Form 6-K/A

 

 

FORM 6-K/A

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Consolidated Financial Results for the Three-Month Period Ended June 30, 2008

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

of the Securities Exchange Act of 1934

For the month of November 4, 2008

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-             

 

 

 


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: November 4, 2008

 

MITSUI & CO., LTD.
By:  

/s/ Junichi Matsumoto

Name:   Junichi Matsumoto
Title:   Executive Director
  Executive Vice President
  Chief Financial Officer


November 4, 2008

For immediate release:

Mitsui & Co., Ltd.

Amendment of the Consolidated Balance Sheet as of March 31, 2008

Included in the Consolidated Financial Results Released on August 4, 2008

for the Three-month Period Ended June 30, 2008

Mitsui & Co., Ltd. announced today on the amendment of its consolidated balance sheet as of March 31, 2008, which was included in the consolidated financial results released on August 4, 2008 for the three-month period ended June 30, 2008.

The amendment is related to the retrospective application of FASB Staff Position (“FSP”) No. FIN 39-1, “Amendment of FASB Interpretation No. 39” to the consolidated balance sheet as of March 31, 2008.

Please refer to the underlined items of attached documents for the details of the amendment.

For further information, please contact:

Mitsui & Co., Ltd.

Investor Relations Division

Tel: +81-3-3285-7910

Corporate Communications Division

Tel: +81-3-3285-7596


Summary of Amendments to the Consolidated Financial Results

for the Three-Month Period Ended June 30, 2008

Please refer to the underlined items of attached forms for the details of the amendments.

1. Consolidated financial results (Unreviewed)

(2) Consolidated financial position information

(Original)

 

          June 30, 2008    March 31, 2008

Total assets

   Millions of yen    10,293,365    9,606,394

Shareholders’ equity

   Millions of yen    2,392,860    2,183,660

Shareholders’ equity ratio

   %    23.2    22.7

Shareholders’ equity per share

   Yen    1,315.53    1,202.03

(As Amended)

 

          June 30, 2008    March 31, 2008

Total assets

   Millions of yen    10,293,365    9,537,829

Shareholders’ equity

   Millions of yen    2,392,860    2,183,660

Shareholders’ equity ratio

   %    23.2    22.9

Shareholders’ equity per share

   Yen    1,315.53    1,202.03


Consolidated Financial Results for the Three-Month Period Ended June 30, 2008

[Based on accounting principles generally accepted in the United States of America (“U.S. GAAP”)]

Tokyo, August 4, 2008 – Mitsui & Co., Ltd. announced its consolidated financial results for the three-month period ended June 30, 2008.

Mitsui & Co., Ltd. and subsidiaries

(Web Site : http://www.mitsui.co.jp)

President and Chief Executive Officer : Shoei Utsuda

Investor Relations Contacts : Katsurao Yoshimori, General Manager, Investor Relations Division TEL 81-3-3285-7533

1. Consolidated financial results (Unreviewed)

(1) Consolidated operating results information for the three-month period ended June 30, 2008

  (from April 1, 2008 to June 30, 2008)

(Millions of yen)

 

     Three-month period ended June 30
     2008    %    2007    %

Revenues

   1,525,871    —      1,334,500    19.9

Income from continuing operations before income taxes, minority interests and equity in earnings

   125,259    —      138,032    71.2

Net income

   103,084    —      181,033    120.1

Net income per share, basic

   56.71       101.37   

Net income per share, diluted

   56.48       99.18   

Notes :

1. Percentage figures for Revenues, Income from continuing operations before income taxes, minority interests and equity in earnings, and Net income represent changes from the previous year.

2. In accordance with Statement of Financial Accounting Standards (“SFAS”) No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the figures for the three-month period ended June 30, 2007 relating to discontinued operations have been reclassified from income from continuing operations.

(2) Consolidated financial position information

 

          June 30, 2008    March 31, 2008

Total assets

   Millions of yen    10,293,365    9,537,829

Shareholders’ equity

   Millions of yen    2,392,860    2,183,660

Shareholders’ equity ratio

   %    23.2    22.9

Shareholders’ equity per share

   Yen    1,315.53    1,202.03

Note :

The companies adopted FASB Staff Position No. FIN 39-1, “Amendment of FASB Interpretation No. 39”, during the three-month period ended June 30, 2008. In accordance with this amendment, the companies adjusted the total assets as of March 31, 2008.

2. Dividend information

 

         Year ended
March 31,
   Year ending
March 31, 2009
(Forecast)
         2009    2008     

Interim dividend per share

  Yen    —      23    25

Year-end dividend per share

  Yen    —      23    25

Annual dividend per share

  Yen    —      46    50

 

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3. Forecast of consolidated operating results for the year ending March 31, 2009 (from April 1, 2008 to March 31, 2009)

 

          Year ending
March 31, 2009

Net income

   Millions of yen    460,000

Net income per share, basic

   Yen    253.21

4. Others

(1) Increase/decrease of important subsidiaries during the fiscal year : None

(2) Number of shares :

 

     June 30, 2008    March 31, 2008

Number of shares of common stock issued, including treasury stock

   1,822,731,135    1,820,183,809

Number of shares of treasury stock

   3,799,584    3,543,891

 

     Three-month period
ended June 30, 2008
   Three-month period
ended June 30, 2007

Average number of shares of common stock outstanding

   1,817,643,244    1,785,928,413

A Cautionary Note on Forward-Looking Statements:

This report contains statements (including figures) regarding Mitsui & Co., Ltd. (“Mitsui”)’s corporate strategies, objectives, and views of future developments that are forward-looking in nature and are not simply reiterations of historical facts. These statements are presented to inform stakeholders of the views of Mitsui’s management but should not be relied on solely in making investment and other decisions. You should be aware that a number of important risk factors could lead to outcomes that differ materially from those presented in such forward-looking statements. These include, but are not limited to, (i) changes in economic conditions that may lead to unforeseen developments in markets for products handled by Mitsui, (ii) fluctuations in currency exchange rates that may cause unexpected deterioration in the value of transactions, (iii) adverse political developments that may create unavoidable delays or postponement of transactions and projects, (iv) changes in laws, regulations, or policies in any of the countries where Mitsui conducts its operations that may affect Mitsui’s ability to fulfill its commitments, and (v) significant changes in the competitive environment. In the course of its operations, Mitsui adopts measures to control these and other types of risks, but this does not constitute a guarantee that such measures will be effective.

 

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I. Highlights of Consolidated Financial Results for the Three-Month Period Ended June 30, 2008

Consolidated financial statements for the three month period ended June 30, 2008 and the corresponding three month period of the previous year are not audited by auditors.

1. Summary of Financial Results for the Three-Month Period Ended June 30, 2008

(1) Operating Results

Mitsui & Co., Ltd. (“Mitsui”) and its subsidiaries (collectively “the Group”) posted consolidated net income of ¥103.1billion, a decrease of ¥77.9 billion, or down 43.0 %, from ¥181.0 billion for the corresponding three month period of the previous year. Major developments during the periods were:

 

 

Substantial one-off gains on sale of securities and divestitures in the three month period of the previous year amounting to approximately ¥84 billion (after tax) including sales of the Group’s stakes in mineral resources and energy businesses, such as Sesa Goa Limited in India, Sakhalin II in Russia and EBM(*1) in Brazil as well as gains on sale of aircraft held by Tombo Aviation (United States).

 

 

Increases in gross profit, equity in earnings of associated companies and dividend income of mineral resources and energy producing businesses all reflecting the continued run-up in prices of related commodities(*2) in the current year. On the other hand, the Consumer Service & IT Segment recorded a downturn chiefly from write downs on inventories in residential home business in Japan. In addition, the Chemical Segment also recognized impairment loss on domestic listed securities.

