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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended March 31, 2005 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report | ||
For the transition period from to |
Yes þ | No o |
Item 17 o | Item 18 þ |
Yes o | No þ |
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• | changes in economic conditions that may lead to unforeseen developments in markets for products handled by us; | |
• | fluctuations in currency exchange rates that may cause unexpected deterioration in the value of transactions; | |
• | adverse political developments in the various jurisdictions where we operate, which among things, may create delays or postponements of transactions and projects; | |
• | changes in laws, regulations or policies in any of the countries where we conduct our operations; and | |
• | significant changes in the competitive environment. |
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Item 1. | Identity of Directors, Senior Management and Advisers. |
Item 2. | Offer Statistics and Expected Timetable. |
Item 3. | Key Information. |
A. | Selected Financial Data. |
In Billions of Yen, Except Amounts per Share and Common Stock Data | ||||||||||||||||||||||
As of or for the Years Ended March 31, | ||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||
Results of Operations: | ||||||||||||||||||||||
Revenues(2)(3) | ¥ | 3,526 | ¥ | 2,983 | ¥ | 2,785 | ¥ | 2,487 | ¥ | 2,366 | ||||||||||||
Gross Profit(2)(3) | 726 | 614 | 570 | 545 | 560 | |||||||||||||||||
Equity in Earnings of Associated Companies(3) | 66 | 40 | 15 | 24 | 7 | |||||||||||||||||
Income from Continuing Operations(3) | 120 | 74 | 37 | 60 | 58 | |||||||||||||||||
Net Income | 121 | 68 | 31 | 55 | 52 | |||||||||||||||||
Free Cash Flows(4) | (24 | ) | (34 | ) | 48 | 51 | 141 | |||||||||||||||
Income from Continuing Operations per Share(3): | ||||||||||||||||||||||
Basic | 76.10 | 47.04 | 23.43 | 37.97 | 37.16 | |||||||||||||||||
Diluted | 71.70 | 44.44 | 22.17 | 35.63 | 34.88 | |||||||||||||||||
Net Income per Share: | ||||||||||||||||||||||
Basic | 76.55 | 43.25 | 19.68 | 34.97 | 37.16 | |||||||||||||||||
Diluted | 72.12 | 40.89 | 18.69 | 32.85 | 30.63 | |||||||||||||||||
Cash Dividends Declared per Share | 9 | 8 | 8 | 8 | 8 | |||||||||||||||||
Cash Dividends Declared per Share in U.S. Dollars(1) | $ | 0.09 | $ | 0.07 | $ | 0.07 | $ | 0.06 | $ | 0.07 |
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In Billions of Yen, Except Amounts per Share and Common Stock Data | |||||||||||||||||||||
As of or for the Years Ended March 31, | |||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||||
Financial Position at Year-End: | |||||||||||||||||||||
Total Assets | ¥ | 7,593 | ¥ | 6,716 | ¥ | 6,541 | ¥ | 6,668 | ¥ | 6,710, | |||||||||||
Total Shareholders’ Equity | 1,123 | 963 | 862 | 915 | 834 | ||||||||||||||||
Long-term Debt, less Current Maturities | 2,905 | 2,541 | 2,500 | 2,620 | 2,709 | ||||||||||||||||
Return on Equity | 11.6 | % | 7.5 | % | 3.5 | % | 6.3 | % | 6.3 | % | |||||||||||
Common Stock | 192 | 192 | 192 | 192 | 192 | ||||||||||||||||
Other Information at Year-End: | |||||||||||||||||||||
Common Stock: | |||||||||||||||||||||
Number of Shares Outstanding (in Thousands) | 1,582,211 | 1,581,013 | 1,581,377 | 1,583,180 | 1,583,675 | ||||||||||||||||
Number of Shareholders | 107,034 | 109,722 | 115,267 | 118,700 | 127,137 |
(1) | The U.S. dollar amounts represent translations of the Japanese yen amounts at the rates in effect on the respective dividend payment dates. |
(2) | For the year ended March 31, 2005, we changed the presentation of financing revenues and costs of certain subsidiaries engaged mainly in external consumer financing, which were formerly reported as “Interest expense, net of interest income.” The prior year figures have been restated to conform to the current year presentation. |
(3) | 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. |
(4) | Free Cash Flows represents the sum of net cash provided by operating activities and net cash used in investing activities. See Item 5. B. “Liquidity and Capital Resources — Use of Non-GAAP Financial Measures.” |
Exchange Rate Information |
Yen per U.S. Dollar | ||||||||
High | Low | |||||||
August 2005 | ¥ | 112.12 | ¥ | 109.37 | ||||
July 2005 | 113.42 | 110.47 | ||||||
June 2005 | 110.91 | 106.64 | ||||||
May 2005 | 108.17 | 104.41 | ||||||
April 2005 | 108.67 | 104.64 | ||||||
March 2005 | 107.49 | 103.87 |
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Yen per U.S. Dollar | ||||
Years Ended March 31, | Average Rate | |||
2005 | ¥ | 107.28 | ||
2004 | 112.75 | |||
2003 | 121.10 | |||
2002 | 125.64 | |||
2001 | 111.65 |
B. | Capitalization and Indebtedness. |
C. | Reasons for the Offer and Use of Proceeds. |
D. | Risk Factors. |
The decrease in the volume of trade and the flow of goods and materials resulting from the worldwide economic downturn may adversely impact our business, results of operations and financial condition. |
Fluctuations in commodity prices can adversely affect our results of operations and financial condition. |
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• | declines in commodity prices may result in a decrease in sales of those commodities in which we act as a principal or a decrease in sales of services in which we act as an agent. For instance, the operating results of the Energy Segment, which reflect annual production from our oil and gas activities, are sensitive to the price of crude oil. A decline of U.S.$1 per barrel in the price of crude oil adversely affects the revenues and equity in earnings of associated companies of this segment and results in a decrease in the segment’s annual net income of approximately ¥1 billion as of the year ended March 31, 2005; | |
• | because we are engaged in spot and derivative trading of commodities, unexpected changes in price may result in trading losses; and | |
• | as we invest a substantial amount of money in the production of commodities, a prolonged or cyclical decline in the price of commodities can have a long term adverse effect on our results of operations and financial condition and make it increasingly difficult for us to recover our capital investments or to divest our interests at prices acceptable to us, if at all. |
Exchange rate fluctuations may adversely affect our operating results. |
We are subject to significant counterparty credit risk from various companies or projects with which we do business or to which we lend. |
• | We provide vendor financing services and also act as guarantors to banks that provide financing to our customers. In addition, many of our customers purchase products and services from us on credit. At March 31, 2005, current trade receivable (less unearned interest and allowance for doubtful receivables — current) were ¥2,488.9 billion, representing 32.8% of our total assets and the recognized losses for doubtful receivables — current for the year ended March 31, 2005 and the balance of the allowance for doubtful receivables — current were ¥6.3 billion and ¥22.5 billion, respectively; | |
• | We engage in significant project financing activities as a lender or guarantor whereby we assume repayment risk; and | |
• | We have counterparty payment risks from various derivative transactions we enter into as part of our hedging activities. |
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• | liquidity crises arise in Japan or elsewhere in the world; | |
• | real estate prices or stock prices in Japan or other markets decline sharply, thereby adversely affecting the liquidity of our counterparties; or | |
• | the number of corporate bankruptcies in Japan increases. |
Changes in interest rates could have an adverse effect on our operating results. |
If the value of assets for which we act as lessor, such as real property and equipment, aircraft, ocean transport vessels and rolling stock decline, we may be forced to write down the value of these assets. |
Declines in the market value of equity and/or debt securities in Japan may decrease the value of our pension assets which in turn may increase the cost of satisfying our unfunded pension obligations. |
Our liquidity could be adversely affected by a downgrade in our credit ratings, significant changes in the lending or investment policies of our creditors or investors. |
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Due to our significant investments in marketable equity securities of Japanese issuers, a substantial decline in the Japanese stock market as experienced in the past could negatively affect our investment portfolio. |
Some of our operations are concentrated in a limited number of regions or countries, which could harm our business and results of operations if activity levels in these regions or countries decline. |
• | In Russia and Brazil, our interests in the exploration, development and production of minerals and energy resources are increasing. | |
• | In Indonesia, we actively participate in infrastructure projects including the operation of power plants. |
We may not be able to successfully restructure or eliminate unprofitable or underperforming subsidiaries or associated companies in a timely manner and any efforts to do so may not lead to improved results of operations. |
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Our alliances by forming joint ventures with, and strategic investments in, third parties may not result in successful operations. |
• | the operational success is critically dependent on factors that are beyond our control such as the financial condition and performance of the partner companies or the strategic investees; or | |
• | with respect to certain associated companies, we may fail to exercise adequate control over the management, operations and assets of the companies in which we invested or may fail to make major decisions without the consent of other shareholders or participants due to lack of common business goals and strategic objectives with our alliance partners. |
Our businesses in exploration, development and production of mineral resources and oil and gas may not develop in line with assumed costs and schedules, and are subject to the risks associated with estimating reserves and the operating performance of third party operators. |
• | development of projects may face schedule delays or cost overruns due to difficulties in technical conditions, procurement of materials, financial conditions and government regulations; | |
• | reserves are estimated based on available geological, technical, contractual and economic information, therefore actual development and production may significantly differ from originally estimated reserves; and | |
• | reserve replacement, on which future production will depend, may not be successfully implemented due to uncertainties such as failures in exploration or negotiations for acquisitions of known reserves with their owners. |
Intense competition from other Japanese general trading companies could have an adverse effect on our results of operations. |
• | stronger business associations and relationships with our customers, suppliers and business partners in both domestic and global markets; or | |
• | stronger global network and regional expertise, diversified global customer bases, greater financial engineering skills and market insights. |
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We may lose the opportunities of entry to new business areas because of the limitation of required human resources. |
Restrictions under environmental laws and regulations and any accidents relating to our use of hazardous materials could negatively affect our business, results of operations and financial condition. |
• | require us to perform site clean-ups; | |
• | require us to curtail or cease certain operations; | |
• | impose fines and payments for significant environmental damage; | |
• | require us to install costly pollution control equipment; and | |
• | require us to modify our operations. |
We are subject to extensive laws and regulations in Japan and other countries throughout the world. Changes in these laws and regulations could adversely affect our results of operations. |
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• | tariffs for products and services that we provide; | |
• | technical specifications with respect to environmental regulations; | |
• | income tax and duty rates; and | |
• | foreign exchange controls with respect to repatriation of investments and dividends. |
Employee misconduct could adversely affect our results of operations and reputation. |
Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of our common stock at a particular price on any particular trading day, or at all. |
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As a holder of ADSs, you will have fewer rights than a direct shareholder and you will have to act through the depositary to exercise those rights. |
Item 4. | Information on the Company. |
A. | History and Development of the Company. |
History |
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Recent Developments |
• | We are establishing more diversified and stable supply sources of mineral and energy resources through our global alliances with worldwide partners represented by the acquisition of shares of Valepar S.A. (the controlling shareholder of Companhia Vale do Rio Doce (“CVRD”), a Brazilian mineral resource producer) in September 2003 and the final investment decision in the second phase of development of the crude oil and LNG producing Sakhalin II Project jointly promoted with Royal Dutch/ Shell Group and Mitsubishi Corporation in May 2003. See “Item 4.B. Business Overview — Metal Products & Minerals Segment — Iron & Steel Raw Materials Unit” and “Item 4.B. Business Overview — Energy Segment.” | |
• | We are increasing our involvement in the power generation businesses. In December 2004, in partnership with International Power plc, a U.K. electric utility company, we completed the acquisition of international power generation portfolio of Edison Mission Energy in the United States pursuant to a share purchase agreement concluded by the three parties, which resulted in the acquisition of nine power plants by the partnership as of March 2005. | |
• | In the food business, aiming to respond to changing demands of consumers in Japan by upgrading our logistics infrastructure, we made an equity infusion into MITSUI FOODS CO., LTD. (formerly Sanyu Koami Co., Ltd.), a nationwide wholesaler and the core of our domestic food distribution business. Additionally, in May 2003, we acquired a majority interest in Mitsui Norin Co., Ltd., a producer and seller of raw tea leaves in Japan. Furthermore, all the business units are establishing a supply chain management (“SCM”) system in order to integrate our information and logistics services with those of our customers. See “Item 4.B. Business Overview.” |
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• | In March 2004, we increased our equity ownership in the United Auto Group, an auto dealer in the United States, with the goal of developing our automobile retail operations worldwide. | |
• | We are also actively pursuing new technologies and materials. For example, we are promoting research and development such as carbon nanotubes and zeolite membrane. See “Item 5.C. Research and Development, Patents and Licenses, etc.” |
Our Organizational Structure for the Year Ended March 31, 2003 |
• | Metal Products & Minerals Group; | |
• | Machinery, Electronics & Information Group; | |
• | Chemical Group; | |
• | Energy Group; and | |
• | Consumer Products & Services Group |
Our Organizational Structure for the Year Ended March 31, 2004 |
• | company wide evaluation of business opportunities; | |
• | re-allocation of assets and human resources; and | |
• | analysis and selection of investment opportunities. |
Our Organizational Structure for the Year Ended March 31, 2005 |
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Capital Expenditures |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Investments in and advances to associated companies | ¥190 | ¥203 | ¥64 | |||||||||
Acquisitions of available-for-sale securities | 91 | 131 | 154 | |||||||||
Acquisitions of held-to-maturity debt securities | 2 | 0 | 4 | |||||||||
Acquisitions of other investments | 68 | 47 | 40 | |||||||||
Additions to property leased to others and property and equipment | 170 | 113 | 123 | |||||||||
Acquisitions of subsidiaries, net of cash acquired | 5 | (3 | ) | 11 | ||||||||
Total | ¥526 | ¥491 | ¥396 | |||||||||
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Investment | ||||||||||
Years Ended | Amount | |||||||||
March 31, | Investee | Country | (Billions of Yen) | |||||||
2005 | Sakhalin Energy Investment Company Ltd. | Associated company | Bermuda (United Kingdom) | 82 | ||||||
IPM Eagle LLC | Associated company | United Kingdom | 62 | |||||||
Quintiles Transnational Japan K.K. | Associated company | Japan | 9 | |||||||
CornerStone Research & Development, Inc. | Subsidiary | United States | 9 | |||||||
2004 | Valepar S.A. | Associated company | Brazil | 97 | ||||||
Sakhalin Energy Investment Company Ltd. | Associated company | Bermuda (United Kingdom) | 57 | |||||||
2003 | Sakhalin Energy Investment Company Ltd. | Associated company | Bermuda (United Kingdom) | 15 | ||||||
NextCom K.K. | Associated company(1) | Japan | 12 | |||||||
Mitsui E&P Middle East B.V. | Subsidiary | Netherlands | 11 |
(1) | Nextcom K.K. became a subsidiary as a result of the business combination which was taken place in the year ended March 31, 2005. See Note 3, “BUSINESS COMBINATIONS,” to our consolidated financial statements. |
(*) | Bussan Credit Co., Ltd. changed its corporate name to Mitsui & Co. Financial Services Ltd. in April 2005. |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Sales of investments in and collection of advances to associated companies | ¥ | 53 | ¥ | 68 | ¥ | 10 | ||||||
Proceeds from sales of available-for-sale securities | 22 | 51 | 66 | |||||||||
Proceeds from maturities of available-for-sale securities | 57 | 110 | 145 | |||||||||
Proceeds from maturities of held-to-maturity debt securities | 3 | 15 | 11 | |||||||||
Proceeds from sales of other investments | 73 | 29 | 30 | |||||||||
Proceeds from sales of property leased to others and property and equipment | 79 | 60 | 62 | |||||||||
Total | ¥ | 287 | ¥ | 333 | ¥ | 324 | ||||||
Years Ended | Amount | |||||||||
March 31, | Investee | Country | (Billions of Yen) | |||||||
2005 | Vodafone K.K. | Japan | 15 | |||||||
2004 | SKY Perfect Communications Inc. | Japan | 12 | |||||||
2003 | Sumitomo Mitsui Banking Corporation | Japan | 11 | |||||||
JSAT Corporation | Japan | 6 | ||||||||
Mitsui Trust Holdings, Inc. | Japan | 2 |
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• | ¥10.8 billion from the sale of our office building in the United Kingdom; and | |
• | ¥12.8 billion from the sale of Mitsui’s corporate residences and dormitories in Japan. |
B. | Business Overview. |
Nature of Our Operations and Principal Activities |
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Seasonality of Our Business Activities |
Dependence on Patents and Licenses and Industrial, Commercial or Financial Contracts |
Marketing Channels |
Competitive Position |
Government Regulations |
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Products and Services and Principal Activities by Reportable Operating Segments |
The Establishment of the Five Major Operating Groups Structure for the Year Ended March 31, 2003 |
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• | Our five products and services focused operating segments were Metal Products & Minerals; Machinery, Electronics & Information; Chemical; Energy; and Consumer Products & Services; and | |
• | Our four region-focused operating segments were Domestic Branches and Offices; Americas; Europe; and Other Overseas Areas. |
Abolishment of the Five Major Operating Groups Structure for the Year Ended March 31, 2004 |
Reorganization of Business Units in the Head Office and Change in the Reportable Segments for the Year Ended March 31, 2005 |
• | The Domestic Branches and Offices Segment was abolished. As a result, the operating results previously reported by the Domestic Branches and Offices Segment are now reviewed by each of Chief Operating Officers of the related business units in the Head Office based on the categories of their products and services. | |
• | Reorganizations of the 18 business units were implemented whereby we integrated business units within the same five products and services focused reportable operating segments. For example, we combined the former Iron & Steel Raw Materials Unit and the former Non-Ferrous Metals Unit into the Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit. Additionally, media related businesses such as broadcasting and content businesses previously included in the Machinery, Electronics & Information Segment were transferred to the Consumer Products & Services Segment. Furthermore, we introduced two new business units whose business activities |
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were in most cases previously reported in “All Other” as businesses handled outside the five products and services based reportable segments. The first is the Transportation Logistics Business Unit which engages in logistics services. The other is the Financial Markets Business Unit which engages in financial services, including businesses previously handled in the Metal Products & Minerals Segment, such as commodity trading. As a result, the Transportation Logistics Business Unit and the Financial Markets Business Unit have comprised a new reportable segment, the Logistics & Financial Markets Segment. |
• | Our six products and services focused operating segments were: |
• | Our three region-focused operating segments were: |
In Billions, Except Percentages | ||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||
Metal Products & Minerals | ¥ | 121.4 | 16.7 | % | ¥ | 77.0 | 12.5 | % | ¥ | 71.5 | 12.6 | % | ||||||||||||
Machinery, Electronics & Information | 137.3 | 18.9 | 128.7 | 21.0 | 121.1 | 21.3 | ||||||||||||||||||
Chemical | 87.1 | 12.0 | 91.1 | 14.8 | 69.3 | 12.2 | ||||||||||||||||||
Energy | 72.6 | 10.0 | 54.6 | 8.9 | 53.8 | 9.4 | ||||||||||||||||||
Consumer Products & Services | 152.6 | 21.0 | 135.9 | 22.1 | 122.6 | 21.5 | ||||||||||||||||||
Logistics & Financial Markets | 46.7 | 6.4 | 32.3 | 5.3 | 33.1 | 5.8 | ||||||||||||||||||
Americas | 49.9 | 6.9 | 40.7 | 6.6 | 44.6 | 7.8 | ||||||||||||||||||
Europe | 20.7 | 2.9 | 20.0 | 3.3 | 22.5 | 4.0 | ||||||||||||||||||
Other Overseas Areas | 25.8 | 3.6 | 24.1 | 3.9 | 23.5 | 4.1 | ||||||||||||||||||
All Other | 12.3 | 1.7 | 10.4 | 1.7 | 10.6 | 1.9 | ||||||||||||||||||
Adjustments and Eliminations | (0.6 | ) | (0.1 | ) | (0.9 | ) | (0.1 | ) | (3.0 | ) | (0.6 | ) | ||||||||||||
Consolidated Total | ¥ | 725.8 | 100.0 | % | ¥ | 613.9 | 100.0 | % | ¥ | 569.6 | 100.0 | % | ||||||||||||
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In Billions, Except Percentages | ||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||
Metal Products & Minerals | ¥ | 68.1 | 34.4 | % | ¥ | 28.7 | 22.6 | % | ¥ | 24.7 | 24.2 | % | ||||||||||||
Machinery, Electronics & Information | 31.4 | 15.9 | 29.4 | 23.2 | 14.1 | 13.8 | ||||||||||||||||||
Chemical | 24.6 | 12.4 | 31.4 | 24.8 | 18.3 | 18.0 | ||||||||||||||||||
Energy | 35.5 | 17.9 | 21.7 | 17.1 | 25.7 | 25.2 | ||||||||||||||||||
Consumer Products & Services | 32.0 | 16.2 | 23.3 | 18.4 | 21.2 | 20.8 | ||||||||||||||||||
Logistics & Financial Markets | 18.5 | 9.3 | 10.4 | 8.2 | 10.9 | 10.7 | ||||||||||||||||||
Americas | 14.7 | 7.4 | 8.5 | 6.7 | 9.5 | 9.3 | ||||||||||||||||||
Europe | 2.4 | 1.2 | 3.0 | 2.4 | 4.2 | 4.1 | ||||||||||||||||||
Other Overseas Areas | 8.2 | 4.1 | 6.6 | 5.2 | 7.6 | 7.5 | ||||||||||||||||||
All Other | (0.5 | ) | (0.2 | ) | (1.9 | ) | (1.5 | ) | (1.8 | ) | (1.8 | ) | ||||||||||||
Adjustments and Eliminations | (36.9 | ) | (18.6 | ) | (34.3 | ) | (27.1 | ) | (32.5 | ) | (31.8 | ) | ||||||||||||
Consolidated Total | ¥ | 198.0 | 100.0 | % | ¥ | 126.8 | 100.0 | % | ¥ | 101.9 | 100.0 | % | ||||||||||||
* | Operating income (loss) reflects our (a) Gross Profit, (b) Selling, general and administrative expenses, (c) Provision for doubtful receivables and (d) Government grant for transfer of substitutional portion of EPF, as presented in the Statements of Consolidated Income. |
In Billions, Except Percentages | ||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||
Metal Products & Minerals | ¥ | 47.0 | 38.8 | % | ¥ | 24.2 | 35.4 | % | ¥ | 16.1 | 51.8 | % | ||||||||||||
Machinery, Electronics & Information | 26.4 | 21.8 | 5.9 | 8.6 | (9.2 | ) | (29.6 | ) | ||||||||||||||||
Chemical | (6.9 | ) | (5.7 | ) | 11.4 | 16.7 | (3.6 | ) | (11.6 | ) | ||||||||||||||
Energy | 42.8 | 35.3 | 24.4 | 35.7 | 23.0 | 74.0 | ||||||||||||||||||
Consumer Products & Services | 16.9 | 14.0 | 18.9 | 27.6 | 9.6 | 30.9 | ||||||||||||||||||
Logistics & Financial Markets | 11.8 | 9.7 | 4.8 | 7.0 | 4.7 | 15.1 | ||||||||||||||||||
Americas | 12.3 | 10.2 | 0.2 | 0.3 | 3.3 | 10.5 | ||||||||||||||||||
Europe | 2.9 | 2.4 | 0.7 | 1.0 | 2.8 | 9.0 | ||||||||||||||||||
Other Overseas Areas | 13.8 | 11.4 | 10.4 | 15.2 | 8.6 | 27.7 | ||||||||||||||||||
All Other | 4.4 | 3.7 | 1.9 | 2.8 | 6.9 | 22.2 | ||||||||||||||||||
Adjustments and Eliminations | (50.3 | ) | (41.6 | ) | (34.4 | ) | (50.3 | ) | (31.1 | ) | (100.0 | ) | ||||||||||||
Consolidated Total | ¥ | 121.1 | 100.0 | % | ¥ | 68.4 | 100.0 | % | ¥ | 31.1 | 100.0 | % | ||||||||||||
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(1) | The figures of “Consolidated Total” for the years ended March 31, 2004 and 2003 have been reclassified to conform to the change in current year presentation for discontinued operations in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” |
(2) | “All Other” includes business activities which primarily provide services, such as development and sales of systems, financing services, and operations services to external customers, and/or to us and associated companies. |
(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) | Starting from the year ended March 31, 2005, we changed the presentation of financing revenues and costs of certain subsidiaries engaged mainly in external consumer financing, which were formerly reported as interest expense, net of interest income. In relation to this change, the figures of gross profit and operating income (loss) for the years ended March 31, 2004 and 2003 have been restated to conform to the current year presentation. |
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Metal Products & Minerals Segment |
• | in the Iron & Steel Products Business Unit, Mitsui Bussan Construction Materials Co., Ltd. (Japan), Tsuda Corporation (Japan), Regency Steel Asia Pte Ltd. (Singapore); and | |
• | in the Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit, Mitsui Bussan Raw Materials Development Corp. (Japan), Mitsui Iron Ore Development Pty. Ltd. (Australia), Mitsui Itochu Iron Pty. Ltd. (Australia), Sesa Goa Limited (India), Mitsui Coal Holdings Pty. Ltd. (Australia), Japan Collahuasi Resources B.V. (Netherlands) and Mitalco Inc. (the Unites States). |
• | in the Iron & Steel Products Business Unit, Nippon Steel Trading Co., Ltd. (Japan), Shanghai Bao-Mit Steel Distribution Co., Ltd. (China) and Thai Tinplate Manufacturing Co., Ltd. (Thailand); and | |
• | in the Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit, Valepar S.A. (Brazil) and BHP Mitsui Coal Pty., Ltd. (Australia). |
Iron & Steel Products Business Unit |
• | steel sheet for automobile and electric appliances, steel plates for shipbuilding and heavy electric machinery, galvanized steel products and tin material and products; | |
• | steel products for oil and gas projects including oil well tube and line pipe; | |
• | wire rod, specialty steel and bearing; | |
• | steel bars and other steel construction materials; and | |
• | semi-finished items including steel slabs to be processed into steel plates and steel billets to be processed into steel bars and wire rods. |
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• | We have recently established steel service centers, galvanized steel plants and tin-plating facilities at our subsidiaries and/or joint ventures with Japanese and overseas business partners in order to meet the rising demand from manufacturers of automobiles, electric appliances and heavy electric machinery that have transplanted their production centers to the United States, Southeast Asia and China. In 2002, we participated in Shanghai Bao-Mit Steel Distribution Co., Ltd. (China), a joint venture with Shanghai Baosteel Group Corporation, a Chinese iron and steel manufacturing company, in order to build a network of steel products service centers in China. Through this associated company, we have been promoting the integration of service centers within China in order to improve operational efficiency, and we are actively pursuing additional investments. | |
• | We frequently draw upon the unit’s logistics expertise in delivering a wide range materials and products in large volume under optimized schedule along with expertise in project financing. We also take advantage of the business relationships and marketing channels of other business units in the fields of energy, industrial plants, shipping and machinery. This enabled us to be involved in various industrial projects including the construction of oil and gas pipeline projects such as the West-East Natural Gas Pipeline project in China and the steel structure for the Bangkok Second International Airport Terminal. |
Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit |
• | trading, investment, logistics management and transportation services related to iron and steel raw materials, such as iron ore, coal, steel scrap, ferro-alloys and other minerals; and | |
• | trading, investment, transportation and processing of non-ferrous metal ores and ingots such as: copper, lead, zinc, tin, nickel, aluminum, magnesium, cobalt, titanium, other non-ferrous metals; sales and marketing of semi-fabricated non-ferrous products such as construction materials; and agent activities in the nuclear fuel import business. |
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• | In August 2002, we completed the construction of the West Angelas iron ore mine in Australia (as a part of the Robe River Joint Venture with Rio Tinto), which began shipments of iron ore to customers worldwide. In Australia, we also have a participating interest in Mount Newman Joint Venture and other joint ventures with BHP Billiton. | |
• | In September 2003, we purchased a 15% ownership interest (or 18.24% in terms of voting shares as of March 31, 2005), of Valepar S.A. (Brazil), the controlling shareholder of Companhia Vale do Rio Doce (“CVRD”) in Brazil. CVRD is a mining enterprise with operations that include mining of iron ore and other raw non-ferrous metals. | |
• | We own a 51% interest in Sesa Goa Limited (India), which produces iron ore and coke in India. | |
• | In April 2002, we entered into a strategic alliance with Anglo American Plc to develop the Moura and German Creek coalmines in Australia, which provides us with a solid foundation for future growth in the coal business. We also have participating interests in other coal mining joint ventures including South Walker Creek Joint Venture and Bengalla Joint Venture with BHP Billiton and Rio Tinto, respectively. |
Revenues | ||||||||||||||||
Billions of Yen | ||||||||||||||||
Revenues from Sales | ||||||||||||||||
Revenues from Sales of Products | of Services | |||||||||||||||
Commissions and | ||||||||||||||||
Revenues from Mineral | Revenues from Sales of | Trading Margins on | ||||||||||||||
Years Ended March 31, | Producing Activities | Other Products(*) | Intermediary Services | Total Revenues | ||||||||||||
2005 | ¥ | 88.0 | ¥ | 134.3 | ¥ | 18.5 | ¥ | 240.8 | ||||||||
2004 | 49.9 | 136.4 | 16.9 | 203.2 | ||||||||||||
2003 | 34.7 | 113.7 | 15.6 | 164.0 |
(*) | Revenues from sales of other products mainly consist of sales of scrap metals and non-ferrous metals such as copper and aluminum. |
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Mitsui’s | Other Major Participants | ||||||||||||||
Joint Venture or | Mitsui’s Subsidiary or | Name of | Percentage of | and Their Percentages of | |||||||||||
Investee(1) | Associated Company(2) | Mines(3) | Location | Ownership | Ownership | ||||||||||
Robe River Iron | |||||||||||||||
Associates | Mitsui Iron Ore | Pannawonica | Pilbara Region, | 33.00% | Rio Tinto | 53.00% | |||||||||
Development Pty. Ltd. | West Angelas | Western Australia | Nippon Steel | 10.50% | |||||||||||
Sumitomo Metal Industries | 3.50% | ||||||||||||||
Mount Newman Joint | |||||||||||||||
Venture | Mitsui Itochu Iron Pty. Ltd. | Mount Whaleback | Pilbara Region, Western Australia | 7.00% | BHP Billiton Itochu | 85.00% 8.00% | |||||||||
Yandi Joint Venture | Mitsui Iron Ore Development Pty. Ltd. | Marillana Creek | Pilbara Region, Western Australia | 7.00% | BHP Billiton Itochu | 85.00% 8.00% | |||||||||
Mount Goldsworthy | |||||||||||||||
Joint Venture | Mitsui Iron Ore Development Pty. Ltd. | North Area (Yarrie) (Nimingarra) Area C | Pilbara Region, Western Australia | 7.00% | BHP Billiton Itochu | 85.00% 8.00% | |||||||||
Sesa Goa Limited | Sesa Goa Limited | Codli Sonshi | Goa, India | 51.00% | (publicly listed company) | ||||||||||
Chitrandurga | |||||||||||||||
Hopset | Karnataka, India |
Mitsui’s | Other Major Participants | ||||||||||||||
Joint Venture or | Mitsui’s Subsidiary or | Name of | Percentage of | and Their Percentages of | |||||||||||
Investee(1) | Associated Company(2) | Mines(3) | Location | Ownership | Ownership | ||||||||||
BHP Mitsui Coal | |||||||||||||||
Pty. Ltd. | BHP Mitsui Coal Pty. Ltd. | Riverside South Walker Creek | Queensland, Australia | 20.00% | BHP Billiton | 80.00% | |||||||||
Bengalla Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Bengalla | New South Wales, Australia | 10.00% | Rio Tinto Wesfarmers Taiwan Power | 40.00% 40.00% 10.00% | |||||||||
Kestrel Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Kestrel | Queensland, Australia | 20.00% | Rio Tinto | 80.00% | |||||||||
Moura Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Moura | Queensland, Australia | 49.00% | Anglo American | 51.00% | |||||||||
German Creek Joint | |||||||||||||||
Venture | Mitsui Coal Holdings Pty. Ltd. | German Creek | Queensland, Australia | 30.00% | Anglo American | 70.00% |
(1) | The term “Investee” refers only to Sesa Goa Limited and BHP Mitsui Coal Pty. Ltd. |
(2) | “Mitsui’s Subsidiary or Associated Company” indicates names of the companies through which we own our interests in the joint ventures or the investee. Sesa Goa Limited is a Mitsui’s subsidiary in which it directly owns a 51% voting share. BHP Mitsui Coal Pty. Ltd. is a Mitsui’s associated company in which it directly owns a 20% voting share. |
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(3) | “Name of Mines” indicates the names of principal producing mines. |
(4) | In addition to the above-mentioned coal mining projects, through Mitsui Coal Holdings Pty. Ltd., we have small interests in two projects in Australia mainly promoted by Anglo American, namely, Moranbah North Joint Venture in Queensland and Drayton Joint Venture in New South Wales. Our percentage of ownership and annual production capacity of Moranbah North Joint Venture and Drayton Joint Venture are 4.75%, 3.9 million tons and 3.83%, 5.1 million tons, respectively. |
• | We participate in Compania Minera Dona Ines de Collahuasi SCM (Chile), a copper mine development company, in which we hold a 7.43% interest. The project, which commenced its commercial production in 1998, has been developed jointly with Anglo American Plc and Falconbridge Ltd. and has annual production capacity of about 500,000 tons of copper per annum. In addition, we have a 1.25% interest in Minera Los Pelambres in Chile whose production capacity is about 360,000 tons of copper per annum. | |
• | We own an undivided interest in both Eastalco and Intalco, aluminum smelting companies in the United States, providing access to 147,000 tons of aluminum ingots annually. Combining the metal taken from these companies with other sources, we have the capability to supply 220,000 tons of aluminum ingots annually. Those primary aluminum ingots are sold to the customers in Japan and the United States. | |
• | We participated in a nickel-cobalt mining and refining project at Rio Tuba area in the Republic of Philippines which has been developed jointly with Sumitomo Metal Mining Co., Ltd., Sojitz Corporation (formerly Nissho Iwai Corporation) and a local partner. This project is expected to produce nickel-cobalt mixed sulfide through a high-pressure acid leaching process, an advanced processing technology for nickel production. In addition, in April 2005, we, jointly with Sumitomo Metal Mining Co., Ltd., concluded an agreement for participation in the Goro Nickel Development Project in New Caledonia, which had been promoted by Inco Limited. |
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Machinery, Electronics & Information Segment |
• | Power, Transportation & Plant Projects Business Unit; | |
• | Machinery Business Unit; and | |
• | Information, Electronics and Telecommunication Business Unit. |
• | assess the commercial and technical feasibility of the projects; | |
• | design projects utilizing our financial, legal and industrial skills; | |
• | select and invite capable partners; and | |
• | arrange and/or assist the syndication of financing. |
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Power, Transportation & Plant Projects Business Unit |
• | energy related projects such as oil and gas development projects, oil refineries, LNG manufacturing facilities, and pipelines; | |
• | electric power projects such as power plants, power transmission and substation facilities; | |
• | water supply projects such as desalination plant, wastewater processing facilities and water supply and sewerage facilities; | |
• | transportation related business such as railway rolling stock and railway facilities and systems; | |
• | social infrastructure projects such as construction of airport, port facilities, road and other public facilities; | |
• | basic industry projects such as iron, non-ferrous metals, chemical plants; and. | |
• | environment-related projects such as waste disposal and recycling plants. |
• | In the Commonwealth of Independent States (“CIS”) and the Middle East, we were engaged in the structuring and the arrangement of debt and equity project financing for various natural gas energy projects. Together with export credit agencies and commercial banks, we also extended loans to project participants. | |
• | We acted as the Engineering, Procurement and Construction (“EPC”) contractor for various oil and gas production projects and for the construction of infrastructure facilities including power plants and petrochemical plants whereby we procured manufacturing equipment from Japanese and overseas subcontractors. | |
• | For gas pipeline projects such as Cabiunas and Malhas which were promoted by Petrobras in Brazil, we were engaged in the structuring and the arrangement of debt, equity and lease financing. We also extended loans to the project participants. | |
• | In a lead-free gasoline production project in Indonesia known as the Blue Sky Project, we were engaged in the structuring and the arrangement of debt and equity project financings. We also extended loans to the project participants. | |
• | As the primary EPC contractor, we are constructing the 790 megawatt Council Bluffs Energy Center Unit 4 coal fired power plant in Iowa, the United States, whereby we have subcontracted to Japanese and the United States subcontractors. |
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• | For the Taiwan High Speed Rail project, we are a commercial leader of a consortium consisting of Japanese railway car manufacturers and general trading companies, which supplied rolling stock and transportation facilities. |
• | In December 2004, we, together with International Power plc, completed the acquisition of the international power generation portfolio (nine power plants in total 4,514 megawatt as of March 2005) of MEC International BV, a Dutch holding company owned by Edison Mission Energy, and in July 2005 acquired additionally the Saltend 1,200 megawatt combined cycle power plant from Calpine Corporation. We established IPM Eagle LLP (United Kingdom) jointly with International Power plc to hold and manage these power generation businesses; | |
• | We have formed a joint venture with Calpine Corporation to construct, own and operate the 1,005 megawatt combined cycle power plants called Greenfield Energy Center which has secured a 20 year Clean Energy Supply contract with Ontario Power Authority of Ontario, Canada; and | |
• | We own a 36.324% interest in P.T. Paiton Energy (Indonesia), an Indonesian power producer, which owns a 1,230 megawatt coal fired power plant in East Java, Indonesia. P.T. Paiton Energy sells electricity to P.T. Perusahaan Listrik Negara, an electric utility company owned by the Indonesian government, under a power purchase agreement. In December 2002, an amendment to the original power purchase agreement became effective, thereby resolving a series of disputes between P.T. Paiton Energy and P.T. Perusahaan Listrik Negara, which were caused in large part by the regional financial crisis in Asia, particularly, in Indonesia in 1997. |
Machinery Business Unit |
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• | import and export, assembly and manufacturing, distribution and dealership of motor vehicles, motor cycles and their parts; retail finance and automobile auction business; | |
• | sales and trading of tanker, LNG carrier, container vessel, cargo vessel; operation of own vessel; chartering vessel; and ocean vessel related finance; | |
• | trading of aircraft and helicopter, leasing of aircraft, and trading of other products such as defense related equipment, aerospace system and aircraft engine; and | |
• | trading of industrial machinery including mining and construction equipment, production equipment and machining tool. |
• | We have operated a subsidiary P.T. Bussan Auto Finance (Indonesia), a retail finance company for Yamaha motorcycles since 1997; | |
• | We have been handling the logistics operations of automobile parts for Toyota’s manufacturing operations in North America and Europe; | |
• | We have increased our ownership in United Auto Group, Inc. (“UAG”), an automobile dealership group in the United States, to about 15.5% and by combining what we learned from our involvement in UAG with our knowledge of the global market, we continue to explore other opportunities to expand into retail dealership operations in developing market such as Russia, China and India; and | |
• | We have also invested in an auction business for used cars as a business partner of Japan Automobile Auction, Inc. (“J.A.A.”), an auction trader in Japan. In order to establish ourselves in the automobile auction business, together with J.A.A., we established an automobile auction joint venture company in Germany. |
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Information, Electronics and Telecommunication Business Unit |
• | network and systems integration (“NI/ SI”) businesses; | |
• | business process outsourcing services; | |
• | mobile communication businesses; | |
• | semiconductors related businesses; and | |
• | display related businesses. |
• | We provide integrated hardware and software solutions such as system building, network infrastructure devices, enterprise applications and network security service. These solutions are provided through subsidiaries and associated companies such as NextCom K.K. (Japan) and Nihon Unisys, Ltd. (Japan). In December 2004, NextCom K.K., a formerly associated company, BSI Co., Ltd., a software development and marketing subsidiary, and ADAM NET Ltd., a data telecommunications equipment marketing subsidiary, merged to seek synergies of comprehensive information technology services. NextCom K.K. remains as the surviving company among them and became a subsidiary. For more information, see Note 3, “BUSINESS COMBINATIONS,” to our consolidated financial statements. Nihon Unisys, Ltd. is a publicly listed company in Japan in which Mitsui and Unisys Corporation in the United States hold a 28.91% each of voting stocks as of March 31, 2005; | |
