FINANCIAL HIGHLIGHTS MANAGEMENT PERSPECTIVE TOPICS REVIEW OF OPERATIONS FINANCIAL SECTION CORPORATE DATA 2 DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2001 develop unique, highly appealing products. As a result, we once again achieved wide profit margins in our fluorochemical and overseas air con- ditioning operations and expanded our share of Japan’s air conditioning market. Operating income increased 54%, to ¥39.8 billion, marking the third consecutive annual increase. Net income surged 91%, to ¥19.9 billion. This substantial increase in rev- enue, combined with the Company’s efforts to reduce accounts payable and inventories as well as curb capital investment, contributed to the secur- ing of ¥17.8 billion in free cash flow for the term. Revenue improvement also contributed to improved consoli- dated return on assets (ROA), which rose 2.0 percentage points, to 4.4%.  Noriyuki Inoue, President During fiscal 2001, ended March 31, 2001, Daikin exerted untiring efforts to expand sales volumes in its air con- ditioning operations, both domestic and overseas, with unrivaled products and to augment sales in its fluoro- chemicals business by creating new demand and developing new applica- tions. As a result, the Daikin Group recorded consolidated net sales of ¥531.9 billion, a substantial increase compared with the previous term and the highest annual sales figure in the 77-year history of the Company. Fiscal 2001 was the final year of Daikin’s Fusion 21 strategic manage- ment plan, which spanned fiscal 1996 through fiscal 2001. Under the plan, the Company strove tirelessly to radically reform its managerial framework, implement comprehensive cost reductions Companywide, and Furthermore, as a result of rapid global development over the past few years in the air conditioning and fluo- rochemicals businesses, the percent- age of overall net sales accounted for by overseas business climbed to 32%, twice the percentage from five years ago. In recent years, Daikin has been working to expand and develop the Daikin Group by implementing advanced initiatives, including introducing its own brand of corpo- rate governance, radical reform of (%) ROA = Net income/Total assets Consolidated basis Non-consolidated basis ’01 ’00 ’99 ’98 ’97 ’96 ’95 0.7 1.7 1.6 1.2 1.4 2.4 4.4 1.7 1.6 1.8 1.2 1.1 2.1 3.9 Management Perspective Return on Assets