 

(*1) Empreendimentos Brasileiros de Mineração S.A.
(*2) Due to the difference in accounting periods as well as time-lag issues, the impact of various run-ups in prices of internationally traded commodities such as iron ore, coal and oil has not been fully reflected in the three month period ended June 30, 2008. Such impact will be reflected in the next three months period.

(2) Financial Condition

Total assets as of June 30, 2008 were ¥10.3 trillion, an increase of ¥0.8 trillion from ¥9.5 trillion as of March 31, 2008. Investments and plant, property and equipment (“PPE”) increased by ¥0.3 trillion mainly due to higher stock prices on Japanese stock exchanges as well as net improvement in foreign currency translation adjustments due to the weaker Japanese Yen against Australian Dollar, U.S. Dollar and Brazilian Real. In addition, various capital expenditures for the expansions made by the Mineral & Metal Resources and the Energy segments also contributed to the increase. Higher commodity prices resulted in an increase of ¥0.5 trillion in the current assets. Shareholders equity as of June 30, 2008 was ¥2.4 trillion, an increase of ¥0.2 trillion from ¥2.2 trillion as of March 31, 2008, as a result of increased retained earnings, higher stock prices and Japanese yen depreciation, and Net Debt-to-Equity Ratio (“Net DER”) as of June, 2008 was 1.21 times, 0.06 points lower than that of March 31, 2008.

(3) Cash Flow Statement

Reflecting net increase of ¥97.5 billion of operating assets and liabilities including increased inventories at Westport Petroleum, Inc. net cash provided by operating activities for the three month period ended June 30, 2008 was ¥30.7 billion despite the steady growth of operating income. Net cash used in investing activities for the three month period ended June 30, 2008 was ¥80.8 billion due mainly to expansion expenditures of natural resources in the Mineral & Metal Resources and the Energy Segments. As a result, free cash flow(*1) for the three-month period ended June 30, 2008 was a net outflow of ¥50.1 billion.

 

(*1) Sum of net cash flow for operating activities and cash flow for investing activities

 

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2. Results of Operations

(1) Analysis on consolidated income statements

Gross Profit

Gross profit for the three month period ended June 30, 2008 was ¥275.0 billion, an increase of ¥38.6 billion, or 16.3%, from ¥236.4 billion for the corresponding three month period of the previous year as a result of the following:

 

 

The Energy Segment reported an increase of ¥25.2 billion in gross profit. This increase is attributable to solid performance by the oil & gas producing businesses and Mitsui Coal Holdings Pty. Ltd. (Australia), reflecting continued run-up in mineral resource prices and additional energy equity production.

 

 

The Mineral & Metal Resources Segment also reported an increase of ¥20.0 billion in gross profit. Reflecting higher iron ore prices Mitsui Iron Ore Development Pty. Ltd. (Australia) reported an increase of ¥16.5 billion.

 

 

Automotive and other machinery businesses; and basic materials such as steel products and chemical products continued to show good performance carrying over last year’s positive trend into this fiscal year.

 

 

The Consumer Service & IT Segment reported a decrease in gross profit due to write downs on inventories in the domestic residential home business as well as a slowdown in other business areas.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three month period ended June 30, 2008 were ¥150.7 billion, an increase of ¥3.7 billion, from ¥147.0 billion for the corresponding three month period of the previous year. The table below provides selling, general and administrative expenses by operating segment.

Billion of Yen

 

Operating Segment

   Iron & Steel
Products
   Mineral &
Metal

Resources
   Machinery &
Infrastructure
Projects
   Chemical    Energy    Foods &
Retail
   Consumer
Service & IT
   Logistics &
Financial
Markets

Three month period ended June 30, 2008

   9.1    3.6    20.8    13.5    11.1    15.8    24.5    8.4

Three month period ended June 30, 2007

   8.5    4.2    19.3    14.9    10.9    16.7    24.3    7.8

Change(* )

   0.6    p0.6    1.5    p1.4    0.2    p0.9    0.2    0.6

 

Operating Segment

   Americas    Europe,
the Middle East

and Africa
   Asia Pacific    Total    All other    Adjustments
and
Eliminations
   Consolidated
Total

Three month period ended June 30, 2008

   17.9    6.3    6.4    137.4    1.4    11.9    150.7

Three month period ended June 30, 2007

   17.1    5.8    5.9    135.4    1.8    9.8    147.0

Change(* )

   0.8    0.5    0.5    2.0    p0.4    2.1    3.7

 

(*) p : Decrease in selling, general and administrative expenses

The table below provides a breakdown of selling, general and administrative expenses used for our internal review.

Billion of Yen

 

     Personnel    Welfare    Travel    Entertainment    Communication    Others    Total

Three month period ended June 30, 2008

   74.4    3.3    8.9    2.6    12.2    49.3    150.7

Three month period ended June 30, 2007

   73.6    3.1    8.5    2.7    10.9    48.2    147.0

Change(* )

   0.8    0.2    0.4    p0.1    1.3    1.1    3.7

 

(*) p : Decrease in selling, general and administrative expenses

 

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Provision for Doubtful Receivables

Provision for doubtful receivables for the three month period ended June 30, 2008 was ¥1.0 billion, a decrease of ¥0.5 billion, from ¥1.5 billion for the corresponding three month period of the previous year. Provisions for both periods consisted of individually small ones.

Interest Expense, Net of Interest Income

Interest expense, net of interest income for the three month period ended June 30, 2008 was ¥9.0 billion, a decrease of ¥1.1 billion from ¥10.1 billion for the corresponding three month period of the previous year. Mitsui recorded a ¥1.1 billion increase reflecting higher Japanese Yen interest rates.

On the other hand, overseas subsidiaries reported a decrease in total due to lower U.S. Dollar interest rates.

The following table sets forth the periodic average of 3 month Libor of Japanese Yen and U.S. Dollar for the three month periods ended June 30, 2008 and 2007.

 

Periodic average of 3 month Libor (%p.a.)
     3 month Period Ended June 30,
     2008    2007

Japanese Yen

   0.92    0.71

U.S. Dollar

   2.77    5.36

Dividend Income

Dividend income for the three month period ended June 30, 2008 was ¥24.6 billion, an increase of ¥6.6 billion from ¥18.0 billion for the corresponding three month period of the previous year.

Dividends from LNG projects in Abu Dhabi, Qatar and Oman were ¥11.9 billion, an increase of ¥6.0 billion over for the corresponding three month period of the previous year. Also, we received a dividend of ¥1.1billion from an LNG project in Equatorial Guinea.

Gain on Sales of Securities

Gain on sales of securities for the three month period ended June 30, 2008 was ¥6.4 billion, a substantial decrease of ¥37.6 billion from ¥44.0 billion for the corresponding three month period of the previous year. While there were no major divestitures for the three month period ended June 30, 2008, the Group posted substantial gains for the corresponding three month period of the previous year as a result of several large scale divestitures such as the sale of a part of its stake in the Sakhalin II project and its whole stake in EBM in Brazil.

Loss on Write-Down of Securities

Loss on write-downs of securities for the three month periods ended June 30, 2008 was ¥10.6 billion, an increase of ¥9.8 billion from ¥0.8 billion for the corresponding three month period of the previous year. Major loss for the three month period ended June 30, 2008 was impairment loss on listed shares in Mitsui Chemicals, Inc. (Japan) while the loss for the corresponding three month period of the previous year consisted of miscellaneous small losses.

