Mitsubishi Corp. (MBC) - Results for Six Months Ended Sept. 2012 RNS Number : 1855Q Mitsubishi Corporation 02 November 2012 FINANCIAL RESULTS FOR THE SIX MONTHS ENDED SEPTEMBER 2012 Based on US GAAP Mitsubishi Corporation 2-3-1 Marunouchi, Chiyoda-ku, Tokyo, JAPAN 100-8086 http://www.mitsubishicorp.com/ November 2, 2012 Mitsubishi Corporation Mitsubishi Corporation and subsidiaries FINANCIAL HIGHLIGHTS for the six months ended September 30, 2012 (Based on US GAAP) (Consolidated) 1. Consolidated operating results for the six months ended September 30, 2012 (1) Operating transactions and income (Figures less than one million yen are rounded) Net income Operating Income before attributable to transactions Operating income income taxes Mitsubishi Corporation For the six Millions of Millions Millions Millions months Yen % of Yen % of Yen % of Yen % ended September 9,650,606 (3.6) 55,658 (67.0) 151,466 (41.4) 190,418 (22.8) 30, 2012 September 10,009,074 4.5 168,606 (15.4) 258,437 (17.7) 246,615 (8.3) 30, 2011 Comprehensive income for the six months ended September 30, 2012 and 2011 were \31,414million (-%) and \-30,379million (-%) respectively. Net income attributable to Net income attributable to Mitsubishi Corporation Mitsubishi Corporation per share per share (diluted basis) For the six months Yen Yen ended September 30, 2012 115.66 115.42 September 30, 2011 149.92 149.57 (2) Assets and shareholders' equity Mitsubishi Ratio of Mitsubishi Corporation Corporation Total assets Total equity shareholders' equity shareholders' to total assets equity As of Millions of Millions of Millions of Yen % Yen Yen September 30, 12,588,602 3,804,227 3,485,076 27.7 2012 March 31, 12,588,320 3,826,777 3,507,818 27.9 2012 The six months ended September 30, 2011 and the year ended March 31, 2012 have been retrospectively adjusted, as described in " 2) Retrospective Adjustment of the Previous Fiscal Year's Consolidated Financial Statements" under " (6) Basis for Preparation of Consolidated Financial Statements" of the consolidated financial statements. 2. Dividends Cash dividend per share (Yen) (Record date) 1Q end 2Q end 3Q end Year-end Annual Fiscal Year - 32.00 - 33.00 65.00 ended March 31, 2012 Fiscal Year - 25.00 ending March 31, 2013 Fiscal Year - 25.00 50.00 ending March 31, 2013 (Forecast) NOTE: Change from the latest released dividend forecasts: No 3. Outlook for the fiscal year ending March 31, 2013 (April 1, 2012 to March 31, 2013) Forecast of Net income Net income Operating Operating Income before attributable to attributable transactions income income taxes to Mitsubishi Mitsubishi Corporation Corporation per share For the Millions % Millions % Millions % Millions % Yen year of Yen of Yen of Yen of Yen ending March 31, 20,000,000 (0.6) 140,000 (48.4) 280,000 (38.4) 330,000 (27.0) 200.41 2013 NOTE: Change from the latest released earnings forecasts: No NOTE: Increase-decrease rate from April 1, 2012 to March 31, 2013 has been retrospectively adjusted, reflecting change of accounting cost method investment to equity method investment. 4. Notes (1) Changes in significant subsidiaries during the period: Yes New companies: 1 (Mitsubishi Corporation (Americas)) Excluded companies: 0 (2) Application of simplified accounting treatment and special accounting treatment: Yes NOTE: Fore more details, please see "5. Notes (2) Application of Simplified Accounting Treatment and Special Accounting Treatment in Preparing Quarterly Consolidated Financial Statements." (3) Changes in accounting principles, procedures and presentation methods -1- Changes due to accounting standards revisions: None -2- Changes other than -1- : None (4) Number of shares issued (Common stock) -1- Number of shares issued at year-end (including treasury shares) September 30, 2012 1,653,505,751 March 31, 2012 1,653,505,751 -2- Number of treasury shares at year-end September 30, 2012 6,883,545 March 31, 2012 7,332,832 -3- Average number of shares during each of the following fiscal years The three months ended September 30, 2012 1,646,331,697 The three months ended September 30, 2011 1,644,938,187 Disclosure Regarding Quarterly Review Procedures As of the date of disclosure of this quarterly earnings release, a review of the quarterly financial statements is being carried out in accordance with the Financial Instruments and Exchange Act. Forward-looking Statements Earnings forecasts and other forward-looking statements in this release are based on data currently available to management and certain assumptions that management believes are reasonable.The achievement of said forecasts cannot be promised. Actual results may therefore differ materially from these statements for various reasons. For cautionary notes concerning assumptions for earnings forecasts and use of earnings forecasts, please refer to "3.Qualitative Information Concerning Consolidated Forecasts for the Year Ending March 2013." Contents 