may fail to introduce new products and services in response to technological changes in a timely manner. Some of Matsushita’s core businesses, such as consumer digital electronics and key components and devices, are concentrated in industries where technological innovation is the central competitive factor. Matsushita continuously faces the challenge of developing and introducing viable and innovative new products. Matsushita must predict with reasonable accuracy both future demand and new technologies that will be available to meet such demand. If Matsushita fails to do so, it will not be able to compete in new markets and this could adversely affect Matsushita’s financial results and growth prospects.

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Matsushita may not be able to develop product formats which would prevail as de facto standards

Matsushita has been forming alliances and partnerships with other major manufacturers to strengthen the development of product formats, such as next-generation home and mobile networking products and software systems. Despite these efforts by Matsushita, its competitors may be the ones who develop the de facto standards for future products.

The alliances with, and strategic investments in, third parties undertaken by Matsushita may not produce positive results

Matsushita develops its business through forming alliances or joint ventures with, and making strategic investments in, other companies, including investments in venture companies. Matsushita’s key alliances are described in Item 4. Matsushita’s reliance on the strategy of partnering with third parties is increasing. They are crucial to Matsushita’s goal of introducing new products and services, including those using digital network technologies. Matsushita does not, however, control these partners, who may make decisions regarding their business undertakings with Matsushita which may be contrary to Matsushita’s interests.

Matsushita may be subject to product liability claims that could result in significant direct or indirect costs

There is a risk that defects may occur in Matsushita’s products and services. Many of Matsushita’s products and services are for so-called “mission-critical” uses — where the consequences of defects would be severe — exposing Matsushita in some cases to greater risks than those posed by ordinary retail products. The occurrence of defects could make Matsushita liable for damages caused by the defects, including consequential damages. Negative publicity concerning these problems could also make it harder for Matsushita to market its products and services.

Currency exchange rate fluctuations could adversely affect Matsushita’s financial results

Matsushita is exposed to risks of foreign currency exchange rate fluctuations. Matsushita’s consolidated financial statements, which are presented in Japanese yen, are affected by foreign exchange rate changes. These changes affect Matsushita’s international business transactions and costs and prices of Matsushita’s products and services in overseas countries in relation to the yen. They can also affect the yen value of Matsushita’s investments in overseas assets and liabilities. Although Matsushita is taking measures to reduce or hedge against foreign currency exchange risks, foreign exchange rate fluctuations may hurt its businesses, financial conditions or results of operations. Most typically, if the yen strengthens, Matsushita’s domestically manufactured products become less attractive to foreign purchasers in terms of price.

- 8 -

Matsushita may not be able to successfully recruit and retain skilled employees, particularly scientific and technical personnel

Matsushita may fail to recruit skilled employees, particularly scientific and technical personnel, which are limited in number. Matsushita’s future success depends largely on its ability to attract and retain certain key personnel, including scientific, technical and management personnel. Matsushita anticipates that it will need to hire additional skilled personnel in all areas of its business. Industry demand for skilled employees, however, exceeds the number of personnel available and the competition for attracting and retaining these employees, especially scientific and technical employees, is intense. Because of this intense competition for these skilled employees, Matsushita may be unable to retain its existing personnel or attract additional qualified employees in the future. If Matsushita is unable to retain skilled employees and attract additional qualified employees to keep up with its future business needs, this may adversely affect its business and results of operations.

Matsushita is dependent on the ability of third parties to deliver parts, components and services in adequate quality and quantity in a timely manner

Matsushita’s manufacturing operations depend on obtaining deliveries of raw materials, components, equipment and other supplies in adequate quality and quantity in a timely manner. Since the products Matsushita purchases are often complex, it may be difficult for Matsushita to substitute one supplier for another or one component for another in a timely manner or at all. Some components are only available from a limited number of suppliers. Although Matsushita believes that it selects only reliable suppliers, shortages could occur in critical materials due to interruption of supply or increased industry demand and may adversely affect Matsushita’s operations.

Matsushita may fail to protect its proprietary intellectual property or face a claim of intellectual property infringement by a third party, and may lose its intellectual property rights on key technologies or be liable for significant damages

Matsushita’s success depends on its ability to obtain patents, licenses and other intellectual property rights covering its products and product design and manufacturing processes. The proceedings for obtaining intellectual property protection can be long and expensive. Patents may not be granted on currently pending or future applications or may not be of sufficient scope or strength to provide Matsushita with enough protection or commercial advantage. In addition, effective copyright and trade secret protection may be unavailable or limited in some countries, and Matsushita’s trade secrets may be vulnerable to disclosure or misappropriation by employees, contractors or others. Competitors or other third parties may also develop technologies that are protected by patents and other intellectual property rights, which make such technologies unavailable or available only on terms unfavorable to Matsushita. Litigation may also be necessary to enforce Matsushita’s intellectual property rights or to defend against intellectual property infringement claims brought against Matsushita by third parties.

Matsushita is exposed to the risk that its customers, including those to whom it has provided vendor financing, may encounter financial difficulties

Matsushita may incur losses if some of its customers encounter financial difficulties. Matsushita provides vendor financing to its customers. As more businesses utilize vendor financing, Matsushita may also provide increased vendor financing in the future. In addition, many of Matsushita’s customers purchase products and services from it on payment terms that do not provide for immediate payment. If customers to whom Matsushita has extended or guaranteed vendor financing, or from whom it has substantial accounts receivable, encounter financial difficulties and are unable to make payments on time, Matsushita’s business, financial condition and operating results could be adversely affected.

- 9 -

Governmental regulations may limit Matsushita’s activities or increase its operating costs

Matsushita is subject to governmental regulations in Japan and other countries in which it conducts its business, including environmental laws and regulations, governmental approvals required for conducting business and investments, laws and regulations governing the radio telecommunications businesses and electric product safety, national security-related laws and regulations and export/import laws and regulations, as well as commercial, antitrust, patent, product liability, consumer and business taxation laws and regulations. To the extent that Matsushita cannot comply with these laws and regulations, Matsushita’s activities would be limited. In addition, these laws and regulations could increase Matsushita’s operating costs.

Interest rate fluctuations could adversely affect Matsushita’s financial results

Matsushita is exposed to the risk of interest rate fluctuations, which, despite the measures taken by Matsushita to hedge a portion of its exposure to interest rate fluctuations, may affect its overall operational costs and the value of its financial assets and liabilities.

The decrease in the value of Japanese stocks may adversely affect Matsushita’s financial results

Matsushita holds Japanese stocks as part of its investment securities. The value of most of these stocks, however, dropped substantially over the past year due to the decline of the Japanese economy. For example, Matsushita recorded a loss of 93 billion yen in its results of operations for the year ended March 31, 2002 related to other than temporary declines in its investment securities.

Item 4. Information on the Company

A. History and Development of the Company

GENERAL

The Company was incorporated in Japan on December 15, 1935 under the laws of Japan as Matsushita Denki Sangyo Kabushiki Kaisha (Address : 1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan. Phone : +81-6-6908-1121 / Agent : Mr. Shigeru Nakatani, President of Panasonic Finance (America), Inc.) as the successor to an unincorporated enterprise founded in 1918 by the late Konosuke Matsushita. Mr. Matsushita led the Company with his corporate philosophy of contributing to the peace, happiness and prosperity of mankind through the supply of quality consumer electrical and electronic goods. The Company’s business expanded rapidly with the recovery and growth of the Japanese economy after World War II, as it met rising demand for consumer electric and electronic products, starting with washing machines, black-and-white television sets (TVs) and refrigerators. During the 1950s, Matsushita expanded its operations by establishing mass production and mass sales structures to meet increasing domestic demand, while also creating subsidiaries, making acquisitions and forming alliances. During the 1960s, Matsushita expanded its overseas businesses, and its products started getting world-wide recognition.

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During the global recession caused by the first oil crisis in 1973, Matsushita strengthened its structure and overseas business relations. The advent and popularity of the video cassette recorder (VCR) from the late 1970s enabled Matsushita to receive worldwide recognition as a global consumer electronics manufacturer. In the 1980s, Matsushita further worked to evolve from a consumer products manufacturer to a comprehensive electronics products manufacturer, expanding its business in the areas of information and communications technology and industrial equipment and components. Since the 1990s, Matsushita has been emphasizing technological development and the use of advanced technology in every phase of life. In particular, Matsushita has been expanding its development activities in such areas as next-generation audiovisual (AV) equipment, multimedia products, and advanced electronic components and devices, many of which incorporate digital technology.

Matsushita currently offers a comprehensive range of products, systems and components for consumer, business and industrial use. Most of the Company’s products are marketed under the “Panasonic” or “National” brand names. The Company also uses the “Technics” brand name for certain hi-fi products, with some of its subsidiaries using other brand names such as “Quasar,” “Victor” and “JVC.” To form the basis for growth in the evolving digital networking age, the Company continues to emphasize technological development and the creation of new businesses, identifying several priority areas, such as digital network systems, mobile communications, data storage devices, environmental systems and key components and devices. The Company is also striving to develop new service-oriented businesses, such as systems solutions and “e-Net” business, as areas of potential growth over the mid-term.

In June 1995, Matsushita sold an 80% equity interest in MCA (now named Universal Studios, Inc.), which the Company purchased in December 1990, to The Seagram Company Ltd. for approximately U.S.$5.7 billion, leaving the Company with a minority interest.

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

In March 1998, the Company announced a package of new management initiatives aimed at better sharing interests with shareholders. As part of this package, management implemented, with approval at the annual shareholders’ meeting in June 1998, the repurchase of 50 million shares of the Company’s common stock, spending approximately 99 billion yen during fiscal 1999. At the same time, as an incentive to Board members and employees toward the enhancement of corporate value, the Company introduced stock option plans for Board members and select senior executives, and established a stock-price-linked remuneration plan, under which modest cash payments have been offered to employees manager-level or above in addition to ordinary salary and bonus payments.

In October 1999, EPCOS AG, a German electronic components joint venture of the Company and Siemens AG of Germany, had its initial public offering, listing its shares on German and U.S. stock exchanges. Following EPCOS AG’s public offering, Matsushita’s 45% (held by a subsidiary) and Siemens AG’s 55% holdings in EPCOS AG were reduced to nearly 12.5%, respectively. Matsushita realized a 59 billion yen gain from the sale of its shares in EPCOS AG in fiscal 2000.

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In April 2000, the Company made its majority-owned subsidiaries, Matsushita Refrigeration Company and Wakayama Precision Company, into wholly-owned subsidiaries, by means of share exchanges. As a result of the share exchanges, the Company issued 16,321,187 shares of its Common Stock to shareholders of the respective companies.

In June 2000, Kunio Nakamura, new President of the Company, established the Company’s new three-year business plan, called Value Creation 21, which was formally implemented in April 2001. The Value Creation 21 plan was designed to take full advantage of the opportunities arising in the evolving digital networking society. Its objective is to transform Matsushita into a company that meets the needs of the 21st century through structural reforms and growth strategies with emphasis on enhancing growth potential, profitability and capital efficiency, thereby ensuring the Company’s continued contribution to society.

During fiscal 2002, the Company implemented a series of structural reforms under the Value Creation 21 plan, such as the restructuring of its domestic consumer sales and distribution structure, management initiatives through the use of information technology, such as supply chain management (SCM), the selective integration of businesses and manufacturing locations, manufacturing reforms, such as the introduction of the cell-style production, the reform of the Company-wide R&D structure to concentrate on development in strategic product or core technology areas, and employment restructuring initiatives including the regional-based employee renumeration system and special early retirement programs.

In April 2001, the Company absorbed Matsushita Electronics Corporation (MEC), its wholly-owned subsidiary, by merger to implement unified operational management in such key device areas as semiconductors and display devices. By establishing new internal divisional companies directly under the control of the parent company, namely the Semiconductor, Display Device and Lighting companies, the development, manufacturing and sales functions that were previously disbursed between Matsushita and MEC for each of these strategic businesses have been integrated.

As an additional structural reform aimed at achieving new growth under the Value Creation 21 plan, on January 10, 2002, Matsushita and five of its majority-owned subsidiaries (Matsushita Communication Industrial Co., Ltd., Kyushu Matsushita Electric Co., Ltd., Matsushita Seiko, Ltd., Matsushita Kotobuki Electronics Industries, Ltd. and Matsushita Graphic Communication Systems, Inc.) announced preliminary agreements to implement share exchanges to transform these subsidiaries into wholly-owned subsidiaries of Matsushita, effective October 1, 2002. The definitive agreements concluded between Matsushita and each of these subsidiaries have been approved by respective companies’ shareholders’ meetings on June 27, 2002. Following the completion of the share exchanges, Matsushita intends to implement, early in January 2003, the major reorganization of four of the five subsidiaries and Matsushita’s related internal divisional companies and sales divisions into seven new operating entities. These seven operating entities are tentatively named: Panasonic AVC Networks Company, Panasonic Communications & Imaging Co., Ltd., Panasonic Mobile Communications & Networks Co., Ltd., Panasonic Automotive Systems Company, Panasonic System Solutions Company, Matsushita Ecology Systems Co., Ltd. and Panasonic Factory Solutions Co., Ltd. Through this reorganization, Matsushita seeks to reestablish its business domains as strategic units, thereby achieving higher management efficiency and accelerated growth on a consolidated Groupwide basis. The reorganization will be implemented with focus on the elimination of duplication of business lines and of counterproductive competition within the consolidated Group, the unification and concentration of research and development resources, and the establishment of a totally integrated operational structure from development and manufacturing to sales in each domain for full customer satisfaction.

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

CAPITAL INVESTMENT

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

Total capital investment (excluding intangibles) amounted to 338 billion yen, 504 billion yen and 309 billion yen for fiscal 2000, 2001 and 2002, respectively. The decrease for fiscal 2002 mainly reflects a severe business environment, as well as the fact that a series of major investment has peaked out in such key components and devices areas as semiconductors.

For the current fiscal year ending March 31, 2003 (“fiscal 2003”), Matsushita expects its capital investment to decrease to approximately 240 billion yen as the Company places emphasis on higher asset efficiency, better utilizing existing facilities. Of the projected total amount, nearly 160 billion yen will be invested in facilities in Japan and the remaining 80 billion yen overseas. This investment will be funded primarily through internal sources.

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B.   Business Overview

SALES BY PRODUCT CATEGORY

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

			Yen (billions) (%)
			Fiscal year ended March 31,
			2002				2001				2000
AVC Networks
	Video and audio equipment			1,797	26	%		1,756	23	%		1,706	23	%
	Information and communications equipment			2,255	33			2,524	33			2,375	33
		Subtotal		4,052	59			4,280	56			4,081	56
Home Appliances				1,178	17			1,316	17			1,306	18
Industrial Equipment				289	4			468	6			382	5
Components and Devices				1,358	20			1,618	21			1,530	21
		Total		6,877	100	%		7,682	100	%		7,299	100	%

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

AVC Networks

The creation of AVC Networks as a new category is Matsushita’s response to the new business environment created by the evolution of digital networks such as the integration of broadcasting and communications and of those with the Internet. Matsushita is seeking new growth, in particular, by enhancing the levels of networkable digital products and interlinking them to develop and promote convenient home networking environments that Matsushita expects will be centered around digital TVs.

Video and Audio Equipment

Principal products in this sector include TVs, VCRs, camcorders, DVD players and recorders, audio equipment, and pre-recorded audio and video software. Matsushita maintains a leading market share in the domestic and overseas markets for a number of major products in this field. Over the last three fiscal years, however, sales in this category did not show marked growth due to such factors as slow consumer spending, especially in Japan, and intensified global price competition, notably in the area of low-end AV equipment. Instead, increasing emphasis has been placed on digital AV equipment and, most recently, on networkable AV equipment to make Matsushita a leader in the approaching home networking age.

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For TVs, Matsushita produces a broad range of models to meet demand in the domestic and international markets. For the mainstay cathode-ray-tube (CRT) TVs, Matsushita has shifted production of conventional CRT models from Japan to Southeast Asian and other overseas factories. Domestic production is now concentrated on flat-surface CRT models. Also, in recent years, Matsushita has gradually expanded production of high-picture-quality, high definition models, as well as flat-screen TVs such as LCD TVs and plasma display panel (PDP) TVs. In October 2001, Matsushita introduced a new range of LCD TVs with built-in DVD players. Volume production of PDP TVs began in the summer of 2001 through a newly established manufacturing joint venture in Osaka with Toray Industries, Inc. Matsushita is also particularly active in the growing market for digital TVs. In the two years ended March 31, 2002, Matsushita captured a top share of domestic broadcast satellite digital TV and set-top-box (STB) production, including production on what is known as an original equipment manufacture basis, or OEM basis. Matsushita believes that this success was mainly attributable to its long commitment to research and development in digital TVs.

To prepare for the launch in Japan of digital TV-based e-Net services in 2002, Matsushita, in cooperation with Toshiba, Hitachi and other Japanese companies, including broadcasting networks and content providers, established eP Corporation to develop a common platform as the basis for interactive TV, which is also linked with the Internet, to substantially enhance the convenience of TV. The eP-platform will cover not only multiple digital TV programming and data providing services but also stay-at-home shopping and banking, e-mail and Internet browsing and other interactive services via TV with an STB incorporating a hard disk drive (HDD). In June 2002, Matsushita started sales of STBs for digital TVs, which can accommodate broadcast satellite and communications satellite digital TV services and other interactive information services through the eP-platform, and which contain an HDD for storing large-capacity digital data. Furthermore, in view of the planned start in 2003 of digital terrestrial TV broadcasting in Japan and in preparation for the coming broadband communication age, Matsushita is developing more advanced Internet-protocol TVs.

In the VCR and video camera area, Matsushita has been accelerating digitization, introducing digital VHS VCR decks and expanding its range of digital camcorders and digital still cameras, some of which incorporate the secure digital memory card mentioned below for memory storage and enhanced networking convenience. Of these, new models of digital still cameras, which benefit from the world-renowned optical technology of Leica Camera AG, achieved an immediate market success upon its introduction in the second half of fiscal 2002.

As for DVDs, Matsushita offers a wide range of products from standard DVD players to portable models equipped with LCDs. In June 2000, Matsushita launched DVD recorders, and has since strengthened this product line by introducing the industry’s most competitively-priced model in June 2001 and the industry’s first DVD recorder with a built-in HDD in December 2001. Matsushita also formed an alliance with Nintendo Co., Ltd. and introduced a new DVD player which is compatible with the “Nintendo GameCube.”

In the area of audio equipment, Matsushita produces a variety of products, including such digital products as compact disc (CD) players, CD radio cassette recorders and Mini Disc players, as well as radio receivers, tape recorders, portable headphone players, stereo hi-fi equipment and electronic musical instruments. Matsushita expanded its range of new audio equipment in recent years, with the launch of DVD-Audio players, and a series of products using the secure digital memory card, such as an ultra-compact portable headphone player. The secure digital memory card is a postage stamp-sized data storage device now supported by more than 400 corporate members of the Secure Digital Association worldwide.

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Information and Communications Equipment

Information equipment includes products such as personal computers (PCs), PC displays, HDDs, CD-ROM drives, DVD-ROM and DVD-RAM drives, DVD-ROM and CD-R/RW combination drives, and other optical disk drives, copying machines and printers. CD-ROM and DVD-ROM drives are devices which permit users to read only the data contained on CDs or DVDs, while CD-R/RW and DVD-RAM drives permit users to read and write data onto them. Communications equipment includes products such as telephones, cellular phones, other mobile communications equipment, digital private branch exchanges and facsimile equipment. Products in this sector also include other systems equipment, such as cable TV systems, car AV equipment, broadcast- and business-use AV equipment and systems, large-screen visual equipment and communications network-related equipment. This has been Matsushita’s fastest growth category during the last decade, led by mobile communications equipment and PC-related equipment.

Matsushita is a worldwide leader in such business lines as optical disk drives, facsimile equipment, broadcast-use digital VCR equipment and airline in-flight AV systems. It also maintains a leading position in the Japanese cellular phone industry. For the last three fiscal years, however, this category’s business has shown some volatility due to such factors as increased price competition in the area of PC peripherals and the recent setback in global demand for information technology-related products such as PCs and cellular phones.

With respect to PCs, Matsushita continued to upgrade its notebook models over the last several fiscal years. Matsushita launched an A5-sized notebook PC which can interface with charge coupled device cameras and cellular phones and, mainly for overseas markets, ruggedized notebook PCs built to resist shock, and thereby supporting such uses as police field activities in North America. This was followed in the year ended March 31, 2000 by the introduction of ultra slim models with added features such as wireless communication. In the year ended March 31, 2001, adding to its slim notebook series, Matsushita introduced an AV-oriented notebook PC that links easily to digital AV equipment to better meet the needs of the digital networking age. In the year ended March 31, 2002, Matsushita introduced what is currently the world’s lightest (960 grams) B5-sized notebook PC in Japan.

In the area of PC peripherals, Matsushita strengthened its disk drive lineups. In HDDs, Matsushita continued to introduce upgraded models to meet the need for greater data storage capacity and faster processing speed. In the area of optical disk drives, Matsushita expanded its range of slim models for notebook PCs in the year ended March 31, 2000, and in the year ended March 31, 2001, introduced several new multiple disk drive models that gained popularity, including the industry’s slimmest and fastest DVD-ROM and CD-R/RW combination drive. In October 2001, Matsushita developed the world’s first 50-gigabyte blue laser rewritable dual-layer optical disc technology. These blue laser discs have more than 10 times the capacity of conventional rewritable optical disks.

In the area of communications equipment, Matsushita has developed and introduced a number of new mobile communications products with focus on downsizing, ease-of-use and Internet connectivity, in recent years. In the year ended March 31, 2000, Matsushita launched NTT DoCoMo’s popular i-mode cellular handsets equipped with e-mail and Internet browsing capabilities.

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Furthermore, in the year ended March 31, 2001, Matsushita began shipments of base transceiver stations for next-generation, wideband code division multiple access (W-CDMA) cellular phone services that NTT DoCoMo, Inc. commenced in the year ended March 31, 2002, followed by shipments of W-CDMA handsets, which permit the transmission of moving images and large volumes of data. W-CDMA is the world’s first third-generation wireless voice, image and data transmission services using an advanced technology which allows service providers to offer faster and higher quality services to their users. In August 2001, Matsushita, Matsushita Communication Industrial Co., Ltd. and NEC Corporation signed an agreement to form a development alliance to strengthen the global expansion of their technologies and products in third-generation mobile handsets, in particular W-CDMA products for the mobile multimedia market. In spite of this new trend, Matsushita’s sales of cellular phones were down for fiscal 2002, mainly as a result of sharp declines in demand for cellular phones especially in Japan and Europe, with additional negative effects of glitches found in certain models of the Company. To counter this unfavorable business environment, Matsushita launched new Internet-compatible slim folding cellular phones for NTT DoCoMo, with high picture quality, in January 2001 and in June 2002. These models are well-accepted and reestablishing Matsushita’s reputation in the Japanese cellular phone market.

In the area of facsimile equipment, Matsushita marketed in April 2000 a new multifunctional model, featuring facsimile, copier, printer, scanner and telephone functions, and in February 2002 a color facsimile machine, compatible with the secure digital memory card, to meet the ever-sophisticated customer needs.

