CENTRAL GLASS AR 01.6.7 9:27 AM ページ 2 file2 Central Glass Co., Ltd. IPerformance n fiscal 2000, ended March 31, 2000, an overall harsh operating environment con-tinued amid a

A N N U A L R E P O R T 2 0 0 0

CENTRAL GLASS_AR 01.6.7 9:27 AM ページ 2

1 Financial Highlights

2 President’s Message

4 Review of Operations

6 Research & Development Activities

8 Management’s Discussion & Analysis

10 Consolidated Balance Sheets

12 Consolidated Statements of Operations

13 Consolidated Statements of Shareholders’ Equity

14 Consolidated Statement of Cash Flows

15 Notes to Consolidated Financial Statements

20 Report of Independent Certified Public Accountants

21 Board of Directors & Auditors

Corporate Data

PR O F I L E

Founded in 1936, Central Glass Co., Ltd. began as a manufacturer of soda ash and caustic soda and expanded

its field of operations to include fertilizers, flat glass, fiberglass and vinyl chloride.

We contribute widely to daily living through such diverse products as flat glass, fabricated glass, safety glass

for automobiles and other vehicles, various chemical products, fertilizers and fiberglass.

While expanding existing businesses, Central Glass is conducting aggressive research and development

and capital investment in new businesses, including fine glass for the electronics materials field and such

organic and inorganic fine chemicals as fluorine.

CO N T E N T S


1Central Glass Co., Ltd.

F I N A N C I A L HI G H L I G H T SYears ended March 31

Proportion of Sales (Year ended March 31, 2000)

63.0%37.0%

Chemica ls Div is ion

Glass Div is ion

Soda, chlorine, organic and

inorganic fluorides, fertilizers,

high-purity gas, solvents, med-

ical and agricultural products

and other chemical products;

fiberglass products; vinyl chlo-

ride and other synthetic resins

Architectural glass, automo-

tive safety glass and industrial

fabricated glass and other

glass-related products

2000 1999 1998 1997 1996 2000

Thousands ofMillions of yen U.S. dollars (Note)

Net Sales ¥175,283 ¥173,782 ¥192,753 ¥194,939 ¥183,028 $1,651,276

Operating Income 11,391 6,784 10,888 8,672 684 107,310

Net Income (Loss) (521) (266) 2,654 3,125 4,388 (4,908)

Total Assets 223,065 212,812 224,693 224,000 232,925 2,101,413

Total Shareholders’ Equity 58,103 57,169 59,328 57,377 54,249 547,367

%

Shareholders’ Equity Ratio 26.05 26.86 26.40 25.61 23.29

Yen U.S. dollars (Note)

Amounts per Share:

Net Income (Loss) ¥ (2.39) ¥ (1.20) ¥ 11.96 ¥ 14.08 ¥ 19.77 $(0.023)

Shareholders’ Equity 270.40 261.72 267.32 258.53 244.44 2.547

Cash Dividends 5 5 5 3 — 0.047

Note: U.S. dollar amounts have been translated from Japanese yen, for convenience, at the rate of ¥106.15=US$1.00, the approximate exchange rate prevailing

on March 31, 2000.



P e r f o r m a n c e

In fiscal 2000, ended March 31, 2000, an

overall harsh operating environment con-

tinued amid a delayed recovery in

private-sector demand, despite signs of a

gradual recovery in the Japanese economy

from the effects of economic stimulus mea-

sures and a recovery in Asian economies.

In response, Central Glass Co.,Ltd.

aggressively advanced marketing activities

to achieve a 0.9% increase in sales to

¥175,283 million (US$1,651 million). Higher

sales of value-added products, such as fine

chemicals, and increased efficiency and

streamlined operations resulted in a 67.9%

increase in operating income to ¥11,391

million (US$107 million).

However, the Company recorded a prior

service cost recognized as liability of ¥8,024

million (US$76 million) to compensate for

unfunded pension liabilities in accordance

with a change in accounting methods.

Consequently, despite a ¥4,069 million

(US$38 million) deferred income tax benefit

in line with the introduction of tax-effect

accounting, a net loss of ¥521 million

(US$5 million) was recorded after deducting

other expenses and taxes.

Net cash provided by operating activities

was ¥15,587 mill ion (US$147 mill ion)

owing to such non-cash expenses as depre-

ciation and amortization expenses and the

provision for allowance for retirement bene-

fits, despite a nominal decline in income

before income taxes.

Net cash used in investing activities

reached ¥6,205 million (US$58 million),

mainly owing to increased capital invest-

ment centered on the Fine Chemicals Sector.

Net cash used in financing activities was

¥6,197 million (US$58 million) reflecting

the repayment of loans and the repurchase

and retirement of 3,556 thousand shares of

treasury stock.

As a result, cash and cash equivalents at

fiscal year-end increased ¥3,089 million

(US$29 million) to ¥21,305 million (US$201

million).

D i v i d e n d s

T he Company’s basic policy is to dis-

tribute stable dividends that reflect

business results while taking a long-

term perspective in accounting for the

operating environment and ensuring suffi-

cient internal reserves for reinvestment.

Based on this policy, management main-

tained cash dividends of ¥5.0 (US$0.047)

per share during fiscal 2000.

M a n a g e m e n t P h i l o s o p h y

Our fundamental policy is to maxi-

mize shareholder value by

expanding corporate value through

higher profitability and a stronger financial

position. Specifically, we aim to build a sta-

ble foundation in our core Glass and

Chemicals Divisions and expand sales of

such highly functional and value-added

products as fine chemicals and fine glass.

Urgent management issues include

strengthening our position in the

Architectural Glass Sector, maintaining

profitability of established products in the

Chemicals Division and accelerating expan-

sion in the growth field of fine chemicals.

We have made progress in these matters.

Furthermore, we will focus on maintaining

profitability in the Automotive Safety Glass

Sector amid global restructuring of the

automotive industry.

Vigorous efforts in the Glass and

Chemicals Divisions to refine operations

and reduce cost are showing results.

Further progress, however, will require a

thorough reform of our production, distrib-

ution and marketing structures. We have

already begun to consider such measures to

raise the profitability of the Glass Division,

and we plan to review conditions at the

Chemicals Division in fiscal 2001, ending

March 31, 2001.

Our long-term prosperity depends on

expanding sales of fine chemicals and

other high-value-added products, and we

are carrying out an active research and

PR E S I D E N T ’ S ME S S AG E



Sadayoshi Nakamura, President

development (R&D) program and making

solid investments in new product develop-

ment to support rapid commercialization.

Based on these measures, we will secure

stable earnings from our base in the materi-

als sectors of glass and chemicals, while

boosting profitability by expanding fine

chemicals and other value-added products.

We aim to regularly achieve return on

equity (ROE) of 10%.

O u t l o o k

W hile the economy is entering

a steady recovery, such “old

economy” sectors as the

housing, automotive and chemical indus-

tries are expected to experience prolonged

harsh operating environments. The already

severe environment for our established

business areas, especially in the Glass

Division, is expected to continue in fiscal

2001. We anticipate a shakeout in the

industry amid increasing domestic and over-

seas competition. Central Glass will work to

improve performance by reinforcing its pro-

duction and marketing structures to

address various needs, and promote

increased efficiency and cost reduction at

all levels of operations.

Given the importance of developing our

fine chemicals operations, in April 1999 we

established the Fine Chemical Business

Development Department. Through this

and other measures, we aim to build a solid

base in fine chemicals and improve our abil-

ity to develop and commercialize new

business areas.

