FINANCIAL HIGHLIGHTS MANAGEMENT PERSPECTIVE TOPICS REVIEW OF OPERATIONS FINANCIAL SECTION CORPORATE DATA Computer Graphics continue to act as the central representative in Japan, and conduct marketing, sales, and support operations. Sonic Solutions will continue to develop new DVD authoring software and conduct marketing, sales, and support for the global market. In the Japanese market, with demand stimulated by invest- ment in IT, sales of Daikin’s network computing software increased steadily. Demand for LSF, which optimizes the burden shared by computers by allocating data processing over a network, grew dramatically, particularly in the semi- conductor design sector. Our newly introduced network management system, KINNETICS, also contributed to sales expansion as its use by universities and research institutions helped boost recognition of its product value. However, overall sales stagnated due to a falloff of demand for our SOFTIMAGE 3-D computer graphics animation software, recent computer downsizing, and shrinkage in the market due to the widespread conversion to the Windows NT operating system.  In our cryogenics business during fiscal 2001, we focused on expanding sales of our cryo-pumps to producers of man- ufacturing equipment, including semiconductors, and sales of our cryo-coolers, introducing new products to market. Daikin posted an all-time high in unit sales of cryo-pumps, thanks to strong demand in semiconductor markets and suc- cessful efforts to expand sales of these pumps in Korea and Taiwan. On the other hand, a delay in new product devel- opment prevented us from realizing an increase in sales of cryo-coolers. Nevertheless, overall sales in our cryogenics business exceeded our targets.  Daikin’s Computer Graphics Division is currently posi- tioning itself in close proximity to the IT industry, an indus- try that has brought about enormous upheaval in recent years and is the current leader of industry trends. In the months and years ahead, the Company will strive to convert its Computer Graphics Division into an IT-related business and thereby expand its operations. Specifically, we will work to obtain profitable business results at the earliest pos- sible date for such new businesses as network solutions, which we brought to market in the second half of fiscal 2001, our virtual digital broadcast studio business, and our appli- cation service provider (ASP), which is centered around time rentals of equipment CAD software. Furthermore, although we developed our SCENARIST DVD authoring system, which we introduced in June 1996, into a global business with sales in the United States, Europe, and Asia, overseas organizational management costs proved to be prohibitive and we sold off the business. From now on, we will merge our DVD authoring software with that of Sonic Solutions Inc. of the United States, In the current fiscal year, we will work to increase sales by concentrating on securing repeat orders from current cus- tomers, carrying out horizontal marketing activities among them, and developing new products for use in the produc- tion of 300mm wafers.  Regarding cluster tools for semiconductor manufacturing, we achieved a more than fourfold rise in sales by stepping up marketing activities aimed at our targeted users and introducing products in the market for compact cluster tools. Despite these efforts, we were unable to attain the targets of our initial plans for increasing sales volume mainly owing to a lag in repeat orders from users.  Amid a rapid recession of the semiconductor market, in the current fiscal year we plan to maintain sales at the same level as in the previous fiscal year by focusing on sales of cryo- pumps for use in the manufacturing of electronic devices other than semiconductors and by targeting sales of cryo- coolers for use in linear motors on Japan Railways trains.  18 Semiconductor Manufacturing Equipment DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2001