Form 6-K/A
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FORM 6-K/A

 


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Interim Business Report First half of the fiscal year ending March 31, 2007

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of December 26, 2006

Commission File Number 09929

 


Mitsui & Co., Ltd.

(Translation of registrant’s name into English)

 


2-1, Ohtemachi 1-chome Chiyoda-ku, Tokyo 100-0004 Japan

(Address of principal executive offices)

 


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F      X            Form 40-F              

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):             

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):             

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes                      No      X    

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            

 



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 26, 2006

 

MITSUI & CO., LTD.
By:  

/s/ Kazuya Imai

Name:   Kazuya Imai
Title:   Executive Director
  Senior Executive Managing Officer
  Chief Financial Officer


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Translated document

This message has been prepared in English solely for the convenience of foreign readers, based on “Kabunushi no minasamae”. The original message in Japanese is definitive.

Message to Shareholders

Mitsui & Co., Ltd. (Mitsui) has announced an amendment to its six-month operating results published in its 88th Interim Business Report previously delivered to shareholders, reflecting losses in relation to naphtha trading transactions at its subsidiary Mitsui Oil (Asia) Pte. Ltd. (MOAS, Headquarters: Singapore).

It was discovered in November 2006 that one of the traders at MOAS had incurred but hidden by deceptively reporting significant unrealized losses on physical and futures trading of naphtha. As of December 19 2006, accumulated losses realized through orderly liquidation of these transactions amounted to ¥9.6 billion (U.S. $81 million) before tax.

Based on the results of internal investigations, Mitsui has revised its six-month operating results in its 88th Interim Business Report which were previously delivered to shareholders (please refer to the amended Consolidated Balance Sheet and Statement of Consolidated Income as shown in Page 2 to 5). Net income of the first half of the fiscal year ending March 31, 2007 has been revised to ¥154.5 billion, down by ¥4.7 billion from ¥159.2 billion as previously reported. For the details of Mitsui’s financial statements following this revision please refer to Mitsui’s website at: http://www.mitsui.co.jp/en/ir/library/business/.

The annual forecast of Mitsui’s consolidated net profit of ¥300 billion for the year ending March 31, 2007, and the interim dividend of ¥17 per share, remain unchanged.

An internal investigation into this incident is ongoing, and based on the results of such investigation, Mitsui will implement measures necessary to prevent the recurrence of similar incidents in future. Mitsui recognizes the seriousness of the incident and will continue to make efforts to improve its group-wide internal controls.

December 2006

Mitsui & Co., Ltd.

President and Chief Executive Officer

Shoei Utsuda

Continued


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CONSOLIDATED BALANCE SHEETS (Unaudited)

(Revisions are shown by an underline.)

ASSETS

 

(Millions of Yen)

   September 30,
2006
    March 31,
2006
 

Current Assets:

    

Cash and cash equivalents

   ¥ 706,464     ¥ 697,065  

Time deposits

     8,343       37,028  

Marketable securities

     167,945       26,860  

Trade receivables:

    

Notes and loans, less unearned interest

     487,647       439,187  

Accounts

     2,112,643       1,997,093  

Associated companies

     170,967       169,709  

Allowance for doubtful receivables

     (27,233 )     (26,703 )

Inventories

     752,497       695,754  

Advance payments to suppliers

     96,296       92,150  

Deferred tax assets—current

     26,196       32,569  

Derivative assets

     337,749       320,134  

Other current assets

     310,272       265,985  
                

Total current assets

     5,149,786       4,746,831  
                

Investments and Non-current Receivables:

    

Investments in and advances to associated companies

     1,471,592       1,300,587  

Other investments

     964,794       935,675  

Non-current receivables, less unearned interest

     529,142       444,487  

Allowance for doubtful receivables

     (95,179 )     (84,513 )

Property leased to others—at cost, less accumulated depreciation

     236,784       218,583  
                

Total investments and non-current receivables

     3,107,133       2,814,819  
                

Property and Equipment—at Cost:

    

Land, land improvements and timberlands

     197,256       203,170  

Buildings, including leasehold improvements

     354,725       349,904  

Equipment and fixtures

     466,658       472,069  

Mineral rights

     165,543       80,953  

Vessels

     22,339       22,376  

Projects in progress

     126,162       55,278  
                

Total

     1,332,683       1,183,750  

Accumulated depreciation

     (459,162 )     (437,581 )
                

Net property and equipment

     873,521       746,169  
                

Intangible Assets, less Accumulated Amortization

     82,011       98,811  
                

Deferred Tax Assets—Non-current

     46,492       47,947  
                

Other Assets

     118,661       119,001  
                

Total

   ¥ 9,377,604     ¥ 8,573,578  
                

 

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LIABILITIES AND SHAREHOLDERS’ EQUITY

 

(Millions of Yen)

   September 30,
2006
    March 31,
2006
 

Current Liabilities:

    

Short-term debt

   ¥ 772,800     ¥ 540,797  

Current maturities of long-term debt

     359,413       353,185  

Trade payables:

    

Notes and acceptances

     118,715       100,402  

Accounts

     2,046,939       1,762,224  

Associated companies

     100,313       108,252  

Accrued expenses:

    

Income taxes

     44,704       63,739  

Interest

     22,015       22,485  

Other

     75,238       72,848  

Advances from customers

     118,105       104,500  

Derivative liabilities

     259,030       214,460  

Other current liabilities

     168,455       168,049  
                

Total current liabilities

     4,085,727       3,510,941  
                

Long-Term Debt, less Current Maturities

     2,699,250       2,658,735  
                

Accrued Pension Costs and Liability for Severance Indemnities

     37,822       36,769  
                

Deferred Tax Liabilities—Non-current

     334,321       318,911  
                

Other Long-Term Liabilities

     254,306       252,155  
                

Minority Interests

     136,720       118,160  
                

Shareholders’ Equity:

    

Common stock

     295,797       295,766  

Capital surplus

     390,545       390,488  

Retained earnings:

    

Appropriated for legal reserve

     38,860       38,508  

Unappropriated

     955,286       825,306  

Accumulated other comprehensive income (loss):

    

Unrealized holding gains and losses on available-for-sale securities

     205,376       216,099  

Foreign currency translation adjustments

     (56,536 )     (83,279 )

Minimum pension liability adjustment

     (5,407 )     (5,417 )

Net unrealized gains and losses on derivatives

     8,090       2,439  
                

Total accumulated other comprehensive income (loss)

     151,523       129,842  
                

Treasury stock, at cost

     (2,553 )     (2,003 )
                

Total shareholders’ equity

     1,829,458       1,677,907  
                

Total

   ¥ 9,377,604     ¥ 8,573,578  
                

 

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STATEMENTS OF CONSOLIDATED INCOME (Unaudited)

(Revisions are shown by an underline.)

 

(Millions of Yen)

   Six-Month
Period ended
September 30,
2006
    Six-Month
Period ended
September 30,
2005
 

Revenues:

    

Sales of products

   ¥ 1,984,093     ¥ 1,597,353  

Sales of services

     270,894       234,550  

Other sales

     69,628       52,240  
                

Total revenues

     2,324,615       1,884,143  
                

Total Trading Transactions:

    

Six-month period ended September 30, 2006: ¥7,622,220 million

    

Six-month period ended September 30, 2005: ¥7,048,604 million

    

Cost of Revenues:

    

Cost of products sold

     1,797,340       1,440,016  

Cost of services sold

     68,112       45,510  

Cost of other sales

     38,268       23,416  
                

Total cost of revenues

     1,903,720       1,508,942  
                

Gross Profit

     420,895       375,201  
                

Other Expenses (Income):

    

Selling, general and administrative

     285,019       259,167  

Provision for doubtful receivables

     1,610       1,218  

Interest expense, net of interest income

     17,920       9,835  

Dividend income

     (28,119 )     (16,074 )

Gain on sales of securities—net

     (26,545 )     (14,074 )

Loss on write-down of securities

     3,207       3,499  

Gain on disposal or sales of property and equipment—net

     (1,236 )     (216 )

Impairment loss of long-lived assets

     9,964       4,771  

Compensation and other charges related to DPF incident

     (3,864 )     9,000  

Other expense—net

     22,331       328  
                

Total other expenses

     280,287       257,454  
                

Income from Continuing Operations before Income Taxes, Minority Interests and Equity in Earnings

     140,608       117,747  
                

[Continued on next page]

 

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[Continued from previous page]

 

Income Taxes:

    

Current

     67,620       46,782  

Deferred

     (8,887 )     16,799  
                

Total

     58,733       63,581  
                

Income from Continuing Operations before Minority Interests and Equity in Earnings

     81,875       54,166  

Minority Interests in Earnings of Subsidiaries

     (5,203 )     (9,001 )

Equity in Earnings of Associated Companies—Net (After Income Tax Effect)

     74,512       38,828  
                

Income from Continuing Operations

     151,184       83,993  

Income from Discontinued Operations—Net (After Income Tax Effect)

     3,271       (800 )
                

Net Income

   ¥ 154,455     ¥ 83,193  
                

 

Note: In accordance with Statement of Financial Accounting Standards No.144, the figures for the six-month period ended September 30, 2005 relating to discontinued operations have been reclassified.

 

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LOGO


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LOGO

From the President

We are pleased to bring you the Interim Business Report for our 88th fiscal year, which ends on March 31, 2007.

The economic environment was strong during the interim period from April 1, 2006 to September 30, 2006, and we achieved consolidated net income of ¥154.5 billion and non-consolidated net income of ¥71.7 billion. Both these results are considerably higher than the previous interim period. Commensurate with this outcome, we have revised our full-year forecast for consolidated net income upwards to ¥300.0 billion.

