RNS Number:0512S
Mitsubishi Corporation
13 November 2003
MITSUBISHI CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003
AND
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
Based on US GAAP
Mitsubishi Corporation
Investor Relations Office
2-6-3 Marunouchi, Chiyoda-ku, Tokyo, JAPAN 100-8086
Phone: +81-3-3210-8580 Fax:+81-3-3210-8583
Email:ml.ir@mitsubishicorp.com
Consolidated Financial Results for the Six Months Ended September 30, 2003
(Based on US GAAP)
November 13, 2003
Mitsubishi Corporation
TOKYO, November 13, 2003
Mitsubishi Corporation announced today its consolidated results, based on
accounting principles generally accepted in the United States, for the six
months ended September 30, 2003.
I. Management Policies
1. Management Policies
To create new value, Mitsubishi Corporation has been implementing the following
measures in line with the MC2003 three-year plan that began in 2001. The goals
of this plan are further increasing the profitability of the Mitsubishi
Corporation Group and strengthening the management base. For the current fiscal
year, the final year of the MC2003 plan, Mitsubishi Corporation has set a target
of Y 100.0 billion in consolidated net income to demonstrate its dedication to
creating value by providing a wide range of services and products to our global
customer.
(1) Progress in Growth Strategies
The overall growth strategy in MC2003 consists of the following three parts.
First is the Portfolio Management Strategy. This strategy calls for Mitsubishi
Corporation to aggressively reshape its portfolio of businesses by reallocating
resources and strengthening strategic business areas. Concerted efforts were
made to withdraw from unprofitable ventures, channel resources into promising
areas and realign the businesses. Through these efforts, machinery businesses
appeared as a fourth pillar of earnings, adding to the already existing earnings
pillars of energy, metal resources and food businesses. They are also yielding
an improved earnings base in all segments.
The second strategy is a blueprint for creating new business models and for
expanding and carving out new business domains that leverage so-called FILM
functions (Finance, IT, Logistics and Marketing technologies) of Mitsubishi
Corporation. Mitsubishi Corporation is actively developing new business models
augmented by these FILM functions. Two examples are expansion of the healthcare
field, encompassing medical support operations and nursing care, and Japanese
real estate investment trusts (J-REITs). These businesses are growing steadily.
Third is the New Technologies Strategy that aims to commercialize new business
models that draw on new technologies and other forms of intellectual property.
In nanotechnology, life science and other high-potential fields, Mitsubishi
Corporation is actively searching for and cultivating new businesses that can
become core sources of earnings in the future.
(2) An Established Management System
Under MC2003, Mitsubishi Corporation introduced business units (BUs) to function
as the smallest unit for organizational control and earnings responsibility. At
the same time, Mitsubishi Corporation introduced a new internal performance
indicator, Mitsubishi Corporation Value Added (MCVA), which measures whether
businesses are able to cover the cost of capital associated with a given level
of risk. BUs are classified into three types: Stretch, Build and Restructure.
- Stretch BUs aim to maintain and increase earnings by adding new functions.
- Build BUs aim to expand new business domains.
- Restructure BUs aim to drastically realign their business through downsizing,
restructuring and withdrawal from unprofitable areas.
All BUs will be assigned a clearly defined mission and MCVA is used to evaluate
their results in detail. This system is thus employed to implement the Portfolio
Management Strategy.
All BUs have been assigned a clearly defined mission and MCVA is used to
evaluate their results in detail. This system is employed to promote the
Portfolio Management Strategy. Now that this management cycle has become firmly
entrenched at Mitsubishi Corporation, it is possible to boldly and swiftly
allocate resources to fields exhibiting growth and expansion potential. This
process has been instrumental to improved earnings at Mitsubishi Corporation.
The company will continue to employ this management system as it seeks to create
still more corporate value.
(3) Corporate Governance
Within the framework of MC2003, Mitsubishi Corporation is taking measures to
improve the transparency and efficiency of its management systems. Goals are
upgrading the system for managing businesses and strengthening corporate
governance. For this purpose, the executive officer system was introduced to
clearly divide the roles and responsibilities of directors and executive
officers. Additionally, through the Governance Committee and International
Advisory Committee, Mitsubishi Corporation is incorporating the views of
prominent individuals from outside the company concerning the governance systems
and management issues of the company due to the increasingly global nature of
markets. Furthermore, steps are being taken to strengthen auditing and
compliance functions. Mitsubishi Corporation is upgrading internal auditing
capabilities, ensuring that reports on audit plans and results are submitted
periodically to directors, and putting in place a compliance system for both
internal operations and business investments.
Note: Mitsubishi Corporations Corporate Governance System
Mitsubishi Corporation has a corporate auditor system as well as a 18-member
Board of Directors that includes 15 internal directors and 3 outside directors.
There are 5 corporate auditors, 3 internal and 2 external. (There are no
significant related-party interests between Mitsubishi Corporation and any of
the external directors and corporate auditors.)
The Board of Directors is advised by the 7-member Governance Committee (composed
of 3 members from outside the company, 1 external director and 3 internal
directors) and a 9-member International Advisory Committee (composed of 6
prominent individuals from outside the company and representing different areas
of the world, 1 external director and 2 internal directors).
Oversight of the auditing function is performed by the Internal Audit Dept.,
which acts as an internal auditing body. This department is responsible for
ensuring that business activities are performed properly and efficiently.
Compliance activities are conducted by making all Mitsubishi Corporation
personnel fully aware of the
"Mitsubishi Corporation Code of Conduct" that was formulated in 2000 (and
partially amended in 2003), and are being strengthened by the Chief Compliance
Officer and the establishment of the Compliance Committee, which provides advice
to this officer.
Through the above actions, and by fully utilizing Mitsubishi Group brand equity,
human resources, business networks and other intangible assets, Mitsubishi
Corporation aims to become a company that can create value and that is
attractive to shareholders, customers and other stakeholders.
2. Basic Policy Regarding the Appropriation of Profits
Basic policy of Mitsubishi Corporation is to meet expectations of shareholders
by maintaining a stable dividend, while using retained earnings to maximize the
corporate value of the Mitsubishi Corporation.
