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					Gaining Momentum




                  Annual Report 2002
              FOR THE YEAR ENDED MARCH 31, 2002
Financial Highlights
Mitsubishi Corporation and subsidiaries
Years ended March 31                                                                                                                       Millions of
                                                                                                           Millions of Yen                 U.S. Dollars
                                                                                                   2001                       2002             2002
For the year:
Operating transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥13,995,298              ¥13,230,675          $99,479
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            603,716                  643,922            4,842
Income from consolidated operations
 before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   131,898                     99,590            749
Income from consolidated operations . . . . . . . . . . . . . . . . . . .                           80,800                     53,715            404
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                92,105                     60,225            453

At year end:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            8,067,189                  8,144,926         61,240
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .                    969,356                  1,028,523          7,733

Per share (yen and dollars):
Net income per share (Basic and diluted EPS) . . . . . . . . . . . .                          ¥          58.77         ¥        38.44      $     0.29
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        8.00                   8.00            0.06
Note: The U.S. Dollar amounts represent translations, for convenience, of yen amounts at the rate of ¥133=$1.




Gross Profit                                          Net Income and Net Income                               Total Shareholders’ Equity
                                                      Per Share (Basic and diluted EPS)
(¥ billions)                                          (¥ billions)                                            (¥ billions)


1998                                  588.2           1998           30.40       47.6                         1998                               1,009.4
1999                                  582.9           1999      19.90     31.2                                1999                             949.5
2000                                 575.1            2000 16.61        26.0                                  2000                           905.7
2001                                   603.7          2001                            58.77       92.1        2001                              969.4
2002                                     643.9        2002                   38.44     60.2                   2002                               1,028.5


                                                           Net Income Per Share (¥)
                                                           (Basic and diluted EPS)




Forward-Looking Statements

This annual report contains forward-looking statements about Mitsubishi Corporation’s future plans, strategies, beliefs and
performance that are not historical facts. They are based on current expectations, estimates, forecasts and projections about the
industries in which Mitsubishi Corporation operates and beliefs and assumptions made by management. As the expectations,
estimates, forecasts and projections are subject to a number of risks, uncertainties and assumptions, they may cause actual results
to differ materially from those projected. Mitsubishi Corporation, therefore, wishes to caution readers not to place undue reliance
on forward-looking statements. Furthermore, the company undertakes no obligation to update any forward-looking statements as a
result of new information, future events or other developments.


Risks, uncertainties and assumptions mentioned above include, but are not limited to, commodity prices; exchange rates and
economic conditions; the outcome of pending and future litigation; and the continued availability of financing, financial
instruments and financial resources.
                                                     Mitsubishi Corporation Annual Report 2002
                                                                    {TABLE OF CONTENTS}




Table of Contents
                                  Letter to Shareholders . . . 2                    Machinery Group . . . . . . . . . . 32
                                  President Sasaki reports on                       How the group is aiming to achieve
                                  progress with MC2003.                             its MC2003 goals by creating new
                                                                                    business models.
                                  Special Feature 1
                                  —Fulfilling Missions . . . . 7                    Chemicals Group . . . . . . . . . . 34
                                  Some BU managers reply to                         A look at the strategies for various
                                  the president’s letters in last                   business sectors in this group.
                                  year’s annual report.
2.                                                                                                           Living Essentials Group . . . . . 36
Special Feature 2—Unlocking Value . . . . . . . . . . 14                                                     How four basic policies are guiding
How partner power, business innovation and execution                                                         the group toward achieving its goals
excellence create value at MC.                                                                               during the course of MC2003.


Business Groups at a Glance . . . . . . . . . . . . . . . 22                                                 Corporate Staff Section . . . . . 38
Fiscal 2002 results, scope and size of operation, primary                                                    How the section supports business
markets, main products and services, and fiscal 2002                                                         groups and generates earnings in its
highlights by business group.                                                                                own right.


Group CEOs Talk . . . . . . . . . . . . . . . . . . . . . . . . 24                  Regional Strategies . . . . . . . . . . . . . . . . . . . . . . . 40
Group CEOs talk about their MC2003 progress and goals for                           How regional strategies are becoming more important for MC.
their business groups.
                                                                                    Global Citizenship . . . . . . . 42
                         New Business                                               Some of the ways MC strives to be
                         Initiative Group . . . . . . . . . . . 24                  a socially and environmentally
                         How the group is using FILM functions                      responsible corporate citizen.
                         to create value.


                         IT & Electronics                                           Members of the Board . . . . . . . . . . . . . . . . . . . . 44
                         Business Group . . . . . . . . . . . 26
                         Details of new businesses and a new                        Corporate Governance . . . . . . . . . . . . . . . . . . . . 46
                         group management structure.                                MC reports on major enhancements to corporate governance.


Energy Business Group . . . . . . 28                                                Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . 48
Strategies for remaining a key player
along the entire energy value chain.                                                Financial Section . . . . . . . . . . . . . . . . . . . . . . . . 49

Metals Group . . . . . . . . . . . . . 30                                           Corporate Section . . . . . . . . . . . . . . . . . . . . . . . . 99
Major developments that strengthen
the group’s presence within the
resources value chain.




                                                                         page   1
                                               Mitsubishi Corporation Annual Report 2002
                                                        {LETTER TO SHAREHOLDERS}




Letter to Shareholders
“While we didn’t match our record performance of ¥92.1 billion last year, I am proud of our
fiscal 2002 results, since we have posted net income in excess of ¥60 billion in only two
other years, both during Japan’s “bubble” economy. MC today is different than the MC of
old. I believe we have entered a new phase in which we can create a higher level of value.”




                                                                page   2
                                                         Mitsubishi Corporation Annual Report 2002
                                                                     {LETTER TO SHAREHOLDERS}




THE OPERATING ENVIRONMENT                              record performance of ¥92.1 billion last year,          management plans: MC2000 and MC2003,

In many ways, 2001 was a historically                  I am proud of our fiscal 2002 results, since            which is now in its second year. Under

significant year, characterized by major               we have posted net income in excess of ¥60              these plans, we have concentrated more of
happenings at home and abroad. In Japan,               billion in only two other years, both during            our resources in strategic areas, reconfig-

the government pushed ahead with long-                 Japan’s “bubble” economy. MC today is                   ured business models, and tightened risk

awaited structural reforms in an attempt to            different than the MC of old. I believe we              management down to our business units
awaken the economy from its long slumber.              have entered a new phase in which we can                (BUs), our smallest unit for organizational

Overseas, the tragic events of September               create a higher level of value.                         control and earnings management.

11 shook the world. On the economic
front, China joined the WTO (World Trade               GAINING MOMENTUM                                        Under our Portfolio Management Strategy,

Organization) and many parts of Europe                 That we were able to stand up in the face of            for example, we have increased investment

switched to a single currency. 2001 was an             a deflationary climate in Japan and consid-             in energy and natural resources, project
unprecedented year.                                    erable uncertainty in the world economy                 development and SCM (Supply Chain

                                                       provides further proof of the progress we               Management) businesses. Recent invest-

A BRIEF LOOK AT RESULTS                                have made in recent years and of the                    ments in coking coal and other projects in
Amid this upheaval in our operating environ-           validity of our strategy. I have no doubt               these strategic areas have quickly paid off.

ment, we posted consolidated net income of             that these positive developments can be                 Also important was our commitment to

¥60.2 billion. While we didn’t match our               accredited to successful execution of two               withdrawing from unprofitable areas.




                               CHANGE OF EARNINGS LEVEL OF MC (FY1986–FY2003)
                               (¥ billions)                                                                                              MC2000            MC2003
                                   100      ■ Consolidated Net Income



                                   75

                                           “Bubble” Economy                                      Japan’s Lost Decade
                                   50



                                   25



                                     0     ’86   ’87     ’88   ’89      ’90   ’91    ’92   ’93   ’94   ’95    ’96      ’97   ’98   ’99   ’00   ’01   ’02      ’03
                                                                                                                                                            Projection

                             For further information, please refer to www.mitsubishi.co.jp/En/investor/company/com_03/com_03_index_e




                                                                              page   3
                                                             Mitsubishi Corporation Annual Report 2002
                                                                        {LETTER TO SHAREHOLDERS}




Since 1999, we have sold or shut down 106                 Added) performance indicator has made it                      The chart below shows risk capital and

companies and disposed of Aristech                        significantly easier to manage and control                    consolidated net income*1 for each BU
Chemical Corporation, streamlining our                    businesses down to operational levels.                        mission. You will see that over the last year

assets by approximately ¥240 billion in total.            BUs, our smallest units for organizational                    we have reduced risk capital in Stretch and

                                                          control, are also now where we primarily                      Restructure BUs and increased it in Build-
Our strategies have lifted earnings in abso-              manage earnings.                                              mission BUs. Consolidated net income of

lute terms without significantly increasing                                                                             BUs rose in all categories. This demon-

total assets, moving us ever closer to our                BUs have been assigned either a Stretch                       strates to me that if we continue to reallo-
goal of becoming an “ultimate service”                    (increase MCVA), Build (spur growth) or                       cate resources, transform business models

company. I believe we are unquestionably                  Restructure (downsize or reshape) mission,                    and reduce losses in Restructure BUs, we

gaining momentum.                                         depending upon how they fit into our Port-                    can improve our performance and raise
                                                          folio Management Strategy. As of March                        consolidated net income going forward.

BUSINESS MODEL TRANSFORMATION                             2002, we had 182 BUs, 7 fewer than a

—A Clear Focus                                            year ago. Part of our annual management                       BUSINESS MODEL TRANSFORMATION
At first glance, MC appears to be a complex               cycle involves reviewing business models                      —Concrete Actions
conglomerate. I am often asked whether it                 and BU missions. We scrapped three BUs                        The transformation of business models is

is really possible for anyone to effectively              that were originally given Build missions                     happening throughout MC. Even some
manage such a huge organization made up                   but failed to achieve their objectives and at                 business models where withdrawal was

of so many diverse businesses. But last                   the same time integrated some other BUs                       once considered the only option are being

year’s introduction of our BU system and                  with similar models.                                          given a new lease on life by drawing on
MCVA (Mitsubishi Corporation Value                                                                                      MC’s collective wisdom.



 CONSOLIDATED NET INCOME VS. RISK CAPITAL (BY TYPE OF MISSION: FY2001–FY2002)
 (¥ billions)
     100
                                                        ’02/3                           Stretch

                                                                                                         ’01/3
       50

                                                                Build

                                                                                                                                         < Risk Capital
        0       50                             300                              ’02/3       400                                    500
                                                          ’01/3

                                                                        ’02/3                     Restructure
     –50

                                                                                                                ’01/3
         <




   Consolidated        *1
                            Consolidated net income for each BU is adjusted so that one-time gains and losses from unwinding cross-shareholdings are excluded.
   Net Income          *2
                            The sum of consolidated net income of BUs does not include corporate overheads.
For further information, please refer to www.mitsubishi.co.jp/En/investor/company/com_03/com_03_index_e




                                                                                 page   4
                                                 Mitsubishi Corporation Annual Report 2002
                                                           {LETTER TO SHAREHOLDERS}




                                                   “I have no doubt that these positive developments can be accredited to
                                                   successful execution of two management plans: MC2000 and MC2003, which
                                                   is now in its second year.”



                                                   — President and CEO, MIKIO SASAKI




SPA (specialty store retailers of private      been able to use our knowledge gained in         expand the scale of our operations and

label apparel) business models are indica-     this field to increase our role as a principal   transform our business model. Leveraging

tive of what can be achieved. In the past,     risk participant through direct investment       our proven marketing capabilities, we have
we acted as a sales agent for apparel sup-     in IPP (Independent Power Producer)              joined forces with our partners to effectively

pliers. Today, we stand on the side of the     projects, creating a new business paradigm       expand our upstream operations, redefin-

buyer and offer SCM-based outsourcing          for MC. Projects in Mexico and the U.S. are      ing the mission of this business from
solutions. This new approach has driven a      starting to generate earnings.                   Stretch to Build.

dramatic increase in sales in this field. We

are now approaching other industries with      Coking coal operations, which were               Some BUs still face challenging operating
this basic SCM model but modifying it to       assigned a Stretch mission, have also been       environments. Here too we are finding

cater to different outsourcing needs.          transformed. Since Japan’s high-growth           new ways to turn things around. Our steel

                                               years of the 1960s, we have actively devel-      products BU, which has been suffering
Export of power systems, petrochemical, oil    oped overseas natural resources, securing        during Japan’s recession, is to be consoli-

and gas, steel and other plants is another     valuable, stable supplies of raw materials       dated with Nissho Iwai Corporation’s steel

model we are using as the starting point for   for Japanese steelmakers. These activities       business to revitalize the processing and
a new platform. Formerly one of our main-      earned us steady import agency commis-           distribution fields. Our goal is a leaner,

stays, plant export has seen earnings          sions from customers and regular dividends       stronger operation.

decline due to stiff global competition.       from subsidiaries. Industry-wide restruc-
While endeavoring to improve our competi-      turing hastened by globalization has             There was considerable debate, even

tiveness in existing businesses, we have       prompted us, however, to strategically           some dissenting opinions, when we




                                                                   page   5
                                                  Mitsubishi Corporation Annual Report 2002
                                                            {LETTER TO SHAREHOLDERS}




    THE THREE CORPORATE PRINCIPLES

    1. Corporate responsibility to society
             2. Integrity and fairness
                        3. International understanding through trade

                                                          www.mitsubishi.co.jp/En/corpo/philo/




assigned a mission to each BU last year.        capabilities enables us to create more value       which our people are unquestionably the

But I believe the time we took was well         than the sum of the parts. It is an ability that   most important. When I became CEO, I

spent, as evidenced by the responses to         I believe few companies can match, and             made a point of overhauling our personnel
my letters to BU managers last year (see        one that I want us to use more to create           and remuneration systems to give employ-

pages 7 to 13). Feedback like this from         value for us as well as our customers.             ees greater incentive to deliver higher

managers is not only encouraging but                                                               earnings, and I endeavored to give employ-
highly motivating as well.                      INTANGIBLE ASSETS                                  ees, regardless of age, gender or nationality,

                                                —The Cornerstones of Our Strength                  the chance to demonstrate their potential

BUSINESS MODEL TRANSFORMATION                   Since our inception, we have conducted             and realize their dreams. I am grateful to
—Creating More Than the Sum of the Parts        our activities in accordance with the Three        all of our 44,000 employees worldwide for

Two points have been key to our efforts to      Corporate Principles above. Guided by              their tireless efforts and am certain that

transform business models. First is identify-   them, we have built up various intangible          they will continue to set new goals for
ing needs by utilizing our vast pool of         assets that facilitate the transformation of       themselves and take on new challenges.

customer relationships and first-hand           our business models I have talked about in

knowledge of major industries. Second is        this letter. Three of these invaluable assets      As I have outlined above, we are pursuing
delivering services that draw on our FILM       are the ability to forge powerful partner-         our strategy to deliver even higher earn-

functions (Financial Technology, Information    ships that deliver results, the ability to         ings. I believe this is the best way to meet

Technology, Logistics Technology and            create new businesses where needs exist            the expectations of our shareholders, cus-
Marketing Technology) and the strengths of      and the ability to execute strategy (see           tomers, employees and other stakeholders.

our partners. The collapse of the IT bubble     pages 14 to 21). These intangible assets,

lent support to the assertion inherent in our   along with many others, have supported             June 27, 2002
“.Commerce” strategy that dot coms will         the development of MC over the years—

require FILM functions, the bedrock of Real     and will be crucial in creating new sources

Economy businesses, to survive. MC has          of earnings in years to come. I believe that
                                                                                                   MIKIO SASAKI
capabilities that go beyond those of simple     MC has a wealth of intangible assets, of           President and CEO
transaction intermediaries. The use of these


                                                                     page   6
                           Mitsubishi Corporation Annual Report 2002
                                      {FULFILLING MISSIONS}




STRETCH
BUILD
RESTRUCTURE




Fulfilling Missions




In this section, three BU managers, one from each of MC’s BU mission
categories, report back to President Sasaki on their first-year accomplishments.
Read on to see how BUs are at the forefront of MC’s drive to create value.




                                            page   7
                                               Mitsubishi Corporation Annual Report 2002
                                                          {FULFILLING MISSIONS}




Stretch
“Our accomplishments to date are undoubtedly the direct result of our sound relation-
ships with customers and partners and the work we have done together over the
years. But this is just a starting point. We still have challenges ahead.”




                                                                page   8
                                                      Mitsubishi Corporation Annual Report 2002
                                                                 {FULFILLING MISSIONS}




    “Stretch BUs are the cornerstone of MC today and they are expected to form the
    basis of MC tomorrow and thereafter. These businesses are supported by strong
    and deep ties with an extensive customer base. This is an invaluable asset that
    your predecessors built for you over many years.”
    — President and CEO, MIKIO SASAKI

                                               2001 Annual Report www.mitsubishi.co.jp/En/investor/ar




I am pleased               to report that we       customers and partners and the work we               came on stream in 1993 and has overcome
performed better in fiscal 2002, just as our       have done together over the years. But               a host of difficulties typical of ground-
mission demands. We delivered MCVA                 this is just a starting point. We still have         breaking projects of this type. From an
approximately 140% above our target. The           challenges ahead.                                    environmental perspective, more and more
foundation for this success was laid years                                                              attention is being paid to sulfur-free, GTL
ago when my predecessors started working           As you know, key themes for us this year             diesel fuel. We will work with the Petroleum
with Malaysia’s state-owned oil company            are extending our shareholder status in the          Business Division to create markets for
Petronas, the oil giant Shell and the              first Malaysia LNG Project and renewing              GTL diesel fuel, and look for opportunities
Sarawak State government in the early              import agency agreements with customers.             to participate in new businesses. GTL
1970s. The first Malaysia LNG Project              Another is marketing LNG from the third              technology may have been ahead of its
(Satu), which started in 1983, stemmed             Malaysia LNG Project (Tiga). Our existing            time some years back, but I believe that
from this partnership, as did the second           functions have served us well in the past            the time is now right to reintroduce it to the
Malaysia LNG Project (Dua), which started          but these capabilities alone probably won’t          world together with our partners.
operations in 1995. We have been receiving         be sufficient for what we need to do. We
substantial dividends from both projects.          must break convention, take on challenges            Rest assured I am determined to accom-
Import agency fees are also making a               and gain the understanding of business               plish our goals and resolve issues one by
contribution to our results. Of strategic          partners and customers in a form that                one. We will draw on the advice of upper
importance to us was our success in                matches market conditions at the time.               management and, as ever, deepen relation-
facilitating an agreement to extend an                                                                  ships with customers and partners. These
LNG contract between Malaysia LNG Sdn.             While my BU was assigned a Stretch                   ties will serve as a source of strength for
Bhd. and The Tokyo Electric Power                  mission, our mission has both Build and              years to come, just as they have in the past.
Company, Incorporated (TEPCO) and                  Restructure aspects to it. Just to give you
Tokyo Gas Co., Ltd. on the first Malaysia          one example, we are working on a GTL
LNG Project by another 20 years. As a              (Gas-to-Liquid) project that converts
shareholder in Malaysia LNG, we helped             natural gas into kerosene and diesel fuel
structure renewal agreements, and as an            specially formulated to be environmentally
import agent we facilitated negotiations for       friendly. Here we took on a high level of            TETSURO KUWABARA
                                                                                                        General Manager,
TEPCO and Tokyo Gas. Our accomplish-               technological risk to invest in a GTL plant,         Malaysia Project Unit
ments to date are undoubtedly the direct           the first commercial facility of its kind in
result of our sound relationships with             the world. Located in Malaysia, the plant



                                                                        page   9
                                               Mitsubishi Corporation Annual Report 2002
                                                          {FULFILLING MISSIONS}




Build
“We were active in two main areas. One was in supporting the management of
medical institutions, the main players in the healthcare sector... The other main
focus of our BU is planning and promoting outsourcing businesses...”




