Mitsubishi Corporation

Earnings Release

FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MARCH 31, 1999
(Mitsubishi Corporation and subsidiaries based on US GAAP)

1. Trading transactions and income

  Total trading transactions Operating income Net income
For the year ended
March 31, 1999
March 31, 1998
Millions of Yen
13,700,556
15,825,653
Millions of Yen
28,130
51,028
Millions of Yen
31,186
47,636
  Net income
per share
Net income
per share
(diluted basis)
Return on equity
For the year ended
March 31, 1999
March 31, 1998
Yen
19.90
30.40
Yen
-
-
%
3.2
4.5

2. Assets and shareholders' equity

  Total assets Shareholders'
equity
Shareholders' equity
to total assets
Shareholders' equity
per share
For the year ended
March 31, 1999
March 31, 1998
Millions of Yen
8,843,388
9,522,309
Millions of Yen
949,514
1,009,383
%
10.7
10.6
Yen
605.88
644.08

3. Projections for the year ending March 31, 2000

  Total trading
transactions
Net income
For the six months ending
September 30, 1999
For the year ending
March 31, 2000
Millions of Yen
6,300,000
 
13,200,000
Millions of Yen
8,000

20,000

(Forecast of Net income per share for the year ending March 31, 2000 : 12.76 Yen)

4. Number of consolidated subsidiaries : 433
    Number of affiliated companies accounted for by equity method : 181

The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America.

Mitsubishi Corporation and subsidiaries
STATEMENTS OF CONSOLIDATED INCOME (US GAAP)
Years ended March 31, 1999 and 1998

  Millions of yen Millions of
U.S. dollars
1999 1998 Increase or
[-]decrease
1999

Total trading transactions

13,700,556

15,825,653

-2,125,097
%
-13.4

116,106

Gross trading profit

582,938

588,225

-5,287

-0.9

4,940
Gross profit ratio 4.25% 3.72%      
Selling, general and administrative expenses (527,509) (515,067) -12,442 2.4 (4,471)
Provision for doubtful receivables (27,299) (22,130) -5,169 / (231)
Operating income 28,130 51,028 -22,898 -44.9 238
Other income (expenses) :          
Interest expense - net (20,060) (14,385) -5,675 39.5 (170)
Dividends 22,994 28,230 -5,236 -18.5 195
Gain (loss) on marketable securities and investments - net 3,752 (3,026) 6,778 / 32
Gain (loss) on property and equipment - net 3,217 6,179 -2,962 / 27
Other (4,125) (4,791) 666 / (35)
Other income - net 5,778 12,207 -6,429 / 49
Income from consolidated operations before income taxes 33,908 63,235 -29,327 -46.4 287
Income taxes:          
Current (35,982) (41,146) 5,164 / (305)
Deferred 15,101 7,896 7,205 / 128
Total (20,881) (33,250) 12,369 / (177)
Income from consolidated operations 13,027 29,985 -16,958 -56.6 110
Equity in earnings of affiliated companies - net
(less applicable income taxes)
18,159 17,651 508 2.9 154
Net income 31,186 47,636 -16,450 -34.5 264

(1)The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America.

(2)The U.S. dollar amounts represent translations, for convenience, of yen amounts at the rate of JPY 118 =$1.

(3)Mitsubishi Corporation adopted SFAS No.130 "Reporting Comprehensive Income" in 1998. The company's comprehensive income comprises net income plus other comprehensive income representing changes in net unrealized gains on securities available for sale, and foreign currency translation and other adjustments.
Total comprehensive loss for the years ended March 31,1999 and 1998 was 47,332 million yen ($401million) and 77,665 million yen, respectively.