Mitsubishi Corporation plans to set the interim dividend at Y 4 per share, the
same as in the previous fiscal year, from the viewpoint of improving its
competitiveness and increasing profitability on a consolidated basis by
effectively using retained earnings for business investments, capital
expenditures and other corporate purposes, as well as in accordance with the
companys desire to provide shareholders with a consistent return on their
investment.
II. Operating Results and Financial Position
1. General Operating Environment
During the interim period, the world economy moved on to a recovery footing,
albeit modest, spurred by an economic rebound in the U.S.
The U.S. economy maintained its momentum, supported by continued growth in
consumer spending and housing starts, against a backdrop of historically low
interest rates, as well as by higher levels of capital expenditures, which
reflected growing confidence in the corporate sector.
In Asia, the prevailing economic tone was one of continuing strong growth
underpinned by expanding exports, mainly to the U.S., and growing internal
demand. There were some countries, however, that struggled as they grappled with
employment problems and other structural issues.
In Europe, sluggish economic conditions persisted as a whole with economies in
major countries other than the U.K. mired in a slump. The key German economy, in
particular, remained lackluster as it continued to be plagued by declining
competitiveness and other structural problems.
Meanwhile, the Japanese economy made solid steps toward an economic recovery.
Corporate earnings, notably those of large manufacturers, are rapidly improving
on the back of an upturn in exports to the U.S. and Asia and the benefits of
many years of restructuring. Another driver of the recovery is an upswing in
capital expenditures, triggered by a more optimistic economic outlook. The
return of stability to the financial sector, brought by a flexible government
policy, has helped in this regard. Tempering the upbeat economic mood is the
dependence of the recovery on overseas economic forces. Moreover, small and
medium-sized enterprises and households have yet to overcome the effects of
persistent deflationary pressures.
2. Consolidated Results (US GAAP)
(1) Summary of Interim Results
For the first half of the fiscal year ending March 31, 2004, consolidated
operating transactions were Y 7,512.4 billion, Y 1,186.8 billion, or 18.8%,
higher than the same period in the previous fiscal year. This result reflects
increased petroleum-related transactions as well as the consolidation of Metal
One, a steel products subsidiary established in January this year.
Gross profit rose Y 28.8 billion, or 8.3%, to Y 378.0 billion, on strong results
at automobile-related subsidiaries, mainly in Asia, improving market conditions
for LPG and petroleum products in the Energy Business, and the boost given by
the aforementioned establishment of Metal One.
Selling, general and administrative expenses increased due to higher retirement
benefit-related expenses, in addition to the consolidation of Metal One and
other subsidiaries. However, the provision for doubtful receivables fell
substantially from the first half of previous fiscal year when there were large
write-offs.
Due to these factors, operating income climbed Y 24.6 billion, or 59.0%, to Y
66.2 billion.
In other income (expenses), dividends received from natural resource projects
declined. A loss on property and equipment-net deteriorated by Y 12.0 billion in
the absence of gains which were recorded on the sale of property and equipment
in the previous fiscal year. These changes were outweighed, however, by a Y 25.7
billion increase in gain on marketable securities and investments-net on account
of increased capital gains, an improvement in write-offs of available-for-sale
marketable securities accompanying the stock market rally and a sharp decline in
write-off related losses on non-performing assets.
As a result, income from consolidated operations before income taxes jumped Y
38.3 billion, or 94.5%, to Y 78.7 billion.
Net equity in earnings of affiliated companies rose Y 5.7 billion, or 33.0%, to
Y 23.0 billion due to an increase in earnings from the investment in Lawson,
which posted higher earnings in the absence of restructuring expenses in the
prior period last year, and a continuation of strong results at automobile
operations in Asia and Europe.
The result was a Y 17.0 billion, or 39.0%, increase in interim net income to Y
60.6 billion despite the recording in the previous fiscal year of a gain for the
net cumulative effect of a change in accounting principle.
(2) Outlook for the Fiscal Year Ending March 31, 2004
Mitsubishi Corporation is projecting the following consolidated financial
results for the current fiscal year.
Fiscal 2004 Fiscal 2003 Change
(Forecast) (Actual)
Operating Y 14,800 billion Y 13,328.7 billion +Y 1,471.3 billion
transactions
Net income Y 100 billion Y 62.3 billion +Y 37.7 billion
Reference: Changes of basic assumptions
Fiscal 2004 Fiscal 2003 Change
(Forecast) (Actual)
Exchange rate 115.0JPY=US$1 122.0JPY=US$1 -7.0JPY to US$1
Crude oil price US$25.0/BBL US$25.9/BBL -US$0.9/BBL
Interest rate 0.10% 0.09% (0.01%
(TIBOR)
Note: Earnings forecasts and other forward-looking statements in this release
are based on current views and beliefs of the management in accordance with data
currently available, and are subject to a number of risks, uncertainties and
other factors that may cause actual results to differ materially from those
projected.
(3) Cash Flows
Cash and cash equivalents as of September 30, 2003 were Y 423.9 billion, Y 75.1
billion, or 21.5%, higher than at March 31, 2003. While cash was used for the
acquisition of airplane leasing and other assets, this was exceeded by cash
inflows from an increase in cash from operating activities and long-term debt.
(Operating activities)
Net cash provided by operating activities was Y 73.9 billion in the interim
period. While investment assets increased at the parent company and overseas
finance subsidiaries, cash was provided by healthy operating transactions at
overseas subsidiaries.
(Investing activities)
Net cash used in investing activities was Y 74.7 billion. Cash provided by the
sale of available-for-sale marketable securities at the parent company was
exceeded by cash outflows for the purchase of airplane leasing assets,
investments in energy resource development-related companies and other uses.
Free cash flows, the sum of operating and investing cash flows, were a negative
Y 0.8 billion as compared with the the prior period last year.
(Financing activities)
Net cash provided by financing activities was Y 71.4 billion. This was due to an
increase in long-term debt at the parent company in an improving fund
procurement environment as well as to an increase liquidity in hand accompanying
the commencement of full-scale operations at Metal One.