For fiscal 2001, management forecasts

sales of ¥177,000 million (US$1,667 mil-

lion) and net income of ¥4,000 million

(US$38 million).

With the conclusion of the 86th Annual

General Shareholders’ Meeting, I succeeded

Hirotaro Okazaki as president of Central

Glass Co., Ltd. While continuing the various

corporate reforms implemented by Mr.

Okazaki, including Groupwide restructuring

measures and a management philosophy

focused on shareholder return, I plan to

carry out more extensive operational and

management reforms.

Thank you for your continued support.

Sadayoshi Nakamura

President



G L A S S D I V I S I O N

Key products in the Glass Division are flat

and fabricated glass and mirrors for archi-

tecture, automotive safety glass, as well as

fine glass for the electronics industry and

others. Effective in April 1999, the Glass

and Building Materials Division was

renamed the Glass Division, with no change

in business content.

Sales in the Glass Division increased

3.1% to ¥110,481 million (US$1,041 mil-

lion). Operating income of ¥690 million

(US$7 million) was recorded, compared

with an operating loss of ¥1,565 million

(US$15 million) in fiscal 1999, as measures

in both manufacturing and marketing divi-

sions to reduce cost of sales resulted in a

sharp improvement in profitability.

A review of each sector is discussed below.

A r c h i t e c t u r a l G l a s s S e c t o r

Sales in the Architectural Glass Sector, com-

prising flat and fabricated architectural glass

for the architectural industry, decreased.

The operating environment in fiscal

2000, ended March 31, 2000, was harsh,

as a 9% decline in the floor space of non-

residential building starts offset a slight

increase in housing starts. In response, the

Company streamlined its sales branches and

reorganized its marketing structure. The

Company also reduced costs at manufactur-

ing bases, revised the terms and conditions

of orders and deliveries for both sales and

purchasing, and reviewed sales prices to

maximize profitability.

Sales of double-glazing glass units were

brisk, particularly for the residential market.

A u t o m o t i v e S a f e t y G l a s s S e c t o r

Strong production and sales for compact

cars resulted in a 6% increase despite

domestic vehicle production falling below

the 10-million-unit level for the second con-

secutive year amid lackluster domestic sales.

However, sales in the Automotive Safety

Glass Sector fell as a result of price reduc-

tions in accordance with automakers’

requests and lower sales at overseas consol-

idated subsidiaries.

F i n e G l a s s S e c t o r

Sales in the Fine Glass Sector, comprising

glass for the electronics industry, increased

as a result of recovered demand for such

products as thin-film transistor (TFT) and

super-twisted nematic (STN) liquid crystal

displays (LCDs), sales of which had

decreased in fiscal 1999.

RE V I E W O F OP E R AT I O N S

119,

921

19961997

19981999

2000

130,

004

128,

861

107,

200

110,

481

Glass Division (Millions of yen)

High-performance glass products for commercial build-

ings in Osaka



Core products in the Chemicals Division

include fine chemicals, fiberglass products,

fertilizers, soda products, chlorine products

and fluorine products.

Sales in the Chemicals Division edged

down 2.7% to ¥64,802 million (US$610

million), and operating income increased

28.2% to ¥10,702 million (US$101 million)

as a result of increased sales of fine chemi-

cal products.

F i n e C h e m i c a l s S e c t o r

Sales in the Fine Chemicals Sector rose on

the back of sales growth in special gas

products such as nitrogen trifluoride (NF3)

used in the cleaning processes of semicon-

ductor and LCD manufacturing and such

medical products as pharmaceutical precur-

sors for general anesthesia.

Aggressive and efficient fine chemical

operations, a growing business field, repre-

sent a key management priority for the

Company. The Company believes increased

production capacity for these highly prof-

itable products will contribute to profit

growth in future periods, although increased

depreciation expenses owing to large-scale

capital investment for NF3 and pharmaceuti-

cal precursors products are anticipated.

F i b e r g l a s s S e c t o r

The Fiberglass Sector recorded an increase

in sales owing to higher demand from such

key clients as manufacturers of wastewater

treatment tanks and bathtubs for residential

use. Brisk demand for computer and other

electronic equipment, as well as a recovery

in exports to Southeast Asia also con-

tributed to sales growth.

F e r t i l i z e r S e c t o r

Sales in the Fertilizer Sector decreased as a

result of lower sales prices and weak

demand for rice-field fertilizers arising from

increased imports and reduced use of fer-

tilizers.

63,1

06

19961997

19981999

2000

64,9

39

63,8

91

66,5

82

64,8

02

Chemicals Division (Millions of yen)

C H E M I C A L S D I V I S I O N

Central Glass aims to achieve further growth through

aggressive investment of management resources in the

Fine Chemicals Sector.



RE S E A R C H & DE V E L O P M E N T AC T I V I T I E S

coating, heat treatment and glass processing.

With a focus on a variety of glass installation

technologies, we are striving to improve the

quality of our technological services by

developing and providing a variety of soft-

ware technology for structural, optical and

thermal analysis.

A u t o m o t i v e S a f e t y G l a s s

In automotive safety glass, we are continu-

ing to make developments in improving

efficiency of production facilities and low-

cost production and environmental

technologies by utilizing a variety of basic

technologies to address automobile manu-

facturers’ basic demands for safety, comfort

and lighter weight glass. We are also devel-

oping and commercializing such products

and technologies as water-repellant glass,

thermal insulating glass, glass with a multi-

purpose antenna system, and thinner

tempered and laminated safety glass.

F i n e G l a s s

In fine glass, we are selectively focusing

efforts on developing and commercializing

thin glass substrates for use in flat-panel

displays, as well as the necessary thin-film

coating and fine patterning technologies to

accompany such products.

C H E M I C A L S D I V I S I O N

C o m m o d i t y C h e m i c a l s

In commodity chemicals, while pursuing

Research and Development (R&D) at

Central Glass (the Company and consoli-

dated subsidiaries) is based on a fundamental

policy of developing innovative products in

response to diversifying market needs amid

social and environmental change. We make

concerted efforts to create core products

for new businesses while expanding and

strengthening existing businesses.

During fiscal 2000, Central Glass con-

ducted R&D activities with the cooperation

of each division through a three-pronged

organization comprising the Glass Research

Center and the Glass Technical Center in the

Glass Division and the Chemical Research

Center in the Chemicals Division. The

Company also raised efficiency by concen-

trating on core research themes, following a

careful review, and reallocating research staff.

G L A S S D I V I S I O N

A r c h i t e c t u r a l G l a s s

In architectural glass, we are responding to

market demand by developing products

with environmental and next-generation

energy conservation features while continu-

ing to advance flat glass research and

development of such functional glass

products as thermal insulation and shield-

ing glass, ultraviolet-ray-shielding and

electromagnetic-wave-shielding glass,

hydrophilic glass, photocatalytic glass and

fire-resistant glass based on such basic

technologies as thin-film and thick-film

R&D Expenses (Millions of yen/U.S. dollars)

¥2,222(US$21)

¥2,308(US$22)

Total ¥4,530 (US$43) million

Glass DivisionChemicals Division

Float Glass Manufactur ing

Central Glass is developing new technologies for reduc-

ing costs, improving facility efficiency and advancing

environmental preservation in order to maximize profits.



production research for HFC-245fa as a

substitute for HCFC-141b, we are partici-

pating in the Research Institute of

Innovative Technology for the Earth’s

“Development of New Refrigerants,

Blowing Agents and Cleaning Solvents for

the Effective Use of Energy,” and carrying

out aggressive technological development

of next-generation substances.

F i n e C h e m i c a l s

In fine chemicals, we are advancing prod-

uct development in line with market needs

based on production and application tech-

nology for fluoride-containing compounds.