1. Qualitative Information Concerning Consolidated Operating Results··························· 2 (1) Summary of Results for the Six Months Ended September 2012 ································· 2 (2) Segment Information ················································································· 3 2. Qualitative Information Concerning Consolidated Financial Position ·························· 6 (1) Changes in Assets, Liabilities and Equity ···························································· 6 (2) Cash Flows ···························································································· 7 3. Qualitative Information Concerning Consolidated Forecasts for the Year Ending March 2013 ······················································································· 8 (1) Reasons for Revisions ················································································· 8 (2) Revisions to Full-Year Consolidated Earnings Forecasts for the Year Ending March 2013······················································································ 9 4. Business Risks* ··························································································· 9 (1) Risks of Changes in Global Macroeconomic Climate ··············································· 10 (6) Risks Related to Specific Investments ······························································· 11 5. Notes ······································································································· 12 (1) Significant Changes in Subsidiaries During the Period ············································· 12 (2) Application of Simplified Accounting Treatment and Special Accounting Treatment in Preparing Quarterly Consolidated Financial Statements············································· 12 6. Consolidated Financial Statements (US GAAP) ····················································· 13 (1) Consolidated Balance Sheets (US GAAP) ···························································· 13 (2) Consolidated Statements of Income (US GAAP) ···················································· 15 (3) Consolidated Statements of Comprehensive (Loss) Income (US GAAP) ························· 16 (4) Consolidated Statements of Cash Flows (US GAAP) ··············································· 17 (5) Notes Concerning Going Concern Assumption ······················································ 18 (6) Basis for Preparation of Consolidated Financial Statements ········································ 18 (7) Operating Segment Information ······································································· 19 (8) Notes Concerning Major Changes in Shareholders' Equity ·········································· 19 * The numbered items under Business Risks correspond to the numbered items in "4. Business Risks" of "Operating Results and Financial Position" in the financial results for the year ended March 2012. ※ Mitsubishi Corporation will hold an earnings conference for the six months ended September 2012 on November 7, 2012 (Wednesday) from 16:00 to 17:30 (Japan Time), inviting institutional investors to join. The conference material can be accessed live in Japanese from the following URL: http://www.mitsubishicorp.com/jp/ja/ir/index.html (English interpretation of the conference call will be posted in the Investor Relations section of our web site as soon as it becomes available.) 1. Qualitative Information Concerning Consolidated Operating Results (Consolidated net income, as used hereinafter, refers to Consolidated net income attributable to Mitsubishi Corporation.) (1) Summary of Results for the Six Months Ended September 2012 In the first six months of the year ending March 2013, the economic environment saw the U.S. continue to experience a modest recovery. In Europe, however, the deepening impact of the debt crisis stymied economic activity. Emerging nations saw growth slow due to the anemic European market. In Japan, whilst consumer spending picked up temporarily, supported in part by government subsidies on environmentally friendly vehicles, the economy marked time as the global economy slowed. Against this backdrop, consolidated operating transactions for the first six months of the year ending March 2013 declined 358.5 billion yen, or 4%, year over year to 9,650.6 billion yen. This decrease in operating transactions was mainly due to lower sales prices and lower sales volume because of strike action at an Australian resource-related (coking coal) subsidiary. Gross profit declined 100.2 billion yen, or 17%, to 488.5 billion yen for the same reason that operating transactions decreased. Selling, general and administrative expenses increased 14.0 billion yen, or 3%, to 432.0 billion yen, due mainly to higher expenses in line with business expansion. In other P/L items, although other income-net decreased due to factors such as