                                                                                           Jukoukai Hospital




                                                               page   10
                                                       Mitsubishi Corporation Annual Report 2002
                                                                   {FULFILLING MISSIONS}




    “Your BUs will form the basis of the MC of tomorrow. MC has traditionally excelled
    in earning commissions by facilitating trading transactions. But intermediation
    alone will not carry us into the future. Your BUs will. They will be case studies in a
    new business paradigm.”
    — President and CEO, MIKIO SASAKI

                                                2001 Annual Report www.mitsubishi.co.jp/En/investor/ar




As you know, the Healthcare                         in. Our newly formed joint venture with a            example of using IT is the joint development
Business Unit was classified as a Build BU          peer company will better enable us to offer          of a new electronic medical record system
due to the potential for dramatic growth in         total solutions, from design when building           for main regional hospitals.
Japan’s rapidly changing healthcare sector          and renovating hospitals to consulting on
and our established presence. True to our           equipment and bulk ordering. We have also            The nursing care field is also important. I
designation, we worked throughout the               helped to create a new image for hospitals           believe that the private sector has a key part
year to create pioneering business models           by setting up call centers that improve their        to play in the effective running of Japan’s
capable of delivering high-quality products         day-to-day operations and by establishing            elderly care insurance system. Subsidiary
and services nationwide.                            hospital convenience stores. Moreover,               Nippon Care Supply Co., Ltd. is already a
                                                    some hospitals are already using a man-              major player, renting nursing equipment.
I feel that we succeeded in making progress,        agement support system that we built to              In nursing care, too, we have launched
both quantitatively and qualitatively. MCVA,        analyze costs and business processes.                new businesses, such as a database of
for example, improved ¥0.7 billion over the                                                              nursing care providers and food distribu-
previous fiscal year. This result was better        The other main focus of our BU is planning           tion services for hospitals.
than we had expected. Although MCVA is              and promoting outsourcing businesses,
still negative, as this business is in its          which are also geared to enhancing the               I hope you get a strong sense from this
infancy, our progress gives me confidence           efficiency of hospitals. This provides oppor-        letter of how active we are in the industry.
that we can fulfill our MC2003 growth mis-          tunities for growth at existing MC Group             I expect that the healthcare industry itself
sion, delivering positive MCVA in the future.       companies and to start entirely new busi-            will continue to undergo change through
The establishment of a number of new                nesses. Over the last year, subsidiary Nihon         2005. This process will create more oppor-
companies and joint ventures during the             Hospital Service, Inc. emerged as one of the         tunities for us, opportunities we intend to
year set the stage for this growth.                 largest providers of medical supply manage-          capture. Ultimately, we plan to become a
                                                    ment services to hospitals in Japan. In new          total provider of medical and healthcare
We were active in two main areas. One was           businesses, we formulated a plan, together           solutions, fulfilling a deeply rooted social
in supporting the management of medical             with hospitals, that will promote greater use        mission, one shared with medical institutions
institutions, the main players in the               of IT in all areas of Japan. One example is          and healthcare providers.
healthcare sector. Due to industry-wide             an innovative regional medical service,
reforms, medical institutions in Japan are          linking hospitals, clinics and other
desperately looking for help in improving           healthcare facilities, that will allow each
efficiency. They are turning to corporate-          entity to better fulfill its role and deliver more   EISAKU TAMURA
                                                                                                         General Manager,
style management. This is where we come             efficient services to the public. Another            Healthcare Business Unit


                                                                        page   11
                                                Mitsubishi Corporation Annual Report 2002
                                                           {FULFILLING MISSIONS}




Restructure
“If we continued to pursue reforms, this BU could survive on its own. But businesses
must do more than just survive—they must continuously seek higher returns and
deliver more value to customers. That’s why we agreed to... the consolidation of steel
products operations with Nissho Iwai...”




                                                                page   12
                                                     Mitsubishi Corporation Annual Report 2002
                                                                {FULFILLING MISSIONS}




    “Your sound judgment and decision-making ability will guide the most effective use
    of MC’s resources... The crucial thing is to analyze carefully where your business
    stands and where its future lies... you should also actively attempt to engineer a
    reversal in fortunes.”
    — President and CEO, MIKIO SASAKI

                                              2001 Annual Report www.mitsubishi.co.jp/En/investor/ar




In fiscal 2002,                  I took on        I am happy to report that we were success-           This decision is expected to propel us to
the challenge of overhauling all four steel       ful in many areas. Fiscal 2002 operating             profitability sooner and could spell a change
product-related BUs to return them to posi-       expenses were ¥1.0 billion lower than                in our mission, to either Stretch or Build.
tive MCVA within the timeframe of MC2003.         budget. We reduced risk capital by ¥19.0
                                                  billion. And MCVA showed a ¥3.0 billion              My action plan for the current fiscal year
The options, given our operating environ-         improvement over the previous fiscal year,           was formulated to that effect. You will see
ment, might have been to withdraw, scale          although it remained in the red due to               more of the same single-minded pursuit of
back or sell. But I believe my mission            large write-offs. We also capitalized on IT          reforms. You will also see us take care of
demanded more than that. I share your             (Information Technology) and LT (Logistics           unfinished business with respect to the
belief that I have a finite period to             Technology) to build several new business            integration of member companies and
strengthen these BUs and help them                models that are already profitable.                  sales bases. This will optimize the alloca-
regain their former status as core, strate-                                                            tion of resources to contribute to MC’s
gic businesses.                                   If we continued to pursue reforms, this BU           consolidated results and improve the quality
                                                  could survive on its own. But businesses             of our assets, getting our house in order,
That’s exactly what I aimed for in fiscal         must do more than just survive—they must             so to speak, before the Nissho Iwai con-
2002. I focused on restructuring to see if        continuously seek higher returns and                 solidation in January 2003. The actions we
these businesses could indeed survive             deliver more value to customers. That’s              are taking today will underpin the success
under their own steam. The four BUs               why we agreed to the basic terms in March            of the joint venture company. When the
were integrated into one as I concentrated        2002 for the consolidation of steel products         merger finally takes place, I am deter-
on quickly accomplishing three goals. One         operations with Nissho Iwai Corporation.             mined to manage this BU cohesively and
was reforming our cost structure. Stream-         After looking at it from all conceivable             in sync with the joint venture as we begin
lining our balance sheet was a second             angles, we felt that this was the best course        moving toward our ultimate goal: an IPO.
goal. Finally, I took advantage of MC’s           of action for our stakeholders. It should
FILM functions to transform our business          capture greater synergies and it should
models and build strong, but efficient,           raise our corporate value.
distribution channels.

                                                                                                       HIROSHI KITO
                                                                                                       General Manager,
                                                                                                       Steel Products Business Unit




                                                                      page   13
                       Mitsubishi Corporation Annual Report 2002
                                   {UNLOCKING VALUE}




MC has a powerful portfolio of tangible assets. We also have
many non-financial strengths that are less well understood
but which “work” behind the scenes in tandem with our more
obvious assets to create value.




                                       page   14
                           Mitsubishi Corporation Annual Report 2002
                                       {UNLOCKING VALUE}




PARTNER POWER
BUSINESS INNOVATION
EXECUTION EXCELLENCE




Unlocking Value




Partner Power, Business Innovation and Execution Excellence define MC.
Although unquantifiable using prevailing standards for measuring financial
value, they are of considerable importance to MC—to any company for that
matter. This section looks at each of these hidden qualities.




                                           page   15
                        Mitsubishi Corporation Annual Report 2002
                                    {UNLOCKING VALUE}




Partner Po
 Partnerships don’t happen overnight. They take time to build. Eventually
 they flourish, expanding beyond their initial boundaries and taking on
 many forms. Successful partnerships serve as a source of strength for
 both parties. MC has endeavored to build lasting partnerships of this
 nature worldwide over the years. Today, these win-win relationships
 with strategic partners, including other firms that bear the Mitsubishi
 group name, are helping us to create value and synergies in many
 ways. This spread showcases just a handful of the powerful partner-
 ships with which we are proud to be associated.




                                        page   16
                                                   Mitsubishi Corporation Annual Report 2002
                                                                {UNLOCKING VALUE}




wer
Helping to Create a New Food Culture             concentrated in certain pockets of the        invaluable source of consistent earnings
MC has built a strong relationship with          world. Developing these resources requires    over the long term.
Nissin Food Products Co., Ltd., dating           huge up-front investments. It also demands
back 43 years. We started working with this      mining and processing capabilities, the       A Platform for More Success
widely recognized Japanese food products         ability and experience to size up and take    For over three decades, we have been
company in 1959 in the marketing of the          on risk and a long-term commitment.           conducting contract research marketing as
world’s first instant noodles, which revolu-     Partnerships often hold the key to the        the sole agency for Battelle in Japan. Our
tionized Japanese eating habits. Since           success of these projects. We bring our       cooperation with Battelle now extends be-
then, MC has represented Nissin Food             strengths—an extensive sales network,         yond our role as an agent. This relationship
Products in Japan, helping it to grow sales      sophisticated market intelligence gathering   produced Photonic Integration Research,
by over 100 times. In 1970, we also helped       capabilities, risk management, finance        Inc. (PIRI), an optical waveguide product
Nissin Food Products introduce U.S. con-         structuring expertise and other skills—to     manufacturer. We sold our stake in PIRI,
sumers to the new taste experience of            these partnerships, complementing the         reaping significant capital gains in fiscal
instant noodles and thereafter to the rest       advanced technological capabilities of        2001. In October 2000, we formed a new
of the world. We are now Nissin Food             major resource players of the caliber of      strategic alliance to jointly create, acquire,
Products’ strategic partner in many countries,   BHP Billiton and Rio Tinto. Such a powerful   fuse and commercialize intellectual proper-
assisting them in their ongoing efforts to       combination has served as the corner-         ties. Fittingly, this expanded alliance was
create a new food culture.                       stone of successful coal, copper, aluminum    formed during the 30th anniversary of our
                                                 and other mineral resource projects around    association with Battelle and will act as a
Complementary Strengths, Mutually                the globe. These projects not only secure     platform for further growth, hopefully in the
Beneficial Growth Opportunities                  a stable supply of vital resources for        form of another PIRI-like success.
Mineral resources, like fossil fuels, are        customers, but also provide MC with an




                                                                   page   17
                        Mitsubishi Corporation Annual Report 2002
                                    {UNLOCKING VALUE}




Business l
 MC is always evolving. We stay in step with ever-changing markets.
 We challenge the status quo. And we constantly seek to create new
 value in constructive, often ingenious ways. In short, business innova-
 tion is ingrained in our corporate DNA. We advance by drawing on all
 of our collective resources and capabilities. And we have broken the
 mold of the traditional trading company, to serve as much more than
 an intermediary. We still do that—and do it well—but we are constantly
 creating new business models in many ways. The following examples
 illustrate how we are developing innovative business models.




                                        page   18
                                                   Mitsubishi Corporation Annual Report 2002
                                                                {UNLOCKING VALUE}




nnovation
Changing the Value Chain From the                Generating Earnings as an Equity Partner          New Technologies, New Growth Drivers
Consumer’s Side                                  Business model innovation is a keyword at         More direct participation and value creation
Selling products and services from the sup-      MC in social infrastructure projects, too.        are also common threads in our drive to
ply side has long been our forte. But looking    One illustration is the IPP (Independent          research, develop and commercialize semi-
at the trading equation from the consumer’s      Power Producer) business, a growth field          nal new technologies and intellectual prop-
side can offer a clearer insight into where we   thrust into the limelight by liberalization and   erty. In the past, we searched for promising
can create value. We saw LAWSON, INC.,           privatization of electricity markets in a host    new technologies mainly for the purpose of
Japan’s second-largest convenience store         of countries. Since the late 1980s in the         passing them on to external business part-
chain, as the perfect platform to gain that      U.S., we have been participating directly as      ners. Now we are investing directly in busi-
insight and create new business models. As       an equity partner, and our activities extend      nesses, using our in-depth knowledge of a
LAWSON’s largest shareholder and a strate-       beyond just coordinating projects and             broad range of fields to commercialize new
gic partner, we have been working and            procuring plant machinery. We are partici-        technologies and intellectual property. And
supporting LAWSON in many ways, creating         pating in long-term projects not only in the      we have stolen a march on other compa-
and recasting business models with MC’s          U.S., but also in Mexico and other countries      nies in some areas. In 1999, we teamed up
FILM functions. For example, we helped           with the aim of generating earnings from          with Research Corporation Technologies
launch a LAWSON-brand credit card, which         electricity sales, as well as creating demand     and Materials and Electrochemical
offers customers new services and greater        for equipment. We can do this because of          Research Corporation in a joint venture to
shopping convenience, and are lending our        our strengths in total project coordination,      commercialize fullerene materials. We hold
distribution and wholesaling expertise in food   our in-depth knowledge of regional and            the patent license for fullerenes in Asia.
product-related areas. In these and other        market conditions, a long-standing pres-          And Frontier Carbon Corporation, a joint
ways, working together with LAWSON, we           ence in the power generation industry and         venture with Mitsubishi Chemical Corpora-
are capturing more value by taking a new         the ability to make investments requiring         tion, is at the vanguard of our nanotech-
approach to convenience store management.        the assumption and management of risk.            nology commercialization drive.


                                                                    page   19
                         Mitsubishi Corporation Annual Report 2002
                                     {UNLOCKING VALUE}




Execution
 Mapping out a destination is easy. Getting there is often the hard part.
 It requires firm resolve. It demands tough decisions and strong leader-
 ship along the way. Recent accomplishments suggest that we are on
 the right track for all these reasons. These accomplishments testify to
 our ability to formulate—and then execute––strategy. They speak of
 our ability to steadily improve. And they point to our ability to link
 strategy with value creation.




                                         page   20
                                                      Mitsubishi Corporation Annual Report 2002
                                                                   {UNLOCKING VALUE}




Excellence
MC2000—Setting the Stage                            MC2003—Reaching Higher                          units. Under his watchful eye, MC has
Under MC2000, we embarked on a process              MC2003 calls for the same approach. A new       already exited from 106 companies and
of self-transformation. We achieved most of         management cycle of portfolio review, plan-     disposed of Aristech Chemical, reducing
our goals. We shed our high cost structure,         ning and action aims to bring out our growth    total assets by approximately ¥240 billion
reducing the parent company head count              potential. A new performance indicator,         in total, since 1999.
from 8,401 to 6,941 over 3 years. Our risk          MCVA, is measuring how well we do at that.
management—and balance sheet—are now                And business units (BUs) are empowering         Corporate Governance—Checks and Balances
even better thanks to new risk management           our employees, who are being rewarded for       Enhanced corporate governance is another
practices and stricter exit rules. MC is also       delivering results. These actions are cata-     contributor to execution excellence. We
quite prepared to withdraw from businesses          lyzing a change in the mindset of our people.   have created the post of corporate execu-
that cease to be a strategic fit, even though                                                       tive officer, clearly separating responsibility.
exit rules don’t apply, to raise the value of its   BUs—The Key to MC2003                           We now have 17 directors, 3 of whom are
assets. MC’s withdrawal from U.S.-based             BUs are crucial to our next stage of            from outside MC. This compares with 45
Aristech Chemical Corporation in fiscal             progress. Their introduction is allowing us     and 2 several years ago. External advisors
2001 was one example of taking the initia-          to see deeper into the organization to          also sit on our Board of Corporate Auditors,
tive. Moreover, we are a more focused               determine where we are competitive and          as they do on the newly formed Governance
company. In fiscal 2000, we bettered our            are generating value––and where we are          Committee. Bringing an even greater
original target of generating 50% of our net        not. President Sasaki talked with each BU       external perspective to our operations is
income from 4 strategic fields—energy and           manager to stress the importance of their       our International Advisory Committee,
natural resources, foodstuffs and food,             role under MC2003. CFO Furukawa’s role          which includes many respected inter-
project development and IT-related areas.           in overseeing Restructure BUs highlights        national business figures.
In fiscal 2002, we generated over 70% of            the importance that MC attaches to these
our net income from these strategic fields.


                                                                       page   21
                                                                   Mitsubishi Corporation Annual Report 2002
                                                                           {BUSINESS GROUPS AT A GLANCE}




Business Groups at a Glance
                                       FISCAL 2002 RESULTS*1                       S C O P E A N D S I Z E O F O P E R AT I O N *2                 PRIMARY MARKETS

                                 Operating transactions: ¥169,186 million          Organization: 4 divisions, 17 BUs                 Financial markets, IT industry, logistics service
                                 Gross profit: ¥30,954 million                     Offices: 8 in 7 countries                         industry, convenience stores, healthcare industry.

 NEW BUSINESS                    Net loss: ¥20,290 million                         No. of employees: 3,690
                                 Segment assets: ¥1,047,290 million
 INITIATIVE GROUP




                                 Operating transactions: ¥430,324 million          Organization: 2 divisions, 20 BUs                 Communications, broadcasting, broadband,
                                 Gross profit: ¥30,095 million                     Offices: 18 in 7 countries                        platform, content, terminals, semiconductors and
                                 Net income: ¥8,671 million                        No. of employees: 617                             electronic devices, space, defense, civil aviation, etc.
 IT & ELECTRONICS
                                 Segment assets: ¥311,521 million
 BUSINESS GROUP




                                 Operating transactions: ¥3,473,374 million        Organization: 3 divisions, 27 BUs                 Electricity, city gas, oil refining, petrochemicals,
                                 Gross profit: ¥49,932 million                     Offices: 29 in 25 countries                       fuels for industry (papermaking, steel making,
                                 Net income: ¥21,717 million                       No. of employees: 1,995                           cement, etc.), gasoline and diesel oil for
 ENERGY BUSINESS                                                                                                                     transportation (cars, trucks, etc.), steel mills,
                                 Segment assets: ¥834,524 million
 GROUP                                                                                                                               electrode manufacturers, carbon black manufac-
                                                                                                                                     turers, etc.



                                 Operating transactions: ¥1,967,007 million        Organization: 2 divisions, 12 BUs                 Iron and steel, non-ferrous metals, metal products,
                                 Gross profit: ¥106,553 million                    Offices: 61 in 28 countries                       machinery, electrical appliances, automobile,
                                 Net income: ¥13,856 million                       No. of employees: 5,524                           construction, electricity and gas, etc.
 METALS GROUP                    Segment assets: ¥1,211,116 million




                                 Operating transactions: ¥2,158,529 million        Organization: 4 divisions, 39 BUs                 Electricity, railroads, plant, petroleum and gas,
                                 Gross profit: ¥122,829 million                    Offices: 183 in 45 countries                      ships, marine transportation, iron, steel, non-
                                 Net income: ¥12,201 million                       No. of employees: 8,689                           ferrous metals, papermaking, textiles, construc-
 MACHINERY GROUP                                                                                                                     tion, printing, facilities, communications, foods,
                                 Segment assets: ¥1,950,836 million
                                                                                                                                     chemical products, real estate, automobiles, etc.




                                 Operating transactions: ¥1,300,479 million        Organization: 2 divisions, 24 BUs                 Commodity chemicals, fertilizers, chemical
                                 Gross profit: ¥50,139 million                     Offices: 42 in 23 countries                       products, paint and adhesives, textiles, electrical/
                                 Net income: ¥6,545 million                        No. of employees: 2,869                           electronics and semiconductors, pharmaceuticals
 CHEMICALS GROUP                                                                                                                     and medical care, distribution, food and
                                 Segment assets: ¥554,036 million
                                                                                                                                     foodstuffs, agriculture and livestock, energy,
                                                                                                                                     automobile, ceramics, construction, communi-
                                                                                                                                     cations, etc.


                                 Operating transactions: ¥3,781,092 million        Organization: 4 divisions, 43 BUs                 Markets related to manufacturing, distribution and
                                 Gross profit: ¥239,227 million                    Offices: 44 in 29 countries                       sales of daily necessities: food, housing and
                                 Net income: ¥29,266 million                       No. of employees: 17,834                          clothing, etc.
 LIVING ESSENTIALS
                                 Segment assets: ¥1,463,152 million
 GROUP




* 1 Figures are before eliminations and other items.
* 2 The “No. of employees” represents the number of employees on a consolidated basis. The number of Corporate Staff employees on a consolidated basis not shown on this page was 2,816.
    The total number of employees, including Corporate Staff, was 44,034. Data for “Organization” and “Offices” are as of April 2002. Data for “No. of employees” are as of March 31, 2002.


                                                                                      page   22
                                                                       Mitsubishi Corporation Annual Report 2002
                                                                                {BUSINESS GROUPS AT A GLANCE}




                    MAIN PRODUCTS AND SERVICES                                                                      FISCAL 2002 HIGHLIGHTS

Functional services extending from financial services to consumer                    ■ Assisted LAWSON, INC. to launch a credit card business and in other ways to raise its
marketing, healthcare, logistics services and IT solutions.                            corporate value.
                                                                                     ■ IT Frontier Corporation officially established and operations began following the integration
                                                                                       of offices.
                                                                                     ■ Listed Japan Retail Fund Investment Corporation, a J-REIT formed with UBS Asset
                                                                                       Management (Japan) Ltd. (now UBS Global Asset Management (Japan) Ltd.), on the
                                                                                       Tokyo Stock Exchange.



Network integration business, satellite and terrestrial communications,              ■ Operations started at broadband content distributor HitPops, Inc.
mobile communications, cable TV, BS and CS broadcasting, semicon-                    ■ Formed MS Communications Co., Ltd. from an equal merger with MC Telenet Co., Ltd.
ductors and electronic devices, mobile phone equipment sales, content                  and Sumisho Telemate Co., Ltd.
                                                                                     ■ Marked full-scale entry into the information security services market with the establish-
business, education business, projects under Japanese ODA, prepaid
cards, high-resolution digital satellite images, information security                  ment of Infosec Corporation.
                                                                                     ■ Established Jicoux Datasystems, Inc., a software company for location-based services,
business, aircraft, aircraft leasing, aircraft interiors, engines, avionics,
                                                                                       automotive telematics and enterprise Geographic Information Systems (GIS).
defense and space business development, etc.                                         ■ Invested in and formed alliance with Obunsha Co., Ltd.
                                                                                     ■ Broadcasting started at PLAT-ONE CORPORATION from a communications satellite (CS)
                                                                                       positioned in the 110-degree east orbital slot.
LNG (liquefied natural gas), LPG (liquefied petroleum gas), crude oil,               ■   Acquired a stake in the Tangguh LNG Project in Indonesia.
gasoline, naphtha, kerosene, diesel oil, heavy oil, lubricating oil, asphalt,        ■   Acquired stakes in gas fields in Brunei and Malaysia.
other petroleum products, Orimulsion®, anthracite, coal coke, petroleum              ■   Raised equity interest in SHOWA YOKKAICHI SEKIYU CO., LTD., a joint venture with
coke, carbon black, artificial graphite electrodes, gas and oil field                    Showa Shell Sekiyu K.K., to boost supply capabilities of petroleum products.
development, new energy development, energy-conservation system
development, electricity and heat supply business, etc.