In the area of car AV equipment, Matsushita has continued to develop advanced car navigation systems for the domestic market, as well as further promoting global expansion in car audio equipment. Building on its success of the world’s first car navigation system incorporating DVD, Matsushita extended its car navigation networking capabilities by launching NTT DoCoMo’s i-mode capable models in the year ended March 31, 2000. Matsushita continues to launch upgraded car navigation systems, with recent introductions of a model that can receive mobile information services and a further advanced model with a built-in HDD capable of processing large volumes of data in an instant. In the related area of electronic toll collection (ETC) services, which were officially inaugurated in March 2001 as an integral part of Japan’s intelligent transport systems project, the Company began supplying not only the infrastructure equipment but also new in-vehicle terminals for the ETC system.

In the area of broadcast-use AV equipment and systems, Matsushita launched in April 2000 a series of digital video electronic news gathering systems called DVCPRO HD, building on the success of its light, compact digital DVCPRO series and, in the year ended March 31, 2001, the Company supplied major broadcast satellite digital TV networks in Japan with conditional access systems and an electronic program guide, both key systems for broadcast satellite digital broadcasting. Matsushita is also solidifying its leading position in the global in-flight AV systems market by delivering AV systems with LCD monitors and personal multimedia systems that allow passengers to enjoy in-flight shopping from their seats.

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Home Appliances

Matsushita’s principal products in this category include home appliances, such as washing machines, clothes dryers, vacuum cleaners, electric irons, microwave ovens, rice cookers and other cooking appliances, dishwashers, refrigerators, air conditioners, electric fans, air purifiers, electric and kerosene heaters and electrically-heated rugs; and household equipment, mainly comprising kitchen fixture systems, electric, gas and kerosene hot-water supply systems, and bath and sanitary equipment. This category also includes healthcare equipment, electric lamps, bicycles, and optical cameras and flash units.

Matsushita has a leading position in the Japanese home appliance market. In recent years, Matsushita responded to diversified customer needs by introducing products with high value-added innovative features, such as a centrifugal-force washing machine for home use, featuring reduced drying time made possible through the world’s first dual air- and water-cooling technology, a compact rechargeable-battery-powered cordless vacuum cleaner employing a centrifugal-force dust collection system and a vacuum cleaner with separate modes for high-power and low-air exhaust operations. Matsushita introduced a series of space-saving refrigerators that do not sacrifice inner capacity, followed by a refrigerator to employ separate cooling functions for the refrigerator compartment, vegetable drawer and freezer for higher energy efficiency. In the year ended March 31, 2002, furthermore, the Company launched Japan’s industry-leading refrigerator that uses hydrocarbon refrigerant, which eliminates the use of ozone-layer depletive refrigerants. In the same year, Matsushita introduced two innovative models of air conditioners to meet the growing consumer interests in energy conservation and healthy lifestyles. One of them features an energy-saving technology achieving reduction of the power consumption by half compared with the Company’s model from ten years ago, and another one featuring the world’s first system that incorporates a negative ion generator with an electronic dust collector.

In addition to developing and introducing high-value-added products designed to stimulate the saturated appliance market in Japan, Matsushita has also been strengthening its business base by taking the lead in the newer, growth product areas, such as dishwashers, frame-free induction heating cooking equipment and compact garbage processing units.

Furthermore, Matsushita is working on the development of new businesses to create enriched living environments in the twenty-first century, offering products and services using digital networking technologies that focus on important issues such as the environment and energy, health and healthcare, comfort and security and greater convenience at home. Activities in progress include the development of networkable home appliances, garbage recycling services for the food industry and home healthcare services. For example, in the year ended March 31, 2002, Matsushita developed a new web-based tele-homecare system which allows patients to measure their vital signs and doctors to access remotely the patient’s information. The Ministry of Health, Labour and Welfare of Japan officially recognized the system to be introduced for medical use.

In May 2001, Matsushita entered into an agreement on a broad business alliance with Hitachi Ltd. in fields such as IC card-based solutions business and home networking appliances. As part of this alliance, the companies are co-developing home network systems linking home appliances with public infrastructures, which is intended to save energy and improve living standards. The companies are also joining hands on research and development of new environmental technologies for home appliances.

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Industrial Equipment

Matsushita’s industrial equipment encompasses factory automation (FA) equipment, welding machines, power distribution equipment, ventilating and air conditioning equipment, vending machines and medical equipment. In addition, Matsushita is reinforcing its engineering services business, mainly for private enterprises and government agencies in Japan and overseas.

In the area of FA equipment, Matsushita is an industry leader in electronic-parts mounting machines, and also produces industrial robots and electronic measuring instruments. Building on this strength to meet increasingly sophisticated customer requirements, Matsushita has launched innovative products in recent years, with a focus on smaller, lighter high-precision machines. Examples include a “Stud Bump Bonding” semiconductor mounting machine and a new high-speed multifunctional chip mounter, as well as a laser processing machine for ultra-fine production of high-integration circuit boards. Matsushita has also added modular components mounters to solidify its mainstay range of parts-mounting machines in the year ended March 31, 2002. Concurrently, Matsushita introduced the world’s smallest and lightest fully digital carbon dioxide/metal active gas automatic welding machine. Matsushita also holds a competitive position in the market for DVD disc mastering and replication equipment. Matsushita is currently augmenting its efforts to become a total FA solutions provider offering not only equipment but also comprehensive engineering services and related support.

In the area of commercial-use ventilating and air-conditioning systems, Matsushita has been expanding delivery of its specialty in-tunnel dust collection and ventilation systems to Japan’s major expressways. Matsushita sources the manufacture of packaged air conditioners to Daikin Industries, Ltd. as part of an alliance entered into in November 1999 between the two companies. The alliance covers a broad range, also including consumer-use air conditioners in which Matsushita will provide manufacturing cooperation to Daikin, as well as joint procurement of parts and materials and co-development of environmentally-conscious products.

Components and Devices

Major products included in this category are semiconductors, general electronic components, display devices, electric motors, compressors and batteries, some of which are incorporated into Matsushita’s finished products and some of which are for sale to other manufacturers.

Recognizing that components and devices hold the key to innovation and advancement, as well as the competitiveness of finished products and systems in the digital networking age, Matsushita places priority on the development of competitive components and devices technology and business. During and since the year ended March 31, 2001, business in this category has been adversely affected by setbacks in the demand from the cellular phone and other information technology-related industries. Given this adverse business environment, Matsushita implemented various structural reforms, including the centralization of manufacturing locations and the establishment of a new liquid crystal display (LCD) joint venture. In addition, to secure growth and profitability in this business category, Matsushita concentrates on the development of proprietary “black-box” technologies and the business expansion centered on the 120 strategic products that have the potential to achieve top global positions in their respective markets.

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Matsushita’s semiconductors are primarily made up of integrated circuits, such as metal oxide semiconductor large-scale integration (LSI) circuits and bipolar integrated circuits, discrete devices and charge coupled devices. Matsushita has been strengthening development of multifunctional system LSI circuits, which form the basis of digital network-related equipment. Successful results in recent years included system LSI chip sets for DVD-ROM drives, MPEG-2 encoder chips, 32-bit microcontrollers with embedded dynamic RAM, system LSI chip sets for digital TV tuners and the world’s first single-chip MPEG-4 multi-codec system LSI circuits. Matsushita has also been a leader in optical pickup semiconductors for DVD equipment, charge coupled devices for video camcorders, and gallium-arsenide power modules for cellular phones. In April 2002, Matsushita commenced production of new 0.13-micron system LSIs and compound semiconductors at new facilities.

Matsushita manufactures general components, encompassing electronic circuit components, printed circuit boards, transformers, power supply components, coils, capacitors, resistors, tuners, speakers, ceramic components, and various sensors. Matsushita has recently been focusing on smaller, more advanced components for equipment downsizing and performance improvement. As part of this effort, Matsushita has expanded its production of compact multi-layer printed circuit boards of its own design and high frequency components for use in compact mobile communications equipment. In the year ended March 31, 2002, Matsushita augmented its range of specialty polymer aluminum electrolytic capacitors. Matsushita also developed cutting-edge ultracompact, high-capacitance products in the field of multiplayer ceramic chip capacitors and film capacitors. In areas related to digital networkable consumer products, Matsushita developed a surface-mounted circuit module for Bluetooth, a short-range wireless networking protocol.

In the area of display devices, Matsushita has recently added high-technology semi-stretched tension flat-surface CRTs and has further expanded this product series to include a model with a brightness level 20% higher than conventional models. Matsushita has been concentrating production of flat-surface CRTs in Japan, while shifting production of traditional CRTs overseas. In the year ended March 31, 2001, Matsushita developed the world’s thinnest 32- and 36-inch flat-surface high-definition direct-view CRTs for broadcast satellite digital high definition TVs. Matsushita also has been focusing on developing high-picture-quality LCD devices with faster picture response and wider viewing angles. In April 2002, Matsushita established Toshiba Matsushita Display Technology Co., Ltd., a new joint venture with Toshiba. The new joint venture has succeeded to LCD operations of the two parent companies, and will further commence manufacture of cutting-edge products, including low-temperature polysilicon LCD panels. Regarding plasma display panels (PDPs), the market for which is expected to grow significantly in the mid-term, Matsushita boosted its product lineup with the marketing of competitively-priced 50-inch and 37-inch units to add to its existing 42-inch model in 2001. Matsushita strengthened its manufacturing structure through a number of initiatives, including the commencement of production at a new PDP plant in China in December 2001.

In the area of electric motors, Matsushita recently augmented its FA equipment motor lineup with smaller, high-speed servomotors with greater energy efficiency than conventional models. During the year ended March 31, 2002, the Company enhanced the lineup of vibration motors for cellular phones and polygon mirror scanner motors for laser beam printers, while launching linear servomotors for industrial applications. In compressors, Matsushita is a world leader, primarily for air conditioners and refrigerators.

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Matsushita is one of the world’s largest battery manufacturers, producing batteries ranging from manganese, alkaline, lithium, silver oxide and zinc air cells, to rechargeable batteries, such as lithium-ion, nickel metal-hydride, nickel-cadmium and sealed lead-acid batteries and storage batteries for automotive use, as well as various battery powered appliances. Among these, Matsushita has increased production of compact, high-performance batteries, such as long-life alkaline batteries and lithium-ion batteries, in recent years, as these batteries are increasingly used in compact electronic equipment. Matsushita is also at the forefront of nickel metal-hydride batteries for electric and hybrid electric vehicles, production of which has been expanding, as they are increasingly installed in the new cars of the leading Japanese auto manufacturers. In the year ended March 31, 2000, Matsushita launched a ultraslim (0.4 mm) manganese dioxide-lithium battery, known as the “paper coin,” for use in what are known as IC cards such as bank or credit cards. To strengthen its competitive position in the compact rechargeable batteries, Matsushita launched prismatic lithium-ion rechargeable batteries in the year ended March 31, 2001, and expanded its Osaka plant in the year ended March 31, 2002 to prepare for an extensive production increase in the future.

MARKETING CHANNELS

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

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

Sales and Distribution in Japan

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

For the consumer market, Matsushita maintains the industry’s most extensive sales networks, supplying many electronics and appliance retailers throughout Japan, and expanding sales to volume retailers.

Matsushita sells its products to non-consumers, such as manufacturers, business corporations, construction companies and governments, through its sales divisions, sales offices and subsidiaries or through outside agencies. Sales to corporate and government customers are centered on information and communications equipment, and sales to the manufacturing industry are focused on industrial equipment and components.

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In April 2001, Matsushita began implementing major reorganizations of its domestic consumer sales and distribution structure. As a first step, Matsushita restructured its corporate consumer products sales divisions, the sales functions of its product divisions and the advertisement division, into two new brand-name-linked marketing divisions: the Corporate Marketing Division for Panasonic Brand, which is primarily responsible for the products of the AVC Networks category, and the Corporate Marketing Division for National Brand, which is primarily responsible for the products of the Home Appliances category. In respect of distribution through local consumer electronics and appliance retailers, in October 2001, Matsushita consolidated its 22 regional consumer sales companies throughout Japan into a single company. Matsushita’s sales for volume retailers will also be strengthened by expanding supply chain management. In addition, on October 1, 2001, Matsushita’s credit sales subsidiary and leasing subsidiary were merged into one company, Matsushita Leasing & Credit Co., Ltd. By implementing these reforms and revitalizing its domestic consumer sales and distribution operations, Matsushita intends to create an efficient structure that ensures speedy responses to customer needs and realizes a significant reduction in distribution costs and an increased market share.

Overseas Activities

Matsushita operates 228 companies in 45 countries outside of Japan, including five regional headquarters, 49 manufacturing/sales companies, 93 manufacturing companies, 49 sales companies, 13 research organizations and four finance subsidiaries. International marketing of Matsushita’s products is conducted through the Company’s sales subsidiaries and affiliates and also through independent distributors. In addition, certain products are sold in foreign markets on an OEM basis and marketed under the brand names of third parties. The Company has been gradually strengthening overseas sales channels for industrial products and components as well as integrated systems products. These efforts are expected to broaden the scope of Matsushita’s overseas sales channels to add to the existing consumer products sales networks that Matsushita has in many countries and regions.

Overseas sales represented approximately 51% of the Company’s total consolidated sales in fiscal 2002.

In order to promote global business development and counter currency fluctuations, in recent years, the Company placed emphasis on building and expanding manufacturing facilities in newly developing areas, such as China and Eastern Europe, in addition to Southeast Asia. Specifically, Matsushita has been focusing on the strategy for China by strengthening the production capacity of its Chinese facilities for such products as DVD players, microwave ovens, compressors and components, and by building a new Chinese facility for plasma display panels. The Company entered into a basic agreement with TCL Holdings Co., Ltd., a Chinese electronics leader, in April 2002, to develop collaborative relationship with each other in this growth market.

Matsushita places emphasis on promoting localization of development of products and technologies to enhance competitiveness of individual overseas manufacturing sites. The Company is also reviewing the functions of its R&D, production and sales bases worldwide, integrating and relocating, as necessary, to achieve optimum efficiency of Matsushita’s global operations.

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Customers

The largest markets for Matsushita have traditionally been consumer products. However, since the 1980s, the proportion of sales to non-consumer customers, such as governments, commercial and industrial corporations and other institutions, including large customers such as electric and electronic equipment manufacturers, automotive manufacturers and various other machinery makers, has been rising as Matsushita places increasing emphasis on industrial and commercial products and electronic components. Matsushita’s business is not materially dependent on any single customer.

SEASONALITY OF BUSINESS

The Company’s main business has no significant seasonality in terms of sales or profits. However, when it comes to the consumer electronics market, normally the fiscal third quarter is a peak because it falls in the year-end sales season for consumer durables in Japan and the holiday sales season in many overseas countries.

Additionally, seasonal appliances, such as air conditioners and refrigerators, have a different business cycle, in line with the practice of the relevant Japanese industry, which starts from October and ends in September. This does not have a material effect upon the Company’s overall operation.

RAW MATERIALS AND SOURCE OF SUPPLY

Matsushita purchases a wide variety of parts and materials from various suppliers in Japan and abroad. The Company applies a multi-sourcing policy — being not dependent upon any one source of supply for any essential item. The Company has also been endeavoring to promote a policy of global optimum purchasing by selecting the most qualified suppliers from all over the world and buying the most competitive parts and materials. Although prices of certain materials, such as metals, are volatile, the Company has managed to minimize the negative effects on its operations by maintaining favorable relations with suppliers and continuing a multi-sourcing policy.

In an attempt to improve operational efficiency and reduce parts and materials costs, Matsushita is centralizing in greater scale of its purchasing at its headquarters and at the internal divisional companies and subsidiaries levels. It is also reducing the number of its suppliers and standardizing parts and materials for common use throughout Matsushita.

PATENT LICENSE AGREEMENTS

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

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Matsushita is a licensee under various license agreements which cover a wide range of products, including AV products, computers, communications equipment, semiconductors and other components. Matsushita has non-exclusive patent license agreements, with among others, Thomson Multimedia Licensing Inc. and Thomson Licensing S.A. covering a broad range of its products, including TVs, VCRs, CD players and CD-ROM drives. Matsushita has non-exclusive patent cross-license agreements, with among others, Texas Instruments Incorporated and International Business Machines Corporation, both covering semiconductors, information equipment and certain other related products. Certain internal divisional companies as successors to Matsushita Electronics Corporation, a former subsidiary now merged into the Company, have non-exclusive patent license agreements with Koninklijke Philips Electronics N.V. covering most of the items manufactured by such divisional companies, including semiconductor devices, various lamps, cathode-ray and electron tubes and certain other products.

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

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

COMPETITION

The markets in which the Company sells its products are highly competitive. Matsushita’s principal competitors, across the full range of its products, consist of several large Japanese and international manufacturers and a number of smaller and more specialized companies. In certain categories of products it encounters additional competition from companies in the United States, Europe and Asia. The Company expects that competition will continue to be intense both in Japan and abroad.

In addition, the recent advancement towards a borderless economy has applied pressure to Japanese manufacturers, including Matsushita, in terms of global price competition. To minimize the effects of these negative factors, the Company is devising various cost-reduction and efficiency measures to enhance competitiveness, such as innovating manufacturing processes through the use of information technology, increasing overseas production, and shortening production and distribution lead time through the introduction of supply chain management in cooperation with several overseas and domestic mass-scale retailers and cell-style production, as well as developing joint ventures and other cooperative agreements with domestic and overseas partners. Also, with the advancement of digital networking technologies, competition around the so-called “de facto” standard has become intense. In response, Matsushita has been strengthening its efforts for alliances with leaders of not only the electronics industry but also the software, devices, broadcasting, communications services and other industries.

GOVERNMENT REGULATIONS

Effective April 1, 2001, the Japanese government enacted the Law for Recycling of Specified Kinds of Consumer Electric Goods (the Recycling Law). The Recycling Law requires that consumers, retailers and manufacturers share the responsibility of recycling used TVs, refrigerators, air conditioners and washing machines.

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	To cope with requirements under the Recycling Law, Matsushita set up an effective system that can utilize its existing infrastructure of recycling and transportation companies throughout Japan for collection and recycling activities. The Company also established the Matsushita Eco Technology Center Co., Ltd. not only for dismantling used products and recycling scrapped materials, but also for research and development of recycling technology. Matsushita, as the industry leader in the domestic home appliance market, has been consistently working on environmental protection measures that meet or exceed standards set forth in the Recycling Law.
	The Company is subject to a number of other government regulations in Japan and overseas, but overall, the Company presently manages to operate its business without any significant difficulty or financial burden in coping with them.
C.	Organizational Structure
	In order to maintain production, sales and service activities in broad business areas as a comprehensive electronics manufacturer, Matsushita has traditionally operated under a decentralized divisional management structure with substantial delegation of authority to divisional companies and subsidiaries, with the headquarters focusing on Groupwide strategic functions, such as corporate planning, personnel administration, finance and corporate communications, as well as corporate-level R&D, sales and marketing functions.
	Principal divisional companies and subsidiaries as of March 31, 2002 are as listed below:

(1)	Internal divisional companies of Matsushita Electric Industrial Co., Ltd.:
	Name of internal divisional company
	AVC Company
	Home Appliance & Housing Electronics Company
	Air-Conditioner Company
	Packaged Air-Conditioner Company
	Motor Company
	Semiconductor Company
	Display Devices Company
	Lighting Company
	Factory Automation Company

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(2) Principal domestic subsidiaries:

Name of company	Percentage owned
Matsushita Communication Industrial Co., Ltd.*		56.3	%
Matsushita Electronic Components Co., Ltd.		99.3
Matsushita Industrial Equipment Co., Ltd.		100.0
Matsushita Battery Industrial Co., Ltd.		98.0
Matsushita Refrigeration Company		100.0
Kyushu Matsushita Electric Co., Ltd.*		51.5
Matsushita Seiko Co., Ltd.*		57.6
Matsushita Graphic Communication Systems, Inc. *		67.8
Matsushita Kotobuki Electronics Industries, Ltd. *		57.6
Victor Company of Japan, Ltd.		52.4

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

(3) Principal overseas subsidiaries:

	Country of
Name of company	incorporation	Percentage owned
Matsushita Electric Corporation of America	U.S.A.		100.0	%
Matsushita Electric Europe (Headquarters) Ltd.	U.K.		100.0
Matsushita Electric Asia Pte. Ltd.	Singapore		100.0
Matsushita Electric Espana S.A.	Spain		100.0
Matsushita Electric (Taiwan) Co., Ltd.	Taiwan		68.2
Matsushita Industrial Corporation Sdn. Bhd	Malaysia		99.3
Matsushita Television & Network Systems Co., (Malaysia) Sdn. Bhd	Malaysia		100.0
Matsushita Refrigeration Industries (S) Pte. Ltd.	Singapore		100.0
Matsushita Electronics (S) Pte. Ltd.	Singapore		100.0

Note: Matsushita’s consolidated financial statements as of March 31, 2002 comprise the accounts of 304 consolidated companies plus 46 companies reflected by the equity method.

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

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

		Floor Space
		(thousands of
Location		square feet)		Principal Products Manufactured
Osaka			9,228	VCRs, PDP TVs, DVD products, audio equipment, washing machines, other home appliances, information equipment, industrial equipment, components, batteries, kitchen fixtures.
Kanagawa			4,264	Communications, information and measuring equipment, VCRs, audio equipment, car AV equipment, compact discs, refrigerators, batteries.
Shiga			3,564	Air conditioners, refrigerators, compressors, vacuum cleaners.
Tochigi			1,869	TVs, TV picture tubes, information equipment.
Nara			1,992	Home appliances, gas and kerosene equipment, compact discs and DVD discs.
Okayama			1,905	VCRs, components, magnetic tapes and discs.
Kyoto			1,627	Semiconductors, components.
Ibaraki			1,118	Magnetic tapes.
Shikoku			3,694	VCRs, information equipment, home appliances.
Kyushu			3,216	Information and communications equipment, components, industrial equipment.
North America			7,715	TVs, home appliances, VCRs, DVD discs, car audio equipment, communications equipment, components, batteries.
Europe			4,184	VCRs, TVs, audio equipment, car audio equipment, home appliances, components, information and communications equipment.
Asia (excluding China)			17,673	TVs, VCRs, audio equipment, air conditioners, refrigerators, other home appliances, components, semiconductors, information and communications equipment, industrial equipment, compressors, batteries.
China			5,185	TVs, audio equipment, air conditioners, washing machines, other home appliances, car audio equipment, communications equipment, industrial equipment, compressors, components, batteries.
Other			17,009	Home appliances, industrial equipment, components, semiconductors, video and audio equipment, batteries, information and communications equipment.
	Total		84,243

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

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In addition to its manufacturing facilities, Matsushita’s properties all over the world include sales offices located in various cities with an aggregate floor space of approximately 7.7 million square feet, research and development facilities with an aggregate floor space of approximately 6.9 million square feet, employee housing and welfare facilities with an aggregate floor space of approximately 11.3 million square feet, and administrative offices with an aggregate floor space of approximately 19.0 million square feet.

As of March 31, 2002, Matsushita leased approximately 17.0 million square feet of floor space, most of which was for sales office space.