deterioration in foreign exchange gains and losses, net financial income improved because of higher dividend income from resource-related business investees. As a result, income before income taxes and equity in earnings of Affiliated companies declined 106.9 billion yen, or 41%, to 151.5 billion yen. Net equity in earnings of Affiliated companies declined 2.8 billion yen, or 3%, to 95.4 billion yen. Accordingly, net income attributable to Mitsubishi Corporation for the six months ended September 2012 declined 56.2 billion yen, or 23%, to 190.4 billion yen. (2) Segment Information 1) Industrial Finance, Logistics & Development Group The Industrial Finance, Logistics & Development Group is developing shosha-type industrial finance businesses. These include asset management businesses, buyout investment businesses, leasing businesses, real estate development and financing businesses, and logistics services. The segment recorded consolidated net income of 9.3 billion yen, a 5.6 billion yen increase year over year. The increase reflects mainly higher earnings in real estate- and lease-related businesses. 2) Energy Business Group The Energy Business Group conducts oil and gas exploration, development and production (E&P) business; investment in LNG (Liquefied Natural Gas) liquefaction projects; and sales of crude oil, petroleum products, carbon materials and products, LNG, and LPG (Liquefied Petroleum Gas) and so forth. The segment recorded consolidated net income of 93.2 billion yen, a 27.8 billion yen increase year over year. This increase reflects increased dividend income from overseas resource-related business investees. 3) Metals Group The Metals Group trades, develops businesses and invests in a range of fields. These include steel products such as steel sheets and thick plates, steel raw materials such as coking coal and iron ore, and non-ferrous raw materials and products such as copper and aluminum. The segment recorded consolidated net income of 13.3 billion yen, a 97.3 billion yen decrease year over year. The decrease reflects mainly lower sales prices and lower sales volume due to strike action at an Australian resource-related subsidiary (coking coal), and lower dividend income from copper mines. 4) Machinery Group The Machinery Group handles sales, finance and logistics for machinery across many different sectors, in which it also invests. These fields range from large-scale plants for production of natural gas, petroleum, chemicals or steel, to marine, automotive and other transport equipment, as well as aerospace-related equipment, mining equipment, construction machinery, industrial equipment and elevating machines. The segment recorded consolidated net income of 34.5 billion yen, a 6.7 billion yen increase year over year. The increase reflects mainly higher sales in Asian automobile-related operations and the absence of a loss on withdrawal from a business recorded in the corresponding period of the previous fiscal year. 5) Chemicals Group The Chemicals Group trades chemical products in a broad range of fields, in which it also develops businesses and invests. These fields extend from raw materials used in industrial products such as ethylene, methanol and salt produced from crude oil, natural gas, minerals, plants, marine resources and so forth, to plastics, electronic materials, food ingredients, fertilizer and fine chemicals. The segment recorded consolidated net income of 13.6 billion yen, a 4.3 billion yen decrease year over year. The decrease was mainly due to lower earnings on transactions at the Parent and a petrochemical business-related company. 6) Living Essentials Group The Living Essentials Group provides products and services, develops businesses and invests in various fields closely linked with people's lives, including food products and food, textiles, essential supplies, healthcare, distribution and retail. These fields extend from the procurement of raw materials to the consumer market. The segment recorded consolidated net income of 23.3 billion yen, a 0.8 billion yen increase year over year. Although it recorded lower earnings on transactions at food- and general merchandise-related subsidiaries, the segment saw earnings rise year over year in the absence of a share write-down recorded in the previous fiscal year and other factors. 