The interim dividend for the interim period has been increased to ¥17 per share, ¥7 per share higher than for the previous interim period. Moreover, based on our dividend policy of targeting a consolidated payout ratio of 20% and assuming we achieve the above-mentioned consolidated net income target for the year of ¥300.0 billion, we plan to increase the total dividend for the full year to ¥34 per share, compared to the ¥24 per share paid for the year ended March 2006.

In May of this year we announced Medium-Term Management Outlook, our corporate vision 3 to 5 years ahead and key strategy to realize it. Based on the ideas outlined in this document, we will continue to pursue the sustainable development of Mitsui and make every effort to increase corporate value.

We look forward to your continued support.

Shoei Utsuda

President and Chief Executive Officer

December 2006

 

 

•      Operating Environment

   2

The Global Economy

   2

The Japanese Economy

   2

•      Medium-Term Management Outlook and Business Results

   3

Corporate Vision 3 – 5 Years Ahead—Quantitative Summary

   3

Progress on Key Initiatives in the Medium-Term Management Outlook and Key Issues to Address

   3

•      Outline of Operating Results

   6

Operating Results of The Group

   6

Results by Operating Segment

   9

Forecasts for the Year ending March 31, 2007

   10

Trends in Company Performance and Value of Assets

   12

•      Corporate Outline

   13

Principal Group Business

   13

Principal Group Offices

   13

Shares of Mitsui & Co., Ltd.

   13

Group Employees

   14

Principal Subsidiaries and Associated Companies

   15

The Number of Subsidiaries and Associated Companies

   16

Details of Senior Company Officers (and Auditors)

   17

Directors and Corporate Auditors

   17

Executive Officers

   18

•      Consolidated Balance Sheets

   19

•      Statements of Consolidated Income

   21

•      Statements of Consolidated Shareholders’ Equity

   23

•      Statements of Consolidated Cash Flows

   25

•      Operating Segment Information

   27

•      Balance Sheets

   30

•      Statements of Income

   33

•      Changes in Shareholders’ Equity

   35

Note: In this translated report, the term “the Group” refers to “corporate organizations” as defined in Clause 2, Article 122 of the enforcement regulations of the Corporate Law of Japan.


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INTERIM BUSINESS REPORT

(April 1, 2006 to September 30, 2006)

OPERATING ENVIRONMENT

THE GLOBAL ECONOMY

An overview of our operating environment in the six-month period ended September 30, 2006 is as follows. The global economy continued its expansion, driven by the steady growth by the U.S. economy, the high growth rate of China and other emerging economies, the recovery of Europe, and the good performance of Japanese economy. In the United States, corporate profits remained robust and consumer spending continued to increase, and despite an easing in housing investment, which had been overheating, the economy performed steadily overall. China and other emerging economies continued to keep high growth, driven by further expansions in capital investment and increases in exports. The European economy demonstrated a clear recovery, supported by greater capital investment, particularly in Germany, and other factors.

The synchronized growth of the global economy made for an upward trend in international commodity markets such as crude oil, non-ferrous metals. Commodity prices reached record-high levels in the summer, and despite falling thereafter, remain at high levels. The global trend towards higher interest rates continued, and in the United States, the policy of raising interest rates that began in 2004 continued during the first half of this fiscal year, while Europe and Japan also raised interest rates.

THE JAPANESE ECONOMY

The Japanese economy continued its recovery. Exports continued to increase, driven by the global economic expansion and the weakening yen. Strong corporate sector profits led to increased capital investment particularly in the digital home appliance field, while improvements in employment and wages led to firmer consumer spending. Because of the economic recovery and the turn of the Consumer Price Index into positive territory, the Bank of Japan decided to terminate its quantitative easing policy this March, and subsequently ended its zero interest rate policy this July.

 

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MEDIUM-TERM MANAGEMENT OUTLOOK AND BUSINESS RESULTS

The key elements of Mitsui’s new Medium-Term Management Outlook, announced in May 2006, are as follows:

 

    Building a business portfolio that meets the needs of customers and of society.

 

    Leveraging business engineering capabilities across Mitsui and its group companies (subsidiaries and associated companies) and optimizing resource allocation.

 

    Prioritizing the development of human resources. In this respect we intend to build on our existing values of challenge and creativity and freedom and open-mindedness with additional emphasis on fairness, humility and compliance. We intend to form and foster a diverse pool of capable personnel.

 

1 CORPORATE VISION 3 – 5 YEARS AHEAD—QUANTITATIVE SUMMARY

Looking ahead three to five years, risks in the operating environment include political, economic and environmental risks. Notwithstanding these risks, we believe that the currently favorable operating environment—with simultaneous growth in different regions of the world, and strong upstream markets for mineral resources, energy and materials—is likely to continue. Based on this assumption, we envisage achieving the parameters over the next three to five years as illustrated in the chart on the right.

LOGO

 

2 PROGRESS ON KEY INITIATIVES IN THE MEDIUM-TERM MANAGEMENT OUTLOOK AND KEY ISSUES TO ADDRESS

(1) DEVELOPMENT OF STRATEGIC BUSINESS PORTFOLIO

 

i Investment plan

The Medium-Term Management Outlook intends to make investments around ¥800.0 billion over the two years to March 31, 2008. In the six-month period ended September 30, 2006, we have made investments of ¥230.0 billion.

 

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  MINERAL RESOURCES AND ENERGY

In the Mineral Resources and Energy area, based on the Medium-Term Management Outlook (as shown on the right), we continued to make investments aimed at increasing our equity production volumes.

Our equity share of output

  

March

2005

  

March

2006

  

March

2007

        5 years ahead

Oil/Gas (Kbbl/d)

   114    123    153       250

Iron Ore (Mtpy)

   39.5    42.2    44.7    è      50

Coal (Mtpy)

   8.2    6.7    7.6       16

 

Our total investment in the Sakhalin II project was approximately ¥350.0 billion as of the end of September 2006, an increase of ¥47.0 billion* compared to the end of March 2006. The Sakhalin II Project continues to progress in accordance with the Production Sharing Agreement with the Russian Government, and the construction work is now more than 80% complete towards the scheduled start of LNG delivery in summer 2008. In the meantime, Sakhalin Energy Investment Company Ltd. (Bermuda) (in which we hold a 25% interest) is working closely with the relevant authorities to resolve the environmental issues raised by the Ministry of Natural Resources of the Russian Federation.   

LOGO

 

The Sakhalin II Project LNG plant (under construction)

 

We also acquired oil and gas interests valued at ¥53.2 billion in the offshore Gulf of Mexico, through an agreement with Pogo Producing Company of United States. Furthermore, in March 2007, we plan to make Mitsui Oil Exploration Co., Ltd. (Japan), currently one of our associated companies, into a subsidiary (in which we will increase our voting rights to 50.3%). In the Australian iron ore and coal business, we made investments of ¥26.7 billion, as part of our plan to increase production capacity.

 

* Including effects from foreign exchange translation

 

  INFRASTRUCTURE PROJECTS BUSINESS

In the Infrastructure Projects Business we invested ¥27.5 billion in the acquisition of Brazilian gas distribution operations. We also invested ¥10.3 billion to acquire newly-issued shares of Toyo Engineering Corporation (Japan) with the aim of enhancing collaboration in the infrastructure projects, which are growing in size in all regions.

 

  GLOBAL TRADING NETWORKS BUSINESS

In the global trading networks area, in response to rising demand for salt for use as a raw material in the chlor-alkali industry, we acquired the Onslow salt field in Australia in June 2006. Furthermore, in September 2006, we launched an initiative in the automobile parts business, acquiring newly issued shares in the automobile parts manufacturer and dealer Asahi Tec Corporation (Japan), which increased its capital to fund expansion of overseas operations, particularly in the United States.

 

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  CONSUMER PRODUCTS AND SERVICES BUSINESS

In the consumer products and services business, we invested ¥5.8 billion to acquire newly-issued shares of Brightstar Corp. of United States, a major U.S. distributor of mobile handsets, and aim to expand our mobile phone business in the Asia-Pacific region.

 

ii Continuous review of our business portfolio based on Mitsui’s business strategy

 

Mitsui’s President sits down twice a year for face-to-face discussions with the Chief Operating Officers of each Business Unit to review the profitability and viability of subsidiaries and associated companies. From this fiscal year, the scope of these examinations has been widened to include the entire portfolio of each Business Unit. The examinations cover business domain prioritization, recycling of inefficient assets, and improvement in the quality of monitoring of subsidiaries and associated companies.   

 

LOGO

 

The President and the Chief Operating Officers at the

portfolio and subsidiaries and associated companies review

meeting

 

(2) EVOLUTION OF OUR BUSINESS MODELS LEVERAGING BUSINESS ENGINEERING CAPABILITIES

In April 2006 we reached an agreement with Petróleo Brasileiro S.A. of Brazil to jointly implement a feasibility study on producing bioethanol and related products in Brazil and exporting and selling them internationally. Mitsui aims to pursue, through comprehensive cross-divisional efforts, the commercialization of bioethanol.

(3) IMPLEMENTATION OF GLOBAL STRATEGY

 

In accordance with our policy of strengthening our business strategy in the broad economic regions of Asia, Europe and the Americas, we introduced the Regional Business Unit system in April 2006. The Asia Business Unit is working in partnership with the Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit of Mitsui’s Head Office towards the acquisition of a 25% equity stake (equivalent to approximately ¥18 billion) in Erdos Electrical Power & Metallurgical Co., Ltd. (Inner Mongolia Autonomous Region, China) with the aim of expanding our business in China.   