Iron ore, coking coal, thermal coal, scrap steel, ferro-alloys, pig iron, steel      ■ Signed a basic agreement with Nissho Iwai Corporation to establish joint venture for steel
sheets and coils, steel tubes and pipes, stainless steel, various steel                products operations.
products, automobile parts, non-ferrous metals raw materials such as                 ■ Created BHP Billiton Mitsubishi Alliance (BMA) with BHP Billiton for joint coking coal
copper concentrates, non-ferrous metals and metal products, precious                   mining and sales.
metals, etc.                                                                         ■ Invested in MOZAL II aluminum smelter project in the Republic of Mozambique, following
                                                                                       on from MOZAL I.
                                                                                     ■ Antamina Mine, a world-class copper and zinc mine, started commercial operations.




Plant and machinery for power generation, elevators, railroad carriages,             ■ Signed a contract for combined-cycle power plants for Tuas Power Station Stage II Blocks
transportation systems, plant and equipment for gas/petroleum/chemical                 No. 3 and No. 4 in Singapore.
industries, steel-making equipment, cement equipment, ships, offshore                ■ Started commercial operation at Tuxpan II IPP Project in Mexico.
facilities, waste treatment equipment, environmental protection facilities,          ■ Signed a contract with SABIC for the JUPC ethylene plant.
automobiles, construction equipment, machine tools, printing machinery, etc.         ■ Automobile sales were strong in Thailand, Indonesia and other markets.

Construction of office buildings and houses, comprehensive regional                  ■ Started a procurement solutions business based on a strategic alliance with U.S.-based

development, including real estate leasing.                                            FreeMarkets, Inc.
Project development, electricity sales and construction and operation of
electricity, water and other social infrastructures.
Commodity chemicals, functional chemicals, fine/specialty chemicals,                 ■ Ammonia manufacturer P.T. Kaltim Parna Industri (KPI) started commercial production
plastic products for automobile and household appliance industries, raw                ahead of schedule.
materials for synthetic fiber, fertilizers, agricultural chemicals, artificial       ■ MC agricultural chemical subsidiary Ryosho Corporation expanded domestic sales with
sweeteners, salt field business, petrochemicals business, basic chemicals              the addition to its lineup of Dow AgroSciences Japan (DAS) products following investment
manufacturing, pharmaceutical and agricultural chemical intermediates                  by Dow Chemical Japan Limited (DOW).
manufacturing, etc.                                                                  ■ Established Delica Container Systems Inc. to rent containers to major supermarkets for
                                                                                       transporting daily delivered products.



Grains, sugars, flour, oils and fats, feed, meats, marine products, fruits           ■ Announced integration of three oil mills: The Nisshin Oil Mills, Ltd., Rinoru Oil Mills Co.,
and vegetables, beer, coffee, mineral water, dairy products, frozen and                Ltd. and Nikko Oil Mills Co., Ltd. Became the largest shareholder of new company,
refrigerated foods, processed foods, etc.                                              Nisshin Oillio, Ltd.
Textile raw materials, yarn, fashion apparel, brand-related business,                ■ Invested in and formed alliances with Fujisan Co., Ltd., Asahi Shokuhin Co., Ltd. and

furniture, tires, construction materials, housing materials, packaging                 Maruichi Co., Inc. to broaden MC’s lineup of food products.
materials, wood chips, pulp, paper, cement, silica, plate glass, film, etc.          ■ Established Food Service Network Co., Ltd. to provide logistics for the foodservice and
                                                                                       ready-to-eat food markets.
                                                                                     ■ Started joint brand businesses such as Martin Margiela.




                                                                                            page   23
                                                Mitsubishi Corporation Annual Report 2002
                                                            {GROUP CEOs TALK}




                     New Business Initiative Group                                          www.mitsubishi.co.jp/En/business/new/




Two flagship projects showcase how we         The other major project is LAWSON, INC.,      We also made a move on another front
are carrying out our MC2003 mandate of        Japan’s second-largest convenience            during the year. We teamed up with The
using FILM functions to create value.         store chain. I feel that we have made         Tokyo Electric Power Company, Incorpo-
                                              significant progress toward accomplish-       rated and some financial institutions to
IT Frontier Corporation (ITF) is one of       ing our investment goal, despite an ¥18.2     establish a company to provide finance
them. ITF was established by integrating      billion impairment loss of equity-method      functions and rate the quality of housing.
5 IT-related MC companies and with            goodwill on our investment in LAWSON in       The latter service is possible through a
capital from IBM Japan, Ltd. It started       fiscal 2002. We have helped LAWSON            company we established in 2000. The
operations in earnest in April last year      to create a new information infrastruc-       Japanese housing industry is under-
and has come together quicker than we         ture and are supporting their efforts to      going structural changes prompted by
expected. With sales of ¥69.4 billion and     improve logistics and materials procure-      market contraction—new single-family
around 1,600 employees, ITF has a grow-       ment. This includes investments in            housing starts slumped to 370,000 units
ing market presence. ITF’s market offers      building a distribution platform for all      in fiscal 2002—and the reluctance of
exciting potential. We are seeing more        temperature ranges. Management is             financially strapped banks to finance
companies in Japan appoint CIOs (Chief        another area where we want to have            small and medium-sized builders who
Information Officers), which I feel is a      more involvement. We signaled our             account for 70% of the new homes. We
sure sign that Japanese companies are         intention to quickly and comprehensively      see growth opportunities in injecting life
getting serious about IT. To provide          support LAWSON to lift its corporate          into this industry.
more support to ITF to seize on market        value in another way during the year.
possibilities, we formed the IT Projects      In May, Takeshi Niinami, who has
Division in April 2002. This Division         been involved with this project from the
brings together strategy and IT integration   very beginning, was appointed president
capabilities and will provide invaluable      of LAWSON.
advice based on its in-depth understand-
ing of client companies’ strategies. I am
convinced that ITF will stimulate the IT
market in Japan and also businesses
within MC.




                                                                                            YORIHIKO KOJIMA
                                                                                            Senior Executive Vice President,
                                                                                            Group CEO, New Business Initiative Group




                                                                page   24
                                                             Mitsubishi Corporation Annual Report 2002
                                                                           {GROUP CEOs TALK}




                                                                                                                New Business Initiative Group

                                                                                                                Strategic Planning Office
                                                                                                                Business Creation Unit
                                                                                                                IT Projects Div.
ITF INTEGRATES OFFICES,
                                                                                                                IT Solution Office
STARTS FULL-SCALE OPERATIONS
                                                                                                                ITF Unit
IT Frontier Corporation (ITF), formed in April 2001
                                                                                                                eCommerce Unit
from a merger of five IT-related subsidiaries to provide
corporate IT solutions, started operations both in                                                              Consumer Business Div.
name and in reality as one company on October 1 last                                                            LAWSON Project Management Unit
                                                                                                                Food Service Business Unit
year following the opening of an integrated office in
                                                                                                                Marketing Business Development Unit
Harumi, Tokyo. Leveraging the benefits of this integra-
tion, ITF is providing a full line of ERP support services                                                      Financial Services Div.
and outsourcing services for ASAHI GLASS CO., Ltd.                                                              Merchant Banking Unit
and has launched service solutions center operations                                                            Capital Markets Unit
                                                                                                                Investment Banking &
in Mitaka, Toda and Makuhari.
www.itfrontier.co.jp/eng/index.html                                                                               Financial Services Unit
                                                                                                                M&A Unit
                                                       NEW COMPANY PROMISES TO RAISE LAWSON’S                   Logistics Services Div.
                                                       CORPORATE VALUE                                          Logistics Solution & Planning Unit
                                                       In 2002, MC, LAWSON, INC. and Credit Saison Co.,         Risk Engineering Unit
                                                       Ltd. established LAWSON CS Card, INC. to provide         International Logistics Business Unit
                                                       credit card services for LAWSON customers. MC will       Tank Terminals Unit
                                                       extend finance and marketing support to the new
                                                                                                                Healthcare Business Unit
                                                        company, as well as use it as a vehicle for providing
                                                        new financial services to LAWSON customers. At the
                                                        same time, by conjoining analysis of customer pur-
                                                         chasing patterns and MC’s CRM (Customer Relation-
                                                         ship Management) expertise, MC will deliver the
                                                 most advanced CRM solutions in the convenience store
                                               industry, assisting LAWSON to reconfigure its product mix and
                                               develop new products.
                                               www.lawson.co.jp/e/e_top.html

MC ESTABLISHES FIRST JOINT VENTURE WITH TOYOTA
On June 25, 2002, MC and TOYOTA MOTOR COR-
PORATION established Good Life Design Co., Ltd. to
provide outsourcing services to help regional hospi-
tals improve efficiency and customer services, as well
as supply nursing care and health maintenance
programs for patients and the general public. This is
MC’s first joint venture with the giant carmaker.
Capitalized at ¥260 million, Good Life Design is 51%
owned by TOYOTA and 49% by MC. The new com-
pany aims to erect a business model that accurately
reflects the needs of each locality so as to support the
creation of healthy, assuring, easy-to-live communi-
ties where hospitals play a central role.




                                                                               page   25
                                                Mitsubishi Corporation Annual Report 2002
                                                            {GROUP CEOs TALK}




                     IT & Electronics Business Group                                            www.mitsubishi.co.jp/En/business/it/




To align the IT & Electronics Business        and UNIDUX Inc., a trading company            creation of new business models target-
Group to best achieve our MC2003              selling semiconductors and electronics        ing nascent fields. New business oppor-
goals, it was divided into two divisions—     components, were respectively rein-           tunities are emerging all the time as
Telecommunication & Broadcasting and          forced by M&A.                                communications and broadcasting
Aerospace—in April 2001. Each division                                                      merge and we head toward a full-fledged
is active in five spheres: content creation   We have also put in place a group man-        broadband era. In the 21st century, it will
and sales, content packaging, infrastruc-     agement infrastructure to achieve our         not be uncommon for our competitors to
ture, platform services and equipment         goals. This entailed formulating guide-       be from completely different industries
sales. In each sphere, we will broaden        lines for the management of our invest-       to our own. But we have strong relation-
our business portfolio by nurturing core      ments and classifying investments into        ships with customers forged through
companies. Ultimately, we aim to create       four categories. We have set targets by       extensive business dealings that will
a powerful value chain that links these       category and will closely monitor the         serve as a source of strength. And we
core companies.                               progress of each company. With com-           are a company that is prepared to take
                                              panies designated as core companies,          on risk—and has the ability to manage
In fiscal 2002, we established new enti-      I am holding regular discussions with         it. We will capitalize on all these qualities
ties that we hope to nurture into core        management of each. We are also send-         to open up new markets.
companies in two of these spheres—            ing MC people to these companies and
content packaging and platform services.      cooperating with them to spur growth.
In the equipment sales sphere, we con-        Our involvement extends to reinvesting
centrated on reinforcing our operating        cash depending on the stage of growth.
base by integrating and merging exist-
ing businesses.                               In fiscal 2003, we will continue to
                                              adhere to our policy of strengthening
New businesses include PLAT-ONE               group management, maintaining our
CORPORATION, a platform operation             focus on nurturing core companies. And
using a communications satellite (CS)         to realize and enhance our value chain,
positioned in the 110-degree east orbital     we will concentrate on the content
slot; HitPops, Inc., which distributes        sphere and solidify our base in equip-
broadband content; Infosec Corporation,       ment sales. In fiscal 2002, we took an
an information security services provider;    equity stake in Obunsha Co., Ltd. to gain
and Jicoux Datasystems, Inc., which           access to educational content.
develops and sells software engines for
satellite digital maps. Meanwhile, MS         Since our formation in 1987, the IT &
Communications Co., Ltd., which sells         Electronics Business Group has been a
mobile phone handsets and services,           driving force within MC through the
                                                                                            TAKESHI HASHIMOTO
                                                                                            Executive Vice President,
                                                                                            Group CEO, IT & Electronics Business Group




                                                                page   26
                                                            Mitsubishi Corporation Annual Report 2002
                                                                        {GROUP CEOs TALK}




                                                                                                                IT & Electronics Business Group

                                                                                                                IT & Electronics Business Group CEO Office
                                                                                                                IT & Electronics Business Group Internal
                                                                                                                  Audit Office
PLAT-ONE STARTS CS DIGITAL BROADCASTING SERVICES
                                                                                                                Telecommunication & Broadcasting Div.
PLAT-ONE, a 35%-owned affiliate of MC, started beaming
                                                                                                                Network Integration Business Unit
digital broadcasts from a communications satellite (CS)
                                                                                                                Contents Business Unit
positioned in the 110-degree east orbital slot on April 1 this
                                                                                                                Education & Information Services
year, gaining a head start on rivals. PLAT-ONE is a platform                                                      Business Unit
that delivers a multitude of programs, including live cover-                                                    Broadcasting Business Unit
age of all 70 YOMIURI GIANTS home-ground baseball                                                               Telecommunication Business Unit
games, movies, music and news. PLAT-ONE performs                                                                Telecommunication Business
billing, customer management and other services for                                                               Development Unit
various broadcasters. Plans also call for groundbreaking                                                        Telecommunication Infrastructure
services, such as interactive broadcasts and a content                                                            Business Unit
storage service that lets viewers watch the same program                                                        International Cooperation Project Unit
as many times as they want.                                                                                     IT Products Business Unit
                                                                                                                China Business Development Unit
                                                        MC TAKES STAKE IN OBUNSHA,                              Semiconductor & Electronic Devices
                                                        FORMS BUSINESS ALLIANCE                                   Business Unit
                                                                                                                Card Business Unit
                                                        In March 2002, MC took an equity interest in and
                                                        formed a business alliance with Obunsha, a major        Aerospace Div.
                                                        Japanese publisher of educational materials, to         Space Transportation Unit
                                                        develop educational solutions that meet the demands     Space Systems Unit
                                                        of the 21st century. This is to be done by marrying     Space Business Development Unit
                                                                                                                Spatial IT Business Unit
                                                        MC’s experience in broadband and consumer busi-
                                                                                                                Electronic Systems Unit
                                                        nesses with Obunsha’s educational content and
                                                                                                                New Business Initiative Unit
                                                        publishing know-how. MC hopes to offer educational
                                                                                                                Aeronautics Unit
                                                        solutions for universities and new testing services,
                                                                                                                Airline Business Unit
                                                        expand e-learning and create entirely new businesses.


FULL-SCALE ENTRY INTO THE INFORMATION
SECURITY SERVICES FIELD
MC’s wholly owned subsidiary Infosec Corpora-
tion formed a capital and business alliance with
leading U.S. and Japanese companies (SAIC,
Predictive Systems, Riptech and LAC) to begin
supplying information security services on April
1, 2002. This consortium is drawing on their
sophisticated technologies to offer advanced,
round-the-clock security to clients in the public
and private sectors. Services include support for
the design and implementation of information
systems and an advanced intrusion monitoring
system that detects network security breaches.




                                                                            page   27
                                                Mitsubishi Corporation Annual Report 2002
                                                            {GROUP CEOs TALK}




                     Energy Business Group                                      www.mitsubishi.co.jp/En/business/fuels/




We made the strong start to MC2003 that       more markets for LNG. Outside of Japan,               rationalization of our terminal and
we planned in fiscal 2002. Operating          our main target is the Asian market,                  carrier operations.
results were supported by high profits        particularly South Korea and Taiwan.
from our strategic natural gas opera-         We are looking at the European and U.S.               Finally, I want to point out that intangible
tions. Several noteworthy developments        markets, too, as we take on a more global             assets are just as valuable as the prime
over the last two years should keep it        perspective in LNG sales. We plan to                  tangible assets in our business portfolio.
that way. We have acquired a stake in         make investments in LNG carriers and                  Most valuable is the trust we have
the Tangguh LNG Project in Indonesia,         LNG receiving terminals to strengthen                 earned from so many prominent busi-
as well as fields in Brunei and Malaysia.     our presence along the entire value chain.            ness partners. We built up this trust over
And we acquired an additional interest                                                              many years of accomplishments, includ-
in the Sakhalin II Project. We have now       In oil and gas exploration & production               ing pioneering achievements, such as the
largely completed our program to secure       (E&P), we are expanding total upstream                first introduction of crude oil for power
the assets needed to fuel growth in natu-     rights (currently equivalent to 1.4 billion           generation in 1962 and LNG in 1969 in
ral gas operations, particularly LNG, from    barrels of oil) in reserves as well as                Japan. We will now be placing even
2010 onward.                                  production capacity. Last year, we                    greater emphasis on fostering individuals
                                              acquired rights to an undeveloped, off-               with the skills needed to draw on this
Amid streamlining and restructuring in        shore gas field in Australia and are pres-            trust and our tangible assets to create
the petroleum industry, we are selling        ently constructing a pipeline through a               business models for today’s markets.
non-core assets and integrating BUs. In       joint venture to transport the natural gas
addition, we are placing greater emphasis     to land for sale to an Australian gas
on high-value-added downstream busi-          supplier. This project is distinguished by
nesses. One example of actions we have        its small scale and small up-front invest-
taken is to increase our equity interest in   ment relative to LNG projects and is
SHOWA YOKKAICHI SEKIYU CO., LTD.,             expected to generate cash flows quickly.
a joint venture with Showa Shell Sekiyu       It marks a first for MC as an entirely new
K.K., to boost our supply capabilities of     business model and will broaden our
petroleum products and make us more           E&P portfolio. In the same way, we will
competitive in terms of cost. We have         produce natural gas from the Gulf of
also expanded our network of service          Mexico and supply it to the continental
stations in Japan. These and other            U.S. via a pipeline.
actions should ensure that we remain
an integral part of this industry.            In the petroleum business, which
                                              revolves around Mitsubishi Shoji Sekiyu
In the current fiscal year, we will con-      Co., Ltd., we will expand retail opera-
tinue to adhere to our basic game plan        tions further through M&As and other                  YUKIO MASUDA
under MC2003. Our most pressing issue         actions, according to market conditions.              Senior Executive Vice President,
                                                                                                    Group CEO,
in the natural gas business is developing     We will also optimize logistics through
                                                                                                    Energy Business Group




                                                                page   28
                                                           Mitsubishi Corporation Annual Report 2002
                                                                        {GROUP CEOs TALK}




                                                                                                                  Energy Business Group

                                                                                                                  Energy Business Group Planning &
                                                                                                                   Coordination Dept.
                                                                                                                  Exploration & Production Unit
MC INCREASES STAKE IN SHOWA YOKKAICHI SEKIYU                                                                      Energy Business Development Unit
In March 2002, MC raised its stake in SHOWA
                                                                                                                  Natural Gas Business Div.
YOKKAICHI SEKIYU CO., LTD. to 20% by acquiring
                                                                                                                  Coordination & Strategy Unit
shares from five Mitsubishi group companies. A joint
                                                                                                                  Brunei Project Unit
venture between Showa Shell Sekiyu K.K and the                                                                    Alaska Project Unit
Mitsubishi group, SHOWA YOKKAICHI SEKIYU oper-                                                                    Malaysia Project Unit
ates one of Japan’s largest and most modern oil refiner-                                                          Australia Unit
ies and is positioned as a strategic core company in the                                                          Indonesia Project Unit
MC Group’s supply of petroleum products. With the                                                                 Oman Project Unit
additional investment, MC has signaled its intention to                                                           Sakhalin Project Unit
work with Showa Shell Sekiyu.                                                                                     Business Development Unit
                                                                                                                  Petroleum Business Div.
                                                                                                                  International Petroleum Business Planning
                                                                                                                    & Development Office
                                                                                                                  Petroleum Business Development Unit
                                                    BRUNEI DARUSSALAM, LICENSING OF NEW PETROLEUM                 Industrial Petroleum Marketing Unit
                                                    AREA, BLOCK K OF EEZ                                          Lubricants & Special Products Unit
                                                    At the end of January this year, Royal Dutch/Shell, Conoco    Utility Feedstock Unit
                                                    Inc. and MC were awarded the rights to explore deepwater      Orimulsion Unit
                                                    Block K by the Brunei government. The three companies         Thermal Coal Unit
                                                    made a joint bid for the international tender, which closed   Petroleum Feedstock Unit
                                                    on November 1, 2001. Block K covers an approximate            International Petroleum Unit
                                                    5,000km2 area located about 80km to 180km off the             Refining & Supply Unit
                                                    Brunei coast in waters deeper than 1,000m. Preliminary        Petroleum Products Supply &
                                                                                                                    Distribution Unit
                                                    studies of this block confirmed several promising crude oil
                                                    and gas structures. Negotiations are presently under way      Carbon & LPG Business Div.
                                                    with PetroleumBRUNEI (Brunei National Petroleum Com-          LPG Business Development Dept.
                                                    pany) on the terms of a production sharing agreement.         Metallurgical Coke Unit
                                                    Exploration will begin as soon as the agreement is signed.    Petroleum Coke Unit
                                                                                                                  Electrode Unit
                                                                                                                  Needle Coke & Tar Products Unit
PATRICIA BALEEN PROJECT                                                                                           Carbon Products Unit
MC is participating with Tokyo Gas Co., Ltd. in the                                                               LPG Unit
Patricia Baleen Project, a gas field located 24 kilo-                                                             Shanghai LPG Project Unit
meters off the coast of Victoria, Australia. The gas is
to be transported via a pipeline to land and sold to
ENERGEX, an energy retailer wholly owned by the
Queensland State government. The project includes
the construction of a plant to process gas from the
field. Production is scheduled to come on stream
around October 2002 and MC expects to quickly
recoup its investment.