2. Qualitative Information Concerning Consolidated Financial Position (1) Changes in Assets, Liabilities and Equity Total assets at September 30, 2012 were 12,588.6 billion yen, up 0.3 billion yen from March 31, 2012. Investments in Affiliated companies and property and equipment increased due to the execution of new investments. On the other hand, there was a decline in unrealized gains on listed shareholdings because of a fall in share prices, and a decrease in accounts receivables due mainly to decreased sales volumes. Total liabilities were 8,784.4 billion yen, up 22.8 billion yen from March 31, 2012. While long-term debt increased due to the procurement of funds for making new investments, accounts payables decreased commensurate with accounts receivables. Interest-bearing liabilities (net), which are interest-bearing liabilities (gross) minus cash and cash equivalents and time deposits, increased 232.6 billion yen from March 31, 2012 to 3,880.0 billion yen. The net debt-to-equity ratio, which is net interest-bearing liabilities divided by total equity, was 1.1. Total shareholders' equity decreased 22.7 billion yen from March 31, 2012 to 3,485.1 billion yen. The decrease was mainly due to the payment of dividends, a decrease in unrealized gains on listed shareholdings and a decrease in foreign currency translation adjustments accompanying the yen's appreciation, despite an increase in retained earnings because of the consolidated net income. (2) Cash Flows Cash and cash equivalents at September 30, 2012 were 1,195.0 billion yen, down 58.0 billion yen from March 31, 2012. (Operating activities) Net cash provided by operating activities was 156.5 billion yen. This was mainly due to cash flows from operating transactions at subsidiaries and dividend income from investees, mainly resource-related businesses, despite an increase in cash requirements due to changes in assets and liabilities associated with operating activities. (Investing activities) Net cash used in investing activities was 386.5 billion yen. Investing activities used net cash mainly for capital expenditures at resource-related subsidiaries, the acquisition of aircraft and real estate, and investments in Affiliated companies. As a result, free cash flow, the sum of operating and investing cash flows, was negative 230.0 billion yen. (Financing activities) Net cash provided by financing activities was 185.6 billion yen. Financing activities provided net cash due to fund procurement for new investments, despite the payment of dividends at the Parent. 3. Qualitative Information Concerning Consolidated Forecasts for the Year Ending March 2013 Mitsubishi Corporation has revised its full-year projections for the year ending March 2013, as below and announced in a press release issued on October 19, 2012 titled "Revision of Full-year Consolidated Earnings Forecasts." (1) Reasons for Revisions The European debt crisis has had a deepening impact on the global economy while emerging nations such as China have seen an even slower pace of growth. As a result of these factors, prices of certain commodities such as coking coal have fallen below the initially anticipated range. In light of these developments in the recent business environment, Mitsubishi Corporation reviewed its full-year consolidated earnings forecasts for the year ending March 2013. As a result, Mitsubishi Corporation reflected the following factors into its forecasts: the impact of longer-than-anticipated strike action and the impact of lower sales prices and so forth at an Australian resource-related (coking coal) subsidiary in the Metals Group, (-150.0 billion yen reduction in net income attributable to Mitsubishi Corporation); deterioration in market conditions in the Chemicals Group (-10.0 billion yen reduction in net income attributable to Mitsubishi Corporation); and additional risk of write-downs of marketable securities (available for sale) due to weak stock prices and so forth (-10.0 billion yen reduction in net income attributable to Mitsubishi Corporation). (2) Revisions to Full-Year Consolidated Earnings Forecasts for the Year Ending March 2013 Operating Income Net Income Operating Income Before Attributable to Transactions Income Taxes Mitsubishi (million Corporation (million yen) yen) (million yen) (million yen) Previous Forecast (Announced on May 8, 21,000,000 340,000 490,000 500,000 2012) (A) Revised Forecast (Announced October 19, 20,000,000 140,000 280,000 330,000 2012) (B) Difference (B-A) -1,000,000 -200,000 -210,000 -170,000 Difference (%) -4.8% -58.8% -42.9% -34.0% Note: Earnings forecasts and other forward-looking statements in this release are based on data currently available to management and certain assumptions that management believes are reasonable. Therefore, they do not constitute a guarantee that they will be achieved. Actual results may differ materially from these statements for various reasons. 