 

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Gain on Disposal or Sales of Property and Equipment—Net

Gain on disposal or sales of property and equipmentnet for the three month period ended June 30, 2008 was ¥2.2 billion, an increase of ¥2.1 billion from ¥0.1 billion for the corresponding three month period of the previous year. Major gain for the three month period ended June 30, 2008 was related to the sale of an office building previously held by Mitsui & Co. France S.A.

Impairment Loss of Long-Lived Assets

Impairment loss of long-lived assets for the three month period ended June 30, 2008 was ¥0.5 billion, an increase of ¥0.5 billion from ¥0 billion for the corresponding three month period of the previous year.

Other Expense—Net

Other expensenet for the three month period ended June 30, 2008 was ¥11.2 billion, an increase of ¥10.3 billion, from ¥0.9 billion for the corresponding three month period of the previous year. The major expenses for the three month period ended June 30, 2008 were foreign exchange losses and exploration expenses in the oil & gas business. Other expenses for the corresponding three month period of the previous year consisted of miscellaneous small items.

Minority Interests in Earnings of Subsidiaries

Minority interests in earnings of subsidiaries for the three month period ended June 30, 2008 was ¥13.6 billion, an increase of ¥3.6 billion from ¥10.0 billion for the corresponding three month period of the previous year. Major factors of the increase are related to the increase in minority interest at Novus International, Inc. (United States) and Japan Collahuasi Resources B.V. (Netherlands), an investment vehicle of Compania Minera Dona Ines de Collahuasi SCM (Chile), a copper mining company.

Equity in Earnings of Associated Companies—Net

Equity in earnings of associated companiesnet (after income tax effect) for the three month period ended June 30, 2008 was ¥44.6 billion, an increase of ¥8.1 billion from ¥36.5 billion for the corresponding three month period of the previous year as a result of followings:

 

 

Increase in earnings at Robe River Mining Company (Australia) reflecting an increase in iron ore prices.

 

 

Increase in earnings at Compania Minera Dona Ines de Collahuasi SCM (Chile), reflecting an increase in copper prices and additional production.

 

 

Reversal effect of IPM Eagle LLP (United Kingdom) which recorded a mark-to-market evaluation loss on long-term swap agreement at their overseas power generating operation for the corresponding three month period of the previous year.

 

 

Valepar S.A. (Brazil) posted a decrease, reflecting a reduction in earnings at Companhia Vale do Rio Doce (“Vale”) mainly due to a drop in nickel price as well as appreciation of Brazilian Real against U.S. Dollar. Impact of the settlement of iron ore contract price negotiation for the current fiscal year is not substantially reflected in the three month period ended June 30, 2008 due to a three-month time lag in consolidating its earnings into our operating results.

 

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Income from Discontinued Operations—Net

Income from discontinued operationsnet (after income tax effect) for the three month period ended June 30, 2008 was nil, a decrease from ¥59.9 billion for the corresponding three month period of the previous year. Major discontinued operations for the corresponding three month period of the previous year were Sesa Goa Limited (India) of the Mineral & Metal Resources Segment and Tombo Aviation, Inc. of Machinery & Infrastructure Projects Segment.

(2) Operating Results by Operating Segment

Based on the reorganization effective April 1, 2008, the following subsidiaries previously included in the Machinery & Infrastructure Projects and the Chemical segments were transferred to the Americas segment. The operating segment information for the three month period ended June 30, 2007 has been restated to conform to the current year presentation.

From the Machinery & Infrastructure Projects segment :

Mitsui Automotoriz S.A. (Peru), Road Machinery LLC (United States), Ellison Technologies Inc.(United States)

From the Chemical Segment :

Novus International, Inc.(*1), Fertilizantes Mitsui S.A. Industria e Comercio (Brazil)

(*1) Novus International, Inc. was transferred in the 4th quarter of the fiscal year ended March 31, 2008.

 

Iron & Steel Products Segment

 

Gross profit for the three month period ended June 30, 2008 was ¥17.7 billion, an increase of ¥2.0 billion from ¥15.7 billion for the corresponding three month period of the previous year. Supported by continued favorable demand, foreign trading transactions, including those of Regency Steel Asia Pte Ltd. (Singapore) to Asian markets, of various products such as steel sheets and plates for automobiles and shipbuilding, steel tubular products and line pipes for oil and gas development recorded solid performance. Furthermore, domestic sales of steel products were robust under tight market condition and contributed to the increase in earnings as well.

     
      LOGO

Operating income for the three month period ended June 30, 2008 was ¥ 9.0 billion, an increase of ¥1.9 billion from ¥7.1 billion for the corresponding three month period of the previous year reflecting the increase in gross profit.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥0.9 billion, a decrease of ¥0.3 billion from ¥1.2 billion for the corresponding three month period of the previous year. Net income for the three month period ended June 30, 2008 was ¥5.8 billion, a ¥0.1 billion decrease from ¥5.9 billion for the corresponding three month period of the previous year.

 

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Mineral & Metal Resources Segment

Gross profit for the three month period ended June 30, 2008 was ¥41.0 billion, an increase of ¥20.0 billion from ¥21.0 billion for the corresponding three month period of the previous year.

The main factor contributing to the increase was the price increase at iron ore mining operations. Reflecting tight supply and demand balance in Asia, especially in China and India, iron ore prices for the year ending March 31, 2009 increased substantially from the year ended March 31, 2008. Following the settlement of Brazilian iron ore fines with increases by 65~71% in February 2008, Australian iron ore lump and fines prices were settled with an increase by 96.5% and 79.9% respectively between June and July 2008. FOB prices of Brazilian iron ore and Australian iron ore had been the same level as a customary practice in this industry up to the year ended March 31, 2008. However, Australian iron ore producers insisted that different price be applied, reflecting ocean freight difference between Australia and Brazil to major steel making countries, China and Japan. Consequently increase in gross profit recorded by Mitsui Iron Ore Development (Australia) was ¥16.5 billion. Part of the price increase achieved is not reflected into the operating results for the three month period ended June 30, 2008, because the final settlement of the price negotiation was delayed until July.

Furthermore, increases in prices of other mineral and metal resources such as iron and steel scrap, ferrous alloy reflecting tight market conditions also contributed to increase in gross profit.

Operating income for the three month period ended June 30, 2008 was ¥ 37.7 billion, an increase of ¥21.0 billion from ¥16.7 billion for the corresponding three month period of the previous year, reflecting increase in gross profit.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥20.3 billion, an increase of ¥6.3 billion from ¥14.0 billion for the corresponding three month period of the previous year. Major factors were as follows:

 

 

Earnings at Robe River Mining Company (Australia) were ¥6.5 billion, an increase by ¥4.2 billion from ¥2.3 billion for the corresponding three month period of the previous year reflecting increase in the iron ore prices.

 

 

Compania Minera Dona Ines de Collahuasi SCM (Chile) recorded earnings of ¥6.6 billion, an increase by ¥3.9 billion from the corresponding three month period of the previous year supported by firm copper price and increased production.

 

 

Valepar S.A. (Brazil) posted a decrease of ¥2.0 billion, reflecting a reduction in earnings at Vale mainly due to a drop in nickel prices as well as the appreciation of Brazilian Real against U.S. Dollar. Most of the upwardly revised iron ore contract prices have not been reflected into the earnings for the three month period ended June 30, 2008 due to a lag in consolidating its earnings into our operating results.

Net income for the three month period ended June 30, 2008 was ¥36.4 billion, a large decrease of ¥48.4 billion from ¥84.8 billion for the corresponding three month period of the previous year. Increase in operating income and equity in earnings were offset by a significant rebound effect from gains from divestitures for the three month period ended June 30, 2007 of a ¥93.9 billion on the sale of its whole stake in Sesa Goa Limited(*1) and a ¥12.4 billion gain on the sale of shares in EBM, a Brazilian iron ore company.