                                                                            page   29
                                                 Mitsubishi Corporation Annual Report 2002
                                                             {GROUP CEOs TALK}




                      Metals Group                    www.mitsubishi.co.jp/En/business/metals/




The special feature of the Metals Group is     In the steel products area, we have taken         materials and technology using non-
that we conduct businesses along the           steps to restructure our business model,          ferrous metals both as a venture capital
entire value chain, from resources through     ultimately coming to the conclusion that          and as a business partner. This will be
final products, maximizing value at each       the establishment of a joint venture with         achieved by employing experts from
step of the way and within our portfolio. In   Nissho Iwai Corporation would give us an          academia and collaborating with part-
fiscal 2002, there were significant devel-     opportunity to create a new, improved             ner companies. The automotive com-
opments to report in this regard.              business model. Under the terms of the            ponents business represents another
                                               joint venture agreement, MC and Nissho            potential growth area. We have begun
In the upstream resources area, we             Iwai will form a new company called               to create new business models based
strengthened our strategic alliance with       Metal One Corporation, capitalized at             on end-user requirements. I will be
BHP Billiton in coking coal assets. We         ¥150.0 billion, 60% of which will be              closely monitoring these new busi-
equalized interests with BHP Billiton by       provided by MC. Clearly, this agreement           nesses, which I hope will drive future
acquiring some of their equity in coking       was made to capture synergies in respect          earnings growth.
coal assets in Bowen Basin, Australia,         of products, markets and costs. What’s
through our subsidiary Mitsubishi              more, it targets growth opportunities. We
Development Pty. Ltd. (MDP). The               have already taken steps in this respect
equal partnership will exploit MDP’s           by investing in coil centers and IT infra-
strengths in marketing and BHP Billiton’s      structure for small and medium-sized
strengths in operations and technology.        wholesalers to make steel distribution
Underpinning this partnership also is our      more efficient, prompting faster inven-
shared vision of the best growth strategy      tory turnover. I believe that our joint
for this industry.                             venture with Nissho Iwai will create more
                                               demand for the services offered by our
MDP aims to be a resource company.             centers and infrastructure, allowing us to
Through its business with BHP Billiton in      grow and recoup our investments quicker.
coking coal and Rio Tinto in thermal
coal, MDP has forged relationships that        In closing, I want to touch on new busi-
it hopes to grow to encompass mineral          ness models in the downstream market
resources in general.                          that have been assigned a Build mission.
                                               One area is new materials. Here we are
In much the same way, we aim to build          promoting businesses with leading
deeper relationships with other major          companies, mainly in respect of metal
resource companies. These relationships        applications. We have also established
will give us more opportunities to partici-    CapTech Corporation to incubate
pate in world-class resource projects.         venture businesses involved with new
                                                                                                 MASAYUKI TAKASHIMA
                                                                                                 Senior Executive Vice President,
                                                                                                 Group CEO, Metals Group




                                                                 page   30
                                                                 Mitsubishi Corporation Annual Report 2002
                                                                               {GROUP CEOs TALK}




                                                                                                                          Metals Group

                                                                                                                          Metals Administration Dept.
                                                                                                                          Metals Group CEO Office
                                                                                                                          IT Planning & Coordination Office
MC FORGES ALLIANCE WITH BHP BILLITON                                                                                      Metals & Resources Investment
In July 2001, MC and BHP Billiton, one of the world’s
                                                                                                                            Administration Unit
leading mineral resources companies, cemented a
                                                                                                                          Steel Products Business Unit
strategic alliance in coking coal by equalizing their
                                                                                                                          Components Business Development Unit
interests in Australian joint ventures. The newly created
BHP Billiton Mitsubishi Alliance (BMA) owns and                                                                           Iron & Steel Div.
operates 7 mines with an aggregate annual production                                                                      Coking Coal Business Unit
capacity exceeding 40 million tonnes, in addition to a                                                                    Thermal Coal Business Unit
port facility. With a significant market share of 26% in                                                                  Iron Ore Business Unit
the seaborne supply of coking coal, BMA is positioned
                                                                                                                          Non-Ferrous Metals Div.
as the world’s number-one supplier. The Metals Group
                                                                                                                          Base Metals Raw Materials Business Unit
is committed to supplying the global steel industry with
                                                                                                                          Copper Metals Business Unit
high-quality coking coal from this alliance, capitalizing
on its experience and in-depth knowledge of the mineral
                                                                                                                          Aluminium Business Unit
resources business.                                                                                                       Non-Ferrous Metals Products
                                                                                                                            Business Unit
                                                                                                                          Bullion & Global Commodity Futures
                                                            THE ANTAMINA MINE OPENS                                         Business Unit
                                                            In November 2001, the Antamina Mine was officially            New Metals Business Unit
                                                            opened in Peru with President Alejandro Toledo and            International Development Project Unit
                                                            other dignitaries in attendance. This world-class mine,
                                                            in which MC has a 10% interest, was completed in
                                                            May 2001 and boasts annual production capacity of
                                                            1,000,000 tonnes of copper concentrates and 500,000
                                                            tonnes of zinc concentrates. The mine is expected to lift
                                                            Peru’s GDP by about 1.4%, making it an important
                                                            element of the country’s economy. It will also be a stable
                                                            source of feedstocks for Japanese copper and zinc
                                                            smelting companies; the mine will export 200,000
                                                            tonnes of copper concentrates and 80,000 tonnes of
                                                            zinc concentrates to Japan annually.



CONSOLIDATION OF STEEL PRODUCTS OPERATIONS
WITH NISSHO IWAI
In March 2002, MC and Nissho Iwai Corporation reached
a basic agreement to consolidate their steel products
operations in a strategic subsidiary, Metal One Corpora-
tion, in January 2003. A rebuilding move, the consoli-
dation will fundamentally alter cost and asset structures,
such as by eliminating overlapping operational bases.
The complementary nature of MC’s and Nissho Iwai’s
operations is expected to drive a business model trans-
formation and position the joint venture at the center of
industry restructuring. At the same time, the joint ven-
ture aims to be number one in the industry, recast as a
highly profitable, value-creating entity.
                                                              (Left)  Masashi Mizutani, Senior Managing Executive
                                                                      Officer, President of Metals Company,
                                                                      Nissho Iwai Corporation
                                                              (Right) Norio Okada, Executive Vice President, Group COO,
                                                                      Metals Group, Mitsubishi Corporation



                                                                                   page   31
                                                Mitsubishi Corporation Annual Report 2002
                                                            {GROUP CEOs TALK}




                     Machinery Group                          www.mitsubishi.co.jp/En/business/machinery/




The Machinery Group improved its earn-        The overseas IPP (Independent Power                 the e-solutions rendered by U.S.-based
ings and MCVA, contributing substantially     Producer) business, in particular, has been         FreeMarkets, Inc., to Japanese corpora-
to MC’s overall performance in fiscal         targeted as a strategic growth field and            tions, and the Machinery New Business
2002. Each of the Machinery Group’s 47        significant resources have been allocated           Initiative Unit, which will be active in the
BUs made steady progress in carrying          for future development. The Machinery               environment and security arenas.
out their strategic missions in the first     Group’s earnings were boosted by gains
year of MC2003.                               from the sale of shares in Orion Power              In fiscal 2003, we will continue to reshape
                                              Holdings, Inc., a U.S. investment. In fiscal        our portfolio by reorganizing our 47 BUs
Our mainstay Asian automotive business,       2003, we will increase our involvement in           into 39 BUs under 4 divisions. While our
which focuses on Indonesia and Thailand,      power generation projects overseas and are          operating environment is turbulent, we see
has seen sales grow on the back of a          considering the acquisition of prime power          opportunities in market change. We aim
post-crisis market recovery in the region.    generation assets. These actions will               to generate profits by leveraging our
We continue to allocate operating re-         ensure stable earnings in fiscal 2004 and           strengths—our extensive networks, corpo-
sources to these markets to develop a         beyond. In Japan, through MC subsidiary             rate brand, project development abilities,
value chain based on Customer Relation-       Diamond Power Corporation, we plan to               environmental awareness and financial
ship Management. Our involvement              continue power retailing, while keeping a           acumen. Our people are the essence of
extends from logistics through consumer       watchful eye on how deregulation unfolds.           our operations. By creating new business
financing and e-business. Our project                                                             models rooted in innovative ideas, we aim
development and financing business,           To advance real estate development                  to achieve the goals set forth in MC2003.
notably ship, oil and gas and petrochemi-     operations, our intention is to pursue new
cal plant-related projects, also performed    business models, such as real estate
well. During the year, we were awarded        investment trusts (REITs) and private
a contract, together with our consortium      finance initiatives (PFIs). Several high-
partners, to build one of the world’s         rise residential condominium develop-
largest ethylene plants in Saudi Arabia.      ment projects in Japan, such as
We also concluded a contract for a Hot        Shinagawa V-Tower, Shimomaruko
Strip Mill Plant in China for the Baosteel    project and Shinonome W Comfort
Group, with whom we have a long-              Towers, are going smoothly.
standing relationship. Our ship and ship-
building business, which is involved in the   In addition to these core operations, we are
sale and purchase of ships, the arranging     determined to increase our involvement in
of financing and the operation of our         growth fields, such as railway systems and
own ships, posted a strong showing.           environmental businesses contributing to
Moreover, our overseas power generation       sustainable development. Two new BUs
businesses, and our housing, building         were set up in fiscal 2003 to initiate busi-
construction and real estate and urban        nesses in new areas: the Procurement                NAOHISA TONOMURA
                                                                                                  Senior Executive Vice President,
development businesses all made solid         Solution Business Unit, which offers
                                                                                                  Group CEO, Machinery Group
contributions to our results.                 sourcing software and services, including



                                                                page   32
                                                           Mitsubishi Corporation Annual Report 2002
                                                                          {GROUP CEOs TALK}




                                                                                                                  Machinery Group

                                                                                                                  Machinery Group CEO Office
                                                                                                                  Machinery New Business Initiative Unit
                                                                                                                  Procurement Solution Business Unit
MEXICO TUXPAN II IPP PROJECT COMES ON LINE
                                                                                                                  Power & Electrical Systems Div.
December 15, 2001 saw the start of commercial
                                                                                                                  Power Systems Unit
operations at a highly efficient, state-of-the-art
                                                                                                                  Power Systems Export Unit
495MW combined-cycle thermal power station in
                                                                                                                  Transportation Systems Unit
Tuxpan, northeast of Mexico City in the state of                                                                  Elevator & Escalator Development Unit
Veracruz. The plant was constructed by MC and                                                                     Power Generation & Marketing,
Kyushu Electric Power Co., Inc. The two companies                                                                   International Unit
will jointly maintain and operate the plant for 25                                                                Power Marketing, Japan Unit
years under a power purchase agreement with the
                                                                                                                  Plant Project Div.
Comisión Federal de Electricidad. Project finance
                                                                                                                  Energy & Chemical Projects Unit
was provided by the Japan Bank for International                                                                  Plant & Heavy Machinery Unit
Cooperation (JBIC) and commercial banks.                                                                          Ship Unit
                                                                                                                  Project Development Unit
                                                                                                                  Paper Plant & Textile Machinery Unit
                                                    SAUDI ARABIA JUPC ETHYLENE PLANT
                                                    During the year, MC, Chiyoda Corporation and Kellogg          Environment & Project Development Div.
                                                    Brown & Root, Inc. (KBR) were awarded a contract by a         Chemtex Business Unit
                                                    subsidiary of Saudi Basic Industries Corporation (SABIC)      Construction Equipment Dealer Operation Unit
                                                    to build the world’s largest ethylene plant with an annual    Environment & Water Business Unit
                                                                                                                  Gellannic Project Unit
                                                    production capacity of 1 million tons. The plant, which
                                                                                                                  New Technology & Industrial Business
                                                    will be constructed in the Al-Jubail Industrial Area, is
                                                                                                                    Development Unit
                                                    slated for completion in July 2004. Chiyoda will be
                                                                                                                  Industrial Machinery & Equipment Sales Unit
                                                    responsible for engineering, procurement and construc-
                                                                                                                  Rental & Construction Equipment Unit
                                                    tion, while KBR will handle project management and            Administration & Consolidated
                                                    install new ethylene technology. MC, for its part, will act     Management Unit
                                                    as business coordinator for the project.                      Shinagawa Project Unit
Artist’s impression
                                                                                                                  New Business Development Unit
                                                                                                                  Construction & Building Equipment Unit
W COMFORT TOWERS                                                                                                  Housing Development Unit
MC, MITSUBISHI ESTATE CO., LTD. and                                                                               Urban Development Unit
RYOSHINTOSHIKAIHATSU Co., Ltd. are devel-                                                                         Overseas Property Investment Unit
oping a high-rise condominium in the Shinonome                                                                    Transplant Unit
area, a 160,000m2 project in Tokyo’s Koto Ward.                                                                   International Infrastructure Project Unit
Called the W Comfort Towers, the condominium                                                                      Motor Vehicle Business Div.
is one of Japan’s largest with 2 towers of 54 and                                                                 Motor Vehicle Unit A
45 floors, housing 1,149 units. MC is also                                                                        Motor Vehicle Unit B
actively involved in the development of a new                                                                     Motor Vehicle Unit C
residential area, Shinonome Canal Court, with                                                                     Motor Vehicle Unit D
URBAN DEVELOPMENT CORPORATION.                                                                                    Isuzu Business Unit
                                                                                                                  Honda Business Unit
                                                                                                                  Automotive Equipment & Plant Business Unit
                                                    Artist’s impression                                           Automotive Component Business Unit
                                                                                                                  Vericode Business Unit
                                                                                                                  New Business Development Unit




                                                                             page   33
                                               Mitsubishi Corporation Annual Report 2002
                                                           {GROUP CEOs TALK}




                     Chemicals Group                         www.mitsubishi.co.jp/En/business/chemicals/




The Chemicals Group consists of 24           production of ammonia, ahead of sched-              leveraging MC’s FILM functions. And by
BUs and 2 divisions: the Commodity           ule, at its Indonesian facility in February         solidifying alliances with sales bases in
Chemicals Division and the Functional        2002. Looking ahead, we plan to con-                Japan and overseas as well as with sub-
Chemicals Division.                          centrate on adding more projects with               sidiaries and affiliates, we will expand
                                             competitive resources to increase earn-             business across a broad customer base.
The commodity chemicals industry has         ings on a consolidated basis.
been witnessing an escalation in com-                                                            The Chemicals Group handles many
petition brought about by large-scale,       In the functional chemicals field, we are           products traded worldwide. As such, we
global mergers. In fiscal 2002, our per-     effectively leveraging our trading rela-            aim to strengthen our strategies targeting
formance in this industry was lackluster     tionships with customers engaged in a               each region of the world by fully utilizing
as soft market conditions hampered our       diverse range of businesses to expand               local offices and overseas subsidiaries.
activities. Commodity chemicals trading,     the scope of the products we handle.                In particular, our focus is on expanding
nevertheless, remains an important           Our BUs are also working closely                    earnings in the growing Asian market-
business activity for MC. I believe that     together to broaden our business and                place. I believe that the key to success
we can carry out our role under MC2003       customer base by capturing new trans-               in this market is to capitalize on our
in two ways in this industry: by enhanc-     actions and creating new businesses.                intangible assets—our integrated,
ing our logistics and other basic trading    Furthermore, we want to be involved                 global network of talented people,
functions to expand overseas transac-        more in downstream sectors of the func-             offices and subsidiaries.
tions to China and elsewhere in Asia;        tional chemicals field. We are targeting
and by honing our competitive edge to        several fields, such as Communications,
grow earnings through investments in         Ecology, Healthcare, Amenities, Natural
natural resource-related products.           Products and Safety, where we expect
                                             growth to be sparked by changes in
The Chemicals Group already has a strong     society’s and consumers’ needs.
portfolio of resource project investments.
Our main projects are SHARQ, a poly-         The principal growth strategy of the
ethylene and ethylene glycol concern in      Chemicals Group is to build a distinctive
Saudi Arabia; Exportadora de Sal, S.A. de    bio-technology/life science business,
C.V. (ESSA), which produces solar salt in    pursuing opportunities with domestic
Mexico; Nippon Jordan Fertilizer Company     and overseas partners. The bases of this
(NJFC) in Jordan for phosphate rock and      business will be the new technologies
potassium chloride; Venezuela-based          and business models derived from invest-
METOR, a producer of methanol; and           ments in bio-related venture capital funds
Aromatics Malaysia Sdn. Bhd. (AMSB),         and businesses.
which produces paraxylene in Malaysia.
Another project, P.T. Kaltim Parna           In the plastics business, we will create            TAKERU ISHIBASHI
                                                                                                 Executive Vice President,
Industri (KPI), started commercial           demand and pursue joint projects,
                                                                                                 Group CEO, Chemicals Group




                                                               page   34
                                                            Mitsubishi Corporation Annual Report 2002
                                                                          {GROUP CEOs TALK}




                                                                                                                     Chemicals Group

                                                                                                                     Chemicals Group CEO Office
                                                                                                                     Aristech Project Unit
                                                                                                                     Phoenix Project Unit
SHARQ COMES OF AGE
                                                                                                                     Commodity Chemicals Div.
Fiscal 2002 saw SHARQ, a joint venture between SPDC
                                                                                                                     Basic Petrochemicals Unit
LTD., a Mitsubishi group-led Japanese consortium, and
                                                                                                                     Methanol Unit
Saudi Basic Industries Corporation (SABIC), celebrate its
                                                                                                                     Saudi Petrochemical Project Unit
20th anniversary. With new capacity having come on line                                                              Acrylonitrile Unit
following the completion of a second-phase expansion                                                                 Ammonia Unit
and its ready access to competitive feedstocks, SHARQ is                                                             Fertilizer Unit
one of the world’s largest petrochemicals companies.                                                                 Inorganic Chemicals Unit
SHARQ can produce annually 1,200,000 tonnes of ethylene,                                                             Chlor-Alkali Unit
680,000 tonnes of mono-ethylene glycol (MEG) and 750,000                                                             PVC Unit
tonnes of linear low-density polyethylene (LLDPE). In addition to                                                    Functional Chemicals Div.
being highly competitive, SHARQ is one of the world’s safest                                                         Plastics Unit
operations of its type—there have been no accidents in more                                                          Fluorochemicals Unit
than 11.5 million hours of continuous operation.                                                                     Organic Amenities Unit
                                                                                                                     Urethane & Detergent Raw Materials Unit
                                                                                                                     Specialty Chemicals Unit
                                                 INNOVATION FUELS GROWTH AT CANADIAN INOVATECH
                                                                                                                     Catalysts & Industrial Gas Unit
                                                 In 1993, MC invested in Canadian Inovatech Inc., a producer
                                                                                                                     Inorganic Specialty Chemicals Unit
                                                 of specialty products based on innovative technologies.             Pharmaceuticals & Functional
                                                 Since then, MC has acted as the sole distributor of Canadian          Intermediates Unit
                                                 Inovatech’s products in Japan and other Asian countries,            Agrochemicals Unit
                                                 helping it to increase total sales from CAN$40 million in           Silicone & Electronics Materials Unit
                                                 1993 to over CAN$100 million in 2002. Canadian                      Life Science Products Unit
                                                 Inovatech’s business has grown out of innovation, from its          Coatings & Composite Materials Unit
                                                 early success in egg-based products to now include revolu-          Life Science & Business Development Unit
                                                 tionary dairy and bio products. Its policy of contributing to the
                                                 nutrition and healthy lives of consumers matches MC’s
                           approach to the life science product business. Canadian Inovatech’s Bio Products
                           Division has expanded rapidly. Growth has been spurred by the development of
                           an egg-extracted enzyme called Lysozyme, which is used in wine and cheese
                           production, as well as technology to safely preserve the freshness of foods.


MC ACQUIRES LICENSE TO MARKET
EPOCH-MAKING TECHNOLOGY
In January 2002, MC acquired an exclusive license to market
California-based Varatouch Technology Inc. (VTI)’s revolu-
tionary “R2TechnologyTM” in Asian markets. R2Technology
converts human motion into variable electronic signals using
resistive silicone rubber as a sensor. This technology has the
potential to replace traditional input devices for computers
and consumer electronics products due to its lower cost,
higher performance and superior reliability. VTI has been
awarded U.S. patents for R2Technology, with international
patents pending. MC plans to sub-license the technology to potential customers, such
as manufacturers of PCs, cellular phones, electronic games and IT appliances.