• | We are focusing on business process outsourcing services as the crucial business fields, through our subsidiary TOYO Officemation, Inc. (Japan). While it has been engaged in distribution of information processing devices such as optical character reader (“OCR”) and information input device. Recently, it has focused on enterprise information management such as customer information input, management and operation; |
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• | We are promoting various mobile communication businesses through alliances with domestic cell phone service providers and manufacturers. In 1990s we had established three regional companies in Japan that were engaged in sales agency of telecommunications line and related businesses. They were consolidated in one company as Mitsui & Associates Telepark Corporation (Japan) in April 2001 that changed corporate name as Telepark Corp. (Japan) in October 2004. Telepark Corp. is one of the major distributors of cell phones in Japan and sold 3.1 million cell phones for the year ended March 31, 2005. Telepark Corp. went public in Japan in April 2004; | |
• | While Bussan Microelectronics Corp. had been our core semiconductor trading subsidiary, we acquired another trading company, TEKSEL Co., Ltd., to broaden our customer base and product portfolio in 2002. To maximize synergies of the combined operations, in 2002 we established Xion Holdings, Inc.(*) (Japan) as a holding company for these two subsidiaries. And in 2004 in partnership with World Peace Group, a large scale distributor of electronic components and computer products who has its headquarter in Taipei and has various marketing channels in Asian countries, we established TEKSEL WPG Ltd. (Hong Kong) in order to provide semiconductor related products and services mainly for Japanese customers who are shifting their production to China; and | |
• | The shift of electronic device production to China has intensified since 2002, prompting our Information, Electronics and Telecommunication Business Unit to allocate additional human and capital resources to bolster our Chinese business. We concluded a broad strategic partnership agreement with SVA (GROUP) CO., LTD., a Chinese electronics manufacturer, and set up a joint venture company in Shanghai to market the strategic products of SVA (GROUP) CO., LTD. in China and worldwide. |
Chemical Segment |
(*) | Xion Holdings, Inc. changed its corporate name to Xion Electronics, Inc. in January 2005. |
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Organic Chemicals Business Unit |
• | petrochemical products such as Olefins, Aromatics, Styrene Monomer, Vinyl Chloride Monomer; | |
• | synthetic fiber intermediates such as Para-Xylene, Terephthalic Acid, Ethylene Glycol, Acrylonitrile; | |
• | industrial chemicals such as Phenol, Bis-Phenols, Acetone, Acetic Acid; | |
• | Methanol and Ammonia; | |
• | specialty chemicals such as polyurethane raw materials, detergent intermediates, oleo chemicals, functional dyes and natural chemicals; | |
• | life science products such as pharmaceutical products and intermediates, feed additives, food ingredients and development of biotechnology business; | |
• | agriscience products such as agricultural chemicals and intermediates, natural agricultural chemicals and biological agricultural chemicals; and | |
• | fertilizer and its raw materials including phosphate and promotion of greenery, agriculture and environmental business. |
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Plastics & Inorganic Chemicals Business Unit |
• | basic inorganic materials such as sulfur, sulfuric acid, salt, titanium ore and iodine; | |
• | inorganic products such as soda ash, caustic soda, catalyst, industrial gas and titanium oxide; | |
• | electronic materials such as electrolytic copper foil, optical fiber, and high-purity chemicals employed in semiconductor production; | |
• | plastic materials and products such as polyvinyl chloride, elastomers, polyolefin, ABS resin, engineering plastics, polystyrene, plastic food containers, wrapping materials, industrial films and carbon fiber; | |
• | additives of plastic such as elasticizer, stabilizer and pigment; and |
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• | SCM related businesses for production and distribution of office automation equipment, cell phone and electric appliances. |
• | A subsidiary, Bussan Nanotech Research Institute Inc. (Japan)(*), succeeded in developing technology to produce high-quality carbon nanotubes, and completed construction of its prototype facility. It has drawn attention and generated expectations for the creation of new business opportunities, which include use in development of new and high performance plastic materials by compounding nanotubes with plastics and in semiconductors to take advantage of their high degree of conductivity. | |
• | We have been developing and promoting the commercialization of ethanol separation technology by using zeolite membranes, which will improve the energy efficiency of biomass ethanol production. |
(*) | Carbon Nanotech Research Institute Inc. was merged with Bio Nanotec Research Institute Inc. and Device Nanotech Research Institute Inc. to form the newly established Bussan Nanotech Research Institute Inc. in April 2004. |
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Energy Segment |
• | Abu Dhabi Gas Liquefaction Limited in Abu Dhabi, in which we hold a 15% interest in LNG production and exporting activities, and which has some 5 million tonnes per annum LNG production capacity; | |
• | Northwest Shelf JV (“NWS JV”) in Australia, in which we hold an 8.33% interest in LNG production and exporting activities, and which has some 11.7 million tonnes per annum production capacity; | |
• | Qatar Liquefied Gas Company Ltd. in Qatar, in which we hold a 7.5% interest in LNG production and exporting activities, and which has some 9.6 million tonnes per annum production capacity; and | |
• | Oman LNG L.L.C. in Oman, in which we hold a 2.77% interest in LNG production and exporting activities, and which has some 6.6 million tonnes per annum production capacity. |
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• | Exploration and development of natural gas and production of LNG require significant capital and financial commitments. Moreover, this involves a broad range of logistical and technological expertise ranging from linking suppliers to distributors and consumers while developing plants in order to efficiently extract and liquefy the natural gas for transportation and then re-gasifying the LNG. Up until the mid-1990’s, purchase commitments by buyers with full “take or pay” obligations for a period of 20 years or more had been an essential element for equity holders, distributors and sellers of LNG projects to make the capital and financial commitment to build LNG production facilities. These equity investors had resisted making a capital and financial commitment without being able to fully securing stable long-term purchase commitments. In recent years, however, equity holders of several LNG projects have been making investments without fully securing long-term purchase commitments from buyers. | |
• | Due to technological innovations in the last decade, LNG producers have successfully reduced capital costs with respect to the construction of LNG production plants and LNG vessels. Technological innovation has also enabled the producers to increase the design capacities of LNG production plants and LNG vessels allowing them to benefit from economies of scale. These technological developments allow LNG to be more competitive with other types of energy sources. | |
• | In response to the needs of LNG buyers to adjust the supply and demand balance for LNG, the spot LNG market has been expanding, whereby the percentage of spot trades in the worldwide LNG contracts rose to 11.6% in 2004 from 1.3% in 1992. | |
• | In addition to traditional core LNG markets in Japan, Republic of Korea and Taiwan, the market is rapidly expanding in Europe and the United States. At the same time, new markets have been emerging in countries such as China and India due to an increasing demand for electricity. Considering the sizable economies of these countries and the increasing popularity of LNG as “clean energy”, the LNG market has been developing rapidly worldwide. |
Consumer Products & Services Segment |
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Foods & Retail Business Unit |
• | Import and domestic/offshore trade of wheat, barley, soybeans, corn, fats and oils, raw sugar, and rice; | |
• | Import and domestic/offshore trade of processed foods such as canned products, frozen foods and condiments, liquor, beverages such as coffee, tea and juice, dairy products, and foodstuffs such as marine products, animal products and vegetables; | |
• | Import and domestic trade of packaging, wrapping materials, and miscellaneous daily goods; | |
• | Manufacturer of beverages, beverage ingredients, boilers, and sugar-based products; | |
• | Domestic distribution and sales through the nationwide wholesaler subsidiary MITSUI FOODS CO., LTD. (Japan); and | |
• | Support services, such as supply chain management, for example logistics management, and product planning and development for retailers. |
(*) | Shin Mitsui Sugar Co., Ltd. (Japan) changed its corporate name to Mitsui Sugar Co., Ltd. (Japan) in April 2005. |
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• | In the cereals and grains area, we have formed a joint venture, United Harvest, LLC, with CHS Inc., an agricultural cooperative in the United States. Our exports of wheat from the United States are among the best, amounting to approximately four million tons per annum. | |
• | Ventura Foods, LLC, another joint venture formed with CHS Inc., is one of the largest suppliers of cooking oils for the institutional market in the United States. We invest in this company through WILSEY FOODS, INC. |
• | inventory management and procurement of foodstuffs, processed foods, and packaging based on sales information obtained from retailers, which enables more efficient and less expensive distribution from manufacturers to retailer stores and cost reductions; and | |
• | proposals for developing new products and services, and support in the form of traceability for securing food safety. |
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• | supply sundry goods and consumables, such as processed food, liquor, fast food, toys, and games, to more than ten thousand 7-Eleven stores in Japan; | |
• | supply food materials, containers, and packaging materials to vendors who supply boxed lunches, pre-cooked meals, and processed food to 7-Eleven stores in Japan; | |
• | supply various temperature-controlled products to 7-Eleven stores in Japan; and | |
• | supply cold products through the affiliate company Beijing Sanxin Refrigeration Logistics Co., Ltd. to 7-Eleven stores in Beijing. |
• | IT and logistics technology (“LT”) know-how for providing high-quality and low-cost services; | |
• | capital strength to withstand the acquisition of fixed assets and the purchases of businesses required for distribution and otherwise demonstrating our business capabilities; | |
• | quick decision-making and execution in marketing and investing; and | |
• | the ability to procure a wide variety of products in all regions by maintaining our credibility and a good reputation in the market. |
Lifestyle Business Unit |
• | apparel and non-apparel textile materials such as fibers, yarns and fabrics; and technical collaboration in these products field; | |
• | apparel products, related product development and manufacturing of those products; and brand merchandise-related businesses including equity participation; | |
• | non-apparel products such as interior and furniture, general merchandise and consumer goods; and | |
• | industrial materials such as paper and pulp. |
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• | original equipment manufacturing (“OEM”) business for domestic apparel manufacturers; and | |
• | business transactions involving branded luxury and accessible luxury products from Europe and the United States for the Japanese market. |
• | We supply a wide range of top-quality consumer goods imported from around the world, which include high-quality Sonicare ultrasonic toothbrushes, Brunswick bowling equipment and systems, MAGLITE handy flashlights, and top-of-the-line Lladro porcelain; | |
• | We trade woodchip and pulp, furthermore, we develop several afforestation projects in Australia, some of which are jointly promoted with several Japanese partners including paper manufacturing companies; and | |
• | As for paper and ceramic products, we closely partner with Japanese manufacturers and participate in joint venture production operations in China to sell products there and export them from China, as well as handling products in and from Japan. |
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Consumer Service Business Unit |
• | real estate development including construction, sale and leasing of houses, condominiums and office buildings and related construction material businesses and development of commercial facilities; | |
• | media-related service business including broadcasting, content service, television shopping channels, software service, amusement business and Internet-based marketing service; | |
• | outsourcing services including catering, uniform rental, building maintenance, and temporary personnel service, child care service; | |
• | medical service and health care related businesses such as nursing care-related services, clinic facilities and medical related information service. |
Logistics & Financial Markets Segment |
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• | in the Financial Markets Business Unit, Mitsui & Co. Energy Risk Management Ltd. (United Kingdom), Mitsui & Co. Precious Metals, Inc. (United States), Mitsui Bussan Futures Ltd. (Japan); and | |
• | in the Transportation Logistics Business Unit, Nitto Logistics Co., Ltd. (Japan), Mitsuibussan Insurance and Consulting Co., Ltd. (Japan), Tri-Net (Japan) Inc. (Japan). |
Financial Markets Business Unit |
• | dealing in derivative financial instruments such as foreign exchange and financial futures; and trading of and investment in debt and equity securities; | |
• | trading in precious metals, non-ferrous metals listed on the London Metal Exchange and derivative commodity instruments for energy, agricultural foods and other commodities; | |
• | financial equity investments including principal investment and venture capital operation; | |
• | real estate investment trusts (“REIT”) related business | |
• | development, origination and sales of financial products; investment in and portfolio management of financial products; and | |
• | leasing business |
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Transportation Logistics Business Unit |
• | international and domestic transport services including transportation of plants and other special cargos, tramper shipping, and airfreight; | |
• | warehousing and port services; operation, construction and management of warehouses and harbor facilities; | |
• | insurance agency and consultation for insurance; | |
• | solution providing service on logistics including SCM; and | |
• | REIT and other liquidating businesses related to logistics related facilities. |
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Americas Segment |
• | The Iron & Steel Products Division maintains alliances with steel mills, steel processors, and customers in the U.S. and other countries. Working closely with solution providers, it specializes in SCM of steel products, manages inventory and process arrangements. This division has been focusing on business activities through subsidiaries and associated companies such as Mitsui Steel, Inc. for steel products sales and demand chain management (“DCM”) services, Mitsui Steel Development Co., Inc. which holds Mi-Tech Steel Inc. (steel service center), PK U.S.A., Inc. (automotive steel stamping), Hannibal Industries, Inc. (steel tube and pallet rack manufacturing); Mitsui Tubular Products, Inc. (steel pipe sales), and TAMCO (steel bar manufacturing and sales). | |
• | The Iron & Raw Materials and Non-Ferrous Metals Division specializes in iron and steel raw materials, coal, primary aluminum, aluminum alloy, copper cathode, and non-ferrous materials. The division is supported by relationships with subsidiaries jointly held with the Head Office, for example, Raw Materials Development Co., Ltd. and Mitalco Inc. both in which the division has equity share of 20%. | |
• | The Power, Transportation & Plant Projects Division deals in power, energy, transportation, and industrial and infrastructure projects in the Americas through close coordination with the Head Office. In addition, subsidiaries such as Hydro Capital Corp. for waste water treatment projects in Mexico and MIT Wind Power, Inc. for wind power generation in Texas are engaged in this business field. | |
• | The Machinery Division deals in motor vehicles, ship and marine projects, aircraft and construction and industrial machinery. The Division works closely with United Auto Group, Hino Motors, Chevron, Modec International, Embraer, JetBlue and Komatsu. Particularly, its activities are seen in investment to distribution & retails of automobile/construction machinery/outdoor power equipment, newbuilding ship tonnage provider to oil major/shipping companies, aircraft leasing for the growing regional airlines. | |
• | The Organic Chemicals Division and the Plastics & Inorganic Chemicals Division are engaged in the domestic and international trade of various organic and inorganic chemicals and chemical intermediates, plastic resins, compounds and final products, pharmaceutical intermediates, food additives, fertilizer and crop protection chemicals, and petrochemicals. This division has extended business activities thorough subsidiaries such as Bioproducts, Inc. Recent development of this |
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division toward a new business is an acquisition of CornerStone Research & Development Inc., which focuses on processing and packaging of healthcare foods and chemicals. | ||
• | The Energy Division specializes in global trading of petroleum products, including crude oil, heavy oil and petroleum coke, as well as importation of LNG. This division has a subsidiary Westport Petroleum, Inc. in which Mitsui U.S.A. has 65.0% equity share and the remaining share is owned by the Head office. Westport Petroleum, Inc. is engaged in sales, trading and commercial and operational services to the energy industry with respect to pipeline and cargo trading of gasoline, jet fuel, diesel, refinery feedstocks, cutterstocks, bunker fuel, and fuel oils throughout the United States and major international energy markets. These transactions by Westport Petroleum, Inc. account for one of major part of our revenues from sales of products groupwide. | |
• | The food division deals in grain, coffee, meats, vegetables, eggs, juices, dairy products, frozen foods, feedstuff, edible oils and canned foods. Notably, this division has a subsidiary United Grain Corp, which is engaged in export facility operation for wheat and barley. | |
• | The Life commerce division focuses on consumer-oriented business development. This division has a subsidiary Portac, Inc. a lumber mill, which produces dimension lumber and specialty items for U.S consumption and export. In other area, the division has an equity share in MBK Real Estate Ltd., a real estate subsidiary jointly held with the Head Office and engaged in development and homebuilding services |
Europe Segment |
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Other Overseas Areas Segment |
China |
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• | In March 2003, we entered into a comprehensive strategic alliance with China Postal Logistics Co., Ltd. Through this alliance, we are now in a position to utilize the facilities and distribution networks of China’s postal service, the China State Post Bureau. | |
• | Through Mitsui International Logistics and Trade (Suzhou) Co., Ltd., which is referred in the business activities of the Plastics & Inorganic Chemicals Business Unit, we also became the first trading company to gain the right to conduct imports and exports under our own name outside a bonded area. We plan to use this subsidiary to handle merchandise flows to and from China, mainly to serve the Chinese bases of Japanese companies. Mitsui & Co., (China) Ltd. has minority share in this subsidiary. |
ASEAN Region |
Oceania |
The Middle East |
Southwest Asia |
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All Other Segment |
• | Bussan Credit Co., Ltd. (Japan)(*) is engaged in financial services such as commercial loan and cash management service, mainly provided to domestic subsidiaries and associated companies | |
• | Mitsui Knowledge Industry Co., Ltd. (Japan) is engaged in planning, development, maintenance and operation of computer systems | |
• | Mitsui & Co., Asia Investment Ltd. (Singapore) is engaged in-house financial services in the South East Asian region. |
(*) | Bussan Credit Co., Ltd. (Japan) changed its corporate name to Mitsui & Co. Financial Services Ltd. in April 2005. |
Principal Markets |
In Billions of Yen | |||||||||||||
Years Ended March 31, | |||||||||||||
2004 | 2003 | ||||||||||||
2005 | (As Restated) | (As Restated) | |||||||||||
Revenues(1),(2) | |||||||||||||
Distribution by Commodity: | |||||||||||||
Iron and Steel | ¥ | 407.1 | ¥ | 312.9 | ¥ | 281.8 | |||||||
Non-Ferrous Metals | 161.4 | 157.2 | 152.1 | ||||||||||
Machinery | 269.2 | 305.0 | 304.8 | ||||||||||
Electronics & Information | 144.8 | 119.8 | 108.1 | ||||||||||
Chemicals | 729.1 | 520.1 | 463.4 | ||||||||||
Energy | 1,048.4 | 954.6 | 831.0 | ||||||||||
Foods | 473.6 | 389.5 | 393.2 | ||||||||||
Textiles | 43.0 | 32.8 | 37.9 | ||||||||||
General Merchandise | 96.1 | 84.8 | 88.8 | ||||||||||
Property and Service Business | 153.0 | 106.2 | 123.5 | ||||||||||
Consolidated Total | ¥ | 3,525.7 | ¥ | 2,982.9 | ¥ | 2,784.6 | |||||||
(1) | Starting from the year ended March 31, 2005, we changed the presentation of financing revenues and costs of certain subsidiaries engaged mainly in external consumer financing, which were formerly reported as interest expense, net of interest income. In relation to this change, the figures of revenues for the years ended March 31, 2004 and 2003 have been restated to conform to the current year presentation. |
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(2) | In accordance with SFAS No. 144, revenues from discontinued operations are eliminated from each product amount and “Consolidated Total.” The figures the years ended March 31, 2004 and 2003 have been reclassified to conform to the current year presentation. |
In Billions of Yen | ||||||||||||
Years Ended March 31, | ||||||||||||
2004 | 2003 | |||||||||||
2005 | (As Restated) | (As Restated) | ||||||||||
Japan | ¥ | 7,736.5 | ¥ | 7,189.3 | ¥ | 7,102.7 | ||||||
United States | 1,096.3 | 831.6 | 808.3 | |||||||||
United Kingdom | 200.4 | 159.7 | 154.1 | |||||||||
China | 608.1 | 421.2 | 350.9 | |||||||||
All Other | 3,973.7 | 3,682.3 | 3,058.2 | |||||||||
Consolidated Total | ¥ | 13,615.0 | ¥ | 12,284.1 | ¥ | 11,474.2 | ||||||
(1) | Total trading transactions is a voluntary disclosure and represents the gross transaction volume or the nominal aggregate value of the sales contracts in which we act as principal and transactions in which we serve as agent. Total trading transactions is not meant to represent sales or revenues in accordance with U.S. GAAP. Total trading transactions should not be construed as equivalent to, or a substitute or proxy for, revenues, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing or financing activities. A substantial part of total trading transactions represents transactions in which title to and payment for the goods pass through us without physical acquisition and delivery through our inventories. We have included the information concerning total trading transactions because it is used by similar Japanese trading companies as an industry benchmark, and we believe it is a useful supplement to results of operations data as a measure of our performance compared to other similar Japanese trading companies. Total trading transactions is included in the measure of segment profit and loss reviewed by the chief operating decision maker. See Notes 2, “BASIS OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” and 17, “SEGMENT INFORMATION” accompanying the consolidated financial statements for further discussion. |
(2) | Starting from the year ended March 31, 2005, we changed the presentation of financing revenues and costs of certain subsidiaries engaged mainly in external consumer financing, which were formerly reported as interest expense, net of interest income. In relation to this change, the figures of total trading transactions for the years ended March 31, 2004 and 2003 have been restated to conform to the current year presentation. |
(3) | Total trading transactions are attributed to countries based on the location of customers. |
(4) | In accordance with SFAS No. 144, total trading transactions to external customers from discontinued operations are eliminated from each geographic area amount and “Consolidated Total.” The figures for the years ended March 31, 2004 and 2003 have been reclassified to conform to the current year presentation. |
(5) | Total trading transactions to the customers located in China, which were previously included in “All Other,” were separately presented in consideration of the importance of the amount for the year ended March 31, 2005. The figures for the years ended March 31, 2004 and 2003 have been restated to conform to the current year presentation. |
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C. | Organizational Structure. |
Ownership | Voting | |||||||||||
Country of | Interest | Power | ||||||||||
Operating Segment | Company | Incorporation | Principal Business | (%) | (%) | |||||||
Metal Products & Minerals | Mitsui Iron Ore Development Pty. Ltd. | Australia | Mining and sales of Australian iron ore | 100.00 | ||||||||
Sesa Goa Limited | India | Mining and sales of Indian iron ore and processing and sales of coke | 51.00 | |||||||||
Mitsui Itochu Iron Pty. Ltd. | Australia | Mining and sales of Australian iron ore | 70.00 | |||||||||
Mitsui Coal Holdings Pty. Ltd. | Australia | Investments in Australian coal business | 100.00 | |||||||||
Japan Collahuasi Resources B.V. | Netherlands | Investments in a copper mine in Chile | 61.90 | |||||||||
Raw Materials Development Co., Ltd. | United States | Investments in ferrous raw materials business | 100.00 | |||||||||
Mitsui Bussan Raw Materials Development Corp. | Japan | Wholesale of ferrous and non- ferrous scrap and ferroalloys | 100.00 | |||||||||
Mitalco Inc. | United States | Aluminum smelting | 100.00 | |||||||||
Mitsui & Co. Metals Ltd. | Japan | Copper and aluminum metals marketing | 100.00 | |||||||||
Mitsui Bussan Construction Materials Co., Ltd. | Japan | Sales of construction materials and semi-assembled steel products | 100.00 | |||||||||
Tsuda Corporation(1) | Japan | Wholesale of steel products | 100.00 | |||||||||
Regency Steel Asia Pte Ltd. | Singapore | Wholesale and retail sale of steel products | 85.00 | |||||||||
Machinery, Electronics & Information | MBK Project Holdings Ltd. | Japan | Investments in manufacturers of plant-related materials and equipment | 100.00 | ||||||||
Mitsui Rail Capital Holdings, Inc. | United States | Freightcar leasing and management | 100.00 | |||||||||
Mitsui Power Ventures Limited | United Kingdom | Investments in power generation business | 100.00 | |||||||||
Mitsui Bussan Plant & Project Corp. | Japan | Sales of chemical plants and heavy machinery equipment | 100.00 | |||||||||
Clio Marine Inc. | Liberia | Shipping business | 100.00 | |||||||||
Mitsui Bussan Transportation System Co., Ltd.(2) | Japan | Monorail, new transportation systems and railway-related machinery | 100.00 | |||||||||
Toyota Chile S.A. | Chile | Import and sales of automobiles and auto parts in Chile | 100.00 | |||||||||
P.T. Bussan Auto Finance | Indonesia | Motorcycle retail finance | 90.00 | |||||||||
CM Pacific Maritime Corporation | Liberia | Shipping business | 100.00 | |||||||||
Mitsui Automotive Europe B.V. | Netherlands | Investments in automotive related companies and trades of automobiles | 100.00 | |||||||||
Lepta Shipping Co., Ltd. | Liberia | Shipping business | 100.00 | |||||||||
Tombo Aviation Inc. | United States | Purchase, sales and leasing of aircraft | 100.00 | |||||||||
Mitsui Bussan Aerospace Co., Ltd. | Japan | Sales of helicopters and defence related systems | 100.00 |
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Ownership | Voting | |||||||||||
Country of | Interest | Power | ||||||||||
Operating Segment | Company | Incorporation | Principal Business | (%) | (%) | |||||||
Tombo Capital Corporation | Japan | Purchase, sales and leasing of aircraft | 100.00 | |||||||||
Telepark Corp.(3) | Japan | Sales of mobile phones and related telecommunication services | 65.41 | |||||||||
Xion Electronics, Inc.(4) | Japan | Investments in semiconductor device sales companies | 100.00 | |||||||||
Toyo Officemation, Inc. | Japan | Design, operation and maintenance of information systems | 100.00 | |||||||||
NextCom K.K. | Japan | Network integrator focused on multi-vendor and in-house developed solutions | 47.72 | 47.46 | ||||||||
Chemical | P.T. Kaltim Pasifik Amoniak | Indonesia | Production and sales of anhydrous ammonia | 55.00 | ||||||||
Novus International, Inc. | United States | Production, marketing and sales of various feed supplements | 65.00 | |||||||||
Fertilizantes Mitsui S.A. Industria e Comercio | Brazil | Production and sales of fertilizers | 100.00 | |||||||||
Nikken Fine Chemicals Co., Ltd. | Japan | Production and sales of sorbitol and related organic chemical products | 100.00 | |||||||||
Mitsui Bussan Agro Business Co., Ltd. | Japan | Development and sales of fertilizers and agricultural products | 100.00 | |||||||||
MITSUI BUSSAN SOLVENT & COATING CO., LTD. | Japan | Domestic sales, export and import, off-shore trade of solvents and coating materials | 100.00 | |||||||||
Daito Chemical Co., Ltd. | Japan | Production and sales of industrial chemicals | 70.00 | |||||||||
Mitsui Bussan Plastics Co., Ltd. | Japan | Wholesale of raw materials and products of plastics | 100.00 | |||||||||
Nippon Trading Co., Ltd. | Japan | Sales of plastics and chemicals | 48.34 | 48.82 | ||||||||
Bussan Nanotech Research Institute Inc.(5) | Japan | Research and development of nano- products | 100.00 | |||||||||
Energy | Mittwell Energy Resources Pty., Ltd. | Australia | Sales of crude oil and condensate, development of Casino gas field in Australia | 100.00 | ||||||||
Wandoo Petroleum Pty Ltd | Australia | Exploration, development and production of oil and natural gas | 70.00 | 100.00 | ||||||||
Mitsui E&P Australia Pty Limited | Australia | Exploration and development of oil and natural gas | 100.00 | |||||||||
Mitsui E&P Middle East B.V. | Netherlands | Exploration, development and production of oil and natural gas | 77.89 | 60.00 | ||||||||
Mitsui Gas Development Qatar B.V. | Netherlands | Development and production of natural gas and condensate | 100.00 | |||||||||
Mitsui LNG Nederland B.V. | Netherlands | Investments in Qatar LNG project | 100.00 | |||||||||
Mitsui & Co. (E&P) B.V. | Netherlands | Exploration, development, production and investments in oil and natural gas resources | 100.00 | |||||||||
Arcadia Petroleum Ltd. | United Kingdom | Physical and future trading of crude oil | 100.00 | |||||||||
Mitsui Oil Co., Ltd. | Japan | Sales of petroleum products in Japan | 89.93 | |||||||||
Endeavour Resources Limited | United Kingdom | Investments in Japan Australia LNG (MIMI) Pty. Ltd. | 100.00 | |||||||||
Mitsui Sakhalin Holdings B.V. | Netherlands | Investments in Sakhalin Energy Investment | 100.00 |
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Ownership | Voting | |||||||||||
Country of | Interest | Power | ||||||||||
Operating Segment | Company | Incorporation | Principal Business | (%) | (%) | |||||||
Mitsui Oil (Asia) Pte. Ltd. | Singapore | Physical and future trading of crude oil and petroleum products | 100.00 | |||||||||
Mitsui Liquefied Gas Co., Ltd. | Japan | Sales of liquefied petroleum gas in Japan | 89.93 | |||||||||
Overseas Petroleum Corporation | Japan | Exploration, development and investments in oil and gas | 96.55 | |||||||||
Consumer Products & Services | Mitsui Norin Co., Ltd. | Japan | Manufacture and sales of food products | 51.85 | 87.63 | |||||||
MITSUI FOODS CO., LTD. | Japan | Wholesale of foods and beverages | 99.87 | |||||||||
WILSEY FOODS, INC. | United States | Investments in processed oil food company | 90.00 | |||||||||
DAI-ICHI BROILER CO., LTD. | Japan | Production, processing, and sales of broilers | 72.33 | |||||||||
Retail System Service Co., Ltd. | Japan | Sales of sundries and foodstuff to retailers | 100.00 | |||||||||
Mitsui Bussan Inter-fashion Ltd. | Japan | Planning and management of production and distribution of apparel | 100.00 | |||||||||
Bussan Real Estate Development Co., Ltd. | Japan | Real estate sales, leasing and management | 100.00 | |||||||||
MBK Laguna Inc. | United States | Investments in real estate-related businesses | 100.00 | |||||||||
Mitsui Bussan House-Techno, Inc. | Japan | Housing business | 100.00 | |||||||||
Logistics & Financial Markets | Mitsui & Co. Energy Risk Management Ltd. | United Kingdom | Energy derivatives dealing | 100.00 | ||||||||
Mitsui & Co. Precious Metals, Inc. | United States | Trading of precious metals | 100.00 | |||||||||
Mitsui Bussan Futures Ltd. | Japan | Future commodities brokering | 100.00 | |||||||||
Nitto Logistics Co., Ltd. | Japan | Warehousing, customs clearance and real estate leasing | 100.00 | |||||||||
Bussan Capital Corp. | Japan | Securities investment, commercial finance and related activities | 100.00 | |||||||||
Mitsuibussan Insurance and Consulting Co., Ltd. | Japan | Property and casualty insurance consignment and agency services | 100.00 | |||||||||
Tri-Net (Japan) Inc. | Japan | International integrated transportation services | 100.00 | |||||||||
Tri-Net Logistics (Asia) Pte. Ltd. | Singapore | International integrated transportation services | 100.00 | |||||||||
Americas | Mitsui & Co. (U.S.A.), Inc. | United States | Trade | 100.00 | ||||||||
Mitsui & Co. (Canada) Ltd. | Canada | Trade | 100.00 | |||||||||
Mitsui Brasileira Importação e Exportação S.A. | Brazil | Trade | 100.00 | |||||||||
Mitsui Steel Development Co., Inc. | United States | Investments in steel-related businesses | 100.00 | |||||||||
Mitsui Steel, Inc. | United States | Wholesale and SCM service of steel products | 100.00 | |||||||||
Channel Terminal Corp. | United States | Investments in tank leasing business | 100.00 | |||||||||
Champions Pipe & Supply, Inc. | United States | Sales of steel pipes | 94.00 | |||||||||
Mitsui Tubular Products, Inc. | United States | Sales of steel pipes | 100.00 | |||||||||
Mitsui Auto Steel Canada Inc. | Canada | Warehouse services for storage and handling of auto steel | 100.00 | |||||||||
Mitsui Comtek Corp. | United States | Electronics and IT-related business | 100.00 |
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Ownership | Voting | |||||||||||
Country of | Interest | Power | ||||||||||
Operating Segment | Company | Incorporation | Principal Business | (%) | (%) | |||||||
CornerStone Research & Development, Inc. | United States | Processing and packaging of healthcare foods and supplements | 100.00 | |||||||||
Westport Petroleum, Inc. | United States | International trading of petroleum products and crude oil | 100.00 | |||||||||
Portac, Inc. | United States | Manufacture of lumber and lumber products | 100.00 | |||||||||
Europe | Mitsui & Co. Europe PLC | United Kingdom | Management of business in Europe and Africa | 100.00 | ||||||||
Mitsui & Co. UK PLC | United Kingdom | Trade | 100.00 | |||||||||
Mitsui & Co. International (Europe) B.V. | Netherlands | Investments and financial services | 100.00 | |||||||||
Mitsui & Co. Deutschland GmbH | Germany | Trade | 100.00 | |||||||||
Mitsui & Co. Benelux S.A./N.V. | Belgium | Trade | 100.00 | |||||||||
Mitsui & Co. France S.A.S. | France | Trade | 100.00 | |||||||||
Mitsui & Co. Italia S.p.A. | Italy | Trade | 100.00 | |||||||||
Other Overseas Areas | Mitsui & Co. (Hong Kong) Ltd. | Hong Kong, China | Trade | 100.00 | ||||||||
Mitsui & Co. (Shanghai) Ltd. | China | Trade | 100.00 | |||||||||
Mitsui & Co. (Taiwan) Ltd. | Taiwan | Trade | 100.00 | |||||||||
Mitsui & Co. (Thailand) Ltd. | Thailand | Trade | 100.00 | |||||||||
Mitsiam International Ltd. | Thailand | Trade | 52.91 | 55.00 | ||||||||
Mitsui & Co. (Australia) Ltd. | Australia | Trade | 100.00 | |||||||||
Mitsui & Co. (Middle East) E.C. | Bahrain | Trade | 100.00 | |||||||||
All Other | Bussan Credit Co., Ltd.(6) | Japan | Financial services | 100.00 | ||||||||
Mitsui Knowledge Industry Co., Ltd. | Japan | Planning, development, maintenance and operation of computer systems | 67.35 | 67.37 | ||||||||
Mitsui & Co., Asia Investment Ltd. | Singapore | Financial services | 100.00 |
(1) | Changed its corporate name to SINTSUDA CORPORATION in April 2005 |
(2) | Changed its corporate name from Bussan Transportation System Co., Ltd. in July 2004 |
(3) | Changed its corporate name from Mitsui & Associates Telepark Corporation in October 2004 |
(4) | Changed its corporate name from Xion Holdings, Inc. in January 2005 |
(5) | Changed its corporate name from Carbon Nanotech Research Institute Inc. in April 2004 |
(6) | Changed its corporate name to Mitsui & Co. Financial Services Ltd. in April 2005 |
D. | Property, Plants and Equipment. |
Property, Plants and | ||||||
Equipment Description | Size or Annual | |||||
(Holder or Lessee Other than Mitsui) | Location | Production Capacity | User of Property | |||
(Sft: Square feet, | ||||||
Mt: Metric Ton) | ||||||
In Japan: | ||||||
Mitsuibussan Building | Tokyo | 1,321,572 Sft | Office use (Corporate Headquarters) | |||
Osaka Mitsuibussan Building | Osaka | 463,404 Sft | Office use |
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Property, Plants and | ||||||
Equipment Description | Size or Annual | |||||
(Holder or Lessee Other than Mitsui) | Location | Production Capacity | User of Property | |||
(Sft: Square feet, | ||||||
Mt: Metric Ton) | ||||||
Nagoya Mitsuibussann Building | Nagoya | 152,471 Sft | Office use | |||
Hibiya Central Building | Tokyo | 509,841 Sft | Office building for lease | |||
Bussan Building Annex | Tokyo | 210,705 Sft | Office building for lease | |||
Company Housing & Dormitory | Chiba | 39,331 Sft | Employees’ residential facility | |||
Human Resource Development Center | Shizuoka | 25,372 Sft | Training facility | |||
Land and equipment (Mitsui Liquefied Gas Co., Ltd.) | Ishikawa | 852,072 Sft | Liquefied petroleum gas terminal | |||
Wakamatsu Building & Shinsuna Bayside Building (Bussan Real Estate Development Co., Ltd.) | Tokyo | 172,406 Sft | Office building for lease | |||
Land (MITSUI FOODS Co., LTD) | Saitama | 71,171 Sft | Distribution center | |||
Land and equipment (DAI-ICHI BROILER CO., LTD.) | Aomori | 46,102 Sft | Broiler processing factory | |||
Land and equipment (Mitsui Norin Co., Ltd.) | Yamanashi | 339,871 Sft | Tea leaf processing factory | |||
Sun East Shinonome Building & Sun East Tatsumi Building (Nitto Logistics Co., Ltd.) | Tokyo | 129,221 Sft | Office use and office building for lease | |||
Tojin Building (TOSHIN SOKO KAISHA, LTD.) | Tokyo | 26,759 Sft | Office use and office building for lease | |||
Overseas: | ||||||
Office Space (Mitsui & Co. (U.S.A.), Inc.) | United States | 199,524 Sft | Office space leased from others | |||
Equipment (Mitsui Coal Holdings Pty. Ltd.) | Australia | 7,760,000 Mt | Mining equipment for coal | |||
Land and plants (Mitalco Inc.) | United States | 465,098 Sft | Aluminium smelting factory | |||
Equipment (Mitsui Iron Ore Development Pty. Ltd.) | Australia | 21,099,000 Mt | Mining equipment for iron ore | |||
Equipment (Mitsui-Itochu Iron Pty. Ltd.) | Australia | 2,449,000 Mt | Mining equipment for iron ore | |||
Equipment (Sesa Goa Limited) | India | 2,573,000 Mt | Mining equipment for iron ore | |||
Land and plants (P.T. Kaltim Pasifik Amoniak) | Indonesia | 579,397 Sft | Ammonia manufacturing plant | |||
Land and plants (Novus International, Inc.) | United States | 636,826 Sft | Methionine production facility | |||
Shopping centers (MBK Newport Inc.) | United States | 186,237 Sft | Leasing asset | |||
Chemical tank yard (Mitsui & Co. (U.S.A.), Inc.) | United States | 11,495,355 Sft | Chemical tank |
(1) | Information on our mining activities related to Mitsui Coal Holdings Pty. Ltd., Mitsui Iron Ore Development Pty. Ltd., and Mitsui Itochu Iron Pty. Ltd. that are located in Australia is shown in “Iron and Steel Raw Materials Unit” of “B. Business Overview” in this Item and “Mining Activities” below. |
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• | Clio Marine Inc. (Liberia), Lepta Shipping Co., Ltd. (Liberia) and LPG Transport Service Ltd. (Bermuda) own ocean vessels leased to foreign and domestic shipping companies whose combined book value amounting to ¥26 billion; | |
• | Mitsui Rail Capital Holdings, Inc. (the United States) owns rolling stock mainly leased to railway companies in the Unites States amounting to ¥8 billion as book value; and | |
• | Tombo Aviation Inc. (the United States) and Tombo Capital Corporation (Japan) own aircraft leased to foreign and domestic airline companies amounting to ¥25 billion as book value of the total of two companies. |
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Mining Activities |
Type of | ||||||||||||||||||||
Name of | Mineral | Fe Basis | Means of Access to the | Type of | ||||||||||||||||
Mines(2) | Location | Resources(3) | (%) | Property | Title/Lease | Mine | Power Source | |||||||||||||
Robe River Iron Associates | ||||||||||||||||||||
Mitsui Iron Ore Development Pty. Ltd. (33%) | ||||||||||||||||||||
Pilbara Region, Western Australia, Australia | ||||||||||||||||||||
Mesa J | Near Pannawonica, 200 km southwest of Cape Lambert | Pisolite | 57.1 | Railway and port in Cape Lambert (owned by Robe River Iron Associates and operated by Pilbara Iron Pty Ltd.) | Agreements for life of mine with Government of Western Australia | Open pit | Supplied by Pilbara Iron Pty Ltd. | |||||||||||||
West Angelas | West Angelas, 330 km southeast of Cape Lambert | Marra Mamba | 62.2 | Same as above | Same as above | Open pit | Same as above | |||||||||||||
Mount Newman Joint Venture | ||||||||||||||||||||
Mitsui Itochu Iron Pty. Ltd. (10%) (Mitsui share of Mitsui Itochu Iron Pty. Ltd. is 70%) | ||||||||||||||||||||
Pilbara Region, Western Australia, Australia | ||||||||||||||||||||
Mt. Whaleback | Near the town of Newman, 426 km south of Port Headland | Brockman Marra Mamba | 62.2 62.6 | Railway (owned and operated by Mount Newman Joint Venture) and port in Port Headland (owned and operated by Mount Newman Joint Venture) | Mineral lease granted in 1967 under the Iron Ore (Mount Newman) Agreement Act 1964 scheduled to expire in 2009 with rights for successive renewals for 21 years | Open pit | Supplied by Alinta Ltd. (partially owned by the state) | |||||||||||||
Yandi Joint Venture | ||||||||||||||||||||
Mitsui Iron Ore Development Pty. Ltd. (7%) | ||||||||||||||||||||
Pilbara Region, Western Australia, Australia | ||||||||||||||||||||
Marillana Creek | 92 km north of Newman, 310 km south of Port Headland | Channel Iron Deposit | 57.6 | Rail spur (owned by Yandi Joint Venture) connected to the main Newman/ Hedland line (owned and operated by Mount Newmani Joint Venture) and port inn Port Hedland (ownd and operated by Mount Newman Joint Venture) | Mining lease granted in 1991 under the Iron Ore (Marillana Creek) Agreement Act 1991 scheduled to expire in 2012 with the right to extend for additional 42 years | Open pit | Supplied by Alinta Ltd. (partially owned by state) | |||||||||||||
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Type of | ||||||||||||||||||||
Name of | Mineral | Fe Basis | Means of Access to the | Type of | ||||||||||||||||
Mines(2) | Location | Resources(3) | (%) | Property | Title/Lease | Mine | Power Source | |||||||||||||
Mount Goldsworthy Joint Venture | ||||||||||||||||||||
Mitsui Iron Ore Development Pty. Ltd. (7%) | ||||||||||||||||||||
Pilbara Region, Western Australia, Australia | ||||||||||||||||||||