4. Business Risks Major changes to Business Risks contained in the financial results for the year ended March 2012 during the six months ended September 2012 are as follows: Forward-looking statements contained herein are management's judgment as of September 30, 2012. The numbered items with titles below correspond to the numbered items in "4. Business Risks" of "Operating Results and Financial Position" in the financial results for the year ended March 2012 and the underlined sections correspond to the sections that have been revised. (1) Risks of Changes in Global Macroeconomic Climate As we conduct businesses on a global scale, our operating results are impacted by economic trends in overseas countries as well as those in Japan. For instance, a decline in prices of energy and metal resources could have a large impact on our resource-related import transactions and earnings from business investments. Furthermore, the worldwide economic slowdown could affect our entire export-related business, including plants, construction machinery parts, automobiles, steel products, ferrous raw materials, chemical products, and other products. In Thailand and Indonesia, we have various automobile businesses, including automobile assembly plants, distribution and sales companies and financial services companies jointly established with Japanese automakers. Because automobile sales volume reflects internal demand in each of these countries, economic trends in both Thailand and Indonesia may have a significant bearing on earnings from our automobile operations. In the year ending March 2013, the economies of industrialized nations have slowed due to the impact of the implementation of austerity measures and turbulence in the financial markets as a result of the deepening of the European debt problems. Meanwhile, in emerging economies, the rate of growth has slowed due to sluggish export growth as well as structural problems domestically even in major countries such as China. (6) Risks Related to Specific Investments (Acquisition of Interest in Chilean Copper Asset) On November 10, 2011, Mitsubishi Corporation completed the acquisition of 24.5% of Anglo American Sur, S.A. (AAS) for US$5.39 billion (approximately 420.0 billion yen).AAS is a Chilean copper mining and smelting company wholly owned by Anglo American plc (AAC).The acquisition was the result of a sales process initiated by AAC. AAS holds a significant portfolio of copper assets in Chile, including the Los Bronces mine, the El Soldado mine, the Chagres smelter and large-scale prospective exploration properties. The Los Bronces expansion project was completed in November 2011, and in 2012 when the Los Bronces mine is at full production, AAS will produce approximately 440,000 tonnes of copper per annum. On August 23, 2012, Mitsubishi Corporation agreed to transfer 4.1% of its 24.5% shareholding in AAS to AAC for the sum of US$895 million. As a result of this deal, Mitsubishi Corporation's risk exposure to this project at September 30, 2012 was approximately 350.0 billion yen. AAC sold a 29.5% shareholding in AAS to a joint venture between Chile's state-run copper producer Corporación Nacional del Cobre de Chile and Mitsui & Co., Ltd., comprising this 4.1% share from Mitsubishi Corporation and 25.4% owned by AAC. Following completion of these transactions, AAC has a 50.1% shareholding in AAS, the aforementioned joint venture has a 29.5% shareholding, and Mitsubishi Corporation has a 20.4% shareholding, thereby forming a strong 4-company partnership. Mitsubishi Corporation has designated the expansion of high-quality resource investments and the expansion of its resource portfolio with sustainable growth as an important area. Mitsubishi Corporation will continue to grow its business in this area. 5. Notes (1) Significant Changes in Subsidiaries During the Period Mitsubishi Corporation (Americas) became a consolidated subsidiary from April 1, 2012. (2) Application of Simplified Accounting Treatment and Special Accounting Treatment in Preparing Quarterly Consolidated Financial Statements Consolidated income taxes are calculated based on the estimated tax rate, taking into account tax effects, for the fiscal year relating to the quarterly period under review. 6.Consolidated Financial Statements Mitsubishi Corporation and subsidiaries (1) CONSOLIDATED BALANCE SHEETS (US GAAP) March 31, 2012 and September 30, 2012 Millions of Yen ASSETS March 31 September 30 Increase or 2012 2012 [-]decrease Current assets: Cash and cash equivalents 1,252,951 1,194,992 -57,959 Time deposits 116,024 127,284 11,260 Short-term investments 19,327 18,150 -1,177 Notes receivables 363,130 329,515 -33,615 Accounts receivables 2,379,899 2,267,515 -112,384 Loans and other receivables 389,678 369,009 -20,669 Receivables from Affiliated companies 250,469 221,612 -28,857 Inventories 965,057 1,012,063 47,006 Advance payments to suppliers 157,817 168,630 10,813 Deferred income taxes 45,780 50,564 4,784 Other current assets 258,953 298,688 39,735 Allowance for doubtful receivables (23,809) (24,261) -452 Total current assets 6,175,276 6,033,761 -141,515 Investments and noncurrent receivables: Investments in and advances to Affiliated 2,097,976 2,200,834 102,858 companies Joint investments in real estates 62,290 60,634 -1,656 Other investments 1,414,584 1,280,736 -133,848 Noncurrent notes, loans and accounts 549,712 566,856 17,144 receivable-trade Allowance for doubtful receivables (30,508) (28,094) 2,414 Total investments