                                                                              page   35
                                               Mitsubishi Corporation Annual Report 2002
                                                           {GROUP CEOs TALK}




                     Living Essentials Group                                   www.mitsubishi.co.jp/En/business/living/




In fiscal 2002, the Living Essentials        Thirdly, I aim to manage the Living                  I often liken our business to “Ekiden ”
Group eclipsed its earnings target. Four     Essential Group as a single, integrated              (road relay races). Everyone must per-
basic policies will continue to guide us     unit. Consolidated performance is para-              form well in each stage of a company’s
toward achieving our goals during the        mount. Raising earnings at our business              development to achieve the overall goal.
course of MC2003.                            investments in Japan and overseas is                 Each generation builds on the successes
                                             more important to us than improving                  and efforts of its predecessors, propel-
One is to promote globalization of our       parent company-only results. This em-                ling the team as a whole toward its ulti-
operations. As Japanese consumers            phasis I believe was one of the reasons              mate goal. As I mentioned at the outset
demand safer products at more reason-        for a year-on-year improvement in our                of this letter, our fiscal 2002 contribution
able prices, we will step up develop-        results. This group has investments in               to MC was enormous in comparison to
ment and imports of quality products.        183 companies in Japan and overseas.                 our human resources. Our “runners” are
Responding to consumer needs is in           It is crucial that we retain this focus on           obviously doing well. We are determined
fact one of this group’s founding tenets.    optimizing group-wide performance and                to pass the baton to an even stronger
The group has crafted demand chains          nurture the people that can look after               team, one in which every member is
both in Japan and overseas over many         such an important portfolio.                         capable of creating greater value.
years, extending from the sourcing and
procurement of raw materials to the          Finally, I want to upgrade our FILM func-
consumer. We want to add value to            tions to provide comprehensive services
these demand chains and we want to           in the clothing, food, housing and other
expand local trade around the world,         lifestyle industries. One example is Food
matching products with consumer              Service Network Co., Ltd., which we
tastes in each region.                       established last year. This company is
                                             one way in which we are enhancing our
Our second basic policy is to build          ability to serve as a buyer’s agent. Food
alliances with prominent, trusted partners   Service Network is capable of meeting all
around the world. We are seeing shake-       the needs of customers in the foodservice
outs in many of the industries where we      and catering industries from a single
operate, amid difficult economic condi-      platform. We want to deliver total ser-
tions. I believe that we can prevail in      vices to customers based on the quick
these markets. We can even play a part       analysis of market trends and logistics
in restructuring the industries them-        expertise in all temperature ranges.
selves by taking equity interests in
companies and using other financial          In addition to our four basic policies, we
techniques to broaden our partner net-       are committed to being a good corporate
work. Consumers will ultimately be the       citizen by continuously finding ways to
winners, as will our shareholders.           help provide adequate supplies of food               KANJI YAMAGUCHI
                                                                                                  Senior Executive Vice President,
                                             and water and deal with the issue of
                                                                                                  Group CEO, Living Essentials Group
                                             global warming.



                                                               page   36
                                                              Mitsubishi Corporation Annual Report 2002
                                                                              {GROUP CEOs TALK}




                                                                                                                         Living Essentials Group

                                                                                                                         Living Essentials Group Internal
                                                                                                                           Audit Office
                                                                  J/V FACTORY
                                                                                                                         Strategic IT Planning and Solution
REMAINING A FORCE IN THE JAPANESE                                   KANSAI SUGAR CO., LTD.                                 Business Unit—Living Essentials Group
                                                                     DAI-NIPPON MEIJI SUGAR CO., LTD.
SUGAR INDUSTRY                                                       ENSUIKO SUGAR REFINING CO., LTD.                    Foods (Commodity) Div.
                                                                     DAITO SEITO CO., LTD.
Annual sugar consumption in Japan has fallen to                                                                          Rice Unit
around 2.3 million tons. This industry is now battling                                                                   Wheat & Barley Unit
                                                             J/V FACTORY
rising costs as capacity utilization rates drop and            KANMON SUGAR MFG. CO., LTD.                               Wheat Flour & Ageless Unit
                                                                DAI-NIPPON MEIJI SUGAR CO., LTD.
falling sales prices accompanying deflation. To                 NIPPON BEET SUGAR MFG. CO., LTD.                         Raw Sugar Unit
remain a force in this industry, MC reached the                                                                          Refined Sugar & Corn Sweeteners Unit
conclusion that industry restructuring was vital. With                                                                   Starch Products & Beer Unit
                                                                                                                         Oilseeds Unit
wholly owned subsidiary Dai-Nippon Meiji Sugar Co.,
                                                                                                                         Oil & Fats Unit
Ltd. leading the way, MC has started producing sugar                                                                     White Meat Unit
jointly with Nissin Sugar Manufacturing Co., Ltd. in                                                                     Red Meat Unit
                                                                             J/V FACTORY
the Kanto region, Ensuiko Sugar Refining Co., Ltd. in                          SHIN HIGASHI NIHON SUGAR MFG. CO., LTD.   Grain Trading Unit
                                                                                DAI-NIPPON MEIJI SUGAR CO., LTD.
the Kansai region and Nippon Beet Sugar Manu-                                   NISSIN SUGAR MFG. CO., LTD.              Feed Material Unit
                                                                                DAITO SEITO CO., LTD.
facturing Co., Ltd. in Kyushu.                                                  SHINMEIWA SUGAR REFINING CO., LTD.       Foods (Products) Div.
                                                                                                                         Food Strategy Engineering Office
                                                                                                                         Tuna Unit
                                                             SUPPORTING EXPANSION IN THE FOODSERVICE AND                 Marine Products Unit
       Food Service Network’s Business Model                 READY-TO-EAT FOOD MARKETS                                   Fresh Produce & Frozen/Chilled Unit
 [Foodservice Market]        [Ready-To-Eat Food Market]      In June 2001, the Living Essentials Group estab-            Dairy Foods Unit
                                              Delicatessen   lished Food Service Network Co., Ltd. to seize on the       Confectionery Raw Materials Unit
    Foodservice         Convenience
                                            Item Producers   many opportunities in Japan’s growing foodservice           Coffee Unit
   Establishments          Stores
                                               and Sellers
                                                             and ready-to-eat food markets. Growth in these              Beverage Unit
                                                             markets is being driven by increasing numbers of            Processed Foods A Unit
                       Boxed Lunch and
                  Delicatessen Item Producers                single households in urban areas and women in the           Processed Foods B Unit
                                                                                                                         Processed Foods C Unit
                                                             workforce. Foodstuff logistics, however, has failed to
              Food Service Network Co., Ltd.                 keep pace with this trend, creating an urgent need          Textiles Div.
                                                             for greater efficiency, such as through centralized         Planning & Control Office
    Mitsubishi           Foodservice                                                                                     Brand Unit
                                                             ordering and logistics. Food Service Network is
    Corporation           Wholesale                                                                                      Apparel Unit
                                                             taking up this challenge, procuring and supplying           S.P.A. Unit
                                                             foodstuffs to foodservice chains and companies that         S.P.A. Business Development Unit
               Food Manufacturers, Packaging
                Manufacturers, e-Markets, etc.               prepare boxed lunches for convenience stores,               Functional Material Unit
                                                             delicatessen items and other ready-to-eat items.            Consumers’ Goods Unit
                                                                                                                         General Merchandise Div.
                                                                                                                         Strategy & Planning Office
FILLING THE VOID
                                                                                                                         Packaging Unit
MC and Mitsubishi Materials Corporation are jointly                                                                      Paper Business Unit
manufacturing and selling cement in the U.S. (Mitsubishi                                                                 Speciality Paper Business Unit
Cement Corporation in southern California) and China                                                                     Pulp Unit
(Yantai Mitsubishi Cement Co., Ltd. in Shandong Province).                                                               Woodchips & Afforestation Unit
These companies are operating at full capacity, sup-                                                                     Clay Unit
ported by the strong economies of both countries. With                                                                   Lumber & Housing Materials Unit
demand constantly outstripping production volumes in                                                                     Asset Management Unit
the U.S., MC is using Mitsubishi Cement Corp.’s Long                                                                     Silica Sand and Ceramics & Minerals Unit
                                                                                                                         Cement Unit
Beach cement import and distribution terminal to supply cement produced by Yantai
                                                                                                                         Tyre & Rubber Products Unit
Mitsubishi Cement in China. By using the production capacity of these companies, MC                                      Opt Media & Business Development Unit
is bridging the gap between supply and demand for concrete in the U.S. and China.                                        Graphic Arts & Photo Unit
                                                                                                                         Tobacco Unit



                                                                                  page   37
                                                 Mitsubishi Corporation Annual Report 2002
                                                         {CORPORATE STAFF SECTION}




                      Corporate Staff Section                                    www.mitsubishi.co.jp/En/business/corporate/




April 2001 marked the start of MC2003,         Staff Section has six service companies.             Besides offering professional services
with BUs introduced in all business            During the year, both Human Link Cor-                as our basic approach, we also want to
groups. The following October, MC’s            poration and MATES Co., Ltd. success-                create corporate value by unlocking MC’s
Head Office had a makeover of its own          fully captured customers outside MC.                 hidden value. Recent debate in the U.S.
with the integration of Corporate depart-      One of the most important service com-               about making accounting information
ments and the Professional Services            panies is Mitsubishi Corporation Financial           more useful underscores the importance
Group to form the Corporate Staff Section.     & Management Services (Japan) Ltd.                   of this task for all stakeholders. One
This organizational change will give           (MCFJ). This wholly owned subsidiary                 point is more accurately measuring a
further impetus to two initiatives. First is   aims to be a one-stop source of account-             company’s value by including intangible
creating highly specialized services that      ing, finance and foreign exchange ser-               assets such as brands. Brand equity is
will eventually be separated and offered       vices, credit control and management                 definitely a significant asset in our B2B
on an independent footing. Second is           and consulting services. MCFJ is helping             businesses due to the reliability of our
downsizing Head Office. Both were also         to promote management system reform                  business models. Our job is to bring that
themes under MC2000. In name and               within MC by offering business groups                value to the fore.
substance, we have positioned the              shared services that replace their admin-
Corporate Staff Section to contribute to       istrative service departments. This is also
meeting the goals of MC2003.                   expected to slash service costs at MC.
                                               Administrative service functions were
Throughout its history, the Corporate Staff    transferred from the New Business
Section has always taken on the form most      Initiative, IT & Electronics Business,
suited to the times and the company’s          Energy Business and Machinery groups
changing needs. As our business groups         during the year. The Metals, Chemicals
have changed, so too have we. This is          and Living Essentials groups will follow
just as true under MC2003. We aim to           suit in the current fiscal year. Effectively
generate earnings in our own right by          acting as a bank to the MC Group, MCFJ
providing specialist services outside MC,      also provides financing to MC Group
as well as inside, to contribute to MC’s       companies in association with the Head
value creation drive. The Corporate            Office Treasurer Office.




                                                                                                    KOJI FURUKAWA
                                                                                                    Senior Executive Vice President,
                                                                                                    Chief Financial Officer




                                                                 page   38
                                                                     Mitsubishi Corporation Annual Report 2002
                                                                               {CORPORATE STAFF SECTION}




                                     CORPORATE STAFF SECTION
   Corporate Planning Dept.

   Internal Audit Dept.

   Technology & Business Development Dept.
   • Image Reality Co., Ltd.                         Solution providing for digital images and documents
   • Fullerene International Corporation             Commercialization of fullerenes/carbon nanotubes
                                                     and IP management
   • Natsource Japan Co., Ltd.                       Energy- and environment-related trading and
                                                     advisory services
                                                                                                            GROOMING LEADERS
   ITS Project Planning Dept.                                                                               Employee development at MC is designed to make a real
   Corporate Communications Dept.                                                                           difference and have practical business applications. One
                                                                                                            example is our Global Leadership Program II, which re-
   • MC Communications Inc.                          Planning and production of publications and
                                                     graphic materials                                      flects the company’s emphasis on innovative new business
                                                                                                            development across divisional, regional and national levels.
   Corporate Real Estate Planning Dept.                                                                     This program builds the entrepreneurial skills needed by
   • MC Facilities Co., Ltd.                         Facility management services                           our high-potential employees from around the world to
                                                                                                            create value for the company through business plans
   HR & Administration Dept.
                                                                                                            developed by the participants.
   • Human Link Corporation                          Personnel operation services and consulting
   • MATES Co., Ltd.                                 Temporary staffing services and re-employment
                                                     support services
   • Business Trip International Inc.                Travel agency

   Legal Dept.

   Regional Strategy & Coordination Dept.

   Corporate Strategy & Research Dept.
   • Inter-Active Inc.                               Management and business consulting
   • B-Incubation Inc.                               Venture business incubation services
   • Industrial Innovation Partners Inc.             Introduction of total optimal schemes for structural
                                                     innovation of corporate groups' manufacturing
                                                     supply chains                                          SHARED SERVICES ALLOW COMPANIES TO CONCENTRATE
                                                                                                            ON CORE OPERATIONS
   Controller Office                                                                                        MCFJ, as a one-stop source for the outsourcing of adminis-
   Treasurer Office                                                                                         trative services, including accounting, finance and credit
                                                                                                            control, is a lynchpin of MC’s back office. High-quality spe-
   Investor Relations Office                                                                                cialist services are tailored to meet the needs of MC Group
                                                                                                            companies, allowing them to cut costs and concentrate
   • Mitsubishi Corporation Financial &              Accounting, finance and foreign exchange services,     resources on core businesses. These highly competitive
     Management Services (Japan) Ltd.                credit control and management consulting
                                                                                                            services are also offered to companies outside the MC Group.

• Indicates principal subsidiaries and affiliates.




                                                                                        page   39
                                                  Mitsubishi Corporation Annual Report 2002
                                                             {REGIONAL STRATEGIES}




                      Regional Strategies

Three elements form the core of MC’s            China and Taiwan (ROC) into the WTO            Tokyo-centric business pattern. Support
regional strategies. All are interwoven         in December 2001 and the agreement,            functions will be strengthened and
with MC2003’s growth strategies. First,         which went into effect a month later, to       specialized to promote efficiency and
our regional portfolios are becoming            establish an ASEAN free trade area—are         growth. At the same time, we are
more selective and focused as we con-           expected to catalyze dramatic change in        actively looking to develop technology-
stantly review operating bases and shift        industrial structures throughout Asia. MC      oriented new businesses by acquiring
resources to growth markets. Second,            wants to have a greater presence as this       patents and incubating technologies
we are developing new business spheres          happens. To this end, we increased the         until they are ready to be commercial-
by promoting growth strategies based on         number of people at our offices in China       ized. We are also expanding business in
the market characteristics and high-            and ASEAN countries in fiscal 2002 to          neighboring areas, such as Africa and
potential industries in each region of the      concentrate on business development in         CIS, as well as trade between Europe
world. A third aim is fostering and making      the fields of IT, systems integration,         and the Americas. In the Middle East,
full use of the talents of all our staff on a   semiconductors, automobiles, grain and         our focus is principally on large oil and
worldwide basis. To this end, we are            food processing, general merchandise,          gas projects. But the region also pre-
enhancing staff development through a           telecommunications and broadcasting,           sents business chances in consumer
number of steps, including carefully            and internationally financed infrastruc-       products as well as opportunities to
planned job rotations and timely man-           ture projects, among others. In China,         cultivate new businesses by leveraging
agement training on regional and global         we introduced the China New Personnel          our logistics capabilities.
levels. As Chief Regional Officer (CRO),        System in January 2002, which aims to
my role is to implement specific initia-        recruit, select, develop and promote
tives to achieve these objectives in a          high potential staff with in-depth local
manner that is consistent with the opera-       knowledge and networks.
tional strategies of business groups and
regional strategies of MC as a whole.           The Americas are of special importance
                                                to MC. We established the Strategic
Factors such as economic growth poten-          Principal Investment Group within iMIC*
tial, expected population growth, natural       in April this year to invest in new business
resources, existing talent pools and            fields. To learn more about activities in
global changes in industrial structure will     the Americas, please look at the oppo-
be used to pinpoint strategic regional          site page.
markets. In those markets where we see
potential, we will narrow our focus to          In Europe, we are upgrading our capa-
build new business models, forging              bilities to increase our expertise in trade
alliances with prominent local partners.        in areas such as chemical products,
                                                aluminum, precious metals and coffee.
China and ASEAN countries have                  We are using a “Euro-centric trading”          HIDETOSHI KAMEZAKI
                                                                                               Executive Vice President,
increasing strategic importance for us.         model to promote our business in the
                                                                                               Chief Regional Officer
Two recent developments—the entry of            region and move away from the traditional



                                                                  page   40
                                                                 Mitsubishi Corporation Annual Report 2002
                                                                              {REGIONAL STRATEGIES}




Message From the President of Mitsubishi International Corporation                                           www.micusa.com/

One of MC’s principal overseas subsid-                       Third, we must partner with European                needed to the most promising areas of
iaries, Mitsubishi International Corpora-                    companies, which are investing signifi-             growth. To date, our Latin American
tion (MIC) has an extremely important                        cantly throughout the Americas. This will           business activities have expanded far
mandate. MIC is no longer merely an                          enable us to build what I like to call our          beyond natural resource and power
agent designed to help MC, the parent                        “Atlantic business.”                                generation projects to include success in
company, maximize its earnings. Instead,                                                                         such diverse fields as foods, automobiles
it is responsible for maximizing its own                     Expansion of our U.S. investment activity           and information technology. I would like
corporate value and contributing to the                      will also drive future growth. In April             particularly to mention two examples, a
development of the MC Group as a whole.                      2002, we formed the Strategic Principal             broad-based international leasing project
                                                             Investment Group as part of our iMIC*               with Colombia’s Antioquia Group, and an
Although our ties with Japan will remain                     new business initiative. The new Strate-            innovative electronic data interchange
strong, we fully recognize that we are                       gic Principal Investment Group will invest          service company in Brazil. These
unlikely to see significant business                         $150 million over the next few years to             success stories will continue to serve as
growth there, as the economy continues                       generate capital gains. Currently, it is            a template for new business models. I
to face uncertainty. Rather, our growth                      hiring market specialists to develop its            see a bright future for our Latin American
depends upon our ability to channel                          operations. In addition, the new venture            operations, particularly in opening up
resources into developing three major                        will pursue synergies with MIC in its               new trade in natural resources with
areas of business here in the Americas.                      current areas of business.                          Asian countries, where imports of these
                                                                                                                 essential commodities are on the rise.
First, we must continue to expand Latin                      Clearly, MIC must be innovative. It must
American trade and build our network of                      reflect the dynamic nature of the U.S.
strategic partnerships with international                    economy, which is so often at the epicen-
lending institutions and consultants in                      ter of global change. MIC must create new
Washington and New York. This will                           business partnerships and successfully
enable us to capitalize on Latin American                    develop new business models. This vitality
investment opportunities originating in                      and flexibility is important not only to MIC.
the U.S.                                                     It also helps ensure that MC participates
                                                             fully in the business structures and
Second, we must foster our business in                       technologies of the future.
Asia, particularly with China. We must
position ourselves to help U.S. companies                    I am also pleased that we have incorpo-
tap into these enormous markets. In this                     rated Canada and Latin America into
respect, it will be vitally important to                     MIC’s management structure, allowing
benefit from the experience of our                           us to manage the Americas as an organic
Japanese customers, who also know                            whole, with MIC at its center. It is our
these markets very well.                                     task to create a framework that is flexible         HIRONORI AIHARA
                                                                                                                 Senior Executive Vice President,
                                                             enough to redistribute resources as
                                                                                                                 President, Mitsubishi International Corporation

* iMIC was formed in fiscal 2001 with the aim of expanding businesses rooted in the U.S. market.
  The “i” in iMIC stands for innovation, information, incubation and initiative.


                                                                                    page   41
                                                                  Mitsubishi Corporation Annual Report 2002
                                                                                {GLOBAL CITIZENSHIP}




                            Global Citizenship                                          www.mitsubishi.co.jp/environment/




Mitsubishi Corporation is strongly com-                        The Social Responsibility Office was                           lated its Environmental Charter, which
mitted to being a socially and environ-                        established in 1973. Typical of its                            serves as the basis for responding to the
mentally responsible company. It firmly                        activities, it has for nearly three decades                    changing demands of society and stake-
believes that as a global organization it                      run the Friendship Camp for Mothers                            holders, and for developing a unique
has a duty to contribute to society and                        and Children, a four-day, three-night                          environmental management system
uphold the highest environmental stan-                         program for single-parent families living                      appropriate for a global trading and invest-
dards in all of its operations thereby                         in the Tokyo metropolitan area. This                           ment company. This system aims to
helping to protect the environment.                            program has achieved widespread                                enhance environmental risk management,
                                                               recognition in Japan.                                          promote environmental businesses, and
Corporate Responsibility to Society                                                                                           improve environmental communication.
Since its formation, MC has acted in                           Environmental Management Policy                                In 1998, the Environmental Affairs Office
accordance with the Three Corporate                            Based on the premise expressed by a                            and Social Responsibility Office were
Principles (see page 6). One of these                          former chairman of MC that “an enter-                          merged to form the Environmental &
principles, “Corporate Responsibility to                       prise cannot continue to exist without                         Social Responsibility Office.
Society,” underlies the Code of Con-                           consideration for its environmental
duct that guides our business. Our                             performance,” MC continuously strives                          Adhering to ISO 14001
“Standards of Conduct of Mitsubishi                            to improve environmental management.                           In 1998, MC’s Head Office obtained ISO
Corporation,” “Code of Conduct,”                               In 1989, MC became the first trading                           14001 certification, the international
“Environmental Charter” and “Basic                             company to establish a Global Environ-                         standard for environmental management
Philosophy on Contributing to Society”*                        ment Committee as the company’s basic                          systems (EMS). The scope of this cer-
are designed to ensure that corporate                          policy decision-making body for address-                       tification has since been widened to
activities reflect our overall philosophy                      ing important internal and external envi-                      encompass almost all offices in Japan.
and provide a framework that encour-                           ronmental issues. A year later, the                            Underscoring the importance MC places
ages our employees to achieve these                            Environmental Affairs Office was estab-                        on this certification is the fact that the
broader goals in the context of their                          lished to provide specialized knowledge                        company’s president oversees operation
business activities.                                           about these issues. In 1996, MC formu-                         of the EMS as a whole. The EMS is firmly




* For a full version of the “Environmental Charter,” please refer to www.mitsubishi.co.jp/environment/pdf/environment_en.pdf
  For a full version of the “Basic Philosophy on Contributing to Society,” please refer to www.mitsubishi.co.jp/environment/pdf/corp_citizen.pdf


                                                                                      page   42
                                              Mitsubishi Corporation Annual Report 2002
                                                         {GLOBAL CITIZENSHIP}




in place at MC, allowing the company to
monitor environmental aspects of the           Code of Conduct (Basic Policy)
                                               Compliance with applicable laws is a critical element in all ethical standards. All
products it handles, manage the environ-
                                               officers and employees of Mitsubishi Corporation must comply with all applicable
mental impact of its business investments
                                               laws, rules and regulations wherever we operate. All officers and employees are
and lower the environmental impact of its      expected to understand which international standards and rules (“Standards”) apply
offices. All officers and employees are        to them in the performance of their jobs and act in accordance with these Standards.
involved. By using this EMS, the com-          All officers and employees are expected to adhere to all internal corporate rules and
pany is reducing its environmental             policies, as well as generally accepted standards in the conduct of their business. As
impact, an important means of fulfilling       representatives of Mitsubishi Corporation, all officers and employees should act in a
its corporate social responsibility.           socially responsible manner.