North Area (Yarrie) (Nimingarra) | 210 km east of Port Headland | Nimingarra | 61.9 | Railway (owned and operated by Mount Goldsworthy Joint Venture) and port in Port Headland (owned and operated by Mount Goldsworthy Joint Venture) | Multiple mineral leases under the Iron Ore (Mount Goldsworthy) Agreement Act 1964 and the Iron Ore (Goldsworthy— Nimingarra) Agreement Act 1972. The last one expires in 2014, with rights of renewal over these leases for successive 21-year periods. | Open pit | Supplied by Alinta Ltd. (partially owned by state) | |||||||||||||
Area C | 120 km northwest of Newman, 37 km southwest of Yandi | Marra Mamba | 62.2 | Rail spur (owned by Goldsworthy Joint Venture) connecting to the Yandi spur line (owned by Yandi Joint Venture) and then onto the main Newman/ Hedland line (owned and operated by Mount Newman Joint Venture) and port in Port Hedland (owned and operated by Goldsworthy Joint Venture) | Same as above | Open pit | Supplied by Alinta Ltd. (partially owned by state) | |||||||||||||
Sesa Goa Limited | ||||||||||||||||||||
Sesa Goa Limited (51%) | ||||||||||||||||||||
Goa and Karnataka, India | ||||||||||||||||||||
Codli | Goa, India | Fines/Lumps | 54.0 | Barge and port in Mormugao | Combination of own lease and sub lease | Open pit | Supplied by state | |||||||||||||
Sonshi | Goa, India | Fines/Lumps | 54.0 | Barge and port in Mormugao | Combination of own lease and sub lease | Open pit | Supplied by state | |||||||||||||
Chitradurga | Karnataka, India | Fines/Lumps | 60.0 | Railway, truck and shipping facility at Mormugao and Chennai | Combination of own lease and sub lease | Open pit | Supplied by state | |||||||||||||
Hospet | Karnataka, India | Fines/Lumps | 60.0 | Railway, truck and shipping facility at Mormugao and Chennai | Combination of own lease and sub lease | Open pit | Supplied by state | |||||||||||||
(1) | The term “Investee” refers only to Sesa Goa Limited. |
(2) | “Name of Mines” indicates the names of principal producing mines. |
(3) | “Pisolite”, “Marra Mamba”, “Brockman”, “Channel Iron Deposit” and “Nimingarra” refer to the types of iron ore that are found in the Pilbara region of Western Australia. |
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Name of | Type of | Means of Access to | Type of | Power | ||||||||||||
Mines(3) | Location | Resources | the Property | Title/Lease | Mine | Source | ||||||||||
BHP Mitsui Coal Pty. Ltd. | ||||||||||||||||
BHP Mitsui Coal Pty. Ltd.(1)(20%) | ||||||||||||||||
Queensland, Australia | ||||||||||||||||
Riverside | In the Bowen Basin, 145 km west of Mackay | Metallurgical coal | Railway (Queensland Rail) and port in Mackay | Leases granted by State and renewable subject to State’s discretion | Open pit | State owned grid | ||||||||||
South Walker Creek | In the Bowen Basin, 145 km west of Mackay | Metallurgical coal | Same as above | Same as above | Open pit | State owned grid | ||||||||||
Bengalla Joint Venture | ||||||||||||||||
Mitsui Coal Holdings Pty. Ltd. (10%) | ||||||||||||||||
New South Wales, Australia | ||||||||||||||||
Bengalla | West of Muswellbrook in the Upper Hunter Valley | Metallurgical coal and thermal coal | Railway and port at Newcastle | Leases granted by State | Open pit | State owned grid | ||||||||||
Kestrel Joint Venture | ||||||||||||||||
Mitsui Coal Holdings Pty. Ltd. (20%) | ||||||||||||||||
Queensland, Australia | ||||||||||||||||
Kestrel | In the Bowen Basin, 300 km west of Rockhampton | Metallurgical coal and thermal coal | Railway and port at Gladstone | Leases granted by State | Underground | State owned grid | ||||||||||
Moura Joint Venture | ||||||||||||||||
Mitsui Coal Holdings Pty. Ltd. (49%) | ||||||||||||||||
Queensland, Australia | ||||||||||||||||
Moura | In the Bowen Basin 185 km southwest of Gladstone | Metallurgical coal and thermal coal | Railway and port at Gladstone | Leases granted by State | Open pit | State owned grid | ||||||||||
German Creek Joint Venture | ||||||||||||||||
Mitsui Coal Holdings Pty. Ltd. (30%) | ||||||||||||||||
Queensland, Australia | ||||||||||||||||
German Creek | In the Bowen Basin, 250 km southwest of Mackay | Metallurgical coal | Railway and port at Gladstone | Leases granted by State | Underground | State owned grid | ||||||||||
(1) | “BHP Mitsui Coal Pty. Ltd.” indicates the name of the company established by BHP Billiton plc and Mitsui. |
(2) | BHP Mitsui Coal Pty. Ltd. is our associated company in which Mitsui has 20% interest. Mitsui Coal Holdings Pty. Ltd. is our subsidiary which owns interests in Bengalla Joint Venture, Kestrel Joint Venture, Moura Joint Venture and German Creek Joint Venture. |
(3) | “Name of mines” indicates the names of principal producing mines. |
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Mesa J | The development of Robe River project began in 1962(*) near Pannawonica. The Robe River project was commissioned and the first shipment was made in 1972. Iron ore reserves at the Mesa J production Base provide the cornerstone of Pannawonica’s sinter fines and lump output. Development of Mesa J began in 1992, and all mine administration, workshops, warehousing and other support facilities were integrated there in 1994. Process Plant 1 was commissioned in 1999 and Process Plant 2 in 2001. The plant processes clay-contaminated pisolite, sub-grade material which was once discarded, to reduce contaminants and retain on-specification ore. Total material hauled at Mesa J is between 65 and 75 million tonnes per year. From this production base, the joint venture produces approximately 32 million tonnes of iron ore each year. | |
West Angelas | The development of West Angelas began in 1998. Mining of ore commenced in March 2002. The West Angelas deposits contain Marra Mamba type iron ore with higher iron content than Robe River’s Mesa J mine. The West Angelas operation is comprised of an open pit mine; a crushing and screening ore processing plant producing lump and sinter fines iron ore, as well as stockpiling, reclaiming and train-loading facilities. Expansion of West Angelas mine is well advanced to increase its capacity from its current 20 million tonnes per year to 25 million tonnes per year by the third quarter of 2005. | |
(*) | The Robe River project was originally started by Cleveland Cliffs Iron Company, an iron and steel producer in the United States. Since then, there were major changes in ownership before Rio Tinto took a 53% stake in Robe River Iron Associates in 2000. |
Mount Whaleback | The joint venture began production in 1969 at the Mount Whaleback ore body. Today, production continues to be sourced from the major Mount Whaleback ore body and is complemented by production from other ore bodies. The facilities at Mount Whaleback include primary and secondary crushing plants with a nominal capacity of 35 million tonnes of product per year, a heavy media beneficiation plant with an annual capacity of 8 million tonnes and a train-loading facility. The mining plant and port facilities were originally built in the late 1960’s and have been maintained and enhanced many times since then. The Rapid Growth Project 2 (“RGP2”) was approved in October 2004. The project comprises increases in mine, rail and port capacity through the development of Ore Body 18, purchases of additional rolling stock and a new car dumper at Finucane Island. Engineering activities are well advanced, tendering procurement processes are underway and initial site activities have commenced. The project will increase installed capacity at Western Australian Iron Ore to 118 million tonnes per annum by the second half of 2006. Development costs are estimated at U.S.$575 million. (Mitsui share U.S.$40 million). |
Marillana Creek | Development of the ore body began in 1991. This included construction of a rail connection to the existing Newman/ Headland rail line, crushing and screening facilities with an annual capacity of 10 million tonnes, ore stacker, mine load-out tunnel, and on-site administration infrastructure. The mine’s first shipment of iron ore was in March 1992. Following a number of modifications between 1994 and 2003, Yandi’s capacity has been increased to 42 million tonnes per year, including both fine and lump ores. | |
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North Area (Yarrie) (Nimingarra) | Mount Goldsworthy was commissioned in 1966 in North Area. The original Goldsworthy mine was closed in 1982 and mining operations ceased at Shay Bay in 1993. Since then, mining has continued from the adjacent Nimingarra mine and Yarrie mine. | |
Area C | The Area C Mine is operated by the Mount Goldsworthy Joint Venture under the POSMAC JV arrangement. Area C Mine is located near the mines operated by the Yandi Joint Venture and it was officially opened in October 2003. First ore was railed from Area C to Port Headland in August 2003, with the first shipment of ore departing the port in September 2003. Area C represents the largest undeveloped Marra Mamba resource in the Pilbara region. The project involves developing mine infrastructure and a rail spur link to the existing Yandi/ Newman railway. | |
Codli Sonshi | Sesa Goa Limited commenced operations in 1954 in North Goa, India. Sesa Goa’s main mining operations are at the Codli and Sonshi mines. Goan ore tends to be relatively high in alumina content, and most Goan ore is beneficiated to raise the iron content. We acquired 51% interest in Sesa Goa in 1996. | |
Chitradurga Hospet | The main operation in Karnataka is at Chitradurga mine. A second mine is located at Hospet. These mines are equidistant from the part of Mormugao and Chennai and ore can be shipped from either port. |
Riverside | In 1983, the joint venture commissioned the Riverside mine. Riverside mine produces metallurgical coal and has a production capacity of three million tonnes per year. Reserves from Riverside were depleted in March 2005. | |
South Walker Creek | South Walker Creek became operational in 1998. It produces pulverized coal injection fuel and minor quantities of by- product energy coal. South Walker Creek has a production capacity of four million tonnes per year. Exploration has increased the reserve base in the past year. BHP Mitsui Coal holds undeveloped leases in the Bowen Basin (principally, the areas of Wards Well, Poitrel, Kemmis-Walker and Nebo West). | |
Bengalla | Development consent was granted in 1996 and production commenced in 1999. Coal & Allied, Rio Tinto’s subsidiary in Australia, acquired its interest in Bengalla in 2001. Its coal preparation plant has a washing capacity of 8 million tonnes per year giving nominal product of 6.6 million tonnes per year. Its plant equipment consists of three stage double roll crushers, dense medium cyclones, spirals, a froth flotation unit, screen bowl centrifuges and automatic stackers/reclaimers. | |
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Kestrel | The Kestrel Coal mine, previously known as Gordonstone Mine commenced operation in 1992. Coal is extracted by underground mining. The mine has two longwall units that are operated alternately to minimize downtime and ensure seamless production and reliability. The Kestrel Preparation Plant has been designed to allow the mine to produce low ash coking coal and high energy thermal coal. Production in 2004 was 3.3 million tonnes saleable high quality coking coal and export thermal coal, and the production is expected to rise to 5.5 million tonnes in a few years. | |
Moura | The Moura Mine commenced operation in 1961. Since 1994, all production at Moura has been from its surface operation. Production tonnage has been increasing steadily throughout the years. Originally the mine was operated by BHP Mitsui Coal Pty Ltd, and after a few changes of ownership, Anglo Coal acquired a 51% share in 2002. In September 2003, the adjacent Theodore deposit was developed which further expanded its capacity. Anglo Coal Australia and Mitsui Coal Holdings intend to recapitalise their existing operations at the Moura mine and to establish two additional operations on adjacent tenures. The new and expanded operations will be known as the Dawson Complex. Joint venture’s capital expenditure is estimated in excess of U.S.$600 million and will include a new coal preparation plant, additional mining equipment, a coal conveying system for transporting coal, rail load out facilities and administration buildings. The additional coal will be made available for the market in 2007, and consequently annual production will increase from existing 7.0 million tonnes to 12.7 million tonnes of metallurgical and thermal coals. | |
German Creek | Open pit mining commenced in 1981. Underground mining in the Central Colliery area started in 1984, while underground mining in the Southern Colliery area began in 1988. Grasstree is a new underground mine being developed within our existing German Creek operations lease area. This mine will produce hard coking coal for our export markets. The mine construction commenced in 2001, underground development work is now underway and the project is on schedule to commence full production in 2006. Lake Lindsay is a potential new open cut mine adjacent to German Creek. Exploration and feasibility studies are currently underway to bring this new mine to production in 2006, gradually increasing up to full production in 2009. |
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In Thousands of Tonnes | |||||||||||||||||||||||||||||
Year Ended March 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||||||
Joint Venture or Investee and | Mitsui’s Subsidiary or | Total | Mitsui’s | Total | Mitsui’s | Total | Mitsui’s | ||||||||||||||||||||||
Name of Mines | Associated Company | Location | Production | Share | Production | Share | Production | Share | |||||||||||||||||||||
Robe River Iron Associates | Mitsui Iron Ore Development Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
Pannawonica | 31,024 | 10,238 | 30,240 | 9,979 | 31,155 | 10,281 | |||||||||||||||||||||||
West Angelas | 19,560 | 6,455 | 14,181 | 4,680 | 7,342 | 2,423 | |||||||||||||||||||||||
Mount Newman Joint Venture | Mitsui Itochu Iron Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
Mt. Whaleback | 34,991 | 2,449 | 36,333 | 2,543 | 30,348 | 2,124 | |||||||||||||||||||||||
Yandi Joint Venture | Mitsui Iron Ore Development Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
Marillana Creek | 40,898 | 2,863 | 40,548 | 2,838 | 35,410 | 2,479 | |||||||||||||||||||||||
Mount Goldsworthy Joint Venture | Mitsui Iron Ore Development Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
North Area (Yarrie) (Nimingarra) | 5,292 | 370 | 7,006 | 490 | 8,101 | 567 | |||||||||||||||||||||||
Area C | 16,753 | 1,173 | 3,736 | 262 | — | — | |||||||||||||||||||||||
Sesa Goa Limited | Sesa Goa Limited | India | |||||||||||||||||||||||||||
Codli, Sonshi | Goa | 2,983 | 1,521 | 2,941 | 1,500 | 2,402 | 1,225 | ||||||||||||||||||||||
Chitradurga, Hospet | Karnataka | 2,063 | 1,052 | 1,556 | 794 | 1,255 | 640 | ||||||||||||||||||||||
TOTAL | 153,564 | 26,121 | 136,541 | 23,086 | 116,013 | 19,739 | |||||||||||||||||||||||
In Thousands of Tonnes | |||||||||||||||||||||||||||||
Year Ended March 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||||||
Joint Venture or Investee and | Mitsui’s Subsidiary or | Total | Mitsui’s | Total | Mitsui’s | Total | Mitsui’s | ||||||||||||||||||||||
Name of Mines | Associated Company | Location | Production | Share | Production | Share | Production | Share | |||||||||||||||||||||
BHP Mitsui Coal Pty. Ltd. | Mitsui Iron Ore Development Pty. Ltd. | Queensland, Australia | |||||||||||||||||||||||||||
Riverside | 3,323 | 665 | 2,641 | 528 | 3,402 | 680 | |||||||||||||||||||||||
South Walker Creek | 3,658 | 732 | 3,927 | 785 | 3,341 | 668 | |||||||||||||||||||||||
Bengalla Joint Venture | Mitsui Coal Holdings Pty. Ltd. | New South Wales, Australia | 5,312 | 531 | 6,203 | 620 | 5,385 | 539 | |||||||||||||||||||||
Kestrel Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Queensland, Australia | 3,282 | 656 | 3,322 | 664 | 4,091 | 818 | |||||||||||||||||||||
Moura Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Queensland, Australia | 7,023 | 3,441 | 5,964 | 2,922 | 5,845 | 2,786 | |||||||||||||||||||||
German Creek Joint Venture(1) | Mitsui Coal Holdings Pty. Ltd. | Queensland, Australia | 5,782 | 1,735 | 5,422 | 1,627 | 2,905 | 872 | |||||||||||||||||||||
TOTAL | 28,380 | 7,760 | 27,479 | 7,146 | 24,969 | 6,363 | |||||||||||||||||||||||
(1) | Reflects production tonnage from our participation since July 2002. |
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In Millions of Tonnes | |||||||||||||||||||||||||||||
Year Ended March 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||||||
Joint Venture or Investee and | Total | Mitsui’s | Total | Mitsui’s | Total | Mitsui’s | |||||||||||||||||||||||
Name of Mines | Mitsui’s Subsidiary or Associated Company | Location | Reserve | Share | Reserve | Share | Reserve | Share | |||||||||||||||||||||
Robe River Iron Associates(2) | Mitsui Iron Ore Development Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
Pannawonica | 172 | 57 | 200 | 66 | 230 | 76 | |||||||||||||||||||||||
West Angelas | 418 | 138 | 440 | 145 | 455 | 150 | |||||||||||||||||||||||
Mount Newman Joint Venture(3) | Mitsui Itochu Iron Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
Mt. Whaleback | 955 | 67 | 1,026 | 72 | 1,193 | 84 | |||||||||||||||||||||||
Yandi Joint Venture(3) | Mitsui Iron Ore Development Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
Marillana Creek | 901 | 63 | 641 | 45 | 687 | 48 | |||||||||||||||||||||||
Mount Goldsworthy Joint Venture(3) | Mitsui Iron Ore Development Pty. Ltd. | Pilbara Region, Western Australia | |||||||||||||||||||||||||||
North Area | 13 | 1 | 21 | 2 | 28 | 2 | |||||||||||||||||||||||
(Yarrie) | |||||||||||||||||||||||||||||
(Nimingarra) | |||||||||||||||||||||||||||||
Area C | 499 | 35 | 204 | 14 | 209 | 15 | |||||||||||||||||||||||
Sesa Goa Limited | Sesa Goa Limited | India | |||||||||||||||||||||||||||
Codli, Sonshi | Goa | 55 | 28 | 55 | 28 | 53 | 27 | ||||||||||||||||||||||
Chitradurga, Hospet | Karnataka | 30 | 15 | 20 | 10 | 20 | 10 | ||||||||||||||||||||||
TOTAL | 3,043 | 404 | 2,607 | 382 | 2,875 | 412 | |||||||||||||||||||||||
(1) | Reserve of Robe River Iron Associates is proved + probable marketable reserve. (“Marketable reserve” is tonnage after accounting for extraction and beneficiation losses.) Reserve amounts of Mt. Newman, Yandi, Mt. Goldsworthy and Sesa Goa consist of proved + probable recoverable reserve. (“Recoverable reserve” is tonnage after accounting for extraction losses.) |
(2) | Reserves of Robe River Iron Associates indicate reserves as of the end of December 2004, 2003 and 2002, respectively. 2005 reserves mean reserves as of the end of December 2004. |
(3) | Reserves of Mount Newman Joint Venture, Yandi Joint Venture and Mount Goldsworthy Joint Venture indicate reserves as of the end of June 2004, 2003 and 2002, respectively. 2005 reserves means reserves as of the end of June 2004. |
In Millions of Tonnes | |||||||||||||||||||||||||||||
Year Ended March 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||||||
Joint Venture or Investee and | Mitsui’s Subsidiary or | Total | Mitsui’s | Total | Mitsui’s | Total | Mitsui’s | ||||||||||||||||||||||
Name of Mines | Associated Company | Location | Reserve | Share | Reserve | Share | Reserve | Share | |||||||||||||||||||||
BHP Mitsui Coal Pty. Ltd. | Mitsui Iron Ore Development Pty. Ltd. | Queensland, Australia | |||||||||||||||||||||||||||
Riverside | 3 | 1 | 5 | 1 | 7 | 1 | |||||||||||||||||||||||
South Walker Creek | 92 | 18 | 96 | 19 | 60 | 12 | |||||||||||||||||||||||
Bengalla Joint Venture | Mitsui Coal Holdings Pty. Ltd. | New South Wales, Australia | 161 | 16 | 166 | 17 | 185 | 19 | |||||||||||||||||||||
Kestrel Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Queensland, Australia | 120 | 24 | 123 | 25 | 127 | 25 | |||||||||||||||||||||
Moura Joint Venture | Mitsui Coal Holdings Pty. Ltd. | Queensland, Australia | 208 | 102 | 132 | 65 | 97 | 48 | |||||||||||||||||||||
German Creek Joint Venture(2) | Mitsui Coal Holdings Pty. Ltd. | Queensland, Australia | 78 | 23 | 90 | 27 | 111 | 33 | |||||||||||||||||||||
TOTAL | 662 | 184 | 612 | 154 | 587 | 138 | |||||||||||||||||||||||
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(1) | Proved + Probable Marketable Reserve (“Marketable Reserve” is tonnage after accounting for extraction and processing and preparation losses.) |
(2) | Reflects production tonnage from our participation since July 2002 onwards. |
Millions of Tonnes | ||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||
Total | Mitsui’s | Total | Mitsui’s | Total | Mitsui’s | |||||||||||||||||
Production | Share | Production | Share | Production | Share | |||||||||||||||||
211.3 | 10.8 | 188.3 | 9.6 | 168.7 | 8.6 |
Millions of Tonnes | ||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||
Total | Mitsui’s | Total | Mitsui’s | Total | Mitsui’s | |||||||||||||||||
Reserve | Share | Reserve | Share | Reserve | Share | |||||||||||||||||
6,869.1 | 350.3 | 4,926.20 | 251.6 | 4,458.60 | 227.7 |
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Oil and Gas Producing Activities |
Production Information |
Millions of Barrels | Billions of Cubic Feet | |||||||||||||||||||||||||||||||
Crude Oil, Condensate and | ||||||||||||||||||||||||||||||||
Natural Gas Liquids(1) | Natural Gas(1) | |||||||||||||||||||||||||||||||
Middle | Middle | |||||||||||||||||||||||||||||||
Year Ended March 31, | East | Oceania | Others | Worldwide | East | Oceania | Others | Worldwide | ||||||||||||||||||||||||
2005 | 3 | 6 | 5 | 14 | 9 | 49 | 34 | 92 | ||||||||||||||||||||||||
2004 | 2 | 8 | 5 | 15 | — | 45 | 29 | 74 | ||||||||||||||||||||||||
2003 | 3 | 8 | 4 | 15 | — | 41 | 24 | 65 |
Proved Reserve Information: |
Proved Reserves |
Millions of Barrels | Billions of Cubic Feet | |||||||||||||||||||||||||||||||
Crude Oil, Condensate and | ||||||||||||||||||||||||||||||||
Natural Gas Liquids(1) | Natural Gas(1) | |||||||||||||||||||||||||||||||
Middle | Middle | |||||||||||||||||||||||||||||||
Year Ended March 31, | East | Oceania | Others | Worldwide | East | Oceania | Others | Worldwide | ||||||||||||||||||||||||
At March 31, 2005 | 24 | 78 | 92 | 194 | 75 | 840 | 1393 | 2,308 | ||||||||||||||||||||||||
At March 31, 2004 | 23 | 49 | 127 | 199 | 84 | 873 | 965 | 1,922 | ||||||||||||||||||||||||
At March 31, 2003 | 28 | 52 | 71 | 151 | — | 1,200 | 221 | 1,421 |
Proved Developed Reserves(2) |
Millions of Barrels | Billions of Cubic Feet | |||||||||||||||||||||||||||||||
Crude Oil, Condensate and | ||||||||||||||||||||||||||||||||
Natural Gas Liquids(1) | Natural Gas(1) | |||||||||||||||||||||||||||||||
Middle | Middle | |||||||||||||||||||||||||||||||
Year Ended March 31, | East | Oceania | Others | Worldwide | East | Oceania | Others | Worldwide | ||||||||||||||||||||||||
At March 31, 2005 | 24 | 20 | 18 | 62 | 75 | 356 | 82 | 513 | ||||||||||||||||||||||||
At March 31, 2004 | 23 | 21 | 19 | 63 | 84 | 330 | 69 | 483 | ||||||||||||||||||||||||
At March 31, 2003 | 28 | 26 | 18 | 72 | — | 364 | 58 | 436 |
(1) | 1 barrel of crude oil = 5,800 cubic feet of natural gas |
(2) | The proportion of Proved Developed Reserves to Proved Developed and Undeveloped Reserves is about 25 percent as of March 31, 2005 and relatively low. The expected costs to develop these undeveloped reserves are estimated to be ¥314 billion in total as of March 31, 2005. The major undeveloped reserves are attributable to an associated company in Russia and an associated company in Australia. It is expected to commence the production of crude oil in 2006 and LNG in 2007, for the associated company in Russia. In relation to the associated company in Australia, the production of crude oil and LNG has already commenced at the existing facilities. The drilling of additional development wells will be performed over the project life according to the drilling program of the project. |
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Item 5. | Operating and Financial Review and Prospects |
A. | Operating Results |
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* | Operating Income |
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Summary of Operations for the Year Ended March 31, 2005 |
Operating Environment |
• | The global economy expanded steadily, driven by growth in the United States as well as emerging countries in Asia, particularly China, and other regions. Contributing factors included higher consumption and housing investment resulting from historically low interest rates as well as acceleration of demand for motor vehicles and firm infrastructure developments in emerging economies. | |
• | These factors contributed to a substantial increase in global trade, supported by very strong demand from Asia, particularly China, and spurred the rising trend in commodity prices such as crude oil, iron ore, coal and non-ferrous metals since the previous fiscal year. | |
• | The Japanese economy continued to recover in the first half of the year under review, underpinned by strong exports to high-growth areas of Asia, and higher capital expenditure as corporate earnings improved in Japan. In the second half of the fiscal year, however, economic recovery slowed down especially in the manufacturing section in response to inventory adjustments in the home electronic equipment and IT-related markets as well as concerns about oil price rise. | |
• | The Bank of Japan continued its quantitative easing policy, and short-term interest rates remained very low. In the United States, meanwhile, the Federal Reserve Board (“FRB”) began progressively raising interest rates beginning in June 2004 in order to restrain inflationary expectations. |
• | Gross profit increased by ¥111.9 billion, or 18.2%, to ¥725.8 billion for the year ended March 31, 2005, compared with ¥613.9 billion for the year ended March 31, 2004. Overseas subsidiaries in the Metal Products & Minerals Segment generated higher gross profit due to price rises and increased shipments of iron ore and coal while gross profit grew in the Energy Segment supported by higher crude oil prices. In addition, market transactions in areas such as commodity derivatives and oil trading performed well. | |
• | Net other income and expenses increased ¥25.1 billion, or 4.8%, to ¥550.2 billion for the year ended March 31, 2005, compared to ¥525.1 billion for the year ended March 31, 2004. |
— | Compensation and other charges related to DPF incident of ¥36.0 billion was recorded for user response plans including free product replacement and compensation for relevant subsidy providers relating to diesel particulate filters (“DPF”s), which is discussed in “Discussion and Analysis of Operating Results for the Year Ended March 31, 2005 — Compensation and Other Charges Related to DPF incident” below. | |
— | Selling, general and administrative expenses increased ¥24.5 billion in the year ended March 31, 2005, largely because there was no government grant for the transfer of the substitutional portion of the Employee Pension Fund (“EPF”, compared to ¥17.2 billion recorded in the year ended March 31, 2004. |
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— | With regard to loss on write-down of securities and other expense — net, the figures recorded in these categories for the year under review reflect the absence of large one-time expenses such as those recorded in the year ended March 31, 2004 of ¥21.7 billion for the write-down of securities relating to investment in the Japanese telecommunications carrier POWERDCOM, Inc. and ¥13.7 billion for the settlement of an antitrust lawsuit filed against a feed ingredient manufacturing subsidiary Bioproducts, Inc. (the United States). |
• | Equity in earnings of associated companies rose by ¥25.8 billion, or 64.3%, to ¥65.9 billion for the year ended March 31, 2005, compared with ¥40.1 billion for the year ended March 31, 2004. As was the case with gross profit, this reflected the strong performance of associated companies in the Metal Products & Minerals Segment and the Energy Segment that benefited from the rise in commodity prices. |
Discussion and Analysis of Operating Results for the Year Ended March 31, 2005 |
Revenues |
Sales of Products |
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• | Revenues from sales of chemicals rose ¥208.2 billion principally because of increases in Mitsui’s sales of petrochemical products, reflecting higher prices for petroleum products due to higher crude oil prices, and increases in volume driven by the strong demand in China and other Asian countries. | |
• | Revenues from sales of energy increased by ¥86.3 billion. The average crude oil price (basis of Japan Crude Cocktail) during the year ended March 31, 2005 was U.S.$36 per barrel, compared to U.S.$29 for the year ended March 31, 2004, driven by strong demand from China and uncertainty in supply from the Middle East and other areas. In this environment, revenues from sales of crude oil and oil products increased at Westport Petroleum Inc. (the United States) and revenues increased domestically as oil product sales companies, Mitsui Oil Co., Ltd. (Japan) and Kokusai Oil & Chemical Co., Ltd. (Japan) were able to transfer higher crude oil cost in their wholesale and retail pricing. | |
• | Revenues from sales of iron and steel increased ¥85.3 billion. In the year ended March 31, 2005, with long-term contract prices for iron ore 18.6% higher than in the year ended March 31, 2004, subsidiaries in mineral resource business such as Sesa Goa Limited (India) and Mitsui Iron Ore Development Pty. Ltd. (Australia) achieved higher revenues. Also, supported by a strong market for steel products in North America, China and elsewhere in Asia, Champions Pipe & Supply, Inc. (the United States), engaged in oil pipe sales, recorded higher revenues. |
Other Sales |
• | Derivative trading revenues were ¥45.4 billion for the year ended March 31, 2005, an increase of ¥27.2 billion from ¥18.2 billion for the year ended March 31, 2004. The principal reasons for this increase were strong crude oil trading performance at Arcadia Petroleum Ltd. (United Kingdom) and strong energy derivatives trading at Mitsui & Co. Energy Risk Management Ltd. (United Kingdom) in the context of extremely high volatility in the crude oil market; and | |
• | Leasing revenues were ¥55.4 billion for the year ended March 31, 2005, an increase of ¥13.2 billion from ¥42.2 billion for the year ended March 31, 2004. |
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Gross Profit |
Gross Profit Classified by Category of Revenues |
Billions of Yen | ||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||
2004 | ||||||||||||||||||||||||
2005 | As Restated | Change | ||||||||||||||||||||||
GP | GP Ratio | GP | GP Ratio | GP | GP Ratio | |||||||||||||||||||
Gross profit from sales of products | ¥296.6 | 10.0 | % | ¥197.4 | 7.9 | % | ¥ 99.2 | 2.1 | % | |||||||||||||||
Gross profit from sales of services | 366.2 | 84.1 | % | 383.1 | 90.2 | % | (16.9 | ) | (6.1 | )% | ||||||||||||||
Gross profit from other sales | 63.0 | 57.4 | % | 33.4 | 48.8 | % | 29.6 | 8.6 | % | |||||||||||||||
Total | ¥725.8 | 20.6 | % | ¥613.9 | 20.6 | % | ¥111.9 | 0.0 | % | |||||||||||||||
Gross Profit Classified by Operating Segment |
• | The Metal Products & Minerals Segment recorded significant increases, as the market for metal raw materials and products rose on strong demand from Asia, particularly China, along with an |
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increase in transaction volume. For the year ended March 31, 2005, iron ore prices under long term contracts rose 18.6%. Sesa Goa Limited (India) and Mitsui Iron Ore Development Pty. Ltd. (Australia) recorded major increases. And Mitsui Coal Holdings Pty. Ltd. (Australia), which is involved in the development of metallurgical coal and thermal coal, also increased gross profit. Steel products operations for the year ended March 31, 2005 generally maintained similar levels of transaction volume to the year ended March 31, 2004, amid price rises and tight demand, with higher gross profit at Mitsui and at domestic and overseas subsidiaries. | ||
• | In the Energy Segment, Arcadia Petroleum Ltd. (United Kingdom) generated significant profit increases as a result of focusing on crude oil trading after reporting losses on petroleum product trading in the year ended March 31, 2004. Mitsui E&P Middle East B.V. (Netherlands), which is engaged in crude oil production in Oman, and Mittwell Energy Resources Pty. Ltd. (Australia), our crude oil and condensate focused subsidiary, saw increased gross profit reflecting rising oil prices. | |
• | The Consumer Products & Services Segment was firm on the sale of large-scale commercial facilities and residential subdivisions by MBK Real Estate Ltd. (the United States), along with Mitsui’s commodity trading including grain and raw sugar. Moreover, as Mitsui Norin Co., Ltd. (Japan) became a subsidiary from the second quarter of the year ended March 31, 2004, gross profit for the year ended March 31, 2005 — the first year of a full-year contribution — rose ¥5.1 billion compared to the year ended March 31, 2004. | |
• | In the Logistics & Financial Markets Segment, Mitsui & Co. Energy Risk Management Ltd. (United Kingdom) generated increases in energy derivative trading reflecting the extremely high volatility in the crude oil market. Mitsui’s commodities derivative and foreign exchange transactions also produced good results. | |
• | In the Americas Segment, there were broad expansions in gross profit at steel product subsidiaries including Mitsui Steel Development Co., Inc. (the United States) driven by active demand and firm market prices. Portac, Inc. (the United States), our lumber and lumber products subsidiary, also saw increased gross profit on surging lumber prices. |
Selling, General and Administrative Expenses |
• | Personnel expenses were ¥257.3 billion for the year ended March 31, 2005, a decrease of ¥3.3 billion from ¥260.6 billion for the year ended March 31, 2004. Personnel expenses at Mitsui improved significantly because of a ¥19.2 billion reduction in amortization of unrecognized net actuarial loss, and operating results for the year ended March 31, 2005 were not impacted by a ¥10.5 billion settlement loss recorded during the year ended March 31, 2004 in relation to the completion of the transfer to the Japanese government of the substitutional portion of the Mitsui Employee Pension Fund (“EPF”). Meanwhile, there was a considerable increase in personnel expenses mainly at overseas subsidiaries. Especially, personnel expenses at Mitsui & Co. Energy Risk Management Ltd. (United Kingdom) and Arcadia Petroleum Ltd. (United Kingdom), on the back of major increases in gross profit from commodities trading, rose ¥4.6 billion and ¥3.6 billion, respectively, due to large increases in performance linked bonuses to traders. |
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• | Communication and information expenses were ¥38.6 billion for the year ended March 31, 2005, an increase of ¥5.2 billion over ¥33.4 billion for the year ended March 31, 2004. This increase resulted from the introduction of a new enterprise resource planning system and implementation of a total overhaul of office automation equipment in Mitsui. | |
• | Selling, general and administrative expenses other than personnel and communication and information expenses were ¥176.7 billion in the year ended March 31, 2005, an increase of ¥22.1 billion from ¥154.6 billion for the year ended March 31, 2004. There was an increased expense of ¥7.4 billion at domestic subsidiaries, mainly due to the ¥3.0 billion increases at the above-mentioned Mitsui Norin Co., Ltd. (Japan). Telepark Corp. (Japan) also recorded an increase of ¥1.9 billion reflecting the expanded cell phone business. Overseas subsidiaries recorded an increase of ¥7.9 billion, including ¥1.0 billion at P.T. Bussan Auto Finance (Indonesia), reflecting an expansion in business activities. There was also an increased expense of ¥6.4 billion including office administration costs and various stamp duties. |
Provision for Doubtful Receivables |
Interest Expense, Net of Interest Income |
• | At Mitsui Sakhalin Holdings B.V. (Netherlands), investments increased to Sakhalin Energy Investment Company Ltd. (Bermuda), and interest expenses rose ¥1.8 billion on the resultant increase in borrowings; and | |
• | Interest expenses at Mitsui & Co. (U.S.A) Inc. (the United States) rose ¥1.7 billion reflecting a rise in U.S. dollar interest rate. |
• | The average of the month-end Japanese yen three-month LIBOR remained 0.05%, roughly unchanged from the 0.06% during the year ended March 31, 2004, as the Bank of Japan maintained its existing very low interest rate policy. The average interest rate on 10-year Japanese Government Bonds was 1.52%, rising from the 1.16% during the year ended March 31, 2004, as |
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yields slipped gradually in line with the emergence of perceptions of a slowing in the business cycle, after a rise to 1.9% in June 2004 on the back of an improvement in global business sentiment; and | ||
• | The average of the month-end U.S. dollar three-month LIBOR during the year ended March 31, 2005 was 2.13%, up from the 1.16% during the year ended March 31, 2004, reflecting the gradual rise in the Federal Funds target rate to 3.0% by the FRB in the period between June 2004 and May 2005, even as the FRB maintained its easing stance. |
Dividend Income |
Government Grant for Transfer of Substitutional Portion of EPF |
Gain on Sales of Securities — Net |
• | In the Machinery, Electronics & Information Segment, we reported a ¥7.2 billion gain on the sale of shares in Vodafone K.K., a Japanese cell-phone carrier, in response to a tender offer, and a ¥4.1 billion gain in Mitsui & Associates Telepark Corporation (Japan), a subsidiary engaged in sales of mobile devices and fixed telecommunication lines, following its initial public offering and listing on the second section of the Tokyo Stock Exchange. (Mitsui & Associates Telepark Corporation changed its name to Telepark Corp. in October 2004.) Also in December 2004, in connection with the merger of a formerly associated company (equity method investee) NextCom K.K. (public company in Japan), a software development and marketing subsidiary BSI Co., Ltd. (non-public company), and a data telecommunications equipment marketing subsidiary ADAM NET Ltd. (non-public company), Mitsui was allotted shares in NextCom K.K. in exchange for shares in two subsidiaries and recorded a ¥3.7 billion gain from the exchange of shares of those two subsidiaries to the extent of the share-down; | |
• | In the Consumer Products & Services Segment, we recorded a combined ¥4.0 billion gain on sales of shares of netprice, ltd. and VeriTrans, Inc. when they were listed on domestic stock exchanges; and | |
• | In the Chemical and the Other Overseas Areas Segments, we sold shares in Bangkok Polyethylene Public Company Limited, a maker of high density polyethylene, and recorded a gain of ¥3.9 billion. |
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Gain on Issuance of Stock by a Subsidiary |
Loss on Write-Down of Securities |
(Gain) Loss on Disposal or Sales of Property and Equipment — Net |
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Impairment Loss of Long-Lived Assets |
• | In the Metal Products & Minerals Segment, we reported a ¥6.5 billion impairment loss on plant facilities at an aluminum smelting subsidiary, Mitalco Inc. (the United States), reflecting the rising trend of electricity costs; | |
• | We recorded a ¥3.3 billion impairment loss on land for development purposes and a loss of ¥1.3 billion on land for lease, both held domestically by Mitsui; and | |
• | In the Energy Segment, Mitsui Oil Co., Ltd. (Japan) recorded an impairment loss of ¥2.3 billion mainly on gas stations. |
• | Impairment losses on Mitsui’s corporate residences and dormitories of ¥8.0 billion were recorded due to a decline in land prices in Japan. The corporate residences and dormitories on which we recorded impairment losses during the year ended March 31, 2004 had been acquired mainly in the early 1990s; | |
• | In the Machinery, Electronics & Information Segment, there were impairment losses of ¥4.3 billion that resulted from the exit from and disposal of certain business at NBI Corporation (formerly Toyo Valve Co., Ltd.) and Mitsui Bussan Machinery Co., Ltd.; | |
• | A combined ¥2.8 billion loss was reported at two domestic subsidiaries that operate golf courses; and | |
• | In the Energy Segment, Mitsui Oil Co., Ltd. (Japan) reported ¥1.7 billion in impairment losses in connection with the restructuring of its gas stations. |
Compensation and Other Charges Related to DPF Incident |
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• | the recording of ¥2.5 billion in exploration expenses, reflecting an expansion in exploration activities at our petroleum and gas development and production subsidiaries, including Wandoo Petroleum Pty Ltd. (Australia); and | |
• | the recording of ¥2.0 billion in restructuring-related charges, mainly representing costs related to the termination of an indemnity agreement which had been made in connection with the sale of a ceramic building materials and fiberboard business at Mitsui Wood Systems, Inc. (Japan) in October 2001. |
• | litigation charges of ¥13.7 billion related to the settlement of an antitrust lawsuit filed against our subsidiary, Bioproducts, Inc. (the United States), which manufactures and sells feed ingredient; and | |
• | restructuring-related charges of ¥6.3 billion, of which main elements included a combined ¥3.7 billion for Mitsui Bussan Machinery Co., Ltd. (Japan) and NBI Corporation (Japan) in the Machinery, Electronics & Information Segment. |
Income Taxes |
• | increases in the effect of taxation on dividends from subsidiaries and corporate joint ventures (an increase of 5.7 points from the year ended March 31, 2004); and | |
• | increases in valuation allowance provided on deferred tax assets (an increase of 3.6 points over the year ended March 31, 2004), due mainly to the increase in valuation allowance on deferred tax assets on the impairment loss of certain of Mitsui’s investments recorded in the past years as a result of a change in a policy to sell certain investments. |
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Minority Interests in Earnings of Subsidiaries |
Equity in Earnings of Associated Companies — Net (After Income Tax Effect) |
• | Since the second quarter of the year ended March 31, 2004, equity in earnings of Valepar S.A. (Brazil), a holding company of the Brazilian iron ore and mineral resources company, Companhia Vale do Rio Doce (“CVRD”), have been included. In the Metal Products & Minerals Segment, earnings of Valepar S.A. and Compania Minera Dona Ines de Collahuasi SCM (Chile) increased to ¥6.4 billion and ¥7.8 billion, respectively, for the year ended March 31, 2005, compared to ¥2.5 billion and ¥1.9 billion, respectively, for the year ended March 31, 2004. | |
• | In the Energy Segment, earnings increased significantly at Japan Australia LNG (MIMI) Pty Ltd. (Australia) which is involved in natural gas, crude oil and condensate exploration, development and marketing in West Australia, due to rising oil prices and increased production on the back of facility expansion. Mitsui Oil Exploration Co., Ltd. (Japan) which is chiefly engaged in the production of gas and crude oil in offshore Thailand, also recorded an increase to ¥2.7 billion for the year ended March 31, 2005 from ¥1.1 billion for the year ended March 31, 2004, mainly due to rises in oil prices. Also, Sakhalin Energy Investment Company Ltd. (Bermuda) increased earnings on rising crude oil prices and an increase in production volume. | |
• | In the Logistics & Financial Markets Segment, Mitsui Leasing & Development Co. Ltd. (Japan) increased to ¥2.5 billion for the year ended March 31, 2005 from ¥0.9 billion for the year ended March 31, 2004 reflecting the strong performance of its machinery and shipping lease business. | |
• | In the Machinery, Electronics & Information Segment, P.T. Paiton Energy (Indonesia) posted earnings of ¥2.9 billion for the year ended March 31, 2005, continuing the firm performance seen for the year ended March 31, 2004. Automobile sales associated companies overseas continued to show solid performance for the year ended March 31, 2005. There was also a new contribution of ¥1.1 billion from United Auto Group Inc. (the United States), an automobile dealer which became an associated company during the year ended March 31, 2005. |
Income (Loss) from Discontinued Operations — Net (After Income Tax Effect) |
• | Shirasagi Golf Club Co., Ltd. (Japan), a subsidiary reported in the All Other Segment, had been engaged in the operation of a membership golf club in Japan, which had reported consecutive losses since the opening of the golf club because both the number of customers and the average sale per |