 

(*1) In this “Operating Results by Operating Segment”, operating results of Sesa Goa have been included in and presented as continuing operation. In the consolidated statement of income, net income of Sesa Goa for the corresponding three month period of the previous year is presented as income from discontinued operations (after income tax effect).

 

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Machinery & Infrastructure Projects Segment

Gross profit for the three month period ended June 30, 2008 was ¥28.2 billion, an increase of ¥0.8 billion from ¥27.4 billion for the corresponding three month period of the previous year.

 

   

Overseas automotive-related and construction machinery subsidiaries continued to show steady performance, particularly a motorcycle retail finance company P.T. Bussan Auto Finance (Indonesia) as well as subsidiaries in Russia and other regions all reporting higher gross profit.

 

   

Reflecting strong demand, ocean vessels and marine project businesses showed overall strong performance through marketing commercial vessels, trading in used vessels, operating and chartering vessels, and owning or leasing special energy-related vessels.

 

   

In infrastructure projects business fields, plant business recorded a downturn in gross profit. Operations of rolling stock leasing subsidiaries in Europe and Americas also reported declines in gross profit.

Operating income for the three month period ended June 30, 2008 was ¥ 6.0 billion, a decrease of ¥1.0 billion from ¥7.0 billion for the corresponding three month period of the previous year. The decrease is primarily attributable to the decrease in gross profit and an increase in selling, general and administrative expenses in infrastructure projects business field. Operating income of automotive and marine business related subsidiaries increased in general, partially offset by an increase in selling, general and administrative expenses.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥9.7 billion, an increase of ¥4.5 billion from ¥5.2 billion for the corresponding three month period of the previous year. Overseas power producing businesses such as IPM Eagle LLP and P.T. Paiton Energy (Indonesia) reported equity in earnings of ¥4.2 billion in total, an increase of ¥3.4 billion from ¥0.8 billion earnings for the corresponding three month period of the previous year. The major factor of this increase is reversal effect (rebound effect) of IPM Eagle LLP which recorded a mark-to-market evaluation loss on long-term swap agreement at their Australian power generating operations for the corresponding three month period of the previous year.

Net income for the three month period ended June 30, 2008 was ¥15.9 billion, an increase of ¥2.3 billion from ¥13.6 billion for the corresponding three month period of the previous year. In addition to the above-mentioned factors, this segment recorded a gain of ¥5.5 billion (*1) on the sale of leased aircraft for the corresponding three month period of the previous year.

 

 

(*1) In this “Operating Results by Operating Segment”, the gain on the sale of aircraft has been included in and presented as continuing operation. In the consolidated statement of income, the gain on the sale for the corresponding three month period of the previous year is presented as income from discontinued operations (after income tax effect).

 

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Chemical Segment

Gross profit was ¥27.5 billion, an increase of ¥0.5 billion from ¥27.0 billion for the corresponding three month period of the previous year. The principal developments in this segment were as follows:

 

   

Basic petrochemicals fields ranging from basic materials to mid-stream intermediate products recorded a slight decline in total. While P.T. Kaltim Pasifik Amoniak (Indonesia), a joint venture manufacturing and marketing company of ammonia recorded an increase in gross profit due to higher price and an increase in sales volume, business of aromatics such as xylene recorded a decrease in gross profit due to a sharp decrease in margins following a rapid cost increase of raw material naphtha.

 

   

Supported by a globally strong demand for agriculture products, businesses of crop protection chemicals and fertilizer as well as sulphur and sulfuric acid, raw materials of fertilizer, remained robust.

Operating income for the three month period ended June 30, 2008 was ¥13.5 billion, an increase of ¥1.0 billion from ¥12.5 billion for the corresponding three month period of the previous year, reflecting increase in gross profit.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥2.3 billion, an increase of ¥0.4billion from ¥1.9 billion for the corresponding three month period of the previous year, mainly due to the contribution of International Methanol Company (Saudi Arabia), a joint venture methanol manufacturing company.

Net income for the three month period ended June 30, 2008 was ¥1.5 billion, a decrease of ¥5.6 billion from ¥7.1 billion for the corresponding three month period of the previous year, despite a small improvement as above. This segment recorded a ¥8.1 billion impairment loss on shares of Mitsui Chemicals, Inc.

 

Energy Segment      LOGO

 

Japan Crude Cocktail (JCC) continued to rise since April 2007, reflecting strong demand and an influx of speculative money into the future markets and reached US$121.83 (preliminary figure) per barrel in June 2008.

 

The JCC price, which has been reflected in revenues of the Mitsui’s oil and gas producing subsidiaries and associated companies, was US$94 per barrel in average for the three month period ended June 30, 2008 compared to US$60 per barrel for the corresponding three month period of the previous year.

    

Gross profit for the three month period ended June 30, 2008 was ¥75.0 billion, an increase of ¥25.2 billion from ¥49.8 billion for the corresponding three month period of the previous year primarily due to the following:

 

   

There were contributions of ¥9.1 billion by Mitsui E&P Australia Pty Ltd (Australia) due to the start-up of oil production at Tui oil field in New Zealand in July 2007 as well as higher oil prices. Likewise, due to increased productions as well as higher oil prices Mitsui Oil Exploration Co., Ltd.(Japan) and MitEnergy Upstream LLC (United States) reported increases of ¥4.8 billion and ¥2.9 billion respectively. On the other hand, Mittwell Energy Resources Pty., Ltd. posted a decrease of ¥4.3 billion in gross profit due to lack of shipment during the three month period ended June 30, 2008.

 

   

The price for representative Australian premium hard coking coal for the year ending March 31, 2009 is quoted as US$300 per ton FOB, which is approximately tripled compared to the price for the year ended March 31, 2008. At the same time thermal coal prices are around doubled.

For the three month period ended June 30, 2008, gross profit at Mitsui Coal Holdings Pty. Ltd. (Australia) increased by ¥13.4 billion, reflecting higher coal price. Its coal production for the three month period ended June 30, 2008 increased slightly over the corresponding three month period of the previous year.

 

-10-


Operating income for the three month period ended June 30, 2008 was ¥ 63.6 billion, an increase of ¥24.8 billion from ¥38.8 billion for the corresponding three month period of the previous year.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥10.0 billion, a slight decrease of ¥0.3 billion from ¥10.3 billion for the corresponding three month period of the previous year.

Net income for the three month period ended June 30, 2008 was ¥30.6 billion, a decrease of ¥15.1 billion from ¥45.7 billion for the corresponding three month period of the previous year. Besides the above-mentioned developments, there were following factors:

 

   

In April 2007, this segment sold 50% of its stake in Sakhalin Energy Investment Company Ltd. (Bermuda) and recorded the relevant gains on sale of the shares.

 

   

Dividends from LNG projects in Abu Dhabi, Qatar, Oman and Equatorial Guinea were ¥13.0 billion, an increase of ¥7.1 billion over the corresponding three month period of the previous year.

 

   

Other expense increased by ¥7.9 billion due mainly to additional exploration.

 

   

Increased dividends from the segment’s overseas subsidiaries resulted in increase in Japanese income tax expense. In addition, Petroleum Resource Rent tax in Australia increased at Mitsui E&P Australia Pty Limited.

Foods & Retail Segment

Gross profit for the three month period ended June 30, 2008 was ¥19.7 billion, a decrease of ¥0.8 billion from ¥20.5 billion for the corresponding three month period of the previous year. Under business circumstances where inflation of raw material costs, food raw material business transactions showed firm performance, however, this segment continues to face severe conditions in terms of profitability, particularly for food raw material manufacturing subsidiaries. In addition, the segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations.