LOGO

 

Facilities of Inner Mongolia Erdos EJM Manganese

Alloys Co., Ltd. (Erdos EJM), a joint venture of Erdos

Electric Power & Metallurgical Co., Ltd., JFE Steel

Corporation and Mitsui

 

 

 

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(4) REINFORCEMENT OF MANAGEMENT FRAMEWORK TO SUPPORT GROWTH

Section 404 of the U.S. Sarbanes-Oxley Act (“SOX 404”) has become applicable to us from the fiscal year ending March 31, 2007. Mitsui and its subsidiaries subject to SOX 404 have, for the most part, completed self-evaluation on internal controls over financial reporting, and audits by the independent auditor are steadily commencing.

With regard to the DPF incident, where Mitsui sold diesel particulate filters (“DPFs”) for diesel cars for which false data had been produced and submitted to the authorities, we have completed the redemption of the DPFs in question. To ensure that we never forget the lessons learned from this incident, which caused major concern to all stakeholders, including our customers and the related authorities, and seriously damaged our social trust, we continue to work vigorously to ensure that our compliance systems are thorough and robust.

OUTLINE OF OPERATING RESULTS

(April 1, 2006 to September 30, 2006)

 

1 OPERATING RESULTS OF THE GROUP

 

  Total Trading Transactions increased by ¥573.6 billion over the previous comparable period to ¥7,622.2 billion, and gross profit increased by ¥45.7 billion to ¥420.9 billion, reflecting increased trading in energy and chemical products. Higher profits were generated at oil and gas producing subsidiaries in Australia and the Middle East and iron ore subsidiaries in Australia, driven by rising prices of crude oil and iron ore. Profits also grew from trade in energy and precious metal products, while iron and steel products, machinery and chemicals continued to perform strongly, backed by active worldwide demand.

LOGO

 

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  Operating income* increased by ¥19.5 billion over the previous comparable period to ¥134.3 billion. While gross profit increased, as mentioned above, selling, general and administrative expenses increased ¥25.8 billion, due to higher expenses in areas such as personnel.

 

  * Operating income = gross profit – selling, general and administrative expenses – provision for doubtful receivables

LOGO

 

  Income from continuing operations before income taxes, minority interests and equity in earnings increased by ¥22.9 billion to ¥140.6 billion. In addition to the increase in operating income, the major factors were as follows:

 

    Interest expenses increased ¥8.1 billion in line with increased investment in the Sakhalin II Project and other projects, while dividend income increased ¥12.0 billion, with a major contribution from the LNG Projects in the Middle East.

 

    In the previous comparable period, compensation and other charges related to the DPF incident came to ¥9.0 billion.

 

    Impairment losses on goodwill and intangible assets were recorded at Mitsui Norin Co., Ltd. (Japan).

LOGO

 

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  Equity in earnings of associated companies increased ¥35.7 billion to ¥74.5 billion.

 

    In mineral resources related business, Valepar S.A. (Brazil) and Compania Minera Dona Ines de Collahuasi SCM (Chile) recorded major increases in profit, supported by rising prices of iron ore and copper.

 

    In energy business, as a result of rising oil prices, profits were higher at Japan Australia LNG (MIMI) Pty. Ltd. (Australia) which conducts LNG business in Australia and Mitsui Oil Exploration Co., Ltd. (Japan).

 

    In overseas power producing business, IPM Eagle LLP (United Kingdom) recorded an increase due to expanding its business scale.

LOGO

As a result of these developments, for the six-month period ended September 30, 2006, the Group recorded net income of ¥154.5 billion, ¥71.3 billion higher than the ¥83.2 billion recorded in the previous comparable period.

LOGO

 

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2 RESULTS BY OPERATING SEGMENT

 

  Iron & Steel Products: Net income for the six-month period ended September 30, 2006 was ¥9.4 billion, an increase of ¥0.1 billion. High-end products such as steel tubular products and steel plates for shipbuilding and automobiles continued to perform well.

 

  Iron & Steel Raw Materials and Non-Ferrous Metals: Net income for the six-month period was ¥62.2 billion, a major increase of ¥36.2 billion. Gross profit increased slightly as iron ore prices increased and coal prices fell. Supported by across-the-board rises in mineral resource prices, associated companies Valepar S.A. (Brazil), and Compania Minera Dona Ines de Collahuasi SCM (Chile), engaged in copper business, benefited particularly from rising copper prices, recorded major increases in profit.

 

  Machinery & Infrastructure Projects: Net income for the six-month period was ¥18.0 billion, an increase of ¥5.2 billion. Profits increased at overseas power producing business IPM Eagle LLP (United Kingdom), as a result of business expansion and success in operations. Furthermore, net income rose at automotive related subsidiaries and associated companies in all regions.

 

  Chemical: Net income for the six-month period was ¥10.4 billion, an increase of ¥8.1 billion. In upstream business, gross profit increased due to improved market conditions in ammonia, methanol and others, as well as good performance in IT–related business, plastics and inorganic raw materials resulting from increased demand, particularly in Asia. The increase also reflects the absence of the burden from compensation and other charges related to the DPF incident that were recorded in the previous comparable period.

 

  Energy: Net income for the six-month period was ¥27.8 billion, an increase of ¥13.6 billion. Despite higher interest expenses due to increased investment in the Sakhalin II Project, rising oil prices resulted in a major increase in net income. There were also increases at associated companies engaged in crude oil and natural gas exploration, development and marketing (such as Japan Australia LNG (MIMI) Pty. Ltd. (Australia) and Mitsui Oil Exploration Co., Ltd. (Japan), as well as increased dividend income from LNG Projects in the Middle East.

 

  Foods & Retail: Net loss for the six-month period was ¥4.2 billion, compared to net income of ¥3.6 billion recorded in the previous comparable period. Gross profit declined at Mitsui Norin Co., Ltd. (Japan) due to increased competition and a decrease in demand for beverage ingredients and restaurant and home-use products, and the Company recorded impairment losses on goodwill and intangible assets.

 

  Lifestyle, Consumer Service, Information, Electronics and Telecommunication: Net income for the six-month period was ¥3.3 billion, a decrease of ¥2.3 billion. As well as a decrease in textiles and increased costs in the Information, Electronics & Telecommunication business, Mitsui Bussan House-Techno Inc. (Japan) withdrew from the houses built for sale business, booking future maintenance-related expenses in the period under review as a result. Associated companies such as QVC JAPAN INC. (Japan), operating in television shopping, recorded an increase in profit.

 

9


Table of Contents
  Logistics & Financial Markets: Net income for the six-month period was ¥6.4 billion, an increase of ¥1.2 billion, due to strong performance in energy derivative and other trading.

 

  Americas: Net income for the six-month period for the Americas was ¥9.1 billion, an increase of ¥5.1 billion. Income from petroleum trading increased at the subsidiary Westport Petroleum Inc. (United States), and iron and steel products performed well. Rising U.S. dollar interest rates resulted in higher interest expenses.

 

  Europe, Asia and Other Overseas: Net income for the six-month period for Europe was ¥2.0 billion, a decline of ¥0.7 billion. Net income for Asia was ¥3.6 billion, a decrease of ¥1.0 billion. Both declines were due to factors such as increased costs. Net income in Other Overseas was ¥6.7 billion, the same as the previous comparable period.

For further details please refer to pages 27 – 29 of this document, “Operating Segment Information”.

On a non-consolidated basis, sales for the six-month period ended September 30, 2006 were ¥5,625.4 billion. Gross profit was ¥112.7 billion, and net income was ¥71.7 billion. For details, please refer to pages 30 – 34 of this document, ‘Balance Sheets’ and ‘Statements of Income’.

 

3 FORECASTS FOR THE YEAR ENDING MARCH 31, 2007

Our initial forecast for net income for the fiscal year ending March 31, 2007 was ¥240.0 billion. However, as a result of good performance in metal resources and energy we have revised this to ¥300.0 billion. Full-year net income forecasts by operating segment are shown below.

LOGO

 

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Table of Contents
  Iron & Steel Raw Materials and Non-Ferrous Metals: Full-year net income forecasts for this segment have been revised to ¥100.0 billion, an increase of ¥45.3 billion over the previous comparable period. Reasons for this include rising prices of copper and iron ore, as well as one-time factors such as the sale of shares in Toho Titanium Co., Ltd. (Japan) and stake in aluminum smelters at Mitalco Inc. (United States), as part of business recycling.

 

  Energy: Full-year net income forecasts in this segment have been revised to ¥77.0 billion, an increase of ¥36.1 billion. The principal factors for this are increased oil prices and increased oil and natural gas production following the start of oil production at the Enfield oil field in Australia.

 

  Iron & Steel Products, First and Second Chemicals: Reflecting continued improvements in the business environment, full-year net income forecasts in these segment have been revised to ¥20.0 billion, an increase of ¥0.6 billion and ¥20.0 billion, an increase of ¥7.9 billion respectively. Pre-tax expenses of ¥9.0 billion relating to the DPF incident were recorded in the Chemical segment in the previous year, which are absent in the period under review.

 

  Machinery & Infrastructure Projects: Full-year net income forecasts in this segment have been revised to ¥34.0 billion, an increase of ¥3.4 billion. This is a result of good performance in automotive business and shipping, as well as contributions from overseas power generator business IPM Eagle LLP (United Kingdom) following business expansion.

 

  Foods & Retail: Full-year net income forecasts in this segment have been revised to ¥0.0 billion, an increase of ¥3.2 billion. In the previous fiscal year this segment recorded a net loss of ¥3.2 billion, as a result of impairment losses on fixed assets at MITSUI FOODS CO., LTD. (Japan) and other factors. We expect a net loss of ¥9.0 billion at Mitsui Norin Co., Ltd. (Japan) as a result of an impairment loss on goodwill and other factors, but we believe that this segment will begin a gentle recovery.