Substantially all of Matsushita’s properties are free of material encumbrances and Matsushita believes such properties are in adequate condition for their purposes and suitably utilized. During fiscal 2002, there was no material problem, regarding both the productive capacity and the extent of utilization of the Company’s properties.

In terms of environmental issues, all of the Matsushita Group’s properties operate in compliance with governmental and municipal laws and regulations. Furthermore, the Company established a number of internal environmental guidelines which are stricter than those provided by the authority. In case any occasional non-compliance may take place, Matsushita takes immediate and appropriate actions to meet the regulatory requirements and to ensure current good utilization standards.

For fiscal 2003, the Company will make a capital investment of approximately 240 billion yen, for the purpose of production of new products and enhancement of production capacity and efficiency with a focus on such areas as AV and information and communications equipment (approximately 85 billion yen), and electronic components and devices including semiconductors and PDPs (approximately 124 billion yen).

The investments stated above will be funded mainly through internal sources.

Item 5.     Operating and Financial Review and Prospects

A.

Operating Results

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

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For the first part of the three years ended March 31, 2002, overseas economic conditions were generally favorable, particularly in the United States. From around the middle of the year ended March 31, 2001, however, economic growth in the United States began to slow down. This slowdown coincided with setbacks in the global IT industry, which had previously enjoyed rapid growth in demand centered on personal computers and cellular phones. These conditions are currently having negative effects on Asian and European economies, as well as the IT and related electronic equipment and components industries around the world.

During the period, sluggish consumer spending and capital investment have triggered deflation in Japan. The consumer price index in Japan declined 0.5% in the year ended March 31, 2000 and declined 0.5% again in the year ended March 31, 2001. In the year ended March 31, 2002, the consumer price index continued to fall, recording a decline of 1.0%. This deflationary trend has been reflected in the declining prices of goods and services in Japan, which have been putting pressure on the earnings of Japanese businesses.

Foreign currency exchange rates were volatile during the three-year period, with the Japanese yen generally weakening against such major currencies as the U.S. dollar and the Euro (see Section A of Item 3). In order to alleviate the effects of currency-related transaction risk, Matsushita has traditionally used several currency risk hedging methods, such as forward foreign-exchange contracts and currency options contracts with leading banks. Matsushita has also implemented matching of exports and imports exchange contracts. As a basic countermeasure against currency exchange risk, the Company has been strengthening production operations outside Japan to meet overseas demand, while reducing dependence on exports from Japan. The Company does not have any material unhedged monetary assets, liabilities, or commitments denominated in currencies other than the operation’s functional currency.

In the face of the previously mentioned severe economic environment, Matsushita commenced, in April 2001, implementing its mid-term business plan, Value Creation 21, which covers the three-year period ending March 31, 2004. This plan is intended to respond to the changing business environment, especially society’s transition to a so-called ubiquitous networking society in the twenty-first century, to which Matsushita believes it must adapt in order to continue to satisfy customer needs and contribute to society. From the viewpoint of its financial results, Matsushita hopes, through the implementation of the plan, to achieve growth in sales and earnings by developing, manufacturing and selling products that respond to the needs of customers in the new era of the ubiquitous networking society, and by improving efficiency through restructuring programs which it hopes will also help to realize a sizable reduction in its fixed costs.

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

In fiscal 2000, net sales decreased 4.5% to 7,299 billion yen, mainly attributable to sluggish demand in Japan due to continued weak consumer spending, intense global price competition and yen appreciation. Net income totaled 100 billion yen increasing 311.2% over the previous year. Increased profitability in Components and Devices and improved overall efficiency could not fully offset the negative effects of price declines and yen appreciation on earnings. However, the significant net income increase was realized largely due to a non-operating gain of 59 billion yen from the sale of shares of EPCOS AG, a German electronic component manufacturing joint venture, as well as adjustments in net deferred tax assets in the previous fiscal year, which were not incurred in fiscal 2000.

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In fiscal 2001, net sales rose 5.2% to 7,682 billion yen, due mainly to generally favorable economic conditions in Japan and overseas, as well as increased demand for IT-related products and components, especially in the first half of the fiscal year. Despite the positive effect of this sales gain and overall cost reduction and efficiency improvement efforts, net income declined 58.4% to 42 billion yen, largely because of restructuring expenses incurred to compensate employees in Japan subject to the new regional-based employee remuneration system and certain subsidiaries’ early retirement programs, both implemented as part of the mid-term Value Creation 21 plan. The absence of the previous year’s non-operating gain from the sale of EPCOS AG shares also adversely affected net income.

In fiscal 2002, net sales declined 10.5% to 6,877 billion yen. Sales in the video and audio equipment sector of the AVC Networks category rose, compared with fiscal 2001, attributable to steady growth in digital AV equipment. Sales in almost all other sectors, however, dropped from the previous year. Specifically, the information and communications equipment sector and the Components and Devices category were negatively affected by a worldwide downturn in IT-related industries, while reduced capital investment globally caused a steep fall in sales in the Industrial Equipment category. In addition to these sales declines, the Company incurred various restructuring expenses under the Value Creation 21 plan as mentioned below. Reflecting these adverse factors, along with corporate tax effects and a decrease in minority interests due to negative earnings of certain subsidiaries, the Company incurred a net loss of 431 billion yen.

Under the Value Creation 21 plan (see Section A of Item 4 for a description of the plan), Matsushita implemented in fiscal 2002 employment restructuring programs, including special early retirement programs for employees of the parent company and several subsidiaries in Japan, in order to meet employees’ ever-diversifying attitudes toward work. The number of employees who participated in the special early retirement programs totaled approximately 13,000 persons. Expenses related to these employment restructuring programs, including one-time payment packages to the early retirees, amounted to approximately 164 billion yen in fiscal 2002.

Concurrently, the Company recognized an impairment loss during fiscal 2002 related to the write-down of the machinery and equipment to manufacture display devices and other components. Matsushita also carried out business restructuring initiatives, including the closure or integration of several manufacturing locations in Japan and overseas to maintain competitiveness and increase capital efficiency. Expenses related to the impairment loss and business restructuring totaled 86 billion yen in fiscal 2002.

For expected cost savings in fiscal 2003 as a result of the above employment and business restructuring, see Section D of this Item 5 - Trend Information.

Details of operating and financial results during the last three fiscal years are as follows:

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Year ended March 31, 2002 compared with 2001

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

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

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With respect to this segment, Matsushita’s segment profit fell 30.4% from 55 billion yen for the year ended March 31, 2001 to 38 billion yen for the year ended March 31, 2002. The cost reduction efforts could not offset the adverse effect of overall sales decrease.

Sales of Industrial Equipment were 296 billion yen, down 37.7% from the previous year. As orders from IT-related industries remained slow, domestic and overseas sales of factory automation (FA) equipment were negatively impacted, leading to a sharp sales decrease in this category.

Due to the significant declines of sales, Matsushita’s segment profit for Industrial Equipment decreased from 18 billion yen for the year ended March 31, 2001 to a loss of 44 billion yen for the year ended March 31, 2002.

Sales of Components and Devices decreased 20.4% to 1,973 billion yen. This was mainly due to sharp declines in sales of general components, semiconductors, liquid crystal display (LCD) devices and batteries all mainly for cellular phone- and IT-related industries.

With respect to this segment, Matsushita’s segment profit decreased from 89 billion yen for the year ended March 31, 2001 to a loss of 96 billion yen for the year ended March 31, 2002, principally owing to significantly reduced sales and further price reductions to meet customer demands.

Year ended March 31, 2001 compared with 2000

(1)	Sales
	Consolidated net sales for fiscal 2001 increased 5.2% to 7,682 billion yen, from 7,299 billion yen in the previous year. The growth mainly reflected a moderate recovery in the Japanese economy and a favorable advance in overseas economies, along with the expansion of worldwide, IT-related investment, although toward the end of the year external conditions led to a sharp adverse turn with a slowdown in growth of the U.S. economy and rapidly weakening global demand for IT-related products and components.
	Domestic sales climbed 9.1% to 4,034 billion yen. This increase was achieved through solid growth in Industrial Equipment, including FA equipment, as well as Components and Devices, such as general electronic components and semiconductors. A moderate recovery in AVC Networks, achieved mainly by growth in digital AV equipment also contributed to the increase in domestic sales. Overseas sales were 3,648 billion yen, up 1.3% when translated into yen and up 5.0% on a local currency basis, with the Components and Devices category leading the way.
(2)	Other Revenues (Revenue excluding Net Sales)
	Other revenues include interest income, dividends received and other income. Of these, interest income increased 1.8% to 44 billion yen, while dividends received decreased 16.6% to 12 billion yen. Other income decreased 60.2% to 54 billion yen, as there was no significant gain recorded in this fiscal year comparable to the previous year’s gain of 59 billion yen from the sale of EPCOS AG shares.

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(3)	Costs and Expenses
	As net sales expanded, cost of sales increased 5.6% to 5,481 billion yen and selling, general and administrative expenses also increased 3.2% to 2,012 billion yen. However, the ratio of these operating expenses in aggregate to net sales declined by 0.3%, compared with the previous year, offsetting the adverse effects of price declines and yen appreciation. Meanwhile, interest expense also decreased 5.8% to 44 billion yen, owing to a reduction in the Company’s borrowings. However, other deductions increased 76.0% to 154 billion yen, due mainly to the aforementioned restructuring expenses, totaling approximately 100 billion yen, associated with compensation for domestic employees affected by the new regional-based employee remuneration system, as well as early retirement programs in several domestic subsidiaries. As a result, total costs and expenses increased 5.7% to 7,691 billion yen.
(4)	Income before Income Taxes
	As a result of the above factors, income before income taxes decreased 53.9% to 101 billion yen, compared with 219 billion yen in fiscal 2000.
(5)	Provision for Income Taxes
	Provision for income taxes amounted to 50 billion yen, compared with 137 billion yen in the previous year. Its ratio to income before income taxes dropped to 49.5%, from 62.7% a year ago, due mainly to a lower increase in the valuation allowance for deferred tax assets.
(6)	Minority Interests
	Minority interests increased to 22 billion yen, compared with negative 1 billion yen in fiscal 2000, reflecting the earnings improvements and turnaround from losses of certain subsidiaries.
(7)	Equity in Earnings of Associated Companies
	Equity in earnings of associated companies decreased 25.8% to 13 billion yen, from the previous year’s 17 billion yen, due mainly to decreased earnings of several associated companies.
(8)	Net Income
	As a result of all the factors stated in the preceding paragraphs, net income for fiscal 2001 decreased 58.4% to 42 billion yen. Net income as a percentage of net sales declined to 0.5%, compared with 1.4% a year ago.

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

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

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

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

Letters of credit generally have contractual lives of less than one year. Loan guarantees are principally provided on behalf of associated companies, customers and retailers and generally have long-term contractual lives coinciding with the maturities of the guaranteed obligations.

In October 2001, Matsushita sold machinery and equipment, which are used to manufacture semiconductors for 44 billion yen. The assets were sold to a special-purpose entity, which in turn leased them back to Matsushita over a period of four years. Sumitomo Mitsui Banking Corporation provided to the special-purpose entity a loan with the same term as that of the resulting leases. The loan paid for approximately 88% of the cost of the machinery and equipment. SMBC Leasing Company, Limited, an affiliate of Sumitomo Mitsui Banking Corporation, owns, through the special-purpose entity, an equity interest in the machinery and equipment, representing approximately 12% of the cost. The leases are classified as operating leases for U.S. GAAP purposes. Matsushita entered into another similar sale and lease-back arrangement in the amount of 64 billion yen in March 2002.

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On January 10, 2002, Matsushita publicly announced that it would repurchase its own shares in Japan pursuant to Japanese law. Matsushita also announced its intention to hold such repurchased shares as treasury stock to increase capital efficiency, and to use some or all of the repurchased shares for the share exchanges to transform five of its subsidiaries into wholly-owned subsidiaries, (see Section A of Item 4 – Information on the Company). Matsushita set the maximum aggregate purchase amount at 100 billion yen and the maximum aggregate number of shares to be purchased at 60 million shares. The period of purchase began on January 11, 2002 and ended on April 19, 2002. During that period, Matsushita acquired 59,586,000 shares.

Also on January 10, 2002, Matsushita publicly announced that it would issue straight bonds in Japan to raise funds necessary for its future business development, including such needs as working capital, redemption at maturity of outstanding convertible bonds and the repurchase of its shares discussed above. Matsushita had previously set up a shelf registration in Japan for issuances of straight bonds, including those announced on January 10, 2002, with the maximum aggregate principal amount of 500 billion yen within two years from December 29, 2001. On February 14, 2002, Matsushita issued straight bonds in the aggregate principal amount of 300 billion yen.

Matsushita’s policy on Financial Position and Liquidity

As its basic policy, Matsushita has long placed emphasis on maintaining sound balance sheets, and on generating as much available funding as possible from internal sources through efforts to raise the operational efficiency or asset turnover ratios, so as not to overly rely on external fund raising. This conservativeness is exemplified in the tradition of maintaining the ratio of stockholders’ equity to total assets at a relatively high level and keeping a large cash balance. The ratio of stockholders’ equity to total assets as of March 31, 2002 stood at 42.5%, although the total of short-term borrowings and long-term debt increased to 1,200 billion yen as of March 31, 2002, from 1,090 billion yen a year ago. Cash balance (the total of cash and cash equivalents plus time deposits with a maturity of more than three months) also remained at the relatively high level of 1,421 billion yen as of March 31, 2002, increasing slightly from the previous year’s 1,376 billion yen due mainly to decreased inventories and capital investment during fiscal 2002.

With this cash balance, combined with generally high credit ratings from the world’s leading credit rating agencies, Matsushita believes that it has sufficient sources of liquidity for either working capital or long-term investment needs.

As of March 31, 2002, the outstanding balance of short-term borrowings totaled 508 billion yen, and long-term debt was at 692 billion yen. Of the short-term borrowings, 98 billion yen is the current portion (maturity of less than one year) of outstanding convertible bonds. Matsushita’s borrowings are not significantly affected by seasonal factors. (For further details, see Note 7 of the Notes to Consolidated Financial Statements.) Most borrowings are at fixed rates.

In recent years, Matsushita has focused on raising capital efficiency upon review of its balance sheet. As part of this move, the Company initiated an endeavor to achieve more efficient utilization of available cash resources held by subsidiaries and associated companies. This is achieved by lending such cash resources to other Group companies, as necessary, through a network of cash management systems at financial subsidiaries located in each global region. Through this operation, the Company is working on the reduction of both excess cash and borrowings on a consolidated Groupwide basis, along with reducing interest and related cost payments to outside financial institutions, to help realize a lean balance sheet.

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

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The main focus of Matsushita’s research and development activities has been increasingly directed to digital networks and the environment and energy. During the year ended March 31, 2001, in order to speedily address these themes, Matsushita categorized its research and development activities into four main technological areas: multimedia software, devices and environment- and energy-related technologies, semiconductors, and production engineering and quality control. At the same time, Matsushita increased communication and collaboration between corporate research and development centers and divisional technology centers and departments across various product areas. This strategic approach enabled Matsushita to launch several “product firsts” onto the market while at the same time forming the base for the creation of new growth businesses. Matsushita also worked on the expansion of its global research and development networks, establishing a number of research and development centers in North America, Europe and Asia.

Notwithstanding such progress, as part of its “Value Creation 21” plan, Matsushita further reviewed all corporate-wide research and development organizations spanning various divisions in a decentralized manner. As a result of this thorough review, and to enable concentration of research and development resources into strategic areas, Matsushita established a “Strategic Products Development Platform” structure in December 2001. Under this new structure, Matsushita has identified nearly 20 strategic product categories which require even more specialized technologies and to which virtually all corporate-level and divisional-level R&D efforts are concentrated. These strategic product categories include: digital TVs; home AVC servers; AVC mobile; mobile communications; car electronics; home gateways; color printing; home networking; fuel cell cogeneration systems; life line systems; mobile devices; circuit devices; secondary batteries; display devices; lighting devices; and strategic semiconductors. Matsushita plans to establish a development center or development task force for each category, concentrating all relevant development resources. Concurrently, to develop the technologies that support these strategic products, Matsushita established corporate-level core technology development groups, which are responsible for the following areas: multimedia software technology; semiconductor technology; devices, environment and production engineering technologies; and cutting-edge technologies.

Total expenditures for research and development amounted to 526 billion yen, 544 billion yen and 566 billion yen for the three fiscal years ended March 31, 2000, 2001 and 2002, respectively, representing 7.2%, 7.1% and 8.2% of Matsushita’s total net sales for each of those periods.

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

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The severe conditions of the Japanese and global economies have caused decreases in Matsushita’s sales in a number of product areas, with significant negative impact on its results of operations in the year ended March 31, 2002. Within its major product categories, Matsushita has been experiencing negative effects on the sales of cellular phones and PC-related products, as well as components and devices and FA equipment. With respect to cellular phones, the slowdown in growth in demand that began in the second half of the year ended March 31, 2001 continued into the year ended March 31, 2002. This contributed to the buildup of industry-wide excess inventory of cellular phones and reduced shipments of Matsushita’s handsets. Similarly, the inventories of personal computers and related products also increased, reflecting the downturn in the market for those products. Meanwhile, Matsushita has suffered substantially reduced orders for components and devices and FA equipment from the global IT industry, as well as declining prices. Matsushita has also been suffering the negative effects of slow consumer spending on its consumer products in Japan, as well as weak overseas demand reflecting the economic slowdowns in the United States and other regions.

Matsushita expects that the sluggish conditions in the domestic market and fierce price competition in Japan and overseas will persist during the current fiscal year, ending March 31, 2003. In this severe business environment, Matsushita will strive to achieve a sales increase by introducing a range of new products, including its “V-Products” which are competitive products that Matsushita believes have the potential to achieve top share in high-volume markets and contribute to the Company’s overall performance. Together with benefits from the restructuring measures implemented during the year ended March 31, 2002, including reduced fixed costs due to the employment restructuring initiatives and the closure or integration of manufacturing locations in and outside Japan, Matsushita aims to realize a recovery in earnings. For fiscal 2003, Matsushita currently expects a reduction in costs of about 119 billion yen as a result of the employment restructuring initiatives, and a savings of approximately 52 billion yen related to the closure or integration of manufacturing locations. However, whether or not Matsushita will succeed in achieving an earnings recovery during the current fiscal year will depend on numerous factors, many of which are beyond Matsushita’s control. As a mid-term growth strategy, Matsushita will implement a comprehensive Groupwide business and organizational restructuring upon transforming five of its subsidiaries into wholly-owned subsidiaries in the second half of the current fiscal year ending March 31, 2003. Matsushita currently expects that any positive effects of such Group restructuring will arise in or after the next fiscal year.

In June 2002, the Company and certain of its domestic subsidiaries obtained approval from the Ministry of Health, Labour and Welfare (the Ministry) for an exemption from the future benefit obligation with respect to the substitutional portion of each Employees Pension Fund (EPF) that the Company and certain of its domestic subsidiaries operate on behalf of the government in accordance with Japanese Welfare Pension Insurance Law, following the enactment in April 2001 of a new law concerning the defined benefit pension plans in Japan. The Company and certain of its domestic subsidiaries will apply for the return of the past benefit obligation of the substitutional portion of each EPF. Settlement of the past benefit obligation of the substitutional portion and the return of the pension assets to the government will be carried out by December 15, 2003. Matsushita currently expects that any positive effects of an exemption from the future benefit obligation and the settlement of the past benefit obligation with respect to the substitutional portion of each EPF will principally arise in the next fiscal year.

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E.	Accounting Principles
	Critical Accounting Policies
	The Company has identified the following critical accounting policies which are important to its financial condition and results of operations, and require management’s judgments.
	Long-lived Assets
	The useful lives of property, plant and equipment are summarized in Note 1(o) to the consolidated financial statements included in this annual report and reflect the estimated period that the Company expects to derive economic benefit from their use. In estimating the useful lives and determining whether subsequent revisions to the useful lives are necessary, the Company considers the likelihood of technological obsolescence, changes in demand for the products related to such equipment, and other factors which may affect their utility. The effect of any future changes to the estimated useful lives of the equipment and machinery could be significant to the Company’s results of operations.
	Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted and without interest charges) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Factors which may contribute to the need for future impairment charges include changes in the use of the assets resulting from the Company’s restructuring initiatives, technological changes or any significant declines in the demand for the related products.
	Valuation of Available-for-sale Securities
	The Company holds available-for-sale securities included in short-term investments and investments and advances. Available-for-sale securities are carried at fair value with unrealized holding gains and losses included as a component of accumulated other comprehensive income (loss), net of applicable taxes.
	Individual securities classified as available-for-sale are reduced to net realizable value by a charge to income for other than temporary declines in fair value. Management regularly reviews each investment security for impairment based on criteria that include the extent to which cost exceeds market value, the duration of that market decline and the financial health of and specific prospects for the issuer.

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Valuation of Inventory

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make a sale. The Company routinely reviews its inventories for their saleability and for indications of obsolescence to determine if inventories should be written-down to net realizable value. Judgments and estimates must be made and used in connection with establishing such allowances in any accounting period. In estimating the net realizable value of its inventories, the Company considers the age of the inventory and the likelihood of spoilage or changes in market demand for its inventories.

Warranties

The Company makes estimates of potential warranty claims related to its revenues. The Company provides for such costs based upon historical experience and its estimate of the level of future claims. Management makes judgments and estimates in connection with establishing the warranty reserve in any accounting period. Differences may result in the amount and timing of its revenue for any period if the Company makes different judgments or utilizes different estimates.

Valuation of Accounts Receivable and Noncurrent Receivables

The Company reviews its accounts receivable on a periodic basis and provides an allowance for doubtful receivables based on historical loss experience and current economic conditions. In evaluating the collectibility of individual receivable balances, the Company considers the age of the balance, the customers’ historical payment history, their current credit-worthiness and adequacy of collateral.

The Company records noncurrent receivables at cost, less the related allowance for impaired receivables. A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected future cash flows or the fair value of the collateral. Cash receipts on impaired receivables are applied to reduce the principal amount of such receivables until the principal has been recovered and are recognized as interest income thereafter. Management’s judgment is required in making estimates of the future cash flows of an impaired loan. Such estimates are based on current economic conditions and the current and expected financial condition of the debtor.

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Accounting for Derivatives

The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. The Company uses derivative instruments principally to manage foreign currency risks resulting from transactions denominated in currencies other than the Japanese yen. As discussed in Note 1(n) to the consolidated financial statements included in this annual report, the Company recognizes all derivatives as either assets or liabilities on the balance sheet at their fair value. Changes in the fair value of those derivatives are reported in earnings or other comprehensive income depending on their use and whether they qualify for hedge accounting. The accounting for gains and losses associated with changes in the fair value of the derivative depends on its hedge designation and whether the hedge is highly effective in achieving offsetting changes in the fair values or cash flows of the hedged item. The Company evaluates and determines on a continuous basis if the derivative remains highly effective in offsetting changes in the fair value or cash flows of the hedged item. If the derivative ceases to be highly effective in offsetting changes in the fair value or cash flows of the hedged item, the Company discontinues hedge accounting prospectively. Because the derivatives the Company uses are not complex, significant judgment is not required to determine their fair values. Fair values are determined principally by receiving quotations from banks or brokers.

