~ Mitsubishi Corporation Annual Report 1991

~ Mitsubishi CorporationAnnual Report 1991For the Year Ended March 31, 1991

Finandal HighlightsFor the years ended March 31

Total trading transacnons ..

Gross trading profit ..

Net income ..

itr.ubishi Corporation and subsldianes

Thousands ofMillions of yen United States dollars

1991 1990 1989 1991

n9,726,536 Y18,522,931 ¥l5,643,815 $139,904,511

582,136 482,914 386,258 4,128,624

65,290 60,356 46,131 463,050

Per share (yen and cents):

et income . ¥40.86 Y37.82 ¥29.13 28.98t

8.00Cash dividends . ----- 9.00 7.00 5.67

Note: The u.s. dollar amounts represent translations,jor convenience, ofyen amounts at the rate of "1'141-$1.

Net Income per Common¥40.86

919089BB87

and CommonEquivalent Share

24

-12----0-

et Income ¥65.3

Billion

-f0 --- ----

20 --- --- ----- --

- - '- _. '----

N

o

B7 88 89 90 91

Gross Trading Profit¥582.1

Billion

0

- ---200

o87 88 90 91

1

Message from Management

In a challenging international environment,

Mitsubishi Corporation maintained its long

term investment strategies and for the second

consecutive year registered record levels of

revenues and earnings.

Yohei Mimura (left), Chairman, and Shinroku Morohashi, President

2

In a slowing international economic environment, Mitsubishi Corporation

worked toward business expansion and made investments in new areas

to secure long-term profitability.

During the Company's fiscal year ended March 31, 1991, the Japanese economy

recorded moderate growth. Signs of a slowdown emerged during the second half

of the year as private capital investment began to lose some of its earlier momentum,

in part because of higher interest rates. Overseas, the economies of the United

States and other industrialized countries also recorded slower rates of expansion.

To attain its long-term strategic objective of improving profitability, the Company

proceeded to implement a program of investments in a broad range of areas,

including natural resource development, manufacturing, services, consumer goods,

and technology, thereby making full use of its human and financial resources.

Examples of our commitment to natural resource development include the

Escondida copper mine in Chile, which recently began production, and our

plans for a number of other large-scale projects, such as the Cossack oil field

in Australia's North West Shelf area and an LNG project in Venezuela.

In manufacturing, the Company purchased a 50% equity interest in UCAR

Carbon Co., Inc., of the United States, a subsidiary of Union Carbide Corp.

Also, to assist American, European, and Japanese corporations with the devel

opment and implementation of their redeployment strategies, the Company has

invested in Phoenix Securities Limited, of the United Kingdom, thereby bolstering

its M&A advisory resources in Europe.

In anticipation of continued growth in domestic consumer spending, the

Company made additional downstream investments and took further steps

to strengthen its position in consumer goods related businesses.

Telecommunications services, a new area for the Company, remain a priority

for future development despite the suspension of communication service via

satellite by Space Communications Corporation, an affiliated company, due to

an anomaly in its SUPERBIRD satellite. Intensive efforts are being made to resume

3

4

service at an early date. Despite this setback, the listing of our affiliate Kentucky

Fried Chicken Japan Ltd. on the Second Section of the Tokyo Stock Exchange

during the fiscal year presents an excellent illustration of the success of our

long-term investment strategies.

Consolidated finandal results for the fiscal year ended March 31, 1991, showed

an 8.2% advance in net income and an 8.0% gain in net income per share.

The Company's total trading transactions rose 6.5%, to ¥19,727 billion

($139.9 billion). This gain was attributable to increases in domestic transactions,

especially those in precious metals, construction materials, and oil and petro

chemical products; expansion in export transactions, particularly for electric

power and chemical plants and automobiles; and higher imports of LNG and

other fuels. Accompanying the rise in total trading transactions, gross trading profit

advanced 20.5%, to ¥582 billion ($4.1 billion). The Company also reported

increased net gains in profits on marketable securities and investments, primarily

because of the listing of Kentucky Fried Chicken Japan.

To ensure the quality of assets, the Company made net additions to reserves,

especially for overseas receivables, including those in connection with the Gulf War.

Equity in earnings of affiliated companies rose 17.4%, to ¥21 billion

($146 million), reflecting the continued favorable performances of LNG

and consumer-related investments. As a result, net income advanced 8.2%,

to ¥65 billion ($463 million)-a record high-and net income per share was

up 8.0%, to ¥40.86 (28.98<t).

Forecasts indicate declining growth rates in Japan, continued diffi.culties in

the United States and other industrialized nations, and slower expansion in

the developing world. The Company will remain responsive to changes in the

operating environment and will proceed with the implementation of strategies

to achieve its long-term objectives.

Though major improvements in international economic conditions are not

expected, we will aim for further gains in performance by working closely with

the Company's subsidiaries and affiliates. We will respond to such international

trends as the development of market economies in the Soviet Union and Eastern

Europe and will cooperate in the postwar recovery of the Middle East.

While pursuing the development of business activities, the Company is

devoting increased attention to being a good corporate citizen, fulfilling its

responsibilities to international society and preserving the global environment.

June 27, 1991

Shinroku Morohashi

President

5

6

Continuing a Tradition ofCorporate Responsibility-Contributions to the Global Community and the Environment

Mitsubishi Corporation has been concerned with its responsibilities toward society since

its early years. Today, Mitsubishi Corporation, as a good corporate citizen, is renewing its

long-standing commitment to building better communities, at home and abroad, and to

protecting and preserving the environment.

In 1934, the fundamental beliefs of Koyata Iwasaki, the first chairman of the Company,

were summarized in three corporate principles: Corporate Responsibility to Society,

Integrity and Fairness, and International Understanding through Trade.

In the 1970s and 1980s, Mitsubishi Corporation embarked on a program of contribut

ing to public welfare. In 1973, the Company set up the Public Affairs Department to make

contributions to society under the general themes of life, environment, heart, and welfare.

The department has continued its activities to this day. For example, under the theme

of "heart;' the department has sponsored outdoor Nature Workshops for single-parent

families and for children who have lost their parents. These workshops are staffed by

Company employees, who provide their time on a voluntary basis. Over the 17 years

since the inception of this program, about 14,000 persons have taken part.

In 1990, Mitsubishi Corporation set up the Environmental Affairs Department to

respond with specific programs, including reforestation projects, to formulate

and implement practical solutions to global environmental problems.

For Mitsubishi Corporation, protecting and preserving the

environment is a task of prime importance. Among

the many activities carried out by the Company

is an experimental rain forest restoration

project in Sarawak, MalaYSia, which is being

conducted in cooperation with Yokohama

National University and Malaysia's

University of Agriculture.

In 1991, Mitsubishi Corporation establis~ed a new committee to oversee its philan

thropic activities and implement a broader and more active set of programs.

To provide a corporate-wide vehicle for the Company's activities that contribute to soci

ety, the Committee for Philanthropy was formed in March 1991. Subsequent discussions

of this committee have led the Company to begin three new activities, namely, awarding

scholarships to foreign students; supporting local community programs, at home and

overseas, to contribute to social welfare; and providing information and encouragement

for Company staff to participate in volunteer programs.

The Company is planning to assume a leadership role in international programs for envi

ronmental preservation in the years ahead. For example, in 1992, the United Nations will

hold a summit conference, UNCED '92, on the global environment. Shinroku Morohashi,

president of Mitsubishi Corporation, will work as an active member of the recently

organized international Business Council for Sustainable Development, which is providing

support for this conference.

Information Systems

and Services

Fuels Metals Machinery

•Collaborative agreement

concluded with the General •Electric Company, of the Decision made to move Major orders for electric

United States, for cooperation ahead with Venezuelan • power generating plants

in the Latin American mar- LNG project (June 1990) Thai joint venture- received from Indonesia

ket for medical electronic Nas Toa (Thailand) (July 1990) and Mexico

equipment (May 1990) Co., Ud.-established for (September 1990)

•Contract signed and manufacturing stainless

marketing began for steel pipe (April 1990) •Electric appliance service ORIMULSION™, a newly Decision made to parti-

center established in Poland developed bitumen-in-water cipate in a town develop-

to enhance servicing capa- emulsion fuel from • ment project near KansaiVenezuela (July 1990) Triland Metals USA, Inc.,

bilities (October 1990)established with Triland

International Airport

Metals Ltd., of the United(December 1990)

• • Kingdom, to expand metalsInitial discussions com-Electronic Devices Infor- futures transactions

mation Service Co., Ud.menced concerning the

(December 1990) Sales activities began in

(EllS-NET), which willdevelopment of Cossack oil

Indonesia for a new com-

assist domestic and overseasfield at Australia's North

mercial vehicle developedWest Shelf Project site

semiconductor and elec-(October 1990) • jointly with Suzuki Motor

tronics manufacturers, set Production began at Corporation (January 1991)

up (November 1990) Escondida copper mine

• in Chile and first ship-

Fifty percent equity interest ments arrived in Japanpurchased in UCAR Carbon (February 1991)

Subsidiary established for

Space Communications Co., Inc., of the United conducting auctions of vin-

Corporation temporarily States, the former carbon tage cars, successfully held

suspended operations due products division of its first auction at Makuhari

to an anomaly in its Union Carbide Corp. Messe convention center,

SUPERBIRD satellite (February 1991) in Chiba Prefecture

(December 1990) (March 1991)

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Information Systems and Services

• OutlookThe Information Systems and Services Group has a strong

base for developing a leading position in the information

industry, which will become a strategically important sector

in the 21st century. This base consists of the distribution

and production capabilities of the Company and its sub

sidiaries as well as the Company's network of global alli

ances with leading companies both in Japan and overseas.

• Operating Highlights

Parallel advances in iriformation, communications, and

electronics technologies have resulted in businesses making

increasing use of information-based products and services.

Moreover, the type and range of industries utilizing these

products and services is steadily expanding, and these

trends are attracting a continuing stream of companies

from various industries to enter the ever-expanding market

for iriformation systems and services.

•aJorDevelop

Scope ofOperatiand

Note: Trading volume for the Information Systems and Services Groupis included in figures for the Machinery Group.

Total Trac

Domestil

Import

Offshore

Export

Gross Tra'

SharTran

• Business Areas • Busine:

Consumer and Medical Electronics; Semiconductor and Computer

Systems; Telecommunications and Multimedia Systems and Services;

Aerospace

Petroleum;

Orinoco TaJ

10 11

Fuels


The Gulf crisis again exemplified the world's dependence

on the Middle East for crude oil. Despite these circum

stances, the Fuels Group is continuing to expand its crude

oil and petroleum product transactions, taking advantage

of close, long-standing ties with oil-producing nations.

• Outlook

In line with growing environmental concerns, the group

is continuing to plan and implement policies to expand its

transactions in LNG, one of the cleanest sources of energy.

The group is working to expand sales offuels for cogenera

tion systems, which provide enhanced efficiency in electric

power generation. To diversify energy sources, the group

also plans to expand sales of ORIMULSION™, the trade

name for a newly developed bitumen-in-water emulsion

fuel from Venezuela.

Metals


The environment for the Metals Group's activities

was characterized by strong domestic demand for public

works construction, which, in tum, sustained production

and sales of related materials at high levels. Important

developments included the recovery of annual crude steel

production in Japan to the nO-million-ton level.

.Outlook

Top priorities are to increase the value added of services,

including improvements in distribution services for domestic

users of steel products; to expand export share through

upgrading offunctions; to assist customers with inter

nationalizing their operations; and to develop additional

raw materials sources. Diversification of operations is also

planned through expanded metals dealing activities, prin

cipally in precious metals, and the group is upgrading its

computer systems to improve services to steel product users.

1991 1991

Total Trading Transactions (Billion V): ¥3,600 Total Trading Transactions (Billion V): ¥5,308

Domestic 503 Domestic 2,736

Import 1,796 Import 624

Offshore 1,239 Offshore 1,679

Export 62 Export 269

Gross Trading Profit (Billion Y) 44 Gross Trading Profit (Billion Y) 103

Share of Total TradingTransactions: 18.3%

• Business Areas

Share of Gross TradingProfit: 7.6%


• Business Areas


Petroleum; Petroleum Products; Gas; Carbon Materials and Products;

Orinoco Tar

11

Raw Materials for Steel; Steaming Coal; Semifinished Products; Steel

Materials; Specialty Steel; Fabricated Steel Structures; Nonferrous

Metals; Nonferrous Metal Products; Nuclear Fuel and Components

Machinery


Demand remained strong both in japan and overseas,

and conditions in virtually all the markets served by the

Machinery Group were strong, namely, industrial capital

goods, such as large-scale plants, other durable goods,

including automobiles, and real estate development.

The group took full advantage of the favorable market

environment to expand its transactions.

• OutlookThe operating environment requires careful monitoring be-

cause of such difficulties as the impact of the US. recession

on Southeast Asia, the effects of the aftermath of the Gulf

War on the Middle East, and the repercussions of high

interest rates and currency fluctuations in the japanese

economy. In spite of these circumstances, the group has

set the objectives of maintaining the scope of present

operations and expanding overall transactions.

Foods


The environment for japan's food industry is undergoing

major change. Important developments include the inter

nationalization of companies in the industry and relaxation

of restrictions on imports, which are occurring in parallel

with greater diversity in the tastes and requirements of

consumers, an increasingly serious shortage of labor;

and rises in the costs of distribution.

• OutlookThe Foods Group is responding aggressively to these trends

by building a more efficient, comprehensive organizational

structure that comprises three major departments: basic

foodstuffs, processed foods, and fresh produce. This new

structure covers all aspects of the industry, from production

to restaurant management. The group is also expanding its

horizons to provide not only products but also services and

marketing iriformation.

1991 1991

Total Trading Transactions (Billion Y): ¥5,383 Total Trading Transactions (Billion Y): ¥2,334

Domestic 2,167 Domestic 1,332

Import 250 Import 428

Offshore 784 Offshore 560

Export 2,182 Export 14

Gross Trading Profit (Billion Y) 165 Gross Trading Profit (Billion Y) 119


• Business Areas



• Business Areas


Plant and Machinery for Power Generation, Electricity, Oil/Gas/

Chemical, Steel/Cement, and Environmental Protection; Ships and

Transportation; Automobiles; Industrial, Agricultural, Construction,

and Other General Machinery; Project Development and Construction

Grains and Agricultural Products; Sweeteners, Oils, and Fats; Feed

stuffs; Meat and Livestock; Marine Products; Fresh and Frozen Foods;

Canned Foods and Beverages; Dairy Foods and Processed Foods

12

Chemicals


Major trends in the chemical industry include plans

for joint ventures in state-of-the-art sectors and the

stabilization of profits through production adjustments

and rationalization. In parallel, as a consequence of the

rapid development of "new chemistry," the scope and

market size of the chemical industry is expanding.

• OutlookThe Chemicals Group is pursuing a policy of investing

in profitable projects, some located at or near sources of

raw materials, some situated close to centers of product

demand, and others based on advanced technologies. At

the same time, the group is strengthening its international

chemical product distribution operations and expanding

its transactions in high-value-added specialty chemicals,

an area where technological advances are expected.

Textiles and General Merchandise


Of the industries served by the Textiles and General

Merchandise Group, the textile industry experienced

stagnation because of difficult market conditions for natural

fibers and the impact of the Gulf War Problems of excess

capacity emerged in the lumber and paper industries, leading

to adjustments. Market conditions in general merchandise,

however, were strong because of the continuing boom in

construction and growth in demand for consumer goods.

• OutlookAlthough sales of luxury goods are expected to slow, further

steady growth in apparel is anticipated. The lumber and

paper industries will move into a period of adjustment, but

this will be a time for the group to consolidate for future

growth. The environment for general merchandise will remain

favorable, and the group will aim to broaden its participa

tion in consumer product related projects.

1991 1991

Total Trading Transactions (Billion V): n,655 Total Trading Transactions (Billion V): n,447

Domestic 866 Domestic 803

Import 152 Import 341

Offshore 439 Offshore 96

Export 198 Export 207

Gross Trading Profit (Billion ¥) 75 Gross Trading Profit (Billion ¥) 76


• Business Areas



• Business Areas


Basic Chemicals; Plastics and High-Peiformance Chemicals;

Fine and Inorganic Chemicals

Made-Up Goods; Fabrics; Textile Raw Materials; Textiles for Industrial

Use; Pulp, Paper, and Packaging Materials; Wood, Wood Products,

and Construction Materials; Tires; Photosensitized Materials;

Beer Materials; Cigarettes

13

Foods Chemicals Textiles and General

Merchandise

Other Corporate

Activities

•Kentucky Fried Chicken

japan I1d. listed its shares Top management of the

on the Second Section of • Company and three other

the Tokyo Stock Exchange Capital investment made Mitsubishi companies met

(August 1990) in Confezzioni FG S.pA, with their counterparts in

• a prominent Italian apparelPolyester fiber manufac- the Daimler-Benz Group,

turing company set up inmanufacturer Uuly 1990) ofGermany, to discuss

• Pakistan as joint venture possible tie-up opportunitiesIndustrias Aliadas SA,

ofColombia, began manu- among japanese, Korean, (March, September 1990)

•facturing coffee extract for and Pakistani interests Group entered the

use in producing canned (April 1990) design business through

coffees and other products an agreement with the •(March 1991) Domus Academy, of Italy The Company announced

(September 1990) the founding of a firm to

Mitsubishi Shoji Plastics operate jack Nicklaus Golf

• Corp. began marketing Academies throughout japan

Manufacture of processed operations for plastics • (August 1990)

pork products began at the (April 1990) New company, Vals Co.,

plant of Indiana Packers I1d., established for mar-

Co., I1d., in the United keting of Coca-Cola brand •States (March 1991) • apparel (October 1990) The Company established

Four Mitsubishi companies an Investor Relations Office

purchased shares in Aristech to expand the Company's

• Chemical Corp., of the • shareholder baseS.M.IC. Company I1d., a

United States (july 1990)Plans moved forward for

(August 1990)Thai corporation, initiated construction of a large-

production of rice snacks scale pulp mill project

for export (April 1991) in Alberta, Canada

(january 1991)

Information Systems and Services

L4

• The Information Industry-Key Sector

in the 21st Century

The Information Systems and Services Group has

identified various high-technology industries that will

apply the basic electronics and information technol

ogies crucial to the 21st century. These industries in

clude information and telecommunications, electronic

equipment, aerospace, medical equipment, and new

media. The group views these industries from three

fundamental perspectives-hardware, software, and

services-and its objective is to take maximum advan

tage of the synergies among these three. Since the initial

three-year period of development following its estab

lishment in 1987, the group has steadily expanded

the scope of its operations. At the start of 1990, the

group reorganized and adopted a new five-year plan

to facilitate major expansion of its activities.