 

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4 TRENDS IN COMPANY PERFORMANCE AND VALUE OF ASSETS

 

(1) TRENDS IN COMPANY PERFORMANCE AND VALUE OF ASSETS (CONSOLIDATED) (UNAUDITED)

(Millions of Yen, Except Net Income per Share)

 

    

Six-month

period ended

September 30,

2003

  

Six-month

period ended

September 30,

2004

  

Six-month

period ended

September 30,

2005

  

Six-month

period ended

September 30,

2006

Total Trading Transactions

   ¥ 5,943,673    ¥ 6,712,625    ¥ 7,048,604    ¥ 7,622,220

Gross Profit

     293,623      347,343      375,201      420,895

Net Income

     25,822      62,101      83,193      154,455

Net Income per Share (Yen)

     16.33      39.24      52.58      89.65

Net Assets

     915,218      1,034,734      1,288,158      1,829,458

Total Assets

     6,470,993      7,024,720      8,207,037      9,377,604

Notes:

 

1. The figures shown in this table have been prepared on the basis of accounting principles generally accepted in the United States of America (“U.S. GAAP”). Total Trading Transactions is a voluntary disclosure and represents the gross transaction volume of the nominal aggregate value of the sales contracts in which Mitsui & Co., Ltd. and its subsidiaries (collectively “the companies”) act as principal and transactions in which the companies serve as agent. Total Trading Transactions is not meant to represent sales or revenues in accordance with US GAAP. The companies have included the information concerning Total Trading Transactions because it is used by similar Japanese trading companies as an industry benchmark, and the companies believe it is a useful supplement to results of operations data as a measure of the companies’ performance compared to other similar Japanese trading companies.

 

2. In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the prior year figures relating to discontinued operations have been reclassified.

 

3. Figures less than ¥1 million and figures less than ¥1/100 (in the case of Net Income per Share) are rounded.

 

(2) TRENDS IN COMPANY PERFORMANCE AND VALUE OF ASSETS (NON-CONSOLIDATED) (UNAUDITED)

(Millions of Yen, Except Net Income per Share)

 

    

Six-month

period ended

September 30,

2003

  

Six-month

period ended

September 30,

2004

  

Six-month

period ended

September 30,

2005

  

Six-month

period ended

September 30,

2006

Sales

   ¥ 4,908,778    ¥ 5,123,768    ¥ 5,434,172    ¥ 5,625,429

Net Income

     6,397      40,646      36,305      71,685

Net Income per Share (Yen)

     4.04      25.68      22.94      41.60

Net Assets

     686,482      736,511      806,122      1,129,445

Total Assets

     4,143,579      4,339,022      4,690,168      5,297,985

Notes:

 

1. The figures shown in this table have been prepared on the basis of accounting principles generally accepted in Japan.

 

2. Net Income per Share was computed based on the average number of shares outstanding during the period.

 

3. Figures less than ¥1 million and figures less than ¥1/100 (in the case of Net Income per Share) are rounded down.

 

12


Table of Contents

Corporate Outline

PRINCIPAL GROUP BUSINESS (AS OF SEPTEMBER 30, 2006)

The Group operates in the following segments: Iron & Steel Products; Iron & Steel Raw Materials and Non-Ferrous Metals; Machinery & Infrastructure Projects; Chemicals; Energy; Foods & Retail; and Lifestyle, Consumer Service, Information, Electronics and Telecommunication. We carry out a variety of activities in each segment, including sales, import and export, international trading and production, as well as operating a diverse range of service businesses such as transportation and finance. In addition, we engage in natural resource development, strategic business investment and a broad range of other business initiatives.

PRINCIPAL GROUP OFFICES (AS OF SEPTEMBER 30, 2006)

 

•      Domestic:

   Head Office    Chiyoda-ku, Tokyo
   Offices and Branches   

Sapporo Office, Tohoku Office (Sendai), Nagoya

     

Office, Osaka Office, Hiroshima Office, Fukuoka

     

Office, Niigata Branch, Hokuriku Branch (Toyama),

     

Takamatsu Branch

•      Overseas:

   Branches   

Singapore Branch, Kuala Lumpur Branch,

     

Manila Branch

   Trading Subsidiaries   

Mitsui & Co. (U.S.A.), Inc.

     

Mitsui & Co. Europe PLC (United Kingdom)

     

Mitsui & Co. (Australia) Ltd.

     

Mitsui & Co., Middle East Ltd. (U.A.E.)

Note: Other than those listed above, there are 8 offices in Japan and 144 offices overseas.

SHARES OF MITSUI & CO., LTD. (AS OF SEPTEMBER 30, 2006)

 

•     Number of shares authorized

   2,500,000,000 shares

•     Number of shares outstanding

   1,725,089,234 shares

•     Number of shareholders

   111,749 shareholders

 

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Table of Contents

GROUP EMPLOYEES

 

Operating segment

  

Number of

Employees as

of September 30,

2006

  

Number of

Employees as

of March 31,

2006

  

Change in

Number of

Employees

 

Iron & Steel Products

   2,110    2,044    +66  

Iron & Steel Raw Materials and Non-Ferrous Metals

   2,573    2,504    +69  

Machinery & Infrastructure Projects

   10,221    9,338    +883  

Chemicals

   3,798    3,735    +63  

Energy

   1,460    1,384    +76  

Foods & Retail

   6,807    6,555    +252  

Lifestyle, Consumer Service, Information, Electronics and Telecommunication

   5,816    5,607    +209  

Logistics & Financial Markets

   1,281    1,239    +42  

Americas

   2,463    2,888    (425 )

Europe

   1,084    1,078    +6  

Asia

   2,147    2,102    +45  

Other Overseas Areas

   525    535    (10 )

All Other

   1,733    1,984    (251 )
                

Total

   42,018    40,993    +1,025  

Notes:

 

1. The above employee figures do not include temporary staff, seconded or part-time staff.

 

2. Of the 42,018 employees at the end of September 30, 2006, 5,874 were employed by the Company (1 more than at the end of the previous fiscal period).

 

3. Following corporate restructuring in April 2006, the figures of ‘All Other’ as of September 30, 2006 is the number of employees in the Corporate Staff Division.

 

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Table of Contents

PRINCIPAL SUBSIDIARIES AND ASSOCIATED COMPANIES

 

1 PRINCIPAL SUBSIDIARIES AND ASSOCIATED COMPANIES (As of September 30, 2006)

 

Subsidiary

  

Operating Segment

  

Capital

  

Percentage owned

by Mitsui & Co., Ltd.

  

Main Business

Mitsui & Co. (U.S.A.), Inc.    Americas    US$350,000 thousand    100    Trading
Mitsui Iron Ore Development
Pty. Ltd. (Australia)
   Iron & Steel
Raw Materials
and
Non-Ferrous
Metals
   A$20,000 thousand   

100

(20)

   Production and
marketing of iron ore
Mitsui E&P Middle East B.V.
(Netherlands)
   Energy    €18 thousand   

60

(60)

  

Exploration,

development and
production of oil

and natural gas
in Oman

Mitsui Coal Holdings Pty. Ltd.
(Australia)
   Iron & Steel
Raw Materials
and
Non-Ferrous
Metals
   A$196,593 thousand   

100

(30)

   Investment in
Australian coal
businesses
MITSUI FOODS CO., LTD.
(Japan)
   Foods & Retail    ¥12,031 million    99.87   

General foods

wholesaling

Associated Company

  

Operating Segment

  

Capital

  

Percentage owned

by Mitsui & Co., Ltd.

  

Main Business

Japan Australia LNG (MIMI)
Pty. Ltd. (Australia)
   Energy    A$369,050 thousand   

50

(50)

   Exploration,
development and
marketing of oil and
natural gas
Valepar S.A. (Brazil)    Iron & Steel
Raw Materials
and
Non-Ferrous
Metals
   R$7,083,206 thousand    18.24    Investment in
Companhia Vale do
Rio Doce, a mineral
resources company
in Brazil
Sakhalin Energy Investment
Company Ltd. (Bermuda)
   Energy    US$11,394,612 thousand   

25

(25)

   Exploration,
development and
marketing of oil and
natural gas

Notes:

 

1. The figures in brackets represent indirect ownership through other subsidiaries.

 

2. The figures for capital have been rounded.

 

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Table of Contents
2 THE NUMBER OF SUBSIDIARIES AND ASSOCIATED COMPANIES

The number of subsidiaries and associated companies as of September 30, 2006, along with the interim periods of the last three years, is as follows:

(Unit: companies)

 

     

Six-month

period ended

September 30,

2003

  

Six-month

period ended

September 30,

2004

  

Six-month

period ended

September 30,

2005

  

Six-month

period ended

September 30,

2006

Subsidiaries

   358    355    317    318

Associated Companies Accounted for
under the Equity Method

   295    289    197    173

 

Note: The number of companies listed above excludes those affiliated companies of certain subsidiaries (other than overseas trading subsidiaries), which are consolidated or accounted for under the equity method by those subsidiaries and companies that are managed by overseas trading subsidiaries.

Furthermore, as from the interim period under review those companies that are managed by overseas trading companies have been included with their managing company, and the data for the interim periods of the last three years has been updated and presented in the same way.