and noncurrent 4,094,054 4,080,966 -13,088 receivables Property and equipment: Property and equipment 3,265,380 3,411,578 146,198 Less accumulated depreciation (1,294,466) (1,310,360) -15,894 Property and equipment - net 1,970,914 2,101,218 130,304 Other assets 348,076 372,657 24,581 Total 12,588,320 12,588,602 282 6.Consolidated Financial Statements Mitsubishi Corporation and subsidiaries (1) CONSOLIDATED BALANCE SHEETS (US GAAP) March 31, 2012 and September 30, 2012 Millions of Yen LIABILITIES AND EQUITY March 31 September 30 Increase or 2012 2012 [-]decrease Current liabilities: Short-term debt 886,431 873,430 -13,001 Current maturities of long-term debt 435,221 533,740 98,519 Notes and acceptances payables 206,049 219,504 13,455 Accounts payables 2,108,171 2,014,164 -94,007 Payables to Affiliates companies 186,094 179,961 -6,133 Advances from customers 160,795 169,695 8,900 Accrued income taxes 32,360 35,798 3,438 Other accrued expenses 118,877 97,661 -21,216 Other current liabilities 331,968 300,790 -31,178 Total current liabilities 4,465,966 4,424,743 -41,223 Long-term liabilities: Long-term debt 3,760,101 3,874,960 114,859 Accrued pension and severance liabilities 51,345 51,856 511 Deferred income taxes 199,051 152,748 -46,303 Other noncurrent liabilities 285,080 280,068 -5,012 Total noncurrent liabilities 4,295,577 4,359,632 64,055 Total liabilities 8,761,543 8,784,375 22,832 Mitsubishi Corporation shareholders' equity: Common stock 204,447 204,447 0 Additional paid-in capital 262,039 262,059 20 Retained earnings: Appropriated for legal reserve 44,133 44,854 721 Unappropriated 3,300,588 3,435,047 134,459 Accumulated other comprehensive income: Net unrealized gains on securities 230,362 156,859 -73,503 available-for-sale Net unrealized losses on derivatives (8,433) (9,380) -947 Defined benefit pension plans (78,303) (74,807) 3,496 Foreign currency translation adjustments (426,450) (514,500) -88,050 Less treasury stock (20,565) (19,503) 1,062 Total Mitsubishi Corporation shareholders' 3,507,818 3,485,076 -22,742 equity Noncontrolling interest 318,959 319,151 192 Total equity 3,826,777 3,804,227 -22,550 Total 12,588,320 12,588,602 282 As written in Note 2) of "(6) Basis for Preparation of Consolidated Financial Statements," the figures at March 31, 2012 have been retrospectively adjusted. Mitsubishi Corporation and subsidiaries (2) CONSOLIDATED STATEMENTS OF INCOME (US GAAP) for the six months ended September 30, 2011 and 2012 Millions of Yen Six months Six months Increase or ended ended [-] decrease % September 30, September 30, 2011 2012 Revenues: Revenues from trading, manufacturing and other 2,367,758 2,503,573 135,815 / activities Trading margins and commissions 308,287 293,838 -14,449 / on trading transactions Total revenues 2,676,045 2,797,411 121,366 / Cost of revenues from trading, manufacturing and other (2,087,347) (2,308,929) -221,582 / activities Gross profit 588,698 488,482 -100,216 -17.0 Other income and expenses: Selling, general and (418,012) (431,978) -13,966 / administrative Provision for doubtful (2,080) (846) 1,234 / receivables Interest expense - net (1,328) (3,827) -2,499 / Dividend income 60,750 81,225 20,475 / Loss on marketable securities (6,700) (7,666) -966 / and investments - net Loss on property and equipment (1,333) (704) 629 / - net Other income - net 38,442 26,780 -11,662 / Total (330,261) (337,016) -6,755 / Income before income taxes and equity in earnings of 258,437 151,466 -106,971 -41.4 Affiliated companies and other Income taxes (95,302) (45,988) 49,314 / Income before equity in earnings of Affiliated 163,135 105,478 -57,657 / companies and other Equity in earnings of 98,197 95,440 -2,757 / Affiliated companies and other Net income 261,332 200,918 -60,414 -23.1 Less net income attributable to (14,717) (10,500) 4,217 / the noncontrolling interest Net income attributable to 246,615 190,418 -56,197 -22.8 Mitsubishi Corporation NOTE: 1. The companies display revenues and cost of revenues in accordance with ASC Paragraph 605-45 [Revenue Recognition - Principal Agent Considerations]. Operating transactions and operating income, as presented below, are voluntary disclosures solely for the convenience of investors in Japan. The figures are as follows: Six months ended Six months ended Increase or September 30, September 30, 2011 2012 [-] decrease % Operating transactions 10,009,074 9,650,606 -358,468 -3.6 Operating income 168,606 55,658 -112,948 -67.0 Operating transactions represent the gross transaction volume or the aggregate nominal value of the sales contracts in which the companies act as principal and transactions in which the companies serve as agent. Operating income reflects the companies' (a) gross profit, (b) selling, general and administrative expenses, and (c) provision for doubtful receivables. Operating transactions and operating income, as presented above, are non-US GAAP measures commonly used by similar Japanese trading companies and should not be construed as equivalent to, or a substitute or proxy for, revenues, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing or financing activities. 