• Meeting the Competitive Challenge

To succeed in the intensely competitive high-technology

industries and expand operations, the basic policy

of ~he group is to establish and nurture specialized

subsidiaries and affiliates in strategic sectors. During

the fiscal year, three companies were established:

KK NETWORLD, Electronic Devices Information

Service Co., Ltd. (EllS-NET), and CMET INC.

TliM TECHNOLOGIES is expanding PCB production in Singapore.

In addition, existing subsidiaries and affiliates,

including ADVANCED SYSTEMS TECHNOLOGY INC.,

TECHNODIA CORPORATION, MEMORY-TECH

CORPORATION, and TriM TECHNOLOGIES (S)

PTE LTD, reported significant gains in performance.

Although the group's satellite communications services

were temporarily suspended, concerted efforts are

being made for an early resumption of activities.

• Developing Global Partnerships

In aerospace, household electronic appliances, and

medical electronic eqUipment-all of which are impor

tant contributors to Company performance-the group

is adopting aggressive policies to expand its activities.

Service center set up in Poland

These include a greater emphasis on sales of aircraft

and related equipment to both the public and private

sectors, the conclusion of a collaborative arrangement

with the General Electric Company and other new

partners, and the establishment of an electric

appliance service center in Poland, where economic

liberalization is creating new business opportunities.

Fuels

• Outbreak of the Gulf War

Oil supplies from Iraq and Kuwait were halted

following the Iraqi invasion of Kuwait and the sub

sequent Gulf War, but the Fuels Group made full use

of its long-standing and close relationships with other

oil-producing nations to almost fully make up for oil

supply shortages.

• Contract for New Fuel Signed

The group set up a project team in April 1990 for

marketing ORIMULSIONnl, the trade name for a newly

developed bitumen-in-water emulsion fuel consisting

of 70% bitumen obtained from Venezuela's Orinoco

region, 30% water, and a chemical additive. BITaR,

a subsidiary of PDVSA, the Venezuelan national oil

company, was set up in October 1988 as a vertically

integrated production and marketing company for

ORIMULSIONnl. The Company is introducing the

product to japan, the Far East, and Oceania under a

marketing agreement with BITaR signed in 1988. The

first contract was concluded in july 1990 with Kashima

Kita Electric Power Co. in japan.

• Major LNG Projects

The group is japan's top trader in fuel products, and

its leading product is LNG. A major project under

way is the joint promotion of LNG in Venezuela with

LNG is the group's principal product.

Lagoven, Shell, and Exxon. This project is scheduled

to begin providing 4.6 million tons of LNG annually

to users in the United States and elsewhere from the

late 1990s. In Australia, the group announced the

discovery of four new gas and oil sources in the area

covered by its LNG project. One of these, the Cossack

oil field, is expected to begin supplying 80,000 barrels

of crude oil per day in early 1993. In japan, the group

expanded its LNG customers to include medium-sized

gas utilities and is making plans for further domestic

market expansion.

• Acquisition of DCAR Carbon Shares

Group purchased 50% interest in UCAR Carbon

The group purchased a 50% interest in UCAR Carbon

Co., Inc., of the United States, the former carbon

products division of Union Carbide Corp. The com

pany will be managed jointly with Union Carbide and

provides an important base for expansion of carbon

products business.

15

16

Metals

• Expanding the Scope of Operations

The Metals Group is emphasizing expansion of im

ports of ferrous and nonferrous ores, metallurgical and

steaming coal, and other raw materials; domestic sales

of ferrous and nonferrous ingots and finished products;

and exports of steel products. In nonferrous metals,

major developments included expansion of aluminum

ingot imports to 2.65 million tons annually to meet

domestic demand in the construction and aluminum

can industries. The group is also actively participating

in overseas projects and is working to increase its off

shore transactions in markets outside Japan. Further,

to provide enhanced customer service, the group is

upgrading its information and software systems.

Me Visions Inc. established for audiovisual productions

• Operating Policies

The main objective of the group is to enhance all

aspects of performance, including the real volume

of transactions and profitability. The group's main

strategies for attaining this objective are responding

appropriately to expansion in domestic demand and

thereby raising profitability and expanding the group's

presence in the United States, Europe, and Asia,

including Japan. In domestic activities, the group

is endeavoring to upgrade and expand its sales and

processing centers and is responding aggressively

to the restructuring of the steel manufacturing sector.

To achieve further growth in Japan, the group is enhanc

ing its sales capabilities for new products. In overseas

activities, the group is participating in new raw materials

development projects and cooperating with Japanese

steel mills as they enter overseas markets. New projects

included the establishment of Nas Toa (Thailand)

Co., Ltd., with Japanese and Thai partners for the

manufacture of stainless steel pipe. To provide for

future development, the group is aggressively increas

ing its involvement in distribution channels abroad,

including the establishment of steel service centers.

• Promoting Nonferrous Operations

The group is placing emphasis on further developing

the Escondida copper mine in Chile, which began

production in November 1990, and on meeting

growing demand for copper raw materials.

To lay the base for future expansion, the group

is investing in sources of nonferrous ingots and in

product development and is upgrading its downstream

marketing capabilities in Japan.

Escondida copper mine began shipments

Machinery

• Major Plant Orders

Japan's industrial plant construction companies began

to receive a large number of inquiries in 1990, espe

cially from business interests in the Middle East and

Southeast Asia. Although communications regarding

inquiries from the Middle East were suspended due

to the Gulf War, the Machinery Group obtained orders

for several major electric power plants. One of these

was the Indonesia Gresik combined-cycle plant, which

will have a total output of 1,500 megawatts. Orders were

also received for two 350-megawatt plants in Mexico.

In the area of environmental protection, the group

obtained its first order for a desulfurization unit from

the Hong Kong Electric Company Ltd. and accepted

an order for a waste gas recovery unit for use at the

Codelco copper mine in Chile. The group worked

to further bolster its capabilities in environmental

protection by establishing an Environmental Systems

Department during the fiscal year.

The Bang Pahong Thennal Power Plant is under construction in Thailand.

• Strengthening Automobile and Other Activities

The group is receiving a growing volume of inquiries

related to mass-produced machinery, including auto

mobiles, construction equipment, and industrial

machinery, and was successful in expanding trans

actions in these product areas both in Japan and

overseas, especially in Southeast Asia. To further

upgrade marketing capabilities, the group has set up

a number of subsidiaries and plans to substantially

bolster the capabilities of these marketing companies.

Our new subsidiary held its first auction of vintage cars.

• Progress in Development Projects

Work on major real estate projects located around

Tokyo Bay continued at a steady pace. In addition, the

group announced its intentions to participate in the

planned Rinku Town Project near Kansai International

Airport, which is now under construction in Osaka Bay.

The group is also engaged in a number of develop

ment and construction projects that it has initiated

in Southeast Asia, North America, and Europe.

17

18

Foods

• Developing Vertically Integrated Supply Systems

In response to the development of the food industry

from upstream to downstream, including basic food

stuffs, processed products, and restaurant operations,

the Foods Group is expanding its presence at each

level. With the vertical integration of its operations,

extending from sources of supply to final consumers,

the group has increasingly assumed a position of

leadership as an efficient and profitable market par

ticipant. The group plans to continue this basic strategy

of integrating operations through various stages of the

food supply chain.

• International Activities

Especially in recent years, the group has moved for

ward as a pioneer in the development of the inter

national operations of Japan's food industry. In addition

to its traditional activities of importing and distribut

ing foodstuffs in Japan, the group has invested in

production facilities overseas and is broadening its

capabilities for supplying local markets overseas as

well as exporting to Japan and other countries.

• Strategies and Directions

Kentucky Fried Chicken Japan listed its shares.

Industrias Aliadas SA is manufacturing coffee extract in Colombia.

The group's basic policy is clearly reflected in its

many investments in the development of integrated

supply sources. For instance, the group's shrimp

sourcing operations in Thailand now include not only

the purchasing of shrimp caught by local fishing com

panies but also direct investments in culture farms

and in freezing and packing plants. These activities

have contributed to stability in prices and consistency

in quality and have facilitated the group's marketing

of shrimp direcdy to restaurant chains in Japan.

Other examples of vertical integration, through

investments in supply, processing, and other facilities,

include the supply system set up for Kentucky Fried

Chicken Japan Ltd.; production facilities for rice

snacks in Thailand to serve Japan and newly devel

oped markets in the United States and Europe; a coffee

extract manufacturing plant in Colombia to meet the

needs of producers of canned coffees worldwide; a

processed pork production facility in Indiana serving

the U.S. and Japanese markets; the KILLARA feedlot

and the Mid Coast packing plant in Australia for the

supply of high-quality beef and by-products to end

users and consumers, in both the domestic and over

seas markets; and an edible oils processing facility

in Dalian, China, that serves international markets.

Chemicals

• Stability in Basic Chemicals Areas

The Company is the major shareholder of Aristech

Chemical Corp., which has 11 production facilities,

principally in the eastern portion of the United States,

for phenols, alcohols, and other basic chemicals and

for plastics, including polypropylene, plasticizers. and

unsaturated polyester resins. Also, the Chemicals Group

is a leading participant in a major petrochemical plant

in Saudi Arabia and through this and other activities

makes an important contribution to stabilizing the

supply of basic chemicals.

Aristech Chemical is focusing on developing new technologies.

• Investment Tailored to Market Needs

To respond to the rapidly growing diversity in demand,

the group has set up separate companies responsible

for fertilizers, solvents, and plastics to upgrade ser

vices to clients. In rapidly growing regions, the group

is moving forward with a number of projects. For

example, the group has invested in a detergent raw

materials production facility and a polystyrene manu

facturing plant, both in Thailand, and in a polyester

fiber manufacturing plant in Pakistan.

Tosoh Hellas A.I.C. has produced battery materials in Greece for a decade.

• Building Positions in New Areas

The group is training specialists in the promising fields

of high-technology chemicals and fine and specialty

chemicals and is en~ged in cooperative marketing

of growth products in such areas as films, synthetics,

and biotechnology. In addition, the group is proceeding

with projects and with new product development in

preparation for the ,coming era of "new chemistry;'

which will involve close linkages with technologies

and products of several industries.

• International Distribution Network

The group's worldwide information network, based

on production ventures and close relationships with

customers in various areas, operates efficiently and

effectively through the group's network of tank yards

in Houston, Rotterdam, Bangkok, and Jakarta and,

of course, inJapan. Through this network, the group

is in a position to respond to Virtually all the

requirements of its customers and suppliers.

19

Textiles and General Merchandise

20

The Textiles and General Merchandise Group serves

a broad range of customer segments from upstream

materials to downstream products and is constantly

working to expand its operations by remaining at the

leading edge of developments in its client industries.

• Textiles

Vals set up to market Coca-Cola brand apparel

Tredia Fashion Co., Ltd., a subsidiary established

by the group to function as the control center for its

operations in China, Thailand, and other areas, con

tinued to expand the scope of its activities, and over

seas apparel production under its management has

successfully expanded. Demand for well-known brand

products under the group's management in Japan

remained steady, and the group made an investment

in Confezzioni FG S.pA, a prominent Italian apparel

manufacturer. The group also announced the estab

lishment of Vals Co., Ltd., which will engage in the

marketing of Coca-Cola brand apparel, and took other

measures to substantially expand its presence in the

marketing of brand products.

• Lumber and Paper

In this area, the group is devoting close attention to

environmental issues, including recycling of materials,

and is focusing on the development of stable supplies

of raw materials. Government approval was obtained

for a large-scale pulp mill in Alberta, Canada, and the

group continued to make progress toward providing

a stable supply of wood chips through its reforestation

activities, with special emphasis on a project in Chile.

The group is also proceeding with activities to bolster

its downstream position through such subsidiaries as

Green Houser Co., Ltd., in housing, M.C.P. Co., Ltd.,

in paper, and other companies in related industries.

• General Merchandise

In this division, the group handles a broad range

of items from raw materials to final products. In the

United States, two new subsidiaries for the manufac

ture and marketing of auto parts were set up. Progress

was also made in the marketing of imported luxury

tableware and furniture, and the group is moving

forward with plans to strengthen its downstream

presence in a wide range of fields. An agreement

concluded with Italy's Domus Academy marked

the group's entry into design activities.

The Domus Design Agency specializes in the design business.

Financial Activities

• More Sophisticated Funding Capabilities

The Finance Group worked to obtain competitive

rates on its funding by expanding its sources among

Japanese and foreign banks and other financial insti

tutions and exercising greater selectiveness. This policy

also allowed the Company to deal effectively with the

shrinkage of bank credit accompanying the introduc

tion of BIS capital ratio guidelines. In domestic and

overseas capital markets, the Company raised funds

on favorable terms, making full use of its well-known

name and high ratings from both Japanese and u.s.rating agencies. Important developments included the

expansion of the Euro medium-term note program

of Mitsubishi Corporation Finance PLC, a London

based subsidiary, to $2 billion. In the domestic market,

the Company's commercial paper (CP) line remained

one of the largest among Japanese corporations and

continued to be a source of funding on favorable terms.

• M&A Operations Expand

The group's Corporate Finance (M&A) Department

is drawing on the Company's extensive pool of strong,

long-term relationships with corporations worldwide

and on the in-depth knowledge generated by the

Company's core trading activities in a broad spec

trum of businesses to expand its presence in the

international mergers and acquisitions (M&A) business.

The department was retained as adviser for sophisti

cated domestic and cross-border transactions, includ

ing the acquisition of Aristech Chemical Corp. and

the purchase of a 50% interest in UCAR Carbon Co.,

Inc., both u.s. corporations. According to the require

ments of the transaction, the Tokyo-based team works

closely with the Company's financial subsidiaries,

MIC Consulting Inc. in New York and MCF ANANCIAL

SERVICES LIMITED in London, both of which have

M&A brokerage licenses. To further strengthen capa

bilities in Europe, the Company acquired a limited

partnership interest in Phoenix Securities Limited,

a London-based investment bank specializing in

European M&A.

• Asia-Pacific Venture Fund Founded

In August 1990, the Company. along with four prime

international financial enterprises, founded CEF New

Asia Co., Ltd. (CEFNA), a Hong Kong-based private

equity fund management company with initial capital

of US$lOO million. Through CEFNA, the Company

is working to realize high returns by actively engaging

in fund management in high-growth companies, cor

porate acquisitions and restructurings, and government

sponsored projects in Asia-Pacific countries.

21

Management's Discussion and Analysis of Operations

• Fiscal 1991 Compared with Fiscal 1990

The global environment during the fiscal year ended

March 31, 1991, was characterized by such destabiliz

ing factors as the Gulf War and the economic crisis

in Eastern Europe as well as a slowing of expansion

in the industrialized countries of Europe and the

United States.

Even though the Japanese economy continued to

expand, led by domestic demand, the pace of growth

slowed. Particularly in the second half of the year,

personal consumption growth softened as consumer

prices rose and the demand for capital investment

lessened accompanying the sharp rise in interest rates.

Under these circumstances, total trading transactions

of Mitsubishi Corporation for the year were up 6.5%,

to Y19,727 billion ($139,905 million).

By principal component, domestic transactions

increased 5.9%, to Y8,407 billion ($59,623 million),

supported by continued growth in domestic demand,

especially for precious metals, construction materials,

and oil and petrochemical products.

Import transactions climbed 10.7%, to Y3,591 billion

($25,469 million), with gains in LNG and other fuels,

refleCting higher transaction volumes and prices.

Offshore transactions rose 0.7%, to Y4,797 billion

($34,023 million), as growth in automotive transactions

and sales of chemicals offset a decline in crude

oil transactions.

Export transactions advanced 13.6%, to Y2,932

billion ($20,790 million), with Significant increases

in electric power and chemical plant and auto

mobile transactions.

Gross trading profit soared 20.5%, to Y582 billion

($4,129 million). Factors accounting for this improve

ment included strong performances in automobile

exports, domestic sales of construction machinery,

and offshore transactions in chemicals. Other major

contributors were larger profits from edible oils, marine

products, resin, and oil products.