 

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Table of Contents

DETAILS OF SENIOR COMPANY OFFICERS (AND AUDITORS)

(AS OF NOVEMBER 1, 2006)

 

1 Directors and Corporate Auditors

 

Name

  

Title

  

Principal position/Area of operation

Nobuo Ohashi    Chairman and Director   
Shoei Utsuda*   

President and

Chief Executive Officer

   Chief Executive Officer
Tetsuya Matsuoka*    Director    Infrastructure Projects Business Unit; Machinery Business Unit; Financial Markets Business Unit; Transportation Logistics Business Unit
Masataka Suzuki*    Director    First Chemicals Business Unit; Second Chemicals Business Unit; Foods & Retail Business Unit; Director, Mitsui & Co. Europe PLC; Director, Mitsui & Co., Middle East Ltd.
Hiroshi Tada*    Director    Iron & Steel Products Business Unit; Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit; Energy Business Unit
Yasunori Yokote*    Director    Chief Compliance Officer; Chief Privacy Officer; Corporate Staff Division (Secretariat, Corporate Planning & Strategy Division, Human Resources & General Affairs Division, Information Strategic Planning Division, Corporate Communications Division, CSR Promotion Division, Legal Division, Logistics Management Division, Domestic Offices and Branches); New Business Promotion; Environmental Matters; Business Continuity Plan Management; DPF Matters; Chief Operating Officer, Business Process Re-Engineering Project Headquarters
Kazuya Imai*    Director    Chief Financial Officer; Corporate Staff Division (Investor Relations Division, Investment Administration Division, Business Process Control Division, Accounting Division, Finance Division, Credit Risk Management Division, Market Risk Management Division, Financial Planning Division); Deputy Chief Operating Officer, Business Process Re-Engineering Project Headquarters; Director, Mitsui & Co. (U.S.A), Inc.
Hiroshi Ito*    Director    Lifestyle Business Unit; Consumer Service Business Unit; Information, Electronics and Telecommunication Business Unit
Akishige Okada    Director    Advisor, Sumitomo Mitsui Banking Corporation
Akira Chihaya    Director    Representative Director and Chairman of the Board of Directors of Nippon Steel Corporation
Nobuko Matsubara    Director    Chairman, Japan Institute of Workers’ Evolution
Tasuku Kondo    Corporate Auditor   
Hiroshi Matsuura    Corporate Auditor   
Ko Matsukata    Corporate Auditor    Standing Advisor, Mitsui Sumitomo Marine and Fire Insurance Co., Ltd.
Yasutaka Okamura    Corporate Auditor    Attorney at Law
Hideharu Kadowaki    Corporate Auditor    Chairman, the Institute of The Japan Research Institute, Limited
Naoto Nakamura    Corporate Auditor    Attorney at Law

Notes:

 

1. Akishige Okada, Akira Chihaya and Nobuko Matsubara are external Directors.

 

2. Ko Matsukata, Yasutaka Okamura, Hideharu Kadowaki and Naoto Nakamura are external Corporate Auditors. Tasuku Kondo and Hiroshi Matsuura are full-time Corporate Auditors.

 

3. Representative Directors are marked with an asterisk.

 

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Table of Contents
2 Executive Officers

 

Name

  

Title

  

Principal position/Area of operation

Shoei Utsuda*   

President and

Chief Executive Officer

   Chief Executive Officer
Tetsuya Matsuoka*    Executive Vice President    Infrastructure Projects Business Unit; Machinery Business Unit; Financial Markets Business Unit; Transportation Logistics Business Unit
Masataka Suzuki*    Executive Vice President    First Chemicals Business Unit; Second Chemicals Business Unit; Foods & Retail Business Unit; Director, Mitsui & Co. Europe PLC; Director, Mitsui & Co., Middle East Ltd.
Gempachiro Aihara    Executive Vice President    Chief Operating Officer, Asia Business Unit
Hiroshi Tada*    Executive Vice President    Iron & Steel Products Business Unit; Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit; Energy Business Unit
Yasunori Yokote*    Senior Executive Managing Officer    Chief Compliance Officer; Chief Privacy Officer; Corporate Staff Division (Secretariat, Corporate Planning & Strategy Division, Human Resources & General Affairs Division, Information Strategic Planning Division, Corporate Communications Division, CSR Promotion Division, Legal Division, Logistics Management Division, Domestic Offices and Branches); New Business Promotion; Environmental Matters; Business Continuity Plan Management; DPF Matters; Chief Operating Officer; Business Process Re-Engineering Project Headquarters
Kazuya Imai*    Senior Executive Managing Officer    Chief Financial Officer; Corporate Staff Division (Investor Relations Division, Investment Administration Division, Business Process Control Division, Accounting Division, Finance Division, Credit Risk Management Division, Market Risk Management Division, Financial Planning Division); Deputy Chief Operating Officer, Business Process Re-Engineering Project Headquarters; Director, Mitsui & Co. (U.S.A), Inc.
Toshihiro Soejima    Senior Executive Managing Officer    Chief Representative of Mitsui & Co., Ltd. in China
Motokazu Yoshida    Senior Executive Managing Officer    Chief Operating Officer, Americas Business Unit
Ken Abe    Senior Executive Managing Officer    Chief Operating Officer, Europe Business Unit
Hiroshi Ito*    Senior Executive Managing Officer    Lifestyle Business Unit; Consumer Service Business Unit; Information, Electronics and Telecommunication Business Unit
Yoshiyuki Izawa    Executive Managing Officer    General Manager, Osaka Office
Osamu Mori    Executive Managing Officer    Chief Operating Officer, Financial Markets Business Unit
Satoru Miura    Executive Managing Officer    General Manager, Nagoya Office
Takao Sunami    Executive Managing Officer    Chief Operating Officer, Machinery Business Unit
Junichi Matsumoto    Executive Managing Officer    Chief Operating Officer, Transportation Logistics Business Unit
Shunichi Miyazaki    Executive Managing Officer    General Manager, Internal Auditing Division
Shinjiro Ogawa    Executive Managing Officer    Chief Operating Officer, Information, Electronics and Telecommunication Business Unit
Toshimasa Furukawa    Executive Managing Officer    Chief Operating Officer, Infrastructure Projects Business Unit
Jitsuro Terashima    Executive Managing Officer    President & CEO, Mitsui Global Strategic Studies Institute
Motonori Murakami    Executive Managing Officer    Assistant to Senior Executive Managing Officer (Corporate Staff Division), Assistant to Chief Financial Officer
Koji Nakamura    Executive Managing Officer    Chief Operating Officer, Second Chemicals Business Unit
Kenichi Yamamoto    Executive Managing Officer    Chief Operating Officer, Lifestyle Business Unit
Toshio Awata    Managing Officer    General Manager, Information Strategic Planning Division; Chief Information Officer
Masaaki Murakami    Managing Officer    President, Mitsui & Co. (Canada) Ltd.
Kiyotaka Watanabe    Managing Officer    Chief Operating Officer, Iron & Steel Products Business Unit
Masaaki Fujita    Managing Officer    Chief Operating Officer, Foods & Retail Business Unit
Junichi Mizonoue    Managing Officer    Chief Operating Officer, First Chemicals Business Unit
Takao Omae    Managing Officer    President, Mitsui Brasileira Importação e Exportação S.A.
Norinao Iio    Managing Officer    Chief Operating Officer, Energy Business Unit
Osamu Koyama    Managing Officer    Executive Vice President, Mitsui & Co. (U.S.A.), Inc.
Terukazu Okahashi    Managing Officer    Deputy General Manager, Osaka Office
Osamu Takahashi    Managing Officer    Chief Operating Officer, Consumer Service Business Unit
Hideyo Hayakawa    Managing Officer    General Manager, Legal Division
Hiraku Shimomaki    Managing Officer    President, Mitsui & Co. Deutschland GmbH
Shigeru Hanagata    Managing Officer    Deputy Chief Operating Officer, Machinery Business Unit
Masami Iijima    Managing Officer    Chief Operating Officer, Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit
Seiichi Tanaka    Managing Officer    General Manager, Human Resources & General Affairs Division

Note: Directors are marked with an asterisk.

 

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Table of Contents

CONSOLIDATED BALANCE SHEETS (Unaudited)

ASSETS

 

(Millions of Yen)

   September 30,
2006
    March 31,
2006
 

Current Assets:

    

Cash and cash equivalents

   ¥ 706,464     ¥ 697,065  

Time deposits

     8,343       37,028  

Marketable securities

     167,945       26,860  

Trade receivables:

    

Notes and loans, less unearned interest

     487,647       439,187  

Accounts

     2,112,643       1,997,093  

Associated companies

     170,967       169,709  

Allowance for doubtful receivables

     (27,233 )     (26,703 )

Inventories

     752,497       695,754  

Advance payments to suppliers

     96,296       92,150  

Deferred tax assets—current

     26,196       32,569  

Derivative assets

     337,749       320,134  

Other current assets

     310,272       265,985  
                

Total current assets

     5,149,786       4,746,831  
                

Investments and Non-current Receivables:

    

Investments in and advances to associated companies

     1,471,592       1,300,587  

Other investments

     964,794       935,675  

Non-current receivables, less unearned interest

     529,142       444,487  

Allowance for doubtful receivables

     (95,179 )     (84,513 )

Property leased to others—at cost, less accumulated depreciation

     236,784       218,583  
                

Total investments and non-current receivables

     3,107,133       2,814,819  
                

Property and Equipment—at Cost:

    

Land, land improvements and timberlands

     197,256       203,170  

Buildings, including leasehold improvements

     354,725       349,904  

Equipment and fixtures

     466,658       472,069  

Mineral rights

     165,543       80,953  

Vessels

     22,339       22,376  

Projects in progress

     126,162       55,278  
                

Total

     1,332,683       1,183,750  

Accumulated depreciation

     (459,162 )     (437,581 )
                

Net property and equipment

     873,521       746,169  
                

Intangible Assets, less Accumulated Amortization

     82,011       98,811  
                

Deferred Tax Assets—Non-current

     46,492       47,947  
                

Other Assets

     118,661       119,001  
                

Total

   ¥ 9,377,604     ¥ 8,573,578  
                

 

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Table of Contents

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

(Millions of Yen)