Forward-Looking Statements
The statements included in this release contain forward-looking statements about
future plans, strategies, beliefs and performance of Mitsubishi Corporation that
are not historical facts. Such statements are based on the assumptions and
beliefs of the company in light of competitive, financial and economic data
currently available and are subject to a number of risks, uncertainties and
assumptions that, without limitation, relate to world economic conditions,
exchange rates and commodity prices. Accordingly, Mitsubishi Corporation wishes
to caution readers that actual results may differ materially from those
projected in this release.
# # #
For further information contact:
Mitsubishi Corporation
Investor Relations Office
Phone: 81-3-3210-8580
Fax: 81-3-3210-8583
e-mail: ml.ir@mitsubishicorp.com
November 13, 2003
Mitsubishi Corporation
FINANCIAL HIGHLIGHTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED)
(Mitsubishi Corporation and subsidiaries based on US GAAP)
1. Operating transactions and income
Operating transactions Operating income Income from consolidated
operations before income
taxes
For the six months ended Millions of Yen Millions of Yen Millions of Yen
September 30, 2003 7,512,422 66,196 78,734
September 30, 2002 6,325,615 41,638 40,470
For the year ended
March 31, 2003 13,328,721 100,639 60,834
Net income Net income per share Net income per share
(diluted basis)
For the six months ended Millions of Yen Yen Yen
September 30,2003 60,560 38.68 35.72
September 30,2002 43,582 27.82 26.54
For the year ended
March 31,2003 62,265 39.76 37.26
2. Assets and shareholders' equity
Total assets Shareholders' Ratio of Shareholders'
shareholders' equity
equity equity to total
assets per share
For the six months ended Millions of Yen Millions of Yen % Yen
September30,2003 8,112,800 1,085,773 13.4 693.52
September30,2002 7,740,050 1,001,564 12.9 639.28
For the year ended
March31,2003 8,097,937 937,058 11.6 598.51
3. Cash Flows
Operating Investing Financing Cash and cash
activities activities equivalents end of
activities year
For the six months ended Millions of Yen Millions of Yen Millions of Yen Millions of Yen
September 30, 2003 73,900 (74,721) 71,380 423,922
September 30, 2002 152,363 (51,887) (127,804) 356,989
For the year ended
March 31, 2003 270,281 (24,388) (282,681) 348,780
4. Prospects for the year ending March 31, 2004
Operating Net income
transactions
For the year ending Millions of Yen Millions of Yen
March 31, 2004 14,800,000 100,000
(Forecast of Net income per share for the year ending March 31, 2004 : 63.87 Yen)
5. Number of consolidated subsidiaries : 368
Number of affiliated companies accounted for by the equity method : 165
(1) The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.
(2) Operating transactions and operating incomes, as presented above, are
voluntary disclosures solely for the convenience of investors in Japan.
Operating transactions represents the gross transaction volume or the aggregate
nominal value of the sales contracts in which the companies act as principal and
transactions in which the companies serve as agent. Operating transactions
exclude the contract value of transactions in which the role of the companies is
limited to that of a broker.
Operating income reflects (a) gross profit, (b) selling, general and
administrative expenses, and (c) provision for doubtful receivables of the
companies.
Operating transactions and operating income, as presented above, are non-GAAP
measure commonly used by similar Japanese trading companies and should not be
construed as equivalent to, or a substitute or proxy for, revenues, or as an
indicator of our operating performance, liquidity or cash flows generated by
operating, investing or financing activities.
(3) Certain restatements and reclassifications for the period ended September
30, 2002 have been made in accordance with SFAS No. 142 "Goodwill and Other
Intangible Assets," and Accounting Principles Board Opinion No. 18 "The Equity
Method of Accounting for Investment in Common Stock."
(4) The translation of Japanese yen amounts into United States dollar amounts
with respect to the six months ended September 30, 2003 are included solely for
the convenience of readers outside Japan and have been made at the rate of Y111=
USD1, the approximate rate of exchange at September 30, 2003.
Forward-looking Statements
This presentation contains forward-looking statements about Mitsubishi
Corporation's future plans, strategies, beliefs and performance that are not
historical facts. Such statements are based on the company's assumptions and
beliefs in light of competitive, financial and economic data currently available
and are subject to a number of risks, uncertainties and assumptions that,
without limitation, relate to world economic conditions, exchange rates and
commodity prices. Accordingly, Mitsubishi Corporation wishes to caution readers
that actual results may differ materially from those projected in this
presentation.
Subsidiaries and Affiliated Companies
Mitsubishi Corporation
Mitsubishi Corporation's subsidiaries and affiliates are diverse organizations
engaged in a wide variety of activities on a global scale. We manufacture and
market a wide range of products, including fuels, metals, machinery, chemicals
and living essentials. Some of our basic functions -- information and
telecommunications, finance, logistics and retailing -- enhance the above
activities and enable us to provide comprehensive solutions to customers. We
also invest actively in energy, natural resources, project development and
information technology areas.
Mitsubishi Corporation organizes business groups according to products and
services. Business groups manage their products and services through
subsidiaries and affiliates (Subsidiaries: 902, Affiliates: 510).
The following table shows products and services by operating segment and major
subsidiaries and affiliates.
As of April 1, 2003, the companies reclassified certain business group. The IT &
Electronics Business Group was disbanded as follows: The IT & Electronics
Group's Telecommunication & Broadcasting Division was mainly included in the New
Business Initiative Group; The Aerospace Division and the Telecommunication &
Broadcasting Division's Satellite Communications Business Unit were mainly
included in the Machinery Group.
PRODUCTS OR SERVICES MAJOR SUBSIDIARIES MAJOR AFFILIATES
NEW BUSINESS IT, Telecommunication & RYOKO LOGISTICS CORPORATION LAWSON, INC.
INITIATIVE Media,
MITSUBISHI CORPORATION FINANCE KENTUCKY FRIED CHICKEN JAPAN
Financial Services, PLC LTD.
Logistics,
IT FRONTIER CORPORATION
Consumer Business,
Healthcare NIPPON CARE SUPPLY CO.,LTD
( 167 ) ( 95 ) ( 72 )
ENERGY Petroleum Products, Carbon, MITSUBISHI SHOJI SEKIYU CO.,LTD. JAPAN AUSTRALIA LNG(MIMI)
BUSINESS PTY.,LTD.