Total Trading Transactions

12

6

o

Y19.73

Trillion

22

'87 88 89 91

Reflecting increased trading volume and higher

interest rates, interest expenses were up Yl52 billion

($1,081 million), which were pardy offset by a gain

in interest income of ¥92 billion ($650 million).

Net interest expenses, as a result, rose to ¥98 billion

($695 million).

Selling, general, and administrative expenses

increased 14.6%, to ¥404 billion ($2,867 million),

accompanying growth in total trading transactions.

"Profits on marketable securities and investments-

net" jumped to ¥51 billion ($358 million), more than

six times higher than the previous year, mainly due

to the sale of the Company's shares in Kentucky Fried

Chicken Japan Ltd. accompanying the listing of that

affiliated company's shares on the Tokyo Stock Exchange.

Provision for doubtful receivables amounted to 'i53

billion ($373 million), compared with ¥ll billion

($75 million) a year earlier, as the Company added

to reserves to ensure the quality of assets. Much of

this increase was accounted for by additional reserves

for overseas receivables, including exposure related

to the Gulf War.

"Equity in earnings of affiliated companies-net"

increased 17.4%, to Y21 billion ($146 million), reflecting

strong performances of LNG and other resource-related

projects, combined with favorable net income levels

of affiliated enterprises in cons~mer-related sectors.

As a result, net income for the year rose 8.2%,

to ¥65 billion ($463 million), exceeding the previous

year's record high of ¥60 billion ($428 million).

Total AssetsY11.93

Trillion

7.0

35

o

87 88 89 90 91

G T din Pr fit Rati •ross ra g 01 0 2.95%

l.8 ---

0.9- I-

- ~- - c-- 1-

0 - - '---

87 88 89 90 91

'Gross trading profit ratio equals gross trading profit as a percentage of totaltrading transactions.

23

.' Fiscal 1990 Compared with Fiscal 1989

Supported by economic growth in the industrial-

ized nations, total trading transactions of Mitsubishi

Corporation for the fiscal year ended March 31, iL990,

increased 18.4%, to ¥18,523 billion ($131,368 million).

By principal component, domestic transactions were

up 17.2%, to ¥7,936 billion ($56,284 million), reflecting

strong domestic demand led by expansion in private

capital investment and personal consumption. Partic

ularly important gains were recorded for transactions

in ferrous metals, construction materials, and

industrial machinery.

Import transactions increased 21.2%, to ¥3,243

billion ($23,002 million), also supported by strong

domestic demand. The recovery of crude oil prices

and higher imports of LNG, iron ore, coking coal,

and corn contributed to this rise.

Offshore transac~ions climbed 25.5%, to ¥4,763 billion

($33,780 million), owing to a sharp rise in crude oil

transactions and an increase in automotive sales.

Export transactions rose 7.5%, to ¥2,581 billion

($18,302 million), This was attributable to higner sales

of automobiles, tires, and petrochemical products.

Gross trading profit advanced 25.0%, to ¥483 billion

($3,425 million). Contributions to growth were espe

cially strong from industrial plant and automobile

exports and, reflecting robust domestic demand,

domestic transactions for construction machinery,

construction materials, and basic chemicals. Improve

ments were also reported in crude oil, precious metal,

and aluminum transactions.

Owing to increased trading volume and higher

interest rates, interest expenses were up ¥134 billion

($954 million). These expenses were, however, offset,

for the most part, by an increase in interest income

'1706Total Shareholders' Equity Billion

~ -- -200"-'-- -- -0- -

2\4

87. 88 90 91

of ¥125 billion ($889 million). Improved financial

management led to an increase in financial income,

which, in tum, helped to reduce financial costs.

Such costs were reduced through the well-timed

issuance of commercial paper and notes with

warrants and conclusion of interest rate exchange

arrangements. As a result, the increase in net interest

expenses was restrained to ¥9 billion ($65 million).

Selling, general, and administrative expenses rose

16.8%, to ¥353 billion ($2,501 million), due to higher

personnel expenses and other increased costs in line

with the expansion in transaction activities.

"Profits on marketable securities and investments-

net" were down ¥2 billion ($17 million), to ¥8 billion

($56 million), due to continued restraint in sales

of listed securities.

Provision for doubtful receivables remained at

¥ll billion ($75 million), approximately the same

level as for the previous year, despite the higher

trading volume. Mitsubishi Corporation conti~ued

to take early action regarding receivables judged

to be of lower quality.

"Equity in earnings of affiliated companies-net"

continued at a high level, amounting to ¥18 billion

($125 million) for the year, reflecting strong economic

conditions in]apan and good performances of affiliated

companies abroad.

As a· result, net income rose 30.8%, to ¥60 billion

($428 million).

Return on AverageShareholders' Equity 9.46%

6- r----

- ~

3- r----

- r----0- '-----

Return on AverageTotal Assets

87 88 89 91

0.4--0.2--o-

87 88. 89 90 9!

25

• Liquidity and Capital Resources

Net cash provided by operating activities in fiscal

1991 was ¥364 billion ($2,584 million), compared

with ¥119 billion ($842 million) used a year earlier.

This was mainly because of higher increases in notes,

acceptances, and accounts payable-trade, against

those in notes, loans, and accounts receivable-trade.

Net cash used in investing activities recorded an

increase of ¥159 billion ($1,129 million), compared

with that of ¥1,086 billion ($7,704 million) in 1990.

To expand future revenues, Mitsubishi Corporation

continued its active program of investments, including

acquisitions and participation in new enterprises.

As part of its effective program of asset management

activities, Mitsubishi Corporation also made invest

ments in financial assets. Most of these were invest

ments in large-denomination time deposits with a

high degree of liquidity and bearing market rates and

in top-quality public-sector and corporate bonds with

a high degree of marketability.

Cash flows from financing activities in fiscal 1991

recorded a decrease of ¥205 billion ($1,454 million).

Mitsubishi Corporation reduced its short-term

funding, such as the issuance of commercial paper,

in view of the inflow from operating activities.

Due to the appreciation of the yen, the effect of

exchange rate changes on consolidated cash was slightly

unfavorable for the Company.

As a result, consolidated cash at the end of fiscal

1991 was ¥57 billion ($407 million), ¥1 billion ($10

million) down from the previous year.

Working capital decreased ¥220 billion ($1,563

million), to ¥586 billion ($4,158 million), and the

Company's liquidity ratio was down to 107.4%,

compared with 111.0% for the previous year.

Total assets were up ¥252 billion ($1,790 million),

to ¥11,930 billion ($84,613 million).

Net Unrealized GainsPertaining to MarketableEquity Securities

II

1,000

"500-

I·

¥1,235

BillionI-

- I-----

26

-o

87

I·...

L-

88

.-

89

1-- I--

- '-

'90' '91

'II!Ii

l.L

• Outlook

During the coming fiscal year, economic growth

in Japan is expected to decline and conditions in

the United States and other industrialized nations

are likely to remain difficult.

Although no major improvement is expected in

international conditions, the Company will aim for

further gains in performance by identifying business

opportunities through its global network for expand

ing net income and by continuing to make selective

investments in promising business fields.

• New Accounting Standards

The Financial Accounting Standards Board has issued

Statement of Financial Accounting Standards (SFAS)

No. 96, Accounting for Income Taxes, as amended

by SFAS No. 100 and SFAS No. 103, and SFAS No. 105,

Disclosure of Information about Financial Instruments

with Off-Balance-Sheet Risk and Financial Instruments

with Concentrations of Credit Risk. SFAS No. 105 was

adopted by Mitsubishi Corporation in the fiscal year

ended March 31, 1991. SFAS No. 96 is currently

effective in the fiscal year ending March 31, 1993,

although earlier adoption is permitted.

Stock Price Range (Tokyo Stock Exchangl)

l.-OO

750----------~---

o

FY 91 II m IV

27

Six-Year Financial Summary--------------------?-----------------------------_'t~

'fea.rs ended March 3'1

~-....,.....---------------O;'l'~

lQ91 1990......-------------------------------..;;.;;~--------;.;;.;;.;;.---oiI,__,_Results of Operations:Trading transactlens:

D0mesti<::"..~ , , , ¥ 8,406,774'

Im]3ott , : :;.,........................... ~,591.158

C/tsh(u:e , : ,.,................... 4.797.286Expert* C'. 2,9.31<;318

Total - ;, : .- :. i19,7i26;·536

Gross tradiI!g profit i: 582,13'6Nl;'t 'iJucome' '65;290

Financial·Position at Year-End:Tbtal.·assets 'ill,930,450

WOTlqrtg ,capitq.l , : :............................... 566,241Leng-tertn a.elli.t; l~s cur-r.ent maturitie$....................................................................... 3,273,816

Total·shareholOet:s: t;qutty, ,..................................................................... 7(:)6,153

¥ 7,936,0443,243,2854,763,031

2,580,571

¥18,522,931

¥ 482,91460,356

¥1l,678,l24806,652

3,606,032673,943

II

II

Amounts per Share: **Net income per common and common equivalent share .

Cash dividends applicable to the year ~

Common Stock:Number of shares issued and outstanding at year-end .

Exchange Rates into U.S. Currency:(Per the Federal Reserve Bank of New York):

At year-end .

Average for the year , .

Range:

High .

Low ; , , ; .

i40.86

8.00

1,563,134

i140.60

141.33

159.90125.05

¥37.829.00

1,561,337

¥157.82143.41

l58.75130.90

Note: The u.s. dollar amounts represent translations, for convenience, ofyen amounts at the rate of ¥141-$1,'Export transactions represent all shipments from Japan and accordingly include sales to overseas customers through overseas branches and subsidiaries,

"See Note 1 of Notes to Consolidated Financial Statements.

28

Mitsubishi Corporation and subsidiaries:,..-.....

~

Thousands of

~Millions of yen United States dollars

1989 1988 1987 - 1986 1991---'I 6,770,697 'I 6,054,515 'I 5,862,871 'I 6,612,789 $ 59,622,511

2,676,344 2,601,899 2,498,838 4,773,276 25,469,2063,796,226 2,431,946 2,074,296 3,062,191 34,023,3052,400,548 2,276,523 2,224,056 2,646,956 20,'789,489

'115,643,815 '113,364,883 '112,660,061 '117,095,212 $139,904,511

'I 386,258 'I 336,354 'I 316,972 'I 348,515 $ 4,128,62446,131 31)67 27,474 32,324 463,050

'I 9,512,524 'I 7,532,021 'I 6,185,408 'I 5,772,659 $ 84,613,121422,822 427,369 215,021 118,061 4,157,738

2,594,337 2,476,282 1,979,751 1,430,171 23,218,553556,328 496,349 452,466 405,525 5,008,178

;Yen' Cents

'129.13 '119.97 '118.46 '122.75 28.98e7.00 7.00 7.00 7.00 5.67

Thousands of shares

1,544,861 1,532,001 1,505,196 1,414,627

Yen per United States dollar

'1132.77 '1124.10 '1145.68 '1177.60129.14 136.84 158.75 2H.28

136.52 il52.85 182.85 255.50

121.10 121.25 145.68 175.00

29

Consolidated Finandal StatementsCCJn.salidated Balance SheetS

Thousands ofGn[tedoSl;\tes doltacs

Millions of yen (Note 1)

!-991 ~9§lO 1~,91

¥ 58,715 $ 406,8l'Y9:lj;p45,82tl- 18,,049,1911,1:57,284 8,5~9,H5'

1,2.i1,?8~ ],l3"S,iJ.65 8,684,9<791,090,99·1 1',9<il6,236 14;829,7233:61.l6~ 3'67,587- 2,§72,7(jo(-l-7,?50J (l9,7,(ij(i)) (l2~;88n

440,30,1 421,4.03 3,122,74543",,607 '24-.1 ,198 .),062,319ll9,877 114,<il~7 8S0,1\92

8;~63;184 8,!I:21,57'9 60,022,?82

ASSETS

March 31, 1991 <!nd 1990

Current ·assef$:Cash ..,., , , ,.', ' ¥

Time d,e!"osits ..~ , : : = ..Sh{Ht~tenn investments (Notes 2 'and 4) ..

Receiv<!bles'-traj:l~ ( 9te 4):Notes and Loans , ..~ ..

Accounts , ,.. .- .-., .- ,..' ; ..

Affilfated c9mpaQies : · ········· ···· · i·

Allowance for doubtful· .receivaf:l!es ; ~ .

I1wentories ( otes '1 ~nd 4) .

Ad~ance payrn.ent$ to. s~ppliers "' , .Prepayments. deferred income taxes ( 'ote 0, etc _---=:..::..:....r.::....:.....:...

19tal cur·rent asse·ts : ~ ; .- , ----'~~~

Investments and Iion-curr~trecejyable$:Invesrments .in 'auo advances to.

affiliated companies (Notes 1 '2, 'and 4}, :: ~ : "' ,.: ' .

Other inv:estrnents, (Notes 2 and 4) , < , .

Non-current notes, loans, and-accoun~ receivable-uacle (Note 4.) ,.

Allowan-ce for doubtful receivi:lbles :.•,.:.", ' ..

Total investni'entS and non-current Teceivables" ..

322;.503 261,04@ 2,287i,255

~1,3~4,629 9,3'98il'78'

1,249.\226 J,3'81,9il7 8,859,159(50~10) 0,6,(68) (35.8,127)

2,846,362 2·;n0.~:Z8 20,186;965

Proper.ty i)nd equipm~nt-At cost les.s .accumulat~d ,depI:~ciation (Notes 1" 3,.;and 1) ·.· ,· ·,; w .. · · ·• .. · .---=-==.:.=...0.,2 3,pj1.,34Q

Oilier assets-Goodwill, ·etc. (Note 1) . 113,140 771,23~

Total.. ¥l1,930,450 )"11;678JZ4 $84,613,12'1

See Notes to Consolidated Financial Statements.

30

LIABIUTIES AND SHAREHOLDERS' E.QJ)ITY

C;UHent liabilities:Sho!'t-t~rm debt otes 4 and 5) ..Current maturities of long-term debt (Nqtes .. and 5) ..Payables-trade (Note 4):

Notes and ac(:~ptances ; .Ac.Q0unts ..Affiliated 'comf,?anies , .

AGcr.ued 'income taxes ., .(l)ther acctiied ~ense!?, ,..; : .Acil.vanGes 'from ~st0mers .n .

l»e!"osit 'Jjabilities; etc : .

1'ot~ '~urr.en.t i:i",bilities " ..

Long·tean debt, less <;u.rrent maturities (Notes- 4 and 5) : .

Acc:roed pension and severance liabilities (Notes 1 alld 7) ..

Peferred income. ~es- on-current ( ate 1 ..

M.lPority interests , ..

Mitsubishi Corporation and subsidiaries

Thousands orUnited States dollars

Milhons .of yen (Note 1)

1991 1990 1991

\' 3,610,336 " 3,994,870 $25,605,220724,-375 382 B31 5,137,411

878,548 905;495 6,230,8371,918,112 1,485,327 13,603,631

121,664 14J,059 862,865n,124 15,152 156,908

1~4,068 105,265 738,071420,475 22'2,9:J.5 2',982,092

77;241 59,983 547809

7,876,943 7,314,927 55,864,844

3,27:3;816 3,606,032 23,218553

49,181 55,995 348,802

2,207 7.474 J5,653

22,150 19,753 157,092

124,554177..H7

40,7265'1-8,162

(134,716)

706,153

Shareholders' equity:Common stock, "50 !"ar-authorizecl, 2,§00,000,000 shares;

issues and outstanaing; 1991-1.563,133.<il.77 shares;1~90-1,561,33J,096shares ( ote 8) ,.., , , .

capital surplus (Notes 5 and 8) ..R~tained earnings C otes 9 and 15')~

Appropriates for legal T.eserv~ .10na12prQpriated (Notes 5 and 8) , ..

Foreig(l c::urrency translation adjustmen~ , _..

Total'sharehold:ers: equity ; ".,., , ..

Commj~ents and c;:ontingent liabilitie$ (. gees 1 and 14)

lotal,.,., ,.., , , , \'11.9:30,~50

123,633176,480

19,278467,596

G13,044)

673,943

¥1l,678,lf4

Sa:3,3621,258,347

t46,99~

3,674,908(955,433)

5,008,177

$84,613,121

31

Statements ojConsolidated IncomeFor the years ended March 31. 1991, 1990, and 1989

Millions of. yen

Thousands ofUnited States' dollars

( ote 1)

1991 ~990 1989 19~1

Total trading transac_tions ( otes 2 and 10) ln9,726,536 XI8;52~,931 ¥15,64~,81§

Gross trading profit (Nore 10). ¥ 582,B6 'I 482,914 'I 386,258

$1J9,904,511

$ ~,l28,624

;3,-348,007102,858

65,915358,461

8;003,865

255;Q1911,481

6,36<;1

1@,311:'>

66Q,4Y7

38Q,J73

14,1266.8217,931

4-72,06914,5039,294

50,24.3

1,128,545

Other income:Interest ..Divid,encls = ..

Rent and warehousing- : ..Profits on m;nketable seGurities and 'investments-net (Note 2) ..

------'=~

Total ..