Namely, in the environmental field, we

have developed proprietary production

methods for non-ozone-depleting cyclic

HFC-type solvents and etching gases with a

minimal global warming potential.

Concurrently, we are enhancing organic

fluorinated intermediates in the medical

and agricultural fields and developing

inorganic fluorinated gases for use in

semiconductor production processes in the

semiconductor field. Central Glass also

focused efforts on the research and devel-

opment of fluorine-containing electrolyte

compounds for batteries in the energy field

as well as precision processing and high-

purity inorganic fluorinated compounds in

the optical materials field, an integral field

in the optical communications area of the

information field.

F l u o r o c a r b o n R e s i n

In fluorocarbon resin, we are enhancing

and expanding the types of high perfor-

mance products and water-soluble

products and carrying out commercializa-

tion while conducting research and

development for optical and electrical

materials that employ the special features

of fluorine.

F e r t i l i z e r

In fertilizer, a new controlled release fertil-

izer “CERACOAT-R” that enables precise

control of effective fertilizer periods is on

stream. We are making earnest efforts to

further improve the biodegradability of its

coating agent.

B i o l o g i c a l - R e l a t e d F i e l d s

In biological-related fields, we are widening

the application range of our “BIOKEEPER”

wettable powder, a microbiological plant

protection agent, to several plants, such as

cabbage and onions. Development of new

micro-organic materials is also being

advanced, including the development

and registration of “MOMIGENKI” wet-

table powder, an agricultural chemical for

rice plant seed disinfection treatment using

microorganism formulation technology.

Through these activities, Central Glass is

working to establish new business fields for

the Chemicals Division.

Central Glass is pursuing R&D activities to expand and

reinforce its high-value-added product lineup and to

develop products that will form the core of new busi-

nesses.

Chemical Research Center in Tokyo

Central Glass is developing new products to meet new

needs, including organic and inorganic fine chemicals,

fluorine resins and biological-related products at its

Chemical Research Centers in Tokyo and Ube.



MA N AG E M E N T ’S DI S C U S S I O N & AN A LYS I S

B u s i n e s s R e s u l t s

During fiscal 2000, ended March 31, 2000,

consolidated net sales edged up 0.9% com-

pared with the previous fiscal year to

¥175,283 million (US$1,651 million). Sales

of the Glass Division rose 3.1% to

¥110,481 million (US$1,041 million) on the

back of a rebound in demand for fine glass.

However, sales of the Chemicals Division

slipped 2.7% to ¥64,802 million (US$610

million) due to weak demand for fertilizers.

Despite the strong yen, overseas sales

climbed 21.3% to ¥25,240 million (US$238

million), accounting for 14.4% of consoli-

dated net sales, an increase of 2.4

percentage points. Sales in North America

advanced 15.7% to ¥12,892 mil l ion

(US$121 million), and sales in Europe rose

11.3% to ¥7,315 million (US$69 million).

Sales in other areas increased 62.5% to

¥5,033 million (US$47 million).

I n c o m e

Gross profit increased 6.0% to ¥49,216

mill ion (US$464 mil l ion), owing to a

decrease in the cost of sales ratio of 1.4

percentage points to 71.9% due to efforts

to reduce expenses. Selling, general and

administrative (SG&A) expenses were down


As a result, operating income soared


Other expenses, net increased 124.0%

to ¥11,023 million (US$104 million), as

prior service cost recognized as liability of

¥8,024 million (US$76 million) was posted

as an extraordinary expense. The applica-

tion of new tax-effect accounting from the

term under review resulted in the recording

of deferred tax assets of ¥4,069 million

(US$38 million). However, a net loss of

¥521 million (US$5 million) was recorded.

I n v e s t m e n t

Capital expenditures advanced 15.6% to

¥9,865 million (US$93 million) compared

with the previous fiscal year. By division,

capital expenditures in the Glass Division

were ¥2,438 million (US$23 million), and

those in the Chemicals Division amounted

to ¥7,427 million (US$70 million).

Research and development expenditures

were ¥4,530 million (US$43 million).

C a s h F l o w s

In accordance with a new accounting stan-

dard for statements of cash flows, which

became effective the year ended March 31,

2000, the Company has prepared the

accompanying consolidated statement of

cash flows for the first time. Comparisons

to previous fiscal years are not provided, as

consolidated statements of cash flows for

previous fiscal years were not required.

183,

028

19961997

19981999

2000

194,

939

192,

753

173,

782

175,

283

Net Sales (Millions of yen)

4,38

8

19961997

19981999

2000

3,12

5

2,65

4

(266

)

(521

)

Net Income (Loss) (Millions of yen)

54,2

49

19961997

19981999

2000

57,3

77

59,3

28

57,1

69

58,1

03

Shareholders’ Equity (Millions of yen)



Net cash provided by operating activities

was ¥15,587 million (US$147 million)

owing to such non-cash expenses as depre-

ciation and amortization expenses and the

prior service cost recognized as liability,

despite a nominal decline in income before

income taxes.

Net cash used in investing activities

reached ¥6,205 million (US$58 million),

mainly owing to increased capital invest-

ment centered on the Fine Chemicals

Sector.

Net cash used in financing activities was

¥6,197 million (US$58 million) reflecting

the repayment of loans and the repurchase

and retirement of 3,556 thousand shares of

treasury stock.

As a result, cash and cash equivalents at

end of year increased ¥3,089 mil l ion

(US$29 million) to ¥21,305 million (US$201

million).

F i n a n c i a l P o s i t i o n

Total assets at the end of the fiscal year

increased 4.8% to ¥223,065 mil l ion

(US$2,101 million). Turnover of total assets

was 0.8. Total current assets increased


Total current liabilities advanced 19.4% to

¥119,658 mil l ion (US$1,127 mil l ion).

Shareholders’ equity rose 1.6% to ¥58,103

million (US$547 million) due to an increase

2,93

4

19961997

19981999

2000

3,17

2

3,45

3

3,30

0

4,53

0

Research & Development Expenditures(Millions of yen)

8,80

1

19961997

19981999

2000

10,1

09

10,9

91

8,53

3

9,86

5

Capital Expenditures (Millions of yen)

in retained earnings. The net worth ratio

decreased 0.5 percentage point to 31.3%.

Shareholders’ equity per share was

¥270.40 (US$2.547), an increase of ¥8.68

(US$0.082) from the previous year-end.

C h a n g e i n A c c o u n t i n g S t a n d a r d s

In the current fiscal year, the Company will

adopt new accounting standards for retire-

ment benefits, and in fiscal 2000, ended

March 31, 2000, the Company changed its

accounting standards for the allowance for

retirement benefits to increase the

allowance. As a result, as of April 1, 2000,

unfunded retirement liabilities amounted to

¥1,400 million (US$13 million), which the

Company plans to write off to promote a

sounder financial structure.