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customer had declined. In these business conditions, as it was very unlikely that Shirasagi Golf Club Co., Ltd. would be able to improve its earnings and pay off its debts in the future, Mitsui disposed of other than by sales the operation during the year ended March 31, 2005. For the year ended March 31, 2005, the income from discontinued operation of Shirasagi Golf Club Co., Ltd. was ¥0.7 billion, partially reversing losses in previous years. |
• | Takeoka Golf Club, a domestic subsidiary in the All Other Segment, which had been engaged in the operation of a public golf club in Japan, suffered from a declining number of visitors due to keen competition with other golf clubs adjacent to the golf club and was disposed of by sale during the year ended March 31, 2004. The business was disposed of and we recorded ¥3.5 billion in losses — net (after income tax effect). We also posted a loss from disposal of Global Octanes Corporation (the United States) and other two subsidiaries, which had managed Global Octanes Texas Limited Partnership, and had been engaged in the manufacture and sale of Methyl Tertiary-Butyl Ether (“MTBE”), as its partners, but had dissolved the partnership and disposed of the operations during the year ended March 31, 2004. |
Cumulative Effect of Change in Accounting Principle (After Income Tax Effect) |
Summary of Operations for the Year Ended March 31, 2004 |
• | Major expansion in the exports and imports by emerging economies including those in Asia, drove the growth of the world economy. The Chinese economy reported an exceptionally strong performance with its government seeking sustainable economic growth and showing a cautious attitude in its monetary and foreign exchange policies to avoid overheating of the economy; | |
• | There was marked overall appreciation in international commodity prices reflecting increasing demand from Asian countries, especially from China; |
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• | The Japanese economy began to recover gradually along with the improvement in the world economic conditions and the apparent reduction in the risks of a recession arising from instability of the Japanese financial system; | |
• | As a result of the improvement in the Japanese economy, stock prices in Japan bottomed out from the beginning of the year ended March 31, 2004; and | |
• | Major countries around the world maintained their low interest rate policies. |
• | Gross profit and equity in earnings of associated companies — net (after income tax effect) benefited from rising commodity market prices driven by strong demand in China and other Asian countries for energy and mineral resources. As a result, the Metal Products & Minerals Segment improved its operating results and the Energy Segment continued to perform well as compared with the year ended March 31, 2003; | |
• | Increased overseas demand for plant projects, automobiles and ocean vessels improved gross profit in the Machinery, Electronics & Information Segment and higher prices and increased demand for petrochemical products, including ammonia and olefin, improved the results of operations of the Chemical Segment. Charges for impairment losses on leased property and equipment, investments in securities and receivables in the Machinery, Electronics & Information Segment and losses resulting from the discontinued operations of North American petrochemical subsidiaries in the Chemical Segment were reduced for the year ended March 31, 2004 as compared to the year ended March 31, 2003; and | |
• | The turnaround of MITSUI FOODS CO., LTD. (Japan), formerly Sanyu Koami Co., Ltd., that had recorded a net loss for the year ended March 31, 2003 due to impairment losses on non-marketable equity securities and unused land and for the year ended March 31, 2002 due to an expense with respect to an early retirement program and provision for doubtful receivables contributed to the improvement in the Consumer Products & Services Segment. |
• | Gross profit increased by ¥44.3 billion to ¥613.9 billion for the year ended March 31, 2004 compared with ¥569.6 billion for the year ended March 31, 2003; and | |
• | Equity in earnings of associated companies — net (after income tax effect) rose by ¥24.8 billion to ¥40.1 billion for the year ended March 31, 2004. Associated companies in the natural resources business contributed to this growth, while there were significant losses for the year ended March 31, 2003 from associated companies in the Machinery, Electronics & Information Segment and the Chemical Segment. |
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Discussion and Analysis of Operating Results for the Year Ended March 31, 2004 |
Revenues |
Sales of Products |
Sales of Services |
Other Sales |
Gross Profit |
Gross Profit Classified by Category of Revenues |
Billions of Yen | ||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||
As Restated | As Restated | Change | ||||||||||||||||||||||
GP | GP Ratio | GP | GP Ratio | GP | GP Ratio | |||||||||||||||||||
Gross profit from sales of products | ¥197.4 | 7.9% | ¥185.7 | 8.0% | ¥11.7 | (0.1 | )% | |||||||||||||||||
Gross profit from sales of services | 383.1 | 90.2% | 345.1 | 88.6% | 38.0 | 1.6 | % | |||||||||||||||||
Gross profit from other sales | 33.4 | 48.8% | 38.8 | 49.7% | (5.4 | ) | (0.9 | )% | ||||||||||||||||
Total | ¥613.9 | 20.6% | ¥569.6 | 20.5% | ¥44.3 | 0.1 | % | |||||||||||||||||
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Gross Profit Classified by Operating Segment |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
Segment | 2004 | 2003 | Change | |||||||||
Chemical | ¥ 91.1 | ¥ 69.3 | ¥21.8 | |||||||||
Machinery, Electronics & Information | 128.7 | 121.1 | 7.6 | |||||||||
Consumer Products & Services | 135.9 | 122.6 | 13.3 | |||||||||
Metal Products & Minerals | 77.0 | 71.5 | 5.5 |
• | Growth in the Chemical Segment was due to higher market prices for ammonia and other petrochemicals resulting from the rising crude oil and natural gas prices; | |
• | Results in the Machinery, Electronics & Information Segment benefited from a higher volume of transactions for construction of oil refineries and power plants, sales of automobiles, ocean vessels and cell phones; | |
• | In the Consumer Products & Services Segment, newly acquired subsidiary Mitsui Norin Co., Ltd. (Japan), a producer and seller of tea leaves, made a new contribution while MITSUI FOODS CO., LTD. (Japan) also recorded higher sales mainly to supermarkets in Japan; and | |
• | In the Metal Products & Minerals Segment, gross profit increased at an iron ore subsidiary Sesa Goa Limited (India), because of growing iron ore exports to China and higher market prices of its products in India, and at Mitsui Iron Ore Development Pty. Ltd. (Australia), reflecting increased shipments of iron ore driven by the demand from China and other countries. |
Selling, General and Administrative Expenses |
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• | At Mitsui, pension costs increased sharply due to a ¥13.0 billion increase in amortization of the unrecognized net actuarial loss; and | |
• | A settlement loss of ¥10.5 billion was incurred due to the completion of the transfer to the Japanese government of the substitutional portion of the Mitsui’s EPF. |
Provision for Doubtful Receivables |
Interest Expense, Net of Interest Income |
Dividend Income |
Gain on Securities Contributed to an Employee Retirement Benefit Trust |
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Government Grant for Transfer of Substitutional Portion of EPF |
Gain on Sales of Securities — Net |
Loss on Write-Down of Securities |
(Gain) Loss on Disposal or Sales of Property and Equipment — Net |
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Impairment Loss of Long-Lived Assets |
• | Impairment losses on Mitsui’s corporate residences and dormitories of ¥8.0 billion were recorded due to a further decline in land prices in Japan. The corporate residences and dormitories on which we recorded impairment losses during the year ended March 31, 2004 had been acquired mainly in early 1990s; | |
• | In the Machinery, Electronics & Information Segment, there were impairment losses of ¥4.3 billion that resulted from the exit from and disposal of certain businesses at NBI Corporation (Japan), formerly Toyo Valve Co., Ltd. and Mitsui Bussan Machinery Co., Ltd. (Japan); and | |
• | Impairment losses were also recorded at two domestic subsidiaries that operate golf courses. |
• | For the year ended March 31, 2003, there was an impairment loss of ¥9.4 billion on MD-11 leased aircraft due to a substantial decline in the fair value of this type of aircraft. For the year ended March 31, 2004, a similar loss on our leased aircraft was not significant; | |
• | In the Energy Segment, there was an impairment loss of ¥9.2 billion mainly related to gas stations operated by Mitsui Oil & Gas Co., Ltd. (Japan), which was divided into Mitsui Oil Co., Ltd. and Mitsui Liquefied Gas Co., Ltd. in December 2004, and Kokusai Oil & Chemical Co., Ltd. (Japan) for the year ended March 31, 2003; and | |
• | MITSUI FOODS CO., LTD. (Japan) recorded an impairment loss on unused land in Japan for the year ended March 31, 2003. |
Other Expense — Net |
• | litigation charges of ¥13.7 billion related to the settlement of an antitrust lawsuit filed against our United States subsidiary, Bioproducts, Inc., which manufactures and sells feed ingredient; and | |
• | restructuring charges of ¥7.0 billion arising from certain subsidiaries such as Mitsui Bussan Machinery Co., Ltd. (Japan) and NBI Corporation (Japan). For more information, see Note 25, “EXIT OR DISPOSAL ACTIVITIES.” |
Income Taxes |
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Minority Interests in Earnings of Subsidiaries |
Equity in Earnings of Associated Companies — Net (After Income Tax Effect) |
• | In the Energy Segment, earnings increased at Japan Australia LNG (MIMI) Pty. Ltd. (Australia), which operates in Western Australia, as both sales volumes and crude oil prices rose; | |
• | In the Metal Products & Minerals Segment, the operating results of Valepar S.A. (Brazil), the holding company of Companhia Vale do Rio Doce (“CVRD”), were included from the second quarter of the year ended March 31, 2004, and there were higher earnings of Compania Minera Dona Ines de Collahuasi SCM (Chile), a copper mine development company reflecting rising copper prices from around the middle of the year ended March 31, 2004; and | |
• | In the Machinery, Electronics & Information Segment, earnings rose at P.T. Paiton Energy in Indonesia due to higher electric power sales volume and at overseas automobile sales subsidiaries. |
• | an other than temporary decline in the value of investments in NextCom K.K. (Japan), formerly an associated company engaged in the information technology business, as a result of the sharp decline in its stock price, and an increase in the reserve for impaired loans at Furukawa Industrial S.A. Produtos Eletrico (Brazil), a telecommunications associated company; and | |
• | an impairment loss on a production facility of Vinylchloride (Malaysia) Sdn. Bhd., an overseas associated company in the chemical business. |
Loss from Discontinued Operations — Net (After Income Tax Effect) |
• | Transpacific Glycols, Inc. (the United States), a subsidiary reported in both the Chemical and Americas Segments, which had been engaged in the sale of ethylene glycol, had ceased its sales |
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operations during the year ended March 31, 2003 due to its declining performance caused by overall market conditions; and | ||
• | Pacific Ammonia Inc. (the United States), a subsidiary reported in the Chemical Segment, which had been engaged in the manufacture and sale of ammonia primarily on the West Coast of the United States, had suffered from high natural gas costs, its main raw material ingredient, and a relatively weak ammonia price due to a worldwide oversupply. Due to this business environment, Pacific Ammonia Inc. recognized an impairment loss on fixed assets during the year ended March 31, 2003 based on a plan to dispose of the operation by sale. |
Cumulative Effect of Change in Accounting Principle (After Income Tax Effect) |
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Gross profit |
Billions of Yen | ||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||
Change | Change | |||||||||||||||||||
2005 | 2004 | 2003 | (2005–2004) | (2004–2003) | ||||||||||||||||
Metal Products & Minerals | ¥ | 121.4 | ¥ | 77.0 | ¥ | 71.5 | ¥ | 44.4 | ¥ | 5.5 | ||||||||||
Machinery, Electronics & Information | 137.3 | 128.7 | 121.1 | 8.6 | 7.6 | |||||||||||||||
Chemical | 87.1 | 91.1 | 69.3 | (4.0 | ) | 21.8 | ||||||||||||||
Energy | 72.6 | 54.6 | 53.8 | 18.0 | 0.8 | |||||||||||||||
Consumer Products & Services | 152.6 | 135.9 | 122.6 | 16.7 | 13.3 | |||||||||||||||
Logistics & Financial Markets | 46.7 | 32.3 | 33.1 | 14.4 | (0.8 | ) | ||||||||||||||
Americas | 49.9 | 40.7 | 44.6 | 9.2 | (3.9 | ) | ||||||||||||||
Europe | 20.7 | 20.0 | 22.5 | 0.7 | (2.5 | ) | ||||||||||||||
Other Overseas Areas | 25.8 | 24.1 | 23.5 | 1.7 | 0.6 | |||||||||||||||
�� | ||||||||||||||||||||
Total | 714.1 | 604.4 | 562.0 | 109.7 | 42.4 | |||||||||||||||
All Other | 12.3 | 10.4 | 10.6 | 1.9 | (0.2 | ) | ||||||||||||||
Adjustments and Eliminations | (0.6 | ) | (0.9 | ) | (3.0 | ) | 0.3 | 2.1 | ||||||||||||
Consolidated Total | 725.8 | 613.9 | 569.6 | 111.9 | 44.3 | |||||||||||||||
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Operating Income (Loss) |
Billions of Yen | ||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||
Change | Change | |||||||||||||||||||
2005 | 2004 | 2003 | (2005–2004) | (2004–2003) | ||||||||||||||||
Metal Products & Minerals | ¥ | 68.1 | ¥ | 28.7 | ¥ | 24.7 | ¥ | 39.4 | ¥ | 4.0 | ||||||||||
Machinery, Electronics & Information | 31.4 | 29.4 | 14.1 | 2.0 | 15.3 | |||||||||||||||
Chemical | 24.6 | 31.4 | 18.3 | (6.8 | ) | 13.1 | ||||||||||||||
Energy | 35.5 | 21.7 | 25.7 | 13.8 | (4.0 | ) | ||||||||||||||
Consumer Products & Services | 32.0 | 23.3 | 21.2 | 8.7 | 2.1 | |||||||||||||||
Logistics & Financial Markets | 18.5 | 10.4 | 10.9 | 8.1 | (0.5 | ) | ||||||||||||||
Americas | 14.7 | 8.5 | 9.5 | 6.2 | (1.0 | ) | ||||||||||||||
Europe | 2.4 | 3.0 | 4.2 | (0.6 | ) | (1.2 | ) | |||||||||||||
Other Overseas Areas | 8.2 | 6.6 | 7.6 | 1.6 | (1.0 | ) | ||||||||||||||
Total | 235.4 | 163.0 | 136.2 | 72.4 | 26.8 | |||||||||||||||
All Other | (0.5 | ) | (1.9 | ) | (1.8 | ) | 1.4 | (0.1 | ) | |||||||||||
Adjustments and Eliminations | (36.9 | ) | (34.3 | ) | (32.5 | ) | (2.6 | ) | (1.8 | ) | ||||||||||
Consolidated Total | 198.0 | 126.8 | 101.9 | 71.2 | 24.9 | |||||||||||||||
Equity in Earnings (Losses) of Associated Companies |
Billions of Yen | ||||||||||||
Years Ended March 31, | ||||||||||||
Change | ||||||||||||
2005 | 2004 | (2005–2004) | ||||||||||
Metal Products & Minerals | ¥ | 22.4 | ¥ | 8.6 | ¥ | 13.8 | ||||||
Machinery, Electronics & Information | 8.2 | 7.7 | 0.5 | |||||||||
Chemical | 2.5 | (1.2 | ) | 3.7 | ||||||||
Energy | 24.5 | 14.5 | 10.0 | |||||||||
Consumer Products & Services | 3.7 | 6.3 | (2.6 | ) | ||||||||
Logistics & Financial Markets | 2.4 | 0.2 | 2.2 | |||||||||
Americas | 1.6 | (2.5 | ) | 4.1 | ||||||||
Europe | 0.1 | 0.2 | (0.1 | ) | ||||||||
Other Overseas Areas | 0.5 | 0.4 | 0.1 | |||||||||
Total | 65.9 | 34.2 | 31.7 | |||||||||
All Other | 0.4 | (0.1 | ) | 0.5 | ||||||||
Adjustments and Eliminations | (0.4 | ) | 6.0 | (6.4 | ) | |||||||
Consolidated Total | 65.9 | 40.1 | 25.8 | |||||||||
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Net Income (Loss) |
Billions of Yen | ||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||
Change | Change | |||||||||||||||||||
2005 | 2004 | 2003 | (2005–2004) | (2004–2003) | ||||||||||||||||
Metal Products & Minerals | ¥ | 47.0 | ¥ | 24.2 | ¥ | 16.1 | ¥ | 22.8 | ¥ | 8.1 | ||||||||||
Machinery, Electronics & Information | 26.4 | 5.9 | (9.2 | ) | 20.5 | 15.1 | ||||||||||||||
Chemical | (6.9 | ) | 11.4 | (3.6 | ) | (18.3 | ) | 15.0 | ||||||||||||
Energy | 42.8 | 24.4 | 23.0 | 18.4 | 1.4 | |||||||||||||||
Consumer Products & Services | 16.9 | 18.9 | 9.6 | (2.0 | ) | 9.3 | ||||||||||||||
Logistics & Financial Markets | 11.8 | 4.8 | 4.7 | 7.0 | 0.1 | |||||||||||||||
Americas | 12.3 | 0.2 | 3.3 | 12.1 | (3.1 | ) | ||||||||||||||
Europe | 2.9 | 0.7 | 2.8 | 2.2 | (2.1 | ) | ||||||||||||||
Other Overseas Areas | 13.8 | 10.4 | 8.6 | 3.4 | 1.8 | |||||||||||||||
Total | 167.0 | 100.9 | 55.3 | 66.1 | 45.6 | |||||||||||||||
All Other | 4.4 | 1.9 | 6.9 | 2.5 | (5.0 | ) | ||||||||||||||
Adjustments and Eliminations | (50.3 | ) | (34.4 | ) | (31.1 | ) | (15.9 | ) | (3.3 | ) | ||||||||||
Consolidated Total | 121.1 | 68.4 | 31.1 | 52.7 | 37.3 | |||||||||||||||
Operating Income (Loss) |
Results of Operations for the Year Ended March 31, 2005 |
Metal Products & Minerals Segment |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥ | 121.4 | ¥ | 77.0 | ¥ | 44.4 | ||||||
Operating income | 68.1 | 28.7 | 39.4 | |||||||||
Equity in earnings of associated companies | 22.4 | 8.6 | 13.8 | |||||||||
Net income | 47.0 | 24.2 | 22.8 |
• | For the year ended March 31, 2005, iron ore prices under long-term contracts rose by 18.6% over the year ended March 31, 2004, resulting in major increases in gross profit at Sesa Goa Limited (India) and Mitsui Iron Ore Development Pty. Ltd. (Australia). Sesa Goa Limited in particular contributed a ¥12.2 billion increase compared to the year ended March 31, 2004, supported by the expansion of sales to China. At Mitsui Iron Ore Development Pty, Ltd., shipments (on our equity production basis) increased to 21.4 million tons for the year ended March 31, 2005 compared to 18.7 million tons for the year ended March 31, 2004 on the back of expanded production at the West Angelas mine which came on line in March 2002. |
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• | Due to the price rise for long-term contracts for thermal coal and metallurgical coal for the year ended March 31, 2005, Mitsui Coal Holdings Pty. Ltd. (Australia) recorded a ¥5.3 billion increase in gross profit compared to the year ended March 31, 2004. Representative prices for Australian metallurgical coal rose to U.S.$57 per ton/FOB for the year ended March 31, 2005 compared to U.S.$47 per ton/FOB for the year ended March 31, 2004. | |
• | We recorded a combined gross profit increase of ¥12.6 billion in the steel products businesses in this segment, as profit margins expanded due to the steady transaction volume mainly in the domestic market and Asia, amid a tightening in supply and demand for various steel products. |
• | In the second quarter of the year ended March 31, 2004, we sold our shares in Caemi Mineração e Metalurgia S.A. to the Brazilian iron ore and mineral resources company Companhia Vale do Rio Doce (“CVRD”) at the same time as acquiring 18.24% of the outstanding voting shares in Valepar S.A. (Brazil), the holding company of CVRD. Our equity in earnings of Valepar S.A. for the year ended March 31, 2005 was ¥6.4 billion, a ¥3.9 billion increase compared to the year ended March 31, 2004, also reflecting the positive impact of higher mineral resource prices on its financial performance. | |
• | Our equity in earnings in the copper mine joint venture, Compania Minera Dona Ines de Collahuasi SCM (Chile), for the year ended March 31, 2005 was ¥7.8 billion, an increase of ¥5.9 billion compared to the year ended March 31, 2004. Average copper prices over the year as listed on the London Metals Exchange (“LME”) rose to U.S.$3,000 per ton/ FOB for the year ended March 31, 2005 from U.S.$2,046 per ton/ FOB for the year ended March 31, 2004. |
• | The year ended March 31, 2005 saw reduced gains on sales of securities, reflecting the absence of the ¥4.4 billion gain recorded from the sale of shares in Caemi Mineração e Metalurgia S.A. for the year ended March 31, 2004. | |
• | We recorded ¥6.5 billion in impairment losses on plant facilities at an aluminum smelting subsidiary, Mitalco Inc. (the United States) for the year ended March 31, 2005, reflecting the rising trend of electricity costs. |
Short-and Long-Term Outlook on Prices and Supply-Demand Balance for Iron & Steel Raw Materials, and Our Equity Production |
Short-Term Pricing and Supply-Demand Balance |
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• | Iron ore prices rose 71.5% compared to the year ended March 31, 2005, on a pure ore content basis. | |
• | Prices for representative Australian metallurgical coal rose to U.S.$125 per ton/ FOB for the year ending March 31, 2006, a 120% rise over the U.S.$57 per ton/ FOB for the year ended March 31, 2005. |
• | Estimated impact on net income from a change of U.S.$1 per ton in iron ore price: Approximately ¥2.6 billion. | |
• | Estimated impact on net income from a change of U.S.$1 per ton in coal price: Approximately ¥0.6 billion. |
Middle- and Long-Term Price Outlook and Supply-Demand Balance and Trends in our Equity Production |
• | We are at present expanding the operation at the West Angelas mine, a joint venture with Rio Tinto, in order to raise iron ore production capacity to 25 million tons per annum from the present 20 million tons within 2005. With respect to joint ventures promoted with BHP Billiton, we are expanding to raise the combined iron ore production capacity to 118 million tons from 110 million tons by the year ending March 31, 2007. | |
• | At the Moura/ Theodore mines, a joint venture with Anglo Coal Australia Pty Ltd., we have decided to boost annual coal production from the present capacity of 7.2 million tons to 12.7 million tons by 2007. |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥ | 137.3 | ¥ | 128.7 | ¥ | 8.6 | ||||||
Operating income | 31.4 | 29.4 | 2.0 | |||||||||
Equity in earnings of associated companies | 8.2 | 7.7 | 0.5 | |||||||||
Net income | 26.4 | 5.9 | 20.5 |
• | Growth in cell phone agency sales by Telepark Corp., leading to an increase in gross profit of ¥3.6 billion. NextCom K.K. (Japan), an associated company in the year ended March 31, 2004, was merged with two of Mitsui’s subsidiaries to become a subsidiary in the third quarter of the year ended March 31, 2005, resulting in growth of ¥4.0 billion. | |
• | In the year ended March 31, 2004, there was a significant contribution from plant and transportation projects such as a power station and railway project in Malaysia, and an oil refinery in Russia. In the year ended March 31, 2005 execution of such large contracts declined and gross profit decreased slightly. | |
• | Business expansion of P.T. Bussan Auto Finance (Indonesia), a motorcycle retail finance company, resulted in growth of ¥1.7 billion. In general, overseas subsidiaries in the automotive field recorded increased gross profit. |
• | For the year ended March 31, 2004 there was a ¥21.7 billion impairment loss on Mitsui’s investment in a telecommunications carrier POWEREDCOM, Inc. in consideration of the deterioration in its financial position. Moreover, in connection with our effort toward reevaluating and restructuring the business of subsidiaries and associated companies for the year ended March 31, 2004, we reorganized the business of NBI Corporation (Japan), formerly known as Toyo Valve Co., Ltd. and Mitsui Bussan Machinery Co., Ltd. (Japan), which led to impairment losses on property and equipment of ¥4.3 billion and other expense-net of ¥3.7 billion; and | |
• | Gains on the sale of shares in Japanese cell-phone carrier Vodafone K.K. for the year ended March 31, 2005 amounted to ¥7.2 billion. As a result of the listing of TelePark Corp. (Japan) on the Tokyo Stock Exchange, we recognized a ¥1.7 billion gain on issuance of stock by a subsidiary |
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and a ¥4.1 billion gain on the sale of securities. In December 2004, following the merger of associated company NextCom K.K. (Japan) with the two subsidiaries ADAM NET Ltd. (Japan) and BSI Co., Ltd. (Japan), Mitsui made a gain of ¥3.7 billion through the receipt of shares in NextCom K.K., in exchange for shares in the two subsidiaries. |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥ | 87.1 | ¥ | 91.1 | ¥ | (4.0 | ) | |||||
Operating income | 24.6 | 31.4 | (6.8 | ) | ||||||||
Equity in earnings (losses) of associated companies | 2.5 | (1.2 | ) | 3.7 | ||||||||
Net (loss) income | (6.9 | ) | 11.4 | (18.3 | ) |
• | For the year ended March 31, 2005, Mitsui discovered that false data had been produced and submitted to authorities for diesel particulate filters (“DPF”s) manufactured by its subsidiary PUREarth Incorporated and sold by Mitsui. The Tokyo Metropolitan Government and other bodies provided subsidies to the purchasers of these DPFs. Mitsui established a user response plan including the free replacement of DPFs and has been proceeding with full compensation of relevant subsidies, which resulted in a ¥36.0 billion loss for the year ended March 31, 2005 as compensation and other charges related to DPF incident. | |
• | For the year ended March 31, 2004, this segment recorded a loss of ¥2.8 billion (after income tax effect) which was the segment’s share basis for the settlement of antitrust lawsuits involving Bioproducts, Inc. (the United States), a subsidiary jointly owned by this segment with its 20% equity interest and Mitsui & Co. (U.S.A.), Inc. that produced choline chloride, a feed ingredient. | |
• | For the year ended March 31, 2005, we sold our shares in Bangkok Polyethylene Public Company Limited, a manufacturer of high-density polyethylene in Thailand, which had been jointly owned by the Chemical Segment and the Other Overseas Areas Segment. Of the ¥3.9 billion realized in the sale, this Segment’s share came to ¥2.5 billion. |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥72.6 | ¥54.6 | ¥18.0 | |||||||||
Operating income | 35.5 | 21.7 | 13.8 | |||||||||
Equity in earnings of associated companies | 24.5 | 14.5 | 10.0 | |||||||||
Net income | 42.8 | 24.4 | 18.4 |
• | For the year ended March 31, 2004 Arcadia Petroleum Ltd. (United Kingdom) recorded a loss in petroleum products trading, from which it withdrew. For the year ended March 31, 2005 Arcadia Petroleum Ltd. concentrated on crude oil trading and its gross profit improved by ¥13.5 billion from the year ended March 31, 2004; | |
• | Among overseas subsidiaries engaged in the development, production and sale of oil and gas, Mitsui E&P Middle East B.V. (Netherlands), which develops and produces oil and gas in Oman, increased gross profit by ¥3.3 billion, reflecting the rise in oil prices and an increase in sales volume. In addition, Mittwell Energy Resources Pty., Ltd. (Australia), which sells crude oil and condensate, recorded an increase of ¥1.7 billion; and | |
• | Domestic petroleum product sales showed strong performance, successfully passing higher oil prices on to their wholesale and retail pricing. Combined gross profits of three of our domestic sales subsidiaries — Mitsui Oil Co., Ltd., Mitsui Liquefied Gas Co., Ltd. (which was separated out from Mitsui Oil Co., Ltd. in December 2004) and Kokusai Oil & Chemical Co., Ltd. — increased by ¥4.7 billion for the year ended March 31, 2005. |
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Short- and Long-Term Outlook on Prices and Supply-Demand Balance for Energy, and Our Equity Production |
Short-Term Pricing and Supply-Demand Balance |
Middle- and Long-Term Price Outlook and Supply-Demand Balance and Trends in Our Equity Production |
• | In the past, the market has grown mainly with long-term purchase contracts by power and gas companies operating in Japan and the Far East. Expansion of incumbent oil and gas projects and green field projects coming on stream will increase the volume of supply to the market, while demand, which has traditionally centered around the Far East, will be joined by growing demand from Europe and the United States, while huge markets in China and India would emerge. Therefore, globalization both in terms of supply and demand is expected to progress. In addition, as the opportunity for supply and demand adjustments in these markets increase, LNG is expected to become a more marketable commodity. | |
• | Those long-term purchase contracts with Japanese companies in many projects are expected to come due for renewal around 2010, and more flexible terms reflecting the above-mentioned supply-demand trends will be requested from the buyers. In evaluating the opportunity for the expansion of incumbent projects and the participation into green field projects, we are putting emphasis on securing stable supply as well as diversifying our source of supply to ensure better flexibility. |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥152.6 | ¥135.9 | ¥16.7 | |||||||||
Operating income | 32.0 | 23.3 | 8.7 | |||||||||
Equity in earnings of associated companies | 3.7 | 6.3 | (2.6 | ) | ||||||||
Net income | 16.9 | 18.9 | (2.0 | ) |
• | There was a ¥4.5 billion increase at MBK Real Estate Ltd. (the United States) resulting from strong sales of large commercial facilities and residential properties; | |
• | With the acquisition of Mitsui Norin Co., Ltd. (Japan) in the second quarter of the year ended March 31, 2004, gross profit for the year ended March 31, 2005 increased by ¥5.1 billion from year ended March 31, 2004 reflecting its full year contribution; and | |
• | Mitsui’s profit margin on commodity trading in corn, soybeans, raw sugar and other agricultural commodities increased, following rises in the markets for those commodities. |
• | While we recorded a combined ¥4.0 billion gain on sales of shares in netprice, ltd. and VeriTrans, Inc., both IT-related companies, when they were listed on domestic stock exchanges in the year ended March 31, 2005, we recorded ¥6.7 billion gain on the sale of SKY Perfect Communications Inc. for the year ended March 31, 2004. | |
• | Considering a deterioration in financial conditions due to sluggish advertising revenue at satellite broadcasters BS-I, INCORPORATED and BS Japan Corporation, we recorded losses on these shares of ¥1.9 billion and ¥1.2 billion, respectively. |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥46.7 | ¥32.3 | ¥14.4 | |||||||||
Operating income | 18.5 | 10.4 | 8.1 | |||||||||
Equity in earnings of associated companies | 2.4 | 0.2 | 2.2 | |||||||||
Net income | 11.8 | 4.8 | 7.0 |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥ | 49.9 | ¥ | 40.7 | ¥ | 9.2 | ||||||
Operating income | 14.7 | 8.5 | 6.2 | |||||||||
Equity in earnings (losses) of associated companies | 1.6 | (2.5 | ) | 4.1 | ||||||||
Net income | 12.3 | 0.2 | 12.1 |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥ | 20.7 | ¥ | 20.0 | ¥ | 0.7 | ||||||
Operating income | 2.4 | 3.0 | (0.6 | ) | ||||||||
Equity in earnings of associated companies | 0.1 | 0.2 | (0.1 | ) | ||||||||
Net income | 2.9 | 0.7 | 2.2 |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥25.8 | ¥24.1 | ¥1.7 | |||||||||
Operating income | 8.2 | 6.6 | 1.6 | |||||||||
Equity in earnings of associated companies | 0.5 | 0.4 | 0.1 | |||||||||
Net income | 13.8 | 10.4 | 3.4 |
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All Other |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
Gross profit | ¥12.3 | ¥10.4 | ¥1.9 | |||||||||
Operating loss | (0.5 | ) | (1.9 | ) | 1.4 | |||||||
Equity in earnings (losses) of associated companies | 0.4 | (0.1 | ) | 0.5 | ||||||||
Net income | 4.4 | 1.9 | 2.5 |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥77.0 | ¥71.5 | ¥5.5 | |||||||||
Operating income | 28.7 | 24.7 | 4.0 | |||||||||
Net income | 24.2 | 16.1 | 8.1 |
• | In the iron and steel raw material operations, we sold shares of Caemi Mineração e Metalurgia S.A. in September 2003 under a sales contract in March 2003 with CVRD, a Brazilian producer of iron ore and other minerals, and recognized a gain of ¥4.4 billion. At the same time, Mitsui acquired an 18.24% voting share of the outstanding shares of Valepar S.A. (Brazil), a controlling shareholder of CVRD that owns a 52.3% voting share of CVRD. Due to the strong performance of CVRD, our equity in earnings of Valepar S.A. for the year ended March 31, 2004 was ¥2.5 billion; and | |
• | In the non-ferrous metal operations, equity in earnings of Compania Minera Dona Ines de Collahuasi SCM (Chile), a copper mine development company in Chile, rose to ¥1.9 billion as the global market price of copper increased from around the middle of the year ended March 31, 2004. |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥128.7 | ¥121.1 | ¥ 7.6 | |||||||||
Operating income | 29.4 | 14.1 | 15.3 | |||||||||
Net income (loss) | 5.9 | (9.2 | ) | 15.1 |
• | the contribution of large-scale electrical machinery and plant projects, including a power plant in Malaysia and an oil refinery in Russia; | |
• | in the information technology category, the increase at Mitsui & Associates Telepark Corporation (Japan), which changed its name to Telepark Corp in October 2004, by ¥3.0 billion reflected the introduction of new cell phone models which raised the sales volume and the contribution by newly acquired subsidiaries including Cablenet Saitama Co., Ltd. (Japan). | |
• | higher gross profit at automobile sales companies and logistics and transportation companies in certain areas of the world; and | |
• | increased sales and lease operations for ocean transport vessels as market prices, including the price of used vessels, climbed, despite lower gains on sales of leased aircraft. |
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• | increasing sales volume of electric power at P.T. Paiton Energy (Indonesia); and | |
• | increased production and sales of automobile companies in Canada and Indonesia. |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥91.1 | ¥69.3 | ¥21.8 | |||||||||
Operating income | 31.4 | 18.3 | 13.1 | |||||||||
Net income (loss) | 11.4 | (3.6 | ) | 15.0 |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥54.6 | ¥53.8 | ¥0.8 | |||||||||
Operating income | 21.7 | 25.7 | (4.0 | ) | ||||||||
Net income | 24.4 | 23.0 | 1.4 |
Billions of Yen | ||||||||||||
Year Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥135.9 | ¥122.6 | ¥13.3 | |||||||||
Operating income | 23.3 | 21.2 | 2.1 | |||||||||
Net income | 18.9 | 9.6 | 9.3 |
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• | the real estate operations after a strong performance for the year ended March 31, 2003 that was driven by the sales of condominiums in Japan and the sale of a large United States commercial facility by MBK Real Estate Ltd. (the United States); and | |
• | the general merchandise operations due to our lower trading transactions involved in sports and leisure activities for the year ended March 31, 2004. |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥32.3 | ¥33.1 | ¥(0.8 | ) | ||||||||
Operating income | 10.4 | 10.9 | (0.5 | ) | ||||||||
Net income | 4.8 | 4.7 | 0.1 |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥40.7 | ¥44.6 | ¥(3.9 | ) | ||||||||
Operating income | 8.5 | 9.5 | (1.0 | ) | ||||||||
Net income | 0.2 | 3.3 | (3.1 | ) |
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Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥20.0 | ¥22.5 | ¥(2.5 | ) | ||||||||
Operating income | 3.0 | 4.2 | (1.2 | ) | ||||||||
Net income | 0.7 | 2.8 | (2.1 | ) |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥24.1 | ¥23.5 | ¥ | 0.6 | ||||||||
Operating income | 6.6 | 7.6 | (1.0 | ) | ||||||||
Net income | 10.4 | 8.6 | 1.8 |
All Other |
Billions of Yen | ||||||||||||
Years Ended | ||||||||||||
March 31, | ||||||||||||
2004 | 2003 | Change | ||||||||||
Gross profit | ¥10.4 | ¥10.6 | ¥(0.2 | ) | ||||||||
Operating income (loss) | (1.9 | ) | (1.8 | ) | (0.1 | ) | ||||||
Net income | 1.9 | 6.9 | (5.0 | ) |
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Impairment of Long-Lived Assets |
Billions of Yen | ||||||||||||
As of March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Long-lived assets | ¥845.9 | ¥829.5 | ¥835.3 | |||||||||
Impairment loss | 21.5 | 21.2 | 23.9 |
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Allowance for Doubtful Receivables |
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Impairment of Investment Securities |
Billions of Yen | ||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||
Impairment | Impairment | Impairment | ||||||||||||||||||||||
Cost | Loss | Cost | Loss | Cost | Loss | |||||||||||||||||||
Marketable equity securities | ¥ | 191.0 | ¥ | 0.6 | ¥ | 178.6 | ¥ | 1.1 | ¥ | 140.5 | ¥ | 15.6 | ||||||||||||
Non-marketable equity securities | 214.1 | 15.9 | 216.6 | 29.7 | 234.0 | 22.3 | ||||||||||||||||||
Total | ¥ | 405.1 | ¥ | 16.5 | ¥ | 395.2 | ¥ | 30.8 | ¥ | 374.5 | ¥ | 37.9 | ||||||||||||
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Pension Benefit Costs |
Billions of Yen | ||||||||
Impact of Change in | ||||||||
Assumption on | Impact of Change | |||||||
NPPC for the Year | in Assumption on | |||||||
Ending | PBO as of | |||||||
March 31, 2006 | March 31, 2005 | |||||||
50 basis point decrease in discount rate | 1.8 | 14.0 | ||||||
50 basis point increase in discount rate | (1.5 | ) | (13.1 | ) | ||||
50 basis point decrease in expected long-term rate of return on plan assets | 1.0 | — | ||||||
50 basis point increase in expected long-term rate of return on plan assets | (1.0 | ) | — |
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Tax Asset Valuation |
First Category |
Second Category |
Third Category |
Fourth Category |
Fifth Category |
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The Meaning of Other-than-Temporary Impairment and Its Application to Certain Investments |
Inventory Costs |
Exchanges of Nonmonetary Assets |
Share-Based Payment |
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Accounting for Stripping Costs Incurred During Production in the Mining Industry |
Conditional Asset Retirement Obligations |
Net Debt-to-Equity Ratio |
• | our capacity to meet debt repayments; and | |
• | leverage to improve return on equity in our capital structure. |
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• | accounts payables, derivative liabilities and others; | |
• | capital lease obligations; and | |
• | SFAS No. 133 fair value adjustment. |
Billions of Yen | |||||||||
As of March 31, | |||||||||
2005 | 2004 | ||||||||
Short-term debt | ¥ | 615.4 | ¥ | 646.7 | |||||
Long-term debt | 3,196.9 | 2,898.9 | |||||||
Less eliminating factors included in long-term debt: | |||||||||
Accounts payables, derivative liabilities and others | (193.0 | ) | (147.6 | ) | |||||
Capital lease obligations | (21.3 | ) | (19.2 | ) | |||||
Less SFAS No. 133 fair value adjustment | (58.2 | ) | (43.2 | ) | |||||
Adjusted interest bearing debt | 3,539.8 | 3,335.6 | |||||||
Less cash and cash equivalents and time deposits | (819.9 | ) | (685.0 | ) | |||||
Net interest bearing debt | ¥ | 2,719.9 | ¥ | 2,650.6 | |||||
Shareholders’ equity | ¥ | 1,122.8 | ¥ | 963.3 | |||||
Net DER (times) | 2.42 | 2.75 | |||||||
Adjusted DER (times) | 3.15 | 3.46 |
Free Cash Flow |
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Billions of Yen | ||||||||||||
As of March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Net cash provided by operating activities | ¥ | 200.1 | ¥ | 100.1 | ¥ | 52.1 | ||||||
Net cash used in investing activities | (224.0 | ) | (134.2 | ) | (4.2 | ) | ||||||
Free Cash Flow | ¥ | (23.9 | ) | ¥ | (34.1 | ) | ¥ | 47.9 | ||||
Funding and Treasury Policies and Objectives |
Funding Sources |
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Credit Ratings |
R&I | Moody’s | S&P | ||||||||||
Short-term debt | a-1+ | P-1 | A-2 | |||||||||
Long-term debt | AA- | A2 | A- | * |
* | The credit rating by S&P on long-term debt was provided without our request. |
• | the gradually improving financial profiles on the Japanese general trading companies, with evidence of an upswing in operating income and equity in earnings of associated companies supported by the progress in restructuring unprofitable businesses, and sound performance in their trading of energy and metal businesses; | |
• | the reduction in the risk from investments and loans, due to proper management of the risks involved in investments and loans, with the resulting improvement in the risk balance between shareholders’ equity and investments and loans; and | |
• | the continuation of our strategy to strengthen our profitability after credit costs. |
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Liquidity Management |
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Investment Plans and Financial Policies of the Current Medium-Term Strategic and Financial Plan |
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• | Cash and cash equivalents increased by ¥153.5 billion from the year ended March 31, 2004, mainly derived from our long-term borrowings and issuance of bonds. | |
• | As a result of increased business transactions and rising prices in various markets, accounts receivables and inventories increased by ¥156.9 billion and by ¥83.9 billion, respectively, mainly at subsidiaries in the Energy Segment, the Metal Products & Minerals Segment, and the Americas Segment. As a result of an increase in the derivative assets of Mitsui & Co. Energy Risk Management Ltd. (United Kingdom) and other subsidiaries in the Logistics & Financial Markets Segment, other current assets increased by ¥74.1 billion. |
• | In addition to a ¥178.3 billion increase in accounts payables corresponding to the above-mentioned increase in accounts receivables, the increase in derivative liabilities of Mitsui & Co. Energy Risk Management Ltd. and others led to a ¥92.1 billion increase in other current liabilities, corresponding to the above-mentioned increase in the derivative assets. | |
• | On the other hand, short-term debts declined by ¥31.4 billion, mainly due to the redemption of Mitsui’s commercial papers. Similarly, there was a decline of ¥65.7 billion in current maturities of long-term debt through repayments by Mitsui on the due date. |
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• | Investments in and advances to associated companies increased due to our investment in the preferred stock of Sakhalin Energy Investment Company Ltd. (Bermuda) of ¥82.4 billion and through our investment in IPM Eagle LLP (United Kingdom) of ¥63.4 billion that purchased Edison Mission Energy’s overseas power plant business portfolio. In addition, there was an ¥84.2 billion increase due to the increase in our equity in earnings of associated companies for the year ended March 31, 2005 and a ¥28.1 billion increase reflecting an increase in unrealized holding gains on available-for-sale securities in relation to the investment in INPEX CORPORATION (“INPEX”) owned by our associated company Mitsui Oil Exploration Co., Ltd. (Japan) following INPEX’s initial public offering. | |
• | Other investments increased due to the increase in unrealized holding gains on available-for-sale securities of ¥23.7 billion. |
Billions of Yen | ||||||||||||
Years Ended March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Net cash provided by operating activities | ¥ | 200.1 | ¥ | 100.1 | ¥ | 52.1 | ||||||
Net cash used in investing activities | (224.0 | ) | (134.2 | ) | (4.2 | ) | ||||||
Net cash provided (used in) by financing activities | 171.3 | (12.2 | ) | 17.8 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 6.1 | (10.2 | ) | (4.5 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 153.5 | (56.5 | ) | 61.2 | ||||||||
Cash and cash equivalents at beginning of year | 638.3 | 694.8 | 633.6 | |||||||||
Cash and cash equivalents at end of year | 791.8 | 638.3 | 694.8 |
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Cash Flows during the Year Ended March 31, 2005 |
Cash Flows from Operating Activities |
• | Operating income which increased steadily in the Metal Products & Minerals Segment, Energy Segment, and other segments | |
• | Dividends received from associated companies as well as our investment in third parties amounting to ¥53.6 billion, mainly from investments in our mineral resource and energy related associated companies such as Japan Australia LNG (MIMI) Pty. Ltd. (Australia), Valepar S.A. (Brazil), and other Middle Eastern LNG companies | |
• | Total payments, in relation to contributions to our defined benefit pension plan and payments under unfunded severance indemnities plans amounting to ¥30.9 billion | |
• | A one-time payment of ¥8.1 billion for compensation and other charges related to DPF incident | |
• | Payments of ¥56.9 billion for corporate income taxes |
• | Operating income which increased by ¥71.2 billion in total, and by operating segment mainly attributable to a ¥39.4 billion increase in the Metal Products & Minerals Segment and a ¥13.8 billion increase at the Energy Segment. | |