404,315 ~52.671 302,057 2,867,48252,581 10;630 10,78~ 372,915

570,0-76 411,705 28:3,241 4,043,0926,302 (7;31) (646) 44,695

-1,033,274 780,275 595,441 7,328,184

'EXpenses and odier 'charges:Selling, general and 'aclml:nistrative expenses ..Provision for doubtful reeeivables ..Interes~ · : ; .Sundry-net __--=-:=...=-.::;

Total ~ -' ~~..=..::.-'---"--"-

95,271 111,890 73,996 675,681

54,944 52,637 41,873 389,674(4,~45) 16,465 3,Bl (30,816)

50,599 69,102 45,604 ~5e,e58

44,672 42,788 28,392 316,823

26,618 17,:568·· 1'T,13~. 146,2,27

6~,290 Ii 6Q,356 Y 46,121 $ 463,050

yen (:~nJS"

'140.86 '07.82 Y29.lJ 28.98t8.00 9.00 7.00 5.67

Amounts per share (Notes 1, 9, ,and 15):Net income per COTnrn0n

and common equivalent s.hare .cash. dividends appliGable t6 the year ; .

Income. taxes (Notes 1 and 6):Current .Deferred __ ..

=~~-

Total __.::O.::...~~

In<:ome: from cOll$olidated o~rations , , ..

Equi~ in earnings. of affiliated companies-Ne~

~less applicable income raxes) ( ales 1 and 2) _----"-=-=~

~et income , , =y=~====

See Notes to COll5olidattd Financial Statements,

Statements oj Changes in Consolidat,ed Shareholders' Equity Mi.l;Subishi Corporation and'subsidia,ries

For the years ended'March 31, 19'91, 1990, and 1989

Millions of,yen

Thousands ofUnited'States dollars

(Note 1)

1991 1990 1989 1991

96?

5,751

$ 883,362

94,156

$ 876,830

5,567

965

$1,251,631

$3,316,284

463,050

3,779,~34

$1,258,347

$ 136,723

10,270

$ 146,993

10,270

104,426

$3;674..908

$ (801,130)

(175,844)

22,141

$ (955,433)

16,294

1,228

17,522

17,522 ¥

1,756

19,278 Y

'i 421,358 )'387,197

60,356 46,131

481,714 433,32t3

12,362 10,742

1,7.56 1,228

14,llS 11,97Q

Y 46,7',596 '/421·,3'58

Y 114.413 Y 109,747

6,461 lJ~2,749 4,560

-y 123,6}3 Y 1l'l:,4~3

Y 145;853 Y 141,1,60

6,464 133

2.749 4,56021,4'14

Y 176,480 Y 145,8:53

19,278 'i

1,448

20,726 -y

CO{lllllon stock (N~t~ 8):

Balanee at beginni.i:lg of the year , Y 1.23,633

Shares issued (or conversion of debentur~ and bonds 785Shares issued for exen;ise of warrants 1,36

Baiance at end of the year Y 124,~54

Gapital surplus, (Notes 5 and 8~:

Balance at beginning of the year , , Y 176,480

Excess of principal amount· q£ deb~:nrures and.hondsconverted over amount ~redited to common ~st0.ck .8U

Exces,5 of pro€eeds from exerci$e df warr'!.nts over ~moumtransferred to common stQCK accouDt.......................................................... 136,

Value ascribed to waHants issued --._ "

Deduct:

Cash cli<;:idends pa(d , ,.................................................. n,276

Transf~r to retained eam.ing~ approFlriated!(or legal reser:ve ~.............................................................. 1,448

Tbtal , , ·.............................. 14,744

Balance at end of the year (Note 15) Y 518,162

Fore~gn cunency ttanslation adjustments:Balance at beginning of the 'year , , Y(1l3,Q44) Y(l41,828) Y(158,049)

Aggregate translation adjustm~nts during the year........................................ ~24,794) 36,2.42 16;954In~ome taxes alloeated to translatlon adjusltnents......................................... 3,122 ((5,458) (l,73J)

Balance at end of the year , Y(134,716) )'(113,044) Y(l42,828)

BaIanee at end of the year , , Y 177,427

Retained earnings-appropriated for legal reserve (Note 9·):

BalanGe at beginning of th'e _year -....................................................... YTransfer from una~prop.rj.ated retained earnings ~ .

Balance at end of the year' ate 15) .- Y

Unappropnated retained. earnings (Notes 5, 8~ ana- 9),

Balance a~ begi..nnin~ of the year Y 46Z,596Net income.............................................................................................................. 65,290

Total............................................................................................................. 532,§86


33

~600,589)

355,206

(934,02'1)'30,912

633,270(6lJ,745)

(1128,957)

(4984,192)6,693,638

(3,071,078)],930

(56,2M)16,254

(21,114.)(126,476}

(87,651)20,677

(141,27-6)

('2.7514)(543,964)

(84,6$3)50,084

Mitsubishi Corporation and subsidiaries

ThousandS ofUilited states dollars

Millions or' yen (Note 1)

1991 1990 1989 1991

65,290 ¥ 60,356 Y 46,131 $ 463,0;50

58,417 45,e13 32,e40 414;30552,581 10,630 10,789 312,915

(50,543) (7,931) (10,310) (358,4'61)

(5,187.) 5,883 (e,120 (36,7i81l)

(4,345) 16,4:65 3,731 (30,816)705 2:810 (3,753) :5,000

-~16,918 133,826 73;10.7 829,206

(139,385) (497:901) (398,834)(26,73>f) (78,126) (2f>,063)425,587 318,755 162,91434,B6 27,781 32,482

(44,220) (23;004) (3@,591)

364,302 (lt8.e69) (185,985)

(131.697)"l,J60

89,29'1 (550,277) (1,03(1),777)(86,538) 243,757- €295,959)

~i59,l83) (1,086,258) Cl,514,2.79)

(702771) 26,507 1,047,10-7943,803 1,437,979 697,418

(433022) (272,049) (95,fJ91)272 5.498 9,120

21,414(13,276) n2~~62) 00,744)

(204,994) 1,296,987 1 ~7,01)

(1,480) 2,539 112

(1,355) 4,599 (53,1l0~

58,?15 54116 107,226

57,36Q \' 5t!.7J,5 ¥ 54,116 $

Statements of Consolidated Cash Flows

Changes in openiting. assets an-a -liabilities:otes, loans,. and accounts receivable-trade .

lr;1ventories· .Notes, acceptances, and a<OCOUIltS payable-trade .@ther current Iiabllities .Other opeJl!,ting accbunts , .

et cash 'prov:ided by (used iii) operating aotivinies __"'--_

Cash flows from investing activities:Expenditures for property and equipment ,.., " ..Pr9ceeds from sales of property anCl equipment ..Acquisition of Aristech Chemical Corporation,

net of cash acquired., : .et increase- in investments in and advancesto affiliated companies .

et decrease (increase) in othednv~tments ,., ..C\1apge in shon-term investing as'serS:

Time deposits .Marketable se:curities , .

Net cash used ib. investing aClivities '.0.' ..

Cash flows from financing ac.tivities:Net iTI<,rease (deGrease) in shon-term debl... ..Proceeds from long-tertI> debt .Repayment of long-term debt' ..Proceeds from.issl,laI¢ce of common srock , .Proceeds from issuah~e of warrantS 0 .

Cash dividends paid .

Net cash provided by (used. in) financing 'a,qiVities ..

Effect of ex.change rate changes on consolidated ~h , .

Net increase (decrease) in consolidated cash ..Consolidated 'cash at beginning of the year ..

Consolidated cash at end of the yeaL =Y=======

Cash -flows from op~rating activities:et ,income , ,., .- Y

Adjustments to reGoncile net income to net cas~ providedby (used in) operating activities:Depreciation and amortization ,.,Provision for do.ubuul receivables ..Profits on marketable securities and investments-neL ..EqUIty in eamin~ of affIliated c9mpanies,

l~s dividends received , .Deferred ,income taxes , .Otner-:net .

·For the years ended March 31. 1991. 1990. and 1>989


34

os Notes to Consolidated Financial Statements

1. Basis of FinancialStatements andSummary of SignificantAccounting Policies

Basis of Finandal StatementsThe accompanying consolidated financial statements are stated in Japanese yen, the currencyof the country in which Mitsubishi Corporation (the "parent company") is incorporated andprincipally operates. The translations of Japanese yen amounts into United States dollaramounts with respect to the year ended March 31, 1991 are included solely for the convenienceof readers outside Japan and have been made at the rate of¥141=$1, the approximate rateof exchange on March 31, 1991. Such translations should not be construed as representationsthat the Japanese yen amounts could be converted into United States dollars at the above orany other rate.

The accompanying financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America. In certain respects, effect has beengiven in the financial statements to adjustments that have not been entered in the companies'general books of account which are maintained principally in accordance with accountingpractices prevailing in the countries of incorporation. The major adjustments include thoserelating to (1) deferred income taxes, (2) accrual of certain expenses, (3) foreign currencytranslation, (4) valuation of marketable equity securities, (5) application of the equity methodof accounting for investments in affiliated companies, and (6) the value ascribed to warrants.

Summary of Significant Accounting PolidesSignificant accounting policies applied in the preparation of the accompanying consolidatedfinancial statements are summarized below:

(l) Consolidation and investments in subsidiaries and affiliated companiesTne consolidated financial statements include the accounts of the parent company and, exceptfor certain minor subsidiaries, all of its majority-owned domestic and foreign subsidiaries(together "the companies"). Affiliated companies comprise minor non-consolidated subsidiaries,companies owned 20% to 50%, certain companies owned less than 20%, and corporate jointventures. Investments in affiliated companies, with minor exceptions, are accounted for by theequity method of accounting. All significant intercompany accounts and transactions have beeneliminated. The excess of cost of the companies' investments in the subsidiaries and affiliatedcompanies over their equity in the net assets at dates of acquisition is being amortized generallyover periods of ten years ranging up to twenty years.

(2) InventoriesInventories, which mainly consist of commodities and materials for resale, are stated at thelower of cost, principally on a specific-identification basis, or market.

(3) DepreciationDepreciation of property and equipment is computed principally under the declining-balancemethod for assets held by the parent company and domestic subsidiaries and principally underthe straight-line method for assets held by foreign subsidiaries based on the estimated usefullives of the assets.

35

(4) Accrued pension and severance liabilitiesEffective April 1, iL989, pension costs for plans of the parent company and certain subsidiariesare determined in accordance with the provisions of Statement of Financial Accounting Standards(SFAS) No. 87 "Employer's Accounting for Pensions:' Certain other subsidiaries have Ilocal pensionplans, which in the aggregate are not significant, and SFAS No. 87 has not been apphed to suchplans. Most of the domestic subsidiaries also have unfunded severance indemnities plans andthe accrued severance liabilities of these subsidiaries are stated on the vested benefits obligationbasis, which is the amount required to be paid if all employees covered by the severanceindemnities plan voluntarily terminated their employment at the balance-sheet date.

In April 1990, the parent company instituted a non-contributory funded pension plantQ replace the then existing unfunded severance indemnities plan. The parent company hasapplied the provisions of SFAS No. 87 in determining the costs and funded sta~us of the newplan. The amount of projected benefit obligation as of April 1, 1990 for the new pension planwas appl'Oximately equal to the accrued severance liabilities previously recorded, and the effecton net income resulting from adoption of the new plan was not material.

(5) Income taxesThe provision for income taxes is based on income for financial statement purposes. The effectof the differences in timing of income and expense items for financial statement and income taxpurposes is recognized as deferred income taxes.

No provision for income taxes is made on undistributed earnings of subsidiaries where theparent company considers that such earnings are permanently invested or would not, under thepresent japanese tax law, be subject to additional taxation should they be distributed as dividends.

SFAS No. 96 "Accounting for Income Taxes;' a~ amended, requires an asset and liabilityapproach to the method of accounting for income taxes. The Statement is currently effective,for the companies, in the year ending March 31, 1993, although earlier application is permitted.The Financial Accounting Standards Board (FASB) has recently announced that it will issuean exposure draft containing several proposal revisions to SFAS No. 96. Accordingly, it is notpossible at the present time to determine the effect that adoption of this new accounting standardmay have on the companies' reported financial results.

(6) Common shares distributionPrior to April 1, 1991, japanese companies, upon approval by the Board of Directors, couldmake a free distribution of shares to shareholders to the extent that the aggregate par valueof the shares to be distributed did not exceed the aggregate excess of the common stock andcapital surplus accounts over the par value of shares issued and outstanding. In accordancewith accepted accounting practice in japan, the aggregate par value of the shares so distributedwas recorded as a transfer from capital surplus to the common stock account to the extentof amounts available in the capital surplus account. In japan, a free distribution as describedabove was clearly distinguished from a "stock dividend" paid out of earnings, which must beapproved by the shareholders (see Note 8).

Effective April 1, 1991, the Commercial Code of Japan was amended to permit Japanesecompanies, upon approval by the Board of Directors, to issue shares, in the form of a "stocksplit" as defined, to shareholders to tEe extent that the aggregate par value of the shares to bedistributed does not exceed the excess of the common stock account over the par value ofshares issued and outstanding.

(7) Amounts per shareNet income per common and common equivalent share has been computed using the weightedaverage number of shares of common stock and dilutive common stock equivalents outstandingduring each year. The warrants issued with the 5 3/ 4 % Notes redeemed in 1988. the 3 1/8 % Notesdue 1994, the 1 3/8% Notes due 1992, and the 4 3/8% Notes due 1994, respectively, and the1.5% Convertible Bonds due 1994 and the 1.6% Convertible Bonds due 1996 have been treatedas common stock equivalents from the time of their issuance (see Note 5). Earnings areadjusted for interest on such convertible bonds (less applicable income taxes). The dilutive effecton the per share amounts of the potential conversion of outstanding convertible debenturesand bonds and the additional dilutive effect of the potential exercise of outstanding warrantsunder a fully diluted earnings per share computation were not material for the years endedMarch 31, 1991, 1990, and 1989.

Cash dividends per share represent the cash dividends declared as applicable to the respectiveyears (see Note 9).

(8) Statement of consolidated cash flowsFor purposes of the statement of consolidated cash flows, consolidated cash includes cashon hand and bank deposits other than time deposits.

Supplemental cash flow information is as follows:

Thousands ofUnited States

Millions of yen dollars

1991 1990 1989 1991

¥554,771 Y394,364 Y274,329 $3,934,54665.843 38,425 28,884 466,972

Cash paid during the year for:Interest .Income taxes .

Noncash investing and financing activities:Exchanges of shares in connection with

business combinations of investees:Fair market value of shares received .Carrying value of shares exchanged .

Liabilities assumed in connection withthe acquisition of businesses:Fair value of assets acquired (including cash) .Cash paid .Liabilities assumed ..

Conversion of long-term debt to common stockand capital surplus .

15,4182.663

170.695(146,762)

(23,933)

1,596 12,925 249

109,34818,887

11,318

(9) Financial instrumentsThe companies are parties to a variety of interest rate and foreign exchange forward contractsin the management of their interest rate and foreign exchange exposures.

The companies enter into interest rate swap agreements as a means of managing theirinterest rate exposures on certain assets and liabilities. The amounts received or paid underthe swap agreements are accrued and recognized as interest related to the assets and liabilitiesover the life of the agreements.

The companies also enter into foreign exchange forward contracts principally 'IS hedgesagainst commitments and receivables or payables denominated in foreign currencies. Foreignexchange gains and losses on the receivables or payables are recognized to the extent that theyare not hedged by the forward exchange contracts.

2. Marketable Securitiesand Investments

Marketable SecuritiesAt March 31, 1991 and 1990 the current and non-current portfolios of marketable equitysecurities (included in "Short-term investments" and "Other investments;' respectively),including securities of which certain of the companies are the beneficial owners under trustagreements with trust companies, were each stated at the lower of aggregate cost or market,and had aggregate costs and market values as follows:

Milhons of yen


dollars

1991 1990 1991

~1,811,657

Current:Cost and carrying value ¥Market value .

Non-current (principally capital stockof customers and suppliers):Cost and carrying value .Market value .

¥ 81,37997,796

328,6701,797,510

$ 341,972406,369

4,156,58212,848,631

At March 31, 1991 gross unrealized gail'ls and losses pertaining to the marketable equitysecurities were as follows:

Icosses

$ 32,950'189.468

Tbousands ofUnuedSrates

dolll!ts

CUHem , Y 13 in6on-current'.................................................................................. 1,266.:39

38

Net realized gains on sales of marketable equity securities, including gains recognized inconnection with the sale of common stock of certain affiliated companies in public offerings,for the years ended March 31, 1991, 12,90, and 1989 were ¥35,094 million ($248,894 thousand),¥7,690 million, and ¥1O,l07 million, respectively. In determining realized gains and losses, thecost of securities sold was based on the average cost of all the shares of each such securityheld at the time of sale.

In connection with cer;tain business combinations involving the exchange of shares ofmarketable equity securities of investees for those of substantial non-investees, the parent companyaccounted for the exchanges as non-monetary transactions. Accordingly, a gain was recognizedto the exteNt that the fair value of the shares received exceeded the cost basis of the sharesexchanged. Gains on such exchange of shares for the year ended March 31, 1991 amountedto ¥i2,755 million ($90,461 thousand).