   September 30,
2006
    March 31,
2006
 

Current Liabilities:

    

Short-term debt

   ¥ 772,800     ¥ 540,797  

Current maturities of long-term debt

     359,413       353,185  

Trade payables:

    

Notes and acceptances

     118,715       100,402  

Accounts

     2,046,939       1,762,224  

Associated companies

     100,313       108,252  

Accrued expenses:

    

Income taxes

     44,704       63,739  

Interest

     22,015       22,485  

Other

     75,238       72,848  

Advances from customers

     118,105       104,500  

Derivative liabilities

     259,030       214,460  

Other current liabilities

     168,455       168,049  
                

Total current liabilities

     4,085,727       3,510,941  
                

Long-Term Debt, less Current Maturities

     2,699,250       2,658,735  
                

Accrued Pension Costs and Liability for Severance Indemnities

     37,822       36,769  
                

Deferred Tax Liabilities—Non-current

     334,321       318,911  
                

Other Long-Term Liabilities

     254,306       252,155  
                

Minority Interests

     136,720       118,160  
                

Shareholders’ Equity:

    

Common stock

     295,797       295,766  

Capital surplus

     390,545       390,488  

Retained earnings:

    

Appropriated for legal reserve

     38,860       38,508  

Unappropriated

     955,286       825,306  

Accumulated other comprehensive income (loss):

    

Unrealized holding gains and losses on available-for-sale securities

     205,376       216,099  

Foreign currency translation adjustments

     (56,536 )     (83,279 )

Minimum pension liability adjustment

     (5,407 )     (5,417 )

Net unrealized gains and losses on derivatives

     8,090       2,439  
                

Total accumulated other comprehensive income (loss)

     151,523       129,842  
                

Treasury stock, at cost

     (2,553 )     (2,003 )
                

Total shareholders’ equity

     1,829,458       1,677,907  
                

Total

   ¥ 9,377,604     ¥ 8,573,578  
                

 

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Table of Contents

STATEMENTS OF CONSOLIDATED INCOME

Unaudited

 

(Millions of Yen)

   Six-Month
Period ended
September 30,
2006
    Six-Month
Period ended
September 30,
2006
 

Revenues:

    

Sales of products

   ¥ 1,984,093     ¥ 1,597,353  

Sales of services

     270,894       234,550  

Other sales

     69,628       52,240  
                

Total revenues

     2,324,615       1,884,143  
                

Total Trading Transactions:

    

Six-month period ended September 30, 2006: ¥7,622,220 million

    

Six-month period ended September 30, 2005: ¥7,048,604 million

    

Cost of Revenues:

    

Cost of products sold

     1,797,340       1,440,016  

Cost of services sold

     68,112       45,510  

Cost of other sales

     38,268       23,416  
                

Total cost of revenues

     1,903,720       1,508,942  
                

Gross Profit

     420,895       375,201  
                

Other Expenses (Income):

    

Selling, general and administrative

     285,019       259,167  

Provision for doubtful receivables

     1,610       1,218  

Interest expense, net of interest income

     17,920       9,835  

Dividend income

     (28,119 )     (16,074 )

Gain on sales of securities—net

     (26,545 )     (14,074 )

Loss on write-down of securities

     3,207       3,499  

Gain on disposal or sales of property and equipment—net

     (1,236 )     (216 )

Impairment loss of long-lived assets

     9,964       4,771  

Compensation and other charges related to DPF incident

     (3,864 )     9,000  

Other expense—net

     22,331       328  
                

Total other expenses

     280,287       257,454  
                

Income from Continuing Operations before Income Taxes, Minority Interests and Equity in Earnings

     140,608       117,747  
                

[Continued on next page]

 

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[Continued from previous page]

 

Income Taxes:

    

Current

     67,620       46,782  

Deferred

     (8,887 )     16,799  
                

Total

     58,733       63,581  
                

Income from Continuing Operations before Minority Interests and Equity in Earnings

     81,875       54,166  

Minority Interests in Earnings of Subsidiaries

     (5,203 )     (9,001 )

Equity in Earnings of Associated Companies—Net (After Income Tax Effect)

     74,512       38,828  
                

Income from Continuing Operations

     151,184       83,993  

Income from Discontinued Operations—Net (After Income Tax Effect)

     3,271       (800 )
                

Net Income

   ¥ 154,455     ¥ 83,193  
                

 

Note: In accordance with SFAS No.144, the figures for the six-month period ended September 30, 2005 relating to discontinued operations have been reclassified.

 

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STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

 

(Millions of Yen)

   Six-Month
Period ended
September 30,
2006
    Year
ended
March 31,
2006
 

Common Stock:

    

Balance at beginning of period

   ¥ 295,766     ¥ 192,493  

Issuance of common stock

     —         102,576  

Common stock listed upon conversion of bonds

     31       697  
                

Balance at end of period

     295,797       295,766  
                

Capital Surplus:

    

Balance at beginning of period

     390,488       288,048  

Issuance of common stock

     —         101,733  

Conversion of bonds

     31       695  

Gain on sales of treasury stock

     26       12  
                

Balance at end of period

     390,545       390,488  
                

Retained Earnings:

    

Appropriated for legal reserve:

    

Balance at beginning of period

     38,508       37,018  

Transfer from unappropriated retained earnings

     352       1,490  
                

Balance at end of period

     38,860       38,508  
                

Unappropriated:

    

Balance at beginning of period

     825,306       656,032  

Net income

     154,455       202,409  

Cash dividends paid

     (24,123 )     (31,645 )

Dividends paid per share

    

Six-month period ended September 30, 2006, ¥14.0

    

Year ended March 31, 2006, ¥20.0

    

Transfer to retained earnings appropriated for legal reserve

     (352 )     (1,490 )
                

Balance at end of period

     955,286       825,306  
                

Accumulated Other Comprehensive Income (Loss)

    

(After Income Tax Effect)

    

Balance at beginning of period

     129,842       (49,551 )

Unrealized holding gains and losses on available-for-sale securities

     (10,723 )     115,920  

Foreign currency translation adjustments

     26,743       59,508  

Minimum pension liability adjustments

     10       274  

Net unrealized gains and losses on derivatives

     5,651       3,691  
                

Balance at end of period

     151,523       129,842  
                

[Continued on next page]

 

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[Continued from previous page]

 

Treasury stock, at cost:

    

Balance at beginning of period

     (2,003 )     (1,212 )

Purchases of treasury stock

     (647 )     (862 )

Sales of treasury stock

     97       71  
                

Balance at end of period

     (2,553 )     (2,003 )
                

Summary of Changes in Equity from Nonowner Sources Comprehensive income:

    

Net income

     154,455       202,409  

Other comprehensive income

    

(After income tax effect):

    

Unrealized holding gains and losses on available-for-sale securities

     (10,723 )     115,920  

Foreign currency translation adjustments

     26,743       59,508  

Minimum pension liability adjustment

     10       274  

Net unrealized gains and losses on derivative

     5,651       3,691  
                

Changes in equity from nonowner sources

   ¥ 176,136     ¥ 381,802  
                

 

Note: Appropriations of retained earnings are reflected in the consolidated financial statements upon shareholders’ approval.

 

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Table of Contents

STATEMENTS OF CONSOLIDATED CASH FLOWS

(Supplementary Information) (Unaudited)

 

(Millions of Yen)

   Six-Month
Period ended
September 30,
2006
    Six-Month
Period ended
September 30,
2005
 

Operating Activities:

    

Net Income

   ¥ 154,455     ¥ 83,193  

Adjustments to reconcile net income to net cash provided by operating activities:

    

(Income) loss from discontinued operations—net (after income tax effect)

     (3,271 )     800  

Depreciation and amortization

     38,909       36,030  

Pension and severance costs, less payments

     (751 )     3,213  

Provision for doubtful receivables

     1,610       1,218  

Gain on sales of securities—net

     (26,545 )     (14,074 )

Loss on write-down of securities

     3,207       3,499  

Gain on disposal or sales of property and equipment—net

     (1,236 )     (216 )

Impairment loss of long-lived assets

     9,964       4,771  

Deferred income taxes

     (8,887 )     16,799  

Minority interests of earnings of subsidiaries

     5,203       9,001  

Equity in earnings of associated companies, less dividends received

     (20,256 )     (11,108 )

Changes in operating assets and liabilities:

    

Increase in trade receivables

     (186,372 )     (51,660 )

Increase in inventories

     (51,785 )     (37,159 )

Increase in trade payables

     131,931       40,666  

Other—net

     (7,675 )     (47,508 )

Net cash used in operating activities of discontinued operations

     (2,541 )     (3,431 )
                

Net cash provided by operating activities

     35,960       34,034  
                

Investing Activities:

    

Net (increase) decrease in time deposits

     28,491       (1,651 )

Net increase in investments in and advances to associated companies

     (68,313 )     (53,318 )

Net increase in other investments

     (64,472 )     (72,949 )

Net decrease in long-term loan receivables

     11,598       23,240  

Net increase in property leased to others and property and equipment

     (139,316 )     (79,917 )
                

Net cash used in investing activities

     (232,012 )     (184,595 )
                

[Continued on next page]

 

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[Continued from previous page]

 

Financing Activities:

    

Net increase in short-term debt

     210,089       81,594  

Net increase in long-term debt

     50       114,607  

Capital contribution from minority interests

     17,095       —    

Purchases of treasury stock—net

     (440 )     (346 )

Payments of cash dividends

     (24,123 )     (15,824 )
                

Net cash provided by financing activities

     202,671       180,031  
                

Effect of Exchange Rate Changes on Cash and Cash Equivalents

     2,780       8,755  
                

Net Increase (Decrease) in Cash and Cash Equivalents

     9,399       38,225  

Cash and Cash Equivalents at Beginning of Period

     697,065       791,810  
                

Cash and Cash Equivalents at End of Period

   ¥ 706,464     ¥ 830,035  
                

 

Note: In accordance with SFAS No. 144, the figures for the six-month period ended September 30, 2005 relating to discontinued operations have been reclassified.