CO N S O L I DAT E D BA L A N C E SH E E T SCentral Glass Co. , Ltd. and Consol idated Subsidiar ies

March 31, 2000 and 1999

March 31,

2000 1999 2000

Thousands ofMillions of yen U.S. dollars (Note 2)

ASSETS

Current assets :

Cash and bank deposits ¥ 21,983 ¥ 18,696 $ 207,094

Marketable securities (Note 13) 4,656 5,363 43,862

Trade notes and accounts receivable 50,309 44,896 473,943

Less: Allowance for doubtful accounts (433) (444) (4,079)

Inventories 21,872 23,969 206,048

Deferred taxes (Note 6) 930 — 8,761

Prepaid expenses and other current assets 1,992 1,826 18,766

Total current assets 101,309 94,306 954,395

Property, plant and equipment, at cost (Note 4) :

Land 23,954 24,246 225,662

Buildings and structures 73,942 73,232 696,580

Machinery and equipment 190,014 191,169 1,790,052

Construction in progress 4,356 2,806 41,036

292,266 291,453 2,753,330

Less: Accumulated depreciation (201,253) (198,017) (1,895,930)

Property, plant and equipment, net 91,013 93,436 857,400

Investments and other assets :

Investment securities (Notes 4 and 13) 16,808 16,934 158,342

Long-term loans receivable 1,055 1,237 9,939

Deferred taxes (Note 6) 6,322 — 59,557

Other assets 5,576 6,175 52,528

Allowance for doubtful accounts (960) (881) (9,043)

Total investments and other assets 28,801 23,465 271,323

Translat ion adjustments 1,942 1,605 18,295

Total assets ¥223,065 ¥212,812 $2,101,413

See accompanying notes to consolidated financial statements.



March 31,

2000 1999 2000


LIABILITIES AND SHAREHOLDERS ’ EQUITY

Current l iabi l i t ies :

Short-term borrowings (Notes 3 and 4) ¥ 59,014 ¥ 56,475 $ 555,950

Current portion of long-term debt (Note 4) 15,000 4,501 141,309

Trade notes and accounts payable 24,907 22,589 234,640

Income taxes payable 3,876 1,958 36,514

Accrued expenses and other current liabilities 16,861 14,721 158,841

Total current liabilities 119,658 100,244 1,127,254

Long-term l iabi l i t ies :

Long-term debt (Note 4) 17,467 35,591 164,550

Allowance for retirement benefits 18,310 10,939 172,492

Allowance for rebuilding furnaces 8,686 7,659 81,828

Other long-term liabilities 183 18 1,723

Total long-term liabilities 44,646 54,207 420,593

Total liabilities 164,304 154,451 1,547,847

Minority interests 658 1,192 6,199

Commitments and contingent l iabi l i t ies (Note 10)

Shareholders ’ equity (Notes 5 and 12) :

Common stock, ¥50 par value:

Authorized—871,500,000 shares;

Issued—214,879,975 shares 18,168 18,168 171,154

Additional paid-in capital 8,117 8,877 76,467

Retained earnings 31,818 30,124 299,746

58,103 57,169 547,367

Treasury stock, at cost:

470,000 shares in 2000 and 254,000 shares in 1999 0 0 0

Total shareholders’ equity, net 58,103 57,169 547,367

Total l iabi l i t ies and shareholders ’ equity ¥223,065 ¥212,812 $2,101,413



CO N S O L I DAT E D STAT E M E N T S O F OP E R AT I O N SCentral Glass Co. , Ltd. and Consol idated Subsidiar ies

For years ended March 31, 2000 and 1999

Years ended March 31,

2000 1999 2000


Net sales ¥175,283 ¥173,782 $1,651,276

Cost of sales 126,067 127,334 1,187,630

Gross profit 49,216 46,448 463,646

Sel l ing, general and administrat ive expenses 37,825 39,664 356,336

Operating income 11,391 6,784 107,310

Other income (expenses) :

Interest and dividend income 406 579 3,825

Interest expense (2,041) (2,419) (19,228)

Lease revenue 204 238 1,922

Equity in earnings of affiliates 365 313 3,438

Gain on sale of property, plant and equipment 361 79 3,401

Loss on liquidation of subsidiaries and affiliates (43) (676) (405)

Write-off of bad debts (369) (1,498) (3,476)

Prior service cost recognized as liability (8,024) — (75,591)

Other, net (1,882) (1,538) (17,730)

(11,023) (4,922) (103,844)

Income before income taxes and minority interests 368 1,862 3,466

Income taxes (Note 6) :

Current 4,953 2,134 46,660

Deferred (4,069) — (38,333)

884 2,134 8,327

Minority interests (5) 6 (47)

Net loss ¥ (521) ¥ (266) $ (4,908)




CO N S O L I DAT E D STAT E M E N T S O F SH A R E H O L D E R S ’ EQ U I T YCentral Glass Co. , Ltd. and Consol idated Subsidiar ies

For years ended March 31, 2000 and 1999

Years ended March 31,

2000 1999 2000


Common stock

Balance at beginning of year

(2000—218,435,975 shares;

1999—221,935,975 shares) ¥18,168 ¥18,168 $171,154

Balance at end of year

(2000—214,879,975 shares;

1999—218,435,975 shares) ¥18,168 ¥18,168 $171,154

Addit ional paid- in capital

Balance at beginning of year ¥ 8,877 ¥ 9,607 $ 83,627

Retirement of shares (760) (730) (7,160)

Balance at end of year ¥ 8,117 ¥ 8,877 $ 76,467

Retained earnings (Note 12)

Balance at beginning of year ¥30,124 ¥31,552 $283,787

Cumulative effect of initial adoption of tax-effect accounting 3,308 — 31,164

Increase resulting from changes in consolidated subsidiaries — 8 —

Net loss (521) (266) (4,908)

Cash dividends paid (1,093) (1,109) (10,297)

Bonuses to directors and corporate auditors — (61) —

Balance at end of year ¥31,818 ¥30,124 $299,746




CO N S O L I DAT E D STAT E M E N T O F CA S H FL OW SCentral Glass Co. , Ltd. and Consol idated Subsidiar ies

For year ended March 31, 2000 and 1999

Year ended March 31,

2000 2000Thousands of

Millions of yen U.S. dollars (Note 2)

Operat ing act iv it ies

Income before income taxes and minority interests ¥ 368 $ 3,466

Depreciation and amortization 10,140 95,525

Provision for allowance for retirement benefits 7,371 69,439

Provision for reserve for rebuilding furnaces 1,026 9,665

Interest and dividend income (406) (3,825)

Interest expense 2,041 19,228

Foreign currency exchange loss 242 2,280

Equity in earnings of affiliates (365) (3,438)

Loss on revaluation of marketable securities 133 1,253

Gain on sale of property, plant and equipment 426 4,013

Changes in operating assets and liabilities:

Increase in trade notes and accounts receivable (5,367) (50,561)

Decrease in inventories 2,001 18,851

Increase in trade notes and accounts payable 2,128 20,047

Increase in accrued expenses 361 3,401

Other, net 149 1,404

Subtotal 20,248 190,748

Interest and dividends received 406 3,825

Interest paid (2,067) (19,472)

Income taxes paid (3,000) (28,262)

Net cash provided by operating activities 15,587 146,839

Invest ing act iv it ies

Payments to time deposits (773) (7,282)

Proceeds from time deposits 665 6,265

Proceeds from sale of marketable securities 528 4,974

Purchases of property, plant and equipment (7,757) (73,076)

Proceeds from sale of property, plant and equipment 895 8,431

Purchases of investment securities (380) (3,580)

Proceeds from sale of investment securities 482 4,541

Other 135 1,272

Net cash used in investing activities (6,205) (58,455)

Financing act iv it ies

Decrease in short-term borrowings (813) (7,659)

Proceeds from long-term debt borrowings 1,163 10,956

Repayment of long-term debt (4,695) (44,230)

Retirement of treasury stock (760) (7,160)

Cash dividends paid (1,092) (10,287)

Net cash used in financing activities (6,197) (58,380)

Effect of exchange rate changes on cash and cash equivalents (95) (904)

Net increase in cash and cash equivalents 3,089 29,100

Cash and cash equivalents at beginning of the year (Notes 1 (d) and 9) 18,126 170,758