Crude Oil, LPG, LNG PETRO-DIAMOND INC.
BRUNEI LNG SENDIRIAN BERHAD
DIAMOND GAS RESOURCES PTY.LTD.
( 132 ) ( 97 ) ( 35 )
METALS Ferrous Products,Coals,Ore, METAL ONE CORPORATION IRON ORE COMPANY OF CANADA
Nickel ,Ferro-Alloy, JECO MOZAL S.A.R.L.
Non-Ferrous Metals & MITSUBISHI DEVELOPMENT PTY.,LTD.
Minerals,
Non-Ferrous Metal Products
( 284 ) ( 198 ) ( 86 )
MACHINERY Power & Electrical Systems, NIKKEN CORPORATION MITSUBISHI AUTO CREDIT-LEASE
CORP.
Plants, Ships, Automobiles, NORELEC DEL NORTE,S.A.DE C.V.
DIAMOND CITY CO.,LTD.
Industrial Machinery, TRI PETCH ISUZU SALES CO.,LTD.
Project SPACE COMMUNICATIONS
MC AVIATION FINANCIAL SERVICES
Development & Construction CORPORATION
, (EUROPE) B.V.
Aerospaces
( 342 ) ( 225 ) ( 117 )
CHEMICALS Chemical Products, MITSUBISHI SHOJI PLASTICS CORP. METANOL DE ORIENTE,METOR,S.A.
Inorganic Chemicals MITENI S.P.A. EXPORTADORA DE SAL,S.A. DE C.V.
Products,
Fertilizer, Chlor-Alkali,
Functional Chemicals
( 101 ) ( 52 ) ( 49 )
LIVING Foods & Food Products, RYOSHOKU LTD. COCA-COLA CENTRAL JAPAN CO.,LTD
ESSENTIALS
Textiles,General TOYO REIZO CO.,LTD. MITSUBISHI PAPER SALES
Merchandise
MITSUBISHI SHOJI CONSTRUCTION CORPORATION
MATERIALS LTD.
PRINCES LTD.
ALPAC FOREST PRODUCTS
INCORPORATED
( 292 ) ( 161 ) ( 131 )
CORPORATE Finance, Accounting, MITSUBISHI CORPORATION FINANCIAL KOHJIN CO.,LTD.
STAFF Personnel, &
SECTION
General affairs MANAGEMENT SERVICES(JAPAN)LTD.
( 54 ) ( 34 ) ( 20 )
OVERSEAS Handling of a Broad Range MITSUBISHI INTERNATIONAL
SUBSIDIARIES of
CORPORATION
Products, similar to the
Parent MITSUBISHI CORPORATION
Company in Japan INTERNATIONAL N.V.
MITSUBISHI CORPORATION
(HONG KONG)LTD.
( 40 ) ( 40 )
Note: Among the above-listed subsidiaries, "RYOSHOKU LTD." is listed on Tokyo
Stock Exchange (1st section).
Mitsubishi Corporation and subsidiaries
STATEMENTS OF CONSOLIDATED INCOME (US GAAP)
for the six months ended September 30, 2003 and 2002 (unaudited)
Millions of yen Millions of
U.S. dollars
Six months Six months Increase or Six months
ended ended (-)decrease ended
Sept.30,2003 Sept.30,2002 Sept.30,2003
%
Operating transactions 7,512,422 6,325,615 1,186,807 18.8 67,679
Gross profit 378,005 349,157 28,848 8.3 3,405
Gross profit ratio 5.03% 5.52%
Selling, general and administrative (311,380) (293,861) -17,519 6.0 (2,805)
expenses
Provision for doubtful receivables (429) (13,658) 13,229 - (4)
Operating income 66,196 41,638 24,558 59.0 596
Other income (expenses) :
Interest expense - net (7,629) (7,295) -334 4.6 (69)
Dividends 10,021 17,792 -7,771 -43.7 90
Gain (loss) on marketable securities and 10,821 (14,884) 25,705 - 97
investments - net
Gain (loss) on property and equipment - net (3,140) 8,894 -12,034 - (28)
Other - net 2,465 (5,675) 8,140 - 23
Other income (expenses) - net 12,538 (1,168) 13,706 - 113
Income from consolidated operations 78,734 40,470 38,264 94.5 709
before income taxes
Income taxes: (34,642) (19,476) -15,166 - (312)
Income from consolidated operations 44,092 20,994 23,098 110.0 397
Minority interests in income of (6,527) (2,806) -3,721 132.6 (59)
consolidated subsidiaries
Equity in earnings of affiliated companies 22,995 17,294 5,701 33.0 208
- net (less applicable income taxes)
Income before cumulative effect of changes 60,560 35,482 25,078 70.7 546
in accounting principles
Cumulative effect of a change in accounting - 8,100 -8,100 - -
principles
Net income 60,560 43,582 16,978 39.0 546
Note: 1.Certain restatements and reclassifications for the period ended
September 30, 2002 have been made in accordance with SFAS No. 142 "Goodwill and
Other Intangible Assets," and Accounting Principles Board Opinion No. 18 "The
Equity Method of Accounting for Investment in Common Stock." See Note 2. of
"Basis of Consolidated Financial Statements".
2.Operating transactions and operating incomes, as presented above, are
voluntary disclosures solely for the convenience of investors Japan.
Operating transactions represents the gross transaction volume or the aggregate
nominal value of the sales contracts in which the companies act as principal and
transactions in which the companies serve as agent. Operating transactions
exclude the contract value of transactions in which the role of the companies is
limited to that of a broker.
Operating income reflects (a) gross profit, (b) selling, general and
administrative expenses, and (c) provision for doubtful receivables of the
companies.
Operating transactions and operating income, as presented above, are non-GAAP
measure commonly used by similar Japanese trading companies and should not be
construed as equivalent to, or a substitute or proxy for, revenues, or as an
indicator of our operating performance, liquidity or cash flows generated by
operating, investing or financing activities.