Operating income for the three month period ended June 30, 2008 was ¥4.0 billion, no variance from ¥4.0 billion for the corresponding three month period of the previous year. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses. As a result, their operating income showed small improvement and remained at the same level respectively.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥0.7 billion, a ¥0.4 billion increase from ¥0.3 billion for the corresponding three month period of the previous year.

Reflecting these developments, net income for the three month period ended June 30, 2008 was ¥3.2 billion, which is the same as that of the corresponding three month period of the previous year.

 

-11-


Consumer Service & IT Segment

Gross profit for the three month period ended June 30, 2008 was ¥19.8 billion, a decrease of ¥8.2 billion from ¥28.0 billion for the corresponding three month period of the previous year. Consumer Service recorded a decrease of ¥5.7 billion due to loss on write down on inventories and reduced sales in the domestic residential home business. In addition, Media related businesses recorded a ¥1.2 billion decreases due to divestiture of cable television business.

For the three month period ended June 30, 2008, this segment recorded a ¥5.2 billion operating loss, a decrease of ¥9.1 billion from operating income of ¥3.9 billion for the corresponding three month period of the previous year.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥0.8 billion, a decrease of ¥1.2 billion from ¥2.0 billion for the corresponding three month period of the previous year.

Net loss for the three month period ended June 30, 2008 was ¥2.1 billion, a decrease of ¥9.8 billion from ¥7.7 billion for the corresponding three month period of the previous year. Other than the above-mentioned factors Gain on sales of securities decreased as follows:

 

   

For the corresponding three month period of the previous year, in conjunction with the merger of Mitsui Knowledge Industry Co., Ltd. (Japan) and NextCom K.K., this segment recorded a gain from the exchange of shares of these subsidiaries, and recorded gain on sales of shares including those in Jupiter Telecommunications Co., Ltd. For the three month period ended June 30, 2008, gains on sales of shares decreased as a reversal effect.

Logistics & Financial Markets Segment

Gross profit was ¥14.3 billion, an increase of ¥2.2 billion from ¥12.1 billion for the corresponding three month period of the previous year. Commodity trading activities remained robust under as the commodity market continued to be volatile.

Reflecting the increase in gross profit, operating income for the three month period ended June 30, 2008 was ¥5.9 billion, an increase of ¥ 1.5 billion from ¥4.4 billion for the corresponding three month period of the previous year.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was a loss of ¥1.6 billion, a ¥1.8 billion decrease from ¥0.2 billion for the corresponding three month period of the previous year. This segment recorded equity in loss from investment in a partnership, NPF-Harmony (Japan), reflecting other than temporary decline in its fair value.

Accordingly, net income for the three month period ended June 30, 2008 was ¥2.9 billion, a decrease of ¥0.6 billion from ¥3.5 billion for the corresponding three month period of the previous year. Other factors included a gain from the exchange of shares in Mitsui Leasing & Development, Ltd. for JA Mitsui Leasing, Ltd.

 

-12-


Americas Segment

Gross profit for the three month period ended June 30, 2008 was ¥19.2 billion, a decrease of ¥3.2 billion from ¥22.4 billion for the corresponding three month period of the previous year. Oil products trading subsidiary Westport Petroleum, Inc. (United States) recorded a significant decrease of ¥12.9 billion due to evaluation losses on derivative contracts(*1). On the other hand, Novus International Inc. recorded an increase of ¥7.6 billion in gross profit for the three month period ended June 30, 2008 reflecting higher product prices as well as increase in sales volume supported by a strong demand of animal feed additives. Also, Steel Technologies, Inc. (United States), which was acquired in June 2007, contributed to the increase in gross profit by ¥2.6 billion.

Operating income for the three month period ended June 30, 2008 was ¥1.2 billion, a decrease of ¥3.8 billion from ¥5.0 billion for the corresponding three month period of the previous year. Selling, general and administrative expenses at Mitsui & Co. (U.S.A.), Inc. and its subsidiaries increased.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥1.2 billion, a ¥0.1 billion decrease from ¥1.3 billion for the corresponding three month period of the previous year.

Net income for the three month period ended June 30, 2008 was ¥2.1 billion, a decrease of ¥0.6 billion from ¥2.7 billion for the corresponding three month period of the previous year. In addition to above factors, interest expenses, net of interest income, decreased by ¥1.2 billion at Mitsui & Co. (U.S.A.), Inc. and its subsidiaries resulting from a decline in U.S. Dollar interest rates.

 

(*1) Besides mark-to-market evaluation losses on derivative contracts, Westport Petroleum, Inc. maintained inventories which involved unrealized holding gains.

Europe, the Middle East and Africa Segment

Gross profit for the three month period ended June 30, 2008 was ¥4.0 billion, a decrease of ¥1.7 billion from ¥5.7 billion for the corresponding three month period of the previous year, reflecting a decrease in gross profit of energy business.

This segment recorded a ¥2.4 billion operating loss for the three month period ended June 30, 2008, a ¥2.2 billion decline from ¥0.2 billion loss for the corresponding three month period of the previous year, reflecting an increase mainly in personnel expenses.

Net income for the three month period ended June 30, 2008 was ¥0.4 billion, a decrease of ¥0.4 billion from ¥0.8 billion for the corresponding three month period of the previous year. The above mentioned decrease in operating profit was partly offset by a gain of ¥1.8 billion from sale of office building previously held by Mitsui & Co. France S.A.S.

Asia Pacific Segment

Gross profit for the three month period ended June 30, 2008 was ¥7.7 billion, a slight decrease of ¥0.2 billion from ¥7.9 billion for the corresponding three month period of the previous year.

Operating income for the three month period ended June 30, 2008 was ¥1.5 billion, a decrease of ¥0.5 billion from ¥2.0 billion for the corresponding three month period of the previous year, reflecting increases mainly in personnel expenses.

Net income for the three month period ended June 30, 2008 was ¥11.8 billion, an increase of ¥6.6 billion from ¥5.2 billion for the corresponding three month period of the previous year. The main factor of the increase in net income is attributable to the segment’s minority interest in Mitsui Iron Ore Development Pty. Ltd. (Australia) and Mitsui Coal Holdings Pty. Ltd. (Australia).

 

-13-


3. Financial Condition and Cash Flows

(1)Assets, Liabilities and Shareholders’ Equity

Total assets as of June 30, 2008 were ¥10,293.4 billion, an increase of ¥755.6 billion from ¥9,537.8 billion, as of March 31, 2008.

Current assets as of June 30, 2008 were ¥5,529.5 billion, an increase of ¥471.4 billion from ¥5,058.1 billion as of March 31, 2008, mainly attributable to increases in trade receivable, inventories and derivative assets at the Energy Segment and the Financial Markets Segment reflecting higher commodity prices.

LOGO

Total current liabilities as of June 30, 2008 were ¥3,868.7 billion, an increase of ¥427.1 billion from ¥3,441.6 billion as of March 31, 2008, primarily due to increases in trade payables and derivative liabilities corresponding to increases in the current assets as well as an increase in short time debt in the Americas Segment.

As a result, working capital, or current assets minus current liabilities, as of June 30, 2008 was ¥1,660.8 billion, an increase of ¥44.3 billion from ¥1,616.5 billion as of March 31, 2008.

 

-14-


The sum of “total investments and non-current receivables,” “property and equipment—at cost,” “intangible asset, less accumulated amortization” “deferred tax assets-non-current” and “other assets” as of June 30, 2008 totaled ¥4,763.9 billion, a ¥284.1 billion increase from ¥4,479.8 billion as of March 31, 2008, mainly due to the following factors:

 

 

Total investments and non-current receivables as of June 30, 2008 was ¥3,476.1 billion, a ¥238.8 billion increase from ¥3,237.3 billion as of March 31, 2008. Within this category, investments in and advances to associated companies as of June 30, 2008 was ¥1,465.5 billion, a ¥132.5 billion increase from ¥1,330.0 billion as of March 31, 2008.