Increase in cash and cash equivalents due to change in scope of consolidation 90 849

Cash and cash equivalents at end of the year (Notes 1 (d) and 9) ¥21,305 $200,707




NOT E S TO CO N S O L I DAT E D F I N A N C I A L STAT E M E N T SCentral Glass Co. , Ltd. and Consol idated Subsidiar ies

1. Summary of S ignif icant Accounting Pol ic ies(a) Basis of presentat ionCentral Glass Co., Ltd. (the “Company”) and its domestic subsidiaries maintain theiraccounting records and prepare their financial statements in accordance with account-ing principles and practices generally accepted and applied in Japan, and its foreignsubsidiaries maintain their books of account in conformity with those of their countriesof domicile. The accompanying consolidated financial statements have been preparedfrom the financial statements filed with the Ministry of Finance as required by theSecurities and Exchange Law of Japan. Accordingly, the accompanying financial state-ments may differ in certain significant respects in order to present the consolidatedfinancial position, results of operations and cash flows in accordance with accountingprinciples and practices generally accepted in countries and jurisdictions other thanJapan. For the purposes of this document, certain reclassifications have been made topresent the accompanying consolidated financial statements in a format which is famil-iar to readers outside Japan.

In March 1998, the Business Accounting Deliberation Council of Japan (the“BADC”) issued a new accounting standard for statements of cash flows, whichbecame effective the year ended March 31, 2000. The Company and its consolidatedsubsidiaries have adopted the new accounting standard for consolidation effective theyear ended March 31, 2000, and the accompanying consolidated statement of cashflows for the year ended March 31, 2000 only has been prepared in accordance withthis standard.

(b) Basis of consolidation and accounting for investments in affiliatesIn accordance with the revised accounting standard for consolidation issued by the BADC,effective April 1, 1999, the accompanying consolidated financial statements include theaccounts of the Company and all its subsidiaries over which substantial control is exertedthrough either majority ownership of voting stock and/or by other means. All significantintercompany balances and transactions have been eliminated in consolidation.

Certain subsidiaries are consolidated on the basis of fiscal periods which differ fromthat of the Company or on the basis of the fiscal period ending March 31 as a tentativeclosing date; however, the necessary adjustments have been made if the effect of thedifference is material.

Investments in unconsolidated subsidiaries are stated at cost because their impacton the consolidated financial statements was immaterial.

Investments in affiliates (companies over which the Company has the ability to exer-cise significant influence) are stated at cost plus equity in their undistributed earnings orlosses. Consolidated net income includes the Company’s equity in the current net incomeor loss of such companies, after the elimination of unrealized intercompany profits.

All assets and liabilities of the subsidiaries are revaluated on acquisition, if applica-ble, and the excess of cost over underlying net assets at the date of acquisition isamortized over a period of five years on a straight-line basis.

Before the adoption of the new accounting standard, subsidiaries and affiliatesincluded only companies in which the Company and its group companies held themajority ownership and companies owned 20% to 50% by the Company and its groupcompanies, respectively.

(c ) Foreign currency translat ionThe revenue and expense accounts of the foreign subsidiaries are translated into yen atthe average rates of exchange in effect during the year. The balance sheet accounts,except for the components of shareholders’ equity, are translated into yen at the ratesof exchange in effect at the balance sheet date. The components of shareholders’ equityare translated at their historical exchange rates.

Current assets and liabilities of the Company and its domestic subsidiaries denomi-nated in foreign currencies are translated at the current exchange rates in effect at eachbalance sheet date when not hedged by forward foreign exchange contracts, or at thecontracted rates of exchange when hedged by forward foreign exchange contracts.Other noncurrent assets and liabilities of the Company and its domestic subsidiariesdenominated in foreign currencies are translated into yen at the historical rates ofexchange in effect at the dates of the respective transactions.

(d) Cash equivalentsAll highly liquid investments, generally with a maturity of three months or less whenpurchased, which are readily convertible into known amounts of cash and are so nearmaturity that they represent only an insignificant risk of any change in value attributableto changes in interest rates, are considered cash equivalents.

Under the new accounting standard for statements of cash flows, the definition ofcash and cash equivalents in the statement of cash flows and cash and bank deposits inthe balance sheets differs in certain components. A reconciliation between the cashdefinitions above is presented in Note 9.

(e) Marketable secur it ies and investment secur it iesMarketable securities and investment securities listed on stock exchanges are mainlystated at the lower of cost or market, cost determined by the moving average method.Under the lower of cost or market method, marketable securities are valued to recog-nize both upward and downward changes in value.

Other securities not listed on stock exchanges are mainly stated at cost determinedby the moving average method.

( f ) InventoriesInventories are mainly stated at cost determined by the average method.

(g) Depreciat ion and amort izat ionDepreciation of property, plant and equipment is calculated by the declining-balancemethod at the rates prescribed in the Corporation Tax Law of Japan. However, build-ings (excluding leasehold improvements) acquired after April 1, 1998 by the Companyand its domestic subsidiaries are depreciated by the straight-line method over the peri-ods prescribed in the Corporation Tax Law.

Intangible assets are amortized by the straight-line method at the rates prescribed inthe Corporation Tax Law. Software costs capitalized are amortized by the straight-linemethod over a period of 5 years.

(h) LeasesNoncancelable leases are accounted for as operating leases regardless of whether suchleases are classified as operating or finance leases, except that lease agreements whichstipulate the transfer of ownership of the leased assets to the lessee are accounted foras finance leases.

( i ) Al lowance for doubtful accountsThe allowance for doubtful accounts is provided at an amount sufficient to cover possi-ble losses on the collection of receivables. The amount of the allowance is determinedmainly based on an estimation of the collectibility of individual receivables based on thefinancial position of the debtors.

( j ) Al lowance for ret i rement benefitsEmployees whose services with the Company and its domestic consolidated subsidiariesare terminated are usually entitled to lump-sum retirement benefits determined by ref-erence to their current basic salary, length of service and the conditions under which thetermination occurs. A portion of the liability for employees’ retirement benefits is fundedby the Company and its domestic consolidated subsidiaries in a pension fund adminis-tered by an independent trustee.

The liability for retirement benefits is provided at the amount which would berequired if all employees terminated voluntarily as of the relevant balance sheet date,less the amount of the plan assets at fair value.

The foreign consolidated subsidiaries do not provide for such a liability because theyhave no such retirement benefit plan.

Formerly the allowance for retirement benefits was stated at 40% of the amountwhich would be required to be paid if all employees covered by the plan voluntarily ter-minated their employment as of the balance sheet date.

Effective April 1, 1999, the Company and its domestic consolidated subsidiarieschanged their accounting policy for retirement benefits for employees. This change wasimplemented in order to achieve a better matching of expenses and related revenues as



well as to promote a sounder financial structure. The effect of this change was todecrease operating income and income before income taxes for the year ended March31, 2000 by ¥107 million ($1,008 thousand) and ¥8,132 million ($76,609 thousand),respectively, from the amounts which would have been recorded under the method fol-lowed in the previous year.

(k) Reserve for rebui lding furnacesThe Company provides for expenditures for the substantial rebuilding of glass meltingfurnaces and other glass manufacturing facilities, taking into account the estimated costof the next rebuilding and the projected operating period.

