January 28, 2002Management

Corporate Restructuring Measures

Asahi Glass Company (head office: Tokyo; President: Shinya Ishizu) has been proceeding with substantive enhancement and business restructuring under the "Shrink to Grow" corporate management strategy since 1998. In April 2001, the company devised the "StoG2003" three-year medium-term management program, which will run until Fiscal Year 2004 (year ending March 2004), and has been carrying out various measures under the plan. However, with rapid changes in the business environment since mid-2001, Asahi Glass Company is considering a partial revision and review of the program as well as the necessity of additional measures as emergency issues. Though it has not finalized a review plan of "StoG2003" and is still working on the review, the implementation of the following measures has been decided.

1. Cease Operations at Its Funabashi Factory

Demand for CRT glass bulbs in Japan has fallen off sharply in recent years as CRT manufacturers-the principal customers for these products-have withdrawn from the business or moved production offshore. Domestic demand is expected to total 7.0 million units in fiscal 2003, compared with 40.0 million in fiscal 1991. Consequently, most of the output from the Funabashi Factory is currently exported. Worldwide, the rapid shift to liquid crystal displays (LCDs) for computer monitors-which has provoked a downturn in global demand-and steps taken by key glass bulb manufacturers to expand production capacity in 2000 have resulted in an excess supply of glass bulbs.

The Funabashi Factory was established in 1956 as Asahi Glass's first CRT glass bulb manufacturing facility and since then has served as mother plant for the Company's other bulb plants. Owing to the withdrawal of key customers in eastern Japan from the CRT business and to the high logistics and other costs necessitated by its inland location, however, the plant's continued operation was judged unfeasible. As a consequence, Asahi Glass has decided cease operations at the facility by the end of 2003. CRT glass bulb production from the Funabashi Factory will be shifted to more cost-effective Group bases, namely, the Company's factory and development base in Takasago, Hyogo Prefecture, and factories in the Southeast Asia, the Republic of Korea and People's Republic of China. This will position production closer to principal bulb customers and ensure responsiveness to demand.

Asahi Glass forecasts the cessation of operations at its Funabashi Factory will result in an extraordinary loss of ¥17.0 billion. The counter measure for personnel treatment is up for review in the future. No decision has been made regarding use of buildings currently occupied by the factory.

(Reference)Funabashi Factory

Location: Funabashi, Chiba Prefecture, Japan
Factory Director: Isao Fujimoto
Start of operations: 1956
Number of employees: 450
Principal products: CRT glass bulbs for color TV

2. Streamlining of the Chemical Business

We have been proactively implementing the restructuring of the chemical business by stages under the "StoG2003" medium-term management program. We completed the first step; the halt of the domestic production of synthetic soda ash in March 2001, and are now doing our utmost to finish the second step; closure of the chemical business at the Kita-kyushu Factory and divestment of equipment, as well as a withdrawal from the bromine and magnesium hydroxide slurry trade attendant upon the closure of the plant in September 2002. As an additional measure to deal with a worsening in earnings, we have decided to streamline the head office functions.

Currently, the head office functions of the chemical business are spread among some 500 employees. We intend to cut personnel by about 150 managerial officials, centering on those in the head office, possibly by October 2002. We will drastically slim organization at the same time by utilizing the voluntary early retirement system when we trim the payroll.

With regard to the shifting of the chlor-alkali business to a local focus, which is planned as a third step, we are striving to improve profitability through cost reduction measures, including reassessing of process fuel procurement and optimization of plant operation, while maintaining the current scheme.

We will shift the mainstay of the chemical business from the chlor-alkali business to the fluorochemical business, while adjusting the high-cost framework of the chemical business through such measures as retrenchment of the personnel.

As for the fluorochemical business, we will enhance the differentiation strategies vis-a-vis our competitors by reinforcing industrial films, PDP protective filter, ETFE fluorinated-resin, etc., and pursue synergies with the European and U.S. fluorinated-resin businesses we acquired in 1999.

3. Expansion of Voluntary Early Retirement System

To build a strong corporation capable of generating profits even in a difficult operating environment, Asahi Glass will broaden the scope of its voluntary early retirement system for a limited period. During this period, early retirement benefits will be made available to management-level employees in the chemical division and other areas of the Company.


Number of eligible
200 (Chemical division 150 and others 50)
(total number of employees of parent company, as of September 30, 2001: 7,170)
Eligibility: Management-level employees
(assistant manager or higher)
Application period: March 21-April 30, 2002
Date of retirement: October 31, 2002
Additional benefits: Additional financial benefits to be paid with ordinary lump-sum payment entitlement under the Company's retirement plan

4. Reduction of Remuneration for Directors and Salaries for Titled Employees

In consideration of the current business conditions, we have decided to slash the remuneration for directors and the salaries for titled employees as follows;

Remuneration for directors: 10-20% cut from January to June 2002
Salaries for titled employees: 3-7% cut from February to June 2002

We will decide the remuneration and salaries starting in July, taking our overall business conditions into consideration.

5. Revision of Earnings Projections for Fiscal Year 2002 (Ending March 2002) (See enclosed materials)

We will revise earnings projections for the fiscal year 2002 (ending March 2002) as in the enclosed materials, to reflect the harsh business climate and implementation of countermeasures to remedy the situation.

Contact :
Asahi Glass Co., Ltd.
Mr. Kenichi Oda
Corporate Communications Div.
FAX : 81-3-3201-5390
TEL: 81-3-3218-5408
E-mail: info-pr@om.agc.co.jp
(Investor Relations)
Investor Relations,
Corporate Planning Div.
FAX : 81-3-3201-7800
TEL: 81-3-3218-5064
E-mail: investor-relations@om.agc.co.jp