Loss Contingencies

Loss contingencies may from time to time arise from situations such as product liability claims, disputes over intellectual property rights, and other legal actions. Loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent liabilities are often resolved over long time periods. In recording liabilities for probable losses, management is required to make estimates and judgments regarding the amount or range of the probable loss. Management continually assesses the adequacy of estimated loss contingencies and, if necessary, adjusts the amounts recorded as better information becomes known.

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New Accounting Pronouncements

The Company will adopt Emerging Issues Task Force Issue (EITF) 01-9 “Accounting for Consideration Given by a Vender to a Customer or Reseller of the Vendor’s Products” in the fiscal year beginning April 1, 2002. The Company does not expect that the adoption of EITF 01-9 will materially affect the results of operations or financial position.

In June 2001, FASB issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that all business combinations be accounted for by the purchase method and changes the criteria for recognition of intangible assets acquired in business combinations. The provisions of SFAS No. 141 apply to all business combinations initiated after June 30, 2001, as well as all purchase method business combinations completed after June 30, 2001. SFAS No. 142 will require that goodwill and intangible assets that have indefinite useful lives no longer be amortized but should be tested at least annually for impairment. Intangible assets that have estimable useful lives will continue to be amortized over their useful lives. SFAS No. 142 also provides specific guidance for testing for impairment of goodwill and intangibles with indefinite useful lives. The provisions of SFAS No. 142 will be effective from the fiscal year beginning April 1, 2002, however, goodwill and intangible assets acquired after June 30, 2001, will be subject immediately to the nonamortization and amortization provisions of SFAS No. 142. The adoption of SFAS No. 141 did not have a material effect on the Company’s results of operations or financial position. The Company does not expect that the adoption of SFAS No. 142 will materially affect the results of operations or financial position.

In June 2001, FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal operation of a long-lived asset, except for certain obligations of lessees. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and subsequently allocated to expense over the asset’s useful life. The Company will adopt the provisions of SFAS No. 143 on April 1, 2003. The Company does not expect that the adoption will materially affect the results of operations or financial position.

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

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Item 6.  Directors, Senior Management and Employees

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

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

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

Yoichi Morishita	Chairman of the Board of Directors – since June 2000
(Jun. 23, 1934)	- -1987	Director of the Company;
	- -1992	Executive Vice President and Director of the Company;
	- -1993	President and Director of the Company.
Masayuki Matsushita	Vice Chairman of the Board of Directors – since June 2000
(Oct. 16, 1945)	- -1986	Director of the Company;
	- -1992	Senior Managing Director of the Company;
	- -1996	Executive Vice President and Director of the Company.
Kunio Nakamura	President and Director – since June 2000
(Jul. 5, 1939)	- -1993	Director of the Company, and Director of Corporate Management Division for the Americas;
	- -1996	Managing Director of the Company;
	- -1997	Senior Managing Director of the Company, and President of AVC Company.
Atsushi Murayama	Executive Vice President and Director – since June 2000
(Mar. 29, 1938)	In charge of Planning, Personnel and General Affairs.
	- -1995	Director of the Company;
	- -1997	Managing Director of the Company;
	- -1998	Senior Managing Director of the Company.
Takashi Kawada	Executive Vice President and Director – since June 2001
(Mar. 13, 1937)	In charge of Communications and Automotive Electronics Business.
	- -1989	Director of Matsushita Communication Industrial Co., Ltd. (MCI);
	- -1993	President of MCI.

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

Kazuo Toda	Senior Managing Director – since June 1999
(Feb. 13, 1941)	In charge of Corporate Marketing Division for Panasonic Brand, Corporate Marketing Division for National Brand, Corporate Consumer Products Distribution Division, Corporate Commodity Sales, Housing Equipment Sales, Electrical Supplies Sales, Advertising, Logistics, and Corporate CS Division.
	-1994	Director of the Company, and in charge of Home Appliance Business;
	- -1996	Managing Director of the Company;
	- -1997	President of Home Appliance & Housing Electronics Company;
	- -2000	President of AVC Company;
	- -2001	Director of Corporate Marketing Division for Panasonic Brand.
Osamu Tanaka	Senior Managing Director – since June 1999
(Nov. 1, 1940)	Tokyo Representative, and in charge of Public and Private Institutions, Recycling Business Promotion and Panasonic Center.
	- -1995	Director of the Company, and Director of Corporate Consumer Sales Division;
	- -1997	Managing Director of the Company;
	- -1999	In charge of Corporate Consumer Sales;
	- -2001	In charge of Corporate Consumer Products Distribution Division and Public and Private Institutions.
Sukeichi Miki	Senior Managing Director – since June 2001
(Feb. 5, 1940)	In charge of Technology, Intellectual Property and Overseas Research Laboratories.
	- -1997	Director of the Company, and in charge of Multimedia Technology;
	- -1999	Managing Director of the Company, and in charge of Technology and Overseas Research Laboratories;
	- -2000	In charge of Intellectual Property.
Yukio Shohtoku	Managing Director – since June 1999
(Nov. 8, 1939)	In charge of Overseas Operations.
	- -1993	Associate Director of Corporate Management Division for Asia, Oceania and the Middle East;
	- -1994	Director of the Company, and Director of Corporate Management Division for China;
	- -2000	In charge of Overseas Operations.

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

Takami Sano	Managing Director – since June 2000
(Apr. 2, 1943)	In charge of Industrial Sales, Semiconductor Sales, Factory Automation Sales and Automotive Electronics Sales, Director of Corporate Industrial Marketing & Sales Division, and President of Factory Automation Company.
	- -1992	Director of Matsushita Battery Industrial Co., Ltd.;
	- -1998	Director of the Company, and Director of Corporate Industrial Marketing & Sales Division.
Susumu Koike	Managing Director – since June 2000
(Nov. 15, 1945)	In charge of Device Technology, Environmental Technology, Production Engineering and Recycling Process Systems Business, and President of Semiconductor Company.
	- -1993	Director of Matsushita Electronics Corporation;
	- -1998	Director of the Company, and in charge of Semiconductor Technology;
	- -2001	President of Semiconductor Company.
Fumio Ohtsubo	Managing Director – since June 2000
(Sep. 5, 1945)	President of AVC Company, and Business Group Executive of AVC Network Business Group, and in charge of Storage Device Business.
	- -1998	Director of the Company, and Vice President of AVC Company;
	- -2001	Business Group Executive of AVC Network Business Group.
Haruo Ueno	Managing Director – since June 2001
(Nov. 9, 1940)	Director of Corporate Legal Affairs Division.
	- -1965	Joined the National Police Agency;
	- -1994	Joined the Company as Advisor;
	- -1998	Director of the Company, and Director of Corporate Legal Affairs Division.
Hidetsugu Otsuru	Managing Director – since June 2001
(Aug. 20, 1943)	President of Display Devices Company, and in charge of Quality and Environment.
	- -1998	Director of the Company, and in charge of Corporate Quality Administration Division and Purchasing Administration Department;
	- -1999	President of Matsushita Electronics Corporation;
	- -2001	President of Display Devices Company.
Yoshiaki Kushiki	Managing Director – since June 2001
(Jan. 17, 1946)	In charge of Multimedia Technology and Software Technology.
	- -1997	Director of Multimedia Development Center;
	- -1999	Director of the Company, and in charge of Multimedia Technology.

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Name		Positions, responsibilities and brief personal records
(Date of birth)
Josei Ito	Director – since June 1994
(May 25, 1929)	(Chairman of the Board of Nippon Life Insurance Co.)
	-1989	President of Nippon Life Insurance Co.;
	-1997	Chairman of the Board of Nippon Life Insurance Co.
Toshio Morikawa	Director – since June 2000
(Mar. 3, 1933)	(Executive Advisor of Sumitomo Mitsui Banking Corporation)
	-1997	Chairman of the Board of The Sumitomo Bank, Ltd.;
	-2001	Executive Advisor of Sumitomo Mitsui Banking Corporation.
Hiroaki Enomoto	Director – since June 1996
(Nov. 3, 1942)	Director of Tokyo Branch, and in charge of Public and Private Institutions.
	-1965	Joined the Ministry of International Trade & Industry;
	-1995	Joined the Company as Corporate Advisor;
	-1998	Director of Tokyo Branch, and in charge of Public and Private Institutions.
Toshio Sugiura	Director – since June 1997
(Sep. 20, 1941)	Director of Corporate Management Division for China and Northeast Asia.
	-1995	President of Matsushita Electric Co., (Malaysia) Bhd.;
	-1997	President of Air-conditioner Company;
	-2000	Director of Corporate Management Division for China.
Tetsuya Kawakami	Director – since June 2000
(Dec. 7, 1941)	In charge of Finance and Accounting.
	-1996	General Manager of Corporate Accounting Department.
Hideaki Iwatani	Director – since June 2000
(Jul. 21, 1945)	Director of Corporate Management Division for the Americas.
	-1996	President of Panasonic Consumer Electronics Company in Matsushita Electric Corporation of America;
	-2000	Director of Corporate Management Division for the Americas.
Yoshitaka Hayashi	Director – since June 2000
(Jun. 7, 1946)	In charge of Appliance Business, President of Home Appliance & Housing Electronics Company and Air-conditioner Company, and in charge of Packaged Air-conditioner Company and Healthcare & Medical Business Center.
	-1999	Vice President of Home Appliance & Housing Electronics Company;
	-2000	President of Home Appliance & Housing Electronics Company;
	-2001	Director of Corporate Marketing Division for National Brand.

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Name		Positions, responsibilities and brief personal records
(Date of birth)
Toshihiro Sakamoto	Director – since June 2000
(Oct. 27, 1946)	Senior Vice President of AVC Company, and Business Group Executive of Visual Network Products Business Group.
	-1998	President of Matsushita Electric (Taiwan) Co., Ltd.;
	-2000	Vice President of AVC Company.
Masaki Akiyama	Director – since June 2001
(Jun. 29, 1943)	Director of Corporate System Sales Division and Corporate Systems Solutions Division.
	-1994	Director of Matsushita Communication Industrial Co., Ltd. (MCI);
	-1998	Senior Managing Director of MCI;
	-2000	Director of Corporate Systems Solutions Division.
Yoichiro Maekawa	Director – since June 2001
(Jan. 6, 1944)	Director of Corporate e-Net Business Division.
	-1997	General Manager of Corporate Planning Office;
	-2000	Director of Corporate e-Net Business Division.
Tomikazu Ise	Director – since June 2001
(Dec. 23, 1946)	Director of Corporate Management Division for Europe.
	-1998	President of Panasonic Deutschland GmbH;
	-1999	President of Panasonic Marketing Europe GmbH;
	-2000	Director of Corporate Management Division for Europe.
Masaharu Matsushita (Sep. 17, 1912)	Honorary Chairman of the Board of Directors and Executive Advisor – since June 2000
	-1947	Director of the Company;
	-1961	President and Director of the Company;
	-1977	Chairman of the Board of Directors of the Company.
Motoi Matsuda	Senior Corporate Auditor – since June 2000
(Feb. 11, 1937)	-1993	Director of the Company, and in charge of Finance and Accounting;
	-1998	Senior Managing Director of the Company.
Yoshitomi Nagaoka	Senior Corporate Auditor – since June 2001
(May 31, 1941)	-1996	Director of the Company, and in charge of AVC Technology;
	-1997	Vice President of AVC Company, in charge of Technology.
Toshiomi Uragami	Corporate Auditor – since June 2000
(Nov. 4, 1935)	(Executive Advisor of Sumitomo Life Insurance Co.)
	-1997	Chairman of the Board of Sumitomo Life Insurance Co.;
	-2001	Executive Advisor of Sumitomo Life Insurance Co.

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Name		Positions, responsibilities and brief personal records
(Date of birth)
Kiyosuke Imai	Corporate Auditor – since June 2000
(Nov. 14, 1934)	(Chairman of the Board of Matsushita Electric Works, Ltd.)
	-1994	President of Matsushita Electric Works, Ltd.;
	-2000	Chairman of the Board of Matsushita Electric Works, Ltd.

	There are no family relationships between any Director or Corporate Auditor and any other Director or Corporate Auditor of the Company except as described below:
	Masayuki Matsushita, Vice Chairman of the Board of Directors is the son of Masaharu Matsushita, Honorary Chairman of the Board of Directors and Executive Advisor.
B.	Compensation
	The aggregate amount of remuneration, including bonuses, paid by the Company during fiscal 2002 to all Directors and Corporate Auditors (38 persons) for services in all capacities was 1,166 million yen.
	In accordance with customary Japanese business practices, a retiring Director or Corporate Auditor receives a lump-sum retirement payment, which is subject to approval of the general meeting of shareholders. Retirement allowances provided for Directors and Corporate Auditors for fiscal 2002 amounted to 294 million yen.
	For details of the Company’s stock option plans for Board members and select senior executives, see Section E of this Item 6.
C.	Board Practices
	For information on the Company’s Directors and Statutory Auditors, see Section A of this Item 6.
	Pursuant to the home country practices exception granted by the New York Stock Exchange, Matsushita is permitted to follow corporate governance practices complying with relevant Japanese laws and Japanese stock exchange rules, which are different from those followed by U.S. domestic companies under the New York Stock Exchange’s listing standards. The New York Stock Exchange rules and Matsushita’s current practices relating to corporate governance have the following significant differences:

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

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

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

On June 6, 2002, the Corporate Accountability and Listing Standards Committee of the New York Stock Exchange issued a report recommending that the Exchange adopt significant changes to its corporate governance listing standards. The report also contains several recommended changes to the Securities and Exchange Commission’s disclosure and corporate governance requirements. The New York Stock Exchange has stated that it plans to submit the proposals for approval to its Board of Directors in August 2002 and then would submit them to the Securities and Exchange Commission for approval. Under the current proposals, non-U.S. issuers such as Matsushita would continue to be permitted to follow home country practices with respect to corporate governance requirements. If and when the proposed rules are finally adopted after the Securities and Exchange Commission’s approval, there would be additional significant differences other than those discussed above between the New York Stock Exchange rules and Matsushita’s current practices relating to corporate governance.

The rights of ADR holders, including their rights relating to corporate governance practices, are governed by the Amended and Restated Deposit Agreement (incorporated by reference to the Registration Statement on Form F-6 (File No. 333-12694) filed on October 4, 2000).

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

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

Most regular employees in Japan, except management personnel, are union members, principally of the Matsushita Electric Industrial Workers Union, which is affiliated with the Japanese Electrical Electronic & Information Union.

As is customary in Japan, Matsushita negotiates annually with the unions and grants annual wage increases and semiannual bonuses. Matsushita also renews the terms and conditions of labor contracts, other than those relating to wages and bonuses, every other year. In recent years, Matsushita has been introducing in Japan new comprehensive employment and personnel systems to satisfy the diversified needs of employees.

Such systems include an individual performance-oriented annual salary system, a regional-based employee remuneration system and an alternative payment system under which employees can receive retirement and fringe benefits up front as an addition to their monthly salary.

For a quarter century, Matsushita has not experienced any major labor strikes or disputes. Matsushita considers its labor relations to be excellent.

The number of voluntary retirees of special early retirement programs implemented for the employees of Matsushita in Japan in the year ended March 31, 2002 was approximately 13,000. They all retired by March 31, 2002.

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

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

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In May 1998, the Board of Directors decided to implement the Company’s first stock option plan for Board members and select senior executives, and to purchase the Company’s own shares for transfer to them under the plan, pursuant to Article 210-2 of the Japanese Commercial Code. Upon approval at the ordinary general meeting of shareholders held in June 1998 and subsequent Board of Directors’ resolutions, stock options (rights to purchase common shares) were provided to the then 32 Directors on the Board and four select senior executives in amounts ranging from 2,000 to 10,000 shares of common stock each, exercisable from July 1, 2000 to June 30, 2004, at an exercise price of 2,291 yen per share, which was calculated by a formula approved by shareholders at the said annual shareholders meeting. To cover these options, the Company in early July 1998 purchased on the Tokyo Stock Exchange (TSE) a total of 113,000 shares of common stock with an aggregate purchase price of approximately 252 million yen.

At the ordinary general meeting of shareholders held in June 1999, the shareholders again approved a stock option plan for Board members and select senior executives. The then 32 Directors on the Board and four select senior executives were granted stock options at a price of 2,476 yen per share, exercisable from July 1, 2001 to June 30, 2005, ranging from 2,000 to 10,000 shares of common stock each. For this purpose, the Company in early August 1999 purchased on the TSE a total of 116,000 shares of common stock with an aggregate purchase price of approximately 287 million yen.

In June 2000, another stock option plan for Board members and select senior executives was approved at the ordinary general meeting of shareholders. The then 28 Directors on the Board and five select senior executives were granted stock options ranging from 2,000 to 10,000 shares of common stock each, at a price of 2,815 yen per share, exercisable from July 1, 2002 through June 30, 2006. For the stock option plan, the Company in early July 2000 purchased on the TSE a total of 109,000 shares of common stock with an aggregate purchase price of approximately 306 million yen.

In June 2001, another stock option plan for Board members and select senior executives was approved at the ordinary general meeting of shareholders. The then 30 Directors on the Board and nine select senior executives were granted stock options ranging from 2,000 to 10,000 shares of common stock each, at a price of 2,163 yen per share, exercisable from July 1, 2003 through June 30, 2007. For the stock option plan, the Company in early July 2001 purchased on the TSE a total of 128,000 shares of common stock with an aggregate purchase price of approximately 250 million yen.

In June 2002, the Company obtained approval of the ordinary general meeting of shareholders regarding the issue of stock acquisition rights as stock options (the Stock Acquisition Rights) for Board members and select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese Commercial Code, as amended. Upon the shareholders’ approval, the Board of Directors has adopted resolutions to issue at no charge an aggregate of 116 Stock Acquisition Rights, each representing a stock option to purchase 1,000 shares of common stock of the Company, to the current 27 Directors on the Board and eight select senior executives. The Stock Acquisition Rights are exercisable during the period from July 1, 2004 through June 30, 2008. The amount to be paid by qualified persons upon exercise of each Stock Acquisition Right is set at 1,734 yen per share of common stock.

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

Item 7.  Major Shareholders and Related Party Transactions

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

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

Except as otherwise provided by law or by the Company’s Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders by a majority of the shares having voting rights represented at the meeting. The Commercial Code and the Company’s Articles of Incorporation provide, however, that the quorum for the election of Directors and Corporate Auditors shall not be less than one-third of the total number of voting rights of all the shareholders. The Company’s shareholders are not entitled to cumulative voting in the election of Directors. A corporate shareholder, more than one-quarter of whose total voting rights are directly or indirectly owned by the Company, may not exercise its voting rights in respect of the shares of the Company. The Company has no voting rights with respect to its own common stock. Shareholders may exercise their voting rights through proxies provided that the proxies are also shareholders holding voting rights. The Company’s shareholders also may cast their votes in writing. Shareholders may also exercise their voting rights by electronic means when the Board of Directors decides to permit such method of exercising voting rights.

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	The Commercial Code provides that in order to amend the Articles of Incorporation and in certain other instances, including a reduction of the stated capital, the removal of a Director or a Corporate Auditor, dissolution, merger or consolidation of the Company requiring shareholders resolutions, the transfer of the whole or an important part of the business, the taking over of the whole of the business of any other corporation, share exchange or share transfer requiring shareholders resolutions for the purpose of establishing 100% parent-subsidiary relationships, splitting of the corporation into two or more corporations requiring shareholders resolutions, any offering of new shares at a “specially favorable” price (or any offering of stock acquisition rights to subscribe for or acquire shares of capital stock (“stock acquisition rights”) or bonds with stock acquisition rights at a “specially favorable” exercise conditions) to any persons other than shareholders, the quorum shall be a majority of the total number of shares having voting rights outstanding and the approval of the holders of at least two-thirds of the shares having voting rights represented at the meeting is required (the “special shareholders resolution”).
(2)	As of March 31, 2002, approximately 8.58% of the Company’s common stock was owned by 176 United States shareholders including the ADR Depositary’s nominee, Moxley & Co., considered as one shareholder of record, owning approximately 4.45 % of the total common stock.
(3)	Matsushita is not, directly or indirectly, owned or controlled by other corporations, by the Japanese government or any foreign government or by any natural or legal person or persons severally or jointly.
(4)	As far as is known to the Company, there is no arrangement, the operation of which may at a subsequent date result in a change in control of Matsushita.

B.	Related Party Transactions
	Matsushita is not a party to any material related party transactions.

C.	Interests of Experts and Counsel
	Not applicable

Item 8.  Financial Information

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

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(2)	Legal Proceedings
	In November 1991, Loral Fairchild Corporation, a Delaware corporation, filed two lawsuits in the United States District Court for the District of Virginia against the Company, Matsushita Electric Corporation of America and 36 other defendants. The suits were consolidated. All defendants were charged with infringement of two U.S. patents by virtue of the production abroad and sale in the United States of certain charge coupled devices (CCDs), which are used in products such as video cameras and facsimile machines. In December 1991, this action was transferred to the United States District Court for the Eastern District of New York. The action seeks damages, attorneys’ fees and a permanent injunction. The Company has asserted that the patents are invalid and not infringed upon by its products incorporating CCDs. This litigation has been bifurcated between liability and damages and has been stayed as to all defendants except one defendant. In a first liability trial involving this defendant, a jury held that it infringed the two U.S. patents at issue. In July 1996, the court granted, among other things, its subsequent motion for judgment as a matter of law, overturning the verdict. Loral Fairchild Corporation appealed this decision to the Court of Appeals for the Federal Circuit and oral argument was held in June 1997. In June 1999, the Federal Circuit affirmed the district court’s claim construction and its non-infringement decision.
	In July 1992, Matsushita Electronics Corporation (MEC, a former subsidiary now merged into the Company), which manufactures CCDs, commenced a suit in the United States District Court for the Southern District of New York seeking a declaration that MEC’s CCDs and all end products incorporating MEC’s CCDs (collectively “products”) are licensed under the two U.S. patents at issue. In April 1993, the district court granted MEC’s motion for summary judgment and ruled that the products were licensed. The Court of Appeals for the Federal Circuit affirmed the decision in September 1994, and denied Loral Fairchild’s petition for rehearing in November 1994. MEC’s tort claim against Loral Fairchild and its parent, Loral Corporation, concerning certain liability issues was denied by the District Court in August 1997. The decision has not been appealed.
	Management is of the opinion that, based on the information currently available, any outcome of these actions against Matsushita will not have a material adverse effect on Matsushita’s operations or financial position.
	There are a number of other legal actions and administrative investigations against Matsushita. Management is of the opinion that damages, based on the information currently available, if any, resulting from these actions will not have a material effect on Matsushita’s results of operations or financial position.
(3)	Dividend Policy
	Maximizing benefit for shareholders has always been one of the fundamental policies of the Company. Consistent with this policy, Matsushita traditionally has distributed regular dividends to its shareholders on a periodic basis. However, due to factors including the severe economic conditions outlined in Section A of item 5, as well as unsatisfactory business results for fiscal 2002, the Board of Directors resolved to decrease the annual cash dividend.
	At the ordinary general meeting of shareholders held on June 27, 2002, a year-end cash dividend of Matsushita Electric Industrial Co., Ltd. was approved at the rate of 3.75 yen per share of common stock. The Company had already paid an interim dividend of 6.25 yen per share to each shareholder; accordingly the annual cash dividend per share was 10.00 yen.