Mitsubishi Corporation and subsidiaries
CONSOLIDATED BALANCE SHEETS (US GAAP)
September 30, 2003(unaudited) and March 31,2003
ASSETS Millions of yen Millions of
U.S. dollars
Sept.30 March 31 Increase or Sept.30
2003 2003 (-)decrease 2003
Current assets:
Cash and cash equivalents 423,922 348,780 75,142 3,819
Time deposits 15,932 38,069 -22,137 144
Short-term investments 197,131 128,670 68,461 1,776
Receivables-trade:
Notes and loans 413,153 514,338 -101,185 3,722
Accounts 1,864,434 1,884,041 -19,607 16,797
Affiliated companies 248,349 278,090 -29,741 2,237
Allowance for doubtful receivables (67,926) (66,506) -1,420 (612)
Inventories 496,054 485,071 10,983 4,469
Advance payments to suppliers 169,400 138,746 30,654 1,526
Deferred income taxes 59,205 55,651 3,554 533
Other current assets 115,021 117,198 -2,177 1,036
Total current assets 3,934,675 3,922,148 12,527 35,447
Investments and non-current receivables:
Investments in and advances to affiliated companies 812,804 712,774 100,030 7,323
Other investments 1,211,732 1,189,107 22,625 10,917
Non-current notes, loans and accounts 667,143 724,195 -57,052 6,010
receivable-trade
Allowance for doubtful receivables (109,962) (116,085) 6,123 (991)
Total investments and non-current receivables 2,581,717 2,509,991 71,726 23,259
Property and equipment- net 1,238,956 1,176,613 62,343 11,162
Other assets 357,452 489,185 -131,733 3,220
Total 8,112,800 8,097,937 14,863 73,088
Mitsubishi Corporation and subsidiaries
CONSOLIDATED BALANCE SHEETS (US GAAP)
September 30, 2003(unaudited) and March 31,2003
LIABILITIES AND SHAREHOLDERS' EQUITY Millions of yen Millions of
U.S. dollars
Sept.30 March 31 Increase or Sept.30
2003 2003 (-)decrease 2003
Current liabilities:
Short-term debt 546,100 572,708 -26,608 4,920
Current maturities of long-term debt 561,358 388,957 172,401 5,057
Payables-trade:
Notes and acceptances 205,829 206,575 -746 1,854
Accounts 1,492,736 1,586,112 -93,376 13,448
Affiliated companies 54,060 70,972 -16,912 487
Advances from customers 151,414 110,814 40,600 1,364
Accrued income taxes 27,454 34,682 -7,228 247
Other accrued expenses 72,349 90,950 -18,601 652
Other current liabilities 204,047 211,684 -7,637 1,839
Total current liabilities 3,315,347 3,273,454 41,893 29,868
Long-term debt, less current maturities 2,959,571 3,085,016 -125,445 26,663
Accrued pension and severance liabilities 221,898 215,679 6,219 1,999
Deferred income taxes 69,396 62,336 7,060 625
Other long-term liabilities 286,848 313,747 -26,899 2,584
Minority interests 173,967 210,647 -36,680 1,567
Shareholders' equity:
Common stock 126,610 126,609 1 1,141
Additional paid-in capital 179,496 179,491 5 1,617
Retained earnings:
Appropriated for legal reserve 35,907 35,550 357 323
Unappropriated 926,877 872,939 53,938 8,350
Accumulated other comprehensive income (loss):
Net unrealized gains on securities available for 101,401 54,745 46,656 914
sale
Net unrealized losses on derivatives (6,873) (10,000) 3,127 (62)
Minimum pension liability adjustments (148,507) (148,126) -381 (1,338)
Foreign currency translation adjustments and others (128,365) (173,401) 45,036 (1,156)
Less treasury stock (773) (749) -24 (7)
Total shareholders' equity 1,085,773 937,058 148,715 9,782
Total 8,112,800 8,097,937 14,863 73,088
Mitsubishi Corporation and subsidiaries
Statements of Consolidated Shareholders' Equity
for the six months ended September 30, 2003 (unaudited) and the year ended March
31, 2003
Millions of yen Millions of U.S.
dollars
2003 2002 2003
Apr. 2003-Sept. Apr. 2002-Mar. Apr. 2003-Sept.
2003 2003 2003
Shareholders' Equity
Common stock
Balance, beginning of period 126,609 126,609 1,141
Issuance of common stock upon exercise of stock 1 - 0
options
Balance, end of period 126,610 126,609 1,141
Additional paid-in capital
Balance, beginning of period 179,491 179,491 1,617
Issuance of common stock upon exercise of stock 2 - 0
options
Gains on sales of treasury stock 3 - 0
Balance, end of period 179,496 179,491 1,617
Retained earnings appropriated for legal reserve:
Balance, beginning of period 35,550 35,524 320
Transfer from unappropriated retained earnings 357 26 3
Balance, end of period 35,907 35,550 323
Unappropriated retained earnings:
Balance, beginning of period 872,939 823,236 7,864
Net income 60,560 62,265 546
Total 933,499 885,501 8,410
Deduct:
Cash dividends paid (6,265) (12,536) (56)
Transfer to retained earnings appropriated
for legal reserve (357) (26) (4)
Total (6,622) (12,562) (60)
Balance, end of period 926,877 872,939 8,350
Accumulated other comprehensive loss (net of tax):
Balance, beginning of period (276,782) (134,897) (2,493)
Other comprehensive income (loss) 94,438 (141,885) 851
Balance, end of period (182,344) (276,782) (1,642)
Treasury stock:
Balance,beginning of period (749) (104) (7)
Purchases-net (24) (645) 0
Balance,end of period (773) (749) (7)
Statements of Consolidated Comprehensive Income(Loss)
for the six months ended September 30, 2003 (unaudited) and the year ended March 31, 2003
Millions of yen Millions of U.S.
dollars
2003 2002 2003
Apr. 2003'Sept. Apr. 2002'Mar. Apr. 2003'Sept.
2003 2003 2003
Comprehensive Income (Loss)
Net income 60,560 62,265 546
Other comprehensive income (loss):
Unrealized gains on securities available for sale 46,656 (24,516) 420
Unrealized losses on derivative instruments 3,127 (3,855) 28
Minimum pension liability adjustments (381) (69,503) (3)
Foreign currency translation adjustments 45,036 (44,011) 406
Other comprehensive income (loss) 94,438 (141,885) 851
Comprehensive Income(Loss) 154,998 (79,620) 1,397
NOTE: Dividends and appropriations for legal reserve shown for each year
represent dividends paid out during the year and the appropriation for legal
reserve made in relation to the respective dividends.