• | Dividends received from associated companies as well as our investments in third parties showed further increase. |
Cash Flows from Investing Activities |
• | A total of ¥190.4 billion was paid for investments in and advances to associated companies. This included ¥80.7 billion* investment in preferred stock of Sakhalin Energy Investment Company Ltd. (Bermuda) and an investment of ¥62.2 billion* in IPM Eagle LLP (United Kingdom) that purchased Edison Mission Energy’s overseas power generation business portfolio. Deduction of a ¥52.7 billion proceeds from sales of investments in and collection of advances to associated companies resulted in a net cash outflow of ¥137.7 billion. | |
• | A total of ¥68.5 billion was used on acquisition of debt securities for fund management purposes, mainly by Mitsui and its financing subsidiaries, and ¥59.8 billion was obtained as proceeds from maturities of debt securities. While ¥14.5 billion was provided by the sale of shares in Vodafone K.K., ¥8.9 billion was used in the purchase of shares in CornerStone Research & Development, Inc. (the United States). |
• | Payments of ¥64.4 billion* for the acquisition of mineral rights and other fixed assets in the Enfield crude oil project in Western Australia | |
• | Payments of ¥17.2 billion for the acquisition of facilities for the development of iron ore and coal |
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• | Payments of ¥16.0 billion for purchasing rolling stock and ocean vessels for lease, and proceeds of ¥17.0 billion from the sale of aircraft, rolling stock and ocean vessels for lease | |
• | A proceed of ¥10.8 billion from the sale of our office building in the United Kingdom | |
• | Proceeds of ¥12.8 billion from the sale of Mitsui’s corporate residences and dormitories |
Cash Flows from Financing Activities |
• | An increase in long-term and short-term debt of ¥183.8 billion, mainly consisting of the increased long-term borrowings and issuance of long-term bonds by Mitsui, Mitsui & Co. (U.S.A.) Inc. and other trading subsidiaries. Of this amount, ¥141.2 billion was procured by Mitsui. | |
• | In response to increasing demand for funds for our investments and acquisition of fixed assets, we increased our level of long-term fund procurement, taking advantage of a favorable financial market environment. As a result, that our long-term debt increased by ¥120.7 billion in long-term borrowings and by ¥55.0 billion in bonds. | |
• | Other major cash flows from financing activities included a ¥2.6 billion proceed from the issuance of stock of Telepark Corp. (Japan), and payments of ¥14.2 billion for cash dividends. |
Cash and Cash Equivalents at End of the Year |
Cash Flows in the Current Medium-Term Strategic and Financial Plan |
• | Our analysis of the trends in mineral resource and energy prices and their expected influence on our operating results for the year ending March 31, 2006 suggests that rising resource and energy prices will continue to support growth in net income and operating cash flows in the year ending March 2006. | |
• | Many investments in our current Medium-Term Strategic and Financial Plan ending March 2006 will be made in the fields of mineral resources and energy. It will take a long time to begin generating cash inflow from those investments. |
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Cash Flows during the Year Ended March 31, 2004 |
Cash Flows from Operating Activities |
• | operating income in almost all segments, especially in the Metal Products & Minerals Segment and the Chemical Segment; and | |
• | dividends from associated companies and unrelated investees, particularly those operating in the natural resources business (e.g., iron and steel raw materials, oil and gas). |
• | ¥21.9 billion higher operating income; and | |
• | ¥25.9 billion decline in contributions to defined benefit plans from ¥26.0 billion to ¥0.1 billion. |
Cash Flows from Investing Activities |
• | ¥124.8 billion cash inflow from proceeds from maturities of debt securities held by financing subsidiaries; | |
• | proceeds of ¥49.8 billion from the sale of investments in Caemi Mineração e Metalurgia S.A. (Brazil); | |
• | payment of ¥97.1 billion for investment in Valepar S.A. (Brazil); and | |
• | payment of ¥56.7 billion for the purchase of preferred stock of Sakhalin Energy Investment Company Ltd. (Bermuda). |
• | purchases of mining facilities in the Metal Products & Minerals Segment; | |
• | purchases of aircraft, rolling stock and ocean transport vessels for leasing; | |
• | proceeds from sales of leased aircraft and ocean transport vessels; and | |
• | proceeds from sales of Mitsui’s residences and dormitories. |
Cash Flows from Financing Activities |
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• | there was an increase in borrowings at the above-mentioned financing subsidiary in Japan to finance early repayments of Mitsui’s trade payables during the year ended March 31, 2003; and | |
• | Mitsui and the domestic financial subsidiary increased the repayments of short-term debt. |
Cash and Cash Equivalents at End of Year |
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Guarantees |
Billions of Yen | ||||||||||||
Maximum | Recourse | Carrying | ||||||||||
Potential Amount | Provisions/ | Amount of | ||||||||||
As of March 31, 2005: | of Future Payments | Collateral | Liabilities | |||||||||
Financial Guarantees | ¥ | 194 | ¥ | 31 | ¥ | 3 | ||||||
Performance Guarantees | 33 | 6 | 0 | |||||||||
Market Value Guarantees | 73 | 42 | — |
Billions of Yen | ||||||||||||
Maximum | Recourse | Carrying | ||||||||||
Potential Amount | Provisions/ | Amount of | ||||||||||
As of March 31, 2004: | of Future Payments | Collateral | Liabilities | |||||||||
Financial Guarantees | ¥ | 258 | ¥ | 41 | ¥ | 6 | ||||||
Performance Guarantees | 37 | 6 | 0 | |||||||||
Market Value Guarantees | 62 | 36 | — |
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Sales of Trade Receivables |
Variable Interest Entities |
Commitments on Deferred Payments |
Billions of Yen | |||||||||||||||||||||
Payment Due by Period | |||||||||||||||||||||
Balance as of | After | ||||||||||||||||||||
Contractual Obligations | March 31, 2005 | March 2006 | March 2008 | March 2010 | March 2010 | ||||||||||||||||
Long-Term Debt | ¥ | 3,118 | ¥ | 255 | ¥ | 704 | ¥ | 664 | ¥ | 1,495 | |||||||||||
Capital Lease Obligations | 23 | 6 | 8 | 2 | 7 | ||||||||||||||||
Operating Leases | 105 | 22 | 29 | 19 | 35 | ||||||||||||||||
Purchase Obligations | 2,317 | 774 | 803 | 305 | 435 | ||||||||||||||||
Total | ¥ | 5,563 | ¥ | 1,057 | ¥ | 1,544 | ¥ | 990 | ¥ | 1,972 | |||||||||||
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Item 6. | Directors, Senior Management and Employees. |
A. | Directors and Senior Management. |
Directors, Corporate Auditors and Executive Officers |
Name | Position | |
Nobuo Ohashi | Chairman and Director | |
Shoei Utsuda | Executive Director | |
Tetsuya Matsuoka | Executive Director | |
Masataka Suzuki | Executive Director | |
Gempachiro Aihara | Executive Director | |
Yushi Nagata | Executive Director | |
Hiroshi Tada | Executive Director | |
Yasunori Yokote | Executive Director |
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Name | Position | |
Kazuya Imai | Executive Director | |
Akishige Okada(1) | Director; Advisor, Sumitomo Mitsui Banking Corporation | |
Akira Chihaya(1) | Director; Representative Director and Chairman of the Board of Directors of Nippon Steel Corporation |
(1) | Mr. Akishige Okada and Mr. Akira Chihaya are external directors as provided for in Item 7-2, Clause 2, Article 188 of the Commercial Code of Japan. See “Item 6.C. Board Practices.” |
Name | Position | |
Tasuku Kondo(2) | Corporate Auditor | |
Hiroshi Matsuura(2) | Corporate Auditor | |
Ko Matsukata(3) | Corporate Auditor, Senior Consultant, Mitsui Sumitomo Marine and Fire Insurance Co., Ltd. | |
Yasutaka Okamura(3) | Corporate Auditor, Member of the Japan Federation of Bar Associations. | |
Hideharu Kadowaki(3) | Corporate Auditor, Chairman of the Institute, The Japan Research Institute, Limited |
(2) | Mr. Tasuku Kondo and Mr. Hiroshi Matsuura are Corporate Auditors of full-time service as provided for in Clause 2, Article 18, of the “Law Concerning Special Measures under the Commercial Code with Respect to Audit, etc. of Corporations” of Japan. |
(3) | Mr. Ko Matsukata, Mr. Yasutaka Okamura and Mr. Hideharu Kadowaki are external Corporate Auditors as provided for in Clause 1, Article 18 of the aforementioned law. |
Name | Title and Principal Position | |
Shoei Utsuda | President and Chief Executive Officer | |
Yasuo Hayashi | Executive Vice President; Managing Director, Mitsui & Co. Europe PLC | |
Tetsuya Matsuoka | Executive Vice President; Power, Transportation & Plant Projects Business Unit; Machinery Business Unit; Information, Electronics and Telecommunication Business Unit; Financial Markets Business Unit; Transportation Logistics Business Unit | |
Masataka Suzuki | Executive Vice President; Organic Chemicals Business Unit; Plastics & Inorganic Chemicals Business Unit; Foods & Retail Business Unit; Lifestyle Business Unit; Consumer Service Business Unit | |
Gempachiro Aihara | Senior Executive Managing Officer, Regional Managing Director, Asia; DPF Matters | |
Yushi Nagata | Senior Executive Managing Officer; Corporate Staff Division (Information Strategic Planning Division, Corporate Planning and Strategy Division, Corporate Administrative Division, Corporate Communications Division, Investor Relations Division); Overall Administrative Divisions of Business Units; New Business Promotion; Chief Operating Officer, Business Process Re-Engineering Project Headquarters; Director, Mitsui & Co. Europe PLC | |
Hiroshi Tada | Senior Executive Managing Officer; Iron & Steel Products Business Unit; Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit; Energy Business Unit |
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Name | Title and Principal Position | |
Yasunori Yokote | Senior Executive Managing Officer; Corporate Staff Division (Secretariat, Compliance & Operational Control Division, Human Resources & General Affairs Division, Legal Division); Chief Compliance Officer; Chief Privacy Officer; Environmental Matters; Deputy Chief Operating Officer, Business Process Re-Engineering Project Headquarters | |
Kazuya Imai | Senior Executive Managing Officer; Chief Financial Officer; 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 | Executive Managing Officer; Chairman for the Americas | |
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 | |
Masayoshi Sato | Executive Managing Officer; Chief Operating Officer, Foods & Retail Business Unit | |
Ken Abe | Executive Managing Officer; Chief Operating Officer, Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit | |
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 | |
Hiroshi Ito | Executive Managing Officer; Chief Operating Officer, Consumer Service Business Unit | |
Takeshi Ohyama | Managing Officer; General Representative of Mitsui & Co., Ltd. in Indonesia | |
Shinjiro Ogawa | Managing Officer; Chief Operating Officer, Information, Electronics and Telecommunication Business Unit | |
Toshimasa Furukawa | Managing Officer; Chief Operating Officer, Power, Transportation & Plant Projects Business Unit | |
Akio Ikeda | Managing Officer; Chairman & Managing Director, Mitsui & Co. (Australia) Ltd. | |
Jitsuro Terashima | Managing Officer; President, Mitsui Global Strategic Studies Institute | |
Motonori Murakami | Managing Officer; General Manager, General Accounting & Risk Management Division | |
Kyoichi Endo | Managing Officer; Managing Director, Mitsui & Co. UK PLC | |
Toshio Awata | Managing Officer; General Manager, Information Strategic Planning Division; Chief Information Officer | |
Koji Nakamura | Managing Officer; Chief Operating Officer, Plastics & Inorganic Chemicals Business Unit | |
Toru Kitamura | Managing Officer; Chief Operating Officer, Lifestyle Business Unit | |
Kenichi Yamamoto | Managing Officer; General Manager, Human Resources & General Affairs Division | |
Masaaki Murakami | Managing Officer; President, Mitsui & Co.(CANADA) Ltd. |
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Name | Title and Principal Position | |
Kiyotaka Watanabe | Managing Officer; Chief Operating Officer, Iron & Steel Products Business Unit | |
Masaaki Fujita | Managing Officer; Deputy Chief Operating Officer, Foods & Retail Business Unit | |
Junichi Mizonoue | Managing Officer; Chief Operating Officer, Organic 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. |
Directors | ||||
Name | Nobuo Ohashi | |||
Date of Birth | September 13, 1938 | |||
Current Position | Chairman and Director (since April 1, 2004) | |||
Prior Positions | • 1994 | A member of Board of Directors (Director, General Manager of Seoul Office) | ||
• 1996 | Director, Chief Operating Officer of Foods Unit | |||
• 1997 | Executive Managing Director, Chief Operating Officer of Foods Unit | |||
• 1998 | Executive Managing Director, General Manager of Corporate Planning Division | |||
• 1999 | Senior Executive Managing Director, General Manager of Corporate Planning Division | |||
• 2000 | Executive Vice President | |||
• 2002 /4 | Executive Vice President, President of Consumer Products & Services Group | |||
• 2002/10 | Chairman and Executive Director | |||
Name | Shoei Utsuda | |||
Date of Birth | February 12, 1943 | |||
Current Position | President and Chief Executive Officer , Executive Director (since October 1, 2002) | |||
Prior Positions | • 1997 | A member of Board of Directors (Director, General Manager of Machinery, Electronics & Information Administrative Division) | ||
• 1998 | Director, Chief Operating Officer of Information Business Unit | |||
• 2000 | Executive Managing Director, General Manager of Corporate Planning Division | |||
• 2002/4 | Senior Executive Managing Officer, Chief Strategic Officer, Responsible for Administration Division |
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Name | Tetsuya Matsuoka | |||
Date of Birth | January 5, 1945 | |||
Current Position | Executive Vice President , Executive Director (since April 1, 2005) | |||
Prior Positions | • 1998 | A member of Board of Directors (Director, General Manager of Metals Administrative Division) | ||
• 1999 | Director, Chief Operating Officer of Non-Ferrous Metals Unit | |||
• 2001 | Executive Managing Director, Managing Director of Mitsui & Co. Europe PLC, Managing Director of Mitsui & Co. UK PLC and Chairman of Mitsui & Co. International (Europe) B.V. | |||
• 2002 | Senior Executive Managing Officer & Chief Strategic Officer, Responsible for Administration Division | |||
• 2003 | Executive Director, Senior Executive Managing Officer and Chief Operating Officer of Business Process Re-Engineering Project Headquarters | |||
• 2004 | Senior Executive Managing Officer | |||
Name | Masataka Suzuki | |||
Date of Birth | April 2, 1944 | |||
Executive Vice President , Executive Director (since April 1, | ||||
Current Position | 2005) | |||
Prior Positions | • 1999 | A member of Board of Directors (Director, Chief Operating Officer of Textile & Fashion Unit) | ||
• 2002/4 | Executive Managing Officer, Chief Operating Officer of Textile & Fashion Unit, Consumer Products & Services Group | |||
• 2002/10 | Executive Managing Officer, President of Consumer Products & Services Group | |||
• 2003 | Executive Director, Senior Executive Managing Officer | |||
Name | Gempachiro Aihara | |||
Date of Birth | October 3, 1943 | |||
Current Position | Senior Executive Managing Officer, Regional Managing Director, Asia; Executive Director (since October 1, 2004) | |||
Prior Positions | • 2000 | A member of Board of Directors (Director, Chief Operating Officer of Performance Chemicals Unit) | ||
• 2002/4 | Executive Managing Officer, General Representative of Mitsui & Co., Ltd. in China | |||
• 2004 /6 | Executive Director, Senior Executive Managing Officer |
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Name | Yushi Nagata | |||
Date of Birth | August 30, 1946 | |||
Current Position | Senior Executive Managing Officer, Chief Operating Officer of Business Process Re-Engineering Project Headquarters ; Executive Director (since June 24, 2004) | |||
Prior Positions | • 2000 | A member of Board of Directors (Director, Chief Operating Officer of Plant & Project Business Unit) | ||
• 2001 | Director, Operating Officer of Electric Machinery, Plant & Project Business Unit | |||
• 2002/4 | Executive Managing Officer, Operating Officer of Electric Machinery, Plant & Project Business Unit, Machinery, Electronics & Information Group | |||
• 2002/10 | Executive Managing Officer, Chief Operating Officer of Electric Machinery, Plant & Project Business Unit | |||
• 2004/4 | Senior Executive Managing Officer, Chief Operating Officer of Business Process Re-Engineering Project Headquarters | |||
Name | Hiroshi Tada | |||
Date of Birth | March 3, 1945 | |||
Senior Executive Managing Officer; Executive Director (since June | ||||
Current Position | 24, 2005) | |||
Prior Positions | • 2000 | A member of Board of Directors (Director, Chief Operating Officer of Iron & Steel Raw Materials Unit) | ||
• 2002/4 | Senior Managing Officer, Chief Operating Officer of Iron & Steel Raw Materials Unit, Metals Group | |||
• 2003 | Executive Managing Officer, Chairman for the Americas, and President and Chief Executive Officer of Mitsui & Co. (U.S.A.), Inc. | |||
• 2004/4 | Senior Executive Managing Officer | |||
Name | Yasunori Yokote | |||
Date of Birth | June 23, 1946 | |||
Current Position | Senior Executive Managing Officer, Chief Compliance Officer; Chief Privacy Officer; Environmental Matters; Deputy Chief Operating Officer, Business Process Re-Engineering Project Headquarters; Executive Director, (since April 1, 2005) | |||
Prior Positions | • 2000 | A member of Board of Directors (Director, General Manager of Personnel Division) | ||
• 2002/4 | Director, Senior Managing Officer, General Representative of Mitsui & Co., Ltd. in Indonesia | |||
• 2002/6 | Senior Managing Officer, General Representative of Mitsui & Co., Ltd. in Indonesia | |||
• 2004 | Executive Director, Executive Managing Officer, Chief Compliance Officer |
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Name | Kazuya Imai | |||
Date of Birth | April 20, 1946 | |||
Current Position | Senior Executive Managing Officer, Chief Financial Officer, Deputy Chief Operating Officer, Business Process Re-Engineering Project Headquarters; Executive Director, (since June 24, 2005) | |||
Prior Positions | • 2001 | A member of Board of Directors (Director, Executive Vice President of Mitsui & Co. (U.S.A.), Inc.) | ||
• 2002/1 | Director | |||
• 2002/4 | Director, Senior Managing Officer | |||
• 2002/6 | Senior Managing Officer | |||
• 2004 | Executive Managing Officer, General Manager of Internal Auditing Division | |||
• 2005 | Senior Executive Managing Officer, Chief Financial Officer, Deputy Chief Operating Officer, Business Process Re-Engineering Project Headquarters | |||
Name | Akishige Okada | |||
Date of Birth | April 9, 1938 | |||
Current Position | Director (since June 27, 2003) | |||
Prior Positions | • 1991 | Director, The Mitsui Taiyo Kobe Bank, Ltd. | ||
• 1997 | President , The Sakura Bank, Ltd. | |||
• 2001 | Director, Chairman of Sumitomo Mitsui Banking Corporation | |||
• 2002 | Director, Chairman of Sumitomo Mitsui Financial Group | |||
• 2005 | Advisor, Sumitomo Mitsui Banking Corporation | |||
Name | Akira Chihaya | |||
Date of Birth | March 6, 1935 | |||
Current Position | Director (since June 24, 2004) | |||
Prior Positions | • 1987 | Director of Nippon Steel Corporation | ||
• 1998 | Representative Director and President of Nippon Steel Corporation | |||
• 2003 | Director, Representative Director and Chairman of the Board of Directors of Nippon Steel Corporation (remaining in the same position on June 30,2005) | |||
Corporate Auditors | ||||
Name | Tasuku Kondo | |||
Date of Birth | August 12, 1942 | |||
Current Position | Corporate Auditor (since June 24, 2005) | |||
Prior Positions | • 1996 | A member of Board of Directors (Director, General Manager of Finance Division) | ||
• 1998 | Executive Managing Director | |||
• 2002 | Senior Executive Managing Officer and Chief Financial Officer, Responsible for General Accounting Division, Finance Division and Corporate Risk Management Division | |||
• 2004 | Executive Vice President and Chief Financial Officer | |||
• 2005/4 | Executive Director |
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Name | Hiroshi Matsuura | |||
Date of Birth | May 24, 1946 | |||
Current Position | Corporate Auditor (since June 27, 2003) | |||
Prior Positions | • 1996 | General Manager of Credit Division | ||
• 2002 | General Manager of Corporate Risk Management Division | |||
Name | Ko Matsukata | |||
Date of Birth | March 27, 1933 | |||
Current Position | Corporate Auditor (since June 27, 1996) | |||
Prior Positions | • 1990 | President of Mitsui Marine and Fire Insurance Co., Ltd. | ||
• 1996 | Vice Chairman of Mitsui Marine and Fire Insurance Co., Ltd. | |||
• 1997 | Senior Advisor to Board of Mitsui Marine and Fire Insurance Co., Ltd. | |||
• 2001 | Senior Consultant, Mitsui Sumitomo Marine and Fire Insurance Co., Ltd. (remaining in the same position on June 30, 2005) | |||
Name | Yasutaka Okamura | |||
Date of Birth | June 13, 1929 | |||
Current Position | Corporate Auditor (since June 27, 2003) | |||
Prior Positions | • 1992 | Prosecutor, General | ||
• 1994 | Attorney at Law (remaining in the same position on June 30, 2005) | |||
• 1997 | Corporate Auditor of Toyota Motor Corporation (remaining in the same position on June 30, 2005) | |||
Name | Hideharu Kadowaki | |||
Date of Birth | June 20, 1944 | |||
Current Position | Corporate Auditor (since June 24, 2004) | |||
Prior Positions | • 2001 | Executive Managing Director of Sumitomo Mitsui Banking Corporation | ||
• 2003 | Director, Executive Vice President of Sumitomo Mitsui Financial Group | |||
• 2004 | Chairman of the Institute, The Japan Research Institute, Limited (remaining in the same position on June 30, 2005) | |||
Executive Officers (excluding Executive Officers who are also a Director) | ||||
Name | Yasuo Hayashi | |||
Date of Birth | August 5, 1942 | |||
Current Position | Executive Vice President, Managing Director of Mitsui & Co. Europe PLC (since April 1, 2004) | |||
Prior Positions | • 2000 | A member of Board of Directors (Executive Managing Director) | ||
• 2001 | Executive Managing Director, Chief Operating Officer of Electric Machinery, Plant & Project Business Unit, Machinery Electronics & Information Group | |||
• 2002 | Executive Managing Director, President of Machinery Electronics & Information Group | |||
• 2003 | Senior Executive Managing Officer |
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Name | Toshihiro Soejima | |||
Date of Birth | November 10, 1946 | |||
Current Position | Senior Executive Managing Officer, Chief Representative of Mitsui & Co., Ltd. in China (since April 1, 2005) | |||
Prior Positions | • 2001 | A member of Board of Directors (Director, Chief Operating Officer of Electronics Devices Business Unit) | ||
• 2002/4 | Director, Senior Managing Officer, Chief Operating Officer of Electronics Business Unit, Machinery, Electronics & Information Group | |||
• 2002/6 | Senior Managing Officer, Chief Operating Officer of Electronics Business Unit, Machinery, Electronics & Information Group | |||
• 2003 | Senior Managing Officer, General Manager of Corporate Planning & Strategy Division | |||
• 2004 | Executive Managing Officer, General Representative of Mitsui & Co., Ltd. in China | |||
Name | Motokazu Yoshida | |||
Date of Birth | January 7, 1948 | |||
Current Position | Executive Managing Officer, Chairman for the Americas and President and Chief Executive Officer of Mitsui & Co. (U.S.A.), Inc. (since April 1, 2005) | |||
Prior Positions | • 2001 | A member of Board of Directors (Director, Chief Operating Officer of Motor Vehicles, Marine & Aerospace Business Unit) | ||
• 2002/4 | Director, Senior Managing Officer Chief Operating Officer of Motor Vehicles, Marine & Aerospace Business Unit, Machinery, Electronics & Information Group | |||
• 2002/6 | Senior Managing Officer, Chief Operating Officer of Motor Vehicles, Marine & Aerospace Business Unit, Machinery, Electronics & Information Group | |||
• 2003 | Executive Managing Officer, Chief Operating Officer of Motor Vehicles, Marine & Aerospace Business Unit | |||
• 2004 | Executive Managing Officer, Chief Operating Officer of Machinery Business Unit | |||
Name | Yoshiyuki Izawa | |||
Date of Birth | February 10, 1948 | |||
Current Position | Executive Managing Officer, General Manager of Osaka Office (since April 1, 2004) | |||
Prior Positions | • 2000 | A member of Board of Directors (Director, Chief Operating Officer of Information Business Unit) | ||
• 2002/4 | Director, Senior Managing Officer, Chief Operating Officer of Information Business Unit, Machinery, Electronics & Information Group | |||
• 2002/6 | Senior Managing Officer, Chief Operating Officer of Information Business Unit |
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Name | Osamu Mori | |||
Date of Birth | January 1, 1949 | |||
Current Position | Executive Managing Officer, Chief Operating Officer of Financial Markets Business Unit (since April 1, 2004) | |||
Prior Positions | • 2000 | A member of Board of Directors (Director, General Manager of Finance Division) | ||
• 2002/4 | Director, Senior Managing Officer, General Manager of Finance Division | |||
• 2002/6 | Senior Managing Officer, General Manager of Finance Division | |||
• 2003 | Senior Managing Officer, Chief Operating Officer, of Financial Markets Business Unit | |||
Name | Satoru Miura | |||
Date of Birth | March 2, 1947 | |||
Current Position | Executive Managing Officer, General Manager of Nagoya Office (since April 1, 2005) | |||
Prior Positions | • 2001 | A member of Board of Directors (Director, Chief Operating Officer of Iron & Steel Products Unit) | ||
• 2002/4 | Director, Senior Managing Officer, Chief Operating Officer of Iron & Steel Products Unit, Metals Group | |||
• 2002/6 | Senior Managing Officer, Chief Operating Officer of Iron & Steel Products Unit | |||
• 2004 | Executive Managing Officer, Chief Operating Officer of Iron & Steel Products Business Unit | |||
Name | Masayoshi Sato | |||
Date of Birth | November 30, 1945 | |||
Current Position | Executive Managing Officer, Chief Operating Officer of Foods & Retail Business Unit (since April 1, 2004) | |||
Prior Positions | • 2002 | Managing Officer, Chief Operating Officer of Foods Unit | ||
Name | Ken Abe | |||
Date of Birth | September 19, 1947 | |||
Current Position | Executive Managing Officer, Chief Operating Officer of Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit (since April 1, 2004) | |||
Prior Positions | • 2002 | Managing Officer, General Manager of Metals Administrative Division | ||
• 2003 | Managing Officer, Chief Operating Officer of Iron & Steel Raw Materials Unit | |||
Name | Takao Sunami | |||
Date of Birth | August 22, 1947 | |||
Current Position | Executive Managing Officer, Chief Operating Officer of Machinery Business Unit (since January 1, 2005) | |||
Prior Positions | • 2002 | Managing Officer, General Manager of e-Mitsui Business Division | ||
• 2003 | Managing Officer, General Manager of Fukuoka Office |
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Name | Junichi Matsumoto | |||
Date of Birth | September 25, 1947 | |||
Current Position | Executive Managing Officer, Chief Operating Officer of Transportation Logistics Business Unit (since April 1, 2005) | |||
Prior Positions | • 2002 | Managing Officer, General Manager of Corporate Planning Division | ||
• 2003 | Managing Officer, Deputy General Vice Representative of Mitsui & Co., Ltd. in China | |||
• 2004 | Managing Officer, Chief Operating Officer of Transportation Logistics Business Unit | |||
Name | Shunichi Miyazaki | |||
Date of Birth | February 11, 1948 | |||
Current Position | Executive Managing Officer, General Manager of Internal Auditing Division (since April 1, 2005) | |||
Prior Positions | • 2002 | Managing Officer, General Manager of Consumer Products & Services Administrative Division | ||
Name | Hiroshi Ito | |||
Date of Birth | February 8, 1947 | |||
Current Position | Executive Managing Officer, Chief Operating Officer of Consumer Service Business Unit (since April 1, 2005) | |||
Prior Positions | • 2003 | Managing Officer, Chief Operating Officer of Service Business Unit | ||
• 2004 | Managing Officer, Chief Operating Officer of Consumer Service Business Unit | |||
Name | Takeshi Ohyama | |||
Date of Birth | May 18, 1947 | |||
Current Position | Managing Officer, General Representative of Mitsui & Co., Ltd. in Indonesia (since April 1, 2004) | |||
Prior Positions | • 2002 | Managing Officer, General Manager of Personnel Division | ||
Name | Shinjiro Ogawa | |||
Date of Birth | September 17, 1948 | |||
Current Position | Managing Officer, Chief Operating Officer of Information, Electronics and Telecommunication Business Unit (since April 1, 2004) | |||
Prior Positions | • 2002 | Managing Officer, General Manager of Machinery, Electronics & Information Administrative Division | ||
Name | Toshimasa Furukawa | |||
Date of Birth | December 25, 1948 | |||
Current Position | Managing Officer, General Manager of Machinery, Electronics & Information Administrative Division (since April 1, 2004) | |||
Prior Positions | • 2002 | Managing Officer, President of Mitsui & Co. (Taiwan) Ltd. | ||
Name | Akio Ikeda | |||
Date of Birth | January 1, 1947 | |||
Current Position | Managing Officer, Chairman & Managing Director of Mitsui & Co. (Australia) Ltd. (since April 1, 2004) | |||
Prior Positions | • 2003 | Managing Officer, Chief Operating Officer of General Merchandise Unit |
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Name | Jitsuro Terashima | |||
Date of Birth | August 11, 1947 | |||
Current Position | Managing Officer, President of Mitsui Global Strategic Studies Institute (since April 1, 2003) | |||
Name | Motonori Murakami | |||
Date of Birth | November 19, 1948 | |||
Current Position | Managing Officer, General Manager of General Accounting & Risk Management Division (since April 1, 2004) | |||
Prior Positions | • 2003 | Managing Officer, General Manager of General Accounting Division | ||
Name | Kyoichi Endo | |||
Date of Birth | October 5, 1947 | |||
Current Position | Managing Officer, Managing Director of Mitsui & Co. UK PLC and Deputy Managing Director, Mitsui & Co. Europe PLC (since April 1, 2004) | |||
Name | Toshio Awata | |||
Date of Birth | July 28, 1948 | |||
Current Position | Managing Officer, Chief Information Officer & General Manager of Information Strategic Planning Division (since April 1, 2005) | |||
Prior Positions | • 2004 | Managing Officer, Chief Information Officer & General Manager of Business Process Re-Engineering Division | ||
Name | Koji Nakamura | |||
Date of Birth | August 15, 1948 | |||
Current Position | Managing Officer, Chief Operating Officer of Plastics & Inorganic Chemicals Business Unit (since April 1, 2004) | |||
Name | Toru Kitamura | |||
Date of Birth | March 23, 1949 | |||
Current Position | Managing Officer, Chief Operating Officer of Lifestyle Business Unit (since April 1, 2004) | |||
Name | Kenichi Yamamoto | |||
Date of Birth | July 25, 1949 | |||
Current Position | Managing Officer General Manager of Human Resources & General Affairs Division (since April 1, 2005) | |||
Prior Positions | • 2004 | Managing Officer, General Manager of Personnel Division | ||
Name | Masaaki Murakami | |||
Date of Birth | August 10, 1949 | |||
Current Position | Managing Officer, President, Mitsui & Co. (Canada) Ltd. (since April 1, 2005) | |||
Prior Positions | • 2004 | Managing Officer, General Manager of Chemical Administrative Division | ||
Name | Kiyotaka Watanabe | |||
Date of Birth | May 31, 1948 | |||
Current Position | Managing Officer, Chief Operating Officer of Iron & Steel Products Business Unit (since April 1, 2005) |
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Name | Masaaki Fujita | |||
Date of Birth | January 4, 1949 | |||
Current Position | Managing Officer, Deputy Chief Operating Officer of Foods & Retail Business Unit (since April 1, 2005) | |||
Name | Junichi Mizonoue | |||
Date of Birth | February 15, 1950 | |||
Current Position | Managing Officer, Chief Operating Officer of Organic Chemicals Business Unit (since April 1, 2005) | |||
Name | Takao Omae | |||
Date of Birth | December 18, 1949 | |||
Current Position | Managing Officer, President of Mitsui Brasileira Importação e Exportação S.A. (since April 1, 2005) | |||
Name | Norinao Iio | |||
Date of Birth | March 2, 1951 | |||
Current Position | Managing Officer; Chief Operating Officer of Energy Business Unit (since April 1, 2005) | |||
Name | Osamu Koyama | |||
Date of Birth | August 8, 1948 | |||
Current Position | Managing Officer; Executive Vice President of Mitsui & Co. (U.S.A), Inc. (since April 1, 2005) |
B. | Compensation. |
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C. | Board Practices. |
Length of Time | |||||||||
Served in Office | |||||||||
(From Appointment | Shareholdings as of | ||||||||
to June 2005)(1) | June 30, 2005 | ||||||||
Director: | |||||||||
Nobuo Ohashi | 11 years | 57,868 | |||||||
Shoei Utsuda | 8 years | 36,810 | |||||||
Tetsuya Matsuoka | 6 years | 24,567 | |||||||
Masataka Suzuki | 5 years | 16,103 | |||||||
Gempachiro Aihara | 3 years | 12,670 | |||||||
Yushi Nagata | 3 years | 18,070 | |||||||
Yasunori Yokote | 3 years | 13,525 | |||||||
Hiroshi Tada | 2 years | 15,473 | |||||||
Kazuya Imai | 1 year | 10,926 | |||||||
Akishige Okada(2) | 2 years | 0 | |||||||
Akira Chihaya(2) | 1 year | 1,000 |
(1) | At Mitsui’s ordinary general meeting of shareholders held on June 24, 2004, an amendment to the Articles of Incorporation was resolved whereby the normal term of office for Directors has been changed from two years to one year. |
(2) | Mr. Akishige Okada and Mr. Akira Chihaya are external directors as defined in the Commercial Code of Japan. |
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Length of Time | |||||||||||||
Served in Office | |||||||||||||
Date of Expiration of | (From Appointment | Shareholdings as of | |||||||||||
Current Term of Office | to June 2005) | June 30, 2005 | |||||||||||
Corporate Auditor: | |||||||||||||
Tasuku Kondo | June 2009 | Less than 1 year | 23,151 | ||||||||||
Hiroshi Matsuura | June 2007 | 2 years | 17,673 | ||||||||||
Ko Matsukata(3) | June 2009 | 9 years | 13,784 | ||||||||||
Yasutaka Okamura(3) | June 2007 | 2 years | 4,079 | ||||||||||
Hideharu Kadowaki(3) | June 2008 | 1 year | 2,276 |
(3) | Mr. Ko Matsukata, Mr. Yasutaka Okamura and Mr. Hideharu Kadowaki are external Corporate Auditors as defined in the Law for Special Exceptions to the Commercial Code of Japan Concerning Audit, etc. of Joint Stock Corporations. |
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Length of Time | |||||||||
Served in Office | |||||||||
(From Appointment | Shareholdings as of | ||||||||
to June 2005)(4) | June 30, 2005 | ||||||||
Executive Officer (excluding Executive Officers who are also a Director): | |||||||||
Yasuo Hayashi | 5 years | 21,621 | |||||||
Toshihiro Soejima | 4 years | 12,172 | |||||||
Motokazu Yoshida | 4 years | 10,396 | |||||||
Yoshiyuki Izawa | 5 years | 10,285 | |||||||
Osamu Mori | 5 years | 23,263 | |||||||
Satoru Miura | 4 years | 10,485 | |||||||
Masayoshi Sato | 3 years | 10,433 | |||||||
Ken Abe | 3 years | 19,319 | |||||||
Takao Sunami | 3 years | 9,966 | |||||||
Junichi Matsumoto | 3 years | 14,000 | |||||||
Shunichi Miyazaki | 3 years | 11,191 | |||||||
Hiroshi Ito | 2 years | 9,250 | |||||||
Takeshi Ohyama | 3 years | 10,775 | |||||||
Shinjiro Ogawa | 3 years | 10,939 | |||||||
Toshimasa Furukawa | 3 years | 11,260 | |||||||
Akio Ikeda | 2 years | 7,874 | |||||||
Jitsuro Terashima | 2 years | 17,987 | |||||||
Motonori Murakami | 2 years | 18,248 | |||||||
Kyoichi Endo | 1 year | 6,000 | |||||||
Toshio Awata | 1 year | 4,712 | |||||||
Koji Nakamura | 1 year | 8,009 | |||||||
Toru Kitamura | 1 year | 1,603 | |||||||
Kenichi Yamamoto | 1 year | 8,801 | |||||||
Masaaki Murakami | 1 year | 16,307 | |||||||
Kiyotaka Watanabe | Less than 1 year | 591 | |||||||
Masaaki Fujita | Less than 1 year | 591 | |||||||
Junichi Mizonoue | Less than 1 year | 591 | |||||||
Takao Omae | Less than 1 year | 7,030 | |||||||
Norinao Iio | Less than 1 year | 295 | |||||||
Osamu Koyama | Less than 1 year | 0 | |||||||
Total Shareholdings by Directors, Corporate Auditors, and Executive Officers | 561,969 | ||||||||
(4) | The rules of Executive Officers provides for the term of the Executive Officers as one year starting April 1 and ending March 31. |
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(5) | In accordance with amendments of the Law for Special Exceptions to the Commercial Code of Japan Concerning Audit, etc. of Joint Stock Corporations, the number of external corporate auditors after the conclusion of the first ordinary general meeting of shareholders held with respect to the fiscal year ending on and after May 1, 2005, is required to be at least half the number of corporate auditors of a large company whose capital is not less than ¥500 million, or whose total debt amount is not less than ¥20 billion. | |
(6) | In accordance with the same amendment as (4), an external corporate auditor who is elected at the first ordinary general meeting of shareholders held with respect to the fiscal year ended on and after May 1, 2005, is defined as any person who has not at any time been an employee, manager or director of the company or of any of its subsidiaries. |
Exemption from Certain Corporate Governance Requirements of NASDAQ. |
• | Nasdaq Marketplace Rule 4350(b) requires that there be a distribution to shareholders of copies of our annual report containing our audited financial statements a reasonable period of time prior to our annual meeting of shareholders. In accordance with Japanese law, we hold an annual meeting of shareholders within three months after the end of each fiscal year. Also, in accordance with Japanese law, we distribute to shareholders, prior to the annual meeting of shareholders, copies of a report of business operations, together with our audited unconsolidated financial statements prepared in accordance with Japanese GAAP in Japanese. Concurrently with such distribution, we distribute Japanese GAAP audited unconsolidated financial statements in English to the depository for the ADSs, and instruct the depository to distribute the same to the registered ADS holders in a timely manner. The English version contains a statement that, upon request by an interested party, we will provide the party with a copy of our annual report on Form 20-F. As a reporting company under the Securities Exchange Act of 1934, we are required to prepare financial statements in accordance with U.S. GAAP for inclusion in our annual report on Form 20-F, which must be filed within six months after the end of each fiscal year. | |
• | Nasdaq Marketplace Rule 4350(c)(1) requires that a majority of the board of directors of each issuer be independent directors as defined in Rule 4200, and Rule 4350(c)(2) requires that independent directors of each issuer have regularly scheduled meetings at which only independent directors are present. For large Japanese companies, including us, which employ a corporate |
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governance system based on a board of corporate auditors, Japan’s company law has no independence requirement with respect to directors. The task of overseeing management and accounting firms is assigned to the corporate auditors, who are separate from the company’s management. Large Japanese companies, including us, are required to have at least one “outside” corporate auditor who must meet independence requirements under Japan’s company law. An outside corporate auditor is defined as a corporate auditor who has not served as a director, manager or any other employee of the company or any of its subsidiaries for the last five years prior to the appointment. Currently, we have three outside corporate auditors. Starting on the date of our ordinary meeting of shareholders relating to the fiscal year ending March 31, 2006, at least 50% of our corporate auditors will be required to be outside corporate auditors. Also, starting on the same date, the independence requirements for outside corporate auditors will be strengthened by extending the five-year period referred to above to any time prior to the appointment. Our Board of Corporate Auditors, which, as explained below, performs functions similar to those of an audit committee, has regularly scheduled meetings at which only corporate auditors are present. | ||
• | Nasdaq Marketplace Rule 4350(d)(2) requires that each issuer have and will continue to have an audit committee of at least three members, each of whom (1) is independent as defined under Rule 4200(a)(15), (2) meets the requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, (3) has not participated in the preparation of the financial statements of the issuer or any current subsidiary thereof at any time during the past three years, and (4) is able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement, as required by Rule 4350(d)(2). Nasdaq Marketplace Rule 4350(d)(1) requires that each issuer have adopted a formal written audit committee charter specifying the items enumerated in that rule and that its audit committee have reviewed and reassessed the adequacy of the charter on an annual basis. Under Japanese law, we are not required to establish or maintain such an audit committee. Japan’s company law has no independence requirement with respect to directors of those “large” companies (defined under Japanese law as joint stock corporations with stated capital of ¥500 million or more or with total liabilities equal to or exceeding ¥20 billion), including Mitsui, that employ a corporate governance system based on a board of corporate auditors. In many such “large” companies, functions similar to those of such an audit committee are performed by its board of corporate auditors. We have established such a board of corporate auditors, each of whom does not concurrently serve as a director, manager or any other employee of the company or any of its subsidiaries. Under Japan’s company law, corporate auditors are elected at a general meeting of shareholders and are under a statutory duty to review the administration of the affairs of Mitsui by its directors and to examine financial statements and other documents and reports of Mitsui. Furthermore, large Japanese companies, including Mitsui, are required to have at least one “outside” corporate auditor who must meet additional independence requirements under Japan’s company law. Starting on the date of our ordinary meeting of shareholders relating to the fiscal year ending March 31, 2006, at least 50% of our corporate auditors will be required to be outside corporate auditors. An outside corporate auditor is currently defined as a corporate auditor who has not served as a director, manager or any other employee of the company or any of its subsidiaries for the last five years prior to the appointment. Starting on the date of our ordinary meeting of shareholders relating to the fiscal year ending March 31, 2006, the additional independence requirements for outside corporate auditors will be strengthened by extending the five-year period to any time prior to the appointment. Currently, we have five corporate auditors, three of whom are outside corporate auditors who meet these additional requirements. Mitsui’s board of corporate auditors has adopted its own regulations setting forth the scope of its responsibilities and the manner in which it carries out such responsibilities, and certain other matters. | |
• | Nasdaq Marketplace Rule 4350(c)(3) requires that compensation of the chief executive officer of each issuer be determined or recommended to its board of directors for determination either by (i) a majority of its independent directors or (ii) a compensation committee comprised solely of independent directors and that compensation of all other executive officers be determined or |