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Matsushita plans to utilize retained earnings for future business growth and to strengthen the corporate management structure.

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

Item 9. The Offer and Listing

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

	Tokyo Stock Exchange				New York Stock Exchange
	Price per Share of				Price per American
	Common Stock (yen)				Depositary Share (dollars)*
Fiscal Year ended March 31	High		Low		High		Low
1998		2,520		1,750		21.10		13.51
1999		2,375		1,640		19.50		12.80
2000		3,320		2,050		30.30		17.35
2001		3,190		1,932		29.90		16.00
2002		2,360		1,398		19.43		11.14

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	Tokyo Stock Exchange				New York Stock Exchange
	Price per Share of				Price per American
	Common Stock (yen)				Depositary Share (dollars)*
Fiscal Year ended March 31	High		Low		High		Low
2001
1st quarter		3,070		2,410		29.28		22.65
2nd quarter		2,995		2,660		28.18		25.05
3rd quarter		3,190		2,430		29.90		22.13
4th quarter		2,800		1,932		25.25		16.00
2002
1st quarter		2,360		1,901		19.43		15.35
2nd quarter		1,960		1,402		15.92		11.50
3rd quarter		1,697		1,398		13.89		11.60
4th quarter		1,826		1,482		14.50		11.14
2003
1st quarter		1,787		1,528		14.64		12.13
Most recent 6 months	High		Low		High		Low
January, 2002		1,815		1,623		13.70		12.35
February, 2002		1,725		1,482		12.83		11.14
March, 2002		1,826		1,573		14.50		12.21
April, 2002		1,749		1,576		13.66		12.13
May, 2002		1,787		1,628		14.64		12.76
June, 2002		1,783		1,528		14.47		12.51

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

B.	Plan of Distribution
	Not applicable

C.	Markets
	See Section A of Item 9.

D.	Selling Shareholders
	Not applicable

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E.	Dilution
	Not applicable

F.	Expenses of the Issue
	Not applicable

Item 10.  Additional Information

A.	Share Capital
	Not applicable

B.	Memorandum and Articles of Association
	Organization
	The Company is a joint stock corporation (kabushiki kaisha) incorporated in Japan under the Commercial Code (shoho) of Japan. It is registered in the Commercial Register (shogyo tokibo) maintained by the Moriguchi Branch Office of the Osaka Legal Affairs Bureau and several other registry offices of the Ministry of Justice.
	Objects and purposes
	Article 3 of the Articles of Incorporation of the Company provides that its purpose is to engage in the following lines of business:

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

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

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Directors

Under the Commercial Code, each Director has executive powers and duties to manage the affairs of the Company and each Representative Director, who is elected from among the Directors by the Board of Directors, has the statutory authority to represent the Company in all respects. Under the Commercial Code, the Directors must refrain from engaging in any business competing with the Company unless approved by the Board of Directors and any Director who has a material interest in the subject matter of a resolution to be taken by the Board of Directors cannot vote on such resolution. The total amount of remuneration to Directors and that to Corporate Auditors are subject to the approval of the general meeting of shareholders. Within such authorized amounts the Board of Directors and the Board of Corporate Auditors respectively determine the compensation to each Director and Corporate Auditor.

Except as stated below, neither the Commercial Code nor the Company’s Articles of Incorporation make special provisions as to the Directors’ or Corporate Auditors’ power to vote in connection with their compensation, the borrowing power exercisable by a Representative Director (or a Director who is given power by a Representative Director to exercise such power), their retirement age or requirement to hold any shares of capital stock of the Company. The Commercial Code specifically requires the resolution of the Board of Directors for a company to acquire or dispose of material assets; to borrow a substantial amount of money; to employ or discharge from employment important employees, such as corporate executive officers; and to establish, change or abolish material corporate organization such as a branch office. The Regulations of the Board of Directors of the Company require a resolution of the Board of Directors for the Company to borrow a large amount of money or to give a guarantee in a large amount. There is no written rule as to what constitutes a “large” amount in these contexts. However, it has been the general practice of the Company’s Board of Directors to adopt a resolution for a borrowing in an amount not less than 10 billion yen or its equivalent.

Common Stock

General

Set forth below is information relating to the Company’s Common Stock, including brief summaries of the relevant provisions of the Company’s Articles of Incorporation and Share Handling Regulations, as currently in effect, and of the Commercial Code of Japan and related legislation. The discussion of the Commercial Code below reflects certain amendments to the Commercial Code, which became effective on October 1, 2001 (the “2001 Amendments”) and April 1, 2002 (the “2002 Amendments”).

In order to assert shareholders’ rights against the Company, a shareholder must have its name and address registered on the Company’s register of shareholders, in accordance with the Company’s Share Handling Regulations. The registered beneficial holder of deposited shares underlying the ADSs is the Depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert shareholders’ rights to the Company.

Authorized capital

Article 5 of the Articles of Incorporation of the Company provides that the total number of shares authorized to be issued by the Company is four billion nine hundred and fifty million (4,950,000,000) shares.

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As of March 31, 2002, 2,138,514,603 shares of Common Stock without having any par value were issued and outstanding.

The 2001 Amendments eliminated the concept of “par value” of shares of capital stock. Thus, all shares of capital stock of the Company have no par value.

Dividends

The Articles of Incorporation of the Company provide that the accounts shall be closed on March 31 of each year and that dividends, if any, shall be paid to shareholders, beneficial shareholders and pledgees of record as of the end of such day. After the close of the fiscal period, the Board of Directors prepares, among other things, a proposed allocation of profits for dividends and other purposes; this proposal is submitted to the Board of Corporate Auditors of the Company and to independent certified public accountants and then submitted for approval to the ordinary general meeting of shareholders, which is normally held in June each year. In addition to provisions for dividends, if any, and for the legal reserve and other reserves, the allocation of profits customarily includes a bonus to Directors and Corporate Auditors. In addition to year-end dividends, the Board of Directors may by its resolution declare a cash distribution pursuant to Article 293-5 of the Commercial Code (an “interim dividend”) to shareholders, beneficial shareholders and pledgees of record as of the end of each September 30, without shareholders’ approval, but subject to the limitations described below.

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

(i)	its stated capital;
(ii)	its capital surplus;
(iii)	its accumulated legal reserve;
(iv)	the legal reserve to be set aside in respect of the fiscal period concerned;
(v)	the excess, if any, of unamortized expenses incurred in preparation for commencement of business and in connection with research and development over the aggregate of amounts referred to in (ii), (iii) and (iv) above; and
(vi)	if certain assets of the Company are stated at market value on such balance sheet pursuant to the provisions of the Commercial Code, the excess, if any, of the aggregate amount of their market value over the aggregate acquisition cost thereof.

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In the case of interim dividends, the net assets are calculated by reference to the non-consolidated balance sheet as at the last closing of the Company’s accounts, but adjusted to reflect; (x) any subsequent payment by way of appropriation of retained earnings and transfer to legal reserve in respect thereof; (y) any subsequent transfer of retained earnings to stated capital; and (z) if the Company has been authorized, pursuant to a resolution of an ordinary general meeting of shareholders, to purchase shares of its Common Stock (see Section B of this Item 10 – Memorandum and Articles of Association – Common Stock – Acquisition by the Company of its Common Stock), the total amount of the purchase price of such shares so authorized by such resolution that may be paid by the Company, provided that interim dividends may not be paid where there is a risk that at the end of the fiscal year there might not be any excess of net assets over the aggregate of the amounts referred to in (i) through (vi) above.

In Japan the ex-dividend date and the record date for dividends precede the date of determination of the amount of the dividends to be paid.

Under its Articles of Incorporation, the Company is not obligated to pay any dividends which are left unclaimed for a period of three years after the date on which they first became payable.

For information as to Japanese taxes on shareholder dividends, see Section E of this Item 10 – Taxation – Japanese Taxation.

Stock splits

The Company may at any time split shares in issue into a greater number of shares by resolution of the Board of Directors, and may amend its Articles of Incorporation to increase the number of the authorized shares to be issued in proportion to the relevant stock split in principle pursuant to a resolution of the Board of Directors rather than a special resolution of a general meeting of shareholders which is otherwise required for amending the Articles of Incorporation.

In the event of a stock split, generally, shareholders will not be required to exchange share certificates for new share certificates, but certificates representing the additional shares resulting from the stock split will be issued to shareholders. When a stock split is to be made, the Company must give public notice of the stock split, specifying the record date therefor, at least two weeks prior to such record date. In addition, promptly after the stock split takes effect, the Company must give notice to each shareholder specifying the number of shares to which such shareholder is entitled by virtue of the stock split.

General meeting of shareholders

The ordinary general meeting of shareholders of the Company for each fiscal year is normally held in June in each year in Kadoma-shi, Osaka, Japan. In addition, the Company may hold an extraordinary general meeting of shareholders whenever necessary by giving notice of convocation thereof at least two weeks prior to the date set for the meeting.

Notice of convocation of a shareholders’ meeting setting forth the place, time and purpose thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident shareholder, to his or her standing proxy or mailing address in Japan) at least two weeks prior to the date set for the meeting. Under the Commercial Code, such notice may be given to shareholders by electronic means, subject to the consent by the relevant shareholders. The record date for an ordinary general meeting of shareholders is March 31 of each year.

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Any shareholder or group of shareholders holding at least three percent of the total number of voting rights for a period of six months or more may require the convocation of a general meeting of shareholders for a particular purpose. Unless such shareholders’ meeting is convened promptly or a convocation notice of a meeting which is to be held not later than six weeks from the day of such demand is dispatched, the requiring shareholder may, upon obtaining a court approval, convene such shareholders’ meeting.

Any shareholder or group of shareholders holding at least 300 voting rights or one percent of the total number of voting rights for a period of six months or more may propose a matter to be considered at a general meeting of shareholders by submitting a written request to a Representative Director at least six weeks prior to the date set for such meeting.

Voting rights

So long as the Company maintains the unit share system (see Section B of this Item 10 – Memorandum and Articles of Association – Common Stock – New “Unit” share system) a holder of shares constituting one or more whole units is entitled to one voting right per unit of shares subject to the limitations on voting rights set forth in the following paragraph. If the Company eliminates from its Articles of Incorporation the provisions relating to the unit of shares, holders of Common Stock will have one voting right for each share they hold. Except as otherwise provided by law or by the Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders by a majority of the number of voting rights of all the shareholders represented at the meeting. The Commercial Code and the Company’s Articles of Incorporation provide, however, that the quorum for the election of Directors and Corporate Auditors shall not be less than one-third of the total number of voting rights of all the shareholders. The Company’s shareholders are not entitled to cumulative voting in the election of Directors. The Company or a corporate shareholder more than one-quarter of whose total voting rights are directly or indirectly owned by the Company may not exercise its voting rights with respect to shares of Common Stock of the Company that it owns. Shareholders may exercise their voting rights through proxies, provided that the proxies are also shareholders holding voting rights. The Company’s shareholders also may cast their votes in writing. Shareholders may also exercise their voting rights by electronic means when the Board of Directors decides to permit such method of exercising voting rights.

The Commercial Code provides that in order to amend the Articles of Incorporation and in certain other instances, including a reduction of stated capital, the removal of a Director or Corporate Auditor, dissolution, merger or consolidation with a certain exception under which shareholders’ resolution is not required, the transfer of the whole or an important part of the business, the taking over of the whole of the business of any other corporation with a certain exception under which shareholders resolution is not required, share exchange or share transfer for the purpose of establishing 100 percent parent-subsidiary relationships with a certain exception under which shareholders resolution is not required, splitting of the corporation into two or more corporations with a certain exception under which shareholders resolution is not required, or any offering of new shares at a “specially favorable” price (or any offering of stock acquisition rights to subscribe for or acquire shares of capital stock (“stock acquisition rights”) or bonds with stock acquisition rights at a “specially favorable” exercise conditions) to any persons other than shareholders, the quorum shall be a majority of the total voting rights of all the shareholders and the approval by at least two-thirds of the voting rights of all the shareholders represented at the meeting is required (the “special shareholders resolutions”).

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Issue of additional shares and pre-emptive rights

Holders of the Company’s shares of Common Stock have no pre-emptive rights under its Articles of Incorporation. Authorized but unissued shares may be issued at such times and upon such terms as the Board of Directors determines, subject to the limitations as to the offering of new shares at a “specially favorable” price mentioned under “Voting rights” above. The Board of Directors may, however, determine that shareholders shall be given subscription rights regarding a particular issue of new shares, in which case such rights must be given on uniform terms to all shareholders as at a record date of which not less than two weeks’ prior public notice must be given. Each of the shareholders to whom such rights are given must also be given notice of the expiry thereof at least two weeks prior to the date on which such rights expire.

Rights to subscribe for new shares may be made generally transferable by the Board of Directors. Whether the Company will make subscription rights generally transferable in future rights offerings will depend upon the circumstances at the time of such offerings. If subscription rights are not made generally transferable, transfers by a non-resident of Japan or a corporation organized under the laws of a foreign country or whose principal office is located in a foreign country will be enforceable against the Company and third parties only if the Company’s prior written consent to each such transfer is obtained. When such consent is necessary in the future for the transfer of subscription rights, the Company intends to consent, on request, to all such transfers by such a non-resident or foreign corporation.

Under the 2002 Amendments, subject to certain requirements, the Company may issue stock acquisition rights by a resolution of the Board of Directors. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as prescribed in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, the Company will be obliged to issue the relevant number of new shares or alternatively to transfer the necessary number of existing shares held by it.

Liquidation rights

In the event of a liquidation of the Company, the assets remaining after payment of all debts and liquidation expenses and taxes will be distributed among shareholders in proportion to the respective numbers of shares of common stock held.

Record date

March 31 is the record date for the Company’s year-end dividends. So long as the Company maintains in its Articles of Incorporation a provision for the unit of shares, the shareholders and beneficial shareholders who are registered as the holders of one unit of shares or more in the Company’s registers of shareholders and/or beneficial shareholders at the end of each March 31 are also entitled to exercise shareholders’ rights at the ordinary general meeting of shareholders with respect to the fiscal year ending on such March 31. September 30 is the record date for interim dividends. In addition, the Company may set a record date for determining the shareholders and/or beneficial shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

The price of shares generally goes ex-dividends or ex-rights on Japanese stock exchanges on the third business day prior to a record date (or if the record date is not a business day, the fourth business day prior thereto), for the purpose of dividends or rights offerings.

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Acquisition by the Company of its Common Stock

The Company may acquire its own shares through a stock exchange on which such shares are listed (pursuant to an ordinary resolution of an ordinary general meeting of shareholders), by way of tender offer (pursuant to an ordinary resolution of an ordinary general meeting of shareholders), or by purchase from a specific party other than a subsidiary of the Company (pursuant to a special resolution of an ordinary general meeting of shareholders) or from a subsidiary of the Company (pursuant to a resolution of the Board of Directors). When such acquisition is made by the Company from a specific party other than a subsidiary of the Company, any other shareholder may make a demand to a Representative Director, more than five calendar days prior to the relevant shareholders’ meeting, that the Company also purchase the shares held by such shareholder. Any such acquisition of shares must satisfy certain requirements, including that the total amount of the purchase price may not exceed the amount of the retained earnings available for dividend payments after taking into account any reduction, if any, of the stated capital, capital surplus or legal reserve (if such reduction of the stated capital, capital surplus or legal reserve has been authorized pursuant to a resolution of the relevant ordinary general meeting of shareholders), minus the amount to be paid by way of appropriation of retained earnings for the relevant fiscal year and the amount to be transferred to stated capital. However, if it is anticipated that the net assets on the balance sheet as at the end of the immediately following fiscal year will be less than the aggregate amount of the stated capital, capital surplus and other items as described in (i) through (vi) of “Dividends” above, the Company may not acquire such shares.

Shares acquired by the Company may be held by it for any period or may be cancelled by resolution of the Board of Directors. The Company may also transfer to any person the shares held by it, subject to a resolution of the Board of Directors, and subject also to other requirements similar to those applicable to the issuance of new shares, as described in “Issue of additional shares and pre-emptive rights” above. The Company may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company.

The Company repurchased 59,586,000 shares in the market between January 11 and April 19, 2002. As of April 30, 2002, the Company holds 60,455,097 shares of its own shares. The ordinary general meeting of shareholders held on June 27, 2002 approved the Company to repurchase its own shares up to 180,000,000 shares during the period between late June 2002 and late June 2003.

New “Unit” share system

The 2001 Amendments introduced a new unit share system called “tangen-kabushiki.”

Pursuant to these amendments and the Articles of Incorporation of the Company, 1,000 shares constitute one unit. Although the number of shares constituting a new unit is included in the Articles of Incorporation, any amendment to the Articles of Incorporation reducing (but not increasing) the number of shares constituting a unit or eliminating the provisions for the unit of shares may be made by the resolution of the Board of Directors rather than by the special shareholders resolution, which is otherwise required for amending the Articles of Incorporation. The number of shares constituting one new unit, however, cannot exceed 1,000 or one two-hundredth (1/200) of all issued shares.

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—Voting rights under the new unit share system

Under the new unit share system, shareholders shall have one voting right for each unit of shares that they hold. Any number of shares less than a full unit will carry no voting rights.

—Share certificates for less than a unit

Unless the Company’s Board of Directors adopts a resolution to eliminate the provision for the unit shares from the Articles of Incorporation or the shareholders amend the Articles of Incorporation by a special shareholders resolution to eliminate the provision not to issue share certificates for less than a unit of shares, a share certificate for any number of shares less than a unit will in general not be issued. As the transfer of shares normally requires the delivery of the share certificates therefor, any fraction of a unit for which no share certificates are issued is not transferable.

—Repurchase by the Company of shares constituting less than a unit

A holder of shares constituting less than one unit may require the Company to purchase such shares at their market value in accordance with the provisions of the Share Handling Regulations of the Company.

—Effect of the unit share system on holders of ADRs

A holder who owns ADRs evidencing less than 1,000 ADSs will indirectly own less than a whole unit of shares of Common Stock. Although, as discussed above, under the unit share system holders of less than a unit have the right to require the Company to purchase their shares, holders of ADRs evidencing ADSs that represent other than integral multiples of whole units are unable to withdraw the underlying shares of Common Stock representing less than a unit and, therefore, are unable, as a practical matter, to exercise the rights to require the Company to purchase such underlying shares unless the Company’s Articles of Incorporation are amended to eliminate the provision not to issue share certificates for the numbers of shares less than a unit. As a result, access to the Japanese markets by holders of ADRs through the withdrawal mechanism will not be available for dispositions of shares of Common Stock in lots less than a unit. The unit share system does not affect the transferability of ADSs, which may be transferred in lots of any size.

Reporting of substantial shareholdings

The Securities and Exchange Law of Japan and regulations thereunder requires any person who has become, beneficially and solely or jointly, a holder of more than five percent of the total issued shares of capital stock of a company listed on any Japanese stock exchange or whose shares are traded on the over-the-counter market in Japan to file with the Director-General of a competent Local Finance Bureau of the Ministry of Finance within five business days a report concerning such shareholdings.

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A similar report must also be filed in respect of any subsequent change of one percent or more in any such holding or any change in material matters set out in reports previously filed, with certain exceptions. For this purpose, shares issuable to such person upon conversion of convertible securities or exercise of share subscription warrants or stock acquisition rights are taken into account in determining both the number of shares held by such holder and the issuer’s total issued share capital. Copies of such report must also be furnished to the issuer of such shares and all Japanese stock exchanges on which the shares are listed or (in the case of shares traded over-the-counter) the Japan Securities Dealers Association.

Except for the general limitation under Japanese anti-trust and anti-monopoly regulations against holding of shares of capital stock of a Japanese corporation which leads or may lead to a restraint of trade or monopoly, and except for general limitations under the Commercial Code or the Company’s Articles of Incorporation on the rights of shareholders applicable regardless of residence or nationality, there is no limitation under Japanese laws and regulations applicable to the Company or under its Articles of Incorporation on the rights of non-resident or foreign shareholders to hold the shares of Common Stock of the Company or exercise voting rights thereon.

There is no provision in the Company’s Articles of Incorporation that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to merger, consolidation, acquisition or corporate restructuring involving the Company.

C.	Material Contracts
	All contracts concluded by the Company during the two years preceding the date of this report were entered into in the ordinary course of business.

D.

Exchange Controls

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

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

• an individual citizen or resident of the United States,

• a corporation or other entity taxable as a corporation organized under the laws of the United States or any State,

• an estate the income of which is subject to U.S. federal income tax without regard to its source, or

• a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons, or that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

An “Eligible U.S. Holder” is a U.S. Holder that:

• is a resident of the United States for purposes of the Treaty,

• does not maintain a permanent establishment or fixed base in Japan to which shares of Common Stock or ADSs are attributable and through which the U.S. Holder carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal services), and

• is not otherwise ineligible for benefits under the Treaty with respect to income and gain derived in connection with the shares of Common Stock or ADSs.

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This summary does not address any aspects of U.S. federal tax law other than income taxation, and does not discuss any aspects of Japanese tax law other than income taxation, inheritance and gift taxation and securities transfer taxation. Investors are urged to consult their tax advisor regarding the U.S. federal, state and local and Japanese and other tax consequences of owning and disposing of shares of Common Stock or ADSs. In particular, where relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax advisors any possible consequences of their failure to qualify as Eligible U.S. Holders. In general, taking into account the earlier assumptions, for purposes of the Treaty and for U.S. federal income and Japanese tax purposes, owners of ADRs evidencing ADSs will be treated as the owners of the shares of Common Stock represented by those ADSs, and exchanges of shares of Common Stock for ADSs, and exchanges of ADSs for shares of Common Stock, will not be subject to U.S. federal income or Japanese tax.

Japanese taxation

The following is a summary of certain Japanese income tax consequences of the ownership and disposition of shares of Common Stock or ADRs by a portfolio investor who is a non-resident of Japan or a non-Japanese corporation having no permanent establishment in Japan.

Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese withholding tax on dividends paid by a Japanese corporation. Stock splits in themselves are not subject to Japanese income tax.

In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-residents of Japan or non-Japanese corporations is 20 percent. At the date of this document, Japan has income tax treaties, conventions or agreements whereby the withholding tax rate is reduced, in most cases, to 15 percent for portfolio investors with, among other countries, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.

Under the Treaty, as currently in force, the maximum rate of Japanese withholding tax which may be imposed on dividends paid by a Japanese corporation to Eligible U.S. Holders generally is limited to 15 percent of the gross amount actually distributed. An Eligible U.S. Holder is required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax on Dividends in advance through the Company to the relevant tax authority before such payment of dividends. A standing proxy in Japan for a non-resident holder of Common Stock may provide this application service. With respect to ADRs, the Depositary or its agent will apply for this reduced rate on behalf of Eligible U.S. Holders by submitting two Application Forms (one before payment of dividends, the other within eight months after the Company’s fiscal year-end) to the Japanese tax authorities. To claim this reduced rate, an Eligible U.S. Holder of ADRs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the Depositary. An Eligible U.S. Holder who does not submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate under the Treaty from the relevant Japanese tax authority.