2. As written in Note 2) of " (6) Basis for Preparation of Consolidated Financial Statements," the figures for the six months ended September 30, 2011 have been retrospectively adjusted. Mitsubishi Corporation and subsidiaries (3) CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (US GAAP) for the six months ended September 30, 2011 and 2012 Millions of Yen Six months ended Six months ended September 30, 2011 September 30, 2012 Comprehensive (loss) income Net income 261,332 200,918 Other comprehensive (loss) income, net of tax: Net unrealized losses on securities (87,318) (76,657) available for sale Net unrealized losses on derivatives (41,838) (1,050) Defined benefit pension plans 3,281 3,333 Foreign currency translation (159,147) (91,423) adjustments Total other comprehensive loss, net of (285,022) (165,797) tax Comprehensive (loss) income (23,690) 35,121 Comprehensive income attributable to (6,689) (3,707) the noncontrolling interest Comprehensive (loss) income (30,379) 31,414 attributable to Mitsubishi Corporation NOTE: As written in Note 2) of " (6) Basis for Preparation of Consolidated Financial Statements," the figures for the six months ended September 30, 2011 have been retrospectively adjusted. Mitsubishi Corporation and subsidiaries (4) CONSOLIDATED STATEMENTS OF CASH FLOWS (US GAAP) for the six months ended September 30, 2011 and 2012 Millions of Yen Six months ended Six months ended September 30, 2011 September 30, 2012 Operating activities: Net income 261,332 200,918 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 70,736 74,368 Provision for doubtful receivables 2,080 846 Loss on marketable securities and 6,700 7,666 investments - net Loss on property and equipment - net 1,333 704 Equity in earnings of Affiliated companies and other, less dividends (63,310) (49,687) received Changes in operating assets and liabilities: Short-term investments - trading (555) 394 securities Notes and accounts receivable - trade (15,462) 121,900 Inventories (108,761) (41,290) Notes, acceptances and accounts 48,609 (50,516) payable - trade Other - net 56,389 (108,782) Net cash provided by operating 259,091 156,521 activities Investing activities: Expenditures for property and (179,484) (268,589) equipment and other assets Proceeds from sales of property and 8,342 8,734 equipment and other assets Investments in and advances to (122,744) (223,514) Affiliated companies Proceeds from sales of investments in and collection of advances to 58,184 89,984 Affiliated companies Purchases of available-for-sale (135,088) (44,837) securities and other investments Proceeds from sales and maturities of available-for-sale securities and 99,445 55,611 other investments Increase in loans receivable (137,506) (75,727) Collection of loans receivable 81,293 83,761 Net increase in time deposits (28,931) (11,888) Net cash used in investing activities (356,489) (386,465) Millions of Yen Six months ended Six months ended September 30, 2011 September 30, 2012 Financing activities: Net decrease in short-term debt (21,085) (12,866) Proceeds from long-term debt - net of 359,054 607,595 issuance cost Repayment of long-term debt (183,292) (343,166) Payment of dividends (64,129) (54,333) Payment of dividends to the (15,823) (11,702) noncontrolling interest Payment for acquisition of subsidiary's interests from the (181) (36) noncontrolling interest Proceeds from sales of subsidiary's interests to the noncontrolling 2,928 125 interest Other - net 595 29 Net cash provided by financing 78,067 185,646 activities Effect of exchange rate changes on (28,200) (13,661) cash and cash equivalents Net decrease in cash and cash (47,531) (57,959) equivalents Cash and cash equivalents, beginning 1,208,742 1,252,951 of period Cash and cash equivalents, end of 1,161,211 1,194,992 period As written in Note 2) of " (6) Basis for Preparation of Consolidated Financial Statements," the figures for the six months ended September 30, 2011 have been retrospectively adjusted (5) Notes Concerning Going Concern Assumption None (6) Basis for Preparation of Consolidated Financial Statements 1) Basic Accounting Policies The accompanying consolidated financial statements of Mitsubishi Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The significant differences between U.S. and Japanese accounting standards applicable to the companies relate to the following: a) Valuation of investments b) Deferral of gain on sales of properties for tax purposes (Not permitted under U.S. GAAP) c) Derivative instruments and hedge accounting d) Pension and retirement benefit accounting (Underfunded obligations and overfunded obligations are recognized as assets, liabilities and accumulated other comprehensive