Investments in common stock of affiliated companies included marketable securities in theamounts of ¥38,338 million ($271,901 thousand) and ¥55,298 million at March 31, 1991 and1990, respectively, with corresponding aggregate quoted market values of ¥108,347 million($768,418 thousand) and ¥133,331 million, respectively.

At March 31, 1991 and 1990 marketable securities other than equity securities, principallybonds and debentures, including securities of which certain of the companies are the beneficialowners under trust agreements with trust companies, were stated at cost or less, which approximated market, and consisted of the following:

Millions of yen


dollars

1991 1990 1991

Current-included in "Short-term investments" n,157,296 Y1,075,905Non-current-included in "Other investments"................................ 494,743 640,663

$8,207,7733,508,816

Investments in Affiliated CompaniesDividends received from affiliated companies for the years ended March 31, 1991, 1990,and 1989 were ¥iL5,431 million ($109,440 thousand), ¥23,451 million, and ¥1l,644 million,respectively.

rhe carrying value of investments in the affiliated companies at March 31, 1991 and 1990includes ¥14,574 million ($103,362 thousand) and ¥3,422 million, respectively, representingthe unamortized balance of the excess of the cost of investments over the companies' equityin the net assets at dates of acquisition.

Cerqtin financja} infor-mati0n ,v:ith respect: to the affiliated companies, which are accountedfor by the equity methqd, for the years eBded. M.ar<.h 31, 1991 and 1990 is pre$emed below:

MillIons of yen

Tnous~ds ofUTiited Stares

dollars

1991

Current assets , "..; ,.,.. ,,, , , ;." , \'2,347,849Property, plant, aild ~uipment-net 975,132Other assets 301,8Q5

Jotali assets Y3,62'!,tH6

Current liaoilities ¥l,933,587Non-.current liaO'ilities , "..................... 1,049,279Shareholders' equity · , , ·....... 641,98e

Totalliabi1lti.es~and sbareholders' equity i::3,624,846

AmoUnts of sharel-ioJ1:H:r~' eqi:IitY,attrib~tlible ,to the companies l' 2iJ.10,OOO

et sales ; , ¥'4,e'1'iJ,006

et income Y 11e,168

1990

Y2.~49;n6

988,47143),341.

Y3,9.71S38

Y2,232,8H1,167,652

")?l,On

YJ,971,5J.§

¥ 17<0,975

¥4 1-i'~.-J64

¥ 79,356

1991

$16,651,4116,915,8302,140,887

$25,708,128

$lJ,713,38J7,4H 6954,553,050

$2l),708,128

$ 1,489,362

,$28,468,128

$ 781,333'

Total tra<1ing transactions for the years ended MarGh 31, 19~1, 1990, and l-~89 included¥l,838;531 milli0n ($13,03C!J,217 thousand), ¥2,oC!JJ.,183 million, and 'il,882,54! million,respectively, in whiGh.affiliated q:lmpanies participateq as purchasers, and Yl,811,24B:million($12,987,574 thousand), ¥l 13.86,440 milli0n, an(LYl,777,0l5 million, r~pectivtly. in whiCh theyparticipated as suppliers.

3. Property andEquipment

Pr~operty and equipment at March 31, 1991 and 1990 c0nsisted of the followin~:

Millions o~ye.n

Thousands orUnited States

do rs

19'91

Lmd and lana improvements , _ , Y1l5,584Buildings, includ.iJ)g leasehold ·improvementS '................. 243;296MaChinery and, eql.\ipment............................................................................ 358,880P,rojecrs in prbgr§S , , , "",.;.,,;.................. 21,947

TotaJ........................................................................................................... 't39, 707'less accumulated del?reCiation '. ,........................................... 227,547

Property ana eguipmem-neL Y512,160

1990

Y 93,8%227,82.7338,8111~,709

679,20320"6,776

Y4n,427

1991

$ 819,7451,725,50"2,5"5,248

l!-55,M~

5,~46,149

l,61J,~09

$3,632,340

40

Bepredation 0f pr0perty and equipment fer the years ended March 31, N91, 1990, and 1989was ¥~0,4(,)8 million ($287,807 thousand), 'i32,465 million, and ¥23,232 fuillion, respectively.

At MarcH 31,,1991 assets, pledged as collateral for~sh6THerm J:l.ebt, long-term debt, ana, c6mingentIiaoilihes of the G:ompal1ies ,were as f£llows:

Thousands ofUnited Slates

'MH~o~ qf yen dqllalO

o;es,: loans, ~nd aCf:ounts r.e-(!~ii{a]jle'-ttade

'(cUrrent and non-curren, , , ,' , "Siron-term and non-mrr'ent inve.s[me:nr~securiries

(iIlc!uding ~4bsidia~ies; G~pitai 'stock; eliutinated in cOTl5olidation,of 1'4 1-,7· ,inillion-$2;~7 tliousana, at cQS~) ..

'Fropeny and"equipl1!e.nt ..<nel,d(.llc!;l.ltnulate<L cLel?r~i~cton} ',: ..'@ther , , , ..

Iow,l · , ..

Y·I73,664

69.737131,9135'13,053

\'388;439

$1,23~,660

494,589936,064

91:574$20,754,887

'Ili'e a:Dove f)leBgea assetS! are classifie'tl by type of liaoilities t6 wKiclf theYlelate as follows:

Thousands ofUnited 'Slates


1i<lbiUti'es appeal.'ing in tne consolidate,d MIll-nee sh&t as:Snorl-teNiJ. cilept n · , ·" .., .. ·, ,",.· ---- ··· " .

Um'g-t~m'1 Clept .C:olJtingentllabiIlties'-gwu'llllt~~ gf &9ntt;u;r,s .';,' ; ', ; , ,

Total .- __ :': ~ , .

'i 2,790JH,309

11,349

Y:388,!l39

$ 19,7872,654,610

80;fl-90.

.$2;754,887

Ir,ust! reGefprs ,issued unGler wstomary; import financing,arrangements give banks a securiryintf~rest 'iF! the' merchandj's~ imported and/or the accounts receivable, or sales proceeds resulting from the sale· of suah merGhandise. The cOlJ1panies fqllow \he practi'ce of repaying ther~?te~ notes!'aqcl aG<;eptances pa~.ple ate 1Ua_14Tlty cl tes without llpplying the ~ale,s proceedsto tl)e s~ecifi'c,lTlotes OT atceJ'l~nees. Ih~ l~rge :number of transactions m,akes it ilI!pt:acticaple~o de~enn~Jle the '[email protected] .atOot!n\$ llf a~sets ,cQv~r_ed by Qu~tan$.ng tr:Ust receipts.

-See bte. 5 reglrding re.Geiya'Ples',Fransfer-red with ,recour.se.See Note 5 for'a clescripnon df'the righF of the lendirig banks to require the· co'mpanies' to

pmvioe Gollateml (or aclditional collateral~ not included ,in pledged assets summarized in theI!rst para~apn of'ibl$ note:

MilllOnsof yen,

Shon-term g~bt at March ~'I.. I99i and 1990 consisteq of the following:5: SQ.Ql7t-Term andl.ontterm'Del>t

S5.Qrr-t~:mllo~pS; prfucipally EfOtTl Danks __ , __ .__ ,., n.898,~80

Commercial paper ~ ,........................................... J ,p'J5,678Transferor's liability for reGeivabl'es transferred

Wi.l,h ~ecourse €nQte.Sldiscounted~wirh .baii,ks) , ,..... ,66;07.8

'10£ L c ,. __ " , '.. n;6!O,336

1999

Yl;89Q,;.7162,93,1,366

60,788

\'3,994,870

Thousands ofHnired Stllte!i

;follars .

1991

,$'13,465,10'111,67'1,)4,75

4-p8;638

~25.Q05,210

The prin'eiF1al ifanges o'f annual iq~erest rates applicable to short-term deb.t outstandingat MaH,}1 ~i, -1~91 1!iJ.d 1990 Were fmm, 7% t~, 8..9% a~d ft6m 6% to 8.9%, tespettivcly.

Long-term debt at March 31, 1991 and 1990 comprised the following:

t.1¥1ions oJ yen


do lars

long-term debt with collateral (see tote 4);Banks.and insurance·companies, maturing serially

through 20ll-principally 7%-8.9% yGoyemmenr-owned b<!.nk andgovemmem

agencies, matuf:ing serially duough 200'7-principally 6%-8:9%, .

Banks and others, maturing serially through 2002 .~payaoJe in foreign curreucies]-principaJly 7%-10.9% .

Torat · .

1991

43,819 'i

136,678

85,ZtD

265,712

1990

?7,899

145,470

135,180

338;~55

1991

$ 31Q,173

969,347

6'04,362

1,884,482

74,595 51,148

313,302 350,07341,086 41,138823,475 24,198

8,641 118

~6,380 63,200

84,570 94,800

2Jl,425 23-'7,00014,095 15,80014,095 15,El0028,190 31.69014,095 15,80011,721 13,13921,IH 23,70010,663 11,~5~.

20,QO@ 20;0006,514 7,325

Ig~29

9,677 10;84814,095 1:5,e00

94,386 36~397

9;670 18;302465,793 601>,593

6,465 18,O6~

3,752,611 3,677;77520,132 27,467

3,732,479 3,650;308

Ir.ong-tef.lT\ debt william collateral,:Balli a,nd ins.urar~~_(iompaflles, m¥1)rlng seviaUy

tnr0ugh 20~ 2-prificipaUy 5%-7.9% , ,......... 2,198,535 1,9'J5o 7...01Government·owned panl< ~na govt':~ninent

agencies, marut:ing serially througn 2016-lJrincipally 4%-7.9% , ..

Ban~and others, mauning seri~y through 2009(payable in fOTelgn cl!Fr~cie,s)--princi-paJJy ~%r-'9.9% ..

1.5% Convertible Bonds due 1994 , .1.6% Convertible Bonds due 1996 ..Other convertible' debentures and bonds .3 1/8% ales due 1994 issued witli warrants

payable in United Sraws dollars .13/8% Otes'due 1992 issued with warrants

P1lyabJe in Uniteq. Stales dollars ..4 3/8 % Otes due 1994 issued with warrants

payable in Un'ifed States dollars .12 1/2% otes due ~ 991 p~yable in United States dolTars ..10 1h% Otes due 1992 payable in United Srates dollins .10%% _ Qt~ du~ 1995 payabl~ in United Srates dollars .10 1/2 % NOtes due 1995 payable in United States dollars11% otes due 1991 payable in United States dollars .7 1/ % Notes due 1992 payable in United States dollars,,,._ ..7% !Dual Gurrericy';.yenlW.S. IDollar otes due 1992.. ..6 1/4 % Bonds due' 19.9,5. with

YenlU.5, IDollar exdiange agreement .- ..65/8% 'Bonds dl\e 1-996 payable in Deutscne -marks .ZeTo <Co~pon, .oles-aue 1'991 payable

in United States dollars ' ..5 1/'1% Notes due 1991.. , " ,.,.,.. , _ , " ..8 5/8% Notes due W93 payablein United States collars ..M.~dium- TeJll11 ot~. maMing serially

through 1995-prihGipaily 7%-9% .. , , : :: ..Trade nOles and atcounts payable and.advances

from customers, due through 2025:Interest·bearing, princi-pally 4%-7% ..

on-interesL-bearing .Miscelliinebus , , .

TOIa1 , .less unamortized issue discount-net .

TotaL ".., , .

1'5,592,447

529,043

2,222000291,390166;489

61,284

399,858

599,787

1,499,46899,96599,965

199,92999,96583,118

lf9,95075,624

1.41,84446,199

68,63199,965

669,404

68,5823,303,496

45,849

26,614,262142,780

26,471,482

42

Toral....................................................................................... 3;998,191Less currelJt ma~liriyes.......................................................................... n4,375

Long-,term debt.les~ current_matUrities \'3,2'73,816

3',988,863382.831

)'3,606,032

1..8,355,9645,137,411

$23,2;t8,?53

The effective annual interest rates with respect to the 31/s% Notes due 1994, the P/s%Notes due 1992, and the 4 3/s % Notes due 1994 are approximately 8%, 9.1%, and 9.9%,respectively, after giving effect to the vahle ascribed to the warrants attached thereto.

At March 31, 1991, the parent company and certain of its subsidiaries had several interestrate swap agreements in an aggregate notional amount ofYl,091,375 million ($7,740,248 thousand)which were made to manage their interest rate exposure for certain short-term and long-termdebt, including intercompany borrowings eliminated in consolidation, and the above notesissued with warrants.

Concurrent with the interest rate swap agreements, the companies have entered into foreigncurrency swap agreements aggregating YI94,07ir million ($1,376,390 thousand) at March 31, 1991.

The effective weighted interest rates for long-term bank loans ofY535,234 million ($3,795,986thousand), Rotes and bonds of Y183,469 miilion ($1,301,199 thousand~, and medium-termnotes and commercial paper of Y145,565 million ($1,032,376 thousand) outstanding at yeareRd after giving effect to the interest rate swap agreements were 5.4%, 5.3%, and 7.0% atMarch 31, 1991, respectively.

At March 31, 1991, certain subsidiaries have also entered into interest rate swap agreementsin an aggregate notional amount ofY345,221 million ($2,448,376 thousand) on certain marketabledebt securities, which were purchased with funds obtained from long-term debt, in the managemeRt of their interest rate exposures.

Maturities of long-term debt subsequent to March 31, 1'991 are as follows:



Year ending March 31:1992 (included in current liabilities) .1993 .i1.994 .1995 .1996 .1997 and thereafter .

¥ 724,3751,250,954

559,252612,304278,804572,502

$5,137,4118,872,0143,966,3264,342,5821,977,3334,060,298

lihe current conversion prices of the convertible debentures and bonds issued by the parentcompany and the prices at which they are redeemable at the option of the issuer at March 31,1991 are as follows:

389.40453.20

Conversionpnce pershare (a)

1.5% Convertible Bonds due i1.994 ¥1,4481.6% Convertible Bonds due 1996................................................................................. 1,448Other convertible debentures and bonds:

6% Convertible Bonds due 1992 ..6 1/2% Convertible 'Debentures due 1994 .

(a) Subject to computational provisions in the related indentures.(b) Redeemable commencing October 1, 1991 at the initial redemption price of 102% of the principal.(c) Redeemable commencing October 1, 1992 at the initial redemption price of 103% of the principal.

Redemptionprice ,~percent

of principal)

(b)

(c)

100%100%

43

6. Income Taxes

44

The indenture under which certain convertible bonds were issued places a limitation onpayment of cash dividends by the parent company. At March 31, 1991 the amount of theunappropriated retained earnings available for the payment of dividends was ¥218,265 million($1,547,979 thousand) under such provisions of the indenture.

Substantially all the short-term and long-term loans from banks are made under agreements,which, as customary in Japan, provide that the bank may, under certain conditions, requirethe borrower to provide collateral (or additional collateral) or guarantors with respect to theloans, and that the bank may treat any collateral, whether furnished as security for short-termor long-term loans or otherwise, as collateral for all indebtedness to such bank. Certainagreements relating to long-term bank loans provide that the bank may require the borrowerto submit proposals as to the payment of dividends and other appropriations of earningsfor the bank's review and approval before presentation to the shareholders. Default provisionsof certain agreements grant certain rights of possession to the banks. Under certain agreements,principally with Government-owned financial institutions, the borrower is required, upon requestof the lender, to apply the proceeds from the sales of any debentures or common stock to thereduction of such loans.

Income taxes in Japan applicable to the companies, imposed by the national, prefectural, andmunicipal governments, in the aggregate result in a normal effective statutory rate of approximately51%, 54%, and 56% for the years ended March 31, 1991, 1990, and 1989, re.spectively, exceptthat lower rates are applicable to the portion of income distributed as dividends. Foreignsubsidiaries are subject to income taxes of the countries in which they operate.

The effective rates of income taxes reflected in the statements of consolidated income differedfrom the statutory rate above due principally to (1) expenses not deductible for income taxpurposes, (2) tax-exempt dividend income, (3) losses of consolidated subsidiaries for whichpotential tax benefits have not been recognized, (4) tax benefits on loss on disposal ofsubsidiary, (5) the effect of taxation on intercompany dividends which have been eliminatedin consolidation, (6) lower income tax rates applicable to income in certain foreign countries,and (7) tax-exempt income from sources in certain foreign countries.

Deferred taxes arose principally from timing differences with respect to the deduction ofcertain prefectural income taxes and certain of the adjustments made for financial statementpurposes explained in Note l.

The amount of undistributed earnings of subsidiaries on which income taxes have notbeen recognized in the accompanying financial statements aggregated ¥84,311 million ($597,950thousand) and ¥85,721 million at March 31, 1991 and 1990, respectively.

7. Accrued Pension andSeverance Liabilities

The companies have non-contributory funded pension plans covering substantially all employeesother than directors. The plans provide benefits based upon years of service, compensation atthe time of service, and other factors. -The parent company also has a funded contributorypension plan which covers substantially all of its employees and provides for lifetime annuitypayments commencing at age 60.

The contributory pension fund is administered by a board of trustees composed of management and employee representatives as required by government regulations. Employee benefitsunder the plan consist of a portion as specified by government regulations and an additionalportion from the parent company's sponsored plan. The plan assets for both portions aremanaged and invested as one asset pool. Both the parent company and its employees arerequired to contribute to the pension fund, however, the parent company has an obligationto fund the plan in a manner sufficient to satisfy the plan benefit obligations.