 

  - Major expenditure was an acquisition of shares in MED3000 Group Inc., a US based company of healthcare management and technology services for healthcare providers for ¥6.5 billion.

 

  - There were increases which do not involve cash outflow such as increases in equity in earnings (before tax effect) of ¥ 30.2 billion (net of ¥33.7 billion dividends received from associated companies) and a net ¥ 74.1 billion increase caused from foreign exchange translation adjustment. Other investment as of June 30, 2008 was ¥1,384.1billion, a ¥102.6 billion increase from ¥1,281.5 billion as of March31, 2008, mainly due to:

 

  - acquisition of shares in Sakhalin Energy Investment for ¥13.3 billion and in Mitsubishi Aircraft Corp. for ¥3.5 billion;

 

  - a ¥60.7 billion net improvement of unrealized holding gains and losses on available-for-sales securities, such as those of INPEX Holdings Inc. and Seven & i Holdings Co., Ltd; and

 

  - ¥8.1billion loss on write down of shares in Mitsui Chemicals, Inc.

 

 

Property and equipment—at cost as of June 30, 2008 was ¥1,058.5 billion, an increase of ¥42.2 billion from ¥1,016.3 billion as of March 31, 2008. Major components were :

 

  - iron ore mining expansion projects in Australia for ¥21.7 billion (including effect from foreign exchange translation of ¥10.7 billion);

 

  - coal mining expansion projects in Australia for ¥18.0 billion (including effect from foreign exchange translation of ¥15.9 billion); and

 

  - energy related projects such as Enfield and Vincent oil field in Australia, Tui oil field in New Zealand, oil and gas projects in Oman, and oil and gas projects of offshore Gulf of Mexico, in total for ¥14.5 billion (including effect from foreign exchange translation of ¥11.8 billion).

Long-term debt, less current maturities as of June 30, 2008 was ¥2,962.0 billion, an increase of ¥17.6 billion from ¥2,944.4 billion as of March 31, 2008 mainly due to an increase in borrowings for rolling stock leasing subsidiaries abroad.

Deferred tax liabilities-non-current as of June 30, 2008 was ¥446.5 billion, an increase of ¥59.2 billion from ¥387.3 billion as of March 31, 2008, reflecting the increases “investments in and advances to associated companies” and “other investments” as discussed above.

Shareholders’ equity as of June 30, 2008 was ¥2,392.9 billion, an increase of ¥209.2 billion from ¥2,183.7 billion as of March 31, 2008, primarily due to the increase in retained earnings by ¥61.3 billion, net improvement in foreign currency translation adjustments by ¥104.5 billion due to stronger U.S. Dollar, Australian Dollar and Brazilian Real against Japanese Yen, and net improvement in unrealized holding gains on available-for-sale securities by ¥36.7 billion.

As a result, shareholders’ equity to total assets ratio as of June 30, 2008 was 23.2%, a 0.3 percentage point improvement from 22.9% as of March 31, 2008. Net interest bearing debt, or interest bearing debt minus cash and cash equivalents and time deposits as of June 30, 2008 was ¥2,885.9 billion, a increase of ¥111.9 billion from ¥2,774.0 billion as of March 31, 2008. Net debt-to-equity ratio as of June 30, 2008 was 1.21 times, 0.06 point lower from 1.27 times as of March 31, 2008.

 

-15-


(*)Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

(2) Cash Flows during the three-month period Ended June 30, 2008

Cash Flows from Operating Activities

Net cash provided by operating activities for the three month period ended June 30, 2008 was ¥30.7 billion. The Group recorded operating income of ¥123.3 billion and net income of ¥103.1 billion for the three month period ended June 30, 2008 led by the robust performance of the Mineral & Metal Resources Segment and Energy Segment, while there were increases in cash outflows of ¥97.5 billion reflecting an increase and decrease of operating assets and liabilities, respectively, including increased inventories at Westport Petroleum, Inc.

Cash Flows from Investing Activities

Net cash used in investing activities for the three month period ended June 30, 2008 was ¥80.8 billion.

 

   

The net outflows of cash that corresponded to investments in and advances to associated companies (net of sales of investments in and collection of advances to associated companies) were ¥11.0 billion, which included an acquisition of shares in MED3000 Group Inc. for ¥6.5 billion.

 

   

The net outflows of cash that corresponded to other investments (net of sales of other investments) were ¥11.8billion. Major expenditures included additional investment in Sakhalin Energy Investment for ¥13.3 billion, acquisition of shares in Mitsubishi Aircraft Corp. for ¥3.5 billion. Proceeds from sales of those investments consisted of miscellaneous small ones.

 

   

The net outflow of cash that corresponded to purchases of property leased to others and property and equipment (net of sales of those assets) was ¥55.6 billion. Major expenditures of equipment included:

 

   

coal mining projects in Australia for ¥13.0 billion;

 

   

iron ore mining projects in Australia for ¥4.1 billion;

 

   

Enfield and Vincent oil field in Australia, Tui oil field in New Zealand, oil and gas projects in Oman, and oil and gas projects of offshore Gulf of Mexico as well as oil and gas projects by Mitsui Oil Exploration Co., Ltd. in total for ¥16.3 billion; and

 

   

leased rolling stock for ¥9.5 billion.

Free cash flow, or sum of net cash provided by operating activities and net cash used in investing activities, for the three-month period ended June 30, 2008 was a net outflow of ¥50.1 billion.

Cash Flows from Financing Activities

During the three-month period ended June 30, 2008, net cash inflow from borrowing of short-term debt and long-term debt was ¥85.3 billion. Thus, net cash provided by financing activities was ¥42.8 billion after the payments of cash dividends of ¥41.8 billion and for the acquisition of treasury stock.

As a result, cash and cash equivalents as of June 30, 2008 were ¥ 910.3 billion, a ¥11.0 billion increase from 899.3 billion as of March 31, 2008.

 

-16-


2. Other

[Changes in Accounting Principles, Procedures and Presentation Methods in Preparing Quarterly Consolidated Financial Statements]

 

 

Offsetting of amounts related to certain contracts

During the three-month period ended June 30, 2008, Mitsui & Co., Ltd. and subsidiaries (collectively, the “companies”) adopted FASB Staff Position (“FSP”) No. FIN 39-1, “Amendment of FASB Interpretation No. 39.”

FSP No. FIN 39-1 amends FASB Interpretation No. 39, “Offsetting of Amounts Related to Certain Contracts–an interpretation of APB Opinion No. 10 and FASB Statement No. 105”, to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement.

As a result of the adoption of this FSP, the companies have offset ¥304,614 million in derivative assets and liabilities against other current assets and liabilities in the Consolidated Balance Sheets as of June 30, 2008. The companies have also offset ¥153,050 million in derivative assets and liabilities against other current assets and liabilities in the Consolidated Balance Sheets as of March 31, 2008 to conform to the current quarterly presentation.

Significant accounting policies other than the described above have not been changed from the Annual Report filed with the Ministry of Financial Services Agency of Japan on June 24, 2008.