income(loss) under U.S. GAAP) e) Accounting for business combinations and goodwill and other intangible assets 2) Retrospective Adjustment of the Previous Fiscal Year's Consolidated Financial Statements The company has retrospectively adjusted the consolidated statements of income and comprehensive income, consolidated statements of cash flows, operating segment information for the six months ended September 30, 2011, since the Company acquired additional investments in cost method investees, and accounted for the company's ownership interest in investees under the equity method. In addition, the Company has retrospectively adjusted the consolidated balance sheet at March 31, 2012, since the Company was able to exert significant influence over the operating and financial decisions by concluding the shareholder's agreement, and accounted for the company's ownership interest in investees under the equity method. (7) Operating Segment Information (US GAAP) Six months ended September 30, 2011 Millions of Yen Industrial Adjustments Finance, Energy Living Logistics & Business Metals Machinery Chemicals Essentials Total Other and Consolidated Development Eliminations Gross profitt 21,452 33,569 162,481 80,238 42,849 228,650 569,239 20,546 (1,087) 588,698 ･･････････ Equity in earnings of affiliated 3,374 36,424 17,852 15,077 10,423 11,624 94,774 4,035 (612) 98,197 companies and other ･･･････････････ Net income (loss) attributable to 3,686 65,386 110,623 27,781 17,911 22,516 247,903 (2,463) 1,175 246,615 Mitsubishi Corporation･･ Segment assets 805,399 1,334,536 2,826,745 1,495,464 720,080 2,238,389 9,420,613 2,619,834 (811,718) 11,228,729 ･･･････ Operating 88,721 2,211,374 2,229,062 1,111,303 1,135,240 2,718,124 9,493,824 566,723 (51,473) 10,009,074 transactions ･･ Six months ended September 30, 2012 Millions of Yen Industrial Adjustments Finance, Energy Living Logistics & Business Metals Machinery Chemicals Essentials Total Other and Consolidated Development Eliminations Gross profit 26,450 23,322 65,529 87,710 46,379 220,428 469,818 19,465 (801) 488,482 ･･････････ Equity in earnings of affiliated 7,474 37,917 16,251 10,884 6,857 11,713 91,096 4,565 (221) 95,440 companies and other ･･･････････････ Net income attributable to 9,300 93,228 13,295 34,479 13,635 23,332 187,269 2,382 767 190,418 Mitsubishi Corporation･･ Segment assets 954,330 1,708,857 3,463,073 1,623,509 759,354 2,414,041 10,923,164 2,723,462 (1,058,024) 12,588,602 ･･･････ Operating 100,613 2,343,114 1,999,797 1,139,917 1,111,910 2,662,307 9,357,658 340,037 (47,089) 9,650,606 transactions ･･ NOTE: (1) Operating transactions, as presented above, are voluntary disclosures solely for the convenience of investors in Japan. Operating transactions represent the gross transaction volume or the aggregate nominal value of the sales contracts in which the companies act as principal and transactions in which the companies serve as agent. Operating transactions exclude the contract value of transactions in which the companies' role is limited to that of a broker. (2) "Other" represents corporate departments which primarily provide services and operational support to the Company and Affiliated companies. This column also includes certain revenues and expenses from business activities related to financing and human resource services that are not allocated to reportable operating segments. Unallocated corporate assets categorized in "Other" consist primarily of cash, time deposits and securities for financial and investment activities. (3) "Adjustments and Eliminations" include certain income and expense items that are not allocated to reportable operating segments and intersegment eliminations. (4) The six months ended September 30, 2011 have been retrospectively adjusted as described in 2) under "(6) Basis for Preparation of Consolidated Financial Statements." (5) Effective April 1, 2012, the Company transferred parts of the business of the "Industrial Finance, Logistics & Development" and "Machinery" to "Other." The consolidated financial position and the results of operations of related reportable operating segments for the six months ended September 30, 2011 have also been reclassified accordingly. (8) Notes Concerning Major Changes in Shareholders' Equity None November 2, 2012 Responsibility Statement Ryoichi Ueda, Member of the Board, Senior Executive Vice President and Chief Financial Officer, confirms that the condensed set of financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and that, to the best of his knowledge, the interim management report was prepared fairly in all material respects including the information required by DTR 4.2.7 and DTR 4.2.8. This information is provided by RNS The company news service from the London Stock Exchange END IR QLLBBLFFFFBZ -0- Nov/02/2012 07:00 GMT
Mitsubishi Corp. MBC Results for Six Months Ended Sept. 2012
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