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recommended to the board of directors for determination either by (i) a majority of the independent directors or (ii) a compensation committee comprised solely of independent directors. As explained above, we are not required to have independent directors. With regard to director compensation, Japan’s company law requires the board of directors to pass a board resolution proposing director compensation to be submitted for approval at a general shareholders’ meeting. Within the upper limit approved at the shareholders meeting, the board of directors may determine the amount of compensation for each director. The board of directors, by resolution of the board of directors, may delegate such decision to the chief executive officer or other persons authorized by the board of directors. As for Mitsui, the upper limit of compensation for its directors approved by the general shareholders’ meeting is 60 million yen per month and the board of directors has determined to delegate to the chief executive officer the decision-making authority as to the amount of compensation for each director within such limit. With regard to employee (including officer) compensation, the board of directors has the authority under Japan’s company law to determine matters relating to employee compensation. The board of directors, by resolution of the board of directors, may delegate employment compensation matters to the chief executive officer or other persons authorized by the board of directors. As for Mitsui, its board of directors duly resolved the Regulations for the Executive Officers, which provide that executive officers who are also directors of the Company shall not be paid any compensation in their capacities as executive officers and that the compensation of the executive officers who are not directors of the Company shall be decided by the board of directors, or decided by the chief executive officer or other officer authorized by the board of directors. Mitsui determines compensation of its chief executive officer and other officers in accordance with the aforementioned procedures. Corporate auditors do not have any specific duties with respect to compensation of the chief executive officer and other executive officers under Japanese law. However, the duties of corporate auditors include a general duty to audit the affairs of the company to ensure that the business is being operated in accordance with applicable law and its charter. If the corporate auditors conclude, in connection with the performance of those duties, that the compensation of directors violated applicable law or the company’s charter, the corporate auditors are required to report their conclusion to the general shareholders’ meeting and may bring a lawsuit against the responsible directors. | ||
• | Nasdaq Marketplace Rule 4350(c)(4) requires that director nominees be selected or recommended for the board of directors’ selection either by (i) a majority of the independent directors or (ii) a nomination committee comprised solely of independent directors. Also, Nasdaq Marketplace Rule 4350(c)(4)(B) requires that each issuer have adopted a formal written charter or board resolution, as applicable, addressing the nominations process and such related matters as may be required under the U.S. federal securities laws. As explained above, We are not required to have independent directors. Under Japan’s company law, a director may be nominated by (i) a resolution of the board of directors or (ii) a shareholder owning one percent or more of the outstanding shares of a company. Approval by a majority of the shareholders in attendance at a general shareholders meeting is required to elect a director. There is no specific requirement that a company adopt a written charter or board resolution addressing the nominations process, nor is it customary to do so. Nominations of directors of Mitsui are conducted in accordance with the aforementioned procedures. Corporate auditors do not have any specific duties with respect to nomination of directors under Japanese law. However, the duties of corporate auditors include a general duty to audit the affairs of the company to ensure that the business is being operated in accordance with applicable law and its charter. If the corporate auditors conclude, in connection with the performance of those duties, that the nomination of directors violated applicable law or the company’s charter, the corporate auditors are required to report their conclusion to the general shareholders’ meeting and may bring a lawsuit against the responsible directors. | |
• | Nasdaq Marketplace Rule 4350(f) requires that there be a provision in the by-laws for a quorum for any meeting of the holders of common stock and that such quorum be not less than 331/3% of the outstanding shares of the common voting stock. In accordance with the Commercial Code of Japan (the “Commercial Code”), however, under our Articles of Incorporation no quorum is |
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required for the adoption of resolutions at a general meeting of shareholders, except for (i) the election of directors and corporate auditors for which the quorum shall not be less than one-third of the total voting rights and (ii) resolutions for other specified issues required by the Commercial Code (the “special shareholders resolutions”), including an amendment to the Articles of Incorporation, a reduction of stated capital, the removal of a director or corporate auditor, dissolution, merger or consolidation requiring shareholders resolution, the transfer of the whole or an important part of the business, the taking over of the whole of the business of any other corporation requiring shareholders resolution, share exchange or share transfer requiring shareholders resolution for the purpose of establishing 100% parent-subsidiary relationships, splitting of the corporation into two or more corporations requiring shareholders’ resolution, any offering of new shares at a “specially favorable” price (or any offering of the rights to subscribe for, or acquire its shares at a “specially favorable” conditions) to any persons other than shareholders, for which the quorum shall be at least one-third of the total voting rights and the approval of the holders of at least two-thirds of the voting rights represented at the meeting is required. This approach is consistent with generally accepted business practices of publicly-held companies in Japan. | ||
• | Nasdaq Marketplace Rule 4350(g) provides that each issuer solicit proxies and provide proxy statements for all meetings of shareholders and provide copies of such proxy solicitation to Nasdaq. Currently a Japanese company whose shares are listed on the securities exchanges defined in the Securities and Exchange Law, including us, may, but is not required to, solicit proxies for meetings of shareholders. If such a Japanese company solicits proxies for a meeting of shareholders, it is required to provide proxy statements and documents for reference as provided for in the Securities and Exchange Law and provide copies of such proxy statements and documents for reference to the Kanto Local Finance Bureau. | |
• | Nasdaq Marketplace Rule 4350(h) provides that each issuer conduct appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis and that all such transactions be approved by the issuer’s audit committee or another independent body of the board of directors. Following the requirements of the Commercial Code of Japan, we require a Director to obtain the approval of our Board of Directors in order for such Director to enter into such transactions. | |
• | Nasdaq Marketplace Rule 4350(i)(1) requires that shareholder approval be obtained for the issuance of the issuer’s stock in certain conditions or certain specified transactions described therein. The Commercial Code requires us to seek shareholder approval of various matters, and in certain instances the special shareholders resolutions as described above are required for approval. In addition, while the Commercial Code permits, in certain instances, the issuance of equity securities without shareholder approval, the Commercial Code also contains provisions requiring the timely dissemination of information relating to such issuance, allowing for opportunities for shareholders to voice their concern with such issuance, and mandating the election of statutory auditors whose fiduciary duty is to, among other things, oversee on behalf of the shareholders actions by the board of directors relating to such issuance. |
Limitation of Liabilities of Directors and Corporate Auditors |
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D. | Employees. |
Metal | Machinery, | Consumer | Logistics & | Other | ||||||||||||||||||||||||||||||||||||||||
Products & | Electronics & | Products & | Financial | Overseas | All | |||||||||||||||||||||||||||||||||||||||
Year Ended March 31, | Minerals | Information | Chemical | Energy | Services | Markets | Americas | Europe | Areas | Other | Total | |||||||||||||||||||||||||||||||||
2005 | 4,517 | 9,510 | 3,903 | 1,620 | 8,458 | 1,179 | 2,677 | 1,062 | 2,997 | 2,287 | 38,210 |
Domestic | ||||||||||||||||||||||||||||||||||||||||||||
Metal | Machinery, | Consumer | Branches | Other | ||||||||||||||||||||||||||||||||||||||||
Products & | Electronics & | Products & | and | Overseas | All | |||||||||||||||||||||||||||||||||||||||
Year Ended March 31, | Minerals | Information | Chemical | Energy | Services | Offices | Americas | Europe | Areas | Other | Total | |||||||||||||||||||||||||||||||||
2004 | 4,065 | 7,243 | 3,581 | 1,466 | 10,809 | 2,736 | 2,612 | 1,098 | 3,138 | 2,987 | 39,735 | |||||||||||||||||||||||||||||||||
2003 | 4,033 | 6,565 | 3,075 | 1,303 | 9,796 | 2,945 | 2,637 | 1,173 | 3,182 | 3,025 | 37,734 |
E. | Share Ownership. |
Directors, Corporate Auditors and Executive Officers |
Employees Shareholding Association |
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Item 7. | Major Shareholders and Related Party Transactions. |
A. | Major Shareholders. |
Thousands of | ||||||||
Shares of Common | Percentage of Common | |||||||
Shareholders | Stock Owned | Stock Issued(*) | ||||||
The Master Trust Bank of Japan, Ltd. (trust account) | 170,138 | 10.74 | % | |||||
Japan Trustee Services Bank, Ltd. (trust account) | 124,071 | 7.83 | ||||||
Mitsui Mutual Life Insurance Co. | 51,033 | 3.22 | ||||||
Sumitomo Mitsui Banking Corporation | 40,500 | 2.55 | ||||||
The Chuo Mitsui Trust and Banking Company, Limited | 37,410 | 2.36 | ||||||
State Street Bank and Trust Company | 36,311 | 2.29 | ||||||
Nippon Life Insurance Co. | 35,070 | 2.21 | ||||||
Mizuho Corporate Bank, Ltd. | 33,083 | 2.08 | ||||||
The Bank of Tokyo-Mitsubishi, Ltd. | 30,375 | 1.91 | ||||||
Mitsui Sumitomo Insurance Co., Ltd. | 24,726 | 1.56 |
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Schroder Investment Management (Japan) Ltd. |
Thousands of Shares of | Percentage of Common | |||||||
Ownership as of | Common Stock Owned | Stock Issued | ||||||
March 31, 2004 | 146,045,454 | 9.22 | % | |||||
September 30, 2004 | 132,175,833 | 8.35 | ||||||
March 31, 2005 | 105,825,213 | 6.68 |
Mitsui Asset Trust Banking Company, Limited |
Thousands of Shares of | Percentage of Common | |||||||
Common Stock Owned | Stock Issued | |||||||
Ownership as of | ||||||||
November 30, 2003 | 87,912,465 | 5.55 | % | |||||
February 22, 2005 | 70,694,710 | 4.46 |
Mizuho Corporate Bank, Ltd. |
Thousands of Shares of | Percentage of Common | |||||||
Common Stock Owned | Stock Issued | |||||||
Ownership as of | ||||||||
April 30, 2003 | 76,810,314 | 4.84 | % |
Deutsche Bank AG |
Thousands of Shares of | Percentage of Common | |||||||
Common Stock Owned | Stock Issued | |||||||
Ownership as of | ||||||||
March 31, 2004 | 81,768,610 | 5.16 | % | |||||
May 31, 2004 | 34,271,518 | 2.16 |
B. | Related Party Transactions. |
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Billions of | ||||||||
Yen | ||||||||
As of | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
Accounts receivable, trade | ¥197 | ¥186 | ||||||
Advances to associated companies | 93 | 115 | ||||||
Accounts payable, trade | 95 | 76 |
C. | Interests of Experts and Counsel. |
Item 8. | Financial Information. |
A. | Consolidated Statements and Other Financial Information. |
Consolidated Financial Statements |
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Export Sales |
Legal Proceedings |
Antitrust Suits against Mitsui, Mitsui U.S.A. and Novus International |
Antitrust Suits against Mitsui, Mitsui U.S.A. and Bioproducts |
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Other Matters |
Dividend Policy |
B. | Significant Changes. |
Item 9. | The Offer and Listing. |
A. | Offer and Listing Details. |
Name of Stock Exchange | Effective Date of Delisting | |||
The Euronext Amsterdam Stock Exchange | February 28, 2005 | |||
The Frankfurt Stock Exchange | May 2, 2005 | |||
The Luxembourg Stock Exchange | September 26, 2005 |
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TSE | NASDAQ | ||||||||||||||||
Price per Share | |||||||||||||||||
of Common | Price per ADS | ||||||||||||||||
Stock (Yen) | (U.S. dollars)(1) | ||||||||||||||||
High | Low | High | Low | ||||||||||||||
Year ended March 31: | |||||||||||||||||
2001 | ¥ | 851 | ¥ | 605 | $ | 161.50 | $ | 98.00 | |||||||||
2002 | 926 | 575 | 152.13 | 91.00 | |||||||||||||
2003 | 910 | 531 | 146.75 | 89.40 | |||||||||||||
2004 | 946 | 541 | 181.50 | 90.90 | |||||||||||||
2005 | 1,074 | 773 | 206.20 | 137.50 | |||||||||||||
Year ended March 31, 2004: | |||||||||||||||||
First quarter | ¥ | 629 | ¥ | 541 | $ | 106.59 | $ | 90.90 | |||||||||
Second quarter | 800 | 620 | 140.50 | 106.76 | |||||||||||||
Third quarter | 903 | 727 | 162.77 | 136.00 | |||||||||||||
Fourth quarter | 946 | 770 | 181.50 | 150.80 | |||||||||||||
Year ended March 31, 2005: | |||||||||||||||||
First quarter | ¥ | 1,010 | ¥ | 773 | $ | 191.11 | $ | 137.50 | |||||||||
Second quarter | 946 | 801 | 172.00 | 144.45 | |||||||||||||
Third quarter | 994 | 841 | 182.00 | 163.98 | |||||||||||||
Fourth quarter | 1,074 | 910 | 206.20 | 176.94 | |||||||||||||
Year ending March 31, 2006: | |||||||||||||||||
First quarter | ¥ | 1,050 | ¥ | 908 | $ | 192.44 | $ | 171.50 | |||||||||
Month of: | |||||||||||||||||
March 2005 | ¥ | 1,074 | ¥ | 975 | $ | 206.20 | $ | 181.75 | |||||||||
April 2005 | 1,023 | 923 | 188.95 | 174.51 | |||||||||||||
May 2005 | 995 | 908 | 189.89 | 171.50 | |||||||||||||
June 2005 | 1,050 | 981 | 192.44 | 180.09 | |||||||||||||
July 2005 | 1,084 | 1,015 | 193.00 | 182.53 | |||||||||||||
August 2005 | 1,188 | 1,057 | 218.00 | 185.52 |
(1) | All fractional figures of the prices per ADS are rounded to the nearest two decimal points. |
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B. | Plan of Distribution. |
C. | Markets. |
D. | Selling Shareholders. |
E. | Dilution. |
F. | Expenses of the Issue. |
Item 10. | Additional Information. |
A. | Share Capital. |
B. | Memorandum and Articles of Association. |
General |
Organization |
Objects and Purposes |
1. | Foreign trading business, purchasing and selling business, wholesaling business, agency business and brokerage business, relating to the following commodities: |
(1) | Ferrous and non-ferrous metals and their raw materials and manufactured goods, and minerals. | |
(2) | Coal, petroleum, natural gas and other fuels and their by-products. |
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(3) | All kinds of machines and appliances (including measuring instruments and medical apparatus), equipment including manufacturing equipment, communications equipment and antipollution equipment, rolling stock and vehicles, ships and boats, aerospace equipment and aircraft, and parts for the foregoing. | |
(4) | All kinds of chemical products, salt, fertilizers, high-pressure gas, explosives, pharmaceuticals (including medicines, non-medicinal drugs, medicine for veterinary use, narcotics, powerful poison and poison), radio isotope, toilet preparations and their raw materials. | |
(5) | Cereals, sugar, oils and fats, feeds and their raw materials; livestocks, agricultural, dairy and marine products, processed foods, alcoholic beverage and other foodstuffs and drinks. | |
(6) | All kinds of textile products and their raw materials. | |
(7) | All kinds of fur products and raw fur. | |
(8) | Lumber, cement, other building materials and housing related equipment. | |
(9) | Rubber, pulp, paper and their manufactured goods; tobacco, cigars, cigarettes and sundry goods. |
(10) Industrial water and drinking water. |
2. | Exploration, development, manufacturing, processing, scrapping and recycling business relating to the above-mentioned commodities. | |
3. | Acquisition, planning, preservation, utilization and disposition of copyrights, patent rights, other intellectual property rights, know-how, system technology, and other software and acting as intermediary in such transactions. | |
4. | Information processing and supply, telecommunications business, broadcasting business, advertising business, publishing business, printing, translation, and production and sales of audio and visual copyright products. | |
5. | Forestry business, sawing business and lumber processing business. | |
6. | Movable assets leasing business. | |
7. | Secondhand goods business. | |
8. | Freight forwarding and agency business, land transportation business, marine transportation business, port transportation business, freight forwarding business, customs brokerage business, shipping agency business and warehousing business. | |
9. | Intermediary business for non-life insurance and insurance under the Automobile Liability Law, and offering of life insurance, and overseas reinsurance business for non-life insurance. |
10. | Business as contractor, design of building, supervision and management of various construction works. | |
11. | Acquisition, disposition, leasing, utilization in any other manner and development of real estate and acting as intermediary in such transactions. | |
12. | Supply and development of hot springs. | |
13. | Surveying and researching business relating to land, sea and sky. | |
14. | Investment in, purchasing, selling and handling as intermediary of negotiable instruments, etc. | |
15. | Lending money, guaranteeing and assuming debts, engaging in the sale and purchase of various credits, dealing in foreign exchange transactions, and conducting any other financing business. | |
16. | Operation and management of medical facilities, day-care facilities, sports facilities and restaurants, and hotel business and travel business. |
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17. | Planning, administration and implementation of various events. | |
18. | Temporary personnel placement service business, employment agency business, and personnel guidance and training business for development of appropriate job skills and qualifications, | |
19. | Maintenance and management of real estate. | |
20. | Investment business, commodities investment dealing service, commodities investment advisory service, securities investment advisory service, trust business, sale of beneficial interest in trust, management service of investment trusts, asset management service for investment corporations. | |
21. | Generation, supply, and sale or purchase of electricity. | |
22. | Administrative agency service for operations, labor and accounting work. | |
23. | Buying, selling, and derivative transactions for greenhouse effect gas emissions rights and related intermediary services. | |
24. | Agent and intermediary for credit cards application. | |
25. | Consultancy business relating to the foregoing items. | |
26. | Other lines of business relating to any of the foregoing items. |
Directors |
Common Stock |
Authorized capital |
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Dividends |
(i) | its stated capital; |
(ii) | its capital surplus; |
(iii) | its accumulated legal reserve; |
(iv) | the legal reserve to be set aside in respect of the fiscal period concerned; |
(v) | the excess, if any, of unamortized expenses incurred in preparation for commencement of business and in connection with research and development over the aggregate of amounts referred to in (ii), (iii) and (iv) above; |
(vi) | the subscription price or the security deposit for the subscription price of new shares issued by the company; and |
(vii) | if certain assets of the company are stated at market value pursuant to the provisions of the Commercial Code, the aggregate amount by which their market value exceeds acquisition cost. |
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Shareholders’ Meetings |
Voting rights |
165
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Subscription rights |
Liquidation rights |
Record date |
Repurchase by Mitsui of its Common Stock |
166
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Transfer of shares |
“Unit” share system |
Voting rights under the unit share system |
Share certificates for less than a unit of shares |
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Repurchase by Mitsui of shares constituting less than a full unit |
Increase in purchase of the shares to make one unit |
Effect of the unit share system on holders of ADSs |
Reporting of Substantial Shareholdings |
Exercise of Voting Rights |
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Change in Control |
Daily Price Fluctuation Limits under Japanese Stock Exchange Rules |
Maximum | ||||||||||||||||
Previous Day’s Closing Price or | Daily Price | |||||||||||||||
Special Quote | Movement | |||||||||||||||
Greater or equal to | ¥ | 200 | Less than | ¥ | 500 | ¥ | 80 | |||||||||
Greater or equal to | 500 | Less than | 1,000 | 100 | ||||||||||||
Greater or equal to | 1,000 | Less than | 1,500 | 200 |
C. | Material Contracts. |
D. | Exchange Controls. |
Foreign Exchange Regulations |
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Acquisition of Shares |
Acquisition of Shares upon Exercise of Subscription Rights Attached to Bonds |
ADRs |
Dividends and Proceeds of Sales |
E. | Taxation. |
Japanese Taxation |
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• | the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law; | |
• | the laws of the jurisdiction of which they are resident; and | |
• | any tax treaty between Japan and their country of residence. |
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United States Taxation |
General |
Taxation of Dividends |
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Taxation of Capital Gains |
PFIC Rules |
F. | Dividends and Paying Agents. |
G. | Statement by Experts. |
H. | Documents on Display. |
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I. | Subsidiary Information. |
Item 11. | Quantitative and Qualitative Disclosures about Market Risk. |
Interest Rate Risk |
Foreign Currency Exchange Rate Risk |
Commodity Price Risk |
Equity Price Risk |
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Risk Management of Derivative Financial Instruments and Other Financial Instruments |
Risk Management of Derivative Commodity Instruments |
VaR |
VaRs for Non-Trading Activities |
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Millions of Yen | ||||||||||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||||||
Year End | High | Low | Average | Year End | High | Low | Average | |||||||||||||||||||||||||
Interest rate risk | ¥ | 376 | ¥ | 1,667 | ¥ | 262 | ¥ | 870 | ¥ | 1,096 | ¥ | 1,453 | ¥ | 197 | ¥ | 983 | ||||||||||||||||
Foreign currency exchange rate risk | 986 | 1,192 | 244 | 753 | 535 | 1,179 | 402 | 738 | ||||||||||||||||||||||||
Commodity price risk | 1,044 | 1,329 | 925 | 1,071 | 1,336 | 1,336 | 1,089 | 1,207 |
VaRs for Trading Activities |
Millions of Yen | ||||||||||||||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||||||
Year End | High | Low | Average | Year End | High | Low | Average | |||||||||||||||||||||||||
Interest rate risk | ¥ | 0 | ¥ | 87 | ¥ | 0 | ¥ | 23 | ¥ | 1 | ¥ | 107 | ¥ | 1 | ¥ | 48 | ||||||||||||||||
Foreign currency exchange rate risk | 133 | 176 | 17 | 72 | 157 | 157 | 1 | 65 | ||||||||||||||||||||||||
Commodity price risk | 2,863 | 3,068 | 2,177 | 2,592 | 2,106 | 2,496 | 1,531 | 2,035 |
Tabular Presentation of Equity Price Risk |
Millions of Yen | ||||||||||||||||||||||||
March 31, 2005 | March 31, 2004 | |||||||||||||||||||||||
Unrealized Holding | Unrealized Holding | |||||||||||||||||||||||
Cost | Fair Value | Net Gains | Cost | Fair Value | Net Gains | |||||||||||||||||||
Manufacturing | ¥ | 113,654 | ¥ | 194,101 | ¥ | 80,447 | ¥ | 101,307 | ¥ | 172,984 | ¥ | 71,677 | ||||||||||||
Commercial, finance and real estate | 29,518 | 49,193 | 19,675 | 43,166 | 68,374 | 25,208 | ||||||||||||||||||
Transport and telecommunication | 17,814 | 32,658 | 14,844 | 11,150 | 15,589 | 4,439 | ||||||||||||||||||
Energy, service and others | 30,021 | 57,145 | 27,124 | 22,986 | 40,071 | 17,085 | ||||||||||||||||||
Total | ¥ | 191,007 | ¥ | 333,097 | ¥ | 142,090 | ¥ | 178,609 | ¥ | 297,018 | ¥ | 118,409 | ||||||||||||
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Millions of Yen | ||||||||||||||||||
Available-for-Sale | Held-to-Maturity | |||||||||||||||||
Aggregate | Aggregate | |||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||
Contractual maturities: | ||||||||||||||||||
Within 1 year | ¥234,870 | ¥234,870 | ¥1,348 | ¥1,348 | ||||||||||||||
After 1 year through 5 years | 67,981 | 67,999 | 233 | 233 | ||||||||||||||
After 5 years through 10 years | 4,069 | 4,073 | 10 | 10 | ||||||||||||||
After 10 years | 2 | 2 | — | — | ||||||||||||||
�� | ||||||||||||||||||
Total | ¥306,922 | ¥306,944 | ¥1,591 | ¥1,591 | ||||||||||||||
Item 12. | Description of Securities Other than Equity Securities. |
Item 13. | Defaults, Dividend Arrearages and Delinquencies. |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds. |
Item 15. | Controls and Procedures. |
Disclosure Controls and Procedures |
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Item 16. | [Reserved] |
Item 16A. | Audit Committee Financial Expert. |
Item 16B. | Code of Ethics. |
Item 16C. | Principal Accountant Fees and Services. |
Millions of Yen | ||||||||
Year Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
Audit fees(1) | ¥1,298 | ¥1,223 | ||||||
Audit-related fees(2) | 122 | 143 | ||||||
Tax fees(3) | 483 | 430 | ||||||
All other fees(4) | 37 | 181 | ||||||
Total | ¥1,940 | ¥1,977 | ||||||
(1) | Audit fees are fees billed for professional services rendered by the principal accountant for the audit of our annual financial statements and services that are provided by the accountant in connection with statutory and regulatory filings or engagements. |
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(2) | Audit-related fees are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, such as assessment of internal accounting controls and due diligence services in connection with potential business acquisitions, that are not reported in audit fees. |
(3) | Tax fees are fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning. |
(4) | All other fees are fees billed for services provided by the principal accountant, other than services reported in audit fees, audit-related fees and tax fees, such as advisory services for risk management and regulatory matters. |
Item 16D. | Exemptions from the Listing Standards for Audit Committees. |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers. |
(c) Total Number of | (d) Maximum Number | |||||||||||||||
Shares Purchased as | of Shares that May | |||||||||||||||
(a) Total Number | (b) Average | Part of Publicly | Yet Be Purchased | |||||||||||||
of Shares | Price Paid per | Announced Plans or | Under the Plans or | |||||||||||||
Period | Purchased(1) | Share (Yen) | Programs | Programs | ||||||||||||
April 1, 2004 – April 30, 2004 | 56,140 | ¥970.03 | N/A | N/A | ||||||||||||
May 1, 2004 – May 31, 2004 | 16,634 | 854.26 | N/A | N/A | ||||||||||||
June 1, 2004 – June 30, 2004 | 25,485 | 848.57 | N/A | N/A | ||||||||||||
July 1, 2004 – July 31, 2004 | 72,383 | 829.12 | N/A | N/A | ||||||||||||
August 1, 2004 – August 31, 2004 | 57,811 | 868.59 | N/A | N/A | ||||||||||||
September 1, 2004 – September 30, 2004 | 63,612 | 923.27 | N/A | N/A | ||||||||||||
October 1, 2004 – October 31, 2004 | 93,439 | 952.50 | N/A | N/A | ||||||||||||
November 1, 2004 – November 30, 2004 | 102,205 | 918.71 | N/A | N/A | ||||||||||||
December 1, 2004 – December 31, 2004 | 168,910 | 877.73 | N/A | N/A | ||||||||||||
January 1, 2005 – January 31, 2005 | 86,405 | 931.93 | N/A | N/A | ||||||||||||
February 1, 2005 – February 28, 2005 | 84,370 | 991.37 | N/A | N/A | ||||||||||||
March 1, 2005 – March 31, 2005(2) | 71,853 | 1,048.64 | N/A | N/A | ||||||||||||
Total | 899,247 | 922.91 | N/A | N/A | ||||||||||||
(1) | Under the Commercial Code of Japan, a holder of shares constituting less than one full unit may require Mitsui to purchase such shares at their market value (See “Memorandum and Articles of |
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Association — ‘Unit’ share system — Repurchase by Mitsui of shares constituting less than a full unit” in “Item 10. Additional Information”). During the year ended March 31, 2005, Mitsui purchased 899,247 shares for a total purchase price of 829,921,816 yen upon such requests from holders of shares constituting less than one full unit. | |
(2) | On January 19, 2005, Mitsui announced that, at its Meeting of the Board of Directors, Mitsui decided to merge with Mitsui Sakhalin Development Co. Ltd. (“MSD”) on March 31, 2005. |
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Item 17. | Financial Statements. |
Item 18. | Financial Statements. |
Item 19. | Exhibits. |
Exhibit | ||||
Number | Document | |||
1 | .1 | The Articles of Incorporation of Mitsui & Co., Ltd., as of June 24, 2005 (English-language translation). | ||
1 | .2* | The Share Handling Regulation of Mitsui & Co., Ltd., as amended on June 24, 2004 (English-language translation). | ||
1 | .3* | The Rules of the Board of Directors of Mitsui & Co., Ltd., as amended on April 1, 2004 (English-language translation). | ||
1 | .4 | The Rules of the Board of Corporate Auditors of Mitsui & Co., Ltd., as amended on September 8, 2004 (English-language translation). | ||
2 | .1** | Deposit Agreement, dated October 1, 1982 among Mitsui & Co., Ltd., Citibank, N.A., and holders of ADRs and European Depositary Receipts. | ||
8 | .1 | List of Subsidiaries of Mitsui & Co., Ltd. | ||
11 | .1 | Code of Ethics for Senior Financial Officers and Professionals. | ||
11 | .2 | Business Conduct Guidelines for Employees and Officers of Mitsui & Co., Ltd. | ||
12 | .1 | Certification of the principal executive officer of Mitsui & Co., Ltd. required by Rule 13a-14(a). | ||
12 | .2 | Certification of the principal financial officer of Mitsui & Co., Ltd. required by Rule 13a-14(a). | ||
13 | .1 | Certification required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. |
* | Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 0-9929) filed on September 30, 2004. |
** | Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 0-9929) filed on September 27, 2002. |
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Page | ||||
Report of Independent Registered Public Accounting Firm | F-2 | |||
Consolidated Balance Sheets, March 31, 2005 and 2004 | F-3 | |||
Statements of Consolidated Income for the Years Ended March 31, 2005, 2004 and 2003 | F-5 | |||
Statements of Consolidated Shareholders’ Equity for the Years Ended March 31, 2005, 2004 and 2003 | F-7 | |||
Statements of Consolidated Cash Flows for the Years Ended March 31, 2005, 2004 and 2003 | F-9 | |||
Notes to Consolidated Financial Statements | F-10 | |||
Supplemental Information on Oil and Gas Producing Activities (Unaudited) | F-82 |
F-1
Table of Contents
F-2
Table of Contents
Millions of | ||||||||||||||
U.S. Dollars | ||||||||||||||
Millions of Yen | (Note 2) | |||||||||||||
2005 | 2004 | 2005 | ||||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents (Notes 2 and 5) | ¥ | 791,810 | ¥ | 638,299 | $ | 7,400 | ||||||||
Time deposits | 28,067 | 46,710 | 262 | |||||||||||
Marketable securities (Notes 2 and 5) | 28,077 | 29,337 | 262 | |||||||||||
Trade receivables (Note 9): | ||||||||||||||
Notes and loans, less unearned interest | 450,678 | 467,380 | 4,212 | |||||||||||
Accounts (Note 8) | 1,863,742 | 1,706,850 | 17,418 | |||||||||||
Associated companies | 197,015 | 186,373 | 1,841 | |||||||||||
Allowance for doubtful receivables (Notes 2, 7 and 8) | (22,519 | ) | (22,498 | ) | (210 | ) | ||||||||
Inventories (Notes 2 and 9) | 596,876 | 513,016 | 5,578 | |||||||||||
Advance payments to suppliers | 90,901 | 62,038 | 850 | |||||||||||
Deferred tax assets — current (Notes 2 and 21) | 46,410 | 31,473 | 434 | |||||||||||
Other current assets | 349,622 | 275,496 | 3,268 | |||||||||||
Total current assets | 4,420,679 | 3,934,474 | 41,315 | |||||||||||
Investments and Non-current Receivables(Notes 2 and 9): | ||||||||||||||
Investments in and advances to associated companies (Notes 6, 11 and 17) | 973,219 | 726,521 | 9,096 | |||||||||||
Other investments (Note 5) | 660,230 | 617,189 | 6,170 | |||||||||||
Non-current receivables, less unearned interest (Note 8) | 544,615 | 485,446 | 5,090 | |||||||||||
Allowance for doubtful receivables (Notes 7 and 8) | (100,066 | ) | (110,098 | ) | (935 | ) | ||||||||
Property leased to others — at cost, less accumulated depreciation (Notes 8, 10 and 24) | 183,175 | 230,311 | 1,712 | |||||||||||
Total investments and non-current receivables | 2,261,173 | 1,949,369 | 21,133 | |||||||||||
Property and Equipment — at Cost(Notes 2, 8, 9, 10 and 11): | ||||||||||||||
Land, land improvements and timberlands | 207,115 | 220,842 | 1,936 | |||||||||||
Buildings, including leasehold improvements | 317,576 | 329,405 | 2,968 | |||||||||||
Equipment and fixtures | 429,315 | 395,010 | 4,012 | |||||||||||
Mineral rights | 78,303 | 27,349 | 732 | |||||||||||
Vessels | 21,002 | 18,215 | 196 | |||||||||||
Projects in progress | 35,727 | 26,224 | 334 | |||||||||||
Total | 1,089,038 | 1,017,045 | 10,178 | |||||||||||
Accumulated depreciation | (426,350 | ) | (417,906 | ) | (3,985 | ) | ||||||||
Net property and equipment | 662,688 | 599,139 | 6,193 | |||||||||||
Intangible Assets, less Accumulated Amortization(Notes 2, 3, 12 and 14) | 104,257 | 90,809 | 974 | |||||||||||
Deferred Tax Assets — Non-current(Notes 2, 11 and 21) | 29,641 | 32,406 | 277 | |||||||||||
Other Assets (Note 14) | 114,949 | 109,831 | 1,074 | |||||||||||
Total | ¥ | 7,593,387 | ¥ | 6,716,028 | $ | 70,966 | ||||||||
F-3
Table of Contents
Millions of | ||||||||||||||
U.S. Dollars | ||||||||||||||
Millions of Yen | (Note 2) | |||||||||||||
2005 | 2004 | 2005 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
Current Liabilities: | ||||||||||||||
Short-term debt (Notes 9 and 13) | ¥ | 615,353 | ¥ | 646,746 | $ | 5,751 | ||||||||
Current maturities of long-term debt (Notes 8, 9 and 13) | 291,950 | 357,675 | 2,728 | |||||||||||
Trade payables: | ||||||||||||||
Notes and acceptances | 113,481 | 124,321 | 1,060 | |||||||||||
Accounts | 1,645,842 | 1,467,516 | 15,382 | |||||||||||
Associated companies | 94,805 | 76,360 | 886 | |||||||||||
Accrued expenses: | ||||||||||||||
Income taxes (Notes 2 and 21) | 47,160 | 32,628 | 441 | |||||||||||
Interest | 19,570 | 20,210 | 183 | |||||||||||
Other | 75,299 | 39,522 | 704 | |||||||||||
Advances from customers | 100,681 | 83,273 | 941 | |||||||||||
Other current liabilities (Notes 2, 21, 22 and 23) | 277,635 | 185,534 | 2,595 | |||||||||||
Total current liabilities | 3,281,776 | 3,033,785 | 30,671 | |||||||||||
Long-term Debt, less Current Maturities(Notes 8, 9, 11 and 13) | 2,904,923 | 2,541,221 | 27,149 | |||||||||||
Accrued Pension Costs and Liability for Severance Indemnities(Notes 2 and 14) | 39,467 | 52,296 | 369 | |||||||||||
Deferred Tax Liabilities — Non-current(Notes 2 and 21) | 143,566 | 47,387 | 1,341 | |||||||||||
Commitments and Contingent Liabilities(Notes 9 and 23) | ||||||||||||||
Minority Interests(Note 11) | 100,827 | 78,061 | 942 | |||||||||||
Shareholders’ Equity(Note 15): | ||||||||||||||
Common stock — no par value | ||||||||||||||
Authorized, 2,500,000,000 shares; | ||||||||||||||
Issued, 1,583,687,322 shares in 2005 and 1,583,674,837 shares in 2004 | 192,493 | 192,487 | 1,799 | |||||||||||
Capital surplus | 288,048 | 287,763 | 2,692 | |||||||||||
Retained earnings: | ||||||||||||||
Appropriated for legal reserve | 37,018 | 36,633 | 346 | |||||||||||
Unappropriated (Notes 6, 13, 21 and 29) | 656,032 | 549,521 | 6,131 | |||||||||||
Accumulated other comprehensive income (loss) (Note 2): | ||||||||||||||
Unrealized holding gains and losses on available-for-sale securities (Note 5) | 100,179 | 69,729 | 936 | |||||||||||
Foreign currency translation adjustments | (142,787 | ) | (161,454 | ) | (1,334 | ) | ||||||||
Minimum pension liability adjustment (Note 14) | (5,691 | ) | (5,743 | ) | (53 | ) | ||||||||
Net unrealized gains and losses on derivatives (Note 26) | (1,252 | ) | (3,996 | ) | (12 | ) | ||||||||
Total accumulated other comprehensive loss | (49,551 | ) | (101,464 | ) | (463 | ) | ||||||||
Treasury stock, at cost: 1,476,692 shares in 2005 and 2,661,783 shares in 2004 | (1,212 | ) | (1,662 | ) | (11 | ) | ||||||||
Total shareholders’ equity | 1,122,828 | 963,278 | 10,494 | |||||||||||
Total | ¥ | 7,593,387 | ¥ | 6,716,028 | $ | 70,966 | ||||||||
F-4
Table of Contents
Millions of | ||||||||||||||||||
U.S. Dollars | ||||||||||||||||||
Millions of Yen | (Note 2) | |||||||||||||||||
2004 | 2003 | |||||||||||||||||
As restated | As restated | |||||||||||||||||
2005 | (Note 2) | (Note 2) | 2005 | |||||||||||||||
Revenues(Notes 2, 17 and 18): | ||||||||||||||||||
Sales of products | ¥ | 2,980,759 | ¥ | 2,490,014 | ¥ | 2,316,828 | $ | 27,858 | ||||||||||
Sales of services | 435,210 | 424,473 | 389,653 | 4,067 | ||||||||||||||
Other sales (Note 8) | 109,764 | 68,449 | 78,090 | 1,026 | ||||||||||||||
Total revenues | 3,525,733 | 2,982,936 | 2,784,571 | 32,951 | ||||||||||||||
Total Trading Transactions (Notes 2 and 17): 2005, ¥13,615,047 million — $127,243 million; 2004, ¥12,284,111 million; 2003, ¥11,474,183 million | ||||||||||||||||||
Cost of Revenues(Notes 2 and 18): | ||||||||||||||||||
Cost of products sold | 2,684,146 | 2,292,662 | 2,131,157 | 25,086 | ||||||||||||||
Cost of services sold | 68,995 | 41,346 | 44,594 | 645 | ||||||||||||||
Cost of other sales (Note 8) | 46,789 | 34,985 | 39,250 | 437 | ||||||||||||||
Total cost of revenues | 2,799,930 | 2,368,993 | 2,215,001 | 26,168 | ||||||||||||||
Gross Profit | 725,803 | 613,943 | 569,570 | 6,783 | ||||||||||||||
Other Expenses (Income): | ||||||||||||||||||
Selling, general and administrative (Notes 2, 8, 12, 14, 18 and 25) | 518,949 | 494,437 | 453,973 | 4,850 | ||||||||||||||
Provision for doubtful receivables (Notes 2 and 7) | 8,863 | 9,883 | 13,665 | 83 | ||||||||||||||
Interest expense, net of interest income (Notes 2 and 26): 2005, ¥35,512 million — $332 million; 2004, ¥30,015 million; 2003, ¥39,641 million | 8,097 | 5,898 | 5,774 | 76 | ||||||||||||||
Dividend income | (24,570 | ) | (18,448 | ) | (16,266 | ) | (230 | ) | ||||||||||
Gain on securities contributed to an employee retirement benefit trust (Notes 5 and 14) | — | — | (15,831 | ) | — | |||||||||||||
Government grant for transfer of substitutional portion of EPF (Notes 2 and 14) | — | (17,224 | ) | — | — | |||||||||||||
Gain on sales of securities — net (Notes 2 and 5) | (34,856 | ) | (27,465 | ) | (11,026 | ) | (326 | ) | ||||||||||
Gain on issuance of stock by a subsidiary (Notes 2 and 19) | (1,677 | ) | — | — | (16 | ) | ||||||||||||
Loss on write-down of securities (Notes 2 and 5) | 16,544 | 31,024 | 37,907 | 155 | ||||||||||||||
(Gain) loss on disposal or sales of property and equipment — net (Note 25) | (6,527 | ) | (4,057 | ) | 1,745 | (61 | ) | |||||||||||
Impairment loss of long-lived assets (Notes 2, 10, 12 and 25) | 21,505 | 22,378 | 23,638 | 201 | ||||||||||||||
Compensation and other charges related to DPF incident (Note 22) | 36,000 | — | — | 336 | ||||||||||||||
Other expense — net (Notes 18, 20, 23 and 25) | 7,831 | 28,712 | 11,001 | 73 | ||||||||||||||
Total other expenses | 550,159 | 525,138 | 504,580 | 5,141 | ||||||||||||||
Income from Continuing Operations before Income Taxes, Minority Interests and Equity in Earnings(Note 21) | 175,644 | 88,805 | 64,990 | 1,642 | ||||||||||||||
Income Taxes(Notes 2 and 21): | ||||||||||||||||||
Current | 65,098 | 45,016 | 39,187 | 608 | ||||||||||||||
Deferred (Note 19) | 38,457 | 2,025 | (389 | ) | 360 | |||||||||||||
Total | 103,555 | 47,041 | 38,798 | 968 | ||||||||||||||
Income from Continuing Operations before Minority Interests and Equity in Earnings | 72,089 | 41,764 | 26,192 | 674 | ||||||||||||||
Minority Interests in Earnings of Subsidiaries | (17,558 | ) | (7,470 | ) | (4,412 | ) | (164 | ) | ||||||||||
Equity in Earnings of Associated Companies — Net (After Income Tax Effect)(Notes 2, 6 and 21) | 65,893 | 40,078 | 15,295 | 615 | ||||||||||||||
Income from Continuing Operations | 120,424 | 74,372 | 37,075 | 1,125 | ||||||||||||||
Income (Loss) from Discontinued Operations — Net (After Income Tax Effect)(Notes 4, 21 and 25) | 712 | (3,700 | ) | (5,937 | ) | 7 | ||||||||||||
Cumulative Effect of Change in Accounting Principle (After Income Tax Effect)(Notes 11 and 21) | — | (2,285 | ) | — | — | |||||||||||||
Net Income | ¥ | 121,136 | ¥ | 68,387 | ¥ | 31,138 | $ | 1,132 | ||||||||||
F-5
Table of Contents
U.S. Dollars | ||||||||||||||||||
Yen | (Note 2) | |||||||||||||||||
Net Income per Share(Notes 2, 11 and 16): | ||||||||||||||||||
Basic: | ||||||||||||||||||
Continuing operations | ¥ | 76.10 | ¥ | 47.04 | ¥ | 23.43 | $ | 0.71 | ||||||||||
Discontinued operations | 0.45 | (2.35 | ) | (3.75 | ) | 0.01 | ||||||||||||
Cumulative effect of change in accounting principle | — | (1.44 | ) | — | — | |||||||||||||
Total | ¥ | 76.55 | ¥ | 43.25 | ¥ | 19.68 | $ | 0.72 | ||||||||||
Diluted: | ||||||||||||||||||
Continuing operations | ¥ | 71.70 | ¥ | 44.44 | ¥ | 22.17 | $ | 0.67 | ||||||||||
Discontinued operations | 0.42 | (2.19 | ) | (3.48 | ) | 0.00 | ||||||||||||
Cumulative effect of change in accounting principle | — | (1.36 | ) | — | — | |||||||||||||
Total | ¥ | 72.12 | ¥ | 40.89 | ¥ | 18.69 | $ | 0.67 | ||||||||||
F-6
Table of Contents
Millions of | |||||||||||||||||
U.S. Dollars | |||||||||||||||||
Millions of Yen | (Note 2) | ||||||||||||||||
2005 | 2004 | 2003 | 2005 | ||||||||||||||
Common Stock(Note 15): | |||||||||||||||||
Balance at beginning of year | |||||||||||||||||
Shares issued: 2005, 2004 and 2003 — 1,583,674,837 shares | ¥ | 192,487 | ¥ | 192,487 | ¥ | 192,487 | $ | 1,799 | |||||||||
Common stock issued upon conversion of bonds | |||||||||||||||||
Shares issued: 2005 — 12,485 shares; 2004 and 2003 — 0 share | 6 | — | — | 0 | |||||||||||||
Balance at end of year | |||||||||||||||||
Shares issued: 2005 — 1,583,687,322 shares; 2004 and 2003 — 1,583,674,837 shares | ¥ | 192,493 | ¥ | 192,487 | ¥ | 192,487 | $ | 1,799 | |||||||||
Capital Surplus(Note 15): | |||||||||||||||||
Balance at beginning of year | ¥ | 287,763 | ¥ | 287,756 | ¥ | 287,756 | $ | 2,690 | |||||||||
Conversion of bonds | 6 | — | — | 0 | |||||||||||||
Gain on sales of treasury stock | 13 | 7 | — | 0 | |||||||||||||
Exchange of treasury stock for subsidiary’s stock | 266 | — | — | 2 | |||||||||||||
Balance at end of year | ¥ | 288,048 | ¥ | 287,763 | ¥ | 287,756 | $ | 2,692 | |||||||||
Retained Earnings(Note 15): | |||||||||||||||||
Appropriated for Legal Reserve: | |||||||||||||||||
Balance at beginning of year | ¥ | 36,633 | ¥ | 36,382 | ¥ | 35,873 | $ | 342 | |||||||||
Transfer from unappropriated retained earnings | 385 | 251 | 509 | 4 | |||||||||||||
Balance at end of year | ¥ | 37,018 | ¥ | 36,633 | ¥ | 36,382 | $ | 346 | |||||||||
Unappropriated(Notes 6, 13, 21 and 29): | |||||||||||||||||
Balance at beginning of year | ¥ | 549,521 | ¥ | 494,038 | ¥ | 476,074 | $ | 5,136 | |||||||||
Net income | 121,136 | 68,387 | 31,138 | 1,132 | |||||||||||||
Cash dividends paid (annual rate per share: 2005, ¥9.0 — 8.4¢; 2004 and 2003, ¥8.0) | (14,240 | ) | (12,653 | ) | (12,665 | ) | (133 | ) | |||||||||
Transfer to retained earnings appropriated for legal reserve | (385 | ) | (251 | ) | (509 | ) | (4 | ) | |||||||||
Balance at end of year | ¥ | 656,032 | ¥ | 549,521 | ¥ | 494,038 | $ | 6,131 | |||||||||
Accumulated Other Comprehensive Income (Loss) (After Income Tax Effect)(Notes 2, 15 and 21): | |||||||||||||||||
Balance at beginning of year | ¥ | (101,464 | ) | ¥ | (147,138 | ) | ¥ | (76,918 | ) | $ | (948 | ) | |||||
Unrealized holding gains and losses on available-for-sale securities (Note 5) | 30,450 | 66,324 | (40,841 | ) | 285 | ||||||||||||
Foreign currency translation adjustments | 18,667 | (20,401 | ) | (22,384 | ) | 174 | |||||||||||
Minimum pension liability adjustment (Note 14) | 52 | 988 | (6,358 | ) | 0 | ||||||||||||
Net unrealized gains and losses on derivatives (Note 26) | 2,744 | (1,237 | ) | (637 | ) | 26 | |||||||||||
�� | |||||||||||||||||
Balance at end of year | ¥ | (49,551 | ) | ¥ | (101,464 | ) | ¥ | (147,138 | ) | $ | (463 | ) | |||||