Mitsubishi Corporation and subsidiaries
CONSOLIDATED BALANCE SHEETS (US GAAP)
March 31, 1999 and 1998

ASSETS Millions of yen Millions of
U.S. dollars
1999 1998 Increase or
[-]decrease
1999
Current assets:        
Cash 83,525 80,765 2,760 708
Time deposits 1,154,670 1,109,805 44,865 9,786
Short-term investments 380,213 514,546 -134,333 3,222
Receivables-trade:        
Notes and loans 583,019 716,267 -133,248 4,941
Accounts 1,620,642 1,822,506 -201,864 13,734
Affiliated companies 308,087 334,365 -26,278 2,611
Allowance for doubtful receivables (29,300) (34,031) 4,731 (248)
Inventories 453,275 491,983 -38,708 3,841
Advance payments to suppliers 224,568 284,492 -59,924 1,903
Other current assets 73,408 92,418 -19,010 622
Total current assets 4,852,107 5,413,116 -561,009 41,120
Investments and non-current receivables:        
Investments in and advances to affiliated companies 451,575 463,929 -12,354 3,827
Other investments 1,547,374 1,778,071 -230,697 13,113
Non-current notes, loans and accounts receivable-trade 1,085,606 1,095,743 -10,137 9,200
Allowance for doubtful receivables (119,770) (105,664) -14,106 (1,015)
Total investments and non-current receivables 2,964,785 3,232,079 -267,294 25,125
Property and equipment-At cost less accumulated depreciation 876,444 718,825 157,619 7,427
Other assets 150,052 158,289 -8,237 1,272
Total 8,843,388 9,522,309 -678,921 74,944
 
LIABILITIES AND SHAREHOLDERS' EQUITY Millions of yen Millions of
U.S. dollars
1999 1998 Increase or
[-]decrease
1999
Current liabilities:        
Short-term debt 1,845,842 2,314,957 -469,115 15,643
Current maturities of long-term debt 459,056 481,077 -22,021 3,890
Payables-trade:        
Notes and acceptances 311,438 372,419 -60,981 2,639
Accounts 1,464,234 1,568,285 -104,051 12,409
Affiliated companies 61,024 80,701 -19,677 517
Accrued income taxes 17,059 19,160 -2,101 145
Other accrued expenses 68,697 73,800 -5,103 582
Advances from customers 145,050 208,623 -63,573 1,229
Other current liabilities 85,408 92,424 -7,016 724
Total current liabilities 4,457,808 5,211,446 -753,638 37,778
Long-term debt, less current maturities 3,078,621 2,893,111 185,510 26,090
Accrued pension and severance liabilities 132,170 134,149 -1,979 1,120
Deferred income taxes 165,348 225,749 -60,401 1,401
Minority interests 59,927 48,471 11,456 508
Shareholders' equity:        
Common stock 126,609 126,609 - 1,073
Capital surplus 179,491 179,491 - 1,521
Retained earnings:        
Appropriated for legal reserve 32,346 30,815 1,531 274
Unappropriated 684,425 667,307 17,118 5,800
Accumulated other comprehensive income:        
Net unrealized gains on securities available for sale 156,290 182,418 -26,128 1,325
Foreign currency translation and other adjustments (229,647) (177,257) -52,390 (1,946)
Total shareholders' equity 949,514 1,009,383 -59,869 8,047
Total 8,843,388 9,522,309 -678,921 74,944

The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America.

Mitsubishi Corporation and subsidiaries
SEGMENT INFORMATION (US GAAP)
Years ended March 31, 1999 and 1998

In 1999, Mitsubishi Corporation adopted SFAS No.131 "Disclosures about Segments of an Enterprise and Related Information". It requires the company to report information about operating segments in financial statements. Operating segments are defined as components of an enterprise about which separate information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The companies' business activities are managed internally by commodity group for which the executive management also decides how to allocate resources and assess performance. The companies' operating segments information for the years ended March 31, 1999 and 1998 were as follows;

Year ended March 31,1999

[SEGMENT INFORMATION BY COMMODITIES]

  Millions of yen
Information
Systems
& Services
Fuels Metals Machinery Chemicals Living
Essentials
Total Eliminations
or
Unallocated
Consolidated
Trading
transactions:
                 