Mitsubishi Corporation and subsidiaries
STATEMENTS OF CASH FLOWS (US GAAP)
for the six months ended September 30, 2003 and 2002 (unaudited)
Millions Millions Millions
of Yen of Yen of U.S.
Dollars
Six months Six months Six
months
ended ended
ended
Sept. 30, Sept. 30,
2003 2002 Sept. 30,
2003
I. Operating activities:
Net income 60,560 43,582 546
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 53,889 48,901 485
Provision for doubtful receivables 429 13,658 4
(Gain) loss on marketable securities and investments - net (10,821) 14,884 (97)
(Gain) loss on property and equipment - net 3,140 (8,894) 28
Equity in earnings of affiliated companies, less dividends (6,936) (5,034) (62)
received
Deferred income taxes 2,434 (7,410) 22
Cumulative effect of a change in accounting principle - (8,100) -
Changes in operating assets and liabilities:
Short-term investments -trading securities (33,931) (6,003) (306)
Notes and accounts receivable - trade 133,038 193,343 1,199
Inventories 8,570 48,905 77
Notes, acceptances and accounts payable - trade (129,077) (182,549) (1,163)
Other - net (7,395) 7,080 (67)
Net cash provided by operating activities 73,900 152,363 666
II. Investing activities:
Expenditures for property and equipment and other assets (97,180) (75,672) (876)
Net decrease (increase) in investments (5,531) 13,963 (50)
Net decrease in loans receivable 1,624 14,933 15
Net decrease (increase) in time deposits 26,366 (5,111) 238
Net cash provided by (used in) investing activities (74,721) (51,887) (673)
III. Financing activities:
Net increase (decrease) in short-term debt 15,798 (35,257) 142
Net increase (decrease) in long-term debt 61,865 (86,113) 557
Issuance of common stock upon exercise of stock options 3 -
Acquisition of treasury stock (21) (166)
Payment of dividends (6,265) (6,268) (56)
Net cash used in financing activities 71,380 (127,804) 643
IV. Effect of exchange rate changes on cash and cash 4,583 (10,910) 41
equivalents
V. Net increase (decrease) in cash and cash equivalents 75,142 (38,238) 677
VI. Cash and cash equivalents, beginning of period 348,780 395,227 3,142
VII. Cash and cash equivalents, end of period 423,922 356,989 3,819
Note: Certain restatements and reclassifications for the period ended September
30, 2002 have been made in accordance with SFAS No. 142 "Goodwill and Other
Intangible Assets," and Accounting Principles Board Opinion No. 18 "The Equity
Method of Accounting for Investment in Common Stock." See Note 2. of "Basis of
Consolidated Financial Statements. "
Basis of Consolidated Financial Statements
1. Basic Accounting Policies
The accompanying consolidated financial statements of Mitsubishi Corporation
(the " Company") and its subsidiaries (collectively, " the companies") have been
prepared in accordance with accounting principles generally accepted in the
United States of America (" U.S. GAAP").
The significant differences between U.S. and Japanese accounting standards
applicable to the companies relate to the followings:
(1) Valuation of investments
(2) Valuation of long-lived assets (Impaired assets are written down to
estimated fair value for U.S. GAAP)
(3) Deferral of gain on sales of properties for tax purpose (Not permitted under
U.S. GAAP)
(4) Derivative instruments and hedge accounting
(5) Pension and retirement benefit accounting (Unfunded obligations are
recognized as liabilities and other comprehensive income (loss) for U.S. GAAP)
(6) Accounting for business combinations, Goodwill and other intangible assets
2. Restatement of Consolidated Financial Statements of Prior Year
The financial statements for the six-months ended September 30, 2002, have been
restated in accordance with Statement of Financial Accounting Standards ("
SFAS") No. 142, " Goodwill and Other Intangible Assets" and with Accounting
Principles Board Opinion (" APB") No. 18 " The Equity Method of Accounting for
Investment in Common Stock. "
The restatement was made because SFAS No. 142 requires the impairment loss on
goodwill accompanying the adoption of the statement that was recognized in the
quarter ended March 31, 2003 be retroactively recorded in the six-month period
ended September 30, 2002.
Also during the year ended March 31, 2003, the companies acquired an additional
investment in a cost method investee. The companiesf investment in the investee,
results of operations and retained earnings were retroactively restated to
account for the ownership interest of the companies in the investee under the
equity method in accordance with APB No. 18.
As a result, the companies retroactively restated the consolidated statement of
income, statement of consolidated cash flows, and segment information for the
six months ended September 30, 2002.
The previously reported amounts, adjustments and the restated amounts for
consolidated net income, shareholders equity and total assets as of and for the
six months ended September 30, 2002 are as follows:
(Millions of Yen)
As Previously Reported Adjustments As Restated
Net income 43,947 -365 43,582
Total shareholders equity 1,000,745 819 1,001,564
Total assets 7,739,231 819 7,740,050
3. Scope of Consolidation and Application of the Equity Method
(1) Number of consolidated subsidiaries and equity-method affiliates
As of Sept. 30, 2003 As of Mar.31, 2003 Change
Consolidated subsidiaries 368 365 3
Equity-method affiliates 165 162 3
Total 533 527 6
Note: The numbers of consolidated subsidiaries and equity-method affiliates
stated above represent companies which the parent company directly consolidates
or applies equity method. The decrease in number of consolidated subsidiaries
and equity method affiliates are 348 companies as of September 30, 2002 and 356
companies as of March 31, 2003 in total.