F-7
Table of Contents
Millions of | |||||||||||||||||
U.S. Dollars | |||||||||||||||||
Millions of Yen | (Note 2) | ||||||||||||||||
2005 | 2004 | 2003 | 2005 | ||||||||||||||
Treasury Stock, at Cost(Note 15): | |||||||||||||||||
Balance at beginning of year | |||||||||||||||||
Shares in treasury: 2005 — 2,661,783 shares; 2004 — 2,297,845 shares; 2003 — 494,860 shares | ¥ | (1,662 | ) | ¥ | (1,378 | ) | ¥ | (302 | ) | $ | (15 | ) | |||||
Purchase of treasury stock | |||||||||||||||||
Shares purchased: 2005 — 1,000,990 shares; 2004 — 472,590 shares; 2003 — 1,802,985 shares | (904 | ) | (356 | ) | (1,076 | ) | (8 | ) | |||||||||
Sales of treasury stock | |||||||||||||||||
Shares sold: 2005 — 317,200 shares; 2004 — 108,652 shares; 2003 — 0 share | 158 | 72 | — | 1 | |||||||||||||
Exchange of treasury stock for subsidiary’s stock | |||||||||||||||||
Shares exchanged: 2005 — 1,868,881 shares; 2004 and 2003 — 0 share | 1,196 | — | — | 11 | |||||||||||||
Balance at end of year | |||||||||||||||||
Shares in treasury: 2005 — 1,476,692 shares; 2004 — 2,661,783 shares; 2003 — 2,297,845 shares | ¥ | (1,212 | ) | ¥ | (1,662 | ) | ¥ | (1,378 | ) | $ | (11 | ) | |||||
Summary of Changes in Equity from Nonowner Sources (Comprehensive Income (Loss))(Notes 2, 15 and 21): | |||||||||||||||||
Net income | ¥ | 121,136 | ¥ | 68,387 | ¥ | 31,138 | $ | 1,132 | |||||||||
Other comprehensive income (loss) (after income tax effect): | |||||||||||||||||
Unrealized holding gains and losses on available-for-sale securities (Note 5) | 30,450 | 66,324 | (40,841 | ) | 285 | ||||||||||||
Foreign currency translation adjustments | 18,667 | (20,401 | ) | (22,384 | ) | 174 | |||||||||||
Minimum pension liability adjustment (Note 14) | 52 | 988 | (6,358 | ) | 0 | ||||||||||||
Net unrealized gains and losses on derivatives (Note 26) | 2,744 | (1,237 | ) | (637 | ) | 26 | |||||||||||
Changes in equity from nonowner sources | ¥ | 173,049 | ¥ | 114,061 | ¥ | (39,082 | ) | $ | 1,617 | ||||||||
F-8
Table of Contents
Millions of | |||||||||||||||||||
U.S. Dollars | |||||||||||||||||||
Millions of Yen | (Note 2) | ||||||||||||||||||
2005 | 2004 | 2003 | 2005 | ||||||||||||||||
Operating Activities(Note 28): | |||||||||||||||||||
Net income | ¥ | 121,136 | ¥ | 68,387 | ¥ | 31,138 | $ | 1,132 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 66,598 | 65,809 | 58,331 | 622 | |||||||||||||||
Pension and severance costs, less payments | (18,575 | ) | 35,441 | (9,660 | ) | (174 | ) | ||||||||||||
Provision for doubtful receivables | 8,863 | 9,883 | 13,665 | 83 | |||||||||||||||
Gain on securities contributed to an employee retirement benefit trust | — | — | (15,831 | ) | — | ||||||||||||||
Government grant for transfer of substitutional portion of EPF | — | (17,224 | ) | — | — | ||||||||||||||
Gain on sales of securities — net | (34,856 | ) | (27,465 | ) | (11,026 | ) | (326 | ) | |||||||||||
Gain on issuance of stock by a subsidiary | (1,677 | ) | — | — | (16 | ) | |||||||||||||
Loss on write-down of securities | 16,544 | 31,024 | 37,907 | 155 | |||||||||||||||
(Gain) loss on disposal or sales of property and equipment — net | (6,527 | ) | (4,057 | ) | 1,745 | (61 | ) | ||||||||||||
Impairment loss of long-lived assets | 21,505 | 22,378 | 23,638 | 201 | |||||||||||||||
Deferred income taxes | 38,457 | 2,025 | (389 | ) | 360 | ||||||||||||||
Minority interests in earnings of subsidiaries | 17,558 | 7,470 | 4,412 | 164 | |||||||||||||||
Equity in earnings of associated companies, less dividends received | (33,076 | ) | (21,364 | ) | (2,258 | ) | (309 | ) | |||||||||||
(Income) loss from discontinued operations — net (after income tax effect) | (712 | ) | 3,700 | 5,937 | (7 | ) | |||||||||||||
Cumulative effect of change in accounting principle (after income tax effect) | — | 2,285 | — | — | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Increase in trade receivables | (169,700 | ) | (127,066 | ) | (42,933 | ) | (1,586 | ) | |||||||||||
Increase in inventories | (73,375 | ) | (32,689 | ) | (27,512 | ) | (686 | ) | |||||||||||
Increase (decrease) in trade payables | 209,689 | 45,549 | (12,703 | ) | 1,960 | ||||||||||||||
Advances from customers | 34,969 | 21,509 | 177 | 327 | |||||||||||||||
Other — net | 3,248 | 14,484 | (2,490 | ) | 31 | ||||||||||||||
Net cash provided by operating activities | 200,069 | 100,079 | 52,148 | 1,870 | |||||||||||||||
Investing Activities(Note 28): | |||||||||||||||||||
Net decrease (increase) in time deposits | 20,324 | (9,603 | ) | 40,220 | 190 | ||||||||||||||
Investments in and advances to associated companies | (190,388 | ) | (203,380 | ) | (63,769 | ) | (1,779 | ) | |||||||||||
Sales of investments in and collection of advances to associated companies | 52,675 | 67,772 | 10,111 | 492 | |||||||||||||||
Acquisitions of available-for-sale securities | (90,769 | ) | (131,207 | ) | (154,050 | ) | (848 | ) | |||||||||||
Proceeds from sales of available-for-sale securities | 21,864 | 51,250 | 66,106 | 204 | |||||||||||||||
Proceeds from maturities of available-for-sale securities | 56,934 | 110,063 | 144,368 | 532 | |||||||||||||||
Acquisitions of held-to-maturity debt securities | (2,233 | ) | (17 | ) | (4,231 | ) | (21 | ) | |||||||||||
Proceeds from maturities of held-to-maturity debt securities | 2,912 | 14,793 | 10,560 | 27 | |||||||||||||||
Acquisitions of other investments | (67,506 | ) | (46,856 | ) | (39,838 | ) | (631 | ) | |||||||||||
Proceeds from sales of other investments | 73,436 | 28,829 | 30,242 | 686 | |||||||||||||||
Increase in long-term loan receivables | (68,111 | ) | (42,768 | ) | (56,169 | ) | (636 | ) | |||||||||||
Collection of long-term loan receivables | 62,829 | 76,384 | 84,445 | 587 | |||||||||||||||
Additions to property leased to others and property and equipment | (170,068 | ) | (113,197 | ) | (123,216 | ) | (1,589 | ) | |||||||||||
Proceeds from sales of property leased to others and property and equipment | 79,324 | 59,924 | 62,186 | 742 | |||||||||||||||
Acquisitions of subsidiaries, net of cash acquired | (5,233 | ) | 3,859 | (11,208 | ) | (49 | ) | ||||||||||||
Net cash used in investing activities | (224,010 | ) | (134,154 | ) | (4,243 | ) | (2,093 | ) | |||||||||||
Financing Activities(Note 28): | |||||||||||||||||||
Net (decrease) increase in short-term debt | (29,113 | ) | (71,759 | ) | 94,026 | (272 | ) | ||||||||||||
Proceeds from long-term debt | 754,425 | 636,957 | 509,517 | 7,050 | |||||||||||||||
Repayments of long-term debt | (541,544 | ) | (564,529 | ) | (571,968 | ) | (5,061 | ) | |||||||||||
Purchases of treasury stock — net | (764 | ) | (264 | ) | (1,086 | ) | (7 | ) | |||||||||||
Payments of cash dividends | (14,240 | ) | (12,653 | ) | (12,665 | ) | (133 | ) | |||||||||||
Proceeds from issuance of stock by a subsidiary | 2,557 | — | — | 24 | |||||||||||||||
Net cash provided by (used in) financing activities | 171,321 | (12,248 | ) | 17,824 | 1,601 | ||||||||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 6,131 | (10,191 | ) | (4,499 | ) | 57 | |||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 153,511 | (56,514 | ) | 61,230 | 1,435 | ||||||||||||||
Cash and Cash Equivalents at Beginning of Year | 638,299 | 694,813 | 633,583 | 5,965 | |||||||||||||||
Cash and Cash Equivalents at End of Year | ¥ | 791,810 | ¥ | 638,299 | ¥ | 694,813 | $ | 7,400 | |||||||||||
F-9
Table of Contents
1. | NATURE OF OPERATIONS |
2. | BASIS OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
I. | BASIS OF FINANCIAL STATEMENTS |
F-10
Table of Contents
II. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-11
Table of Contents
F-12
Table of Contents
F-13
Table of Contents
F-14
Table of Contents
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
F-18
Table of Contents
III. | RECLASSIFICATION |
IV. | NEW ACCOUNTING STANDARDS |
F-19
Table of Contents
F-20
Table of Contents
V. | USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS |
3. | BUSINESS COMBINATIONS |
F-21
Table of Contents
Millions of Yen | |||||
Current assets | ¥ | 2,174 | |||
Property and equipment | 209 | ||||
Intangible assets | 7,885 | ||||
Total assets acquired | 10,268 | ||||
Current liabilities | (1,414 | ) | |||
Total liabilities assumed | (1,414 | ) | |||
Net assets acquired | ¥ | 8,854 | |||
F-22
Table of Contents
Millions of Yen | |||||
Current assets | ¥ | 16,995 | |||
Property and equipment | 908 | ||||
Intangible assets | 3,198 | ||||
Investments and other assets | 1,488 | ||||
Total assets acquired | 22,589 | ||||
Current liabilities | (6,270 | ) | |||
Long-term liabilities | (1,356 | ) | |||
Minority interest | (5,981 | ) | |||
Total liabilities assumed | (13,607 | ) | |||
Net assets acquired | ¥ | 8,982 | |||
F-23
Table of Contents
Millions of Yen | |||||
Current assets | ¥ | 30,736 | |||
Property and equipment | 8,162 | ||||
Intangible assets | 35,541 | ||||
Investments and other assets | 3,263 | ||||
Total assets acquired | 77,702 | ||||
Current liabilities | (54,414 | ) | |||
Long-term liabilities | (11,151 | ) | |||
Minority interest | (5,737 | ) | |||
Total liabilities assumed | (71,302 | ) | |||
Net assets acquired | ¥ | 6,400 | |||
F-24
Table of Contents
Millions of Yen | |||||
Current assets | ¥ | 3,104 | |||
Property and equipment | 8,528 | ||||
Intangible assets | 9,051 | ||||
Total assets acquired | 20,683 | ||||
Current liabilities | (2,514 | ) | |||
Minority interest | (5,822 | ) | |||
Total liabilities assumed | (8,336 | ) | |||
Net assets acquired | ¥ | 12,347 | |||
F-25
Table of Contents
4. | DISCONTINUED OPERATIONS |
Millions of Yen | ||||||||||||
Shirasagi | Other | |||||||||||
Golf Club | subsidiaries | Total | ||||||||||
Year ended March 31, 2005: | ||||||||||||
Revenues | — | — | — | |||||||||
Loss from discontinued operations before income taxes | — | — | — | |||||||||
Gain on disposal | ¥ | 1,161 | ¥ | 47 | ¥ | 1,208 | ||||||
Income tax expense | (477 | ) | (19 | ) | (496 | ) | ||||||
Income from discontinued operations — net | ¥ | 684 | ¥ | 28 | ¥ | 712 | ||||||
Year ended March 31, 2004: | ||||||||||||
Revenues | ¥ | 365 | ¥ | 3,979 | ¥ | 4,344 | ||||||
Loss from discontinued operations before income taxes | ¥ | (100 | ) | ¥ | (1,818 | ) | ¥ | (1,918 | ) | |||
Income tax benefit | 39 | 2,210 | 2,249 | |||||||||
(Loss) income from discontinued operations — net | ¥ | (61 | ) | ¥ | 392 | ¥ | 331 | |||||
Year ended March 31, 2003: | ||||||||||||
Revenues | ¥ | 426 | ¥ | 8,021 | ¥ | 8,447 | ||||||
Loss from discontinued operations before income taxes | ¥ | (495 | ) | ¥ | (26 | ) | ¥ | (521 | ) | |||
Income tax benefit (expense) | 86 | (45 | ) | 41 | ||||||||
Loss from discontinued operations — net | ¥ | (409 | ) | ¥ | (71 | ) | ¥ | (480 | ) | |||
F-26
Table of Contents
Millions of Yen | ||||||||||||
Takeoka | Other | |||||||||||
Golf Club | subsidiaries | Total | ||||||||||
Year ended March 31, 2004: | ||||||||||||
Revenues | ¥ | 423 | ¥ | 2,393 | ¥ | 2,816 | ||||||
Loss from discontinued operations before income taxes | ¥ | (5,919 | ) | ¥ | (2,139 | ) | ¥ | (8,058 | ) | |||
Loss on disposal — net | (49 | ) | (1,958 | ) | (2,007 | ) | ||||||
Income tax benefit | 2,449 | 3,585 | 6,034 | |||||||||
Loss from discontinued operations — net | ¥ | (3,519 | ) | ¥ | (512 | ) | ¥ | (4,031 | ) | |||
Year ended March 31, 2003: | ||||||||||||
Revenues | ¥ | 432 | ¥ | 3,989 | ¥ | 4,421 | ||||||
Loss from discontinued operations before income taxes | ¥ | (282 | ) | ¥ | (3,621 | ) | ¥ | (3,903 | ) | |||
Income tax benefit | 339 | 583 | 922 | |||||||||
Income (loss) from discontinued operations — net | ¥ | 57 | ¥ | (3,038 | ) | ¥ | (2,981 | ) | ||||
F-27
Table of Contents
Millions of Yen | ||||||||||||
Petrochemicals | ||||||||||||
subsidiaries in | Other | |||||||||||
North America | subsidiaries | Total | ||||||||||
Year ended March 31, 2003: | ||||||||||||
Revenues | — | ¥ | 3,740 | ¥ | 3,740 | |||||||
Loss from discontinued operations before income taxes | ¥ | (12,776 | ) | ¥ | (1,912 | ) | ¥ | (14,688 | ) | |||
(Loss) gain on disposal — net | (1,724 | ) | 3,425 | 1,701 | ||||||||
Income tax benefit | 8,171 | 2,340 | 10,511 | |||||||||
(Loss) income from discontinued operations — net | ¥ | (6,329 | ) | ¥ | 3,853 | ¥ | (2,476 | ) | ||||
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5. | MARKETABLE SECURITIES AND OTHER INVESTMENTS |
Millions of Yen | |||||||||||||||||||||
Unrealized holding gains (losses) | |||||||||||||||||||||
Cost | Fair value | Gains | Losses | Net | |||||||||||||||||
March 31, 2005: | |||||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||
Marketable equity securities | ¥ | 191,007 | ¥ | 333,097 | ¥ | 143,261 | ¥ | (1,171 | ) | ¥ | 142,090 | ||||||||||
Foreign debentures, commercial paper and other debt securities | 306,922 | 306,944 | 24 | (2 | ) | 22 | |||||||||||||||
Held-to-maturity debt securities, consisting principally of foreign debentures | 1,591 | 1,591 | 0 | — | 0 | ||||||||||||||||
March 31, 2004: | |||||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||
Marketable equity securities | ¥ | 178,609 | ¥ | 297,018 | ¥ | 119,438 | ¥ | (1,029 | ) | ¥ | 118,409 | ||||||||||
Foreign debentures, commercial paper and other debt securities | 206,429 | 206,551 | 159 | (37 | ) | 122 | |||||||||||||||
Held-to-maturity debt securities, consisting principally of foreign debentures | 2,106 | 2,106 | 0 | — | 0 |
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Millions of Yen | ||||||||||||||||||
Less than 12 months | 12 months or more | |||||||||||||||||
Unrealized | Unrealized | |||||||||||||||||
Fair value | holding losses | Fair value | holding losses | |||||||||||||||
March 31, 2005: | ||||||||||||||||||
Available-for-sale: | ||||||||||||||||||
Marketable equity securities | ¥ | 16,402 | ¥ | (1,171 | ) | — | — | |||||||||||
Foreign debentures, commercial paper and other debt securities | 4 | (2 | ) | — | — | |||||||||||||
Held-to-maturity debt securities, consisting principally of foreign debentures | — | — | — | — | ||||||||||||||
Total | ¥ | 16,406 | ¥ | (1,173 | ) | — | — | |||||||||||
March 31, 2004: | ||||||||||||||||||
Available-for-sale: | ||||||||||||||||||
Marketable equity securities | ¥ | 8,234 | ¥ | (1,029 | ) | — | — | |||||||||||
Foreign debentures, commercial paper and other debt securities | 9,084 | (37 | ) | — | — | |||||||||||||
Held-to-maturity debt securities, consisting principally of foreign debentures | — | — | — | — | ||||||||||||||
Total | ¥ | 17,318 | ¥ | (1,066 | ) | — | — | |||||||||||
Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Net trading losses | ¥ | (7 | ) | ¥ | (32 | ) | ¥ | (136 | ) |
F-30
Table of Contents
Millions of Yen | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Proceeds from sales | ¥ | 21,864 | ¥ | 51,250 | ¥ | 66,106 | |||||||
Gross realized gains | ¥ | 10,018 | ¥ | 18,741 | ¥ | 9,661 | |||||||
Gross realized losses | (52 | ) | (239 | ) | (4,628 | ) | |||||||
Net realized gains | ¥ | 9,966 | ¥ | 18,502 | ¥ | 5,033 | |||||||
Millions of Yen | ||||||||||||||||||
Available-for-sale | Held-to-maturity | |||||||||||||||||
Amortized | Aggregate | Amortized | Aggregate | |||||||||||||||
cost | fair value | cost | fair value | |||||||||||||||
Contractual maturities: | ||||||||||||||||||
Within 1 year | ¥ | 234,870 | ¥ | 234,870 | ¥ | 1,348 | ¥ | 1,348 | ||||||||||
After 1 year through 5 years | 67,981 | 67,999 | 233 | 233 | ||||||||||||||
After 5 years through 10 years | 4,069 | 4,073 | 10 | 10 | ||||||||||||||
After 10 years | 2 | 2 | — | — | ||||||||||||||
Total | ¥ | 306,922 | ¥ | 306,944 | ¥ | 1,591 | ¥ | 1,591 | ||||||||||
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6. | INVESTMENTS IN AND ADVANCES TO ASSOCIATED COMPANIES |
F-32
Table of Contents
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Investments in capital stock | ¥ | 880,609 | ¥ | 611,397 | |||||
Advances | 92,610 | 115,124 | |||||||
Total | ¥ | 973,219 | ¥ | 726,521 | |||||
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Current assets | ¥ | 3,702,750 | ¥ | 2,770,593 | |||||
Property and equipment — net of accumulated depreciation* | 4,195,274 | 3,036,282 | |||||||
Other assets* | 1,473,911 | 1,087,349 | |||||||
Total assets | ¥ | 9,371,935 | ¥ | 6,894,224 | |||||
Current liabilities | ¥ | 2,974,848 | ¥ | 2,362,786 | |||||
Long-term liabilities | 2,835,459 | 2,261,190 | |||||||
Minority interests | 599,892 | 376,730 | |||||||
Shareholders’ equity | 2,961,736 | 1,893,518 | |||||||
Total liabilities and shareholders’ equity | ¥ | 9,371,935 | ¥ | 6,894,224 | |||||
The companies’ equity in the net assets of associated companies | ¥ | 780,069 | ¥ | 527,255 | |||||
* | Mineral rights are classified as “Property and equipment — net of accumulated depreciation” at March 31, 2005, which were formerly included in “Other assets.” The figures at March 31, 2004 have been reclassified to conform to the current year presentation. |
Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Revenues | ¥ | 6,295,587 | ¥ | 4,212,195 | ¥ | 3,460,933 | ||||||
Gross profit | 1,582,586 | 986,659 | 730,929 | |||||||||
Income before cumulative effect of change in accounting principle | 357,019 | 195,059 | 92,593 | |||||||||
Net income | 357,019 | 190,857 | 92,593 |
F-33
Table of Contents
Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Revenues | ¥ | 121,283 | ¥ | 107,816 | ¥ | 91,372 | ||||||
Purchases | 192,405 | 161,221 | 143,107 |
7. | ALLOWANCE FOR DOUBTFUL RECEIVABLES |
Millions of Yen | ||||||||||||
Current | Non-current | Total | ||||||||||
Year ended March 31, 2005: | ||||||||||||
Balance at beginning of year | ¥ | 22,498 | ¥ | 110,098 | ¥ | 132,596 | ||||||
Credits charged off | (3,604 | ) | (19,241 | ) | (22,845 | ) | ||||||
Provision for doubtful receivables | 6,307 | 2,556 | 8,863 | |||||||||
Charged to other accounts* | (2,682 | ) | 6,653 | 3,971 | ||||||||
Balance at end of year | ¥ | 22,519 | ¥ | 100,066 | ¥ | 122,585 | ||||||
Year ended March 31, 2004: | ||||||||||||
Balance at beginning of year | ¥ | 21,236 | ¥ | 139,793 | ¥ | 161,029 | ||||||
Credits charged off | (3,230 | ) | (33,584 | ) | (36,814 | ) | ||||||
Provision for doubtful receivables | 6,503 | 3,380 | 9,883 | |||||||||
Charged to other accounts* | (2,011 | ) | 509 | (1,502 | ) | |||||||
Balance at end of year | ¥ | 22,498 | ¥ | 110,098 | ¥ | 132,596 | ||||||
Year ended March 31, 2003: | ||||||||||||
Balance at beginning of year | ¥ | 20,625 | ¥ | 139,478 | ¥ | 160,103 | ||||||
Credits charged off | (3,974 | ) | (10,163 | ) | (14,137 | ) | ||||||
Provision for doubtful receivables | 6,063 | 7,602 | 13,665 | |||||||||
Charged to other accounts* | (1,478 | ) | 2,876 | 1,398 | ||||||||
Balance at end of year | ¥ | 21,236 | ¥ | 139,793 | ¥ | 161,029 | ||||||
* | Principally reclassification to discontinued operations and effect of changes in foreign exchange rates. |
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Millions of Yen | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
Allowance | Allowance | ||||||||||||||||
Impaired | for doubtful | Impaired | for doubtful | ||||||||||||||
loans | receivables | loans | receivables | ||||||||||||||
Impaired loans with an allowance for doubtful receivables | ¥ | 129,805 | ¥ | 93,665 | ¥ | 158,884 | ¥ | 106,242 | |||||||||
Impaired loans without an allowance for doubtful receivables | 5,919 | — | 6,249 | — | |||||||||||||
Total | ¥ | 135,724 | ¥ | 93,665 | ¥ | 165,133 | ¥ | 106,242 | |||||||||
Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Average investment in impaired loans | ¥ | 150,429 | ¥ | 180,081 | ¥ | 181,687 | ||||||
Interest income recognized on impaired loans | 1,304 | 1,701 | 1,800 |
8. | LEASES |
F-35
Table of Contents
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Total minimum lease payments to be received | ¥ | 86,060 | ¥ | 73,065 | |||||
Estimated unguaranteed residual value of leased assets | 15,926 | 13,632 | |||||||
Less unearned income | (33,690 | ) | (30,317 | ) | |||||
Investment in direct financing leases | 68,296 | 56,380 | |||||||
Less allowance for doubtful receivables | (890 | ) | (855 | ) | |||||
Net investment in direct financing leases | ¥ | 67,406 | ¥ | 55,525 | |||||
Millions of Yen | |||||
Year ending March 31: | |||||
2006 | ¥ | 8,901 | |||
2007 | 7,633 | ||||
2008 | 9,257 | ||||
2009 | 7,333 | ||||
2010 | 7,379 | ||||
Thereafter | 45,557 | ||||
Total | ¥ | 86,060 | |||
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Total minimum lease payments to be received (net of principal and interest on third-party nonrecourse debt) | ¥ | 4,634 | ¥ | 4,605 | |||||
Estimated unguaranteed residual value of leased assets | 6,288 | 8,344 | |||||||
Less unearned income | (2,721 | ) | (3,115 | ) | |||||
Investment in leveraged leases | 8,201 | 9,834 | |||||||
Less allowance for doubtful receivables | (292 | ) | — | ||||||
Less deferred tax liabilities arising from leveraged leases | (7,252 | ) | (6,627 | ) | |||||
Net investment in leveraged leases | ¥ | 657 | ¥ | 3,207 | |||||
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Table of Contents
Millions of Yen | |||||||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Accumulated | Accumulated | ||||||||||||||||||||||||
Cost | depreciation | Net | Cost | depreciation | Net | ||||||||||||||||||||
Real estate | ¥ | 164,468 | ¥ | (59,863 | ) | ¥ | 104,605 | ¥ | 195,430 | ¥ | (63,559 | ) | ¥ | 131,871 | |||||||||||
Aircraft | 31,737 | (5,391 | ) | 26,346 | 45,588 | (9,351 | ) | 36,237 | |||||||||||||||||
Ocean transport vessels | 29,685 | (5,575 | ) | 24,110 | 44,222 | (4,552 | ) | 39,670 | |||||||||||||||||
Rolling stock | 21,238 | (1,470 | ) | 19,768 | 15,113 | (1,429 | ) | 13,684 | |||||||||||||||||
Equipment and others | 19,895 | (11,549 | ) | 8,346 | 21,114 | (12,265 | ) | 8,849 | |||||||||||||||||
Total | ¥ | 267,023 | ¥ | (83,848 | ) | ¥ | 183,175 | ¥ | 321,467 | ¥ | (91,156 | ) | ¥ | 230,311 | |||||||||||
Millions of Yen | |||||
Year ending March 31: | |||||
2006 | ¥ | 10,029 | |||
2007 | 8,054 | ||||
2008 | 7,073 | ||||
2009 | 5,082 | ||||
2010 | 3,202 | ||||
Thereafter | 15,938 | ||||
Total | ¥ | 49,378 | |||
Millions of Yen | |||||||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Accumulated | Accumulated | ||||||||||||||||||||||||
Cost | depreciation | Net | Cost | depreciation | Net | ||||||||||||||||||||
Equipment | ¥ | 28,024 | ¥ | (13,651 | ) | ¥ | 14,373 | ¥ | 28,975 | ¥ | (14,097 | ) | ¥ | 14,878 | |||||||||||
Others | 6,846 | (1,958 | ) | 4,888 | 4,404 | (1,869 | ) | 2,535 | |||||||||||||||||
Total | ¥ | 34,870 | ¥ | (15,609 | ) | ¥ | 19,261 | ¥ | 33,379 | ¥ | (15,966 | ) | ¥ | 17,413 | |||||||||||
F-37
Table of Contents
Millions of Yen | ||||
Year ending March 31: | ||||
2006 | ¥ | 5,624 | ||
2007 | 5,094 | |||
2008 | 3,367 | |||
2009 | 1,404 | |||
2010 | 829 | |||
Thereafter | 6,546 | |||
Total minimum lease payments | 22,864 | |||
Less amount representing interest | (1,536 | ) | ||
Present value of net minimum lease payments | 21,328 | |||
Less current capital lease obligations | 5,363 | |||
Long-term capital lease obligations | ¥ | 15,965 | ||
Millions of Yen | |||||
Year ending March 31: | |||||
2006 | ¥ | 22,159 | |||
2007 | 16,631 | ||||
2008 | 12,925 | ||||
2009 | 10,233 | ||||
2010 | 8,676 | ||||
Thereafter | 34,806 | ||||
Total | ¥ | 105,430 | |||
F-38
Table of Contents
9. | PLEDGED ASSETS AND FINANCIAL ASSETS ACCEPTED AS COLLATERAL |
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Trade receivables (current and non-current) | ¥ | 66,968 | ¥ | 47,354 | |||||
Inventories | 26,625 | 17,073 | |||||||
Investments | 27,232 | 24,665 | |||||||
Property leased to others (net book value) | 28,856 | 23,691 | |||||||
Property and equipment (net book value) | 31,525 | 46,857 | |||||||
Other | 14,442 | 969 | |||||||
Total | ¥ | 195,648 | ¥ | 160,609 | |||||
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Short-term debt | ¥ | 27,887 | ¥ | 22,866 | |||||
Long-term debt | 123,345 | 113,384 | |||||||
Guarantees of contracts, etc. | 44,416 | 24,359 | |||||||
Total | ¥ | 195,648 | ¥ | 160,609 | |||||
Millions of Yen | ||||||||
2005 | 2004 | |||||||
Bank deposits | ¥ | 2,081 | ¥ | 1,971 | ||||
Promissory notes | 5,465 | 10,796 | ||||||
Trade receivables — accounts | 231 | 54 | ||||||
Stocks and bonds | 7,787 | 12,695 |
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Table of Contents
10. | IMPAIRMENT LOSS OF LONG-LIVED ASSETS |
Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Metal Products & Minerals | ¥ | 8,217 | ¥ | 628 | ¥ | 1,029 | ||||||
Machinery, Electronics & Information | 353 | 5,842 | 10,344 | |||||||||
Chemical | 1,698 | 581 | — | |||||||||
Energy | 2,580 | 1,340 | 9,219 | |||||||||
Consumer Products & Services | 1,694 | 413 | 2,187 | |||||||||
Logistics & Financial Markets | 57 | 213 | — | |||||||||
Americas | 954 | 181 | — | |||||||||
Other Overseas Areas | — | 115 | 348 | |||||||||
All Other | 5,601 | 3,992 | 511 | |||||||||
Adjustments and Eliminations* | 296 | 8,039 | — | |||||||||
Consolidated Total | ¥ | 21,450 | ¥ | 21,344 | ¥ | 23,638 | ||||||
* | “Adjustments and Eliminations” represents impairment losses related to assets not allocated to specific operating segments. |
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Table of Contents
11. | ASSET RETIREMENT OBLIGATIONS |
Millions of Yen | ||||||||
2005 | 2004 | |||||||
Balance at beginning of year | ¥ | 7,328 | ¥ | 6,423 | ||||
Liabilities incurred | 6,557 | 3,124 | ||||||
Liabilities settled | (3,135 | ) | (2,805 | ) | ||||
Accretion expense | 409 | 168 | ||||||
Foreign currency translation adjustments | 355 | 418 | ||||||
Balance at end of year | ¥ | 11,514 | ¥ | 7,328 | ||||
Note: | The balance at the beginning of the year ended March 31, 2004 includes the cumulative effect of change in accounting principle. |
F-41
Table of Contents
Millions of Yen | ||||||||
2004 | 2003 | |||||||
Net income | ¥ | 70,672 | ¥ | 31,003 |
Yen | ||||||||
2004 | 2003 | |||||||
Basic net income per share | ¥ | 44.69 | ¥ | 19.59 | ||||
Diluted net income per share | 42.25 | 18.61 |
(1) | Pro forma net income for the year ended March 31, 2004 represents reported net income excluding cumulative effect of change in accounting principle (after income tax effect) of ¥2,285 million (loss) (¥1.44 per basic share and ¥1.36 per diluted share). |
(2) | Basic and diluted net income per share presented in the Statements of Consolidated Income were ¥19.68 and ¥18.69, respectively, for the year ended March 31, 2003. |
12. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Millions of Yen | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
Gross carrying | Accumulated | Gross carrying | Accumulated | ||||||||||||||
amount | amortization | amount | amortization | ||||||||||||||
Software | ¥ | 44,221 | ¥ | 18,406 | ¥ | 35,779 | ¥ | 15,151 | |||||||||
Unpatented technologies | 15,695 | 2,742 | 15,658 | 1,174 | |||||||||||||
Trademarks | 9,839 | 6,498 | 11,461 | 6,750 | |||||||||||||
Patents | 9,099 | 8,583 | 9,073 | 8,539 | |||||||||||||
Customer relationships | 6,564 | 1,099 | 2,139 | 866 | |||||||||||||
Other | 28,531 | 16,151 | 26,095 | 14,399 | |||||||||||||
Total | ¥ | 113,949 | ¥ | 53,479 | ¥ | 100,205 | ¥ | 46,879 | |||||||||
Millions of Yen | ||||
Year ending March 31: | ||||
2006 | ¥ | 15,949 | ||
2007 | 13,114 | |||
2008 | 9,670 | |||
2009 | 7,283 | |||
2010 | 5,015 |
F-42
Table of Contents
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Land rights | ¥ | 7,242 | ¥ | 7,212 | |||||
Trademarks | 2,386 | 2,383 | |||||||
Other | 2,382 | 2,657 | |||||||
Total | ¥ | 12,010 | ¥ | 12,252 | |||||
F-43
Table of Contents
Millions of Yen | ||||||||||||||||||||||||
Metal | Machinery, | Consumer | ||||||||||||||||||||||
Products & | Electronics & | Products & | Consolidated | |||||||||||||||||||||
Minerals | Information | Chemical | Services | Americas | Total | |||||||||||||||||||
Balance at April 1, 2003 | ¥ | 2,912 | ¥ | 2,586 | ¥ | 829 | ¥ | 1,017 | ¥ | 433 | ¥ | 7,777 | ||||||||||||
Acquisition | — | 822 | 616 | 16,547 | — | 17,985 | ||||||||||||||||||
Foreign currency translation adjustments | (352 | ) | (125 | ) | (100 | ) | (55 | ) | (11 | ) | (643 | ) | ||||||||||||
Balance at March 31, 2004 | 2,560 | 3,283 | 1,345 | 17,509 | 422 | 25,119 | ||||||||||||||||||
Acquisition | 705 | 3,147 | 262 | — | 3,597 | 7,711 | ||||||||||||||||||
Impairment losses | — | (1,114 | ) | — | — | — | (1,114 | ) | ||||||||||||||||
Foreign currency translation adjustments | 42 | (169 | ) | 7 | (5 | ) | 106 | (19 | ) | |||||||||||||||
Balance at March 31, 2005 | ¥ | 3,307 | ¥ | 5,147 | ¥ | 1,614 | ¥ | 17,504 | ¥ | 4,125 | ¥ | 31,697 | ||||||||||||
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Table of Contents
13. | SHORT-TERM AND LONG-TERM DEBT |
Millions of Yen | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
Interest rate*1 | Interest rate*1 | ||||||||||||||||
Short-term bank loans and others | ¥410,880 | 2.3 | % | ¥401,493 | 1.8 | % | |||||||||||
Commercial paper | 94,643 | 1.0 | 120,976 | 0.5 | |||||||||||||
Notes under medium-term note programme | 109,210 | 0.1 | 120,796 | 0.1 | |||||||||||||
Total | 614,733 | 643,265 | |||||||||||||||
SFAS No. 133 fair value adjustment*2 | 620 | 3,481 | |||||||||||||||
Total | ¥615,353 | ¥646,746 | |||||||||||||||
*1 | The interest rates represent weighted average rates in effect at March 31, 2005 and 2004, regardless of borrowing currencies, though the range of the interest rates varies by borrowing currency. |
*2 | In accordance with the requirements of SFAS No. 133, the portion of the companies’ fixed-rate debt obligations that is designated and effective as a fair value hedge is reflected in the Consolidated Balance Sheets as an amount equal to the sum of the debt’s carrying value plus a SFAS No. 133 fair value adjustment representing changes recorded in the fair value of the hedged debt obligations attributable to movements in the designated benchmark interest rates and applicable foreign currency exchange rates during the term of the hedge. |
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Millions of Yen | |||||||||||||
2005 | 2004 | ||||||||||||
Long-term debt with collateral (Note 9): | |||||||||||||
Banks and insurance companies, maturing serially through 2015 — principally 0.7% to 10% | ¥ | 38,554 | ¥ | 56,112 | |||||||||
Government-owned banks and government agencies, maturing serially through 2056 — principally 0.7% to 7% | 65,504 | 60,187 | |||||||||||
Other, maturing serially through 2018 — principally 2% | 5,286 | 5,885 | |||||||||||
Total | 109,344 | 122,184 | |||||||||||
Long-term debt without collateral: | |||||||||||||
Banks and others (principally insurance companies): | |||||||||||||
Principally 0.03% to 6%, maturing serially through 2018 | 1,518,613 | 1,461,479 | |||||||||||
Principally 0.8% to 13%, maturing serially through 2017 (payable in foreign currencies) | 477,776 | 387,352 | |||||||||||
Bonds and notes: | |||||||||||||
Japanese yen convertible bonds (fixed rate 1.05%, due 2009) | 92,775 | 92,786 | |||||||||||
Japanese yen bonds with early redemption clause (fixed rate 0.7% to 1.4%, due 2013 — 2016) | 71,000 | 71,000 | |||||||||||
Japanese yen bonds (fixed rate 0.5% to 3.6%, due 2005 — 2019) | 250,270 | 240,500 | |||||||||||
Japanese yen bonds (fixed and floating rate: floating rate 1.9% to 2.6%, due 2013 — 2017) | 70,500 | 38,500 | |||||||||||
Japanese yen bonds (fixed and floating rate: fixed rate 2.4% to 3.3%, due 2014 — 2024) | 31,000 | 33,000 | |||||||||||
Japanese yen bonds (floating rate 2.1% to 2.7%, due 2010 — 2016) | 87,000 | 72,000 | |||||||||||
Reverse dual currency yen/ U.S. dollar bonds (fixed rate 3.0% to 3.25%, due 2007 — 2012) | 30,000 | 30,000 | |||||||||||
Notes under global medium-term note programme (fixed rate 0.2% to 4.7%, due 2004 — 2014) | 18,381 | 25,205 | |||||||||||
Notes under euro medium-term note programme (fixed and floating rate: fixed rate 0.1% to 7.9%, due 2004 — 2024) | 168,391 | 118,380 | |||||||||||
Capital lease obligations (principally 0.7% to 5.5%, maturing serially through 2030) | 21,328 | 19,177 | |||||||||||
Accounts payables, derivative liabilities and others due through 2019: | |||||||||||||
Interest bearing | 43,081 | 31,203 | |||||||||||
Non-interest bearing | 149,893 | 116,441 | |||||||||||
Total | 3,030,008 | 2,737,023 | |||||||||||
Total | 3,139,352 | 2,859,207 | |||||||||||
SFAS No. 133 fair value adjustment* | 57,521 | 39,689 | |||||||||||
Total | 3,196,873 | 2,898,896 | |||||||||||
Less current maturities | 291,950 | 357,675 | |||||||||||
Long-term debt, less current maturities | ¥ | 2,904,923 | ¥ | 2,541,221 | |||||||||
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* | In accordance with the requirements of SFAS No. 133, the portion of the companies’ fixed-rate debt obligations that is designated and effective as a fair value hedge is reflected in the Consolidated Balance Sheets as an amount equal to the sum of the debt’s carrying value plus a SFAS No. 133 fair value adjustment representing changes recorded in the fair value of the hedged debt obligations attributable to movements in the designated benchmark interest rates and applicable foreign currency exchange rates during the term of the hedge. |
F-47
Table of Contents
Millions of Yen | |||||
Year ending March 31: | |||||
2006 | ¥ | 259,927 | |||
2007 | 368,668 | ||||
2008 | 343,589 | ||||
2009 | 218,862 | ||||
2010 | 447,045 | ||||
Thereafter | 1,501,261 | ||||
Total | ¥ | 3,139,352 | |||
14. | PENSION COSTS AND SEVERANCE INDEMNITIES |
F-48
Table of Contents
Millions of Yen | ||||||||||
2005 | 2004 | |||||||||
Change in benefit obligation: | ||||||||||
Benefit obligation at beginning of year | ¥ | 255,806 | ¥ | 286,075 | ||||||
Service cost | 10,798 | 11,920 | ||||||||
Interest cost | 5,616 | 5,487 | ||||||||
Plan participants’ contributions | 365 | 385 | ||||||||
Plan amendments | (342 | ) | 1,155 | |||||||
Actuarial loss | 1,552 | 4,610 | ||||||||
Benefits paid from plan assets | (10,799 | ) | (13,794 | ) | ||||||
Direct benefit payments | (3,120 | ) | (5,739 | ) | ||||||
Curtailments | — | (64 | ) | |||||||
Settlements | — | (38,057 | ) | |||||||
Acquisitions and divestitures | 774 | 4,763 | ||||||||
Foreign currency translation adjustments | 547 | (935 | ) | |||||||
Benefit obligation at end of year | 261,197 | 255,806 | ||||||||
Change in plan assets: | ||||||||||
Fair value of plan assets at beginning of year | 262,786 | 228,418 | ||||||||
Actual return on plan assets | 11,218 | 65,183 | ||||||||
Employer contribution | 27,734 | 140 | ||||||||
Plan participants’ contributions | 365 | 385 | ||||||||
Benefits paid from plan assets | (10,799 | ) | (13,794 | ) | ||||||
Settlements | — | (18,650 | ) | |||||||
Acquisitions and divestitures | 95 | 1,657 | ||||||||
Foreign currency translation adjustments | 246 | (553 | ) | |||||||
Fair value of plan assets at end of year | 291,645 | 262,786 | ||||||||
Funded status at end of year | 30,448 | 6,980 | ||||||||
Unrecognized prior service cost | (6,413 | ) | (6,483 | ) | ||||||
Unrecognized net actuarial loss | 53,855 | 59,499 | ||||||||
Net amount recognized | ¥ | 77,890 | ¥ | 59,996 | ||||||
Amounts recognized in the Consolidated Balance Sheets consist of: | ||||||||||
Intangible assets | ¥ | 80 | ¥ | 112 | ||||||
Other assets (prepaid pension costs) | 107,958 | 102,872 | ||||||||
Accrued pension costs and liability for severance indemnities | (39,467 | ) | (52,296 | ) | ||||||
Accumulated other comprehensive loss (before income tax effect) | 9,319 | 9,308 | ||||||||
Net amount recognized | ¥ | 77,890 | ¥ | 59,996 | ||||||
F-49
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Millions of Yen | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Service cost — benefits earned during the period | ¥ | 10,798 | ¥ | 11,920 | ¥ | 11,582 | |||||||
Interest cost on projected benefit obligation | 5,616 | 5,487 | 7,234 | ||||||||||
Expected return on plan assets | (6,723 | ) | (6,013 | ) | (5,815 | ) | |||||||
Amortization of unrecognized prior service cost | (410 | ) | (137 | ) | (171 | ) | |||||||
Amortization of unrecognized net actuarial loss | 2,998 | 21,806 | 8,809 | ||||||||||
Curtailment gain | — | (64 | ) | — | |||||||||
Settlement loss | — | 10,504 | — | ||||||||||
Gain on derecognition of previously accrued salary progression | — | (2,183 | ) | — | |||||||||
Net periodic pension costs | ¥ | 12,279 | ¥ | 41,320 | ¥ | 21,639 | |||||||
2005 | 2004 | |||||||
Discount rate | 2.4 | % | 2.4 | % | ||||
Rate of increase in future compensation levels | 0.4 | 0.5 |
2005 | 2004 | 2003 | ||||||||||
Discount rate | 2.4 | % | 2.5 | % | 3.2 | % | ||||||
Expected long-term rate of return on plan assets | 2.5 | 2.6 | 2.6 | |||||||||
Rate of increase in future compensation levels | 0.5 | 1.0 | 1.0 |
F-50
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Asset category | 2005 | 2004 | |||||||
Equity securities | 54 | % | 58 | % | |||||
Debt securities | 27 | 26 | |||||||
Life insurance company general accounts | 4 | 4 | |||||||
Cash and deposits | 11 | 6 | |||||||
Other | 4 | 6 | |||||||
Total | 100 | % | 100 | % | |||||
F-51
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Millions of Yen | ||||
Year ending March 31: | ||||
2006 | ¥ | 13,925 | ||
2007 | 14,066 | |||
2008 | 14,160 | |||
2009 | 14,884 | |||
2010 | 15,110 | |||
2011-2015 | 78,040 |
F-52
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F-53
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Millions of Yen | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Unrealized Holding Gains and Losses on Available-for-Sale Securities: | |||||||||||||
Balance at beginning of year | ¥ | 69,729 | ¥ | 3,405 | ¥ | 44,246 | |||||||
Pre-tax amount of unrealized holding gains and losses on available-for-sale securities | 63,409 | 125,856 | (85,488 | ) | |||||||||
Deferred income taxes | (26,530 | ) | (49,395 | ) | 34,673 | ||||||||
Adjustments for year (after income tax effect) | 36,879 | 76,461 | (50,815 | ) | |||||||||
Pre-tax amount of reclassification adjustments | (12,409 | ) | (17,240 | ) | 10,540 | ||||||||
Deferred income taxes | 5,980 | 7,103 | (566 | ) | |||||||||
Adjustments for year (after income tax effect) | (6,429 | ) | (10,137 | ) | 9,974 | ||||||||
Balance at end of year | ¥ | 100,179 | ¥ | 69,729 | ¥ | 3,405 | |||||||
Foreign Currency Translation Adjustments: | |||||||||||||
Balance at beginning of year | ¥ | (161,454 | ) | ¥ | (141,053 | ) | ¥ | (118,669 | ) | ||||
Pre-tax amount of translation adjustments | 20,935 | (27,098 | ) | (26,957 | ) | ||||||||
Deferred income taxes | (3,613 | ) | 4,538 | 1,032 | |||||||||
Adjustments for year (after income tax effect) | 17,322 | (22,560 | ) | (25,925 | ) | ||||||||
Pre-tax amount of reclassification adjustments | 1,426 | 2,969 | 4,721 | ||||||||||
Deferred income taxes | (81 | ) | (810 | ) | (1,180 | ) | |||||||
Adjustments for year (after income tax effect) | 1,345 | 2,159 | 3,541 | ||||||||||
Balance at end of year | ¥ | (142,787 | ) | ¥ | (161,454 | ) | ¥ | (141,053 | ) | ||||
F-54
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Millions of Yen | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Minimum Pension Liability Adjustment: | |||||||||||||
Balance at beginning of year | ¥ | (5,743 | ) | ¥ | (6,731 | ) | ¥ | (373 | ) | ||||
Pre-tax amount | (11 | ) | 4,355 | (10,584 | ) | ||||||||
Deferred income taxes | 63 | (3,367 | ) | 4,226 | |||||||||
Adjustments for year (after income tax effect) | 52 | 988 | (6,358 | ) | |||||||||
Balance at end of year | ¥ | (5,691 | ) | ¥ | (5,743 | ) | ¥ | (6,731 | ) | ||||
Net Unrealized Gains and Losses on Derivatives: | |||||||||||||
Balance at beginning of year | ¥ | (3,996 | ) | ¥ | (2,759 | ) | ¥ | (2,122 | ) | ||||
Pre-tax amount of net unrealized gains and losses on derivatives | 2,143 | (6,467 | ) | (3,782 | ) | ||||||||
Deferred income taxes | (1,094 | ) | 3,101 | 1,621 | |||||||||
Adjustments for year (after income tax effect) | 1,049 | (3,366 | ) | (2,161 | ) | ||||||||
Pre-tax amount of reclassification adjustments | 2,881 | 3,542 | 2,762 | ||||||||||
Deferred income taxes | (1,186 | ) | (1,413 | ) | (1,238 | ) | |||||||
Adjustments for year (after income tax effect) | 1,695 | 2,129 | 1,524 | ||||||||||
Balance at end of year | ¥ | (1,252 | ) | ¥ | (3,996 | ) | ¥ | (2,759 | ) | ||||
Accumulated Other Comprehensive Income (Loss) — Total: | |||||||||||||
Balance at beginning of year | ¥ | (101,464 | ) | ¥ | (147,138 | ) | ¥ | (76,918 | ) | ||||
Pre-tax amount | 78,374 | 85,917 | (108,788 | ) | |||||||||
Deferred income taxes | (26,461 | ) | (40,243 | ) | 38,568 | ||||||||
Other comprehensive income (loss) for year (after income tax effect) | 51,913 | 45,674 | (70,220 | ) | |||||||||
Balance at end of year | ¥ | (49,551 | ) | ¥ | (101,464 | ) | ¥ | (147,138 | ) | ||||
F-55
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2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
Net income | Shares | Per share | Net income | Shares | Per share | Net income | Shares | Per share | ||||||||||||||||||||||||||||
(numerator) | (denominator) | amount | (numerator) | (denominator) | amount | (numerator) | (denominator) | amount | ||||||||||||||||||||||||||||
Millions of | Yen | Millions of | Yen | Millions of | Yen | |||||||||||||||||||||||||||||||
Yen | In Thousands | Yen | In Thousands | Yen | In Thousands | |||||||||||||||||||||||||||||||
Basic Net Income per Share: | ||||||||||||||||||||||||||||||||||||
Income from continuing operations | ¥ | 120,424 | 1,582,473 | ¥ | 76.10 | ¥ | 74,372 | 1,581,195 | ¥ | 47.04 | ¥ | 37,075 | 1,582,278 | ¥ | 23.43 | |||||||||||||||||||||
Income (loss) from discontinued operations — net (after income tax effect) | 712 | 1,582,473 | 0.45 | (3,700 | ) | 1,581,195 | (2.35 | ) | (5,937 | ) | 1,582,278 | (3.75 | ) | |||||||||||||||||||||||
Cumulative effect of change in accounting principle (after income tax effect) | — | — | — | (2,285 | ) | 1,581,195 | (1.44 | ) | — | — | — | |||||||||||||||||||||||||
Net income available to common shareholders | 121,136 | 1,582,473 | 76.55 | 68,387 | 1,581,195 | 43.25 | 31,138 | 1,582,278 | 19.68 | |||||||||||||||||||||||||||
Effect of Dilutive Securities: | ||||||||||||||||||||||||||||||||||||
1.5% Convertible Bonds due 2003 | — | — | — | — | 189 | 19,266 | ||||||||||||||||||||||||||||||
1.05% Convertible Bonds due 2009 | 591 | 105,311 | 581 | 105,319 | 581 | 105,319 | ||||||||||||||||||||||||||||||
Diluted Net Income per Share: | ||||||||||||||||||||||||||||||||||||
Income from continuing operations | 121,015 | 1,687,784 | 71.70 | 74,953 | 1,686,514 | 44.44 | 37,845 | 1,706,863 | 22.17 | |||||||||||||||||||||||||||
Income (loss) from discontinued operations — net (after income tax effect) | 712 | 1,687,784 | 0.42 | (3,700 | ) | 1,686,514 | (2.19 | ) | (5,937 | ) | 1,706,863 | (3.48 | ) | |||||||||||||||||||||||
Cumulative effect of change in accounting principle (after income tax effect) | — | — | — | (2,285 | ) | 1,686,514 | (1.36 | ) | — | — | — | |||||||||||||||||||||||||
Net income available to common shareholders after effect of dilutive securities | ¥ | 121,727 | 1,687,784 | ¥ | 72.12 | ¥ | 68,968 | 1,686,514 | ¥ | 40.89 | ¥ | 31,908 | 1,706,863 | ¥ | 18.69 | |||||||||||||||||||||
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F-57
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OPERATING SEGMENT INFORMATION |
Millions of Yen | ||||||||||||||||||||||||||
Metal | Machinery, | Consumer | Logistics & | |||||||||||||||||||||||
Products & | Electronics & | Products & | Financial | |||||||||||||||||||||||
Minerals | Information | Chemical | Energy | Services | Markets | |||||||||||||||||||||
Year ended March 31, 2005: | ||||||||||||||||||||||||||
Total trading transactions: | ||||||||||||||||||||||||||
External customers | ¥ | 2,640,261 | ¥ | 2,720,517 | ¥ | 1,901,950 | ¥ | 1,402,521 | ¥ | 2,633,114 | ¥ | 94,354 | ||||||||||||||
Intersegment | 239,357 | 116,033 | 408,446 | 82,231 | 83,152 | 11,172 | ||||||||||||||||||||
Total | ¥ | 2,879,618 | ¥ | 2,836,550 | ¥ | 2,310,396 | ¥ | 1,484,752 | ¥ | 2,716,266 | ¥ | 105,526 | ||||||||||||||
Gross profit | ¥ | 121,449 | ¥ | 137,310 | ¥ | 87,112 | ¥ | 72,604 | ¥ | 152,627 | ¥ | 46,662 | ||||||||||||||
Operating income (loss) | ¥ | 68,138 | ¥ | 31,381 | ¥ | 24,559 | ¥ | 35,453 | ¥ | 32,019 | ¥ | 18,480 | ||||||||||||||
Equity in earnings of associated companies | ¥ | 22,444 | ¥ | 8,228 | ¥ | 2,450 | ¥ | 24,480 | ¥ | 3,688 | ¥ | 2,439 | ||||||||||||||
Net income (loss) | ¥ | 46,991 | ¥ | 26,437 | ¥ | (6,852 | ) | ¥ | 42,759 | ¥ | 16,882 | ¥ | 11,835 | |||||||||||||
Total assets at March 31, 2005 | ¥ | 1,227,494 | ¥ | 1,306,359 | ¥ | 779,930 | ¥ | 894,175 | ¥ | 1,109,464 | ¥ | 405,355 | ||||||||||||||
Millions of Yen | ||||||||||||||||||||||||||||||
Other Overseas | Adjustments and | Consolidated | ||||||||||||||||||||||||||||
Americas | Europe | Areas | Total | All Other | Eliminations | Total | ||||||||||||||||||||||||
Year ended March 31, 2005: | ||||||||||||||||||||||||||||||
Total trading transactions: | ||||||||||||||||||||||||||||||
External customers | ¥ | 1,026,282 | ¥ | 403,448 | ¥ | 769,262 | ¥ | 13,591,709 | ¥ | 25,014 | ¥ | (1,676 | ) | ¥ | 13,615,047 | |||||||||||||||