MC has put in place a framework to train                                                               www.mitsubishi.co.jp/En/corpo/philo

and educate employees about ISO 14001
and the importance of strong environ-
mental performance.
                                            MC established an Energy Service Com-
Assessment of Environmental Risk            pany (ESCO) that provides consulting on
in New Business Investments                 energy conservation and building modifi-        what it is doing and how
MC carries out environmental assess-        cation services to help mitigate global         and what its various environmental com-
ments prior to making new investments.      warming. MC has also invested in                mitments and policies are.
Although every business has an impact       Natsource Japan Co., Ltd., which trades
on the environment in some way or           in emission credits for greenhouse gases.       MC has been included in FTSE4Good,
another, MC’s efforts to minimize this      Furthermore, MC encourages recycling            a Socially Responsible Investment index
impact as far as possible start even        through EchorClub, which makes a wide           compiled by FTSE, an independent
before an investment decision is made.      range of products using recycled plas-          global index company. MC has also been
Afterward, MC encourages the use of         tics, and Digital Reuse Co., Inc., which        selected as a component of the Dow
ISO 14001-certified systems to minimize     recovers and reuses PCs. These are just         Jones Sustainability World Indexes (DJSI
environmental risk and as a matter of       some of the many environmental busi-            World), attesting to the high level of the
principle fosters communication with        nesses with which MC is involved.               company’s activities on a global scale.
stakeholders in its varied business
investments.                                Socially Responsible Investment                 As the company continues to grow, we
                                            As interest grows generally in the environ-     will seek to ensure that both our employ-
Environmental Businesses                    mental and social activities of companies,      ees and the general public are aware of
MC is actively engaged in environmen-       there is a trend among investors to base        MC’s management philosophy and cor-
tal businesses that contribute to the       their investment decisions on whether           porate values, and we will strive to pro-
creation of a sustainable society. With     companies meet certain environmental            mote businesses that contribute to and
The Tokyo Electric Power Company,           standards. MC is acutely aware of the           are in harmony with the world’s diverse
Incorporated and others, for example,       importance of letting stakeholders know         societies and economies.



                                                              page   43
                                               Mitsubishi Corporation Annual Report 2002
                                                          {MEMBERS OF THE BOARD}




Members of the Board




Minoru Makihara                             Mikio Sasaki
1956                                        1960
 Joined Mitsubishi Corporation               Joined Mitsubishi Corporation
1998 to present                             1998 to present
 Chairman of the Board                       President, Chief Executive Officer*




Hironori Aihara                             Koji Furukawa                                  Naohisa Tonomura
1962                                        1962                                           1964
 Joined Mitsubishi Corporation               Joined Mitsubishi Corporation                  Joined Mitsubishi Corporation
1998 to present                             1999 to present                                1999 to present
 Senior Executive Vice President,            Senior Executive Vice President*               Group CEO, Machinery Group
 Mitsubishi Corporation*                    2000 to present                                2000 to present
2000 to present                              Chief Financial Officer                        Senior Executive Vice President*
 President, Director,                       2001 to present
 Mitsubishi International Corporation        Compliance Officer




Yorihiko Kojima                             Kanji Yamaguchi                                Masayuki Takashima
1965                                        1962                                           1964
 Joined Mitsubishi Corporation               Joined Mitsubishi Corporation                  Joined Mitsubishi Corporation
2000 to present                             1999 to present                                2002 to present
 Group CEO, New Business Initiative Group    Group CEO, Living Essentials Group             Senior Executive Vice President*,
2001 to present                             2001 to present                                 Group CEO, Metals Group
 Senior Executive Vice President*,           Senior Executive Vice President*
 Chief Information Officer




Yukio Masuda                                Susumu Kani                                    Takeshi Hashimoto
1964                                        1964                                           1966
 Joined Mitsubishi Corporation               Joined Mitsubishi Corporation                  Joined Mitsubishi Corporation
2000 to present                             2001 to present                                2000 to present
 Group CEO, Energy Business Group            Executive Vice President*                      Group CEO, IT & Electronics Business Group
2002 to present                             2002 to present                                2001 to present
 Senior Executive Vice President*            General Manager, Kansai Branch                 Executive Vice President*




                                                                  page   44
                                                          Mitsubishi Corporation Annual Report 2002
                                                                     {MEMBERS OF THE BOARD}




                                                                                                           Corporate Auditors
                                                                                                           Yuzo Shinkai
                                                                                                           1962
                                                                                                            Joined Mitsubishi Corporation
                                                                                                           2001 to present
                                                                                                            Senior Corporate Auditor, Mitsubishi Corporation

                                                                                                           Tsuneo Wakai
                                                                                                           1948
                                                                                                            Joined The Mitsubishi Bank, Ltd.
                                                                                                           1998 to present
Takeru Ishibashi                                       Shunichi Inai                                        Senior Advisor, The Bank of Tokyo-Mitsubishi, Ltd.
1964                                                   1965                                                 Corporate Auditor, Mitsubishi Corporation
 Joined Mitsubishi Corporation                          Joined Mitsubishi Corporation
2001 to present                                        2001 to present                                     Koukei Higuchi
 Executive Vice President*,                             Executive Vice President*,                         1960
 Group CEO, Chemicals Group                             General Manager, Nagoya Branch                      Joined The Tokio Marine and Fire Insurance Company, Limited
                                                                                                           1998 to present
                                                                                                            Corporate Auditor, Mitsubishi Corporation
                                                                                                           2001 to present
                                                                                                            Chairman, The Tokio Marine and Fire Insurance Company, Limited

                                                                                                           Yoshihiro Ogura
                                                                                                           1966
                                                                                                            Joined Mitsubishi Corporation
                                                                                                           2000 to present
                                                                                                            Corporate Auditor, Mitsubishi Corporation

                                                                                                           Manabu Ueno
                                                                                                           1968
Hidetoshi Kamezaki                                     Nobuyuki Masuda                                      Joined Mitsubishi Corporation
                                                                                                           2001 to present
1966                                                   1957                                                 Corporate Auditor, Mitsubishi Corporation
 Joined Mitsubishi Corporation                          Joined Mitsubishi Shipbuilding
2002 to present                                         & Engineering Co., Ltd.
 Executive Vice President*,                            1999 to present
 Chief Regional Officer                                 Chairman, Mitsubishi Heavy Industries, Ltd.
                                                        Director, Mitsubishi Corporation
                                                                                                               Governance Committee
                                                                                                               Minoru Makihara (Chairman of the Committee)
                                                                                                               Mikio Sasaki
                                                                                                               Koji Furukawa
                                                                                                               Tatsuo Arima
                                                                                                               (Plus 3 non-Board committee members)


                                                                                                               International Advisory Committee
                                                                                                               Minoru Makihara (Chairman of the Committee)
Ichiro Taniguchi                                       Tatsuo Arima                                            Mikio Sasaki
1959                                                   1962
                                                                                                               Tatsuo Arima
 Joined Mitsubishi Electric Corporation                 Joined the Ministry of Foreign Affairs                 (Plus 6 non-Board committee members)
1998 to present                                        1997 to present
 Director, Mitsubishi Corporation                       Councilor for the Ministry of Foreign Affairs,
2002 to present                                         Ambassador
 Chairman, Mitsubishi Electric Corporation             1998 to present
                                                        Professor, Department of Politics,                     Portfolio Management Committee
                                                        Waseda University;
                                                        The Representative of the Government of Japan;         Koji Furukawa (Chairman of the Committee)
                                                        Corporate Advisor, Mitsubishi Corporation
                                                                                                               This Committee advises and reports to the Executive
                                                       2001 to present
                                                        Director, Mitsubishi Corporation                       Committee on investment and finance projects meeting
                                                                                                               certain conditions. In addition, this advisory body studies
                                                                                                               and makes recommendations regarding policies related
                                                                                                               to MC’s overall portfolio. Chaired by Senior Executive
                                                                                                               Vice President Koji Furukawa, the Committee also
                                                                                                               comprises CFOs from Mitsubishi Corporation’s seven
                                                                                                               business groups and the Corporate Staff Section. The
                                                                                                               Committee met 26 times during the year under review.


                                                                                                                                                       (As of July 1, 2002)

There are 17 members of MC’s Board of Directors, 3 of whom are outside                                   * Appointed to the post of executive officer, in line with the
directors. During the year under review, the Board held 15 meetings.                                       introduction of an Executive Officer System in fiscal 2002.
The Executive Committee, comprised of 14 members and supervised by
the full Board, met 25 times during the year under review.                                                Company names and titles indicated are as of specified years.




                                                                            page   45
                                                 Mitsubishi Corporation Annual Report 2002
                                                          {CORPORATE GOVERNANCE}




Corporate Governance
MC continuously works to earn more trust from shareholders, customers, employees,
society and other stakeholders. Since the start of fiscal 2002, MC has taken a number of
specific actions to enhance corporate governance, one of the main themes of MC2003.
MC believes that the actions outlined below have clarified responsibility and accountability,
making MC a more transparent company.

Enhancing the Board’s Function                The Committee has held four meetings              (3) Reforms to the Board: The Commit-
MC introduced the post of executive           since its inception. The main themes                  tee discussed the most suitable
officer, clearly separating the roles and     discussed so far are as follows.                      governance system for MC, taking
responsibilities of directors and execu-      (1) Auditing and compliance systems:                  into account expected revisions to
tive officers. Simultaneously, the number         The Committee concluded that the                  the Japanese Commercial Code
of directors was sharply reduced. These           company’s systems are in order.                   sometime in the first half of 2003.
actions have facilitated faster decision-         Among its recommendations to the                  MC will pursue further improvements
making by the Board and enhanced its              Board, the Committee concluded                    to corporate governance in fiscal
supervisory role.                                 that MC should foster greater com-                2003 based on these discussions.
                                                  munication among the corporate,
Governance Committee                              internal and independent external             International Advisory Committee
July 2001 saw the establishment of the            auditors to build and conduct an              The International Advisory Committee
Governance Committee, as an advisory              efficient auditing system.                    was established in October 2001 to
body to the Board. The Committee is           (2) Evaluation and remuneration system            provide advice to the Board from a glo-
made up of four Board members and                 for executive officers: The Committee         bal perspective. The Committee’s rec-
three individuals from outside the                endorsed the company-proposed                 ommendations are vital to making the
company. It reports to and advises the            framework as it fits in well with             most effective use of MC’s extensive
Board on how to improve corporate                 MC2003’s drive to create value and            worldwide network to develop business.
governance, bringing an objective,                aligns the executive officers’ interests      Six of the Committee’s nine members
external perspective to discussions on            with those of shareholders. Executive         hail from countries other than Japan,
this important subject.                           officers are given yearly incentives          thus representing a diverse range of
                                                  linked to results, evaluated on their         perspectives. The Committee held one
                                                  individual performance and offered            scheduled meeting in fiscal 2002, the
                                                  stock options.                                inaugural meeting in December 2001 to

                                   Governance Committee
                                                                                                              From Left (Front)
                                                                                                              Haruo Shimada
                                                                                                                 Professor (Economics Dept.),
                                                                                                                 Keio University
                                                                                                              Shigeru Nakajima
                                                                                                                 Attorney-at-Law
                                                                                                              Kunio Ito
                                                                                                                 Professor, Graduate
                                                                                                                 School of Commerce,
                                                                                                                 Hitotsubashi University
                                                                                                              From Left (Back)
                                                                                                              Tatsuo Arima
                                                                                                                 Director
                                                                                                              Minoru Makihara
                                                                                                                 Chairman of the Board
                                                                                                                 (Chairman of the Committee)
                                                                                                              Mikio Sasaki
                                                                                                                 President,
                                                                                                                 Chief Executive Officer
                                                                                                              Koji Furukawa
                                                                                                                 Senior Executive
                                                                                                                 Vice President




                                                                 page   46
                                                    Mitsubishi Corporation Annual Report 2002
                                                             {CORPORATE GOVERNANCE}




Management and Internal Audit System

                              Board of Corporate
                                   Auditors

      General Meeting         Corporate Auditors            International Advisory
      of Shareholders                                             Committee
                               Board of Directors
                                                            Governance Committee

                                                               Corporate Staff Section
                                                                                                                        Business Groups /
                                                                                                                        Divisions /
                                                                  Internal Audit Dept.
                               President and CEO                                                                        Business Units

                                   Executive                                                                            Domestic and
                                   Committee                   (Crisis Management)
                                                               Compliance Committee                                     Overseas Offices
                                                               Emergency Crisis Management Committee
                                                               Investigation Committee

                                                               (Functional Committees)
                                                               Portfolio Management Committee, etc.



discuss globalization. A host of invalu-        was also raised by the Governance Com-              to the Board. Corporate and independent
able views were expressed, the consen-          mittee. For example, when MC launched               external audits also constitute important
sus being that globalization of MC              MC2000 in 1998, there were 35 employ-               parts of MC’s overall audit system.
should be driven from the top down and          ees connected with internal audit, mostly           Corporate auditors review the activities
that this process entails winning respect       assigned to the Internal Audit Dept.                of the Board while independent external
as a good corporate citizen wherever the        There are now 120*1 such employees                  auditors are responsible for checking
company operates. These views will be           carrying out the established action                 MC’s financial statements. This three-
incorporated in future globalization            plans. Plans call for the number to be              pronged system means that audits are
programs at MC.                                 raised to 170*2 by the end of fiscal 2004,          carried out independently from a multi-
                                                the final year of MC2003. Audit reports             tude of angles.
Enhancing Internal Audit Functions              prepared by the Internal Audit Dept. are
MC is constantly working to improve             sent directly to the president and audit            *1
                                                                                                         As of September 2002
internal audit functions, an issue which        plans and results are reported regularly            *2
                                                                                                         Projection as of September 2002


International Advisory Committee
                                                                                           From Left
                                                                                           Sir David Scholey, CBE
                                                                                              Former Chairman of S.G. Warburg Group,
                                                                                              Senior Advisor of UBS Warburg
                                                                                           Dr. Herminio Blanco Mendoza
                                                                                              Former Secretary of Commerce and Industrial Promotion
                                                                                              of the United Mexican States
                                                                                           Jaime Augusto Zobel de Ayala II
                                                                                              President of Ayala Corporation
                                                                                           The Honorable Thomas S. Foley
                                                                                              Former Ambassador of the United States of
                                                                                              America to Japan
                                                                                           Tatsuo Arima
                                                                                              Director
                                                                                           Minoru Makihara
                                                                                              Chairman of the Board (Chairman of the Committee)
                                                                                           Mikio Sasaki
                                                                                              President, Chief Executive Officer
                                                                                           Lucio A. Noto
                                                                                              Retired Vice Chairman, ExxonMobil Corporation;
                                                                                              Managing Partner, Midstream Partners, LLC
                                                                                           Ratan N. Tata
                                                                                              Chairman of Tata Sons Limited




                                                                    page   47
                                                   Mitsubishi Corporation Annual Report 2002
                                                               {EXECUTIVE OFFICERS}




Executive Officers                      (47 persons)

Mikio Sasaki                       Takeru Ishibashi                          Ichiro Mizuno                          Tatsuo Sato
Member of the Board,               Member of the Board,                      Senior Vice President,                 Senior Vice President,
President,                         Executive Vice President,                 Group CFO,                             Division COO, Telecommunication
Chief Executive Officer            Group CEO, Chemicals Group                New Business Initiative Group          & Broadcasting Division,
                                                                                                                    IT & Electronics Business Group
Hironori Aihara                    Shunichi Inai                             Yutaka Kasahara
Member of the Board,               Member of the Board,                      Senior Vice President,                 Kazui Kondo
Senior Executive Vice President,   Executive Vice President,                 General Manager, Representative        Senior Vice President,
President, Director, Mitsubishi    General Manager,                          of Mitsubishi Corporation in Jakarta   Division COO,
International Corporation          Nagoya Branch                                                                    Foods (Commodity) Division,
                                                                             Kazuo Tatsumiya                        Living Essentials Group
Koji Furukawa                      Masahiro Abe                              Senior Vice President,
Member of the Board,               Executive Vice President,                 Senior Assistant to Group CEO,         Hiroshi Tanaka
Senior Executive Vice President,   Group COO, Machinery Group                New Business Initiative Group          Senior Vice President,
Chief Financial Officer,                                                                                            Division COO, Textiles Division,
Compliance Officer                 Motoatsu Sakurai                          Haruo Matsumoto                        Living Essentials Group
                                   Executive Vice President,                 Senior Vice President,
Naohisa Tonomura                   Executive Vice President,                 Division COO, Environment &            Hajime Katsumura
Member of the Board,               Mitsubishi International Corporation      Project Development Division,          Senior Vice President,
Senior Executive Vice President,                                             Machinery Group                        President,
Group CEO, Machinery Group         Yukio Ueno                                                                       Mitsubishi Corporation
                                   Executive Vice President,                 Moriji Kanada                          (Taiwan) Ltd.
Yorihiko Kojima                    General Manager,                          Senior Vice President,
Member of the Board,               Corporate Planning Department             Metals Group                           Hiroshi Mino
Senior Executive Vice President,                                                                                    Senior Vice President,
Group CEO,                         Hidetoshi Kamezaki                        Hisanori Yoshimura                     Division COO,
New Business Initiative Group,     Member of the Board,                      Senior Vice President,                 Consumer Business Division,
Chief Information Officer          Executive Vice President,                 Division COO,                          New Business Initiative Group
                                   Chief Regional Officer                    Natural Gas Business Division,
Kanji Yamaguchi                                                              Energy Business Group                  Masatoshi Nishizawa
Member of the Board,               Takeshi Inoue                                                                    Senior Vice President,
Senior Executive Vice President,   Executive Vice President,                 Yoshihisa Morozumi                     General Manager,
Group CEO,                         Group COO,                                Senior Vice President,                 HR & Administration Department
Living Essentials Group            Living Essentials Group                   Division COO, Power & Electrical
                                                                             Systems Division, Machinery Group      Tsunao Kijima
Masayuki Takashima                 Toshihiko Iriyama                                                                Senior Vice President,
Member of the Board,               Senior Vice President,                    Nobuyasu Kamei                         Division COO,
Senior Executive Vice President,   General Manager,                          Senior Vice President,                 Foods (Products) Division,
Group CEO, Metals Group            Internal Audit Department                 President,                             Living Essentials Group
                                                                             Mitsubishi International G.m.b.H.
Yukio Masuda                       Yasuhiro Sayama                                                                  Mamoru Horio
Member of the Board,               Senior Vice President,                    Shun-ichi Imamiya                      Senior Vice President,
Senior Executive Vice President,   General Manager,                          Senior Vice President,                 Group Human Resources Officer,
Group CEO,                         Kyushu Branch                             Division COO, Non-Ferrous Metals       Living Essentials Group
Energy Business Group                                                        Division, Metals Group
                                   Masao Miyamoto                                                                   Junta Fujikawa
Norio Okada                        Senior Vice President,                    Nobuo Ikeuchi                          Senior Vice President,
Executive Vice President,          Division COO,                             Senior Vice President,                 Division COO,
Metals Group                       Motor Vehicle Business Division,          Division COO, Plant Project            Aerospace Division,
                                   Machinery Group                           Division, Machinery Group              IT & Electronics Business Group
Susumu Kani
Member of the Board,               Katsutoshi Takeda                         Yoshikuni Kanai                        Yoshiaki Katayama
Executive Vice President,          Senior Vice President,                    Senior Vice President,                 Senior Vice President,
General Manager,                   Resident Managing Director,               Division COO,                          General Manager,
Kansai Branch                      China, President,                         Petroleum Business Division,           Machinery Group CEO Office
                                   Mitsubishi Corporation (China)            Energy Business Group
Takeshi Hashimoto                  Investment Co., Ltd                                                              Hideshi Takeuchi
Member of the Board,                                                         Shunichi Nagai                         Senior Vice President,
Executive Vice President,          Masaki Miyaji                             Senior Vice President,                 Treasurer
Group CEO,                         Senior Vice President,                    General Manager,
IT & Electronics Business Group    Chief Executive Officer,                  Hokkaido Branch                        Mutsumi Kotsuka
                                   Mitsubishi Corporation European                                                  Senior Vice President,
                                   Headquarters, Chairman &                                                         General Manager,
                                   Managing Director, Mitsubishi                                                    Metals Group CEO Office
                                   Corporation International N.V.