The companies' funding policy is to contribute the amount allowable for income tax purposes.Contributions are intended to provide not only for benefits attributable to service to date butalso for those expected to be earned in the future.

Effective April 21, 1990, the parent company's sponsored plan (the additional portion) ofthe contributory pension plan was amended to increase the employees' benefits by 100% duringthe employees' age period from 60 to 64.

Net periodic pension costs of the parent company's and certain of its subsidiaries' pensionplans for the years ended March 31, 1991 and 1990 included the following components:

Service cost-benefits earned during the year .Interest cost on projected benefit obligation ..Actual return on plan assets .Net amortization and deferraL .

Millions of yen

1991 1990

¥ 6,485 ¥ 3,6868,018 4,752

(5,498) (6,999)(732) 167

Net periodic pension cost. ¥ 8,273 ¥ 1,606


dollars

1991

$ 45,99356,865

(38,993)(5,191)

$ 58,674

Pension expense for the plans of certain other subsidiaries not included above for theyears ended March 31, 1991 and 1990 were ¥1,741 million ($12,348 thousand) and ¥1,593million, respectively.

The expense for all pension plans reported under the previous accounting principle for theyear ended March 31, 1989, which have not been restated, was ¥6,476 million.

45

T]1e following t<,ible sets for thl:: Rlans' f4,nded status and arn0.llJlts r.eq)gn.izect in the ~ons9lic

qated balanG _sheet at Marc.h 31" 19~1an'cl 1~90:

1991 1990

Conrrlbulory ~on-<omrii5utory

pension plan pension plans Pension pans

Actuarial present value of benefit obligations:Vested benefit obli~ation , , " "" ,.. , ", ..

Accumulated benefit obligation ~ ,· , :..

Projected 'Benefit o'Bllganon, ', ,..,·Plan ,assets at fair value;, ,Ilrimarily lfsted' stocks;

marketable bonds, and loans recetvaDle ,.. , ,..

Pr6j~cted be.nefit,ob1i/W-ociii (in el<cess,6D-less than plan assets .l:Jnrecognizea nef'@in) lo~., , , ..p:tiot 'serVice 'CO~t nacyet recognized in n~t fler.ioQ.ic;

pension cost , , , , .Unrecognized ne ob,ligation (assets) at tranSittibhb~ing recognized over Uj yBars,., .... ,.. ,., .... ,......."." .. ,.. """ .. "", ..",

Adjustment req1:lired to reflectjminimum liability ,'" .

Pr~pa,i.Cl p,enSion C~Sts (illtdu~d pen~dn li~]Jilt.ty) recognizedIn the balance slieeL., , " ", .. , " =,.,..

y 84,006

n0B,5B'7

nrS,4i75

101893

H6;SB2)9,944

10,BOO

2,112(12 968)

Y J,1.869

Y.32,1i4

Y 43;5io

~i926

(3'h644)S·18

72

(339)

Y69,698

¥S'7, ;!;3.l

Y97,555

,~9.j92

1,837(949)

770

2,liJ5

Actuarial present value of benefit ooligations:Vested benefit 6bli~tion".. , " , ,..

Accumulated benefii obligation , ,: " "::.. , , ,,

P.roJected benefit obligation , ~ " , ..Plari assets at fair value, primarily'listed stocks, ,mi:frl<etab\e bonds.

and loans reGeivable" ,.. , " , , ..

Projected Benefit obligatiort· in exces's of'planassets ,' ,'".,..Unrecogftized nerloss : , , , " " .PriQt seJ:\d,ce. cost not yet te'cogq,ized in ns:t periodic pension, C,oSL ..Unrec;o-W1ized n~t obligSltion (assets) at tTal1sition being

recognized oyer t5 years, " , , , "." ".,.,.','.', ,.. , """,.."" ..Adjustment feqq:ired t~ t;eflect'mihi'rfltim, liabiliJY <', ,.., , , ;.

Acl.;ru.¢ ,p~nsion liabiliw'recognized in the' balance sheeL ..

$,595,18t $ 2'26;021

$ 7-70,12;1 $ 22,'l,830

$ 840;24.8 $ 309;00t

122,615 g;3,30S

(117.603) (215,702)7O,525 3,67476,596' lHO

14 979 (2,404)(<)1,9'72)

$ (j\-7475), $(21J 92.2)

46

Assul11f1t1on~. used for ~1<:)91 a'nd 1990 in determining <::osts·'(Ol" tPe P]p.ns,9J;1.Q .rh~ fUpd~g

statl!S, inIortJ!aJion ~h9wn .al;lOve_ wer.e pJinctpaUy as follpw~:

Coiitrilj,utoty pension pJ.~n:

vJe!gl1tecl-avet~gedis,COl.lllt rate ,.. ".. , " , ,,,, 55% 5,5%Average r~te of increa?~ in future cgrnpepS;lItion leve!s , " , 1--796 3,0%Expected long-term rare of return 'on plan assets ,~ n , 7~096 8:0%

Non-connibuto-ry pension plans:Weiglfted-avernge discounr rate _ ,.. " " ,,,,", ,,.,,,,,.,, _., " ' 55%Average ra\ecuf"increase. in future compeqsari6n l~)Ie1L ".." """,,. 4.3%Expecte9 lq,tlg·te.,tin rate.~'0~_tu);n,OD planrasset!i " ", , :' , 7,0%

8. Common Stockand Capital Surplus

In addition to the pension plans, most of the domestic subsidiaries have unfunded severanceindemnities plans under which their employees, other than directors, are entitled, under mostcircumstances, upon mandatory retirement at normal retirement age or earlier terminationof employment, to lump-sum severance indemnities based on compensation at the time ofseverance, years of service, and other factors. The amounts charged to income for the yearsended March 31, 1991, 1990, and 1989 were Y2,303 million ($16,333 thousand), 7,794 million,and 7,995 million, respectively.

Iihe changes in the number of issued shares of common stock during the years endedMarch 31, 1991, 1990, and 1989 were as follows:

Thousands of shares

1991

Balance at beginning of the year........ 1,561,337Issued for conversion of debentures and bonds.................................... 1,510Issued for exercise of warrants.................................................................. __--=2:..:8:..:..7

Balance at end of the year.. 1,563,134

1990

1,544,8619,0267,450

1,561,337

1989

1,532,001320

12,540

1,544,861

In accordance with the provisions of the Commercial Code of Japan, as amended in 1982,exercises of warrants issued and conversion of debentures and bonds sold on or after October1, 1982 have been accounted for by crediting one-half each of the exercise or conversion pricesto the common stock account and to the capital surplus account. Conversions of debenturesand bonds issued prior thereto have been accounted for by crediting the par values of theshares issued to capital stock and the excess over the par values to capital surplus.

At March 31, 1991 the holders of outstanding warrants issued with Notes are entitledto subscribe to the parent company's common stock as follows:

Exercise Aggregate numberprice per of exercisableshare (a) common shares (a)

Exercisablethrough

Warrants issued in:May 1986 .May 1987 .May 1989 .

(a) Subject to adjustments as specified in the indentures.

Y 7381,4151,712

3,539,98359,253,742

116,574,182

April 25, 1994April 28, 1992April 27, 1994

Pursuant to resolutions of the Board of Directors, the parent company from time to timeissues new shares of its common stock to the existing shareholders without consideration.Such free share distributions have been accounted for by a transfer from capital surplus tocommon stock of the aggregate par value of shares issued (see Note 1). A publicly-ownedcorporation in the United States issuing shares in similar transactions would be required toaccount for them as stock dividends as of the shareholders' record date by reducing retainedearnings and increasing appropriate capital accounts by an amount equal to the fair valueof the shares issued. The parent company made no such free share distributions during thethree years ended March 31, 1991. If such United States practice had been applied to thecumulative free distributions made by the parent company during the ten years to March 31,1991, capital surplus at March 31, 1991 would have been increased by Y144,593 million($1,025,482 thousand) with a corresponding decrease in unappropriated retained earnings.

The Commercial Code of Japan permits, upon approval of the Board of Directors, transfersof amounts from capital surplus to the common stock account.

At March 31, 1991, 224,069,780 shares of common stock were reserved for the conversionof outstanding debentures and bonds and for the exercise of outstanding warrants.

-47

9. Retained Earningsand Dividends

10. Trading Transactions

Retained Earnings Appropriated for Legal ReserveThe Commercial Code of Japan provides that an amount at least equal to 10% of the amountof cash dividends (effective April 1, 1991, it was amended to require an amount at least equalto 10% of all cash payments which are made,as an appropriation of retained earnings commencingwith fiscal periods ending on or after April 1, 1991) applicable to each fiscal period shall beappropriated and set aside as a legal reserve until such reserve equals 25% of capital stock.The retained earnings so appropriated may be used to eliminate or reduce a deficit by aresolution of the shareholders or it may be transferred to capital stock by a resolution ofthe Board of Directors.

Unappropriated Retained Earnings and DividendsThe amount of retained earnings available for dividends under the Commercial Code of Japanis based on the amount recorded in the parent company's general books of account maintainedin accordance with accepted Japanese accounting practice. The adjustments included in theaccompanying financial statements but not recorded in the books as explaiNed in Note 1 haveno effect on the determination of retained earnings available for dividends under the Code. Inaddition to the provision that requires an appropriation for legal reserve in connection withthe payment of cash dividends as described above, the Code imposes certain limitations onthe amount of retained ear;nin~ available for dividends. None of the retained earnings shownby the parent company's general books of account as of March 31, 1991 Ci269,On million$1,908,312 thousand, exclusive of the amount previously appropriated for legal reserve) isrestricted by such limitations under the Code. See Note 5 for the dividend restriction imposedby an indenture relative to certain convertible bonds.

Effective April 1, 1991, the Commercial Code ofjapan was amended to permit transfers, uponapproval of the shareholders, of a portion of unappropriated retained earnings available fordividends to the capital stoCK account without the issuance of al~Y shares under ceFtain conditions.

Dividends are approved by the shareholders at the meeting held subsequent to the fiscal yearto which the dividend is applicable. In addition, a semi-annual interim dividend payment may bemade by a resolution of the Board of Directors, subject to limitations imposed by the Code.

In the accompanying statements of changes in consolidated shareholders' equity, dividendsand appropriations to legal reserve shown for each year represent dividends paid out duringthe year and the appropriation to legal reserve made in relation to tne respective dividends.

The parent company and certain of its subsidiaries are general trading companies and act aseither principal or agent in their trading transactions. As to a substantial portion of the transactions in which the companies act as principal ("purchase and sale transactions"), only titleto and payment for the goods pass through the companies without physical acquisition anddelivery through the companies. As ill the transactions in which the companies act as, agent,payments for goods in some instances are made by purchasers directly to suppliers. Totaltrading transactions shown in the statements of consolidated income consist principallyof net sales with respect to ~ransaGti0ns in which the companies act as principal and amountsof transactions in which the companies act as agent. Gross trading profit represents grossmargins with respect to purchase and sale transactions and compensation, in the form ofcommissions or service charges, with respect to agency transactions. See Note 11.

The parent company and certain of its subsidiaries enter into commodity futures GontraGts as ,ameans of hedging transactions in inventories and trading commitments. These contracts relateprincipally to foodstuffs (mainly soybeans, corn, and raw sugar), non-ferrous metals (mainlycopper and aluminum), and crude oil. Changes in the market value of the futures contracts arerecognized in income when the corresponding commodities transactions are consummated.

11. Segment Information The companies operate predominantly in a single industry commonly classified as generaltrading companies. The companies' general trading activities consist principally of performingpurchasing and marketing functions in domestic and international markets, providing director indirect financing arrangements for purchasers and suppliers, and organizing and coordinating industrial projects primarily in conjunction with purchasing and marketing activities.In their general trading activities the companies deal in a wide variety of raw materials forand products of the manufacturing, extractive, agricultural and marine, and service industries.

The companies' operations for the years ended March 31, 1991, 1990, and 1989 aresummarized by geographic areas as follows:

Millions of yen

Year ended March 31, 1991

~apan

NorthAmenca Europe Other areas Eliminations Consolidated

Trading transactions:

Outside customers. .. ¥ 16,156,365 ¥ 1,144,696 ¥ 1,945,331 ¥ 480,144 ¥ 19,726,536

Inter-area 1,923,345 1,600,866 1,092,009 1,206,468 ¥ (5,822,688)-----

Total ¥ 18,079,710 ¥ 2,745,562 ¥ 3,037,340 ¥ 1,686,612 ¥ (5,822,688)¥ 19,726,536

Operating profit ¥

Other income, expenses,and charges-net

Income from consolidated operations before income taxes ..

101,270 ¥ 14,186 ¥ 5,704 ¥ 12,001 ¥ 1,373 ¥ 134,534

(39,263)

95,271

Identifiable assets atMarch 31, 1991... .. . .... ¥ 10,446,740 ¥ 855,433 ¥ 1,618,148 ¥ 558,521 ¥ (1,870,895)); 11,607,947

Investments in and advancesto affiliated companies .

Total assets at March 31, 1991....

322,503

¥ 11,930,450

Thousands of United States donars


JapanNorth

Amenca Europe Other areas ElImmatlons Consolidated

Trading transactions:

Outside customers ..

Inter-area .....

Total ..

Operating profit.. .

$114,584,149 $ 8,118,411 $13,796,674 $ 3,405,277 $139,904,511

13,640,745 11,353,660 7,744,745 8,556,510 $(41,295,660)-----

$128,224,894 $19,472,071 $21,541,419 $11,961,787 $(41,295,660) $139,904,511

$ 718,227 $ 100,610 $ 40,454 $ 85,113 $ 9,738 $ 954,142

Other income, expenses,and charges-net .

Income from consolidated operations before income taxes ....... $

(278,461)

675,681

Identifiable assets atMarch 31, 1991.. $ 74,090,355 $ 6,066,901 $11,476,227 $ 3,961,142 $(13,268,759) $ 82,325,866

Investments in and advancesto affiliated companies .

Total assets at March 31, 1991....

2,287,255

$ 84,613,121

49

Millions of yen


JapanNorth

America Europe Other areas Elimmations ConsolIdated

Trading transactions:Outside customers ..

Inter-area .

Total .

..... ¥l5,138,059 I'I,126,9l7 I'I,905,315 I' 352,640 I'I8,522,9312,057,871 1,234,599 1,020,752 876,881 I'(5,190,103)

-~====3

...... I'I7,195,930 I'2,361,516 I'2,926,067 I'I,229,521 I'(5,190,103) I'I8,522,931

Operating profit . ..... I' JrOO,806 I' 1,868 I' 4,460 I' 16,845 I' 2,455 I' 126,434

Other income, expenses,and charges-net .

Income from consolidated operationsbefore income taxes .

(14,544)

I' lll,890

Identifiable assets at March 31, 1990 I'I0,458,779 I'I,001,872 I'I,176,042 I' 464,353 I'(l,683,962)I'll,417,084

Invesrments in and advancesto affiliated companies .

Total assets at March 31, 1990


Japan

NorthAmenca

261,040

I'll ,678,124

Millions of yen

Europe Other areas Elimmations Consolidated

Trading transactions:Outside customers

Inter-area .

Total

............. I'I2,214,969 I'I,085,809 I'2,153,299 I' 189,738 I'I5,643,8151,939,164 1,165,089 890,461 724,434 \'(4,719,148)----

....................... I'I4,154,133 I'2,250,898 I'3,043,760 I' 914,172 I'(4,719,148)I'I5,643,815

Operating profit ............................. I' 70,415 I' 3,674 I' 1,587 I' 3,240 I' 865 I' 79,781

Other income, expenses,and charges-net.. .....

Income from consolidated operationsbefore income taxes .. I'

(5,785)

73,996

'50

Identifiable assets at March 31, 1989 ...

Invesrments in and advancesto affiliated companies ..

Total assets at March 31, 1989 .

I' 8,580,355 I' 680,927 I' 862,880 I' 207,407 I'(I,071,534)I' 9,260,035

252,489

I' 9,512,524

12. Foreign ExchangeGains and Losses,Forward Contracts, andForeign Operations

13. Rent Expense

"Other areas" consist principally of Oceania, Asia. and Latin America."Operating profit" is gross trading profit (see Note 10) and rent and warehousing income

less selling, general, and administrati~ expenses and provision for doubtful receivables.Inter-area transactions generally are priced with reference to prices applicable to transactions

with unaffiliated parties.The total trading transactions in Japan with outside customers include export transactions

of "¥2,342,452 million ($16,613,135 thousand), "¥2,056,972 million. and "¥1.821,894 million forthe years ended March 31. 1991, 1990, and 1989. respectively. principally to countries in Asia,North America, Europe, and the Middle East.

The affiliated companies operate principally in the manufacturing, extractive, agricultural, andservice industries and substantially participate in the companies' trading transactions as eitherpurchasers or suppliers. The geographic areas in which such companies prinCipally operateare Japan, Asia, Europe, and North America.

Foreign Exchange Gains and LossesNet foreign currency transaction gains included in the determination of net income for theyears ended March 31, 1991 and 1989 were "¥24,512 million ($173,844 thousand) and "¥1,981million, respectively. Net foreign currency transaction losses included in the determination ofnet income for the year ended March 31, 1990 were "¥2,315 million.