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Gains derived by a non-resident of Japan or a non-Japanese corporation from the sale of shares of Common Stock or ADRs outside Japan or from the sale of shares of Common Stock within Japan by a non-resident of Japan or a non-Japanese corporation having no permanent establishment in Japan, are in general not subject to Japanese income or corporation tax.

Japanese inheritance or gift tax at progressive rates may be payable by a non-resident individual who has acquired shares of Common Stock or ADRs as a legatee, heir or donee even though neither the individual nor the deceased nor donor is a Japanese resident.

Holders of shares of Matsushita’s Common Stock or ADSs should consult their tax advisers regarding the effect of these taxes.

U.S. federal income taxation

The following is a summary of certain United States federal income tax consequences of the ownership of shares of Common Stock or ADSs by a U.S. Holder. This summary is based on United States tax laws, including the United States Internal Revenue Code of 1986, as amended, and on the Treaty all of which are subject to change possibly with retroactive effect.

Taxation of dividends

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

Subject to certain limitations, the Japanese tax withheld in accordance with the Treaty will be creditable against the U.S. Holder’s United States federal income tax liability. For foreign tax credit limitation purposes, the dividend will be income from sources without the United States, but generally will be treated separately, together with other items of “passive income” or “financial services income.”

Taxation of capital gains

Subject to the PFIC rules discussed below, upon a sale or other disposition of shares of Common Stock or ADSs, a U.S. Holder will recognize gain or loss in an amount equal to the difference between the U.S. dollar value of the amount realized and the U.S. Holder’s tax basis (determined in U.S. dollars) in such shares of Common Stock or ADSs. Generally, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period for such shares of Common Stock or ADSs exceeds 1 year. Any such gain or loss will be income or loss from sources within the United States for foreign tax credit limitation purposes.

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Transfers of retained earnings and sales of shares of Common Stock to the Company

A transfer of retained earnings or legal reserve to stated capital is generally treated as a dividend payment for Japanese tax purposes subject to withholding tax. A sale of shares of Common Stock or ADSs to the Company results in a deemed dividend to the selling shareholders to the extent that the sales price exceeds the aggregate of the stated capital and the capital surplus attributable to the shares sold. Transfers of retained earnings or legal reserves to stated capital and deemed dividends that may result from sales of shares of Common Stock to the Company are not generally taxable events for United States federal income tax purposes and therefore would not give rise to foreign source income and U.S. Holders would not be able to use the foreign tax credit arising from any Japanese withholding tax imposed on such transactions unless they can apply the credit (subject to limitations) against U.S. tax due or other foreign source income in the appropriate category for foreign tax credit purposes.

Passive foreign investment company considerations

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

F.	Dividends and Paying Agents
	Not applicable

G.	Statement by Experts
	Not applicable

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

U.S. Securities and Exchange Commission:
    450 Fifth Street, N.W., Washington D.C. 20549

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New York Stock Exchange:
   20 Broad Street, New York, New York 10005

Pacific Exchange:
   301 Pine Street, San Francisco, California 94104

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

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

I.	Subsidiary Information
	Not applicable

Item 11. Quantitative and Qualitative Disclosures about Market Risk

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

Equity Price Risk

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

Maturities, costs and fair values of available-for-sale securities were as follows at March 31, 2002 and 2001:

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

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Foreign Exchange Risk

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

The following table provides the contract amounts and fair values of foreign exchange contracts, primarily hedging U.S. dollar revenues, at March 31, 2002 and 2001. Amounts related to foreign exchange contracts entered into in connection with long-term debt denominated in foreign currencies which eliminate all foreign currency exposures, are shown in the table of “Interest Rate Risk.”

		Yen (millions)
		2002					2001
		Contract amount		Fair value			Contract amount		Fair value
Forward:
	To sell foreign currencies		374,993		(3,746	)		350,087		(4,997	)
	To buy foreign currencies		173,546		2,470			109,523		2,283
Options purchased to sell foreign currencies			37,940		(219	)		16,430		(334	)
Options purchased to buy foreign currencies			—		—			34,412		1,327
Options written to buy foreign currencies			—		—			24,956		(1,483	)
Options written to sell foreign currencies			—		—			40,080		246

Interest Rate Risk

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

- 76 -

The following tables provide information about the Company’s financial instruments that are sensitive to changes in interest rates at March 31, 2002 and 2001. The table presents principal cash flows by expected maturity dates, related weighted average interest rates and fair values of financial instruments.

						Yen (millions)
						Carrying amount and maturity date (as of March 31, 2002)
			Average
			interest																	There-
			rate			Total			2003			2004		2005		2006		2007		after		Fair value
Long-term debt, including current portion:
	Japanese yen convertible bonds			1.2	%		143,226			16,999			97,744		11,483		17,000						161,532
	Straight bonds			1.0	%		300,000								100,000				100,000		100,000		297,503
	Straight bonds issued by a subsidiary			1.8	%		45,000						5,000				10,000		20,000		10,000		45,954
	U.S. dollar unsecured bonds			5.8	%		133,340			133,340													135,219
	Unsecured yen loans from banks and insurance companies and others			0.8	%		339,772			121,571			98,081		66,846		40,784		12,474		16		337,176
		Subtotal					961,338			271,910			200,825		178,329		67,784		132,474		110,016		977,384
Foreign exchange contracts							(8,103	)		(8,103	)												(8,103	)
		Total					953,235			263,807			200,825		178,329		67,784		132,474		110,016		969,281
						Yen (millions)
						Carrying amount and maturity date (as of March 31, 2001)
			Average
			interest																	There-		Fair
			rate			Total			2002			2003		2004		2005		2006		after		value
Long-term debt, including current portion:
	Japanese yen convertible bonds			1.2	%		241,934			98,708			16,999		97,744		11,483		17,000				332,641
	Straight bonds issued by a subsidiary			1.8	%		50,000			5,000					5,000				10,000		30,000		51,535
	U.S. dollar unsecured bonds			5.8	%		123,785						123,785										126,874
	Unsecured yen loans from banks and insurance companies and others			1.2	%		393,392			165,229			96,986		72,568		41,241		16,246		1,122		392,648
		Subtotal					809,111			268,937			237,770		175,312		52,724		43,246		31,122		903,698
Foreign exchange contracts							1,367						1,367										1,399
		Total					810,478			268,937			239,137		175,312		52,724		43,246		31,122		905,097

Item 12. Description of Securities Other than Equity Securities

Not applicable

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None

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

None

Item 15. [ Reserved ]

Item 16. [ Reserved ]

- 78 -

PART III

Item 17.      Financial Statements

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

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

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

- 79 -

Independent Auditors’ Report

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

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

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Matsushita Electric Industrial Co., Ltd. and subsidiaries as of March 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG

Osaka, Japan
April 26, 2002, except as to Note 10 and Note 19,
which are as of June 27, 2002

- 80 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2002 and 2001

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

See accompanying Notes to Consolidated Financial Statements.

w

- 81 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2002 and 2001

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

See accompanying Notes to Consolidated Financial Statements.

- 82 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended March 31, 2002, 2001 and 2000

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

See accompanying Notes to Consolidated Financial Statements.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Years ended March 31, 2002, 2001 and 2000

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

(Continued)       

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Years ended March 31, 2002, 2001 and 2000

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

See accompanying Notes to Consolidated Financial Statements.

- 85 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2002, 2001 and 2000

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

(Continued)          

- 86 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2002, 2001 and 2000

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

See accompanying Notes to Consolidated Financial Statements.

- 87 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2002, 2001 and 2000

(1) Summary of Significant Accounting Policies

(a)	Description of Business
	Matsushita Electric Industrial Co., Ltd. (hereinafter, the “Company,” including consolidated subsidiaries, unless the context otherwise requires) is one of the world’s leading producers of electronic and electric products. The Company currently offers a comprehensive range of products, systems and components for consumer, business and industrial use based on sophisticated electronics and precision technology. Most of the Company’s products are marketed under several trade names, including “Panasonic,” “National,” “Technics,” “Quasar,” “Victor” and “JVC.”
	Sales in fiscal 2002 were categorized as follows: AVC Networks—59%, Home Appliances—17%, Industrial Equipment—4%, and Components and Devices—20%. A sales breakdown in fiscal 2002 by geographical market was as follows: Japan—49%, North and South America—20%, Europe—11%, and Asia and Others—20%.
	The Company is not dependent on a single supplier, and has no significant difficulty in obtaining raw materials from suppliers.
(b)	Basis of Presentation of Consolidated Financial Statements
	The Company and its domestic subsidiaries maintain their books of account in conformity with financial accounting standards of Japan, and its foreign subsidiaries in conformity with those of the countries of their domicile.
	The consolidated financial statements presented herein have been prepared in a manner and reflect the adjustments which are necessary to conform with accounting principles generally accepted in the United States of America.
(c)	Principles of Consolidation (See Note 3)
	The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated on consolidation.
	Investments in certain associated companies in which the Company’s ownership is 20% to 50% are stated at their underlying net equity value after elimination of intercompany profits.

- 88 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	The difference between the cost and underlying net equity at acquisition of investments in subsidiaries and associated companies accounted for on an equity basis is allocated to identifiable assets based on fair market value at the date of acquisition. The unallocated portion of the difference, which is recognized as goodwill, is being amortized over a ten- to forty-year period.
(d)	Revenue Recognition
	The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectibility is reasonably assured.
(e)	Leases (See Note 5)
	A subsidiary of the Company leases machinery and equipment. Leases of such assets are principally accounted for as direct financing leases and included in “Trade receivables—Accounts” and “Noncurrent receivables” in the accompanying balance sheets.
(f)	Inventories (See Note 2)
	Finished goods and work in process are stated at the lower of cost (average) or market. Raw materials are stated at cost, principally on a first-in, first-out basis, not in excess of current replacement cost.
(g)	Foreign Currency Translation (See Note 11)
	Foreign currency financial statements are translated in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, “Foreign Currency Translation,” under which all assets and liabilities are translated into yen at year-end rates and income and expense accounts are translated at weighted average rates. Adjustments resulting from the translation of financial statements are reflected under the caption, “Accumulated other comprehensive income (loss),” a separate component of stockholders’ equity.
(h)	Property, Plant and Equipment
	Property, plant and equipment is stated at cost. Depreciation is computed primarily using the declining balance method based on the following estimated useful lives:

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

- 89 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(i)	Investments in Available-for-Sale Securities (See Notes 4 and 11)
	The Company accounts for debt and equity securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.”
	SFAS No. 115 requires that certain investments in debt and equity securities be classified as held-to-maturity, trading, or available-for-sale securities. The Company classifies its existing marketable equity securities other than investments in associated companies and all debt securities as available-for-sale. Available-for-sale securities are carried at fair value with unrealized holding gains or losses included as a component of accumulated other comprehensive income (loss), net of applicable taxes.
	Individual securities classified as available-for-sale are reduced to net realizable value by a charge to income for other than temporary declines in fair value. Realized gains and losses are determined on the average cost method and are reflected in income.
(j)	Income Taxes (See Note 9)
	Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
	Income taxes have not been accrued for undistributed earnings of foreign subsidiaries and associated companies, as these amounts are considered to be reinvested indefinitely. Calculation of the unrecognized deferred tax liability related to these earnings is not practicable.
(k)	Advertising (See Note 13)
	Advertising costs are expensed as incurred.
(l)	Net Income (Loss) per Share (See Notes 7, 10 and 12)
	The Company accounts for net income (loss) per share in accordance with SFAS No. 128, “Earnings per Share.” This Statement establishes standards for computing net income (loss) per share and requires dual presentation of basic and diluted net income (loss) per share on the face of the statements of operations for all entities with complex capital structures.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged asset or liability or unrecognized firm commitment of the hedged item that is attributable to the hedged risk are recorded in earnings. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until earnings are affected by the variability in cash flows of the designated hedged item. Changes in the fair value of derivatives that are highly effective as hedges and that are designated and qualify as foreign-currency hedges are recorded in either earnings or other comprehensive income (loss), depending on whether the hedge transaction is a fair-value hedge or a cash-flow hedge. Changes in the fair value of derivative instruments that are not designated as part of a hedging relationship are reported in current period earnings.
(o)	Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of (See Note 6)
	The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted and without interest charges) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
(p)	Use of Estimates
	Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
(q)	Reclassifications
	Certain reclassifications have been made to the prior years’ consolidated financial statements to conform with the presentation used for the year ended March 31, 2002.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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

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

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

(4)	Investments in Available-for-Sale Securities
	The Company classifies its existing marketable equity securities other than investments in associated companies and all debt securities as available-for-sale.
	The cost, fair value, gross unrealized holding gains, and gross unrealized holding losses of available-for-sale securities included in short-term investments and investments and advances at March 31, 2002 and 2001 are as follows:

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

(6)	Long-Lived Assets
	The Company periodically reviews the recorded value of its long-lived assets to determine if the future cash flows to be derived from these properties will be sufficient to recover the remaining recorded asset values. As discussed in Note 1(o), the Company accounts for impairment of long-lived assets in accordance with SFAS No. 121.
	The Company recognized an impairment loss of 24,420 million yen during fiscal 2002 related to the write-down of the machinery and equipment to manufacture display devices and other components.
	The Company recognized an impairment loss of 19,565 million yen during fiscal 2000 related to the write-down of the machinery and equipment to manufacture CRTs and other components.
	In both cases, as the prices of these products significantly decreased during the respective fiscal year due to highly competitive market conditions, the Company projected that the future business of those products would result in a net operating loss.
	Impairment losses recorded in fiscal 2002 and 2000 are included in other deductions of costs and expenses in the consolidated statements of operations.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7)	Long-term Debt and Short-term Borrowings
	Long-term debt at March 31, 2002 and 2001 is set forth below:

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

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

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	Each of the loan agreements grants the lender the right to request additional security or mortgages on property, plant and equipment. At March 31, 2002 and 2001, short-term loans subject to such general agreements amounted to 108,386 million yen and 88,069 million yen, respectively. The balance of short-term loans represents borrowings under commercial paper, acceptances and short-term loans of foreign subsidiaries. The weighted average interest rate on short-term borrowings outstanding at March 31, 2002 and 2001 was 4.2%.
	Acceptances payable by foreign subsidiaries, in the amount of 108 million yen and 187 million yen at March 31, 2002 and 2001, respectively, are secured by a portion of the cash, accounts receivable and inventories of such subsidiaries. The amount of assets pledged is not calculable.
	The 1.4% convertible bonds maturing in 2004 are redeemable from 2001 at the option of the Company at prices ranging from 102% of principal to 100% of principal, and are currently convertible into approximately 60,336,000 shares of common stock at 1,620 yen per share.
	The convertible bonds maturing through 2005 issued by subsidiaries are redeemable at the option of the subsidiaries at prices ranging from 103% of principal to 100% of principal near maturity.
	The Company set up a shelf registration in Japan for issuance of straight bonds within two years from December 29, 2001 with the maximum aggregate principal amount of 500,000 million yen. In February 2002, straight bonds in the aggregate principal amount of 300,000 million yen were issued.
(8)	Retirement and Severance Benefits
	The Company and certain subsidiaries have contributory, funded benefit pension plans covering substantially all employees who meet eligibility requirements. Benefits under the plans are primarily based on the combination of years of service and compensation.
	The contributory, funded benefit pension plans include a portion of social security tax calculated in accordance with the Welfare Pension Insurance Law. The Company and certain subsidiaries contribute to the pension funds as well as to the social security tax portion (“substitutional portion”). The employees contribute only to the social security tax portion.
	In addition to the plans described above, upon retirement or termination of employment for reasons other than dismissal, employees are entitled to lump-sum payments based on the current rate of pay and length of service. If the termination is involuntary or caused by death, the severance payment is greater than in the case of voluntary termination. The lump-sum payment plans are not funded.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Effective April 1, 2002, the Company and certain of its subsidiaries amended their lump-sum payment plans to cash balance pension plans. Under the cash balance pension plans, each participant has an account which is credited yearly based on the current rate of pay and market-related interest rate.

Net periodic benefit cost for the contributory, funded benefit pension plans and the unfunded lump-sum payment plans of the Company for the three years ended March 31, 2002 consisted of the following components:

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Reconciliation of beginning and ending balances of the benefit obligations of the contributory, funded benefit pension plans and the unfunded lump-sum payment plans and the fair value of the plan assets at March 31, 2002 and 2001, and actuarial assumptions used as of March 31, 2002, 2001 and 2000 are as follows:

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

							Yen (millions)
				Domestic			Foreign			Total
2002:
	Loss before income taxes				(543,624	)		(4,385	)		(548,009	)
	Income taxes:
		Current			10,904			19,131			30,035
		Deferred			(78,398	)		(8,848	)		(87,246	)
			Total income taxes		(67,494	)		10,283			(57,211	)
2001:
	Income before income taxes				49,542			51,193			100,735
	Income taxes:
		Current			95,820			22,035			117,855
		Deferred			(68,585	)		591			(67,994	)
			Total income taxes		27,235			22,626			49,861
2000:
	Income before income taxes				99,538			119,067			218,605
	Income taxes:
		Current			125,155			53,290			178,445
		Deferred			(33,251	)		(8,179	)		(41,430	)
			Total income taxes		91,904			45,111			137,015

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

The effective tax rates for the years differ from the normal tax rates for the following reasons:

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

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2002 and 2001 are presented below:

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

The net change in total valuation allowance for the years ended March 31, 2002 and 2001 were increases of 141,161 million yen and 5,087 million yen, respectively.

At March 31, 2002, the Company and certain of its subsidiaries had, for tax reporting purposes, net operating loss carryforwards of approximately 668,492 million yen, which will generally expire between 2003 and 2022.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

(10)	Stockholders’ Equity
	In accordance with the Japanese Commercial Code, at least 50% of the amount of converted debt must be credited to the common stock account. The Company issued 58,941,866 shares, 580,241 shares and 326,535 shares in connection with the conversion of bonds for the years ended March 31, 2002, 2001 and 2000, respectively.
	On April 1, 2000, the Company issued 16,321,187 shares under exchange offering in connection with the integration of two subsidiaries.
	For the year ended March 31, 2002, 54,000,000 shares of the Company’s common stock were repurchased from the market for the aggregate cost of 90,598 million yen pursuant to a revision in the Japanese Commercial Code, with the intention to hold such repurchased shares as treasury stock to improve capital efficiency, and to use some or all of the repurchased shares for the forthcoming share exchange (See Note 19) to transform five companies into wholly-owned subsidiaries of the Company.
	The Japanese Commercial Code, amended effective October 1, 2001, provides that an amount equal to at least 10% of appropriations paid in cash be appropriated as a legal reserve until the aggregated amount of capital surplus and legal reserve equals 25% of stated capital. The capital surplus and legal reserve, up to 25% of stated capital, are not available for dividends but may be used to reduce a deficit or may be transferred to stated capital. The capital surplus and legal reserve, exceeding 25% of stated capital, are available for distribution upon approval of the shareholders’ meeting.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Cash dividends and transfers to the legal reserve charged to retained earnings during the three years ended March 31, 2002 represent dividends paid out during the periods and related appropriation to the legal reserve. The accompanying consolidated financial statements do not include any provision for the semi-annual dividend of 3.75 yen per share, totaling 7,813 million yen, proposed in June 2002 in respect of the year ended March 31, 2002 or for the related appropriation.

In accordance with the Japanese Commercial Code, there are certain restrictions on payment of dividends in connection with the treasury stock repurchased. As a result of restrictions on the treasury stock repurchased, retained earnings of approximately 92,185 million yen at March 31, 2002 were restricted as to the payment of cash dividends.

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

		Number			Weighted average
		of shares			exercise price (Yen)
Balance at March 31, 1999			113,000			2,291
	Granted		116,000			2,476
Balance at March 31, 2000			229,000			2,385
	Granted		109,000			2,815
	Exercised		(33,000	)		2,291
	Forfeited		(10,000	)		2,291
Balance at March 31, 2001			295,000			2,557
	Granted		128,000			2,163
	Forfeited		(28,000	)		2,490
Balance at March 31, 2002,
	weighted average remaining life – 3.99 years		395,000			2,434

The Company applies Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option plans described above. Accordingly, as the option price at the date of grant exceeded the fair market value of common shares, no compensation costs have been recognized in connection with the plans. If the accounting provision of SFAS No. 123, “Accounting for Stock Based Compensation,” had been adopted, the impact on the Company’s net income (loss) for the three years ended March 31, 2002 would not be material.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

			Yen (millions)
			Pre-tax			Tax			Net-of-tax
			amount			expense			amount
For the year ended March 31, 2001
	Translation adjustments			144,684			—			144,684
	Unrealized holding gains of available-for-sale securities:
		Unrealized holding gains (losses) arising during the period		(192,578	)		78,714			(113,864	)
		Less: Reclassification adjustment for gains included in net income		(13,706	)		5,743			(7,963	)
		Net unrealized gains (losses)		(206,284	)		84,457			(121,827	)
		Other comprehensive income (loss)		(61,600	)		84,457			22,857
For the year ended March 31, 2000
	Translation adjustments			(139,946	)		—			(139,946	)
	Unrealized holding gains of available-for-sale securities:
		Unrealized holding gains (losses) arising during the period		225,671			(94,556	)		131,115
		Less: Reclassification adjustment for gains included in net income		(39,712	)		16,639			(23,073	)
		Net unrealized gains (losses)		185,959			(77,917	)		108,042
		Other comprehensive income (loss)		46,013			(77,917	)		(31,904	)

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

		Number of shares
			2002	2001	2000
Average common shares outstanding			2,075,667,943	2,079,235,871	2,062,295,743
Dilutive effect of assumed conversions:
	Convertible bonds, due 2002, interest 1.3%		—	60,941,152	61,090,690
	Convertible bonds, due 2004, interest 1.4%		—	60,376,132	60,941,462
	Stock options		—	23,848	15,403
Diluted common shares outstanding			2,075,667,943	2,200,577,003	2,184,343,298

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

Included in other deductions of costs and expenses for the years ended March 31, 2002 and 2001 is a loss of 164,056 million yen and 100,195 million yen, respectively, associated with the implementation of the early retirement programs and the regional-based employee remuneration system in some domestic companies.

Included in other deduction of costs and expenses for the year ended March 31, 2002 is a loss of 61,622 million yen associated with the closure or integration of several manufacturing facilities, of which the total of 6,660 million yen was accrued at March 31, 2002.

Included in other income of revenues for the year ended March 31, 2000 is a gain of 58,566 million yen from the sale of EPCOS AG shares, a German electronic components manufacturing joint venture, held by a subsidiary, upon its initial public offering.

Foreign exchange gains and losses included in other deductions of costs and expenses for the years ended March 31, 2002 and 2001 is a loss of 12,975 million yen and 6,730 million yen, respectively. Foreign exchange gains and losses included in the consolidated statements of operations for the year ended March 31, 2000 were not significant.