(2) Changes in scope of consolidation and application of the equity method
(Consolidated subsidiaries)
New: TECHNOLOGY ALLIANCE GROUP, PETRO-DIAMOND RISK MANAGEMENT,
TOSHO CORPORATION and others (Total 16 companies)
Excluded: 13 companies
(Equity-method affiliates)
New: KIRIN MC DANONE WATERS CO., LTD and others (Total 10 companies)
Excluded: PARA PIGMENTOS S.A. and others (Total 7 companies)
4. Application of New Accounting Standards
In January 2003, the Financial Accounting Standards Board (" FASB") issued FIN
No. 46 (" FIN 46"),
" Consolidation of Variable Interest Entities." This interpretation requires
primary beneficiaries to consolidate variable interest entities (" VIEs"). FIN
46 is effective immediately for all new VIEs created or acquired on or after
February 1, 2003. However, for VIEs created or acquired prior to February 1,
2003, the Company is required to apply the provisions of FIN 46 by the end of
the third quarter of the year ending March 31, 2004, with early adoption
encouraged from the second quarter of the year ending March 31, 2004. The
Company adopted FIN 46 on July 1, 2003, with respect to VIEs created or acquired
prior to February 1, 2003. The adoption of FIN 46 did not have a material impact
on the Companies results of operations and financial position.
SFAS No. 143, " Accounting for Asset Retirement Obligations, " issued by the
FASB, was adopted effective from the first quarter of the year ending March 31,
2004. The statement addresses the recognition and recalculation of obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The adoption of SFAS No. 143 did not have a material
impact on the Companiesf results of operations and financial position.
SFAS No. 149, " Amendment of Statement 133 on Derivative Instruments and Hedging
Activities, " was adopted effective from the second quarter of the year ending
March 31, 2004. This statement amends and clarifies accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities under SFAS No. 133. The adoption of
SFAS No. 149 did not have an impact on the Companiesf results of operations and
financial position.
In January 2003, the Emerging Issues Task Force reached a final consensus on
Issue 03-2 (EITF No. 03-2),
" Accounting for the Transfer to the Japanese Government of the Substitutional
Portion of Employee Pension Fund Liabilities". EITF No. 03-2 addresses
accounting for a transfer to the Japanese government of a substitutional portion
of an Employeesf Pension Fund plan (EPF) which is a defined benefit pension plan
established under the Welfare Pension Insurance Law. EITF No. 03-2 requires
employers to account for the entire separation process of a substitutional
portion from an entire plan (including a corporate portion) upon completion of
the transfer to the government of the substitutional portion of the benefit
obligation and related plan assets as the culmination of a series of steps in a
single settlement transaction. On October 29, 2003, the application, which was
submitted by the Company for approval on October 1, 2003, was approved by the
government for an exemption from the obligation to pay benefits for future
employee service related to the substitutional portion. Currently, the effect on
the Companiesf results of operations and financial position of the transfer has
not been determined.
5. Contingent Liabilities
The Company and/or a U.S. subsidiary have been named as a defendant in several
lawsuits in the U.S. and Canada by graphite electrode users and also as a
defendant in a lawsuit by UCAR International Inc. (" UCAR", now known as
GrafTech International Ltd.), a graphite electrode manufacturer in connection
with the sales and marketing of graphite electrodes. Five of the lawsuits
brought by graphite electrode users have been resolved between the parties, and
one reached a settlement, while four others remain active. The lawsuits brought
by graphite electrode users, that remain active do not specify the amount of
damages that are sought. UCAR is seeking damages in the amount of $406 million
and other unspecified damages, plus interest. It is not possible for the Company
to predict at this time what, if any, liability the Company may sustain on
account of these lawsuits.
Mitsubishi Corporation and subsidiaries
SEGMENT INFORMATION (US GAAP)
for the six months ended September 30, 2003 and 2002 (unaudited)
( OPERATING SEGMENT INFORMATION )
The companies' operating segment information at and for the six months ended
September 30, 2003 and 2002 is as follows:
Six months ended September 30, 2003
Millions of yen
New Energy Metals Machinery Chemicals Living Total Other Adjustments Consolidated
Business Business Essentials and
Initiative Eliminations
Operating
transactions:
External 109,886 1,848,520 1,428,746 1,308,296 758,345 2,086,491 7,540,284 6,654 (34,516) 7,512,422
customers
Intersegment 2,211 20,874 2,168 2,611 1,526 2,052 31,442 925 (32,367) -
Total 112,097 1,869,394 1,430,914 1,310,907 759,871 2,088,543 7,571,726 7,579 (66,883) 7,512,422
Gross profit 22,955 35,760 80,161 70,492 34,458 132,074 375,900 2,248 (143) 378,005
Operating (3,512) 13,841 26,938 27,226 12,453 24,363 101,309 (28,564) (6,549) 66,196
income(loss)
Net income 413 16,609 18,301 21,537 8,423 15,327 80,610 (10,549) (9,501) 60,560
(loss)
Segment 1,089,380 834,276 1,595,760 1,975,664 586,328 1,448,038 7,529,446 922,521 (339,167) 8,112,800
assets
Millions of U.S. dollars
New Energy Metals Machinery Chemicals Living Total Other Adjustments Consolidated
Business Business Essentials and
Initiative Eliminations
Operating
transactions:
External 990 16,653 12,872 11,786 6,832 18,797 67,930 60 (311) 67,679
customers
Intersegment 20 188 19 24 14 19 284 8 (292) -
Total 1,010 16,841 12,891 11,810 6,846 18,816 68,214 68 (603) 67,679
Gross profit 207 322 722 635 310 1,190 3,386 20 (1) 3,405
Operating (32) 125 243 245 112 220 913 (258) (59) 596
income(loss)
Net income 4 149 165 194 76 138 726 (95) (85) 546
(loss)
Segment assets 9,814 7,516 14,376 17,799 5,282 13,046 67,833 8,311 (3,056) 73,088
Six months ended September 30, 2002
Millions of yen
New Energy Metals Machinery Chemicals Living Total Other Adjustments Consolidated
Business Business Essentials and
Initiative Eliminations
Operating
transactions:
External 133,053 1,434,035 989,871 1,050,401 676,395 2,033,206 6,316,961 13,862 (5,208) 6,325,615
customers
Intersegment 3,299 19,484 16,614 10,159 1,331 14,974 65,861 860 (66,721) -
Total 136,352 1,453,519 1,006,485 1,060,560 677,726 2,048,180 6,382,822 14,722 (71,929) 6,325,615
Gross profit 22,312 24,969 69,435 61,126 31,612 135,582 345,036 4,184 (63) 349,157
Operating (4,988) 3,061 30,589 6,749 9,847 26,806 72,064 (21,516) (8,910) 41,638
income(loss)
Net income (2,728) 9,774 14,517 5,023 5,890 16,408 48,884 8,959 (14,261) 43,582
(loss)
Segment 1,071,288 776,018 1,162,279 2,014,432 562,951 1,442,862 7,029,830 898,386 (188,166) 7,740,050
assets
1. The segment information has been prepared in accordance with accounting
principles generally accepted in Japan (Japanese GAAP).