 

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Table of Contents

OPERATING SEGMENT INFORMATION

(Unaudited)

The companies allocate their resources and review their performance by operating segments comprised of the business units of the Head Office, overseas branches and offices, and overseas trading subsidiaries. The companies’ operating segments have been aggregated based on the nature of the products and other criteria into six product-focused reportable operating segments and four region-focused reportable operating segments.

Six-month period ended September 30, 2006 (from April 1, 2006 to September 30, 2006)

(Millions of Yen)

 

     Iron & Steel
Products
   Iron & Steel
Raw Materials
and
Non-Ferrous
Metals
   Machinery &
Infrastructure
Projects
   Chemical     Energy    Foods & Retail    

Lifestyle,
Consumer

Service,
Information,
Electronics

and
Telecommunication

    Logistics &
Financial
Markets

Total Trading Transactions

   676,584    846,549    1,029,226    1,153,972     1,038,187    941,603     725,425     90,191

Gross Profit

   27,820    57,758    46,976    51,431     38,355    40,600     61,911     30,590

Operating Income (Loss)

   12,256    45,734    7,161    16,934     22,231    7,145     6,961     12,841

Equity in Earnings of Associated Companies

   1,443    31,738    13,056    2,576     17,866    1,512     3,464     900

Net Income (Loss)

   9,442    62,162    18,012    10,405     27,785    (4,152 )   3,281     6,370

Total Assets at September 30, 2006

   610,718    969,767    1,458,086    917,917     1,319,464    723,136     801,978     774,065
     Americas    Europe    Asia    Other
Overseas
Areas
    Total    All Other     Adjustments
and
Eliminations
    Consolidated
Total

Total Trading Transactions

   591,791    230,265    258,611    34,893     7,617,297    3,879     1,044     7,622,220

Gross Profit

   31,890    10,821    13,096    2,390     413,638    4,180     3,077     420,895

Operating Income (Loss)

   11,738    1,698    4,426    (109 )   149,016    (1,512 )   (13,238 )   134,266

Equity in Earnings of Associated Companies

   1,696    166    102    273     74,792    58     (338 )   74,512

Net Income (Loss)

   9,123    1,979    3,584    6,734     154,725    4,212     (4,482 )   154,455

Total Assets at September 30, 2006

   464,618    152,412    189,328    89,459     8,470,948    2,958,306     (2,051,650 )   9,377,604

 

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Table of Contents

Six-month period ended September 30, 2005 (from April 1, 2005 to September 30, 2005) (Restated)

(Millions of Yen)

 

    

Iron & Steel

Products

  

Iron & Steel

Raw Materials

and

Non-Ferrous

Metals

  

Machinery &

Infrastructure

Projects

   Chemical    Energy    Foods & Retail    

Lifestyle,

Consumer

Service,

Information,

Electronics

and

Telecommunication

   

Logistics &

Financial

Markets

Total Trading Transactions

   699,381    862,791    1,057,463    1,001,076    779,793    920,665     687,695     43,608

Gross Profit

   27,635    55,420    41,576    46,052    33,299    42,454     60,752     20,131

Operating Income (Loss)

   12,928    44,782    9,692    14,790    15,519    6,031     10,006     6,107

Equity in Earnings of Associated Companies

   1,576    9,487    6,489    2,129    14,121    1,722     807     1,803

Net Income (Loss)

   9,296    26,005    12,803    2,332    14,200    3,568     5,616     5,229

Total Assets at September 30, 2005

   551,025    795,334    1,149,442    787,339    1,143,621    714,139     757,024     518,894
     Americas    Europe    Asia   

Other

Overseas

Areas

   Total    All Other    

Adjustments

and

Eliminations

   

Consolidated

Total

Total Trading Transactions

   523,975    194,074    242,423    34,833    7,047,777    4,442     (3,615 )   7,048,604

Gross Profit

   24,081    10,520    12,365    2,274    376,559    3,842     (5,200 )   375,201

Operating Income (Loss)

   5,286    2,694    5,170    368    133,373    (1,777 )   (16,780 )   114,816

Equity in Earnings of Associated Companies

   1,011    134    56    281    39,616    94     (882 )   38,828

Net Income

   3,977    2,692    4,550    6,668    96,936    5,333     (19,076 )   83,193

Total Assets at September 30, 2005

   463,062    146,515    177,014    76,274    7,279,683    2,753,193     (1,825,839 )   8,207,037

 

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Table of Contents

Notes:

 

1. In accordance with SFAS No.144, the figures of “Consolidated Total” for the six-month period ended September 30, 2005 have been reclassified. The reclassifications to “Income (Loss) from Discontinued Operations—Net (After Income Tax Effect)” are included in “Adjustments and Eliminations.”

 

2. “All Other” includes business activities which primarily provide services, such as financing service and operation services to external customers and/or to the companies and associated companies. Total assets of “All Other” at September 30, 2006 and 2005 consisted primarily of cash and cash equivalents and time deposits related to financing activities, and assets of certain subsidiaries related to the above services.

 

3. Net loss of “Adjustments and Eliminations” includes income and expense items that are not allocated to specific reportable operating segments, such as certain expenses of the corporate departments, and eliminations of intersegment transactions.

 

4. Transfers between operating segments are made at cost plus a markup.

 

5. Operating Income (Loss) reflects the companies’ a) Gross Profit, b) Selling, general and administrative expenses, and c) Provision for doubtful receivables.

 

6. Starting from the year ended March 31, 2006, Iron & Steel Products and Iron & Steel Raw Materials and Non-Ferrous Metals which formally composed the “Metal Products & Minerals,” and Foods & Retail, which was formally included in “Consumer Products & Services” are disclosed as a separate product-focused reportable operating segment, and Electronics & Information, which was formally included in the “Machinery, Electronics & Information” is aggregated to Life Style and Consumer Service, which were formally included in “Consumer Products & Services” and disclosed as “Life Style, Consumer Service, Information, Electronics and Telecommunication.” Machinery and Infrastracture Projects, which were formally included in “Machinery, Electronics & Information,” are disclosed as “Machinery & Infrastracture Projects.” Also, starting from the six-month period ended September 30, 2006, Mitsui & Co., Financial Services (Europe) which was formerly included in “Europe,” is transferred to “All Other,” in order to centralize the operation of financing services to the companies and associated companies. The operating segment information for the six-month period ended September 30, 2005 has been restated to conform to the current period presentation.

 

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Table of Contents

BALANCE SHEETS (Unaudited)

ASSETS

 

(Millions of Yen)

  

Six-Month
Period ended

September 30,
2006

   

Year

ended

March 31,
2006

 

Current Assets

    

Cash and Time Deposits

   ¥ 329,818     ¥ 420,540  

Notes Receivable, Trade

     267,934       241,929  

Accounts Receivable, Trade

     1,473,768       1,368,569  

Securities

     261,053       21,449  

Inventories

     199,898       223,949  

Advance Payments to Suppliers

     42,600       44,291  

Short-Term Loans Receivable

     147,161       188,343  

Deferred Tax Assets—Current

     14,977       19,200  

Other

     222,448       239,140  

Allowance for Doubtful Receivables

     (15,549 )     (15,801 )
                

Total Current Assets

     2,944,111       2,751,614  

Non-Current Assets

    

Tangible Assets (Net)

     93,570       95,598  

Intangible Assets

     24,331       23,116  

Investments and Other Assets:

    

Investments in Securities and Subsidiaries and Associated Companies

     1,633,937       1,560,592  

Ownership in Subsidiaries and Associated Companies

     317,483       264,670  

Long-Term Loans Receivable

     192,519       180,374  

Other

     185,907       179,616  

Allowance for Doubtful Receivables

     (93,874 )     (93,072 )

Total Investments and other Assets

     2,235,972       2,092,181  
                

Total Non-Current Assets

     2,353,874       2,210,896  
                

Total Assets

     5,297,985       4,962,510  
                

 

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Table of Contents

LIABILITIES, NET ASSETS AND SHAREHOLDERS’ EQUITY

 

(Millions of Yen)

  

Six-Month
Period ended

September 30,
2006

   

Year

ended
March 31,
2006

Current Liabilities

    

Notes Payable, Trade

   ¥ 62,371     ¥ 55,561

Accounts Payable, Trade

     1,133,243       1,072,438

Short-Term Borrowings

     334,224       215,602

Commercial Paper

     48,000       50,000

Accounts Payable, Other

     201,940       87,838

Advances from Customers

     43,398       44,719

Reserve for Directors’ Bonuses

     121       —  

Other

     128,318       126,622
              

Total Current Liabilities

     1,951,619       1,652,782

Long-Term Liabilities

    

Bonds

     508,400       518,400

Convertible Bonds

     91,320       91,382

Long-Term Borrowings

     1,474,267       1,476,864

Liability for Retirement Benefits

     6,823       5,842

Allowance for the obligation for guarantees and commitments

     4,872    

Deferred Tax Liabilities—Non-Current

     74,257       68,192

Other

     56,979       58,040
              

Total Long-Term Liabilities

     2,216,920       2,218,720
              

Total Liabilities

     4,168,539       3,871,502
              

Net Assets

    

Shareholders’ Equity

    

Common Stock

     295,797       —  

Capital Surplus:

    

Capital Reserve

     322,219       —  

Other Capital Surplus

     45       —  
              

Total Capital Surplus

     322,265       —  

Retained Earnings

    