( l ) Income taxesEffective April 1, 1999, the Company and its consolidated subsidiaries adopted tax-effect accounting for income taxes in accordance with a new accounting standardissued by the BADC. This standard requires recognition of income taxes by the liabilitymethod. Under the liability method, deferred tax assets and liabilities are determinedbased on the differences between financial reporting and the tax bases of the assets andliabilities and are measured using the enacted tax rates and laws which will be in effectwhen the differences are expected to reverse. The cumulative effect of this change isreported as “cumulative effect of initial adoption of tax-effect accounting” in the con-solidated statements of shareholders’ equity.

The effect of this change on deferred income tax assets amounted to ¥7,252 million($68,318 thousand: ¥930 million as current assets and ¥6,322 million as investmentsand other assets) as of March 31, 2000. In addition, the effect of this change was todecrease net loss by ¥4,069 million ($38,333 thousand) for the year ended Mach 31,2000 and to increase retained earnings as of March 31, 2000 by ¥7,377 million($69,496 thousand) from the amounts which would have been recorded under themethod applied in the previous year.

(m) Appropriat ion of retained earningsUnder the Commercial Code of Japan, the appropriation of retained earnings withrespect to a given financial period is made by resolution of the shareholders at a generalmeeting held subsequent to the close of such financial period. The accounts for thatperiod do not, therefore, reflect such appropriations. See Note 12.

2. Japanese Yen and U.S. Dol lar AmountsThe U.S. dollar amounts included in the consolidated financial statements and notesthereto represent the arithmetical results of translating Japanese yen to U.S. dollars at¥106.15 = US$1.00, the approximate exchange rate prevailing on March 31, 2000. Theinclusion of such U.S. dollar amounts is solely for the convenience of the reader and isnot intended to imply that Japanese yen amounts have been or could be converted,realized or settled in U.S. dollars at that or any other rate.

3. Short-Term BorrowingsShort-term borrowings substantially represent short-term borrowings from banks at anaverage interest rate of 1.6% per annum at March 31, 2000.

4. Long-Term DebtLong-term debt at March 31, 2000 and 1999 consisted of the following:

2000 1999 2000Thousands of

Millions of yen U.S. dollars

2.125% yen unsecuredbonds due 2001 ¥15,000 ¥15,000 $141,309

Loans from banks, due through 2009 at the average rate of 2.7% in 2000 20,885 25,092 196,750

Total long-term debt 35,885 40,092 338,059Less: Current portion of bonds 15,000 — 141,309

Current portion of loans from banks(included in short-term borrowings) 3,418 4,501 32,200

¥17,467 ¥35,591 $164,550

The assets pledged as collateral for short-term borrowings and long-term debt atMarch 31, 2000 were as follows:

Thousands of Millions of yen U.S. dollars

Land ¥ 2,482 $ 23,382Buildings and structures 859 8,092Machinery and equipment 2,587 24,371Investment securities 4,105 38,672

¥10,033 $94,517

The related debt for which the above assets were pledged as collateral at March 31,2000 was as follows:

Thousands ofMillions of yen U.S. dollars

Short-term borrowings ¥2,736 $25,775Long-term debt included current portion thereof 5,688 53,584

¥8,424 $79,359

The aggregate annual maturities of long-term debt subsequent to March 31, 2000are summarized as follows:

Thousands ofYear ending March 31, Millions of yen U.S. dollars

2001 ¥18,418 $173,5092002 5,799 54,6302003 3,732 35,1582004 and thereafter 7,936 74,762

¥35,885 $338,059

5. Legal Reserve and Addit ional Paid- in CapitalIn accordance with the Commercial Code of Japan, the Company has provided a legalreserve as an appropriation of retained earnings. The Code provides that neither addi-tional paid-in capital nor the legal reserve is available for dividends, but both may beused to reduce or eliminate a deficit by resolution of the shareholders or may be trans-ferred to common stock by resolution of the Board of Directors.

6. Income TaxesIncome taxes applicable to the Company and its domestic subsidiaries comprised corpo-ration tax, inhabitants’ taxes and enterprise tax which, in the aggregate, resulted instatutory tax rate of approximately 41% for 2000. Income taxes of the foreign consoli-dated subsidiaries are based generally on the tax rates applicable in their countries ofincorporation.

The major components of deferred tax assets and liabilities as of March 31, 2000 aresummarized as follows:


Deferred tax assets:Enterprise tax payable ¥ 332 $ 3,128Allowances for employees’ bonuses 221 2,082Allowance for retirement benefits 4,743 44,682Reserve for rebuilding furnaces 1,221 11,502Net operating loss carryforward 3,252 30,636Other 1,408 13,264

Total gross deferred tax assets 11,177 105,294Valuation allowance (3,457) (32,567)Total deferred tax assets 7,720 72,727Deferred tax liabilities:

Reserve for deferred gains on properties (344) (3,241)Other (124) (1,168)

Total deferred tax liabilities (468) (4,409)Net deferred tax assets ¥ 7,252 $ 68,318



A reconciliation between the statutory rate and the effective tax rate as a percent-age of income before income taxes for the year ended March 31, 2000 is summarizedas follows:

2000

Statutory income tax rate 41.0%Reconciliation:

Non-recognized deferred tax assets 200.2Non-deductible expenses for income tax purposes 25.2Inhabitants’ per capita taxes 15.6Equity in earnings of affiliates (39.7)Other (2.2)

Effective income tax rate 240.1%

7. Leases(a) Lessees ’ accountingThe following pro forma amounts represent the acquisition costs, accumulated deprecia-tion and net book value of the leased assets as of March 31, 2000 and 1999, whichwould have been reflected in the balance sheets if lease accounting had been applied tofinance leases currently accounted for as operating leases.

Year ended March 31, 2000

OtherMachinery (property, plant Intangible

and vehicles and equipment) assets Total

Millions of yen

Acquisition costs ¥980 ¥1,413 ¥368 ¥2,761Accumulated

depreciation 696 1,138 245 2,079Book value ¥284 ¥ 275 ¥123 ¥ 682




Thousands of U.S. dollars

Acquisition costs $9,232 $13,311 $3,467 $26,010Accumulated

depreciation 6,557 10,720 2,308 19,585Book value $2,675 $ 2,591 $1,159 $ 6,425




Millions of yen

Acquisition costs ¥1,061 ¥1,360 ¥474 ¥2,895Accumulated

depreciation 652 757 306 1,715Book value ¥ 409 ¥ 603 ¥168 ¥1,180

Lease payments relating to finance leases accounted for as operating leases in theaccompanying consolidated financial statements amounted to ¥481 million ($4,531thousand) for the year ended March 31, 2000 which was equal to the pro formaamount of depreciation for the year ended March 31, 2000 if lease accounting hadbeen applied to finance leases currently accounted for as operating leases.

Future minimum lease payments (including the interest portion thereon) subsequentto March 31, 2000 for finance lease transactions accounted for as operating leases,except for lease agreements which stipulate the transfer of ownership of the leasedproperty to the Company and its subsidiaries, are summarized as follows:


Due within one year or less ¥ 692 $ 6,519Due subsequent to one year 918 8,648Total ¥1,610 $15,167

(b) Lessors ’ accountingSublease income subsequent to March 31, 2000 for finance leases accounted for asoperating leases is summarized as follows:

Thousands ofYear ending March 31, Millions of yen U.S. dollars

2000 ¥364 $3,4292001 and thereafter 630 5,935Total ¥994 $9,364

8. Amounts per ShareAmounts per share of net loss and net assets, as presented below, are based on theweighted average number of shares of common stock outstanding during each year andthe number of shares outstanding at each balance sheet date, respectively.


2000 1999 2000Yen U.S. dollars

Net loss ¥ (2.39) ¥ (1.20) $(0.02)Net assets 270.40 261.72 2.55

Per share amounts assuming full dilution have not been presented because no com-mon stock equivalents remained outstanding as of March 31, 2000 and 1999.