                                                                                                                                   (As of July 1, 2002)




                                                                     page   48
            Mitsubishi Corporation Annual Report 2002
                       {FINANCIAL SECTION}




Financial Section


Management’s Discussion and Analysis of
 Financial Condition and Results of Operations          50

Six-Year Financial Summary                              64

Consolidated Balance Sheets                             66

Consolidated Statements of Income                       68

Consolidated Statements of Comprehensive Income         69

Consolidated Statements of Shareholders’ Equity         70

Consolidated Statements of Cash Flows                   71

Notes to Consolidated Financial Statements              72

Independent Auditors’ Report                            98




                            page   49
                                                      Mitsubishi Corporation Annual Report 2002
                                {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




Management’s Discussion and Analysis of Financial Condition and Results of Operations

1. OVERVIEW                                                                   (5) Machinery Group. We engage in diverse businesses related
                                                                              to motor vehicles, power and electrical systems, plant projects,
We are a general trading company in Japan, and derive net
                                                                              ships, environmental technologies, construction and industrial
income from a wide variety of business activities in relation to a
                                                                              equipment and real estate development. Independent power
number of different business fields. Our business activities
                                                                              producer projects are a core field for growth.
include our traditional intermediation business of arranging trans-
actions for the purchase, sale, marketing and distribution of                 (6) Chemicals Group. We invest in resources and facilities for
various industrial and consumer products and services. We also                chemical production and engage in trading, marketing and distri-
participate in manufacturing and production operations, such as               bution of commodity and specialty chemicals.
the extraction and commercial exploitation of natural resources.
                                                                              (7) Living Essentials Group. We engage in sourcing, marketing
Additionally, we participate in new business ventures, invest in
                                                                              and distribution services, including export-import services and
existing businesses and provide a wide range of consulting and
                                                                              financing services, for food commodities, food products, textiles
outsourcing services. We provide financing and engage in a num-
                                                                              and various general merchandise, and we invest in enterprises for
ber of financial services, in relation to many of our activities,
                                                                              the production and distribution of those products.
including the provision of debt financing in connection with pur-
chase and sale transactions in which we act as intermediary and
                                                                              These activities contribute to net income in three primary ways:
making debt and equity investments in businesses or projects in
which we participate. We conduct these activities on a global                 (1) Revenues. We generate revenues from fees and commissions
basis through our offices in Japan and overseas including those               we earn from trading activities and sales revenues from manufac-
in Asia Pacific, the Americas, Europe, East Asia and Africa.                  turing, service, and rental activities.
  We organize these activities broadly into seven business groups             (2) Equity in earnings of affiliates. We recognize our proportion-
which report separately as operating segments. The following are              ate share of income or loss from affiliates accounted for using the
our seven reportable operating segments.                                      equity method in our consolidated financial statements. Because
(1) New Business Initiative Group. We invest in, develop and                  we conduct a large portion of our operations through minority
operate businesses based on new business models. Our core                     interests in joint ventures and other affiliates, equity in earnings of
businesses focus on the use of financial, information, logistics,             affiliates accounts for a substantial portion of our net income.
and marketing technologies.                                                   (3) Dividend income. We receive dividends from businesses in
(2) Information Technology & Electronics Business Group. We                   which we have invested that are accounted for using the cost
engage in a variety of businesses in the information technology               method in our consolidated financial statements. In particular, we
services, telecommunications, broadcasting and content delivery               have a number of minority investments in resource and chemical
industries. We also provide trading, financing and related services           projects that are accounted for by the cost method. Many of these
for buyers and sellers of aerospace products.                                 projects are structured such that the profits are distributed to the
                                                                              investors through dividends, which form a substantial portion of
(3) Energy Business Group. We provide customers in Japan and
                                                                              our net income.
globally with access to stable, long-term supplies of fuels. We
invest in projects for the production and processing of crude oil,
                                                                                  We believe products and services can be viewed in terms of
petroleum products, LNG, natural gas, LPG and carbon products
                                                                              value chains, in which service providers add value by performing
and engage in trading, marketing and distribution of these products.
                                                                              activities in relation to each stage of the creation and delivery of a
(4) Metals Group. We engage in investment and financing activities,           product or service, from supplying the resources necessary for its
logistics services, processing operations and trading activities              production to distribution and sale to end-users. We believe that
related to steel products and resources, including coal and iron              our traditional intermediation services, which orient around large
ore, and non-ferrous metal products and resources, including                  manufacturers in the middle of value chains by providing them
copper, aluminum and chrome.                                                  with procurement, marketing, sales and wholesale distribution




                                                                      page   50
                                                         Mitsubishi Corporation Annual Report 2002
                                 {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




services, have been experiencing increased competition, lower                    2. CRITICAL ACCOUNTING POLICIES
margins and reduced growth in demand. As a result, we have
                                                                                 The preparation of these consolidated financial statements
been shifting our focus to other portions of value chains. In par-
                                                                                 requires management to make estimates and assumptions that
ticular, we have increased our participation in upstream projects
                                                                                 affect the reported amounts of assets and liabilities and the disclo-
and businesses for the production of resources such as LNG,
                                                                                 sure of contingent assets and liabilities at the date of the consoli-
coking coal, non-ferrous metals, chemicals and food commodities,
                                                                                 dated financial statements and the reported amounts of revenues
primarily through investments in joint ventures. We are also
                                                                                 and expenses during the reporting period. On an ongoing basis,
enhancing our downstream sales, marketing and distribution
                                                                                 management evaluates its estimates and judgments, including
capabilities in various business fields.
                                                                                 those related to the valuation of receivables, investments, long-
  A large portion of our upstream operations are conducted
                                                                                 lived assets, inventories, revenue recognition, income taxes,
through affiliates accounted for by the equity or cost methods and
                                                                                 financing operations, restructuring costs, retirement benefits, and
many of our downstream operations are conducted through con-
                                                                                 contingencies and litigation. Management bases its estimates and
solidated subsidiaries or equity-method affiliates. The contributions
                                                                                 judgments on historical experience and on various other factors
to net income from revenues, dividend income and equity in earn-
                                                                                 that are believed to be reasonable under the circumstances, the
ings of affiliated companies, were ¥1,199,069 million, ¥32,555
                                                                                 results of which form the basis for making judgments about the
million and ¥16,423 million, respectively, for the year ended March
                                                                                 carrying values of assets and liabilities that are not readily apparent
31, 2001 and ¥1,291,493 million, ¥36,348 million and ¥8,646
                                                                                 from other sources. Actual results may differ from these estimates
million, respectively, for the year ended March 31, 2002.
                                                                                 under different assumptions or conditions.
<Operating Transactions and Presentation of Revenues> As shown                       Management believes the following are our critical accounting
in our consolidated statements of income, our results of opera-                  policies. These policies were considered “critical” because:
tions include “operating transactions.” Operating transactions
                                                                                 • the estimate requires us to make assumptions about matters
consist of sales in which we act as principal and transactions in
                                                                                     that are highly uncertain at the time the estimate is made, and
which we serve as agent. Operating transactions include the con-
tract value of all transactions in which we participate, acting as               • different estimates that we reasonably could have used in the
principal or agent. When we serve as agent, we are responsible for                   current period, or changes in the accounting estimate that are
the payment of the inventory purchase price and the collection of                    reasonably likely to occur from period to period, would have a
the sales proceeds. Operating transactions are not meant to repre-                   material impact on the presentation of our financial condition,
sent sales or revenues in accordance with accounting principles                      changes in financial condition, or results of operations.
generally accepted in the United States of America. Operating
transactions is a non-GAAP measure and should not be construed                   Valuation of Receivables
as equivalent to, or a substitute or proxy for, revenues, or as an               The balance of our trade receivables, notes and loans is significant
indicator of our liquidity or cash flows generated by operating,                 and the accounting estimate for the valuation of receivables is a
investing or financing activities. We have included the information              critical accounting policy for all of our segments. The allowance
concerning operating transactions because it is used by similar                  for doubtful accounts increases by current period estimate of bad
Japanese trading companies as an industry benchmark, and we                      debts referred to as the “provision for doubtful receivables.” The
believe it is a useful supplement to results of operations data as a             allowance is offset by direct write-offs of receivables and recoveries
measure of our performance.                                                      of previously written-off receivables. We perform ongoing credit
  In addition, in accordance with accounting principles generally                evaluations of our customers and adjust credit limits based upon
accepted in the United States of America, revenues from certain                  payment history and the customer’s current credit worthiness, as
activities should be reported gross with separate display of cost of             determined by our review of their current credit information. We
sales to arrive at gross profit. Revenues from our manufacturing                 continuously monitor collections and payments from our customers
and other activities have been presented gross. These manufac-                   and we establish credit limits and an allowance for doubtful
turing and other activities include activities in which we are the               accounts based upon factors surrounding the credit risk of any
primary obligor responsible for fulfillment, act as a principal,                 specific customers, specific customer collection issues that we
change the product or perform part of the service, take title to                 have identified, past credit loss experience, historical trends, an
inventory and assume the risk and rewards of ownership, such as                  evaluation of potential losses in the receivables outstanding, credit
the risk of loss for collection, delivery, or returns.                           ratings from applicable agencies, and other information.
                                                                                     However, in the opinion of our management, the allowance for
                                                                                 doubtful accounts is adequate, and receivables are presented at
                                                                                 net realizable value. For each of our significant customers, we
                                                                                 monitor their financial conditions, credit level and collections on
                                                                                 receivables as part of our effort to reach an appropriate accounting




                                                                         page   51
                                                      Mitsubishi Corporation Annual Report 2002
                                {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




estimate for the allowance for doubtful accounts. In recent years, as          investee’s stock is publicly traded, we will also analyze the
a result of a combination of the factors described above, we have              investee’s stock price, because that price reflects the market’s
materially increased our allowance for doubtful accounts to reflect            most recent evaluation of the total mix of available information.
our estimated amount of bad debts, uncollectible loans and spe-                    If the length of time and the extent to which the market value
cific customer situations. It is also possible that bad debts could            has been less than cost are long and significant, this is a negative
increase rapidly and significantly in the future. Accordingly, estimat-        factor indicating impairment. If such factors exist, we will then
ing doubtful accounts requires significant management judgment.                analyze any objective evidence to support a realizable value in
  As of March 31, 2001, we increased our total allowance for                   excess of market price or record a write down to the net realizable
doubtful accounts over the previous year by ¥1.1 billion or 0.7%,              value. We further consider any operating transactions with the
to ¥153.9 billion. As of March 31, 2002, we increased our total                investee and country risk in the evaluation of the impairment of
allowance for doubtful accounts over the previous year by ¥15.0                the investment.
billion or 9.7%, to ¥168.9 billion, because of certain specific                    In each of the last two years, we have tested investments for
customers receivables deemed uncollectible. The allowance for                  impairment using similar methods and in each year we deter-
doubtful accounts represented approximately 4.4% and 4.9% of                   mined that, based on our assumptions, an impairment on certain
our total receivables (current and non-current) as of March 31,                investments should be recognized. These amounts are included
2001 and 2002, respectively.                                                   in gain on marketable securities and investments–net in the con-
                                                                               solidated statements of income. During the years ended March 31,
Valuation of Investments                                                       2001 and 2002, losses of ¥43.0 billion and ¥14.9 billion, respec-
The balance of our investments is significant and the valuation                tively, were recognized on write-down of available-for-sale securi-
of investments is a critical accounting estimate for all of our                ties to reflect the decline in market value considered to be other
segments. We assess the impairment of investments by consid-                   than temporary.
ering whether a decline in value is other than-temporary. The
factors we consider are:                                                       Revenue Recognition
                                                                               We are engaged in business activities such as buying and selling
• the length of time and the extent to which the market value has
                                                                               of various commodities worldwide, financing for customers and
  been less than cost,
                                                                               suppliers relating to such activities and organizing and coordinat-
• the financial condition and near-term prospects of the issuer,               ing industrial projects through our worldwide business networks.
  including any specific events which may influence the opera-                 We conduct export, import, offshore and domestic production,
  tions of the issuer such as changes in technology that may                   sales, marketing and distribution in relation to a wide variety of
  impair the earnings potential of the investment or the discon-               products, including steel resources and non-ferrous metals, oil
  tinuance of a segment of the business that may affect the future             and gas products, machinery, information technology and elec-
  earnings potential; and                                                      tronics, chemicals, food products and general consumer mer-
• our intent and ability to retain the investment in the issuer for a          chandise, and perform various services such as consulting,
  period of time sufficient to allow for any anticipated recovery in           information technology services, technical support, transportation

  market value. If a decline in value occurs and is deemed to be               and logistics. The revenue recognition policies require difficult
  other-than-temporary, an impairment loss will be recorded to                 judgments on complex matters that are often the subject to mul-
  write-down the carrying value of the investment to fair value.               tiple sources of authoritative guidance. However, we recognize
                                                                               revenue in accordance with Staff Accounting Bulletin (“SAB”) No.
  We believe that the accounting estimate related to investment                101, “Revenue Recognition in Financial Statements,” which pro-
impairment is a critical accounting estimate because a) it is highly           vides guidance on revenue recognition issues in financial state-

susceptible to change from period to period because it requires our            ments. In general, revenue is recognized when it is realized or
management to make assumptions about future financial condition                realizable and earned when we have a) persuasive evidence of an
and cash flows of investees; and b) the impact that recognizing an             arrangement, b) the goods have been delivered or the services

impairment would have on the total assets reported on our balance              have been rendered to the customer, c) the sales price is fixed or
sheet as well as our net income would be material.                             determinable, and d) collectibility is reasonably assured.
  The assessment process for impairment of investments is                      (1) Trading Activities. For trading activities involving operations
based on the factors noted above such as financial condition and               purchasing and selling commodities we act as principal or agent
expected cash flows. For those investments in which the decline                in the legal form of transactions to earn fees, commissions or
in value is classified as other than temporary, the investment is              profits from trading margins. Trading margins and commissions
written down to fair value and an exit strategy implemented or it              on trading transactions consist principally of transactions in which
is the responsibility of the applicable Business Unit to justify a             we act as a principal or agent. A substantial portion of operating
greater value and continuing support for the investee. If the                  transactions represents transactions in which title to and payment




                                                                       page   52
                                                        Mitsubishi Corporation Annual Report 2002
                                  {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




for the goods pass through us without physical acquisition and                   3. FACTORS AFFECTING OUR RESULTS OF OPERATIONS
delivery through our inventories. Net commissions from trading
                                                                                 (1) Macroeconomic conditions in Japan and other major economies.
activities represents compensation, in the form of commission,
                                                                                 Many world markets in which we operate have been suffering from
with respect to agency transactions.
                                                                                 an economic downturn, including Japan, other Asian markets, the
(2) Manufacturing and Other Activities. Our manufacturing and                    United States and Europe. However, we are engaged in business
other activities consist of the following:                                       activities through our worldwide business network which insulates
                                                                                 us from an economic downturn in any single geographic market.
• Product and manufacturing based businesses. Principal
                                                                                 In addition, we have diversified our operations into various non-
  and product based transactions are recognized at the time the
                                                                                 cyclical industries such as processed foods and information ser-
  delivery conditions are met. These conditions are usually con-
                                                                                 vices which are less susceptible to economic cycles or deflation.
  sidered to have been met when the goods are received by the
                                                                                     We are also affected by macroeconomic conditions in Asia,
  customer, title to the warehouse receipts are transferred or the
                                                                                 particularly the automotive sector in Thailand and Indonesia,
  implementation testing is duly completed, and any future
                                                                                 where we assist automotive customers import and distribute prod-
  obligations are perfunctory and do not affect the customer’s
                                                                                 ucts in local markets and establish and implement manufacturing
  final acceptance of the arrangement.
                                                                                 operations in these markets. So far, there has been little impact
• Service related businesses. Revenues from services are                         from the world economic slowdown on either Thailand’s or
  recorded when the contracted services are rendered to third-                   Indonesia’s automotive industry.
  party customers. The services are considered to have been
                                                                                 (2) Fluctuations in prices for various commodities. One of our
  rendered pursuant to the arrangement when the contracts
                                                                                 primary business activities is investment in projects for the
  between the manufacturer and customers are made if the
                                                                                 extraction and commercial exploitation of oil, gas and mineral
  service is related to conclusion of the contract or when pay-
                                                                                 resources and the processing and production of foods and
  ments for the goods or service are made.
                                                                                 chemical commodities. For example, the earnings driver for our
• Rental activities. Revenues from rental and warehousing                        energy business, which accounted for approximately 36% of our
  activities are recorded over the terms of the rental agreement.                net income for the year ended March 31, 2002, is investment
                                                                                 returns in the form of dividends and equity method earnings
Derivatives                                                                      from LNG projects, mainly in the Pacific Rim region. Crude oil
We utilize derivative instruments primarily to manage interest rate              price trends have a major impact on profits from LNG projects
risks, reduce risk exposure to movements in foreign exchange                     and, therefore, on our return on investment.
rates, and to hedge various inventory and trading commitments.                       We invest in projects for the extraction and commercial exploi-
Effective April 1, 2001, we adopted SFAS No. 133, “Accounting                    tation of oil, gas and mineral resources and the processing and
for Derivative Instruments and Hedging Activities,” as amended                   production of foods and chemical commodities on the basis of
by SFAS No. 138 (collectively “SFAS No. 133”), which establish                   various assumptions regarding the price of the commodities to be
accounting and reporting standards for derivative instruments and                produced and sold and, for midstream production operations
hedging activities, requires all derivative instruments be reported              such as chemical plants, the price of feedstocks of raw materials
on the balance sheet at fair value, and establishes criteria for                 necessary for production of products. Also, as a part of our trading
designation and effectiveness of hedging relationships. The                      activities, we buy and sell various commodities for our own
adoption of SFAS No. 133 resulted in an insignificant impact on                  account. Generally, we hedge these risks, but we often take
reported earnings.                                                               unhedged positions in products, securing supplies or entering into
  A discussion of our accounting policies for derivative financial               supply contracts before we can locate matching buyers or suppli-
instruments is included in Note 2 to the consolidated financial                  ers. Unanticipated fluctuations in oil and other commodity prices
statements. Generally, on the date on which the derivative con-                  will have a positive or negative effect on our financial results
tract is executed, we designate the derivative as either a fair value            depending on the direction of the unexpected price movement
hedge or a cash flow hedge. Changes in derivative fair values that               relative to the net position we have taken.
are designated as fair value hedges are recognized in earnings as
                                                                                 (3) Investment projects. One of our primary business activities is
offsets to the changes in fair value of related hedged assets,
                                                                                 investing in projects for the extraction and commercial exploitation
liabilities and firm commitments. Derivative instruments desig-
                                                                                 of oil, gas and mineral resources. In the past, these projects have
nated as cash flow hedges include interest rate swaps to convert
                                                                                 made a healthy contribution to our net income. A substantial
floating liabilities to fixed rate liabilities and foreign currency to
                                                                                 portion of our equity in the earnings of affiliated companies, which
eliminate variability in functional currency equivalent cash flows
                                                                                 accounted for 17.8% and 14.4% of our net income in the fiscal
on certain debt obligations.
                                                                                 years ended March 31, 2001 and 2002, respectively, was derived
                                                                                 from our investments in mining and LNG projects. Similarly, our




                                                                         page   53
                                                      Mitsubishi Corporation Annual Report 2002
                                {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




joint ventures with BHP Billiton Limited (“BHP Billiton”) in coal              (5) Strategic investments, acquisitions and dispositions. Our
operations resulted in nearly all of our net income from coking coal           portfolio management strategy is to generate net income that is
in the fiscal year ended March 31, 2002, which represented a sub-              appropriate to the level of risk we assume in, each of our busi-
stantial majority of our net income for steel resources in this period.        nesses. As such, we have been making strategic changes in our
                                                                               portfolio of investments by using mergers and acquisition to grow
(4) Foreign currency fluctuations. Foreign currency fluctuations
                                                                               core businesses and to incubate promising new businesses. This
may have a positive or negative effect on our results of operations.
                                                                               process involves acquiring undervalued complementary busi-
Fluctuations primarily between the yen and the U.S. dollar and
                                                                               nesses, reducing costs, increasing efficiency and thereby improv-
between the U.S. dollar and other currencies, in which we
                                                                               ing profitability. We have also tightened our exit guidelines and
operate, create both translation risk and transaction risk.
                                                                               are taking a tougher approach to our use of capital by selling
• Translation risk. Foreign currency translation risk may affect               businesses that do not produce income commensurate with the
  the financial statements for particular periods or dates due to              amount of risk we take. These actions can have a material effect
  fluctuations in the currencies of the countries in which financial           on our financial results.
  statements of foreign subsidiaries are prepared. Our reporting                   The most significant changes to our portfolio of businesses
  currency is the Japanese yen. Our foreign subsidiaries prepare               include the following:
  financial statements in their reporting currencies which are then
                                                                               • Joint venture with Nissho Iwai. On March 27, 2002, we
  translated to Japanese yen prior to consolidation in our financial
                                                                                   entered into an agreement with Nissho Iwai for the establish-
  statements. As a result, changes in the value of the Japanese
                                                                                   ment of a joint venture to integrate many of our downstream
  yen relative to the reporting currencies of these subsidiaries
                                                                                   steel product distribution, sales and marketing activities. Upon
  create translation gains and losses on our equity investments in
                                                                                   completion of the establishment of the joint venture, which is
  foreign subsidiaries which are recorded as foreign currency
                                                                                   planned to occur in January 2003, we will own 60% and Nissho
  translation adjustments on our consolidated balance sheets
                                                                                   Iwai will own 40% of a new company through which we will
  until we dispose of or liquidate the relevant subsidiaries. The
                                                                                   jointly operate these businesses. This new company is expected
  results of operations of our foreign subsidiaries, when translated
                                                                                   to operate under the name “Metal One Corporation” and is
  into yen and consolidated into our statement of income, may
                                                                                   expected to be Japan’s largest steel trading and services com-
  also be affected by fluctuations in the value of the Japanese yen
                                                                                   pany. We believe that Metal One will be able to reduce trans-
  relative to the reporting currencies of our consolidated subsid-
                                                                                   portation costs, improve supply-chain management to better
  iaries. Equity in earnings of affiliates is similarly affected by
                                                                                   handle inventory, and improve the ability to deal in greater
  fluctuations in the value of the Japanese yen relative to the
                                                                                   volume with many customers, by eliminating repetitive func-
  reporting currencies of our equity-method affiliates.
                                                                                   tions and automating the information infrastructure.
• Transaction risk. We operate globally and are exposed to for-
                                                                               • QCT Resources Limited. In October 2000, the parent
  eign currency risks related to purchasing, selling, and financing
                                                                                   company, through its wholly owned subsidiary Mitsubishi
  in currencies other than the local currencies in which we oper-
                                                                                   Development Pty. Ltd. (“MDP”), and BHP Billiton jointly
  ate. As we enter into transactions denominated in currencies
                                                                                   acquired QCT Resources Limited (“QCT”), a company holding
  other than the local currencies in which our entities operate, we
                                                                                   ownership interests in various coal-mining joint ventures in
  face foreign currency transaction risk to the extent that the
                                                                                   Australia including the CQCA (“CQCA”) and the Gregory
  amounts and relative proportions of various currencies in which
                                                                                   (“Gregory”) joint ventures, by way of a cash offer. MDP has
  our costs and liabilities are denominated deviates from the
                                                                                   already owned minority interests in these joint ventures. As a
  amounts and relative proportions of the various currencies in
                                                                                   result, MDP paid a cash consideration of A$413 million,
  which sales and assets are denominated. As a result, currency
                                                                                   equivalent to ¥26,265 million, for a 50% ownership interest in
  fluctuations may have a different impact on our costs and liabili-
                                                                                   QCT. In June 2001, MDP acquired from BHP Billiton the
  ties than on our sales and assets, leading to a positive or negative
                                                                                   remaining interests of QCT, as well as additional shares of
  impact on our results of operations. Our strategy to manage
                                                                                   CQCA and Gregory for a total of A$1,005 million, equivalent to
  foreign currency risk is to net foreign currency exposures on
                                                                                   ¥67,104 million ($504 million). Subsequent to this acquisi-
  recognized assets, liabilities and unrecognized firm commitments
                                                                                   tion, MDP and BHP Billiton each held 50% of Gregory and
  by taking advantage of natural offsets and purchase forward
                                                                                   50% of CQCA. The ownership interest, substantially consisting
  exchange contracts to preserve the economic value of cash
                                                                                   of mining rights, was recorded as intangible assets and amor-
  flows in non-functional currencies. We believe that our forward
                                                                                   tized using the units of production method.
  exchange contracts, which have not been designated as hedging
  instruments under SFAS No. 133, effectively hedge the impact of              • Participation in Tangguh LNG Project. We acquired
  the variability in exchange rates. Principal currencies hedged                   Occidental Berau of Indonesia LLC (“OXY Berau”) from Occidental
  include the U.S. dollar, Euro and Australian dollar.                             International Oil and Gas Ltd. for $503 million, equivalent to