Shipping and handling costs are included in selling, general and administrative expenses in the consolidated statements of operations.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Income taxes and interest expenses paid and noncash investing and financing activities for the three years ended March 31, 2002 are as follows:

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

(14)	Foreign Exchange Contracts (Prior to SFAS No. 133 and SFAS No. 138)
	The Company and its subsidiaries operate internationally, giving rise to significant exposure to market risks arising from changes in foreign exchange rates. Derivative financial instruments are comprised principally of foreign exchange contracts utilized by the Company and some of its subsidiaries to hedge these risks. The Company and its subsidiaries do not hold or issue financial instruments for trading purposes.
	The Company and its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties to foreign exchange contracts, but such risk is considered minor because of the high credit rating of the counterparties.
	The contract amounts of foreign exchange contracts at March 31, 2001 are as follows:

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	The Company and its subsidiaries enter into forward exchange contracts and options to hedge firm commitments expected to be denominated in foreign currencies, principally U.S. dollars. The terms of these foreign exchange contracts rarely extend beyond a few months.
(15)	Derivatives and Hedging Activities
	The Company and its subsidiaries operate internationally, giving rise to significant exposure to market risks arising from changes in foreign exchange rates. Derivative financial instruments are comprised principally of foreign exchange contracts utilized by the Company and some of its subsidiaries to hedge these risks. The Company assesses foreign currency exchange rate risk by continually monitoring changes in these exposures and by evaluating hedging opportunities. The Company does not hold or issue derivative financial instruments for any purposes other than hedging.
	Gains and losses related to derivative instruments are classified in other income (deductions) in the statements of operations. The amount of the hedging ineffectiveness and net gain or loss excluded from the assessment of hedge effectiveness is not material for the year ended March 31, 2002. Amounts included in accumulated other comprehensive income (loss) at March 31, 2002 are expected to be recognized in earnings over the next twelve months. The maximum term over which the Company is hedging exposures to the variability of cash flows for foreign currency exchange risk is approximately five months.
	The Company and its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties to foreign exchange contracts, but such risk is considered mitigated by the high credit rating of the counterparties.
	The contract amounts of foreign exchange contracts at March 31, 2002 are as follows:

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

(16)	Fair Value of Financial Instruments
	The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Cash and cash equivalents, Time deposits, Trade receivables, Short-term borrowings, Trade payables and Accrued expenses
The carrying amount approximates fair value because of the short maturity of these instruments.

Short-term investments
The fair value of short-term investments is estimated based on quoted market prices.

Noncurrent receivables
The carrying amount which is generally stated at the net realizable value approximates fair value.

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

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

Derivative financial instruments
The fair value of derivative financial instruments, consisting principally of foreign exchange contracts, all of which are used for hedging purposes, are estimated by obtaining quotes from brokers.

The estimated fair values of financial instruments, all of which are held or issued for purposes other than trading, at March 31, 2002 and 2001 are as follows:

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	Limitations
	Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
(17)	Commitments and Contingent Liabilities
	At March 31, 2002, commitments outstanding for the purchase of property, plant and equipment approximated 6,496 million yen. Contingent liabilities at March 31, 2002 for discounted export bills of exchange and guarantees of loans amounted to approximately 79,674 million yen, including 59,521 million yen for loans guaranteed principally on behalf of associated companies and customers.
	There are a number of legal actions against the Company and certain subsidiaries. Management is of the opinion that damages, if any, resulting from these actions will not have a material effect on the Company’s consolidated financial statements.
(18)	Segment Information
	The Company adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” in the fiscal year beginning April 1, 2001, and accordingly, prior year figures have been restated to reflect this change. These segments reported below are the components of the Company for which separate financial information is available that is evaluated regularly by the chief operating decision maker of the Company in deciding how to allocate resources and in assessing performance. Business segments correspond to categories of activity classified primarily by markets and products. “AVC Networks” includes video and audio equipment and information and communications equipment. “Home Appliances” includes home appliances and household equipment. “Industrial Equipment” includes electronic-parts-mounting machines, industrial robots and industrial equipment. “Components and Devices” includes electronic components, semiconductors, electric motors and batteries.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Information by segment for the three years ended March 31, 2002 is shown in the tables below:

By Business Segment:

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

Corporate assets consist of cash and cash equivalents, time deposits, marketable securities in short-term investments, investments and advances and other assets related to unallocated expenses.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

By Geographical Area:

Sales attributed to countries based upon the customer’s location and long-lived assets are as follows:

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

There are no individually material countries of which sales and long-lived assets should be separately disclosed in North and South America, Europe and Asia and Others, except for the United States of America.

Transfers between business segments or geographic segments are made at arms-length prices. There are no sales to a single external major customer for the three years ended March 31, 2002.

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

	Yen (millions), except per share information
	2001
			Net			Net income			Net income
	Net		income			(loss) per share:			(loss) per share:
	sales		(loss)			basic (yen)			diluted (yen)
Quarter ended
June 30		1,772,375		9,399			4.52			4.45
September 30		1,964,666		41,973			20.19			19.25
December 31		1,992,628		22,782			10.96			10.53
March 31		1,951,892		(32,654	)		(15.70	)		(15.70	)

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Schedule II

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Valuation and Qualifying Accounts and Reserves

(In millions of yen)

Years ended March 31, 2002, 2001 and 2000

						Deduct
		Balance
		at		Add		Bad				Add (deduct)
		beginning		-charged		debts				-cumulative			Balance
		of		to		written				translation			at end of
		period		income		off		Reversal		adjustments			period
Allowance for doubtful trade receivables:
	2002		42,530		4,249		3,729		4,013		1,261			40,298
	2001		42,098		13,289		12,460		1,929		1,532			42,530
	2000		63,649		10,252		28,670		1,473		(1,660	)		42,098
Allowance for doubtful noncurrent receivables:
	2002		98		1,514		1,562		—		—			50
	2001		144		3,160		3,206		—		—			98
	2000		304		1,728		1,888		—		—			144

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Item 18. Financial Statements

Not applicable

Item 19. Exhibits

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

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

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SIGNATURES

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

	MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
	(Registrant)
Date: July 17, 2002	By	/s/ Shigeru Nakatani
		Shigeru Nakatani
		President of
		Panasonic Finance (America), Inc.
		1 Rockefeller Plaza, Suite 1001,
		New York, N.Y. 10020-2002

EX-1.1

Exhibit

(TRANSLATION)

ARTICLES OF INCORPORATION

(Amended on June 27, 2002)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

-1-

(TRANSLATION)

ARTICLES OF INCORPORATION
OF
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
(Matsushita Denki Sangyo Kabushiki Kaisha)

CHAPTER I

GENERAL PROVISIONS

Article 1. (Trade Name)

     The Company shall be called Matsushita Denki Sangyo Kabushiki Kaisha, and written in English as Matsushita Electric Industrial Co., Ltd.

Article 2. (Principal Office)

     The principal office of the Company shall be located in Kadoma-shi, Osaka-fu.

Article 3. (Purpose)

     The purpose of the Company shall be to engage in the following businesses:

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

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

Article 4. (Method of Public Notice)

     Public notices of the Company shall be given in the “Nihon Keizai Shimbun.”

-3-

CHAPTER II

SHARES

Article 5. (Total Number of Shares)

     The total number of shares authorized to be issued by the Company shall be four billion nine hundred and fifty million (4,950,000,000).

Article 6. (Number of Shares Constituting One Unit of Shares)

     The number of shares constituting one unit (tangen) of shares shall be one thousand (1,000).

Article 7. (Non-issuance of Certificate of Shares Constituting less than One Unit of Shares)

     The Company shall not issue certificate of shares constituting less than one unit of shares (hereinafter referred to as “shares not constituting a full unit”).

     However, this does not apply to the cases which are determined by the Company’s Share Handling Regulations.

Article 8. (Record Date)

     The Company shall deem those shareholders (including beneficial shareholders; hereinafter the same interpretation being applicable) having voting rights whose names are registered as such in writing or in digital format on the register of shareholders (including register of beneficial shareholders; hereinafter the same interpretation being applicable) as of the end of each fiscal period as the shareholders entitled to exercise their rights as shareholders at the ordinary general meeting of shareholders for such fiscal period.

     In addition to the preceding paragraph, the Company shall, by a resolution of the Board of Directors and upon giving prior public notice, determine those shareholders and registered pledgees whose names appear as such in writing or in digital format on the register of shareholders as of a designated date as the shareholders or pledgees entitled to exercise their rights.

Article 9. (Transfer Agent)

     The Company shall appoint a transfer agent with respect to shares.

     The transfer agent and its handling office shall be designated by a resolution of the Board of Directors, and public notice shall be given with regard thereto.

-4-

     The register of shareholders of the Company shall be kept at the handling office of the transfer agent, and the handling business related to shares, such as registration of transfer of shares, purchase by the Company of shares not constituting a full unit, etc., shall be handled by the transfer agent and the Company shall not handle such business.

Article 10. (Share Handling Regulations)

     Registration of transfers of shares, purchase by the Company of shares not constituting a full unit and other handling business related to shares of the Company shall be governed by, in addition to these Articles of Incorporation, the Share Handling Regulations established by the Board of Directors.

CHAPTER III

GENERAL MEETINGS OF SHAREHOLDERS

Article 11. (Convocation)

     An ordinary general meeting of shareholders of the Company shall be convened within three (3) months from the day immediately following the day on which the accounts are closed, and an extraordinary general meeting of shareholders may be convened whenever necessary.

Article 12. (Chairman of General Meetings of Shareholders)

     Chairmanship of general meetings of shareholders shall be assumed by the President. Should the President be unable to act, one of the other Representative Directors shall take his/her place as previously determined by the Board of Directors.

Article 13. (Method of Adopting Resolutions)

     Unless otherwise provided by laws or ordinances or by these Articles of Incorporation, resolutions of general meetings of shareholders shall be adopted by a majority of the votes of shareholders present or represented at the meeting.

Article 14. (Exercise of Voting Rights through Proxy)

     A shareholder may exercise his/her voting rights through a proxy who is also a shareholder of the Company entitled to exercise voting rights; provided, however, that such shareholder or the proxy must submit to the Company a power of attorney authorizing such proxy.

-5-

CHAPTER IV

DIRECTORS AND BOARD OF DIRECTORS

Article 15. (Number of Directors)

     The number of Directors of the Company shall be three (3) or more.

Article 16. (Election of Directors)

     Directors shall be elected at a general meeting of shareholders.

     Resolutions for such election shall be adopted by a majority of the votes of the shareholders present who hold not less than one-third of the voting rights held by the total shareholders.

     No cumulative voting shall be used with respect to the resolutions for the election of Directors.

Article 17. (Representative Directors and Directors with Special Titles)

     The Company may, by a resolution of the Board of Directors, appoint from among the Directors one Chairman of the Board of Directors, one Vice Chairman of the Board of Directors, one President, and one or more Executive Vice Presidents, Senior Managing Directors and Managing Directors.

     The Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President, Executive Vice Presidents, Senior Managing Directors and Managing Directors shall severally represent the Company.

Article 18. (Terms of Office of Directors)

     The terms 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 (2) years from their assumption of office.

     The term of office of a Director elected to fill a vacancy shall expire at the time his/her predecessor’s full term of office would have expired.

Article 19. (Remuneration and Retirement Allowances for Directors)

     Remuneration and retirement allowances for Directors shall be determined at a general meeting of shareholders.

-6-

Article 20. (Notice of Convocation of a Meeting of Board of Directors)

     Notice of convocation of a meeting of the Board of Directors shall be dispatched to each Director and Corporate Auditor three (3) days in advance of the date set for the meeting; provided, however, that in case of urgency this period may be shortened.

Article 21. (Regulations of Board of Directors)

     Matters to be resolved by the Board of Directors and any other details concerning the Board of Directors shall be governed by the Regulations of the Board of Directors established by the Board of Directors.

CHAPTER V

CORPORATE AUDITORS AND
BOARD OF CORPORATE AUDITORS

Article 22. (Number of Corporate Auditors)

     The number of Corporate Auditors of the Company shall be three (3) or more.

Article 23. (Election of Corporate Auditors)

     Corporate Auditors shall be elected at a general meeting of shareholders.

     Resolutions for such election shall be adopted by a majority of the votes of the shareholders present who hold not less than one-third of the voting rights held by the total shareholders.

Article 24. (Full-time Corporate Auditors and Senior Corporate Auditors)

     The Company shall appoint one or more Full-time Corporate Auditor(s) who shall be selected by the Corporate Auditors from among their number.

     The Company may appoint one or more Senior Corporate Auditor(s) who shall be selected by the Corporate Auditors from among their number.

Article 25. (Terms of office of Corporate Auditors)

     The terms of office of Corporate Auditors shall expire at the conclusion of the ordinary general meeting of shareholders with respect to the last closing of accounts within three (3) years from their assumption of office.

-7-

     The term of office of a Corporate Auditor elected to fill a vacancy shall expire at the time his/her predecessor’s full term of office would have expired.

Article 26. (Remuneration and Retirement Allowances for Corporate Auditors)

     Remuneration and retirement allowances for Corporate Auditors shall be determined at a general meeting of shareholders.

Article 27. (Notice of Convocation of a Meeting of Board of Corporate Auditors)

     Notice of convocation of a meeting of the Board of Corporate Auditors shall be dispatched to each Corporate Auditor three (3) days in advance of the date set for the meeting; provided, however, that in case of urgency this period may be shortened.

Article 28. (Regulations of Board of Corporate Auditors)

     Matters to be resolved by the Board of Corporate Auditors and any other details concerning the Board of Corporate Auditors shall be governed by the Regulations of the Board of Corporate Auditors established by the Board of Corporate Auditors.

CHAPTER VI

ACCOUNTS

Article 29. (Fiscal Year and Closing of Accounts)

     The fiscal year of the Company shall commence on April 1 each year and end on March 31 the following year and the accounts shall be closed on the last day of each fiscal year.

Article 30. (Dividends)

     Dividends of the Company shall be paid to those shareholders or registered pledgees whose names appear as such in writing or in digital format on the register of shareholders at the end of each fiscal period.

Article 31. (Interim Dividends)

     The Company may, by a resolution of the Board of Directors, pay interim dividends (cash distributions as provided in Article 293-5 of the Commercial Code; hereinafter the same being applicable) to those shareholders or registered pledgees whose names appear as such in writing or in digital format on the register of shareholders as of the close of September 30 of each year.

-8-

Article 32. (Expiration Period for Dividends and Interim Dividends)

     In case dividends or interim dividends shall not be received within three (3) years from the commencement of payment thereof, the Company shall be relieved from the obligation for the payment thereof.

     Dividends and interim dividends shall bear no interest.

Article 33. (Timing of Conversion of Convertible Debentures and Dividends)

     With respect to the first payment of dividends on shares issued upon conversion of convertible debentures, such conversion shall be deemed to have been made at the beginning of the business year in which the application for conversion was made and the dividends shall be paid accordingly.

     For the purpose of the application of the above provisions, the interim dividends pursuant to the provisions of Article 31 shall be deemed as the dividends and each of the periods from April 1 to September 30 and from October 1 to March 31 of the next following year shall be deemed a business year respectively.

CHAPTER VII

MISCELLANEOUS RULES

Article 34. (Transfer Agent of Bonds or Debentures)

     The Company shall appoint a transfer agent or agents in respect to bonds or debentures issued by the Company.

EX-1.2 4 k00247exv1w2.htm SHARE HANDLING REGULATIONS

(TRANSLATION)

SHARE HANDLING REGULATIONS

(Amended on June 27, 2002)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

-1-

(TRANSLATION)

SHARE HANDLING REGULATIONS
OF
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

(Matsushita Denki Sangyo Kabushiki Kaisha)

CHAPTER I

GENERAL PROVISIONS

Article 1. (Purpose)

     Pursuant to the authority granted by Article 10 of the Articles of Incorporation of the Company, as amended, these Regulations shall govern the denominations of share certificates, handling of shares of stock of the Company and charges therefor; handling of shares in respect of beneficial shareholders shall be governed by Chapter IX of these Regulations.

Article 2. (Transfer Agent)

     The Transfer Agent of the Company, its handling office and liaison offices shall be as follows:

Transfer Agent:	The Chuo Mitsui Trust and Banking Company, Limited 33-1, Shiba 3-chome, Minato-ku, Tokyo
Handling Office:	The Chuo Mitsui Trust and Banking Company, Limited, Osaka Branch Office 2-21, Kitahama 2-chome, Chuo-ku, Osaka
Liaison Offices:	Head office and all branch offices of The Chuo Mitsui Trust and Banking Company, Limited
	Head office and all branch offices of Japan Securities Agents, Ltd.

-2-

Article 3.          (Denominations of Share Certificates)

1.       All share certificates to be issued by the Company shall be of the non-bearer type, and shall be in the denominations of one hundred (100), five hundred (500), one thousand (1,000), five thousand (5,000), ten thousand (10,000), one hundred thousand (100,000) shares and those representing any number less than one hundred (100) shares; provided, however, that the share certificates to be reissued to represent shares deposited with Japan Securities Depository Center, Inc. (the “Center”) in respect of which non-possession of share certificates was requested, which are purchased by the Company for the purpose of retirement thereof, may be issued in the number of such shares to be reissued.

2.       However, of the share certificates referred to in the preceding paragraph, shareholders may not request for the issue of share certificates representing any number of shares less than one unit as provided for in Article 7 of the Articles of Incorporation (hereinafter referred to as “fractional unit shares”), except pursuant to the provisions of Articles 15 through 17 hereof.

Article 4.          (Method of Making Requests and Reports)

1.       All requests, reports and other procedures with respect to the business which the Company has entrusted to the Transfer Agent shall be made to the Transfer Agent.

2.       All requests and reports under these Regulations shall be made in the forms prescribed by the Company and affixed with the seal impression which has been filed with the Company under Article 9.

3.       Should any request or report referred to in the preceding paragraph be made by a proxy, a document evidencing the authority of such proxy shall be submitted, or if the consent of a curator (hosanin) or an assistant (hojonin) is required, a document evidencing such consent shall be submitted, to the Transfer Agent.

CHAPTER II

REGISTRATION OF TRANSFER OF SHARES

Article 5.          (Registration of Transfer of Shares)

1.       In case registration of transfer of shares is requested, a written request therefor shall be submitted together with the share certificates concerned.

2.       In case registration of transfer of shares is requested for reasons other than assignment, a written request therefor and the share certificates concerned together with a document evidencing the reason for such acquisition shall be submitted; provided, however, that if no share certificates have been issued for such shares, submission of share certificates shall not be required.

-3-

Article 6.          (Registration of Transfer of Shares Where Special Procedure is Required by Laws or Ordinances)

       In case the transfer of shares requires the compliance with a special procedure by laws or ordinances, a document evidencing the completion of the compliance with such special procedure shall also be submitted.

CHAPTER III

REGISTRATION OF PLEDGE
AND INDICATION OF TRUST PROPERTY

Article 7.          (Registration of Pledge and Cancellation Thereof)

       In case registration of a pledge or cancellation thereof is requested in respect of shares, a written request therefor jointly signed by the pledgor and the pledgee shall be submitted together with the share certificates concerned.

Article 8.       (Indication of Trust Property and Cancellation Thereof)

       In case indication of a trust property or cancellation thereof is requested in respect of shares, a written request therefor shall be submitted either by the trustor or by the trustee together with the share certificates concerned.

CHAPTER IV

REPORTS

Article 9.          (Reports of Name, Address and Seal Impression)

1.     A shareholder, his/her registered pledgee or his/her legal representative, if any, shall report their names, addresses and seal impressions; provided, however, that a foreigner may substitute his/her specimen signature for such seal impression.

2.     In case of any change in the matters referred to in the preceding paragraph, a report thereof shall be submitted.

-4-

Article 10.          (Report of Address by Nonresident Shareholders)

1.     A shareholder and his/her registered pledgee or his/her legal representative, if any, who is not residing in Japan shall, in addition to the procedures referred to in the preceding Article, either appoint a standing proxy or designate a mailing address in Japan, and a report thereof shall be submitted.

2.     The provisions of the preceding Article shall apply mutatis mutandis to the standing proxy.

Article 11.          (Representative of Corporation)

1.     If a shareholder is a corporation, the name of a representative of such corporation shall be reported.

2.     With respect to any change in the matters referred to in the preceding paragraph, a written report thereof shall be submitted together with a certified copy of the extract of the corporate registration record.

Article 12.          (Representative of Jointly-Owned Shares)

1.     Shareholders who own shares jointly shall appoint one representative and a report thereof signed by all such shareholders shall be submitted.

2.     The same shall apply in case of any change occurring in such representative.

Article 13.          (Change in Entries in the Register of Shareholders and in Share Certificates)

       Should it be desired to make any change of an entry in the register of shareholders or in share certificates for the following reasons, a written report thereof shall be submitted together with the share certificates concerned and any document evidencing the fact of such change:

1)	change of family name, or first name;
2)	appointment of legal representative, change or cancellation thereof;
3)	change of trade name or corporate name; and
4)	change in corporate organization.

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CHAPTER V

REISSUANCE OF SHARE CERTIFICATES

Article 14. (Reissuance due to Division or Consolidation)

     In case issuance of new share certificates is requested for the purpose of dividing or consolidating share certificates, a written request therefor shall be submitted together with the share certificates concerned.

Article 15. (Reissuance due to Loss)

     In case issuance of new share certificates is requested due to loss, a written request therefor shall be submitted together with a certified transcript of the judgment of nullification of such lost share certificates.

Article 16. (Reissuance due to Defacement or Mutilation)

     In case issuance of new share certificates is requested due to defacement or mutilation, a written request therefor shall be submitted together with the share certificates concerned; provided, however, that if it is difficult to discern whether the share certificates in question are genuine or not because of excessive defacement or mutilation, the procedure prescribed in the preceding Article shall apply mutatis mutandis.

Article 17. (Reissuance due to Completion of Columns for Endorsement)

     In case all the columns for endorsement of a share certificate have been filled, the Company shall retrieve such share certificate and issue a new share certificate.

CHAPTER VI

NON-POSSESSION OF SHARE CERTIFICATES

Article 18. (Request for Non-possession of Share Certificates)

     In case non-possession of share certificates is requested, a written request therefor shall be submitted together with the share certificates concerned; provided, however, that if the share certificates concerned have not yet been issued, submission of share certificates shall not be required.

-6-

Article 19.          (Request for Issuance or Delivery of Share Certificates Placed in Non-possession Status)

       In case a shareholder who has requested non-possession of share certificates requests the issuance or return of the share certificates, a written request therefor shall be submitted; provided, however, that no request may be made for delivery of share certificates representing fractional unit shares if the Company has treated the certificates for such shares as non-issued share certificates.

CHAPTER VII

PURCHASE OF FRACTIONAL UNIT SHARES

Article 20.          (Request for Purchase of Shares)

       In case purchase of fractional unit shares by the Company is requested, a request therefor in the form prescribed by the Company shall be submitted together with the share certificates concerned; provided, however, that if no share certificates have been issued for such shares, submission of share certificates shall not be required.