9. Supplementary Cash F low InformationThe following table represents a reconciliation of cash and cash equivalents as of March31, 2000:




Cash and bank deposits ¥21,983 $207,094Time deposits with a maturity

of more than three months (678) (6,387)Cash and cash equivalents ¥21,305 $200,707

10. Commitments and Contingent L iabi l i t iesContingent liabilities for trade notes receivable discounted and endorsed, loans guaran-teed and joint indebtedness as of March 31, 2000 were as follows:




Trade notes receivable discountedand endorsed ¥1,739 $16,382

Joint indebtedness for bank loans of companies other than consolidated subsidiaries 796 7,499

In addition, the Company and its consolidated subsidiaries had commitments atMarch 31, 2000 to guarantee bank borrowings of companies other than consolidatedsubsidiaries of ¥873 million ($8,224 thousand) in the aggregate. These guarantees canbe activated at any time by the respective banks on behalf of those companies.

11. Segment InformationThe business and geographical segment information and overseas sales for the Companyand its consolidated subsidiaries for the years ended March 31, 2000 and 1999 are out-lined as follows:



Business segmentsYear ended March 31, 2000

Eliminations or unallocated

Glass Chemicals Total amounts Consolidated

Millions of yen

I. Sales and operating incomeSales to external customers ¥110,481 ¥64,802 ¥175,283 ¥ — ¥175,283Intersegment sales or transfers 1,423 1,756 3,179 (3,179) —Total sales 111,904 66,558 178,462 (3,179) 175,283Operating expenses 111,214 55,856 167,070 (3,178) 163,892Operating income ¥ 690 ¥10,702 ¥ 11,392 ¥ (1) ¥ 11,391

II. Total assets, depreciation and capital expendituresTotal assets ¥132,469 ¥90,864 ¥223,333 ¥ (268) ¥223,065Depreciation 5,318 4,878 10,196 — 10,196Capital expenditures 2,438 7,427 9,865 — 9,865


Eliminations or unallocated

Glass Chemicals Total amounts Consolidated


I. Sales and operating incomeSales to external customers $1,040,801 $610,475 $1,651,276 $ — $1,651,276Intersegment sales or transfers 13,405 16,543 29,948 (29,948) —Total sales 1,054,206 627,018 1,681,224 (29,948) 1,651,276Operating expenses 1,047,707 526,198 1,573,905 (29,939) 1,543,966Operating income $ 6,499 $100,820 $ 107,319 $ (9) $ 107,310

II. Total assets, depreciation and capital expendituresTotal assets $1,247,942 $855,996 $2,103,938 $ (2,525) $2,101,413Depreciation 50,099 45,954 96,053 — 96,053Capital expenditures 22,967 69,968 92,935 — 92,935


Glass and Eliminations building or unallocatedmaterials Chemicals Total amounts Consolidated

Millions of yen

I. Sales and operating incomeSales to external customers ¥107,200 ¥66,582 ¥173,782 ¥ — ¥173,782Intersegment sales or transfers 1,581 2,093 3,674 (3,674) —Total sales 108,781 68,675 177,456 (3,674) 173,782Operating expenses 110,346 60,328 170,674 (3,676) 166,998Operating income (loss) ¥ (1,565) ¥ 8,347 ¥ 6,782 ¥ 2 ¥ 6,784

II. Total assets, depreciation and capital expendituresTotal assets ¥129,020 ¥83,951 ¥212,971 ¥ (159) ¥212,812Depreciation 5,899 5,271 11,170 — 11,170Capital expenditures 3,228 5,305 8,533 — 8,533

Notes:a) Basis of segmentation

(1) Business segments are divided into the Glass Division and the ChemicalsDivision based on the nature of the manufacturing process and sales market.

Effective April 1999, only the name of the Glass and Building MaterialsDivision has been changed to the Glass Division.

(2) Major products in each business segment:Glass—flat architectural glass, fabricated glass products for automobiles, fabri-

cated glass products for industries, etc.Chemicals—soda, chlorine products, fine chemical products, fiberglass prod-

ucts, fertilizer , etc.b) No unallocated operating expenses were included in eliminations or unallocated

amounts for the years ended March 31, 2000 and 1999.c) No total assets were included in eliminations or unallocated amounts as of March 31,

2000 and 1999.d) Amortization of and additions to long-term prepaid expenses have been included in

depreciation and capital expenditures.

Geographical segmentsAs permitted, the information on geographical segments for the years ended March 31,2000 and 1999, has been omitted because the Japanese segment constituted morethan 90% of total consolidated sales, assets and operating income.

Overseas salesYear ended March 31, 2000

North America Europe Other areas Total

Millions of yen

Overseas salesOverseas sales ¥12,892 ¥7,315 ¥5,033 ¥ 25,240Consolidated net sales ¥175,283% of consolidated

net sales 7.4% 4.2% 2.8% 14.4%






Overseas salesOverseas sales $121,451 $68,912 $47,414 $ 237,777Consolidated net sales $1,651,276% of consolidated

net sales 7.4% 4.2% 2.8% 14.4%



Millions of yen

Overseas salesOverseas sales ¥11,141 ¥6,570 ¥3,098 ¥ 20,809Consolidated net sales ¥173,782% of consolidated

net sales 6.4% 3.8% 1.8% 12.0%

Notes:a) Geographical areas are divided into categories based on their geographical proximity.b) Major nations or regions included in each geographical area:

(1) North America—U.S.A., Canada(2) Europe—Netherlands, England, Germany, France, Belgium, etc.(3) Other areas—Taiwan, Korea, China, Singapore, Philippines, Australia, etc.

c) Overseas sales are sales of the Company and its consolidated subsidiaries in foreigncountries.

12. Subsequent EventThe following appropriations of retained earnings of the Company, which have not beenreflected in the consolidated financial statements for the year ended March 31, 2000,were approved at a shareholders’ meeting held on June 29, 2000:


Cash dividends (¥5 = U.S.$0.047 per share) ¥1,074 $10,118

13. Marketable Securit ies and Investment Securit iesInformation with respect to the book and fair value of marketable securities and invest-ment securities for which market prices are available is summarized as follows:

March 31, 2000

Book Fair Unrealizedvalue value gain

Millions of yen

Marketable securities:Equity securities ¥ 4,656 ¥11,512 ¥ 6,856Debt securities — — —Other — — —

4,656 11,512 6,856Investment securities:Equity securities 8,571 15,274 6,703

8,571 15,274 6,703Total ¥13,227 ¥26,786 ¥13,559


Marketable securities:Equity securities $ 43,862 $108,450 $ 64,588Debt securities — — —Other — — —

43,862 108,450 64,588Investment securities:Equity securities 80,745 143,891 63,146

80,745 143,891 63,146Total $124,607 $252,341 $127,734

The fair value of listed securities is based primarily on the closing prices on the TokyoStock Exchange. The fair value of securities traded over-the-counter (OTC) are the pricesissued by the Japan Securities Dealers’ Association.

The following items have been excluded from the above table and were carried atthe respective amounts in the balance sheet as of March 31, 2000:


Non-current assets:Unlisted equity securities

(except for OTC equity securities) ¥6,687 $62,996Unlisted debt securities 1,550 14,602Investments in affilaites 6,385 60,151

14. Der ivat ive and Hedging Act iv it iesWith respect to the Company and its consolidated subsidiaries, only the Company hasdealings in derivatives and conducts hedging activities. The contents of the dealings areinterest rate swaps and currency swaps. The Company primarily utilizes them todecrease the charge of loan interest and to hedge their exposure to foreign exchangefluctuations arising from trade receivable in the normal course of business. These trans-actions effectively offset each risk on assets and liabilities in the balance sheet. TheCompany is exposed to the risk of credit loss in the event of nonperformance by thecounterparties to the interest rate and currency derivatives; however, the Company doesnot anticipate nonperformance by any of these counterparties, all of whom are financialinstitutions with high credit ratings.