Legal Reserve

     27,745       —  

Other Retained Earnings:

    

General Reserve

     176,851       —  

Special Reserve

     1,619       —  

Reserve for Loss on Overseas Investments

     4,211       —  

Reserve for Tax-Deductible Write-down of Tangible Assets

     1,482       —  

Retained Earnings Brought Forward

     123,502       —  
              

Total Retained Earnings

     335,413       —  

Treasury Stock

     (2,366 )     —  

Total Shareholders’ Equity

     951,109       —  

Difference of Appreciation and Conversion

    

Net Unrealized Gain on Available-for-Sale Securities

     181,808       —  

(continued on next page)

 

31


Table of Contents

(continued from previous page)

 

Deferred Gains or Losses on Hedges

   (3,472 )   —    
            

Total Difference of Appreciation and Conversion

   178,336     —    
            

Total Net Assets

   1,129,445     —    
            

Total Liabilities and Net Assets

   5,297,985     —    
            

Shareholders’ Equity

    

Common Stock

   —       295,766  

Capital Surplus

    

Capital Reserve

   —       322,189  

Other Capital Surplus

   —       32  
            

Total Capital Surplus

   —       322,221  

Retained Earnings

    

Legal Reserve

   —       27,745  

Voluntary Reserves

   —       185,144  

Unappropriated Retained Earnings

   —       75,191  

Total Retained Earnings

   —       288,081  

Net Unrealized Gain on Available-for-Sale Securities

   —       186,853  

Treasury Stock

   —       (1,914 )
            

Total Shareholders’ Equity

   —       1,091,007  
            

Total Liabilities and Shareholders’ Equity

   —       4,962,510  
            

Notes:

 

1. Figures less than ¥1 million are rounded down.

 

2. For the six-month period ended September 30, 2006, the amounts of items listed below were as follows:

 

(1)    Accumulated Depreciation of tangible assets:

   ¥ 86,955 million

(2)    Assets pledged as security:

   ¥ 93,349 million

(3)    Guarantees and contingent liabilities:

  

•     Guarantees:

   ¥ 1,336,808 million

Commitments and other letters similar to guarantees amounting to ¥74,867 million are included in guarantees.

•     Notes receivable discounted:

   ¥ 53,902 million

 

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Table of Contents

STATEMENTS OF INCOME (Unaudited)

 

(Millions of Yen)

   Six-Month
Period ended
September 30,
2006
   Six-Month
Period ended
September 30,
2005(*)

Sales

   ¥ 5,625,429    ¥ 5,434,172

Cost of Sales

     5,512,747      5,328,740
             

Gross Profit

     112,682      105,431

Selling, General and Administrative Expenses

     100,900      98,785
             

Operating Profit

     11,781      6,646

Non-Operating Income

     

Interest Income

     8,250      8,603

Dividend Income

     81,797      69,309

Other

     6,207      6,433
             

Total Non-Operating Income

     96,255      84,346

Non-Operating Expenses

     

Interest Expense

     16,290      11,192

Other

     7,149      6,376
             

Total Non-Operating Expenses

     23,440      17,568
             

Ordinary Profit

     84,596      73,423

Extraordinary Gains

     

Gain on Sales of Tangible Assets

     34      120

Gain on Sales of Investments in Securities and Subsidiaries and Associated Companies

     25,502      9,008

Gain on Reversal of Provision for Doubtful Receivables

     947      1,076
             

Gain on Reversal of Compensation and Other Charges Related to DPF Incident

     3,864      —  
             

Total Extraordinary Gains

     30,348      10,204

Extraordinary Losses

     

Loss on Sales of Tangible Assets

     238      249

Impairment Losses

     201      2,455

Loss on Sale of Investments in Securities and Subsidiaries and Associated Companies

     212      296

Loss on Write-Down of Investments in Securities and Subsidiaries and Associated Companies

     6,789      5,920

Provision for Doubtful Receivables from Securities and Subsidiaries and Associated Companies

     3,665      1,956

Provision for the obligation for guarantees and commitments

     4,872   

Compensation and Other Charges Related to DPF Incident

     —        9,000
             

Total Extraordinary Losses

     15,980      19,878
             

 

(*)    Supplementary information

   [Continued on next page]

 

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[Continued from previous page]

 

Income before Income Taxes

     98,964      63,750

Income Taxes—Current

     11,072      6,845

Income Taxes—Deferred

     16,207      20,599
             

Net Income

     71,685      36,305

Unappropriated Retained Earnings at Beginning of Period

     —        16,507
             

Unappropriated Retained Earnings at end of period

   ¥ —      ¥ 52,813
             

Notes:

 

1. Figures less than ¥1 million are rounded down.

 

2. Net income per share for the six-month period ended September 30, 2006: ¥41.60.

 

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CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(April 1, 2006 to September 30, 2006)

(Unit: Millions of Yen)

 

     Shareholders’ Equity  
     Common
Stock
   Capital Surplus    Retained Earnings  
        Capital
Reserve
  

Other
Capital

Surplus

  

Total
Capital

Surplus

   Legal
Reserve
   Other Retained Earnings  
                    General
Reserve
   Special
Reserve
   Reserve for
Loss on
Overseas
Investments
 

Balance as of March 31, 2006

   295,766    322,189    32    322,221    27,745    176,851    1,619    5,075  

Changes during Interim Period

                       

New Share Issuance

   31    30       30            

Reversal of Reserve for Loss on Overseas Investments

                        (863 )

Reversal of Reserve for Tax-Deductible Write-down of Tangible Assets

                       

Dividend from Surplus

                       

Bonuses to Directors

                       

Net Income

                       

Acquisition of Treasury Stock

                       

Disposal of Treasury Stock

         13    13            

Changes to Items other than Shareholders’ Equity (net)

                       

Total Changes during Interim Period

   31    30    13    43    —      —      —      (863 )

Balance as of September 30, 2006

   295,797    322,219    45    322,265    27,745    176,851    1,619    4,211  

 

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Table of Contents
     Shareholders’ Equity     Difference of Appreciation and
Conversion
    Total Net
Assets
 
     Retained Earnings    

Treasury

Stock

   

Total

Shareholders’

Equity

   

Net

Unrealized

Gain on
Avairable
-for-Sale
Securities

   

Deferred

Gains or

Losses
on
Hedges

   

Total

Difference of

Appreciation
and
Conversion

   
     Other Retained Earnings    

Total

Retained
Earnings

             
     Reserve for
Tax-Deductible
Write-down of
Tangible
Assets
    Retained
Earnings
Brought
Forward
               

Balance as of March 31, 2006

   1,597     75,191     288,081     (1,914 )   904,154     186,853     —       186,853     1,091,007  

Changes during Interim Period

                  

New Share Issuance

           61           61  

Reversal of Reserve for Loss on Overseas Investments

     863     —         —             —    

Reversal of Reserve for Tax-Deductible Write-down of Tangible Assets

   (114 )   114     —         —             —    

Dividend from Surplus

     (24,123 )   (24,123 )     (24,123 )         (24,123 )

Bonuses to Directors

     (230 )   (230 )     (230 )         (230 )

Net Income

     71,685     71,685       71,685           71,685  

Acquisition of Treasury Stock

         (475 )   (475 )         (475 )

Disposal of Treasury Stock

         23     36           36  

Changes to Items other than Shareholders’ Equity (net)

             (5,044 )   (3,472 )   (8,516 )   (8,516 )

Total Changes during Interim Period

   (114 )   48,310     47,331     (452 )   46,954     (5,044 )   (3,472 )   (8,516 )   38,438  

Balance as of September 30, 2006

   1,482     123,502     335,413     (2,366 )   951,109     181,808     (3,472 )   178,336     1,129,445  

These financial statements, which are on a non-consolidated basis, have been

prepared in accordance with accounting principles generally accepted in Japan.

 

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Management Philosophy (MVV)

Mission

We will contribute to the creation of a future where the dreams of the inhabitants of our irreplaceable Earth can be fulfilled.

Vision

We aim to become a global business enabler that can meet the needs of our customers throughout the world.

Values

 

    Making it a principle to be fair and humble, we, with sincerity and in good faith, will strive to be worthy of the trust society places in us.

 

    With lofty aspirations and from an honest perspective, we will pursue business that benefits society.

 

    Always taking on the challenge of new fields, we will dynamically create business that can lead the times.

 

    Making the most of our corporate culture that fosters “Freedom and Open-mindedness,” we will fully demonstrate our abilities as a corporation as well as individuals.

 

    In order to nurture human resources full of creativity and a superior sense of balance, we will provide our people with a workplace for self-development as well as self-realization.

 

Shareholders’ information

 

Fiscal year end    March 31
Record date    March 31
Interim dividend record date    September 30
General Shareholders’ Meeting    June
Manager of the Register of Shareholders    The Chuo Mitsui Trust & Banking Company Limited
(head office)    33-1 Shiba, 3-chome
   Minato-ku, Tokyo
Contact information for above    The Chuo Mitsui Trust & Banking Company Limited, Stock
   Transfer Agency Division
   8-4 Izumi, 2-chome
   Suginami-ku, Tokyo
   168-0063
   Tel: 0120-78-2031 (free dial)
Representative branches for transfer agent    The Chuo Mitsui Trust & Banking Company Limited (various
   locations around the country)
   Japan Securities Agents, Ltd. (main office, various locations
   around the country)
Stock exchange listings    Tokyo, Osaka, Nagoya, Sapporo, Fukuoka
Mitsui & Co., Ltd.    2-1, Ohtemachi 1-chome
   Chiyoda-ku, Tokyo
   100-0004
   Tel: 03-3285-1111 (general)
   Website: www.mitsui.co.jp

 

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