 

-17-


3. Consolidated Financial Statements

(1) Consolidated Balance Sheets

(Millions of Yen)

Assets

 

     June 30,
2008
    March 31,
2008
 

Current Assets

    

Cash and cash equivalents

   ¥ 910,289     ¥ 899,264  

Time deposits

     14,918       12,302  

Marketable securities

     16,167       7,114  

Trade receivables:

    

Notes and loans, less unearned interest

     455,126       424,406  

Accounts

     2,189,596       2,125,640  

Associated companies

     287,120       228,831  

Allowance for doubtful receivables

     (22,530 )     (23,289 )

Inventories

     781,023       739,721  

Advance payments to suppliers

     141,970       95,188  

Deferred tax assets–current

     39,496       37,766  

Derivative assets

     388,699       279,295  

Other current assets

     327,606       231,826  
                

Total current assets

     5,529,480       5,058,064  
                

Investments and Non-current Receivables:

    

Investments in and advances to associated companies

     1,465,496       1,333,042  

Other investments

     1,384,062       1,281,476  

Non-current receivables, less unearned interest

     479,600       497,265  

Allowance for doubtful receivables

     (59,347 )     (58,957 )

Property leased to others–at cost, less accumulated depreciation

     206,273       184,447  
                

Total investments and non-current receivables

     3,476,084       3,237,273  
                

Property and Equipment—at Cost:

    

Land, land improvements and timberlands

     174,465       188,848  

Buildings, including leasehold improvements

     376,135       385,104  

Equipment and fixtures

     865,183       815,202  

Mineral rights

     150,505       146,120  

Vessels

     34,839       33,789  

Projects in progress

     212,871       176,987  
                

Total

     1,813,998       1,746,050  

Accumulated depreciation

     (755,499 )     (729,715 )
                

Net property and equipment

     1,058,499       1,016,335  
                

Intangible Assets, less Accumulated Amortization

     132,478       128,504  

Deferred Tax Assets—Non-current

     19,265       20,574  

Other Assets

     77,559       77,079  
                

Total

   ¥ 10,293,365     ¥ 9,537,829  
                

 

-18-


(Millions of Yen)

Liabilities and Shareholders’ Equity

 

     June 30,
2008
    March 31,
2008
 

Current Liabilities:

    

Short-term debt

   ¥ 553,504     ¥ 464,547  

Current maturities of long-term debt

     295,611       276,620  

Trade payables:

    

Notes and acceptances

     80,067       79,414  

Accounts

     1,976,076       1,888,911  

Associated companies

     80,024       69,476  

Accrued expenses:

    

Income taxes

     92,900       127,411  

Interest

     20,886       21,924  

Other

     95,758       85,526  

Advances from customers

     171,011       113,939  

Derivative liabilities

     414,277       238,684  

Other current liabilities

     88,597       75,111  
                

Total current liabilities

     3,868,711       3,441,563  
                

Long-term Debt, less Current Maturities

     2,962,000       2,944,383  
                

Accrued Pension Costs and Liability for Severance Indemnities

     32,041       32,754  
                

Deferred Tax Liabilities—Non-current

     446,546       387,337  
                

Other Long-Term Liabilities

     318,362       304,156  
                

Minority Interests

     272,845       243,976  
                

Shareholders’ Equity:

    

Common stock

     338,662       337,544  

Capital surplus

     433,427       432,245  

Retained earnings:

    

Appropriated for legal reserve

     48,336       47,463  

Unappropriated

     1,457,736       1,397,313  

Accumulated other comprehensive income (loss):

    

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

     177,138       140,446  

Foreign currency translation adjustments

     (30,726 )     (135,196 )

Defined benefit pension plans

     (31,600 )     (32,160 )

Net unrealized gains and losses on derivatives

     5,715       1,135  
                

Total accumulated other comprehensive income (loss)

     120,527       (25,775 )
                

Treasury stock, at cost

     (5,828 )     (5,130 )
                

Total shareholders’ equity

     2,392,860       2,183,660  
                

Total

   ¥ 10,293,365     ¥ 9,537,829  
                

 

Notes:

1. The Consolidated Balance Sheets above are not reviewed by auditor.
2. The Consolidated Balance Sheet as of March 31, 2008 above has been adjusted due to the adoption of FASB Staff Position No. FIN 39-1, “Amendment of FASB Interpretation No. 39”, during the three-month period ended June 30, 2008.

 

-19-


(2) Statement of Consolidated Income

(Millions of Yen)

 

     Three-month period ended
June 30, 2008
 

Revenues :

  

Sales of products

   ¥ 1,346,921  

Sales of services

     138,275  

Other sales

     40,675  
        

Total revenues

     1,525,871  
        

[Total Trading Transactions :

  

¥ 4,287,897 million]

  

Cost of Revenues :

  

Cost of products sold

     (1,188,869 )

Cost of services sold

     (42,569 )

Cost of other sales

     (19,453 )
        

Total cost of revenues

     (1,250,891 )
        

Gross Profit

     274,980  

Other Expenses (Income) :

  

Selling, general and administrative

     150,718  

Provision for doubtful receivables

     997  

Interest expense, net of interest income

     8,997  

Dividend income

     (24,616 )

Gain on sales of securities - net

     (6,412 )

Loss on write-down of securities

     10,628  

Gain on disposal or sales of property and equipment - net

     (2,228 )

Impairment loss of long-lived assets

     473  

Other expense - net

     11,164  
        

Total other expenses

     149,721  
        

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

     125,259  
        

Income Taxes

     53,155  
        

Income from Continuing Operations before Minority Interests and Equity in Earnings

     72,104  

Minority Interests in Earnings of Subsidiaries

     (13,646 )

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

     44,626  
        

Net Income

   ¥ 103,084  
        

Comprehensive Income :

  
        

Net income

   ¥ 103,084  
        

Other comprehensive income (after income tax effect):

  

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

     36,692  

Foreign currency translation adjustments

     104,470  

Defined benefit pension plans

     560  

Net unrealized gains and losses on derivatives

     4,580  
        

Comprehensive Income

   ¥ 249,386  
        

 

Note: The Statement of Consolidated Income above is not reviewed by auditor.

 

-20-


(3) Statement of Consolidated Cash Flows

(Millions of Yen)

 

     Three-month period ended
June 30, 2008
 

Operating Activities:

  

Net income

   ¥ 103,084  

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

  

Depreciation and amortization

     34,495  

Pension and severance costs, less payments

     1,752  

Provision for doubtful receivables

     997  

Gain on sales of securities – net

     (6,412 )

Loss on write-down of securities

     10,628  

Gain on disposal or sales of property and equipment – net

     (2,228 )

Impairment loss of long-lived assets

     473  

Deferred income taxes

     (18,640 )

Minority interests in earnings of subsidiaries

     13,646  

Equity in earnings of associated companies, less dividends received

     (9,606 )

Changes in operating assets and liabilities:

  

Increase in trade receivables

     (63,310 )

Increase in inventories

     (68,103 )

Increase in trade payables

     53,242  

Other – net

     (19,351 )
        

Net cash provided by operating activities

     30,667  
        

Investing Activities:

  

Net increase in time deposits

     (2,011 )

Net increase in investments in and advances to associated companies

     (11,028 )

Net increase in other investments

     (11,846 )

Net increase in long-term loan receivables

     (325 )

Net increase in property leased to others and property and equipment

     (55,635 )
        

Net cash used in investing activities

     (80,845 )
        

Financing Activities:

  

Net increase in short-term debt

     65,388  

Net increase in long-term debt

     19,875  

Purchases of treasury stock – net

     (632 )

Payments of cash dividends

     (41,788 )
        

Net cash provided by financing activities

     42,843  
        

Effect of Exchange Rate Changes on Cash and Cash Equivalents

     18,360  
        

Net increase in Cash and Cash Equivalents

     11,025  

Cash and Cash Equivalents at Beginning of Period

     899,264  
        

Cash and Cash Equivalents at End of Period

   ¥ 910,289  
        

 

Note: The Statement of consolidated cash flows above is not reviewed by auditor.