The derivatives are conducted by the Finance Section and controlled by theAccounting Section under the director in charge of such transactions. Management ofthe Company believes that risks inherent to the derivatives could be avoided by theCompany’s internal control system which includes monitoring activities of the FinanceSection and Accounting Section each other.

Information with respect to the contract amount, fair value, and unrealized gain orloss on derivatives is summarized as follows:

Interest-related swapsMarch 31, 2000

Contract amount

Non-current Fair UnrealizedTotal portion value gain (loss)

Millions of yen

Interest rate swaps:Receive/fixed and pay/floating ¥3,050 ¥2,500 ¥100 ¥100Receive/floating and pay/fixed 2,500 2,500 (15) (15)Receive/floating and pay/floating 550 — (2) (2)

¥6,100 ¥5,000 ¥ 83 ¥ 83Thousands of U.S. dollars

Interest rate swaps:Receive/fixed and pay/floating $28,732 $23,551 $942 $942Receive/floating and pay/fixed 23,551 23,552 (141) (141)Receive/floating and pay/floating 5,183 — (19) (19)

$57,466 $47,103 $782 $782

Note: Fair value is based on the respective prices quoted by the counterparty financialinstitutions.


The Board of Directors of

Central Glass Co., Ltd.

We have audited the accompanying consolidated balance sheets of Central Glass Co., Ltd. and consolidated subsidiaries as of March 31, 2000

and 1999, and the related consolidated statements of operations and shareholders’ equity for the years then ended, all expressed in yen. We

have also audited the statement of cash flows for the year ended March 31, 2000. Our audits were made in accordance with auditing stan-

dards, procedures and practices generally accepted and applied in Japan and, accordingly, included such tests of the accounting records and

such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the consolidated financial statements, expressed in yen, present fairly the consolidated financial position of Central Glass Co.,

Ltd. and consolidated subsidiaries at March 31, 2000 and 1999, and the consolidated results of their operations for the years then ended in

conformity with accounting principles and practices generally accepted in Japan applied on a consistent basis. The financial statements also

present fairly the consolidated results of their cash flows for the year ended March 31, 2000, in conformity with accounting principles and

practices generally accepted in Japan.

As described in Note 1 to the consolidated financial statements, Central Glass Co., Ltd. and consolidated subsidiaries have adopted new

accounting standards for research and development expenses and tax-effect accounting in the preparation of their consolidated financial state-

ments for the year ended March 31, 2000.

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2000 are presented

solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation

has been made on the basis described in Note 2 to the consolidated financial statements.

Shinsuke Kawai Tsutomu Nakano

Certified Public Accountant Certified Public Accountant

Tokyo, Japan

June 29, 2000


RE P O RT O F IN D E P E N D E N T CE RT I F I E D PU B L I C AC C O U N TA N T S


BOA R D O F DI R E C TO R S

& AU D I TO R S(As of June 29, 2000)

M E M B E R S O F T H E B O A R DPresidentSadayoshi Nakamura

Executive Senior Managing DirectorsAtsushi IchikawaYo Kawakami

Managing DirectorsAkira NegishiNorihisa YamamotoKazuyuki TsurumiHirohiko SakaiTadashi SasakiArao Abe

DirectorsShousuke FukueMasataka TsuboiKunihiko UmesakiSeiichi MitsumotoTakashi Tamura

Corporate AuditorsSakuichi UenoShigeo MaruyamaShigeharu NegishiSeiichi Yada

H E A D O F F I C EKowa-Hitotsubashi Building 7-1, Kanda-Nishikicho 3-chomeChiyoda-ku, Tokyo 101-0054, JapanTel: 81-3-3259-7111 Fax: 81-3-3259-7883

E S T A B L I S H E DOctober 10, 1936

P A I D - I N C A P I T A L¥18,168 million

C O M M O N S H A R E SAuthorized: 871,500,000Issued: 214,879,975

B U S I N E S S A C T I V I T I E SManufacture and sales of flat glass, fabricatedglass and other glass products; soda, chlorine,organic and inorganic fluorides, fertilizers, high-purity gas, solvents, medical and agriculturalproducts and other chemical products; fiberglassproducts; vinyl chloride and other synthetic resins.

D O M E S T I C O F F I C E S A N D P L A N T SSales OfficesSapporo BranchSendai BranchNagoya BranchOsaka BranchFukuoka Branch

PlantsMatsusaka PlantSakai PlantUbe Plant

S U B S I D I A R I E S A N D A F F I L I A T E SPrincipal Domestic SubsidiariesCentral Chemical Co., Ltd.Central Kasei Chemical Co., Ltd.Central Glass Fiber Co., Ltd.Mie Glass Industry Co., Ltd.Central Glass Wool Co., Ltd.

Principal Overseas Subsidiaries andAffiliatesU . S . A .Carlex Glass Company77 Excellence WayVonore, TN 37885, U.S.A.Tel: 1-423-884-1111

Central Glass International Inc.(New York)50 Main Street, 8th FloorWhite Plains, NY 10606, U.S.A.Tel: 1-914-683-3868 (Detroit)1330 Fieldway DriveBloomfield Hills, MI 48302, U.S.A.Tel: 1-248-745-0740

Northwestern Industries Inc.2500 West Jameson StreetSeattle, WA 98199, U.S.A.Tel: 1-206-285-3140

T A I W A NYue Sheng Industrial Co., Ltd.40-5 Po-Kung Keng, Hsi-Hu TsunSannyi Hsiang, Miaoli Hsien 36705Taiwan, R.O.C.Tel: 886-37-871-815

Taiwan Central Glass Co., Ltd.40-17 Po-Kung Keng, Hsi-Hu Tsun Sannyi Hsiang, Miaoli Hsien 36705Taiwan, R.O.C.Tel: 886-37-872-795

T H A I L A N DCentral Glass Co., Ltd. Thailand Representative OfficeMetro Building, 180-184 Rajawongse RoadBangkok 10100, ThailandTel: 66-2-221-8893

Thai Central Chemical Public Co., Ltd.Metro Building, 180-184 Rajawongse RoadBangkok 10100, ThailandTel: 66-2-221-8893

PMK-Central Glass Co., Ltd.41 Moo 12 Petchkasem Road Omnoi Krathumban Samutsakorn 74130ThailandTel: 66-2-813-7277

V I E T N A MJapan Vietnam Fertilizer Company118 Nguyen Dinh Chiew Street District 1, Ho Chi Minh CityVietnamTel: 84-8-829-8482

C H I N ABeijing Sanchong Mirror Co., Ltd.East Xisanqi Dewai Haidian DistrictBeijing 100096, ChinaTel: 86-10-8291-3827

CO R P O R AT E DATA(As of June 29, 2000)

Head Office21

Central Glass Co., Ltd.


Kowa-Hitotsubashi Building

7-1, Kanda-Nishikicho 3-chome

Chiyoda-ku, Tokyo 101-0054, Japan Printed in Japan


Documents

CENTRAL GLASS AR 01.6.7 9:27 AM ページ 2 file2 Central Glass Co., Ltd. IPerformance n fiscal 2000, ended March 31, 2000, an overall harsh operating environment con-tinued amid a