Outside
customers
709,957 1,953,811 2,967,373 2,893,133 1,321,161 3,770,420 13,615,855 84,701 13,700,556
Inter-
segment
575 24,448 85,972 4,945 1,802 2,455 120,197 (120,197) -
Total 710,532 1,978,259 3,053,345 2,898,078 1,322,963 3,772,875 13,736,052 (35,496) 13,700,556
Net
income
1,909 9,613 1,044 2,925 2,453 10,075 28,019 3,167 31,186
Segment
assets
330,098 571,083 1,043,847 1,968,032 577,470 1,223,809 5,714,339 3,129,049 8,843,388
Depreciation
and
amortization
2,958 8,427 7,473 10,399 8,157 12,069 49,483 16,216 65,699
Capital
expenditures
for
long-lived
segment
assets
42,380 22,014 13,324 10,675 32,779 18,160 139,332 35,401 174,733

[GEOGRAPHIC INFORMATION]

  Millions of yen
Trading Transactions
Japan 11,381,171
U.S.A. 936,400
United Kingdom 627,881
Others 755,104
Total 13,700,556
  Millions of yen
Long-lived Assets
Japan 603,843
U.S.A. 123,772
Others 235,393
Total 963,008

Year ended March 31,1999

[SEGMENT INFORMATION BY COMMODITIES]

  Millions of U.S. dollars
Information
Systems
& Services
Fuels Metals Machinery Chemicals Living
Essentials
Total Eliminations
or
Unallocated
Consolidated
Trading
transactions:
                 
Outside
customers
6,016 16,558 25,147 24,518 11,196 31,953 115,388 718 116,106
Inter-
segment
5 207 729 42 15 21 1,019 (1,019) -
Total 6,021 16,765 25,876 24,560 11,211 31,974 116,407 (301) 116,106
Net
income
16 81 9 25 21 85 237 27 264
Segment
assets
2,798 4,840 8,846 16,678 4,894 10,371 48,427 26,517 74,944
Depreciation
and
amortization
25 72 63 88 69 102 419 138 557
Capital
expenditures
for
long-lived
segment
assets
359 187 113 90 278 154 1,181 300 1,481

[GEOGRAPHIC INFORMATION]

  Millions of U.S. dollars
Trading Transactions
Japan 96,451
U.S.A. 7,935
United Kingdom 5,321
Others 6,399
Total 116,106
  Millions of U.S. dollars
Long-lived Assets
Japan 5,117
U.S.A. 1,049
Others 1,995
Total 8,161

Year ended March 31,1998

[SEGMENT INFORMATION BY COMMODITIES]

  Millions of yen
Information
Systems
& Services
Fuels Metals Machinery Chemicals Living
Essentials
Total Eliminations
or
Unallocated
Consolidated
Trading
transactions:
                 
Outside
customers
642,712 2,511,045 3,938,550 3,347,623 1,467,617 3,951,169 15,858,716 (33,063) 15,825,653
Inter-
segment
973 40,088 101,549 15,511 1,252 6,191 165,564 (165,564) -
Total 643,685 2,551,133 4,040,099 3,363,134 1,468,869 3,957,360 16,024,280 (198,627) 15,825,653
Net
income
4,427 16,154 8,781 24,345 1,544 5,686 60,937 (13,301) 47,636
Segment
assets
273,925 589,003 1,148,237 1,901,323 626,174 1,219,253 5,757,915 3,764,394 9,522,309
Depreciation
and
amortization
2,020 7,318 6,053 10,922 8,659 9,008 43,980 19,796 63,776
Capital
expenditures
for
long-lived
segment
assets
21,519 5,789 9,696 13,847 17,941 25,459 94,251 71,368 165,619

[GEOGRAPHIC INFORMATION]

  Millions of yen
Trading Transactions
Japan 12,673,226
United Kingdom 1,282,908
U.S.A. 993,424
Others 876,095
Total 15,825,653
  Millions of yen
Long-lived Assets
Japan 527,791
U.S.A. 115,865
Others 167,036
Total 810,692
  1. "Eliminations or Unallocated" include income and expense that are not allocated to the individual operating segments.
  2. Unallocated common assets included in the column of "Eliminations or Unallocated" for the years ended March 31, 1999 and 1998 were 3,421,458 million yen ($28,995 million) and 4,052,293 million yen, respectively. The assets mainly consist of cash, time deposits and securities for financial activities.
  3. Trading transactions are attributed to geographic areas based on the locations of the assets producing revenues.