 

-21-


(4) Assumption for going concern : N/A

(5) Operating Segment Information

Three-month period ended June 30, 2008 (from April 1, 2008 to June 30, 2008)

(Millions of Yen)

     Iron & Steel
Products
   Mineral & Metal
Resources
   Machinery &
Infrastructure
Projects
   Chemical    Energy    Foods & Retail    Consumer
Service & IT
    Logistics &
Financial Markets
 

Total Trading Transactions

   389,722    402,492    535,230    682,605    741,666    520,086    224,626     48,267  

Gross Profit

   17,666    40,997    28,195    27,483    75,027    19,668    19,795     14,304  

Operating Income (Loss)

   8,955    37,739    5,960    13,476    63,617    4,005    (5,161 )   5,939  

Equity in Earnings of Associated Companies

   856    20,266    9,689    2,272    10,011    685    829     (1,639 )

Net Income (Loss)

   5,793    36,372    15,893    1,473    30,572    3,171    (2,123 )   2,897  
                                          

Total Assets at June 30, 2008

   661,734    1,028,892    1,584,611    876,952    1,932,600    701,779    699,460     836,095  
                                          

 

     Americas    Europe,
the Middle East
and Africa
    Asia Pacific    Total    All Other    Adjustments
and
Eliminations
    Consolidated
Total

Total Trading Transactions

   458,441    122,160     161,591    4,286,886    1,016    (5 )   4,287,897

Gross Profit

   19,228    3,975     7,748    274,086    1,505    (611 )   274,980

Operating Income (Loss)

   1,170    (2,361 )   1,505    134,844    109    (11,688 )   123,265

Equity in Earnings of Associated Companies

   1,219    324     159    44,671    8    (53 )   44,626

Net Income (Loss)

   2,086    379     11,815    108,328    1,537    (6,781 )   103,084
                                    

Total Assets at June 30, 2008

   761,565    274,770     369,984    9,728,442    2,822,915    (2,257,992 )   10,293,365
                                    

 

Notes:

1. The Operating segment information above is not reviewed by auditor.
2. “All Other” includes business activities which primarily provide services, such as financing services and operations services to external customers and/or to the companies and associated companies. Total assets of “All Other” at June 30, 2008 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 as presented in the Statements of Consolidated Income.
6. Effective April 1, 2008, some of the chemical and automobile subsidiaries located in North and South America, which had been included in “Chemical” and “Machinery & Infrastructure Projects” respectively, were transferred to “Americas” to expand the regional business unit system.

 

-22-


(6) Significant changes in shareholders’ equity : None

[Supplemental Information]

Consolidated Financial Statements of the same period previous year

(1) Statement of Consolidated Income

(Millions of Yen)

 

     Three-month period ended
June 30, 2007
 

Revenues :

  

Sales of products

   ¥ 1,156,427  

Sales of services

     135,462  

Other sales

     42,611  
        

Total revenues

     1,334,500  
        

[Total Trading Transactions :

  

¥ 3,863,173 million]

  

Cost of Revenues :

  

Cost of products sold

     (1,035,715 )

Cost of services sold

     (37,911 )

Cost of other sales

     (24,514 )

Total cost of revenues

     (1,098,140 )
        

Gross Profit

     236,360  
        

Other Expenses (Income) :

  

Selling, general and administrative

     147,007  

Provision for doubtful receivables

     1,522  

Interest expense, net of interest income

     10,065  

Dividend income

     (17,954 )

Gain on sales of securities - net

     (43,981 )

Loss on write-down of securities

     838  

Gain on disposal or sales of property and equipment - net

     (60 )

Impairment loss of long-lived assets

     2  

Other expense - net

     889  
        

Total other expenses

     98,328  
        

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

     138,032  
        

Income Taxes

     43,426  
        

Income from Continuing Operations before Minority Interests and Equity in Earnings

     94,606  

Minority Interests in Earnings of Subsidiaries

     (9,962 )

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

     36,470  
        

Income from Continuing Operations

     121,114  

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

     59,919  
        

Net Income

   ¥ 181,033  
        

Comprehensive Income :

  
        

Net income

   ¥ 181,033  
        

Other comprehensive income (after income tax effect):

  

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

     25,217  

Foreign currency translation adjustments

     75,501  

Defined benefit pension plans

     153  

Net unrealized gains and losses on derivatives

     6,057  
        

Comprehensive Income

   ¥ 287,961  
        

 

Note: The Statement of Consolidated Income above is not reviewed by auditor.

 

-23-


(2) Operating Segment Information

Three-month period ended June 30, 2007 (from April 1, 2007 to June 30, 2007) (As restated)

(Millions of Yen)

 

     Iron & Steel
Products
   Mineral & Metal
Resources
   Machinery &
Infrastructure
Projects
   Chemical    Energy    Foods & Retail    Consumer
Service & IT
   Logistics &
Financial Markets

Total Trading Transactions

   363,633    415,585    550,383    629,992    466,052    489,202    246,650    36,703

Gross Profit

   15,689    20,950    27,449    26,971    49,821    20,509    28,009    12,132

Operating Income (Loss)

   7,121    16,725    6,994    12,546    38,804    3,980    3,854    4,364

Equity in Earnings of Associated Companies

   1,245    14,002    5,201    1,867    10,278    334    1,980    229

Net Income

   5,930    84,813    13,561    7,064    45,707    3,191    7,736    3,519
                                       

Total Assets at June 30, 2007

   690,085    1,085,557    1,685,161    888,323    1,715,669    727,090    732,439    681,534
                                       

 

     Americas    Europe,
the Middle East
and Africa
    Asia Pacific    Total    All Other     Adjustments
and
Eliminations
    Consolidated
Total

Total Trading Transactions

   358,511    121,600     186,862    3,865,173    1,229     (3,229 )   3,863,173

Gross Profit

   22,417    5,725     7,888    237,560    1,042     (2,242 )   236,360

Operating Income (Loss)

   4,951    (231 )   2,039    101,147    (762 )   (12,554 )   87,831

Equity in Earnings of Associated Companies

   1,302    52     132    36,622    37     (189 )   36,470

Net Income

   2,733    766     5,232    180,252    2,565     (1,784 )   181,033
                                     

Total Assets at June 30, 2007

   737,354    214,024     284,139    9,441,375    2,887,747     (2,110,487 )   10,218,635
                                     

 

Notes:

1. The Operating segment information above is not reviewed by auditor.
2. Total Assets at June 30, 2007 is not adjusted in accordance with the FASB Staff Position No. FASB Interpretation No. FIN 39-1, “Amendment of FASB Interpretation No.39.”
3. The figures of “Consolidated Total” for the-three month period ended June 30, 2007 has been reclassified to conform to the change in current period presentation for discontinued operations in accordance with SFAS No. 144. The reclassification to income (loss) from discontinued operation-net (after income tax effect) is included in “Adjustments and Eliminations.”
4. “All Other” includes business activities which primarily provide services, such as financing services and operations services to external customers and/or to the companies and associated companies. Total assets of “All Other” at June 30, 2007 consisted primarily of cash and cash equivalents and time deposits related to financing activities, and assets of certain subsidiaries related to the above services.
5. 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.
6. Transfers between operating segments are made at cost plus a markup.
7. Operating Income (Loss) reflects the companies’ a) Gross Profit, b) Selling, general and administrative expenses, and c) Provision for doubtful receivables as presented in the Statements of Consolidated Income.
8. Effective April 1, 2008, some of the chemical and automobile subsidiaries located in North and South America, which had been included in “Chemical” and “Machinery & Infrastructure Projects” respectively, were transferred to “Americas” to expand the regional business unit system.

The operating segment information for the three-month period ended June 30, 2007 has been restated to conform to the current period presentation.

 

-24-