Foreign Exchange Forward ContractsThe companies have entered into foreign exchange forward contracts principally to hedgerisk of changes in foreign currency exchange rates associated with certain assets and obligationsdenominated in foreign currencies. At March 31, 1991 the companies had foreign exchangeforward contracts of approximately "¥l,994,104 million ($14,142,582 thousand).

Foreign OperationsNet income from foreign operations, before elimination of certain inter- .and intra-companyitems, amounted to "¥22,860 million ($162,128 thousand). "¥26,959 million, and "¥14,996 millionfor the years ended March 31, 1991, 1990, and 1989, respectively. Net foreign assets, beforeelimination, at March 31, 1991 and 1990 were "¥324,127 million ($2,298,773 thousand) and"¥319,845 million, respectively. In determining net income from foreign operations, no allocationhas been made of certain corporate administrative expenses and financing costs which wereincurred in Japan but may be applicable to foreign operations.

The companies lease office space and certain other assets under operating leases. Total rentalexpenses under such leases for the years ended March 31, 1991, 1990, and 1989 were"¥32,579 million ($231,057 thousand), "¥26,750 million, and "¥26,851 million, respectively.

At March 31, 1991 the future minimum lease payments under noncancelable leases are asfollows: "¥7,949 million ($56,376 thousand) in 1992, "¥6,462 million ($45,830 thousand) in1993, "¥5,073 'million ($35,979 thousand) in 1994, "¥3,636 million ($25,787 thousand) in 1995,"¥2,805 million ($19,894 thousand) in 1996, and "¥20,540 million ($145,674 thousand) thereafter.

51

14. Commitments andContingent Liabilities

15. Events sinceMarch 31, 1991

52

The companies, in the normal course of trading operations, enter into substantial long-termpurchase commitments, which provide for either fixed prices or basic prices adjustable tomarket. Such purchase commitments are in most instances matched with counterpart salescontracts.

The companies also utilize various financial instruments with off-balance-sheet risk tomanage their own business and to meet the financial needs of their customers. The financialinstruments include principally financial commitments and guarantees, interest rate swaps, andforward exchange contracts. Those instruments involve, to varying degrees, elements of creditand market risk in excess of the amounts recognized in the consolidated balance sheet. Exposureto market risk is managed through position limit and other controls and by entering into counterbalancing positions. Exposure to credit risk in the event of counterparty nonperformance iscontrolled through credit approvals, limits, and monitoring procedures based on the samecredit poliCies used for on-balance-sheet instruments. The companies require collateral to theextent as necessary.

The companies engage in trading transactions with a significant number of customersincluding governments of countries worldwide and in a wide variety of industries, and theirreceivables from and guarantees to such parties are broadly diversified. Consequently, inmanagement's opinion, no significant concentration of credit risk exists for the companies.Management does not anticipate that the companies will incur losses on trade receivablesin excess of established allowance.

The companies' contingent liabilities at March 31, 1991 as guarantor of indebtednessof others aggregated Y343,784 million ($2,438,184 thousand), including Y132,602 million($940,440 thousand) relating to affiliated companies. Such guarantees have been providedprimarily to suppliers and customers as indirect financing arrangements.

The companies also had long-term financing commitments aggregating Y168,664 million($1,196,199 thousand) at March 31, 1991 for loans, investments in equity capital, and financingon a deferred-payment basis of the cost of equipment to be purchased by customers.

The companies are involved in various matters of litigation. In the opinion of managementand legal counsel, the companies' liability, if any, when ultimately determined will not havea materially adverse effect on the companies' financial position.

On June 27, 1991 the shareholders authorized (1) payment of a cash dividend to shareholdersof record on March 31, 1991 of Y4.0 (2&) per share, or a total of Y6,253 million ($44,348thousand) and (2) a transfer from unappropriated retained earnings to retained eamin~

appropriated for legal reserve of Y626 million ($4,440 thousand).

Independent Auditors' Report

Deloitte RossTohmatsu

MS Shlbaura Building13-23, Shlbaura 4-chomeMlnato-ku:Tokyo 108

Mitsubishi Corporation(Mitsubishi Shoji Kabushiki Kaisha):

We have audited the accompanying consolidated balance sheets of Mitsubishi Corporation (MitsubishiShoji Kabushiki Kaisha) and subsidiaries as of March 31, 1991 and 1990 and the related statements ofconsolidated income, changes in consolidated shareholders' equity, and consolidated cash flows for eachof the three years in the period ended March 31,1991 (all expressed in Japanese yen). These consolidatedfinancial statements are the responsibility of the Corporation's management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion, the above-mentioned consolidated financial statements present fairly, in all materialrespects, the financial position of Mitsubishi Corporation and its subsidiaries as of March 31, 1991 and1990 and the results of their operations and their cash flows for each of the three years in the periodended March 31, 1991 in conformity with accounting principles generally accepted in ~he United Statesof America.

Our audits also comprehended the translation of Japanese yen amounts into United States dollaramounts included in the consolidated financial statements with respect to the year ended March 31, 1991and, in our opinion, such translation has been made in conformity with the basis stated in Note 1. SuchUnited States dollar amounts are presented solely for the convenience of readers outside Japan.

May 28, 1991 (June 27, 1991 as to the matters discussed in Note 15)

Corporate Officers

From left, Yohei Mimura and Shinroku Morohashi

CHAIRMAN OF THE BOARDOF DIRECTORS

Yohei Mimura

PRESIDENT, DIRECTOR

Shinroku Morohashi

EXECUTIVE VICE PRESIDENT,DIRECTOR

Takeshi EguchiNew Business

EXECUTIVE VICE PRESIDENT,DIRECTOR

Ichiji KishimotoGeneral Manager, Osaka Branch

SENIOR MANAGING DIRECTORS

Shiro ShibuyaInformation Systems and Services

Shinichiro OhtaAdministration

Minoru MakiharaResident Senior Managing Director

. for The AmericasChairman of the Board,Mitsubishi International Corporation

Takeshi Eguchi

54

Ichiji Kishimoto

Akira HorieGeneral Manager, Nagoya Branch

Yoshiaki ShibataMachinery

Nobuo KobayashiChairman & Managing Director,Mitsubishi Euro-Africa SA,Mitsubishi Corporation (UK) Limited

Enshiro MatsuyamaFoods

MANAGING DIRECTORS

Nobuaki IwaiChemicals

Hideo NoguchiMachinery

Hiroaki TanakaPlanning and Coordination, Logistics

Naoyasu KurokiMachinery

Yasushi HottaMetals

Makoto KurodaMetals

Tsuneaki KakuNew Business

Nobuyuki KondoTextiles and General Merchandise

Ichiro YokoseFuels

Tetsuo KamimuraPresident, Director,Mitsubishi International Corporation

Toshiharu linoInternal Audit, Informationand Communication Systems

Mitsutake OkanoPersonnel and General Affairs

Toshio KawachiMetals

Takeshi KobayashiInfonnation Systems and Services

DIRECTORS

Nihachiro Katayama*Chainnan of the Board of Directors,Mitsubishi Electric Corporation

Yotaro lida*Chainnan of the Board of Directors,Mitsubishi Heavy Industries, Ltd.

Kanji ShimamuraSenior Assistant to Executive Vice President,New Business

]unichi NakamuraSenior Assistant to Managing Director,Internal Audit

Zenshiro NagasakaGeneral Manager, General Affairs Department

Hiroshi laizenResident Managing Director, China,General Manager, Beijing Office

Izuru NagasawaGeneral Manager, Ferrous Raw MaterialsDivision

]un KoharaGeneral Manager, Logistics DevelopmentDepartment

Kaname ShimazakiDeputy General Manager, Osaka Branch

Takuya ShitaraSenior Assistant to Managing Director,Chemicals

Kazuaki KawasumiGeneral Manager, Personnel Department

Takao MiyakeGeneral Manager, Non-Ferrous Metals Division

Toshihiro KoizumiGeneral Manager, Regional Planningand Coordination Department

Motohiko NumaguchiChainnan & Managing Director,Mitsubishi Corporation (Hong Kong) Ud.

Hiroshi SatoGeneral Manager, Motor Vehicle Division B

Koichi KuwaharaSenior Assistant to Managing Director,Information and Communication Systems

Naoyoshi UeharaGeneral Manager, Power andElectrical Systems Division

Hiroshi KawamuraSenior Assistant to Managing Director,Fuels

Yoshio SawaiGeneral Manager, Steel International Division

Mikio KawamuraSenior Assistant to Senior Managing Director,Infonnation Systems and Services

Choi Moon HoGeneral Manager, Seoul Branch

Katsumi MiyataPresident, Director,Mitsubishi Company (Thailand), Ltd.

Osamu EbiharaSenior Assistant to Senior Managing Director,Administration

Hitoshi AriwakaSenior Assistant to Senior Managing Director,Machinery

Takaaki TakebeGeneral Manager, Foods (Fresh & Frozen)Division

Kazuhiko NaganoGeneral Manager, Kyushu Branch

Yoshitaka MuraseGeneral Manager, Steel Domestic SalesDivision A

STANDING STATUTORY AUDITOR

Keishi Nakamura

STATUTORY AUDITORS

Hajime Yamada

Haruo Takeda

Michie Harayama

Takeshi Ishikawa

*Non-executivt director

(As ofJune 27, 1991)

55

Global Network

Mitsubishi Corporation provides a broad range•of integrated services designed to satisfy the diverse •

•needs of clients through its global network of offices • ••and subsidiaries. We currently maintain 53 domestic •offices and 107 overseas offices in addition to the

71 main offices and branch offices of our overseas •subsidiaries.

To maximize responsiveness and efficiency, our •worldwide network of offices is linked by a state-of-

the-art telecommunications network. Using this system,

information can be exchanged among offices and sub- • • • •sidiaries instantaneously by teletext, facsimile, high- •speed data transmission, and through our internal • •telephone links. The primary link in this system

is a high-speed digital backbone network that connects

telecommunications computers in Tokyo, Osaka, ••• •• The North Pole

London, New York, and other major business centers. • • •'" •

Leased telecommunications lines are used to transmit

information from these centers to other offices.

Our staff around the world use this telecommuni- ••

cations network for quick and easy access to infor-

mation on a wide range of topics, including the global • •• •• • •economy, market trends, new products, technological • I:• •• • •developments, and weather conditions. By collecting •• ••and analyzing this data, experienced market specialists •can offer timely services in trading, resource develop- •.,ment, technology transfer, and financing to contribute • "to the success of commercial transactions and

•international projects.

(As of April 1, 1991)

•

• ••

• ••

56

NORTH AMERICA•• r1 AND CENTRAL AMERICA

• • Offices• • Guatemala

• San Salvador

• EUROPE • Subsidiaries• • Offices New York• Prague Durham (North Carolina)

• Budapest Stratford

• Warsaw Bensenville• • Sofia White PlainsOCEANIABucharest Seatde• • Office Moscow PortlandNoumeaKhabarovsk San Francisco.-..

ASIA • Subsidiaries Belgrade Los Angeles. .-. •• • • Offices Sydney Ankara Huntsville• • • Brisbane Istanbul• • Karachi Houston•• • Islamabad Melbourne Oslo Dallas•• • • • Perth• Lahore Stockholm Chicago• AucklandKuala Lumpur Helsinki Akron

Sin~poreWellington Vienna Bloomington-Normal

• TaipeiMIDDLE EAST • Subsidiaries Minneapolis

• Kaohsiung London Adanta• • • • Offices• • ManilaAmman Lisbon Detroit

SeoulDamascus Madrid Palo Alto

PusanBaghdad Las Palmas St. Louis

PohangCairo Paris Pittsburgh

KwangyangKhartoum Brussels Washington, DC

UlsanDoha Rotterdam Philadelphia

DhakaRiyadh Dusseldorf Boston,

Hanoi TorontoJeddah HamburgHochiminh City

Al Khobar Berlin VancouverBeijing

Sana'a Stutt~rt MontrealGuangzhou

Abu Dhabi Trebur Cal~ry

XiamenDubai Frankfurt Mexico City

TianjinMuscat Milan Monterrey

Nanjing Athens PanamaQingdao • Subsidiaries

Shanghai Manama AFRICA SOUTH AMERICA

Dalian Kuwait• Offices • Offices

Yangon Tehran Tripoli Quito

New Delhi Casablanca La Paz

Bombay Algiers Asuncion

Cochin Tunis • SubsidiariesBan~lore Kinshasa CaracasMadras Lusaka Puerto OrdazCalcutta Kitwe BogotaJakarta Harare LimaSurabaya Nairobi Sao PauloBandar Seri Be~wan Dar es Salaam Porto AlegreColombo Luanda Brasilia

• Subsidiaries Abidjan Apucarana

Bangkok Dakar Santos

Haadyai • Subsidiaries Rio de Janeiro

Kuala Lumpur Addis Ababa Belo Horizonte

Hong Kong Lagos Buenos Aires

Douala Santiago

57

Prindpal Subsidiaries and Affiliates

• Information Company Name Main Business Company Name Main BusinessSystems

JAMCO AMERICA, INC. Manufacturing and marketing Electronic Devices Providing information on IC/and Services Information Service(US.A.) ofaircraft galleys and lavatories Co., ltd. (Japan) LSI through data-base networks

KONICA BUSINESS MACHINES Distribution of KONICA MC electronics Co., ltd. Marketing of l'roductionINTERNATIONAL GmbH photocopiers (Japan)· equipment ana testers(Germany) for semiconductorsKONICA BUSINESS Distribution of KONICA MC Medical, Inc. (Japan)· Marketing of medicalMACHINES ITALlA S.p.A.(Italy) photocopiers electronic equipment

KONICA BUSINESS Distribution of KONICA MEMORY-TECH ManufactUring of CDsMACHINES (UK) ltd. photocopiers CORPORATION (Japan) and CD-ROMs(UK)

SM2E (SOCIETE EUROPEENNE Supplier ofturnkey printed MITSUBISHI OffiCE Reseller of value-addedDE MICRO-ELECTRONIQUE ET circuit assembly services MACHINERY CO., LTD. computer systemsD'ELECTRONIQUE) (France)· (Japan)·

TriM TECHNOLOGIES Supplier ofturnkey printed Net One Systems Co., ltd. Marketing and installation

(S) PTE LTD (Singapore)· circuit assembly services (Japan) of LAN systems and relatedproducts

ADVANCED SYSTEMS Network management and KK NETWORLD (Japan) Distribution of PC LANTECHNOLOGY INC. computer systems integration software and related hardware(Japan) services

DlA OffiCE SYSTEMS Marketing and maintenance SECOM SYSTEMS Office security managementCORPORATION (Japan)· of photocopiers CO., LTD. (Japan) services

Dia Semicon Systems Inc. Marketing ofsemiconductors Space Communications Satellite communications(Japan)· Corporation (Japan) services

DSCJapan Incorporated Marketing%DSC switching TECHNODlA Marketing and development(Japan) equipment or telecommuni- CORPORATION (Japan)· of CAD/CAM systemscations carriers

• Fuels Company Name Main Business Company Name Main Business

Brunei LNG Sendirian ManufactUring of LNG JR MC Tokai Corp. (Japan) Commercial businessBerhad (Brunei)

CARBONEX Marketing of carbon materials MC Carbon Co., Ltd. Marketing of carbon productsCORPORATION (US.A.)· and products (Japan)·

Japan Australia LNG ManufactUring and marketing MC Marine Co., Ltd. Tanker operation and

(MIMI) Pty., Ltd. (Australia) of LNG/condensate (Japan)· marketing of petroleumproducts

Malaysia LNG Sdn. Bhd. ManufactUring and marketing Mitsubishi Liquefied Marketing of LPG(MLNG) (Malaysia) of LNG Petroleum Gas Co., ltd.

(Japan)

MCFARM Sendirian Berhad Livestock industry (cattle Mitsubishi Petroleum Exploration for and productionDevel0rment Co., ltd.(Brunei)· breeding) (Japan of petroleum

Petro-Diamond Inc. Marketing of crude oil Mitsubishi Shoji Sekiyu Marketing of petroleum(US.A.)· and petroleum products Co., ltd. (Japan)· products

Petro-Diamond Singapore Marketing of crude oil Sekiyu Cokes Kogyo KK Storage of petroleum cokes(PTE.) ltd. (Singapore)· and petroleum products (Japan)·

Dia Shoseki Co., ltd. Marketing of petroleum(Japan) products

58

• MetalsCompany Name Main Business Company Name Main Business

Coilplus Holdings, Inc. Overall supervision of steel Asahi Steel Co. (Japan)· Marketing of specialty steels(US.A.)· sheet processing

Eletrovale S.A. Industria e Manufacturing and sale Daiya Steel Co., Ltd. Marketing of steel productsComercio (Brazil) offerrosilicon (Japan)·

Enkei America, Inc. (US.A.) Man1sactUrin~of aluminum Howa Kozai Co., Ltd. Marketing of iron and steelwhee sand ot er aluminum (Japan)· productsauto parts

Fabricacion Metalica de Processing of welded Kyushu Steel Center Warehousing and processingMatamoros S.A. de CY.(Mexico)· steel sheet Co., Ltd. (Japan)· of steel materials

M.e. Inversiones Limitada Holding company for M.e. Aluminum Manufacturing of secondary(Chile)· CAP stocks Company Ltd. (Japan)· aluminum metals

Mitsubishi Development Coal mining and contract MC Gold Co., Ltd. (Japan)· Retailing of precious metalPry., Ltd. (Australia)· processing of aluminum products

P. T. Steel Center Indonesia Steel sheet processing MC Nonferrous Metals Sales of nonferrous metal(Indonesia) Sales Co., Ltd. (Japan)· construction materials

Rio Negro Comercio e Steel sheet processing M.e. Recycling Co., Ltd. Wholesaling ofnonferrous metalIndustria de A(:o S.A. and sales (Japan)· scrap and raw materials(Brazil)·

Shenzhen Boaling Tonglt Steel sheet processing Ryotetsu Co., Ltd. (Japan)· Warehousing and processingLtd., Corporation (China) and sales of specialty steels

Triland Metals Ltd. (UK.)· Metals dealer and broker Ryowa Steel Co., Ltd. Cutting of steel products(Japan)·

• MachineryCompany Name

Chemtex International Inc.(US.A.)·

Diamond Energy Inc.(US.A.)·

Entertainment DesignInternational Inc. (US.A.)·

Frontier Cruises Ltd.(Bahamas)

Machinery DistributionInc. (US.A.)·

Mitsubishi Motor Salesof America, Inc. (US.A.)