MITSUBISHI CORPORATION REPORTS
DECLINE IN PERFORMANCE
Further Cost Reduction Support Plans for Earnings Recovery

TOKYO, May 20, 1999.....Mitsubishi Corporation today announced consolidated results, using accounting principles generally accepted in the United States, for the year ended March 31,1999.

Commenting on the performance for the year, Mr. Koji Furukawa, executive vice president said, "Our stable source of earnings in the natural resources and retail areas, where we have strong market shares and competitive advantage, has supported our consolidated performance. However the overall result was a decline in net sales and gross trading profit, reflecting the state of the Japanese economy and conditions in Asia. Management is taking further steps to change the corporate structure to strengthen competitive advantage not only by continuing to reduce costs but also encouraging the selective shift of corporate resources. Thus when the economy recovers, we expect a sharp rebound in net income within two years to a level, around 100 billion yen, that management finds more acceptable."

Results for March 1999 fiscal year

The 2,125.1 billion yen decrease, to 13.700.6 billion yen, in total trading transactions was due primarily to declines in both the domestic market and in international markets, principally Asia where demand for capital goods fell sharply.

Gross trading profit declined 0.9% to 582.9 billion yen. The growing profits of consolidated operations, both domestic and international, was not sufficient to offset the decline for the parent company. From another perspective, the 5.3 billion yen decline was the net result of increases for living essentials and metals and declines for machinery and chemicals.

Selling, general and administrative expenses rose 2.4%, to 527.5 billion yen, with higher expenses incurred by consolidated subsidiaries as their revenues expanded.

The provision for doubtful receivables was 27.3 billion yen for the current period and 22.1 billion yen for the previous year.

Operating income declined 44.9% to 28.1 billion yen.

Among other income and expenses, there was an increase in net interest expenses and declines for dividend income and gains on property and equipment. These were offset in part by higher gains on marketable securities and investments.

Income from consolidated operations before income taxes declined 46.4% to 33.9 billion yen.

Equity in earnings of affiliated operations was 18.2 billion yen with contributions mainly from LNG projects.

Net income declined 34.5% to 31.2 billion yen and net income per share was 19.90 yen, compared with 30.40 yen the previous year.

For the fiscal year ending in March 2000, management foresees a relatively unchanged environment, with adverse conditions in Japan and Asia. The forecasts are net income of 20 billion yen, with interim net income of 8 billion yen, and total trading transactions of 13.2 trillion yen, with an interim level of 6.3 trillion yen. Net income per share is forecast at 12.76 yen.

Prospects for March 2000 and 2001 fiscal years

The projected decline in net income for the current fiscal year is due to steps being taken by the parent company to significantly reduce compensation expenses and set the stage for a sharp upturn in the March 2001 year when net income is forecast to reach 100 billion yen.

During the next year the parent company will abolish early retirement allowances as part of the early retirement program that is projected to cost 50 billion yen and to reduce the number of employees over two years by 1,000 from the current 8,000. Along with the continuing effort to eliminate seniority system, compensation costs will also become more flexible, with the introduction of a bonus system for managers and employees that links their bonuses to the operating performance of the businesses for which they are responsible.

Over the next two years, management also projects an upturn in the profitability of resource development projects as the prices of LNG, nonferrous metals and steel-related raw materials are expected to recover from their currently depressed levels. We also foresee a renewed stream of orders for plants and capital goods from Asia. An upturn in the market for motor vehicles in ASEAN and Europe should also contribute to a rebound in earnings. This period should also see rapid growth for the aerospace sector, including rockets and digital satellite information. A sharp rebound in these areas will be strengthened by finesse and muscle created from combined advantages, that is, expanded customer networks and applications for finance and electronic commerce, and new logistic systems relying on continued advances in information technology.

Given the outlook for performance for the next two years, management anticipates that it will maintain annual dividends at 8 yen per share.

These forecasts are based on current expectations that are subject to risks and uncertainties. These forecasts are forward-looking and actual results may differ materially.

# # #

For further information contact:

Mitsubishi Corporation
Investor Relations Office
Yoshihiro Kuroi (Mr.)
Phone 81-3-3210-8580
Fax 81-3-3210-8583
e-mail ir@tk.mitsubishi.co.jp

PAGE TOP