2. "Adjustment or Eliminations" includes certain adjustments and
reclassifications (which have been incorporated in the accompanying consolidated
financial statements) to conform with U.S. GAAP along with certain income and
expense items that are not allocated to reportable operating segments and
intersegment eliminations.
3."Other"reperesents the Corporate Staff Section which primarily provide
services and operational support to the companies and affiliates.
This column also includes certain revenue and expenses from business activities
related to financing and human resource services that are not allocated to
reportable operating segments.
Unallocated corporate assets categorized in "Other" were Y 922,521 million (USD
8,311 million) and Y 898,386 million at September 30, 2003 and 2002
respectively, which consist primarily of cash, time deposits and securities for
financial and investment activities.
4. Certain restatements and reclassifications for the six months ended September
30, 2002 have been made in accordance with SFAS No. 142 "Goodwill and Other
Intangible Assets," and Accounting Principles Board Opinion No. 18 "The Equity
Method of Accounting for Investment in Common Stock.". See Note 2.of "Basis of
Consolidated Financial Statements".
As of April 1, 2003, the companies reclassified certain business groups. The IT
& Electronics Business Group was disbanded as follows: The IT & Electronics
Group's Telecommunication & Broadcasting Division was mainly included in the New
Business Initiative Group; The Aerospace Division and the Telecommunication &
Media Division's Satellite Communications Business Unit were mainly included in
the Machinery Group. The consolidated financial position and results of
operations of related reportable operating segments for the six months ended
September 30, 2002 have also been reclassified accordingly.
Mitsubishi Corporation and subsidiaries
SEGMENT INFORMATION (US GAAP)
for the six months ended September 30, 2003 and 2002 (unaudited)
( GEOGRAPHIC SEGMENT INFORMATION )
The companies' segment information by geographic areas at and for the six months
ended September 30, 2003 and 2002 is as follows:
Millions of yen Millions of
U.S. dollars
Six months Six months Increase or Six months
ended ended decrease ended
Sept. 30, 2003 Sept. 30, 2002 Sept. 30, 2003
I Operating transactions
Japan 6,299,153 5,321,388 977,765 56,749
U.S.A. 380,666 308,101 72,565 3,429
United Kingdom 189,565 141,468 48,097 1,708
Other 643,038 554,658 88,380 5,793
Total 7,512,422 6,325,615 1,186,807 67,679
II Gross profit
Japan 275,070 244,624 30,446 2,478
Australia 23,816 29,659 (5,843) 215
U.S.A. 19,751 20,387 (636) 178
Other 59,368 54,487 4,881 534
Total 378,005 349,157 28,848 3,405
III Long-lived assets
Japan 687,973 616,485 71,488 6,198
Australia 89,481 64,038 25,443 806
Canada 61,556 64,247 (2,691) 555
Other 358,029 336,587 21,442 3,225
Total 1,197,039 1,081,357 115,682 10,784
(NOTE) The companies' segment information by geographic areas are disclosed in
accordance with SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information."
Mitsubishi Corporation and subsidiaries
FAIR VALUE INFORMATION OF INVESTMENTS (US GAAP)
September 30, 2003 (unaudited) and March 31, 2003
Pursuant to SFAS No.115 "Accounting for Certain Investments in Debt and Equity
Securites", substantially all of the companies' marketable equity securities and
debt securities, principally corporate bonds and commercial paper, were
classified as available-for-sale or held-to-maturity securities, except for
certain items categorized as trading securities.
Fair value information regarding each category of the securities classified as
trading, available-for-sale and held-to-maturity at September 30, 2003 and March
31, 2003, is as follows.
September 30, 2003
Millions of Yen
Cost Unrealized Unrealized Fair
Gains Losses Value
Trading 76,381
Available-for-sale
Equitysecurities 327,427 226,207 (5,658) 547,976
Debtsecurities 412,000 593 (2,768) 409,825
Held-to-maturity 11,556 146 0 11,702
March 31, 2003
Millions of Yen
Cost Unrealized Unrealized Fair
Gains Losses Value
Trading 44,565
Available-for-sale
Equitysecurities 340,648 153,064 (10,407) 483,305
Debtsecurities 252,488 0 (3,430) 249,058
Held-to-maturity 168,439 902 (764) 168,577
September 30, 2003
Millions of U.S.Dollars
Cost Unrealized Unrealized Fair
Gains Losses Value
Trading 688
Available-for-sale
Equitysecurities 2,950 2,038 (51) 4,937
Debtsecurities 3,712 5 (25) 3,692
Held-to-maturity 104 1 0 105
The changes in net unrealized holding gains and losses on trading securities
that were included in earnings were losses of Y732 million (USD 7 million), and
losses of Y 1,039 million for the six months ended September 30, 2003 and the
year ended March 31, 2003, respectively.
"Other investments" include investments in non-traded and unaffiliated companies
and non-current time deposits
amounting to Y363,125 million(USD3,272million) and Y372,410 million at
September 30, 2003 and March 31,
2002, respectively.
As a result of reviewing the portfolio management strategy, Y 156,530 million
(USD 1,410 million) investments in debt securities which were previously
classified as held-to-maturity securities were transferred to available-for-sale
securities.
(For Reference:Fair value of marketable securities regarding subsidiaries and affiliated companies held
by the parent company)
(as of September 30, 2003) Millions of Yen Millions of U.S.Dollars
Cost Fair value Difference Cost Fair value Difference
Subsidiaries 11,188 71,393 60,205 101 643 542
Affiliated 42,122 106,364 64,242 379 958 579
Total 53,310 177,757 124,447 480 1,601 1,121
This information is provided by RNS
The company news service from the London Stock Exchange
END
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