Intersegment | 494,017 | 368,812 | 1,362,376 | 3,165,596 | 10,674 | (3,176,270 | ) | — | ||||||||||||||||||||||
Total | ¥ | 1,520,299 | ¥ | 772,260 | ¥ | 2,131,638 | ¥ | 16,757,305 | ¥ | 35,688 | ¥ | (3,177,946 | ) | ¥ | 13,615,047 | |||||||||||||||
Gross profit | ¥ | 49,911 | ¥ | 20,657 | ¥ | 25,810 | ¥ | 714,142 | ¥ | 12,349 | ¥ | (688 | ) | ¥ | 725,803 | |||||||||||||||
Operating income (loss) | ¥ | 14,737 | ¥ | 2,412 | ¥ | 8,191 | ¥ | 235,370 | ¥ | (466 | ) | ¥ | (36,913 | ) | ¥ | 197,991 | ||||||||||||||
Equity in earnings of associated companies | ¥ | 1,608 | ¥ | 134 | ¥ | 479 | ¥ | 65,950 | ¥ | 417 | ¥ | (474 | ) | ¥ | 65,893 | |||||||||||||||
Net income (loss) | ¥ | 12,343 | ¥ | 2,930 | ¥ | 13,765 | ¥ | 167,090 | ¥ | 4,411 | ¥ | (50,365 | ) | ¥ | 121,136 | |||||||||||||||
Total assets at March 31, 2005 | ¥ | 445,221 | ¥ | 345,917 | ¥ | 270,237 | ¥ | 6,784,152 | ¥ | 2,312,547 | ¥ | (1,503,312 | ) | ¥ | 7,593,387 | |||||||||||||||
F-58
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Millions of Yen | ||||||||||||||||||||||||||
Metal | Machinery, | Consumer | Logistics & | |||||||||||||||||||||||
Products & | Electronics & | Products & | Financial | |||||||||||||||||||||||
Minerals | Information | Chemical | Energy | Services | Markets | |||||||||||||||||||||
Year ended March 31, 2004 (As restated): | ||||||||||||||||||||||||||
Total trading transactions: | ||||||||||||||||||||||||||
External customers | ¥ | 2,206,439 | ¥ | 2,640,632 | ¥ | 1,548,680 | ¥ | 1,401,288 | ¥ | 2,577,867 | ¥ | 81,486 | ||||||||||||||
Intersegment | 260,323 | 133,884 | 415,753 | 100,189 | 135,319 | 25,989 | ||||||||||||||||||||
Total | ¥ | 2,466,762 | ¥ | 2,774,516 | ¥ | 1,964,433 | ¥ | 1,501,477 | ¥ | 2,713,186 | ¥ | 107,475 | ||||||||||||||
Gross profit | ¥ | 77,027 | ¥ | 128,736 | ¥ | 91,094 | ¥ | 54,616 | ¥ | 135,865 | ¥ | 32,293 | ||||||||||||||
Operating income (loss) | ¥ | 28,715 | ¥ | 29,400 | ¥ | 31,352 | ¥ | 21,708 | ¥ | 23,321 | ¥ | 10,370 | ||||||||||||||
Net income | ¥ | 24,208 | ¥ | 5,860 | ¥ | 11,389 | ¥ | 24,449 | ¥ | 18,909 | ¥ | 4,786 | ||||||||||||||
Total assets at March 31, 2004 | ¥ | 994,364 | ¥ | 1,223,610 | ¥ | 624,799 | ¥ | 610,374 | ¥ | 1,079,914 | ¥ | 358,263 | ||||||||||||||
Millions of Yen | ||||||||||||||||||||||||||||||
Other Overseas | Adjustments and | Consolidated | ||||||||||||||||||||||||||||
Americas | Europe | Areas | Total | All Other | Eliminations | Total | ||||||||||||||||||||||||
Year ended March 31, 2004 (As restated): | ||||||||||||||||||||||||||||||
Total trading transactions: | ||||||||||||||||||||||||||||||
External customers | ¥ | 843,532 | ¥ | 342,286 | ¥ | 624,435 | ¥ | 12,266,645 | ¥ | 26,954 | ¥ | (9,488 | ) | ¥ | 12,284,111 | |||||||||||||||
Intersegment | 448,399 | 335,262 | 1,009,695 | 2,864,813 | 8,700 | (2,873,513 | ) | — | ||||||||||||||||||||||
Total | ¥ | 1,291,931 | ¥ | 677,548 | ¥ | 1,634,130 | ¥ | 15,131,458 | ¥ | 35,654 | ¥ | (2,883,001 | ) | ¥ | 12,284,111 | |||||||||||||||
Gross profit | ¥ | 40,711 | ¥ | 19,965 | ¥ | 24,060 | ¥ | 604,367 | ¥ | 10,461 | ¥ | (885 | ) | ¥ | 613,943 | |||||||||||||||
Operating income (loss) | ¥ | 8,531 | ¥ | 3,030 | ¥ | 6,562 | ¥ | 162,989 | ¥ | (1,902 | ) | ¥ | (34,240 | ) | ¥ | 126,847 | ||||||||||||||
Net income | ¥ | 161 | ¥ | 693 | ¥ | 10,425 | ¥ | 100,880 | ¥ | 1,923 | ¥ | (34,416 | ) | ¥ | 68,387 | |||||||||||||||
Total assets at March 31, 2004 | ¥ | 399,599 | ¥ | 247,574 | ¥ | 215,185 | ¥ | 5,753,682 | ¥ | 2,152,005 | ¥ | (1,189,659 | ) | ¥ | 6,716,028 | |||||||||||||||
Millions of Yen | ||||||||||||||||||||||||||
Metal | Machinery, | Consumer | Logistics & | |||||||||||||||||||||||
Products & | Electronics & | Products & | Financial | |||||||||||||||||||||||
Minerals | Information | Chemical | Energy | Services | Markets | |||||||||||||||||||||
Year ended March 31, 2003 (As restated): | ||||||||||||||||||||||||||
Total trading transactions: | ||||||||||||||||||||||||||
External customers | ¥ | 1,997,884 | ¥ | 2,490,125 | ¥ | 1,365,247 | ¥ | 1,240,435 | ¥ | 2,555,328 | ¥ | 93,636 | ||||||||||||||
Intersegment | 254,925 | 161,982 | 322,658 | 40,886 | 128,123 | 13,861 | ||||||||||||||||||||
Total | ¥ | 2,252,809 | ¥ | 2,652,107 | ¥ | 1,687,905 | ¥ | 1,281,321 | ¥ | 2,683,451 | ¥ | 107,497 | ||||||||||||||
Gross profit | ¥ | 71,505 | ¥ | 121,095 | ¥ | 69,266 | ¥ | 53,824 | ¥ | 122,632 | ¥ | 33,158 | ||||||||||||||
Operating income (loss) | ¥ | 24,698 | ¥ | 14,098 | ¥ | 18,278 | ¥ | 25,738 | ¥ | 21,206 | ¥ | 10,929 | ||||||||||||||
Net income (loss) | ¥ | 16,133 | ¥ | (9,206 | ) | ¥ | (3,563 | ) | ¥ | 22,980 | ¥ | 9,587 | ¥ | 4,646 | ||||||||||||
Total assets at March 31, 2003 | ¥ | 866,698 | ¥ | 1,266,442 | ¥ | 572,935 | ¥ | 620,412 | ¥ | 998,500 | ¥ | 273,063 | ||||||||||||||
F-59
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Millions of Yen | ||||||||||||||||||||||||||||||
Other Overseas | Adjustments and | Consolidated | ||||||||||||||||||||||||||||
Americas | Europe | Areas | Total | All Other | Eliminations | Total | ||||||||||||||||||||||||
Year ended March 31, 2003 (As restated): | ||||||||||||||||||||||||||||||
Total trading transactions: | ||||||||||||||||||||||||||||||
External customers | ¥ | 786,707 | ¥ | 355,061 | ¥ | 577,425 | ¥ | 11,461,848 | ¥ | 29,295 | ¥ | (16,960 | ) | ¥ | 11,474,183 | |||||||||||||||
Intersegment | 485,566 | 224,247 | 729,116 | 2,361,364 | 7,023 | (2,368,387 | ) | — | ||||||||||||||||||||||
Total | ¥ | 1,272,273 | ¥ | 579,308 | ¥ | 1,306,541 | ¥ | 13,823,212 | ¥ | 36,318 | ¥ | (2,385,347 | ) | ¥ | 11,474,183 | |||||||||||||||
Gross profit | ¥ | 44,584 | ¥ | 22,470 | ¥ | 23,503 | ¥ | 562,037 | ¥ | 10,554 | ¥ | (3,021 | ) | ¥ | 569,570 | |||||||||||||||
Operating income (loss) | ¥ | 9,485 | ¥ | 4,163 | ¥ | 7,571 | ¥ | 136,166 | ¥ | (1,828 | ) | ¥ | (32,406 | ) | ¥ | 101,932 | ||||||||||||||
Net income (loss) | ¥ | 3,291 | ¥ | 2,845 | ¥ | 8,627 | ¥ | 55,340 | ¥ | 6,921 | ¥ | (31,123 | ) | ¥ | 31,138 | |||||||||||||||
Total assets at March 31, 2003 | ¥ | 412,659 | ¥ | 218,304 | ¥ | 201,032 | ¥ | 5,430,045 | ¥ | 2,085,802 | ¥ | (975,327 | ) | ¥ | 6,540,520 | |||||||||||||||
(1) | The figures of “Consolidated Total” for the years ended March 31, 2004 and 2003 have been reclassified to conform to the change in current year presentation for discontinued operations in accordance with SFAS No. 144. The reclassification to income (loss) from discontinued operation — net (after income tax effect) are included in “Adjustments and Eliminations.” |
(2) | “All Other” includes business activities which primarily provide services, such as development and sales of systems, financing services, and operations services to external customers and/or to the companies and associated companies. Total assets of “All Other” at March 31, 2005, 2004 and 2003 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. |
Net loss of “Adjustments and Eliminations” for the year ended March 31, 2005 includes (a) ¥21,722 million in general and administrative expenses of the corporate departments excluding pension costs, (b) a charge of ¥15,292 million for the valuation allowance for deferred tax assets as a result of change in a policy to sell certain investments, and (c) a gain of ¥2,432 million for pension related items (all amounts are after income tax effects). | |
Net loss of “Adjustments and Eliminations” for the year ended March 31, 2004 includes (a) ¥14,001 million in general and administrative expenses of the corporate departments excluding pension costs, (b) a charge of ¥13,247 million for pension related items, and (c) ¥4,743 million in impairment losses of long-lived assets (all amounts are after income tax effects). | |
Net loss of “Adjustments and Eliminations” for the year ended March 31, 2003 includes (a) a charge of ¥7,485 million for an early retirement support program, (b) ¥5,814 million in losses on write-down of marketable securities, and (c) ¥3,142 million in losses on sale of marketable securities (all amounts are after income tax effects). |
(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, (c) provision for doubtful receivables, and (d) government grant for transfer of substitutional portion of EPF, as presented in the Statements of Consolidated Income. |
F-60
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PRODUCT INFORMATION |
Millions of Yen | ||||||||||||||||||||||||||||||||||||||||||||
Property and | ||||||||||||||||||||||||||||||||||||||||||||
Iron and | Non-Ferrous | Electronics & | General | Service | Consolidated | |||||||||||||||||||||||||||||||||||||||
Steel | Metals | Machinery | Information | Chemicals | Energy | Foods | Textiles | Merchandise | Business | Total | ||||||||||||||||||||||||||||||||||
Year ended March 31, 2005: | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | ¥ | 407,103 | ¥ | 161,380 | ¥ | 269,241 | ¥ | 144,780 | ¥ | 729,103 | ¥ | 1,048,362 | ¥ | 473,573 | ¥ | 43,019 | ¥ | 96,136 | ¥ | 153,036 | ¥ | 3,525,733 | ||||||||||||||||||||||
Year ended March 31, 2004 (As restated): | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | ¥ | 312,853 | ¥ | 157,248 | ¥ | 305,025 | ¥ | 119,843 | ¥ | 520,115 | ¥ | 954,556 | ¥ | 389,496 | ¥ | 32,793 | ¥ | 84,812 | ¥ | 106,195 | ¥ | 2,982,936 | ||||||||||||||||||||||
Year ended March 31, 2003 (As restated): | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | ¥ | 281,761 | ¥ | 152,145 | ¥ | 304,780 | ¥ | 108,110 | ¥ | 463,375 | ¥ | 830,997 | ¥ | 393,228 | ¥ | 37,871 | ¥ | 88,752 | ¥ | 123,552 | ¥ | 2,784,571 | ||||||||||||||||||||||
GEOGRAPHIC AREA INFORMATION |
Millions of Yen | ||||||||||||||||||||||||
United | United | Consolidated | ||||||||||||||||||||||
Japan | States | Kingdom | China | All Other | Total | |||||||||||||||||||
Year ended March 31, 2005: | ||||||||||||||||||||||||
Total trading transactions to external customers | ¥ | 7,736,548 | ¥ | 1,096,321 | ¥ | 200,399 | ¥ | 608,100 | ¥ | 3,973,679 | ¥ | 13,615,047 | ||||||||||||
Year ended March 31, 2004 (As restated): | ||||||||||||||||||||||||
Total trading transactions to external customers | ¥ | 7,189,292 | ¥ | 831,566 | ¥ | 159,698 | ¥ | 421,247 | ¥ | 3,682,308 | ¥ | 12,284,111 | ||||||||||||
Year ended March 31, 2003 (As restated): | ||||||||||||||||||||||||
Total trading transactions to external customers | ¥ | 7,102,671 | ¥ | 808,293 | ¥ | 154,142 | ¥ | 350,884 | ¥ | 3,058,193 | ¥ | 11,474,183 | ||||||||||||
(1) | Total trading transactions are attributed to countries based on the location of customers. |
(2) | The Company provides total trading transactions instead of revenues, as certain costs related to revenues presented net in accordance with EITF No. 99-19 are not attributed to countries based on the location of customers. |
(3) | In accordance with SFAS No. 144, total trading transactions to external customers from discontinued operations are eliminated from each geographic area amount and “Consolidated Total.” The figures for the years ended March 31, 2004 and 2003 have been reclassified to conform to the current year presentation. |
(4) | Total trading transactions to the customers located in China, which were previously included in “All Other,” were separately presented in consideration of the importance of the amount for the year ended March 31, 2005. The figures for the years ended March 31, 2004 and 2003 have been restated to conform to the current year presentation. |
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Millions of Yen | ||||||||||||||||||||
United | Consolidated | |||||||||||||||||||
Japan | States | Australia | All Other | Total | ||||||||||||||||
At March 31, 2005: | ||||||||||||||||||||
Long-lived assets | ¥ | 431,236 | ¥ | 99,636 | ¥ | 177,273 | ¥ | 137,718 | ¥ | 845,863 | ||||||||||
At March 31, 2004: | ||||||||||||||||||||
Long-lived assets | ¥ | 469,074 | ¥ | 128,100 | ¥ | 95,405 | ¥ | 136,871 | ¥ | 829,450 | ||||||||||
At March 31, 2003: | ||||||||||||||||||||
Long-lived assets | ¥ | 497,112 | ¥ | 113,433 | ¥ | 70,433 | ¥ | 154,311 | ¥ | 835,289 | ||||||||||
18. | SUPPLEMENTAL INCOME STATEMENT INFORMATION |
Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Depreciation of property and equipment* | ¥ | 52,921 | ¥ | 54,502 | ¥ | 50,652 | ||||||
Research and development expenses | 5,647 | 6,019 | 3,415 | |||||||||
Advertising expenses | 9,012 | 7,915 | 6,898 | |||||||||
Foreign exchange gains — net | 4,583 | 2,887 | 3,154 |
* | In accordance with the change in classification of mineral rights in the Consolidated Balance Sheets, the figures of “Depreciation of property and equipment” for the years ended March 31, 2004 and 2003 have been reclassified to conform to the current year presentation. |
19. | ISSUANCE OF STOCK BY SUBSIDIARIES AND ASSOCIATED COMPANIES |
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20. | OTHER EXPENSE — NET |
Millions of Yen | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Exploration expenses | ¥ | 2,458 | ¥ | 1,367 | ¥ | 932 | |||||||
Restructuring-related charges | 1,950 | 6,284 | 1,131 | ||||||||||
Impairment loss of goodwill | 1,114 | — | — | ||||||||||
Litigation charges | 430 | 16,173 | 4,050 | ||||||||||
Foreign exchange losses (gains) — net | 5 | (7 | ) | 2,365 | |||||||||
Other | 1,874 | 4,895 | 2,523 | ||||||||||
Total | ¥ | 7,831 | ¥ | 28,712 | ¥ | 11,001 | |||||||
21. | INCOME TAXES |
% | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Normal statutory tax rate in Japan applied to income from continuing operations before income taxes, minority interests and equity in earnings | 41.0 | % | 42.0 | % | 42.0 | % | ||||||||
Increases (decreases) in tax rate resulting from: | ||||||||||||||
Expenses not deductible for tax purposes and income not taxable — net | 2.4 | 4.3 | 4.3 | |||||||||||
Application of lower tax rates to certain taxable income | (5.4 | ) | (5.7 | ) | (9.9 | ) | ||||||||
Effect of taxation on dividends from subsidiaries and corporate joint ventures | 8.4 | 2.7 | 10.4 | |||||||||||
Changes in valuation allowance — net | 11.3 | 7.7 | 11.6 | |||||||||||
Other — net | 1.3 | 2.0 | 1.3 | |||||||||||
Effective income tax rate on income from continuing operations | 59.0 | % | 53.0 | % | 59.7 | % | ||||||||
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Millions of Yen | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Income taxes on income from continuing operations | ¥ | 103,555 | ¥ | 47,041 | ¥ | 38,798 | |||||||
Income (loss) from discontinued operations — net | 496 | (8,283 | ) | (11,474 | ) | ||||||||
Equity in earnings of associated companies | 18,342 | 9,096 | 26 | ||||||||||
Cumulative effect of change in accounting principle | — | (161 | ) | — | |||||||||
Other comprehensive income (loss) | 26,461 | 40,243 | (38,568 | ) | |||||||||
Total | ¥ | 148,854 | ¥ | 87,936 | ¥ | (11,218 | ) | ||||||
Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Deferred Tax Assets: | |||||||||
Accrued pension costs and liability for severance indemnities | ¥ | 15,293 | ¥ | 25,083 | |||||
Allowance for doubtful receivables | 13,977 | 21,994 | |||||||
Estimated losses | 46,060 | 21,944 | |||||||
Impairment loss of long-lived assets | 25,763 | 16,746 | |||||||
Loss carryforwards of subsidiaries and associated companies | 70,584 | 76,528 | |||||||
Unrealized intercompany profit | 17,428 | 21,107 | |||||||
Foreign currency translation | 13,138 | 15,110 | |||||||
Other | 12,291 | 19,709 | |||||||
Total deferred tax assets | 214,534 | 218,221 | |||||||
Valuation allowance | (44,915 | ) | (31,245 | ) | |||||
Deferred tax assets — net | 169,619 | 186,976 | |||||||
Deferred Tax Liabilities: | |||||||||
Property | 96,824 | 74,428 | |||||||
Investment securities | 72,506 | 56,256 | |||||||
Undistributed earnings of associated companies other than corporate joint ventures | 61,165 | 42,566 | |||||||
Other | 8,441 | 2,089 | |||||||
Deferred tax liabilities | 238,936 | 175,339 | |||||||
Net deferred tax (liabilities) assets | ¥ | (69,317 | ) | ¥ | 11,637 | ||||
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Millions of Yen | |||||||||
2005 | 2004 | ||||||||
Current Assets — Deferred tax assets — current | ¥ | 46,410 | ¥ | 31,473 | |||||
Deferred Tax Assets — Non-current | 29,641 | 32,406 | |||||||
Current Liabilities — Other current liabilities | (1,802 | ) | (4,855 | ) | |||||
Deferred Tax Liabilities — Non-current | (143,566 | ) | (47,387 | ) | |||||
Net deferred tax (liabilities) assets | ¥ | (69,317 | ) | ¥ | 11,637 | ||||
Millions of Yen | |||||
Within 5 years | ¥ | 21,306 | |||
After 5 to 10 years | 26,951 | ||||
After 10 to 15 years | 1,521 | ||||
After 15 years | 59,097 | ||||
Total | ¥ | 108,875 | |||
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Millions of Yen | ||||||||||||
The Company | ||||||||||||
and its domestic | Foreign | |||||||||||
subsidiaries | subsidiaries | Total | ||||||||||
Year ended March 31, 2005 | ¥ | 54,938 | ¥ | 120,706 | ¥ | 175,644 | ||||||
Year ended March 31, 2004 | ¥ | 38,403 | ¥ | 50,402 | ¥ | 88,805 | ||||||
Year ended March 31, 2003 | ¥ | 10,815 | ¥ | 54,175 | ¥ | 64,990 | ||||||
Millions of Yen | ||||||||||||||
The Company | ||||||||||||||
and its domestic | Foreign | |||||||||||||
subsidiaries | subsidiaries | Total | ||||||||||||
Year ended March 31, 2005: | ||||||||||||||
Current | ¥ | 32,885 | ¥ | 32,213 | ¥ | 65,098 | ||||||||
Deferred | 29,659 | 8,798 | 38,457 | |||||||||||
Total | ¥ | 62,544 | ¥ | 41,011 | ¥ | 103,555 | ||||||||
Year ended March 31, 2004: | ||||||||||||||
Current | ¥ | 27,166 | ¥ | 17,850 | ¥ | 45,016 | ||||||||
Deferred | 1,884 | 141 | 2,025 | |||||||||||
Total | ¥ | 29,050 | ¥ | 17,991 | ¥ | 47,041 | ||||||||
Year ended March 31, 2003: | ||||||||||||||
Current | ¥ | 20,617 | ¥ | 18,570 | ¥ | 39,187 | ||||||||
Deferred | (6,447 | ) | 6,058 | (389 | ) | |||||||||
Total | ¥ | 14,170 | ¥ | 24,628 | ¥ | 38,798 | ||||||||
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22. | COMPENSATION AND OTHER CHARGES RELATED TO DPF INCIDENT |
23. | COMMITMENTS AND CONTINGENT LIABILITIES |
I. | LONG-TERM PURCHASE CONTRACTS AND FINANCING COMMITMENTS |
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II. | GUARANTEES |
Millions of Yen | |||||||||||||||||||||||||||||||
Maximum | |||||||||||||||||||||||||||||||
Expire | Total | Recourse | potential | Carrying | |||||||||||||||||||||||||||
within | Expire after | amount | provisions/ | amount of future | amount of | Expire no | |||||||||||||||||||||||||
1 year | 1 year | outstanding | collateral | payments | liabilities | later than | |||||||||||||||||||||||||
March 31, 2005: | |||||||||||||||||||||||||||||||
Type of guarantees: | |||||||||||||||||||||||||||||||
Financial guarantees: | |||||||||||||||||||||||||||||||
Guarantees for third parties | ¥ | 12,251 | ¥ | 72,503 | ¥ | 84,754 | ¥ | 22,572 | ¥ | 88,549 | ¥ | 1,360 | 2021 | ||||||||||||||||||
Guarantees for associated companies | 21,918 | 35,650 | 57,568 | 8,857 | 63,712 | 2,108 | 2022 | ||||||||||||||||||||||||
Guarantees to financial institutions for employees’ housing loans | — | 15,170 | 15,170 | — | 41,388 | — | 2029 | ||||||||||||||||||||||||
Total | ¥ | 34,169 | ¥ | 123,323 | ¥ | 157,492 | ¥ | 31,429 | ¥ | 193,649 | ¥ | 3,468 | |||||||||||||||||||
Performance guarantees | ¥ | 14,564 | ¥ | 18,595 | ¥ | 33,159 | ¥ | 5,779 | ¥ | 33,159 | ¥ | 331 | 2013 | ||||||||||||||||||
Market value guarantees: | |||||||||||||||||||||||||||||||
Obligation to repurchase bills of exchange | ¥ | 52,420 | ¥ | 1,302 | ¥ | 53,722 | ¥ | 41,700 | ¥ | 53,722 | — | 2007 | |||||||||||||||||||
Minimum purchase price guarantees | — | 3,222 | 3,222 | — | 3,222 | — | 2013 | ||||||||||||||||||||||||
Residual value guarantees of leased assets | — | 16,362 | 16,362 | — | 16,362 | — | 2008 | ||||||||||||||||||||||||
Total | ¥ | 52,420 | ¥ | 20,886 | ¥ | 73,306 | ¥ | 41,700 | ¥ | 73,306 | — | ||||||||||||||||||||
Derivative instruments | ¥ | 805,527 | ¥ | 398,632 | ¥ | 1,204,159 | — | ¥ | 1,204,159 | ¥ | 65,869 | ||||||||||||||||||||
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Millions of Yen | |||||||||||||||||||||||||||||||
Maximum | |||||||||||||||||||||||||||||||
Expire | Total | Recourse | potential | Carrying | |||||||||||||||||||||||||||
within | Expire after | amount | provisions/ | amount of future | amount of | Expire no | |||||||||||||||||||||||||
1 year | 1 year | outstanding | collateral | payments | liabilities | later than | |||||||||||||||||||||||||
March 31, 2004: | |||||||||||||||||||||||||||||||
Type of guarantees: | |||||||||||||||||||||||||||||||
Financial guarantees: | |||||||||||||||||||||||||||||||
Guarantees for third parties | ¥ | 26,745 | ¥ | 93,071 | ¥ | 119,816 | ¥ | 31,178 | ¥ | 143,654 | ¥ | 884 | 2021 | ||||||||||||||||||
Guarantees for associated companies | 17,947 | 44,343 | 62,290 | 9,975 | 72,586 | 5,275 | 2022 | ||||||||||||||||||||||||
Guarantees to financial institutions for employees’ housing loans | — | 18,524 | 18,524 | — | 41,388 | — | 2029 | ||||||||||||||||||||||||
Total | ¥ | 44,692 | ¥ | 155,938 | ¥ | 200,630 | ¥ | 41,153 | ¥ | 257,628 | ¥ | 6,159 | |||||||||||||||||||
Performance guarantees | ¥ | 10,688 | ¥ | 26,094 | ¥ | 36,782 | ¥ | 5,766 | ¥ | 36,787 | ¥ | 408 | 2013 | ||||||||||||||||||
Market value guarantees: | |||||||||||||||||||||||||||||||
Obligation to repurchase bills of exchange | ¥ | 41,655 | ¥ | 296 | ¥ | 41,951 | ¥ | 36,361 | ¥ | 41,951 | — | 2006 | |||||||||||||||||||
Minimum purchase price guarantees | — | 3,171 | 3,171 | — | 3,171 | — | 2013 | ||||||||||||||||||||||||
Residual value guarantees of leased assets | — | 16,516 | 16,516 | — | 16,516 | — | 2008 | ||||||||||||||||||||||||
Total | ¥ | 41,655 | ¥ | 19,983 | ¥ | 61,638 | ¥ | 36,361 | ¥ | 61,638 | — | ||||||||||||||||||||
Derivative instruments | ¥ | 271,761 | ¥ | 37,353 | ¥ | 309,114 | — | ¥ | 309,114 | ¥ | 18,210 | ||||||||||||||||||||
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Millions of Yen | ||||||
March 31, 2005: | ||||||
Guaranteed party: | ||||||
POWEREDCOM | ¥ | 14,276 | ||||
Nippon Asahan Aluminium | 10,116 | |||||
Usinas Siderurgicas de Minas Gerais | 7,786 | |||||
Petro21 Intertrade Company | 4,861 | |||||
Project Finance BLRE | 4,619 | |||||
Siam Cement | 3,432 | |||||
Modec Venture 11 | 3,207 | |||||
Qatar LNG Investment | 3,193 | |||||
Bontang Train G Project Finance | 2,706 | |||||
Leeward Navigation | 2,592 | |||||
Others | 69,275 | |||||
Total | ¥ | 126,063 | ||||
March 31, 2004: | ||||||
Guaranteed party: | ||||||
POWEREDCOM | ¥ | 19,640 | ||||
Hutchison 3G UK | 10,302 | |||||
Usinas Siderurgicas de Minas Gerais | 9,195 | |||||
Sanha Fpso | 6,256 | |||||
Qatar LNG Investment | 6,062 | |||||
Project Finance BLRE | 5,372 | |||||
Telefonos De Mexico | 5,342 | |||||
Siam Cement | 4,129 | |||||
Nippon Asahan Aluminium | 3,862 | |||||
Vinyl Chloride (Malaysia) | 3,805 | |||||
Others | 85,512 | |||||
Total | ¥ | 159,477 | ||||
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Millions of Yen | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Balance at beginning of year | ¥ | 1,754 | ¥ | 2,130 | ¥ | 2,356 | ||||||
Payments made in cash or in kind | (562 | ) | (486 | ) | (419 | ) | ||||||
Accrual for warranties issued during the year | 2,075 | 828 | 956 | |||||||||
Changes in accrual related to pre-existing warranties | (736 | ) | (718 | ) | (763 | ) | ||||||
Balance at end of year | ¥ | 2,531 | ¥ | 1,754 | ¥ | 2,130 | ||||||
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25. | EXIT OR DISPOSAL ACTIVITIES |
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26. | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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27. | FINANCIAL INSTRUMENTS |
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Millions of Yen | ||||||||||||||||
2005 | 2004 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
amount | Fair value | amount | Fair value | |||||||||||||
Financial Assets (other than Derivative Financial Instruments): | ||||||||||||||||
Current financial assets other than marketable securities | ¥ | 3,510,747 | ¥ | 3,510,747 | ¥ | 3,108,795 | ¥ | 3,108,795 | ||||||||
Non-current receivables and advances to associated companies (less allowance for doubtful receivables) | 625,017 | 626,252 | 477,991 | 485,434 | ||||||||||||
Financial Liabilities (other than Derivative Financial Instruments): | ||||||||||||||||
Current financial liabilities | (2,730,348 | ) | (2,730,348 | ) | (2,381,894 | ) | (2,381,894 | ) | ||||||||
Long-term debt (including current maturities) | (3,140,057 | ) | (3,146,342 | ) | (2,826,102 | ) | (2,877,995 | ) | ||||||||
Derivative Financial Instruments (Assets): | ||||||||||||||||
Interest rate swap agreements | 54,398 | 54,398 | 28,378 | 28,378 | ||||||||||||
Currency swap agreements | 10,375 | 10,375 | 24,714 | 24,714 | ||||||||||||
Foreign exchange forward contracts | 19,941 | 19,941 | 20,540 | 20,540 | ||||||||||||
Derivative Financial Instruments (Liabilities): | ||||||||||||||||
Interest rate swap agreements | (7,043 | ) | (7,043 | ) | (3,825 | ) | (3,825 | ) | ||||||||
Currency swap agreements | (5,113 | ) | (5,113 | ) | (8,227 | ) | (8,227 | ) | ||||||||
Foreign exchange forward contracts | (14,084 | ) | (14,084 | ) | (8,878 | ) | (8,878 | ) |
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Millions of Yen | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Cash paid during the year for: | ||||||||||||||
Interest | ¥ | 45,226 | ¥ | 58,235 | ¥ | 55,211 | ||||||||
Income taxes (Note 21) | 56,927 | 35,676 | 31,002 | |||||||||||
Non-cash investing and financing activities: | ||||||||||||||
Exchange of shares in connection with a business combination of investees (EITF No. 91-5) (Note 5): | ||||||||||||||
Fair market value of shares received | 4,810 | — | 7,110 | |||||||||||
Cost of shares surrendered | 2,029 | — | 2,635 | |||||||||||
Acquisitions of subsidiaries (Note 3): | ||||||||||||||
Fair value of assets acquired | 32,857 | 77,702 | 20,683 | |||||||||||
Fair value of liabilities assumed | 15,021 | 71,302 | 8,336 | |||||||||||
Acquisition costs of subsidiaries | 17,836 | 6,400 | 12,347 | |||||||||||
Non-cash acquisition cost | 8,982 | — | — | |||||||||||
Cash acquired | 3,621 | 10,259 | 1,139 | |||||||||||
Acquisitions of subsidiaries, net of cash acquired | 5,233 | (3,859 | ) | 11,208 | ||||||||||
Consolidation of VIEs related to the implementation of FIN No. 46R (Note 24): | ||||||||||||||
Total assets recorded | — | 20,439 | — | |||||||||||
Total liabilities recorded | — | 20,439 | — | |||||||||||
Contribution of securities to an employee retirement benefit trust (Notes 5 and 14) | — | — | 27,343 |
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TABLE 1. | COSTS INCURRED FOR PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT*1,*2,*3 |
Millions of Yen | ||||||||||||||||||||
Associated | ||||||||||||||||||||
Consolidated Companies | Companies | |||||||||||||||||||
Oceania | Middle East | Oceania | Others | Worldwide | ||||||||||||||||
Year Ended March 31, 2005: | ||||||||||||||||||||
Acquisition of Proved Properties | ¥ | 20,944 | — | — | ¥ | 323 | ¥ | 21,267 | ||||||||||||
Acquisition of Unproved Properties | 26,403 | — | — | — | 26,403 | |||||||||||||||
Exploration | 2,365 | ¥ | 93 | ¥ | 30 | 535 | 3,023 | |||||||||||||
Development | 15,909 | 6,466 | 5,432 | 91,464 | 119,271 | |||||||||||||||
Total Costs Incurred | ¥ | 65,621 | ¥ | 6,559 | ¥ | 5,462 | ¥ | 92,322 | ¥ | 169,964 | ||||||||||
Year Ended March 31, 2004: | ||||||||||||||||||||
Acquisition of Proved Properties | — | — | — | ¥ | 1,015 | ¥ | 1,015 | |||||||||||||
Acquisition of Unproved Properties | ¥ | 1,553 | — | — | — | 1,553 | ||||||||||||||
Exploration | 1,102 | ¥ | 467 | ¥ | 599 | 209 | 2,377 | |||||||||||||
Development | 2,443 | 7,816 | 9,973 | 51,187 | 71,419 | |||||||||||||||
Total Costs Incurred | ¥ | 5,098 | ¥ | 8,283 | ¥ | 10,572 | ¥ | 52,411 | ¥ | 76,364 | ||||||||||
Year Ended March 31, 2003: | ||||||||||||||||||||
Acquisition of Proved Properties | ¥ | 1,444 | ¥ | 15,986 | — | ¥ | 44 | ¥ | 17,474 | |||||||||||
Acquisition of Unproved Properties | — | — | — | 441 | 441 | |||||||||||||||
Exploration | 637 | 586 | ¥ | 136 | 1,360 | 2,719 | ||||||||||||||
Development | 998 | 4,809 | 5,636 | 16,957 | 28,400 | |||||||||||||||
Total Costs Incurred | ¥ | 3,079 | ¥ | 21,381 | ¥ | 5,772 | ¥ | 18,802 | ¥ | 49,034 | ||||||||||
*1 | Includes costs incurred whether capitalized or expensed. |
*2 | Excludes the cumulative-effect adjustment of ¥5,821 million for the initial application of SFAS No. 143, “Accounting for Asset Retirement Obligations,” from the costs incurred for the year ended March 31, 2004. |
*3 | Includes capitalized asset retirement costs incurred in accordance with SFAS No. 143 for the years ended March 31, 2005 and 2004. |
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TABLE 2. | CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES |
Millions of Yen | ||||||||||||||||||||
Consolidated Companies | Associated Companies | |||||||||||||||||||
Oceania | Middle East | Oceania | Others | Worldwide | ||||||||||||||||
Year Ended March 31, 2005: | ||||||||||||||||||||
Proved Properties* | ¥ | 60,775 | ¥ | 26,191 | ¥ | 126,618 | ¥ | 277,034 | ¥ | 490,618 | ||||||||||
Unproved Properties | 26,346 | — | — | 4,818 | 31,164 | |||||||||||||||
Gross Capitalized Properties | 87,121 | 26,191 | 126,618 | 281,852 | 521,782 | |||||||||||||||
Accumulated Depreciation, Depletion, Amortization and Valuation Allowances | 14,261 | 5,710 | 69,435 | 85,830 | 175,236 | |||||||||||||||
Net Capitalized Costs | ¥ | 72,860 | ¥ | 20,481 | ¥ | 57,183 | ¥ | 196,022 | ¥ | 346,546 | ||||||||||
Year Ended March 31, 2004: | ||||||||||||||||||||
Proved Properties* | ¥ | 21,989 | ¥ | 23,674 | ¥ | 118,332 | ¥ | 185,443 | ¥ | 349,438 | ||||||||||
Unproved Properties | 1,977 | — | — | 4,928 | 6,905 | |||||||||||||||
Gross Capitalized Properties | 23,966 | 23,674 | 118,332 | 190,371 | 356,343 | |||||||||||||||
Accumulated Depreciation, Depletion, Amortization and Valuation Allowances | 14,191 | 3,193 | 63,119 | 77,686 | 158,189 | |||||||||||||||
Net Capitalized Costs | ¥ | 9,775 | ¥ | 20,481 | ¥ | 55,213 | ¥ | 112,685 | ¥ | 198,154 | ||||||||||
Year Ended March 31, 2003: | ||||||||||||||||||||
Proved Properties | ¥ | 16,652 | ¥ | 21,194 | ¥ | 81,810 | ¥ | 95,413 | ¥ | 215,069 | ||||||||||
Unproved Properties | — | — | 365 | 33,059 | 33,424 | |||||||||||||||
Gross Capitalized Properties | 16,652 | 21,194 | 82,175 | 128,472 | 248,493 | |||||||||||||||
Accumulated Depreciation, Depletion, Amortization and Valuation Allowances | 11,596 | 3,157 | 43,554 | 58,549 | 116,856 | |||||||||||||||
Net Capitalized Costs | ¥ | 5,056 | ¥ | 18,037 | ¥ | 38,621 | ¥ | 69,923 | ¥ | 131,637 | ||||||||||
* | Includes capitalized asset retirement costs in accordance with SFAS No. 143. |
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TABLE 3. | RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES* |
Millions of Yen | ||||||||||||||||||||
Associated | ||||||||||||||||||||
Consolidated Companies | Companies | |||||||||||||||||||
Oceania | Middle East | Oceania | Others | Worldwide | ||||||||||||||||
Year Ended March 31, 2005: | ||||||||||||||||||||
Sales to Unaffiliated Enterprises | — | ¥ | 2,686 | ¥ | 29,805 | ¥ | 30,631 | ¥ | 63,122 | |||||||||||
Transfers to Affiliated Enterprises | ¥ | 4,028 | 14,330 | 7,791 | — | 26,149 | ||||||||||||||
Total Revenues | 4,028 | 17,016 | 37,596 | 30,631 | 89,271 | |||||||||||||||
Production Cost | 2,369 | 2,393 | 11,123 | 6,687 | 22,572 | |||||||||||||||
Exploration Expenses | 2,365 | 93 | 126 | 535 | 3,119 | |||||||||||||||
Depreciation, Depletion, Amortization, Accretion and Valuation Allowances | 436 | 3,252 | 3,669 | 5,562 | 12,919 | |||||||||||||||
Income Tax Expense | 5 | 5,240 | 6,247 | 9,045 | 20,537 | |||||||||||||||
Results of Operations for Oil and Gas Producing Activities | ¥ | (1,147 | ) | ¥ | 6,038 | ¥ | 16,431 | ¥ | 8,802 | ¥ | 30,124 | |||||||||
Year Ended March 31, 2004: | ||||||||||||||||||||
Sales to Unaffiliated Enterprises | — | ¥ | 1,385 | ¥ | 30,254 | ¥ | 21,564 | ¥ | 53,203 | |||||||||||
Transfers to Affiliated Enterprises | ¥ | 4,240 | 11,086 | 6,603 | — | 21,929 | ||||||||||||||
Total Revenues | 4,240 | 12,471 | 36,857 | 21,564 | 75,132 | |||||||||||||||
Production Cost | 2,345 | 2,320 | 13,426 | 5,997 | 24,088 | |||||||||||||||
Exploration Expenses | 900 | 467 | 242 | 209 | 1,818 | |||||||||||||||
Depreciation, Depletion, Amortization, Accretion and Valuation Allowances | 597 | 2,365 | 5,230 | 6,281 | 14,473 | |||||||||||||||
Income Tax Expense | 342 | 4,331 | 5,203 | 5,573 | 15,449 | |||||||||||||||
Results of Operations for Oil and Gas Producing Activities | ¥ | 56 | ¥ | 2,988 | ¥ | 12,756 | ¥ | 3,504 | ¥ | 19,304 | ||||||||||
Year Ended March 31, 2003: | ||||||||||||||||||||
Sales to Unaffiliated Enterprises | ¥ | 43 | ¥ | 8,790 | ¥ | 28,789 | ¥ | 19,856 | ¥ | 57,478 | ||||||||||
Transfers to Affiliated Enterprises | 4,916 | 3,123 | 7,351 | — | 15,390 | |||||||||||||||
Total Revenues | 4,959 | 11,913 | 36,140 | 19,856 | 72,868 | |||||||||||||||
Production Cost | 2,156 | 2,460 | 13,402 | 5,867 | 23,885 | |||||||||||||||
Exploration Expenses | 637 | 295 | 489 | 1,360 | 2,781 | |||||||||||||||
Depreciation, Depletion, Amortization and Valuation Allowances | 530 | 2,272 | 4,984 | 4,503 | 12,289 | |||||||||||||||
Income Tax Expense | 521 | 3,168 | 7,320 | 4,239 | 15,248 | |||||||||||||||
Results of Operations for Oil and Gas Producing Activities | ¥ | 1,115 | ¥ | 3,718 | ¥ | 9,945 | ¥ | 3,887 | ¥ | 18,665 | ||||||||||
* | Excludes the cumulative-effect adjustment of ¥2,214 million for the initial application of SFAS No. 143 from the results of operations for the year ended March 31, 2004. |
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TABLE 4. | PROVED RESERVE QUANTITY INFORMATION |
Proved Developed and Undeveloped Reserves: |
Millions of Barrels | Billions of Cubic Feet | ||||||||||||||||||||||||||||||||||||||||
Crude Oil, Condensate and Natural Gas Liquids*1 | Natural Gas*1*3 | ||||||||||||||||||||||||||||||||||||||||
Consolidated | Associated | Consolidated | Associated | ||||||||||||||||||||||||||||||||||||||
Companies | Companies | Companies | Companies | ||||||||||||||||||||||||||||||||||||||
Oceania | Middle East | Oceania | Others | Worldwide | Oceania | Middle East | Oceania | Others | Worldwide | ||||||||||||||||||||||||||||||||
Reserves at April 1, 2002 | 11 | 9 | 39 | 59 | 118 | — | — | 1,155 | 219 | 1,374 | |||||||||||||||||||||||||||||||
Changes Attributable to: | |||||||||||||||||||||||||||||||||||||||||
Revision of Previous Estimates (includes improved recovery) | — | — | 7 | 16 | 23 | — | — | 59 | (3 | ) | 56 | ||||||||||||||||||||||||||||||
Extensions and Discoveries | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Purchases | 3 | 22 | — | — | 25 | 27 | — | — | 29 | 56 | |||||||||||||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Production | (2 | ) | (3 | ) | (6 | ) | (4 | ) | (15 | ) | — | — | (41 | ) | (24 | ) | (65 | ) | |||||||||||||||||||||||
Reserves at March 31, 2003 | 12 | 28 | 40 | 71 | 151 | 27 | — | 1,173 | 221 | 1,421 | |||||||||||||||||||||||||||||||
Changes Attributable to: | |||||||||||||||||||||||||||||||||||||||||
Revision of Previous Estimates (includes improved recovery) | — | (3 | ) | 5 | 7 | 9 | — | — | (282 | ) | 2 | (280 | ) | ||||||||||||||||||||||||||||
Extensions and Discoveries | — | — | — | 52 | 52 | — | 84 | — | 729 | 813 | |||||||||||||||||||||||||||||||
Purchases | — | — | — | 2 | 2 | — | — | — | 42 | 42 | |||||||||||||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Production | (2 | ) | (2 | ) | (6 | ) | (5 | ) | (15 | ) | — | — | (45 | ) | (29 | ) | (74 | ) | |||||||||||||||||||||||
Reserves at March 31, 2004 | 10 | 23 | 39 | 127 | 199 | 27 | 84 | 846 | 965 | 1,922 | |||||||||||||||||||||||||||||||
Changes Attributable to: | |||||||||||||||||||||||||||||||||||||||||
Revision of Previous Estimates (includes improved recovery) | — | 3 | (6 | ) | (32 | ) | (35 | ) | — | — | (26 | ) | 4 | (22 | ) | ||||||||||||||||||||||||||
Extensions and Discoveries | 2 | 1 | — | — | 3 | 42 | — | — | 437 | 479 | |||||||||||||||||||||||||||||||
Purchases | 39 | — | — | 2 | 41 | — | — | — | 21 | 21 | |||||||||||||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Production | (1 | ) | (3 | ) | (5 | ) | (5 | ) | (14 | ) | — | (9 | ) | (49 | ) | (34 | ) | (92 | ) | ||||||||||||||||||||||
Reserves at March 31, 2005 | 50 | 24 | 28 | 92 | 194 | 69 | 75 | 771 | 1,393 | 2,308 | |||||||||||||||||||||||||||||||
Proved Developed Reserves*2: | |||||||||||||||||||||||||||||||||||||||||
Reserves at April 1, 2002 | 11 | 9 | 17 | 18 | 55 | — | — | 370 | 66 | 436 | |||||||||||||||||||||||||||||||
Reserves at March 31, 2003 | 9 | 28 | 17 | 18 | 72 | — | — | 364 | 58 | 422 | |||||||||||||||||||||||||||||||
Reserves at March 31, 2004 | 7 | 23 | 14 | 19 | 63 | — | 84 | 330 | 69 | 483 | |||||||||||||||||||||||||||||||
Reserves at March 31, 2005 | 6 | 24 | 14 | 18 | 62 | — | 75 | 356 | 82 | 513 | |||||||||||||||||||||||||||||||
*1 | 1 barrel of crude oil = 5,800 cubic feet of natural gas |
*2 | The proportion of Proved Developed Reserves to Proved Developed and Undeveloped Reserves is about 25% as of March 31, 2005 and relatively low. The expected costs to develop these undeveloped reserves are estimated to be ¥313,911 million in total as of March 31, 2005, which is included in “Future Development Cost” in Table 5. The major undeveloped reserves are attributable to an associated company in Russia and an associated company in Australia. It is expected to commence the production of crude oil in 2006 and LNG in 2007, for the associated company in Russia. In relation to the associated company in Australia, the production of crude oil and LNG has already commenced at the existing facilities. The drilling of additional development wells will be performed over the project life according to the drilling program of the project. |
*3 | The proved gas reserves are restricted to those volumes that are related to firm sales commitments. |
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TABLE 5. | STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES |
1) | Standardized Measure of Discounted Future Net Cash Flows |
Millions of Yen | ||||||||||||||||||||
Consolidated Companies | Associated Companies | |||||||||||||||||||
Oceania | Middle East | Oceania | Others | Worldwide | ||||||||||||||||
At March 31, 2005: | ||||||||||||||||||||
Future Cash Inflows from Production | ¥ | 206,903 | ¥ | 180,308 | ¥ | 392,005 | ¥ | 1,021,275 | ¥ | 1,800,491 | ||||||||||
Future Production Cost | (39,241 | ) | (20,760 | ) | (161,141 | ) | (240,064 | ) | (461,206 | ) | ||||||||||
Future Development Cost | (42,915 | ) | (9,467 | ) | (98,020 | ) | (267,650 | ) | (418,052 | ) | ||||||||||
Future Income Taxes | (37,675 | ) | (80,860 | ) | (62,292 | ) | (141,239 | ) | (322,066 | ) | ||||||||||
Undiscounted Future Net Cash Flows | 87,072 | 69,221 | 70,552 | 372,322 | 599,167 | |||||||||||||||
10% Annual Discount for Timing of Estimated Cash Flows | (35,103 | ) | (27,902 | ) | (28,197 | ) | (275,684 | ) | (366,886 | ) | ||||||||||
Standardized Measure of Discounted Future Net Cash Flows | ¥ | 51,969 | ¥ | 41,319 | ¥ | 42,355 | ¥ | 96,638 | ¥ | 232,281 | ||||||||||
At March 31, 2004: | ||||||||||||||||||||
Future Cash Inflows from Production | ¥ | 36,333 | ¥ | 138,382 | ¥ | 382,405 | ¥ | 656,697 | ¥ | 1,213,817 | ||||||||||
Future Production Cost | (20,177 | ) | (20,641 | ) | (226,059 | ) | (145,972 | ) | (412,849 | ) | ||||||||||
Future Development Cost | (5,140 | ) | (9,067 | ) | (4,850 | ) | (228,608 | ) | (247,665 | ) | ||||||||||
Future Income Taxes | (2,085 | ) | (58,820 | ) | (51,950 | ) | (98,338 | ) | (211,193 | ) | ||||||||||
Undiscounted Future Net Cash Flows | 8,931 | 49,854 | 99,546 | 183,779 | 342,110 | |||||||||||||||
10% Annual Discount for Timing of Estimated Cash Flows | (1,539 | ) | (21,446 | ) | (39,289 | ) | (211,595 | ) | (273,869 | ) | ||||||||||
Standardized Measure of Discounted Future Net Cash Flows | ¥ | 7,392 | ¥ | 28,408 | ¥ | 60,257 | ¥ | (27,816 | ) | ¥ | 68,241 | |||||||||
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Millions of Yen | ||||||||||||||||||||
Consolidated Companies | Associated Companies | |||||||||||||||||||
Oceania | Middle East | Oceania | Others | Worldwide | ||||||||||||||||
At March 31, 2003: | ||||||||||||||||||||
Future Cash Inflows from Production | ¥ | 51,459 | ¥ | 124,006 | ¥ | 795,677 | ¥ | 307,554 | ¥ | 1,278,696 | ||||||||||
Future Production Cost | (21,526 | ) | (21,462 | ) | (348,748 | ) | (76,675 | ) | (468,411 | ) | ||||||||||
Future Development Cost | (6,246 | ) | (10,206 | ) | (15,476 | ) | (41,685 | ) | (73,613 | ) | ||||||||||
Future Income Taxes | (7,773 | ) | (50,141 | ) | (119,352 | ) | (60,375 | ) | (237,641 | ) | ||||||||||
Undiscounted Future Net Cash Flows | 15,914 | 42,197 | 312,101 | 128,819 | 499,031 | |||||||||||||||
10% Annual Discount for Timing of Estimated Cash Flows | (5,774 | ) | (18,320 | ) | (191,033 | ) | (67,421 | ) | (282,548 | ) | ||||||||||
Standardized Measure of Discounted Future Net Cash Flows | ¥ | 10,140 | ¥ | 23,877 | ¥ | 121,068 | ¥ | 61,398 | ¥ | 216,483 | ||||||||||
2) | Details of Changes for the Year |
Millions of Yen | |||||||||||||||||||||||||||||||||||||
Consolidated Companies | Associated Companies | Worldwide | |||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||||||
Present Value at April 1 | ¥ | 35,800 | ¥ | 34,017 | ¥ | 8,951 | ¥ | 32,441 | ¥ | 182,466 | ¥ | 125,565 | ¥ | 68,241 | ¥ | 216,483 | ¥ | 134,516 | |||||||||||||||||||
Sales/ Transfers of Oil and | |||||||||||||||||||||||||||||||||||||
Gas Produced, Net of Production Costs | (16,282 | ) | (12,046 | ) | (12,256 | ) | (50,417 | ) | (38,998 | ) | (36,727 | ) | (66,699 | ) | (51,044 | ) | (48,983 | ) | |||||||||||||||||||
Development Costs Incurred | 22,375 | 10,259 | 5,807 | 96,896 | 61,160 | 22,593 | 119,271 | 71,419 | 28,400 | ||||||||||||||||||||||||||||
Purchases of Reserves in Place | 23,150 | — | 24,635 | 1,578 | 1,894 | — | 24,728 | 1,894 | 24,635 | ||||||||||||||||||||||||||||
Extensions and Discoveries | 11,117 | 16,746 | — | 124,122 | 119,609 | — | 135,239 | 136,355 | — | ||||||||||||||||||||||||||||
Net Changes in Prices, Development and Production Cost | 23,033 | (2,475 | ) | 7,156 | (37,454 | ) | (253,034 | ) | (4,650 | ) | (14,421 | ) | (255,509 | ) | 2,506 | ||||||||||||||||||||||
Revisions of Previous Quantity*1 | — | (2,837 | ) | — | (33,933 | ) | (37,158 | ) | 64,001 | (33,933 | ) | (39,995 | ) | 64,001 | |||||||||||||||||||||||
Accretion of Discount | 3,580 | 3,402 | 895 | 3,244 | 18,247 | 12,557 | 6,824 | 21,649 | 13,452 | ||||||||||||||||||||||||||||
Net Changes in Income Taxes | (11,387 | ) | (137 | ) | (1,127 | ) | 1,839 | 29,126 | (6,076 | ) | (9,548 | ) | 28,989 | (7,203 | ) | ||||||||||||||||||||||
Others*2 | 1,902 | (11,129 | ) | (44 | ) | 677 | (50,871 | ) | 5,203 | 2,579 | (62,000 | ) | 5,159 | ||||||||||||||||||||||||
Net Changes for the Year | 57,488 | 1,783 | 25,066 | 106,552 | (150,025 | ) | 56,901 | 164,040 | (148,242 | ) | 81,967 | ||||||||||||||||||||||||||
Present Value at March 31 | ¥ | 93,288 | ¥ | 35,800 | ¥ | 34,017 | ¥ | 138,993 | ¥ | 32,441 | ¥ | 182,466 | ¥ | 232,281 | ¥ | 68,241 | ¥ | 216,483 | |||||||||||||||||||
*1 | Includes amounts resulting from changes in the timing of production. |
*2 | Main portion of “Others” is foreign currency translation adjustments. |
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MITSUI & CO., LTD. | ||||
(Registrant) | ||||
Date: September 26, 2005 | by | |||
/s/ Kazuya Imai | ||||
Kazuya Imai Senior Executive Managing Officer and Chief Financial Officer |
Table of Contents
Exhibit | ||||
Number | Document | |||
1 | .1 | The Articles of Incorporation of Mitsui & Co., Ltd., as of June 24, 2005 (English-language translation). | ||
1 | .2* | The Share Handling Regulation of Mitsui & Co., Ltd., as amended on June 24, 2004 (English-language translation). | ||
1 | .3* | The Rules of the Board of Directors of Mitsui & Co., Ltd., as amended on April 1, 2004 (English-language translation). | ||
1 | .4 | The Rules of the Board of Corporate Auditors of Mitsui & Co., Ltd., as amended on September 8, 2004 (English-language translation). | ||
2 | .1** | Deposit Agreement, dated October 1, 1982 among Mitsui & Co., Ltd., Citibank, N.A., and holders of ADRs and European Depositary Receipts. | ||
8 | .1 | List of Subsidiaries of Mitsui & Co., Ltd. | ||
11 | .1 | Code of Ethics for Senior Financial Officers and Professionals. | ||
11 | .2 | Business Conduct Guidelines for Employees and Officers of Mitsui & Co., Ltd. | ||
12 | .1 | Certification of the principal executive officer of Mitsui & Co., Ltd. required by Rule 13a-14(a). | ||
12 | .2 | Certification of the principal financial officer of Mitsui & Co., Ltd. required by Rule 13a-14(a). | ||
13 | .1 | Certification required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. |
* | Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 0-9929) filed on September 30, 2004. |
** | Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 0-9929) filed on September 27, 2002. |