Mitsubishi MotorsAustralia Ltd. (Australia)

MMC Auto DeutschlandGmbH (Germany)

P.T. Mitsubishi KramaYudha Motors andManufacturing (Indonesia)

The Colt Car CompanyLtd. (UK.)

Main Business

Plant engineering

Power generation

Software creation relatingto theme parks

Adventure cruise operation

Distribution of constructionmachinery

Distribution of passenger cars

ManufactUring anddistribution of passenger cars


Distribution of cars


Company Name

Tri Petch Isuzu SalesCo. Ltd. (Thailand)

Diamond City Ltd. (Japan)

Fuji Coca-Cola BottlingCo., Ltd. (Japan)

MC Machinery, Inc. (Japan)·

MF Marine ManagementCo., Ltd. (Japan)·

Mitsubishi-Shoji MachineTool Sales Corporation(Japan)·

MSK Tokyo MachineryCo., Ltd. (Japan)·

Nikken Corporation (Japan)

Ryoshin LeasingCorporation (Japan)

Toyo Thermo ControlCo., Ltd. (Japan)·

Main Business

Distribution of cars

Construction and managementof shopping complexes

Bottling and distribution

Importing and exportingof machinery components

Fleet operation

Distribution of machine tools

Distribution of agriculturalmachinery

Rental

Leasing

Distribution of transportationpurpose refrigerators

·Subsidiary

59

• Foods Company Name Main Business Company Name Main Business

AGREX Inc. (US.A.)· Grain shipper Dainihon Sugar Reftning of sugarManufacturing Co., ltd.(Japan)·

Asia Modified Starch Modified starch producer Diamond Sea Foods Processing and distributingCo., ltd. (Thailand) Co., ltd. (Japan)· marine products

Indiana Packers Co., ltd. Meat-packer (pork) Japan Fann, ltd. (Japan) Breeding and processing(US.A.) of broilers and swine

KILlARA (Quirindi) Pty., Feedlot Kentucky Fried Chicken Fast-food restaurant chainltd. (Australia)· Japan ltd. (Japan)

MC Snack, Inc. (US.A.)· Manufacturing and Nihon Shokuhin Kako Com wet millerdistributing snacks Co., ltd. (Japan)

Mid Coast Meat Pty., ltd. Meat-packer (beef) Nitta Flour Milling Flour milling(Australia) • Co., ltd. (Japan)

Mitsubishi Foods (MC) Manufacturing and Rinoru Oil Mills Co., ltd. Crushing and reftningInc. (US.A.)· distributing canned products (Japan)· of oilseeds

Premier Edible Oils Reftning of vegetable oils Ryochiku Co., ltd. (Japan)· Distributor of chicken, pork,Corporation (US.A.)· and beef

Princes ltd. (O.K.). Wholesaling offood products Ryoshoku ltd. (Japan)· Wholesaling offood products

Thai Pineapple Canning Manufacturing and exporting Toyo Reizo Co., ltd. Marketing of marine productsIndustry Corp., ltd. of pineapple products (Japan)·(Thailand)

• ChemicalsCompany Name Main Business Company Name Main Business

Ado Compounders Inc. Polyoleftn plastics compounding Siamount Plastic Corp. Manufacturing of disposable(Canada)· (Thailand) polyvinyl chloride (PVC) gloves

Aristech Chemical Corp. Manufacturing of intermediate Thai Chemical Corporation Manufacturing of plasticizers,(US.A.)· petrochemicals ltd. (Thailand) adhesives, and formalin

Atlanta Precision Molding Manufacturing of plastic Tosoh Hellas A.I.C. Manufacturing of rawCo., ltd. (US.A.)· products (Greece) materials for batteries

C&M Fine Pack Inc. Manufacturing of disposable Dainippon Toryo Co., ltd. Manufacturing of paints(U.S.A.) fast-food packages (Japan)

Diaplastics (UK) ltd. Manufacturing of plastic- Graphite Design Inc. Manufacturing ofgraphite(O.K.). molding products (Japan)· golf shafts

Exportadora de Sal, Production of solar salt MC Chemical Corp. Marketing of solvents andS.A. de C.v. (Mexico) (Japan)· other chemical products

Kux Manufacturing Co. Manufacturing of automotive Mitsubishi Shoji Marketing offertilizers(US.A.)· decals Agri-Service Corp. (Japan)· and soil conditioners

MITENI S.d. (Italy) Manufacturing of Mitsubishi Shoji Marketing of plastics.fluorochemicals Plastics Corp. (Japan)·

Rimtec Corp. (US.A.) Polyvinyl chloride (PVC) Plantech Research Institute R&D and marketingplastics compounding (Japan) of plant technologies

Sanken US.A. Inc. (US.A.) Manufacturing of.floppy disks Towa Chemical Industry Manufacturing and marketingand shells Co., ltd. (Japan) of sugar alcohol

60

• TextilesCompany Name Main Business Company Name Main Business

and GeneralMerchandise Astillas Exportaciones Wood chip production AIMS International Marketing of high-quality

Ltda. (Chile)· Corporation (Japan) imported china and porcelain

Cape Flanery Silica Mines Mining of silica sand AITEX Co., Ltd. (Japan)· Spinning of cotton yamPry., Ltd. (Australia)·

Crestbrook Forest Manufacturing of lumber Artespana Japan Co., Ltd. Marketing of high-grade

Industries Ltd. (Canada) and pulp (Japan) imported furniture andinterior goods

Eidai do Brasil ManufactUring of plywood Dia Packaging Corp. Marketing of packagingMadeiras SA (Brazil) and doors (Japan)· materials

Forestal Tierra Chilena Forestation for pulp chips Green Houser Co., Ltd. Marketing of housingLtda. (Chile) (Japan)· materials

Mayo Forest Products Ltd. Sawmill Hakodate Plywood ManufactUring of plywood(Canada) Manufacturing Co. (Japan)·

MC Forest Investment Inc. Investments in the forest Kawagoe &: Co., Ltd. Wholesaling of textiles(Canada)· industry (Japan)·

Mitsubishi Cement ManufactUring and marketing Life Gear Corporation Marketing offootwearCorporation (US.A.) of cement and concrete (Japan)·

Toyo Tire sales companies Marketing of "Toyo" MC Kosan Ltd. (Japan)· Marketing of silica sand(Canada, Australia, Europe) brand tires and other minerals

Tredia Fashion Co., Ltd. ManufactUring of clothing RJ. Reynolds/MC Tobacco Marketing of "REYNOillS"(Hong Kong)· Co., Ltd. (Japan) cigarettes

• OthersCompany Name Main BUSiness Company Name Main Business

MC Capital (Asia) Ltd. Financial selVices MC Credit and Research Company credit analysis, debt

(Hong Kong)· Co., Ltd. (Japan)· management selVices, andother selVices

MCF FINANCIAL SERVICES M&A advisory and merchant M.e. Finance Co., Ltd. Financial selVicesLIMITED (UK.)· banking selVices (Japan)·

MC Finance International Financial selVices MC Insurance Center, Ltd. Insurance agentB:v. (The Netherlands)· (Japan)·

MIC Consulting Inc. M&A adVisory and consulting MC Mates Co., Ltd. (Japan) Personnel agency(US.A.)· selVices

Mitsubishi Corporation Financial St:lVices Meiwa Trading Co., Ltd. General import/exportFinance PLC (UK.)· (Japan) domestic traders

New Century Insurance Reinsurance company Ryoko Warehouse Co., Ltd. Warehousing and leasingCo., Ltd. (Bermuda)· (Japan)·

ABLE Corporation (Japan)· Pr1essional staff search Seto Futo Co., Ltd. (Japan) Stevedoring, warehOUSing,an recruitment consulting and transportationfor corporate employment

KOHJIN Co., Ltd. (Japan) ManufactUring of special- Shintoa Koeki Kaisha, Ltd. General import/exportpurpose paper and packaging (Japan) domestic tradersmaterialS

MC Communications Inc. Sales promotion, publishing,(Japan)· and related selVices

•Subsidiary

61

General Information

• Authorized andIssued Share Capital

• Principal Shareholders

The Company's authorized share capital, as defined in the Articles of Incorporation, is2,500,000,000 shares of common stock. There is only one class of share in the issued sharecapital of the Company. Each issued share has a par value of ¥50, is fully paid and nonassessable and is in registered form. At March 31, 1991, a total of 1,563,133,977 shares werein issue. At the same date, 224,069,780 shares were issuable upon conversion of the Company'soutstanding convertible bonds and debentures and upon exercise of the Company's outstandingequity warrants.

An increase in the authorized share capital is only possible by means of an amendmentto the Articles of Incorporation.

The 10 largest shareholders of the Company and their respective holdings of sharesat March 31, 1991, were as follows:

The Tokio Marine and Fire Insurance Company, LimitedThe Meiji Mutual Life Insurance CompanyThe Mitsubishi Trust and Banking CorporationThe Mitsubishi Bank, LimitedThe Bank of Tokyo, Ltd.The Dai-Ichi Kangyo Bank, LimitedNippon Life Insurance CompanyMitsubishi Heavy Industries, Ltd.The Dai-Ichi Mutual Life Insurance CompanyThe Sanwa Bank, Limited

Total

Number ofshares held

(thousands)

95,25790,77785,91377,20076,12854,73849,56248,92140,54637,935

656,977

Percentage oftotal sharesoutstanding

(%)

6.095.815.504.944.873.503.173.132.592.43

42.03

• Directors' and StatutoryAuditors' Shareholdings

Except as disclosed above, the Directors are not aware of any shareholder who is direcdyor indirecdy interested in 5% or more of the issued share capital of the Company.

The following is a list of Directors and Statutory Auditors with their shareholdings in theCompany at June 27, 1991. At the same date, Directors and Statutory Auditors owned a totalof 557 thousand shares in the Company.

62

Yohei MimuraShinroku MorohashiTakeshi EguchiIchiji KishimotoShiro ShibuyaShinichiro OhtaMinoru MakiharaAkira HorieYoshiaki ShibataNobuo KobayashiEnshiro MatsuyamaNobuaki IwaiHideo NoguchiHiroaki TanakaNaoyasu KurokiYasushi HottaMakoto KurodaTsuneaki KakuNobuyuki Kondo


(thousands)

532411182021156

2518211111131052

148

Ichiro YokoseTetsuo KamimuraToshiharu linoMitsutake OkanoToshio KawachiTakeshi KobayashiNihachiro KatayamaYotaro lidaKanji Shimamura]unichi NakamuraZenshiro NagasakaHiroshi ZaizenIzuru Nagasawa]un KoharaKaname ShimazakiTakuya ShitaraKazuaki KawasumiTakao MiyakeToshihiro Koizumi


(thousands)

57

121720

45

109

15644657656

Motohiko NumaguchiHiroshi SatoKoichi KuwaharaNaoyoshi UeharaHiroshi KawamuraYoshio SawaiMikio KawamuraChoi Moon HoKatsumi MiyataOsamu EbiharaHitoshi AriwakaTakaaki TakebeKazuhiko NaganoYoshitaka MuraseKeishi NakamuraHajime YamadaHaruo TakedaMichie HarayamaTakeshi Ishikawa


(thousands)

1155362

113249543

123235

• General MeetingofShareholders

• Share Dealingsand Settlement

Dividends

• Foreign ExchangeControls

• Japanese Taxation

The ordinary general meeting of the Company's shareholders is usually held in Tokyo in Juneeach year. In addition, the Company may hold an extraordinary general meeting of shareholders whenever necessary.

Notice of a shareholders' meeting stating the place, the time and the purpose thereof mustbe mailed to each shareholder (or, in the case of a non-resident shareholder, to its standingproxy in Japan) at least two weeks prior to the date set for the meeting.

In accordance with the Commercial Code of Japan, the transfer of shares is effected by deliveryof share certificates, but in order to assert shareholder rights against the Company, the transferee must have his name and address registered on the Company's register of shareholders.For this purpose, shareholders are required to file their names, addresses and seal impressions(or specimen signatures in the case of non-Japanese shareholders) with the Company's transferagent for the shares. Non-resident shareholders are required to appoint a standing proxy inJapan for the purpose of communicating with the Company. Japanese commercial banks andsecurities companies customarily act as standing proxy and provide related services for standard fees. The transfer agent for the shares is The Mitsubishi Trust and Banking Corporation,at its Stock Transfer Agency Division, 4-5, Marunouchi l-chome, Chiyoda-ku, Tokyo 100, Japan.

Following shareholders' approval, final dividends are distributed to shareholders on recordat March 31 in each year in proportion to the number of shares held by each shareholder,either in cash or in the form of shares. The Articles of Incorporation permit the payment ofinterim cash dividends (i.e. cash distributions made pursuant to Articles of the CommercialCode of Japan) to the shareholders on record at September 30 in each year by resolutionof the Board of Directors.

Under its Articles of Incorporation, the Company is not obliged to pay any final or interimdividends unclaimed for a period of three years after the date on which they are first madeavailable by the Company.

In general, the acquisition of shares in a listed Japanese company by a non-resident ofJapanrequires prior notification of the proposed transaction to the Minister of Finance of Japan.If the acquisition is made from, or through, a securities company deSignated by the Ministerof Finance, such prior notification is not generally required.

Except in exceptional circumstances, cash dividends and the proceeds of any sale of sharesin Japan may be converted into any foreign currency and repatriated by non-residents withoutnotifying any regulatory authOrity in Japan. The acquisition of shares by non-resident shareholders by way of stock dividend or free distribution of shares is not subject to any of theprior notification requirements.

In general, the rate of Japanese withholding tax applicable to cash and stock dividends and totaxable free distributions of shares made by a Japanese corporation to a non-resident ofJapanis 20%. At present, Japan has income tax treaties, conventions or agreements with variouscountries under which the withholding tax rate for portfolio investors is reduced in most casesto 15%.

The Company does not make additional payments on account of tax withheld from dividendsand other distributions.

Note: This general information is provided solely for the convenience of the readers of this Annual Report,and as such the readers should consult their legal and tax advisors as to foreign exchange controlsand Japanese taxation.

63

Organizational Structure

(Commodity) Division(Fresh Cst Frozen) Division(Products) Division

IMLER BENZ Project Department

es Divisioner and Paper Divisionral Merchandise Division

Chemicals Divisioncs and High-Performanceicals Division

and Inor~mic Chemicals Division

r and Electrical Systems Divisionand Plant Divisionr Vehicle Division Ar Vehicle Division Btrial Machinery Divisionct Development and Construction Division Act Development and Construction Division B

Domestic Sales Division ADomestic Sales Division BInternational Divisionalty Steel Cst Wire Divisionus Raw Materials DivisionFerrous Metals Division

eum Supply and Trading Divisioneum Marketing DivisionBusiness Division

on Division

hnology Affairs Department Ahnology Affairs Department B

MACS Departmentw Marketing Development Departmentw Business Creation Departmenttropolitan Area Business Department

onics Equipment and Systems Divisiononics Business Division

rmation and Aerospace Division

• TecNew • Tec- Business .A

Opportunities • NeGroup • NeGeneral Meeting

• MeofShareholders • DA

• Information• ElectrAu8itors• ~

Systems• Electrand

Services Group • Info

'!joard ofDirectors

• Petrol

"- Fuels Group• Petrol• LNG

• Carb

President • Steel• Steel

"- • SteelGeneral Administration

Metals Group• Sped

Division ~ • Ferro• Non-

Executive • PoweCommittee • Ship

Strategy and -MotoCoordination Committee ~

Machinery • MotoGroup

• Indus

Personnel and • Proje

Oq~mization G:ommittee • Proje

Investment and • FoodsCredit Committee "- Foods GI'lllJP • Foods

• Foods

OA Committee• Basic

L I- Chemicals • PlastiGroup Chern

OA Planning and • FineCoordination Department

Corporate Planning OfficeTextiles and

General • TextilInternal Audit Department I- • Lumb

Merchandise• GeneGroup

"- Domestic Offices

-

"- Overseas Offices

64 (As of April I, 1991)

J... Mitsubishi Corporation -Your Partner for Success

Printed in Japan

Documents

~ Mitsubishi Corporation Annual Report 1991