FINANCIAL HIGHLIGHTS MANAGEMENT PERSPECTIVE TOPICS REVIEW OF OPERATIONS FINANCIAL SECTION CORPORATE DATA Net Income Total Assets Shareholders’  Equity Ratio DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2001 22 effectiveness of Companywide efforts to streamline production systems and to reduce costs of design as well as material and component procurement, which offset the effects of the yen’s appreciation and declining domestic air conditioner retail prices. Selling, general and administrative (SG&A) expenses rose ¥12,137 million, to ¥135,769 million. This was due to an increase in the Company’s share of the burden for pension expenses stemming from the adoption of new accounting standards govern- ing retirement benefits, increased logistics expenses associated with the rise in sales volumes, and the allocation of necessary funds to priority and strategic initiatives. Operating income leaped 53.8%, to ¥39,814 million. Examined by individual seg- ment, operating income for air conditioning surged 81.3%, to ¥24,455 million, as the significant increase in both domestic and overseas sales volumes, due to the Company’s aggressive sales promotion activities, absorbed the effects of the yen’s appreciation. Rebounding from the effects of a May 1999 accident at the manufactur- ing plant of Daikin America, Inc., operating income for the Chemicals Division increased 32.5%, to ¥15,955 million.  Other expenses—net declined 29.2% on a Companywide basis, to ¥4,580 million, due largely to an increase in royalty revenues of ¥1,099 million and a ¥1,202 million decrease in foreign currency exchange losses. As a result, net income for fiscal 2001 soared 90.7%, to ¥19,939 million. Concerning assets, Daikin made Groupwide efforts during fiscal 2001 to reduce notes and accounts receivable as well as inventories. In terms of the number of days retained compared with the previous year, notes and accounts receivable decreased by 13 days and inventories decreased by 3 days. Capital expenditures totaled ¥27,152 million and depreciation was ¥19,436 million. As a result, net property, plant and equipment for the term increased ¥10,113 million. Meanwhile, investment securities increased approximately ¥8,270 million, due to the adoption of the market price accounting rule.  As a result, total assets grew 5.1%, to ¥453,142 million. Due to the Company’s efficient use of assets, interest-bearing debt liabilities declined ¥15,376 million. On the other hand, notes and accounts payable increased ¥9,213 million and construction liabilities increased ¥5,998 million. As a result, total current and long-term liabilities increased ¥7,042 million, to ¥273,960 million. Financial Position (¥ billion) (¥ billion) (%) 6.6 5.5 6.2 10.5 19.9 ’97 ’98 ’99 ’00 ’01 ’97 ’98 ’99 ’00 ’01 428.4 448.7 434.3 431.0 453.1 ’97 ’98 ’99 ’00 ’01 33.4 32.4 34.3 37.0 38.4 Years Ended March 31,  2001 2000 1999 1998 1997 Notes and accounts receivable (¥ billion)......... 104.2 106.3 103.6 110.0 100.4 Inventories (¥ billion)...................................... 92.2 84.2 95.4 102.9 96.6 Interest-bearing debt (not including  trade notes discounted) (¥ billion)................. 143.7 159.1 171.9 186.4 180.2