FINANCIAL HIGHLIGHTS MANAGEMENT PERSPECTIVE TOPICS REVIEW OF OPERATIONS FINANCIAL SECTION CORPORATE DATA Consolidated Statements of Cash Flows Daikin Industries, Ltd. and Consolidated Subsidiaries Years Ended March 31, 2001 and 2000 Millions of yen 2001 2000 Operating activities: Income before income taxes and minority interests ................................................................ ¥35,234 ¥19,418 Adjustment for: Income taxes—paid ......................................................................................................... (10,217) (8,681) Depreciation and amortization........................................................................................... 19,875 19,176 Gain on sales of investment securities .............................................................................. (6) (1,632) Write-off of investment securities ...................................................................................... 436 1,828 Write-off of other assets ................................................................................................... 728 Loss on disposals of property, plant and equipment ........................................................... 898 755 Equity in earnings of associated companies ....................................................................... (325) 369 Changes in assets and liabilities: Notes and accounts receivable...................................................................................... 7,399 (3,750) Inventories .................................................................................................................. (3,855) 5,438 Other current assets .................................................................................................... (4,180) 823 Trade notes and accounts payable ................................................................................ 5,871 283 Accrued expenses ........................................................................................................ 2,550 1,602 Other—net....................................................................................................................... (5,860) (3,852) Total adjustments .................................................................................................... 13,314 12,359 Net cash provided by operating activities ................................................................... 48,548 31,777 Investing activities: Purchases of property, plant and equipment........................................................................... (20,292) (15,608) Increase in investments in unconsolidated subsidiaries and associated companies .................. (529) (2,786) Payments to acquire investment securities ............................................................................ (3,763) (5,259) Proceeds from sales of investment securities ........................................................................ 2,065 2,319 Other—net........................................................................................................................... (684) 1,069 Net cash used in investing activities.......................................................................... (23,203) (20,265) Financing activities: Increase (decrease) in short-term borrowings ......................................................................... (20,318) 658 Increase in long-term debt .................................................................................................... 5,928 25 Repayments of long-term debt............................................................................................... (5,786) (8,779) Payments of cash dividends.................................................................................................. (2,901) (2,638) Other—net........................................................................................................................... (602) (306) Net cash used in financing activities.......................................................................... (23,679) (11,040) Effect of exchange rate changes on cash and cash equivalents ................................................. 382 (568) Net increase (decrease) in cash and cash equivalents .............................................................. 2,048 (96) Cash and cash equivalents of newly consolidated subsidiaries, beginning of year ....................... 100 438 Cash and cash equivalents, beginning of year ........................................................................... 33,334 32,992 Cash and cash equivalents, end of year .................................................................................... ¥35,482 ¥33,334 See notes to consolidated financial statements. 28 DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2001