Article 21.          (Purchase Price)

       The purchase price per share of the fractional unit shares shall be the last selling price of the shares at the Tokyo Stock Exchange on the day when such request is accepted by the Handling Office or any of the Liaison Offices of the Transfer Agent referred to in Article 2; provided, however, that if no sales were made on such day at the Tokyo Stock Exchange, the price at which the shares were first sold thereat subsequent to that day shall be the purchase price.

Article 22.          (Payment of Purchase Price)

1.     The purchase price shall be paid on and after the day specified by the Company which will be within six business days from the day following the day when the purchase price is fixed pursuant to the preceding Article, at the place where the request for purchase was submitted, to the shareholder who requested such payment.

2.     The shareholder who made a request for such purchase may request that such payment be made by way of transfer to a bank account designated by him/her, or by postal money order.

3.     At the time of payment of such purchase price, share handling charges provided for in item 2 of Article 24 shall be deducted.

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Article 23.          (Transfer of Title of Purchased Shares)

       When purchase of fractional unit shares by the Company is requested, the title to such shares shall be transferred to the Company on the date specified by the Company in the case provided in paragraph 1 of the preceding Article, or on the date when all payment procedures have been completed in the case provided in paragraph 2 of the preceding Article.

CHAPTER VIII

HANDLING CHARGES

Article 24.          (Handling Charges)

    Handling charges in connection with shares of the Company shall be as follows:

1.     In the case of issuing share certificates pursuant to Article 15. (Reissuance due to Loss), Article 16. (Reissuance due to Defacement or Mutilation), and Article 19. (Request for Issuance or Delivery of Share Certificates Placed in Non-possession Status):

The charges shall be an amount equivalent to the amount of revenue stamps incurred for the issuance of the new share certificates.

2.     In the case of purchasing of fractional unit shares pursuant to Article 20. (Request for Purchase of Shares):

The charges shall be the amount equal to the proportion of an amount set forth below as equivalent to the brokerage commission for sales of shares to the relevant number of fractional unit shares so purchased.

In respect of the total amount obtained by multiplying the purchase price per share provided for in Article 21 by the number of shares constituting one unit of shares:

For the portion of not more than one million (1,000,000) yen: 1.15%

For the portion of more than one million (1,000,000) yen and not more than five million yen (5,000,000) yen: 0.9%

(Any amount less than one (1) yen shall be disregarded.)

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CHAPTER IX

SPECIAL TREATMENT
WITH RESPECT TO BENEFICIAL SHAREHOLDERS

Article 25.          (Entry into Register of Beneficial Shareholders)

     The entry into the register of beneficial shareholders in writing or in digital format shall be made based on the notice of beneficial shareholders from the Center and beneficial shareholder cards.

Article 26.          (Beneficial Shareholder Cards)

     The beneficial shareholders shall file with the Company their beneficial shareholder cards through any participant of the Center (the “Participant”).

Article 27.          (Integration)

     In case any shareholder whose name appears on the register of shareholders in writing or in digital format is deemed to be the same person as any beneficial shareholder whose name appears on the register of beneficial shareholders in writing or in digital format because of the identity of names and addresses, the respective numbers of shares of each such registration shall be aggregated in respect of the exercise of rights of shareholders.

Article 28.          (Reports by Beneficial Shareholders)

1.     The provision of Chapter IV shall be applicable, mutatis mutandis, to the beneficial shareholders; provided, however, that submission of share certificate(s) shall not be required for changing the entry in the register of beneficial shareholders.

2.     Whenever the beneficial shareholders shall make any reports as provided in the preceding paragraph to the Company, such report shall be made through the Participant, except when the change of the registered seal impression is made.

Article 29.          (Purchase of Fractional Unit Shares of Beneficial Shareholders)

     The provisions of Chapter VII shall be applicable, mutatis mutandis, to the beneficial shareholders; provided, however, that if any beneficial shareholder requests the purchase of fractional unit shares, he/she shall do so through the Participant(s) and the Center.

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Article 30. (Miscellaneous)

     Treatment and handling relating to the beneficial shareholders shall be governed by the rules or regulations established by the Center in addition to this Chapter.

SUPPLEMENTARY PROVISION

     The amendments to these Regulations shall come into force on June 27, 2002.

EX-1.3 5 k00247exv1w3.htm REGULATIONS OF THE BOARD OF DIRECTORS

(TRANSLATION)

REGULATIONS OF THE BOARD OF DIRECTORS

(Amended on June 27, 2002)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

-1-

(TRANSLATION)

REGULATIONS OF THE BOARD OF DIRECTORS
OF
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

CHAPTER I

GENERAL PROVISIONS

Article 1.          (Purpose)

     All matters concerning the Board of Directors of the Company shall, except as provided for by laws or ordinances or by the Articles of Incorporation, be governed by the provisions of these Regulations.

Article 2.          (Constitution)

1.     The Board of Directors shall consist of the Directors.

2.     Corporate Auditors shall attend meetings of the Board of Directors and whenever necessary, express their opinions thereat.

Article 3.         (Authority)

       The Board of Directors shall, except as provided for by laws or ordinances or by the Articles of Incorporation, make decisions on the execution of the business of the Company, and supervise the performance by the Directors of their duties.

Article 4.          (Type and Convocation of Meetings)

1.     Meetings of the Board of Directors shall consist of regular meetings and extraordinary meetings.

2.     A regular meeting of the Board of Directors shall be convened, as a general rule, once a month, and an extraordinary meeting of the Board of Directors shall be held from time to time whenever necessary.

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CHAPTER II

CONVOCATION

Article 5.          (Person who Convenes Meetings)

1.     The Chairman shall, unless otherwise provided by laws or ordinances, convene meetings of the Board of Directors.

2.     When the Chairman is unable to act, one of the other Representative Directors shall take his/her place in the order predetermined by a resolution of the Board of Directors.

Article 6.          (Convocation Procedures)

1.     Notice of convocation of a meeting of the Board of Directors shall be dispatched to each Director and Corporate Auditor three (3) days in advance of the date set for the meeting; provided, however, that in case of emergency this period may be shortened.

2.     With the consent of all Directors and Corporate Auditors, a meeting of the Board of Directors may be held without the convocation procedure.

CHAPTER III

PROCEEDINGS OF MEETINGS

Article 7. (Chairman)

1.     The Chairman shall act as chairman at meetings of the Board of Directors.

2.     When the Chairman is unable to act, one of the other Representative Directors shall take his/her place in the order provided for in Article 5, paragraph 2.

Article 8. (Method of Adopting Resolutions)

1.     Resolutions of meetings of the Board of Directors shall be adopted by an affirmative vote of a majority of the Directors present thereat which Directors present shall constitute a majority of all Directors then in office.

2.     Any Director who has a material interest with respect to a resolution of the Board of Directors shall not participate in such resolution. In such case, such Director shall not be counted in the number of the Directors present.

Article 9. (Matters Requiring Resolutions)

1.     The following matters shall be resolved at meetings of the Board of Directors:

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1.	convocation of general meetings of shareholders;
2.	approval of agenda items concerning balance sheet, profit and loss statement, business report, appropriation of retained earnings or disposition of deficit and schedules thereto;
3.	interim dividends;
4.	issuance of new shares;
5.	capitalization of statutory reserves;
6.	stock split;
7.	amendment to the Articles of Incorporation concerning an increase in the total number of shares authorized to be issued by the Company due to a stock split;
8.	amendment to the Articles of Incorporation concerning a decrease in the number of shares constituting one unit of shares or the abolition of unit of shares;
9.	repurchase, disposal and retirement of its own shares;
10.	issuance of stock acquisition rights;
11.	issuance of bonds or debentures;
12.	issuance of bonds with stock acquisition rights;
13.	election of Representative Directors;
14.	election of Directors with special titles;
15.	approval of transactions by a Director which are competitive with the Company’s businesses;
16.	approval of transactions between a Director and the Company;
17.	approval of transactions between the Company and a third party in which a Director has a conflicting interest;
18.	matters for which decisions have been entrusted to the Board of Directors by a general meeting of shareholders;
19.	other matters listed below:

(1)	important business plans;
(2)	acquisition and disposition of important assets;
(3)	execution, amendment and abolition of important agreements;
(4)	establishment, amendment and abolition of important rules and regulations;

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(5)	matters concerning important lawsuits;
(6)	important matters concerning personnel administration and organizational units; and
(7)	other important operation of business.

     20. in addition to the foregoing items, matters provided for by laws or ordinances or by the Articles of Incorporation.

2.     With respect to the matters referred to in item 19 of the preceding paragraph, in case there is insufficient time for resolution by the Board of Directors and the President takes emergency measures at his/her own discretion, the President shall obtain ratification of such action at the next meeting of the Board of Directors.

Article 10. (Reports on Business)

     Directors shall report to meetings of the Board of Directors the status of execution of business affairs not less frequently than once every three (3) months.

Article 11. (Attendance of Persons Concerned)

     The Board of Directors may, whenever necessary, cause a person concerned to attend the meeting thereof and give a report or express his/her opinion.

Article 12. (Minutes)

     The substance of the proceedings at each meeting of the Board of Directors and the results thereof shall be recorded in the minutes, which shall bear the signatures, manually or in an electronic format, of the Directors and Corporate Auditors present.

CHAPTER IV

MISCELLANEOUS PROVISION

Article 13. (Amendment)

     For any amendment to these Regulations, a resolution of the Board of Directors shall be required.

SUPPLEMENTARY PROVISION

     These Regulations shall take effect on June 27, 2002.

EX-1.4 6 k00247exv1w4.htm REGULATIONS OF THE BOARD OF CORPORATE AUDITORS

(TRANSLATION)

REGULATIONS OF THE BOARD OF CORPORATE AUDITORS

(Amended on June 27, 2002)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

- 1 -

(TRANSLATION)

REGULATIONS OF
THE BOARD OF CORPORATE AUDITORS
OF
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

Article 1.      (Purport of These Regulations)

     Pursuant to laws, ordinances and the Articles of Incorporation, matters concerning the Board of Corporate Auditors of the Company shall be governed by these Regulations.

Article 2.      (Organization)

     The Board of Corporate Auditors shall consist of the Corporate Auditors.

Article 3.      (Purpose)

     The Board of Corporate Auditors shall receive reports, deliberate or take resolutions on important matters pertaining to auditing; provided, however, that it shall not prevent a Corporate Auditor from exercising his power.

Article 4.      (Holding of Meetings)

     Meetings of the Board of Corporate Auditors shall be held, as a general rule, once a month; provided, however, that meetings may be held from time to time whenever necessary.

Article 5.     (Person who Convenes Meetings and Chairman thereof)

1.     The Board of Corporate Auditors may decide in advance the person who shall convene meetings of the Board of Corporate Auditors; provided, however, that other Corporate Auditors shall not be prevented from convening the meetings.

2.     The person who has convened a meeting of the Board of Corporate Auditors pursuant to the preceding paragraph shall act as chairman at the meeting.

3.     When the chairman is unable to act, another chairman shall be elected by the Corporate Auditors present at the meeting from among their number.

Article 6.      (Convocation Notice)

1.     Notice of convocation of a meeting of the Board of Corporate Auditors shall be dispatched to each Corporate Auditor three (3) days in advance of the date set for the meeting; provided, however, that in case of emergency this period may be shortened.

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2.     With the consent of all Corporate Auditors, a meeting of the Board of Corporate Auditors may be held without the convocation procedure.

Article 7.      (Method of Adopting Resolutions)

     Other than the resolutions for dismissal set forth in paragraph 2 of Article 15 and the consent of the Board of Corporate Auditors set forth in Article 16, resolutions of meetings of the Board of Corporate Auditors shall be adopted by a majority vote of all Corporate Auditors.

Article 8.      (Making Decisions on Auditing Policies, etc.)

1.     The policy, plan and method of auditing, the assignment of auditing work and budget for auditing expenses, etc. shall be deliberated and determined by resolutions of meetings of the Board of Corporate Auditors at the commencement of auditing.

2.     In addition to the preceding paragraph, matters which any Corporate Auditor deems necessary in order to fulfill his duty may be determined by resolutions of a meeting of the Board of Corporate Auditors.

Article 9.      (Report by Corporate Auditors to the Board of Corporate Auditors)

1.     Each Corporate Auditor shall report on the state of execution of his duty to the Board of Corporate Auditors from time to time, and at any time upon request by the Board of Corporate Auditors.

2.     Any Corporate Auditor who has received a report from an Accountant Auditor, a Director or any other person shall make the report thereof to the Board of Corporate Auditors.

Article 10.     (Hearing Reports from the Accountant Auditor or Directors, etc.)

     Corporate Auditors may hear reports from the Accountant Auditor, Directors or other persons at the meeting of the Board of Corporate Auditors whenever necessary.

Article 11.     (Measures to be Taken in the Event of Hearing Special Reports)

1.     In case a Director reports to the Board of Corporate Auditors a finding of a fact that might cause material damage to the Company, the Board of Corporate Auditors shall deliberate about the treatment thereof and otherwise.

2.     In case the Accountant Auditor reports to the Board of Corporate Auditors a finding of unfair practices pertaining to the fulfillment of duty of a Director or material facts in violation of laws or ordinances or the Articles of Incorporation in the fulfillment of duty of a Director, the provision of the preceding paragraph shall apply.

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Article 12.      (Receipt of Accounting Documents, etc.)

1.     The Board of Corporate Auditors shall receive accounting documents, etc., from the Directors and the audit report from the Accountant Auditor. The Corporate Auditors who shall receive these documents may be Full-time Corporate Auditors.

2.     The Corporate Auditor who has received the documents mentioned in the preceding paragraph must promptly submit them to the Board of Corporate Auditors.

Article 13.      (Preparation of Audit Report)

1.     The Board of Corporate Auditors shall prepare an audit report upon deliberation after being reported by the Corporate Auditors on the matters to be stated in the audit report, etc.

2.     In preparing the audit report mentioned in the preceding paragraph, if any Corporate Auditor expresses a different opinion, such opinion shall be affixed to the audit report.

3.     Each Corporate Auditor shall either affix his signature and seal to or put his electronic signature on the audit report. Full-time Corporate Auditors shall state that they are Full-time Corporate Auditors.

Article 14.      (Consent and Requests for Proposals relating to the Appointment of a Corporate Auditor)

     The following matters pertaining to the appointment of a Corporate Auditor shall be determined by resolutions of the Board of Corporate Auditors:

(1)	Consent to the agenda concerning the appointment of a Corporate Auditor which is to be submitted to a general meeting of shareholders;
(2)	Request for making the matters pertaining to the appointment of a Corporate Auditor as the agenda of a general meeting of shareholders; and
(3)	Request for submitting a proposal relating to the appointment of a Corporate Auditor to a general meeting of shareholders.

Article 15.      (Resolutions relating to the Appointment, Non-reappointment, Dismissal of an Accountant Auditor)

1.     The following matters pertaining to the appointment, non-reappointment or dismissal of an Accountant Auditor shall be determined by resolutions of the Board of Corporate Auditors:

(1)	Consent to the agenda concerning the appointment, non-reappointment or dismissal of an Accountant Auditor which is to be submitted to a general meeting of shareholders;
(2)	Request for making the matters pertaining to the appointment, non-reappointment or dismissal of an Accountant Auditor as the agenda of the general meeting of shareholders;

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(3)	Request for submitting a proposal relating to the appointment of an Accountant Auditor to a general meeting of shareholders; and
(4)	Appointment of those who shall perform temporarily duties of an Accountant Auditor when a vacancy occurs.

2.     In case the Board of Corporate Auditors shall dismiss an Accountant Auditor based upon a reason for dismissal provided by the statute, a resolution of a meeting of the Board of Corporate Auditors for such dismissal shall be adopted unanimously. In such a case, the Corporate Auditor designated by the Board of Corporate Auditors shall explain such dismissal and the reason therefor at the first general meeting of shareholders held after such dismissal.

Article 16.      (Consent of the Board of Corporate Auditors relating to the Exemption of Directors from Liabilities, etc.)

     Consent of the Board of Corporate Auditors relating to the following agenda, etc. shall be adopted unanimously by the Board of Corporate Auditors:

(1)	Proposal to exempt Directors from liabilities to the Company which is to be submitted to a general meeting of shareholders;
(2)	Amendment to the Articles of Incorporation in order to enable the Company to exempt Directors from liabilities to the Company by a resolution of the Board of Directors;
(3)	Proposal to exempt Directors from liabilities to the Company which is to be submitted to a meeting of the Board of Directors pursuant to the provisions of the Articles of Incorporation;
(4)	Amendment to the Articles of Incorporation in order to enable the Company to enter into an agreement with any outside Director (shagai torishimariyaku) to limit liabilities of such Director; and
(5)	Participation in litigation in order for the Company to support a Director.

Article 17.      (Minutes)

     The substance of the proceedings at a meeting of the Board of Corporate Auditors and the results thereof shall be recorded, in writing or in digital format, in the minutes of the meeting of the Board of Corporate Auditors, which shall bear the signatures, manually or in an electronic format, of Corporate Auditors present. The treatment similar to that of the minutes of the meeting of the Board of Directors shall be accorded to the minutes of the meeting of the Board of Corporate Auditors.

Article 18.      (Amendment to or Abolition of These Regulations)

     Any amendment to or abolition of the provisions of these Regulations shall require a resolution of a meeting of the Board of Corporate Auditors.

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SUPPLEMENTARY PROVISION

     These Regulations shall take effect on June 27, 2002.

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(Schedule 1)

POWERS OF THE BOARD OF CORPORATE AUDITORS

(1)	To consent to an agendum concerning the appointment of a Corporate Auditor (Article 18 (3) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(2)	To propose an agendum for, or submit a proposal of, the appointment of a Corporate Auditor (Article 18 (3) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(3)	To consent to an agendum concerning the appointment of an Accountant Auditor (Article 3 (2) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(4)	To propose an agendum for, or submit a proposal of, the appointment of an Accountant Auditor (Article 3 (3) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(5)	To consent to an agendum concerning the non-reappointment of an Accountant Auditor (Article 5-2 (3) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(6)	To propose an agendum for the non-reappointment of an Accountant Auditor (Article 5-2 of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(7)	To consent to an agendum concerning the dismissal of an Accountant Auditor (Article 6 (3) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(8)	To propose an agendum for the dismissal of an Accountant Auditor (Article 6 of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(9)	To dismiss an Accountant Auditor (Article 6-2 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(10)	To designate a Corporate Auditor who shall report the dismissal of an Accountant Auditor at a general meeting of shareholders (Article 6-2 (2) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(11)	To appoint a provisional Accountant Auditor (Article 6-4 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(12)	To receive reports from the Accountant Auditor (Article 8 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);

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(13)	To receive accounting documents and schedules from the Director or liquidator (Article 12 (1) and (2), 19 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation and Article 420 (1) of the Commercial Code);
(14)	To receive audit reports from the Accountant Auditor (Article 13 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(15)	To receive reports on the results, etc. of investigation of the audit reports prepared by the Accountant Auditor from the Corporate Auditors (Article 14 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(16)	To prepare audit reports (Article 14 (2), (3) and (4) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(17)	To receive reports on the status of execution of duties from Corporate Auditors (Article 18-2 (3) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(18)	To receive reports from Directors (Article 19 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation and Article 274-2 of the Commercial Code);
(19)	To consent to an agendum concerning the exemption of Directors from liabilities to the Company (Article 18-3 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation and Article 266 (9), (13) and (21) of the Commercial Code);
(20)	To consent to the participation in litigation in order for the Company to support a Director (Article 18-3 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation, and Article 266 (9) and Article 268 (8) of the Commercial Code);
(21)	To determine policy of auditing, method of investigation of the status of business affairs and properties of the Company or any other matters relating to execution of duties of Corporate Auditors; provided, however, that any Corporate Auditor shall not be prevented from exercising his power (Article 18-2 (2) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation).

     The Board of Corporate Auditors shall consist of the Corporate Auditors (Article 18-2 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation). Except resolution for dismissal of an Accountant Auditor, consent to an agendum concerning the exemption of Directors from liabilities to the Company or consent to participation in litigation in order for the Company to support a Director which shall be adopted unanimously, resolutions shall be adopted by a majority vote of all Corporate Auditors (Article 18-3 (1) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation).

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(Schedule 2)

POWERS AND DUTIES OF EACH CORPORATE AUDITOR

(1) General auditing powers:

(1)	Power to audit the execution by the Directors of their duties (Article 274 (1) of the Commercial Code);
(2)	Power to audit accounting documents, etc. (Article 281 (2) of the Commercial Code).

(2) Investigatory powers:

(1)	Power to require a report on the business and power to investigate status of business affairs and properties of the Company (Article 274 (2) of the Commercial Code);
(2)	Power to require a report on the business of affiliated companies and power to investigate status of their business affairs and properties (Article 274-3 of the Commercial Code);
(3)	Power to require the Accountant Auditor to make a report (Article 8 (2) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation).

(3) Rights and duties in connection with general meetings of shareholders and meetings of the Board of Directors, etc.:

(1)	Duty to explain at a general meeting of shareholders (Article 237-3 of the Commercial Code);
(2)	Duty to attend a meeting of the Board of Directors and express opinions thereat (Article 260-3 (1) of the Commercial Code);
(3)	Duty to report to the Board of Directors (Article 260-3 (2) of the Commercial Code);
(4)	Right to require the convocation of a meeting of the Board of Directors and right to convene the same (Article 260-3 (3) and (4) of the Commercial Code);
(5)	Duties to examine and make a report on proposals and documents to be submitted to a general meeting of shareholders (Article 275 of the Commercial Code).

(4) Rights concerning status of Corporate Auditors:

(1)	Right to express opinions with respect to appointment or dismissal of a Corporate Auditor (Article 275-3 of the Commercial Code);
(2)	Right to express opinions with respect to the resignation of a Corporate Auditor (Article 275-3-2 of the Commercial Code):
(3)	Right to deliberate among Corporate Auditors as to the amount of remuneration of each Corporate Auditor (Article 279 (2) of the Commercial Code);

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(4)	Right to express opinions with respect to remuneration (Article 279 (3) of the Commercial Code);
(5)	Right to require payment of auditing expenses (Article 279-2 of the Commercial Code);
(6)	Right to appoint one or more Full-time Corporate Auditor(s) (Article 18 (2) of the Law concerning Special Measures to the Commercial Code with respect to Audit, etc. of Joint Stock Corporation);
(7)	Right to appoint one or more Standing Corporate Auditor(s) (Article 24 of the Articles of Incorporation).

(5) Rights concerning measures for supervision and correction:

(1)	Right to apply for an injunction of acts of Directors (Article 275-2 of the Commercial Code);
(2)	Right to institute any actions or apply for any proceedings (Articles 247, 280-15 (2), 380 (2), 381 (1), 415, 428 (2), 431 (1) and 452 (1) of the Commercial Code).

(6) Others:

(1)	Right to investigate procedures for incorporation (Article 173-2 of the Commercial Code);
(2)	Right to represent the Company in any action between the Company and a Director (Article 275-4 of the Commercial Code).

EX-2.1 7 k00247exv2w1.htm SPECIMEN COMMON STOCK CERTIFICATES

(TRANSLATION)

SPECIMEN COMMON STOCK CERTIFICATES

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

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EX-1.2

exv1w2

EX-1.3

exv1w3

EX-1.4

exv1w4

EX-2.1

exv2w1