                                                                       page   54
                                                      Mitsubishi Corporation Annual Report 2002
                                {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




  ¥63,086 million, in cash, in July 2001. OXY Berau held a                       (8) Provision for doubtful receivables. Provisions for doubtful
  22.856% interest in a LNG joint venture in Berau, Indonesia,                   receivables are allocations made each period to our existing allow-
  called the Tangguh LNG Project. This joint venture project is                  ance for receivables losses. Allowances for doubtful receivables
  scheduled to start producing LNG in 2006 from gas fields                       are based upon our estimates of probable uncollectible receiv-
  spread over three adjoining blocks: Berau, Muturi and Wiriagar,                ables in our receivables portfolio. We determine this allowance
  Indonesia. Subsequently, we transferred our interest to MI                     based upon various factors including the status and risk profile of
  Berau, which is 56% owned by Diamond Gas Indonesia, a                          the customer, financial performance, credit ratings, and our
  wholly owned subsidiary of the parent company, and 44%                         historical loss experience.
  owned by INPEX CORPORATION. INPEX contributed $221
                                                                                 (9) Interest expense—net. We finance our operations through
  million, in cash to MI Berau in exchange for its 44% ownership
                                                                                 borrowings from banks and through the capital markets. We have
  interest in MI Berau.
                                                                                 both fixed rate and floating rate debt obligations, and engage in
(6) Personnel expenses. We are actively redeploying our workforce                hedging transactions to limit to some extent our interest rate risk
and implementing a performance based personnel system in order                   exposure. However, changes in prevailing interests rates may affect
to improve our operating efficiency and improve our medium to long-              our overall average interest rate. Interest expense fluctuates with
term profitability in all of our operating segments. Although in some            changes in market interest rates, market conditions, our mix of
cases, such as our early retirement program, we incur an immediate               funding sources and the amounts of our borrowings. In recent
charge in connection with these restructuring activities, we believe             periods, we have benefited from the extremely low interest rate
that these efforts will enhance our medium to long-term profitability.           environment in Japan. We use interest rate swap contracts in order
  The discount rate assumption related to the contributory and                   to reduce the risk of fluctuations in interest rates on our borrowings.
non-contributory pension plans was steady at 3.0% and 3.3%,
                                                                                 (10) Gain on marketable securities and investments—net. We
respectively, for 2001 and 2002.
                                                                                 have invested in securities of Japanese and other issuers, prima-
  The expected rate of return on long-term plan assets used to
                                                                                 rily marketable equity securities, for relationship and other pur-
determine the net periodic pension cost for the year ended March
                                                                                 poses. Substantially all of our marketable equity securities were
31, 2002 decreased by 0.5% from 4.5% to 4.0% for the contribu-
                                                                                 classified as available-for-sale securities. The fair value of these
tory plan and by 0.2% from 4.7% to 4.5% for the non-contributory
                                                                                 securities exposes us to equity price risks that can affect our
plan. Fluctuations in the discount rate and rate of return assump-
                                                                                 earnings. The carrying amounts of equity securities classified as
tions will have a positive or negative effect on our net periodic
                                                                                 available-for-sale securities in our consolidated balance sheets
pension costs depending on the direction of change.
                                                                                 were ¥695,379 million and ¥581,648 million as of March 31,
(7) Depreciation and amortization. Selling, general and adminis-                 2001 and 2002, respectively. Changes in the value of these secu-
trative expenses also include depreciation expenses for property                 rities affect our financial statements as they are carried on the
and equipment and amortization of intangible assets, including                   balance sheet at fair value and any gains and losses resulting
goodwill relating to acquisitions of subsidiaries. Depreciation                  from change in values of these securities are reported, net of
expense for the years ended March 31, 2001 and 2002 was                          related taxes, in a separate component of shareholders’ equity,
¥72,218 million and ¥79,480 million, respectively. We generally                  but are not reflected in earnings until sold. Due to stock market
amortize goodwill, which represents the excess cost of our invest-               declines, we had valuation losses in the amount of ¥43,043 mil-
ments in subsidiaries and affiliated companies over our equity in                lion and ¥14,926 million during the years ended March 31, 2001
the net assets as of the date of acquisition, generally from 10 to               and March 31, 2002, respectively. However, these losses were
20 years. In the past two fiscal years, we have made a number of                 offset by capital gains on the sale of shareholdings with the result
substantial acquisitions. New accounting standards for business                  that we had net gains on our marketable securities and invest-
combinations and the treatment of goodwill and other intangibles                 ments in the amount of ¥75,530 million during the year ended
require our management to make complex judgments about the                       March 31, 2001 and ¥33,287 million during the year ended
allocation and fair value ascribed to the assets we acquire in                   March 31, 2002.
acquisitions and the useful lives, recoverability, impairment and                    We also held marketable equity securities classified as trading
carrying value of those assets in our financial statements. See                  securities of ¥40,745 million at March 31, 2001 and ¥36,204
“Recent Accounting Pronouncements” below. Goodwill and in-                       million at March 31, 2002. These securities are carried on the
definite lived intangible assets may not be amortized but must be                balance sheet at fair value and any changes in market value are
reviewed for impairment on an annual basis. In evaluating the fair               reflected in earnings. The changes in net unrealized holding gains
value of these assets, our management must estimate expected                     and losses on trading securities that were included in earnings
future cash flows, and if there is a change in estimated future                  were gains of ¥856 million during the year ended March 31, 2001
cash flows indicating an impairment, the carrying values of the                  and ¥120 million during the year ended March 31, 2002. For
assets must be reduced.                                                          information about cost and fair value of our marketable securities,
                                                                                 see Note 4 of the consolidated financial statements.



                                                                         page   55
                                                                         Mitsubishi Corporation Annual Report 2002
                                            {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




4. OUTLOOK OF RESULTS FOR THE YEAR ENDING                                                                beneficial effects of expanding operations related to metal re-
   MARCH 31, 2003                                                                                        sources and foods. We are projecting a moderate increase in net
                                                                                                         income and a substantial improvement in equity in earnings of
Many world markets continue to experience an economic down-
                                                                                                         affiliated companies, which suffered from the write down of our
turn and in Japan, although the decline in exports and manufac-
                                                                                                         investment in LAWSON during the year ended March 31, 2002.
turing output seems to have ended, the economic situation still
                                                                                                         The foregoing statements are forward-looking statements based
remains uncertain due to the substantial reduction in capital
                                                                                                         upon our assumptions and beliefs as to economic and market
expenditures and the current level of unemployment. It is too early
                                                                                                         conditions, our performance under those conditions and other
in the fiscal year to accurately forecast results of operations for
                                                                                                         factors. Our forecasts assume an exchange rate of ¥130 to U.S.
the fiscal year ending March 31, 2003. Despite these general
                                                                                                         $1, a crude oil price of U.S.$22 per barrel and a yen interest rate
economic trends, based on our diversified and geographically
                                                                                                         (TIBOR) of 0.10% and are subject to the qualifications under
dispersed operations and other factors known to us that affect
                                                                                                         “Forward-Looking Statements.” Our actual results of operation
demand, for the year ending March 31, 2003, we believe that
                                                                                                         could vary significantly from those described above as the result
operating transactions will increase slightly based on forecasts of
                                                                                                         of factors including those discussed elsewhere herein.
higher transactions in the Machinery and Chemicals groups. We
also expect gross profit to increase considerably due to the


< RESULTS OF OPERATIONS >
The table below shows selected items from our consolidated statements of income for the periods indicated:
                                                                                                                                                                        Millions of
                                                                                                                                           Millions of Yen              U.S. Dollars
Years ended March 31                                                                                                                2001                     2002           2002

Operating transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥13,995,298          ¥13,230,675        $99,479

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥   603,716          ¥       643,922    $ 4,842
Expenses and other:
  Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       511,272                  542,813        4,081
  Provision for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       24,053                   32,920          248
  Interest expense (net of interest income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          11,406                   11,767           88
  Dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (32,555)                 (36,348)        (273)
  Gain on marketable securities and investments—net . . . . . . . . . . . . . . . . . . . . . . .                                   (86,372)                 (34,908)        (262)
  Loss on property and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               24,483                    8,489           64
  Litigation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              16,602                   13,362          100
  Other expense—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     2,929                    6,237           47
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       471,818                  544,332        4,093
Income from consolidated operations before income taxes . . . . . . . . . . . . . . . . . . . . .                                   131,898                   99,590          749
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             51,098                   45,875          345
Minority interests in income of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . .                                (5,118)                  (2,136)         (16)
Equity in earnings of affiliated companies—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             16,423                    8,646           65
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥    92,105          ¥        60,225    $     453



5. COMPARISON OF THE YEARS ENDED MARCH 31, 2002                                                          analyzed the results of operations of these activities based on total
   AND MARCH 31, 2001                                                                                    revenues. Instead, consistent with the way in which management
                                                                                                         analyzes the operating results of the businesses, management’s
As noted above, in our consolidated statements of income, we
                                                                                                         discussion and analysis of operations presented herein focuses on
have included the information concerning operating transactions
                                                                                                         operating transactions and gross profit.
because it is used by similar Japanese trading companies as an
industry, and we believe it is a useful supplement to results of                                         (1) Operating transactions. Operating transactions decreased
operations data as a measure of our performance. Similarly, we                                           ¥764.6 billion or 5.5%, to ¥13,230.7 billion in the fiscal year
separately present our revenues from trading activities and                                              ended March 31, 2002 from ¥13,995.3 billion in the fiscal year
manufacturing and other activities in accordance with U.S. GAAP.                                         ended March 31, 2001. This decrease was primarily a result of
However, for this comparison of results of operations, we have not                                       the down turn in trading transactions in our Metals Group of ¥319




                                                                                               page   56
                                                     Mitsubishi Corporation Annual Report 2002
                               {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




billion due to the decrease in market prices for non-ferrous metals            (6) Dividend income. Dividend income from investments in-
such as aluminum and copper and a decrease of ¥548 billion in                  creased ¥3,793 million, or 11.7% to ¥36,348 million in the fiscal
our Machinery Group as a result of a change in our involvement                 year ended March 31, 2002 from ¥32,555 million in the fiscal
with certain automobile export transactions. These decreases                   year ended March 31, 2001. This increase in dividends results
were offset by slight increases in our Living Essential and Energy             primarily from our investments in businesses related to the devel-
Business groups.                                                               opment of natural resources, which continued to perform strongly.
                                                                               As a result, our net financial income, which is dividend income
(2) Gross profit. Gross profit increased ¥40,206 million, or 6.7%,
                                                                               less net interest expense, increased beyond last year’s record
to ¥643,922 million in the fiscal year ended March 31, 2002 from
                                                                               level to a new high of ¥24,581 million.
¥603,716 million in the fiscal year ended March 31, 2001, driven
higher by the weak yen and strong performances by subsidiaries in              (7) Gain on marketable securities and investments—net. Our
the Metals Group through the acquisition of QCT Resources which                net gain on marketable securities and investments decreased
is engaged in natural resource development, food-related subsidiar-            ¥51,464 million, or 59.6%, to ¥34,908 million in the fiscal year
ies in the Living Essentials Group, and full consolidation of Nikken           ended March 31, 2002 from ¥86,372 million in the fiscal year
Corporation, a construction equipment rental company, which was                ended March 31, 2001. This decline was due mainly to the
previously accounted for by the equity method, in the Machinery                absence of large capital gains on sales of shares in affiliates in
Group. On the other hand, these positive factors were partially offset         comparison to the fiscal year ended March 31, 2001. For the
by lower margins in pulp, LPG and petrochemical products, which                fiscal year ended March 31, 2002, our net gain on marketable
suffered from deteriorating market conditions and prices.                      securities and investments was comprised of a realized gain of
                                                                               ¥26,226 million on the contribution of securities to our pension
(3) Selling, general and administrative expenses. Selling, general
                                                                               plan, and a ¥33,287 million net realized gain on sales of available
and administrative expenses increased ¥31,541 million, or 6.2%, to
                                                                               for sale securities which were offset by a ¥34,888 million write-
¥542,813 million in the fiscal year ended March 31, 2002 from
                                                                               down of other securities and investments, such as Japanese bank
¥511,272 million in the fiscal year ended March 31, 2001 due
                                                                               stocks Mizuho and UFJ, whose fair value was less than the carrying
mainly to higher pension costs of ¥4.5 billion and the impact of full
                                                                               amount and the decline was judged to be other than temporary.
consolidation of QCT Resources and Nikken of ¥9.9 billion.
                                                                               (8) Loss on property and equipment—net. As a result of the
(4) Provision for doubtful receivables. Provision for doubtful
                                                                               continuing decline in land prices in Japan, we assessed the
receivables increased ¥8,867 million, or 36.9%, to ¥32,920
                                                                               potential impairment of long-lived assets and determined that
million in the fiscal year ended March 31, 2002 from ¥24,053
                                                                               certain properties maintained for corporate use, lands and build-
million in the fiscal year ended March 31, 2001 due primarily to
                                                                               ings held for use in our leasing operations, and lands for develop-
an increase in write-offs of certain specific customers’ receivables
                                                                               ment were deemed to be impaired because the assets are not
due to bankruptcies in our Metals Group.
                                                                               expected to recover their entire carrying value through future cash
(5) Interest expense—net. Interest expense, net of interest in-                flows. These amounts are included in “Loss on property and
come, increased ¥361 million, or 3.2% to ¥11,767 million in the                equipment—net” in our consolidated statements of income and
fiscal year ended March 31, 2002 from ¥11,406 million in the                   were determined as the difference between the carrying value and
fiscal year ended March 31, 2001. Interest expense decreased by                the estimated fair value of these assets. Estimated fair value of
¥3,192 million at the parent company due to decreases in prevail-              assets was primarily determined based on independent appraisals
ing interest rates on interest bearing borrowings. This decrease               and discounted cash flows analyses. The net loss on property and
was offset by an increase of ¥3,553 million due to increased                   equipment decreased ¥15,994 million, or 65.3% to ¥8,489
funding demands for expansion at foreign subsidiaries such as                  million in the fiscal year ended March 31, 2002 from ¥24,483
coal businesses in Australia and automobile businesses in Asia.                million in the fiscal year ended March 31, 2001 due to the
As a result, net interest expense increased slightly.                          absence of large losses recorded in fiscal 2001, when such
                                                                               assets were considered impaired.

                                                                               (9) Litigation charge. Litigation charge decreased ¥3,240 million,
Gross Profit                                                                   or 19.5% to ¥13,362 million in the fiscal year ended March 31,
                                                                               2002 from ¥16,602 million in the fiscal year ended March 31,
(¥ billions)
                                                                               2001. The litigation charge for 2001 and 2002 are in connection
1998                                                       588.2               with our ongoing graphite electrodes trading cases which continue
1999                                                      582.9
                                                                               to be settled in due course.
2000                                                      575.1
2001                                                        603.7
2002                                                               643.9




                                                                       page   57
                                                                         Mitsubishi Corporation Annual Report 2002
                                            {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




(10) Other expense—net. Other expenses increased ¥3,308 million,                                         (14) Equity in earnings of affiliated companies—net (less appli-
or 112.9% to ¥6,237 million in the fiscal year ended March 31, 2002                                      cable income taxes). Equity in earnings of affiliated companies—
from ¥2,929 million in the fiscal year ended March 31, 2001. The                                         net (less applicable income taxes) decreased ¥7,777 million, or
primary increase in other expenses was due to the financial sup-                                         47.4%, to ¥8,646 million in the fiscal year ended March 31, 2002
port provided to Kinsho Corporation of ¥6,460 million offset by                                          from ¥16,423 million in the fiscal year ended March 31, 2001
decreases in net foreign currency transaction gains, the provision                                       mainly due to the ¥18,151 million impairment loss of equity
for purchase commitments, and write-downs of golf memberships.                                           method goodwill on our investment in LAWSON, INC. based on
                                                                                                         the estimated fair value of the investment determined by the
(11) Income from consolidated operations before income taxes.
                                                                                                         discounted cash flow method. We considered a number of factors
As a result of the foregoing, income from consolidated operations
                                                                                                         including the low prevailing stock price of LAWSON shares before
before income taxes decreased ¥32,308 million, or 24.5%, to
                                                                                                         deciding to recognize the impairment loss of the equity method
¥99,590 million in the fiscal year ended March 31, 2002 from
                                                                                                         investment. This was offset in part by earnings of existing affili-
¥131,898 million in the fiscal year ended March 31, 2001.
                                                                                                         ates, mainly those engaged in the business of natural resource
(12) Income taxes. Income taxes decreased ¥5,223 million, or                                             development. In addition, we lowered our equity ownership in
10.2%, to ¥45,875 million in the fiscal year ended March 31,                                             Mitsubishi Motors Australia and, therefore, no longer apply equity-
2002 from ¥51,098 million in the fiscal year ended March 31,                                             method accounting for this investment which posted a loss in the
2001 due primarily to the decline in pre-tax income.                                                     year ended March 31, 2001.
(13) Minority interests in income of consolidated subsidiaries.                                          (15) Net income. As a result of the foregoing, net income
Our losses from minority interests decreased ¥2,982 million, or                                          decreased ¥31,880 million, or 34.6%, to ¥60,225 million in the
58.3%, to ¥2,136 million in the fiscal year ended March 31, 2002                                         fiscal year ended March 31, 2002 from a record high of ¥92,105
from ¥5,118 million in the fiscal year ended March 31, 2001 due                                          million in the fiscal year ended March 31, 2001.
primarily to the decrease in the allocable losses incurred by such
consolidated subsidiaries.



6. RESULTS BY INDUSTRY SEGMENT
We divide our business into seven groups for financial reporting purposes: New Business Initiative, IT & Electronics Business, Energy
Business, Metals, Machinery, Chemicals and Living Essentials.
   The following table presents gross profit in each of our business segments for the years ended March 31, 2001 and 2002.
                                                                                                                                            Millions of Yen, Except Percentages
Years ended March 31                                                                                                                      2001                           2002

New Business Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥ 28,583         4.7%            ¥ 30,954        4.8%
Information Technology & Electronics Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             30,513         5.1               30,095        4.7
Energy Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           55,759         9.2               49,932        7.8
Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      92,694        15.4              106,553       16.5
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        105,727        17.5              122,829       19.1
Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         51,350         8.5               50,139        7.8
Living Essentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        235,959        39.1              239,227       37.1
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥600,585        99.5%            ¥629,729       97.8%
Adjustments and Eliminations, and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          3,131             0.5           14,193        2.2
          Total gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ¥603,716       100.0%            ¥643,922       100.0%




Net Income and Net Income Per Share                                                                      Return on Average Shareholders’ Equity

(¥ billions)                                                                                             (%)

                             30.40
1998                                             47.6                                                    1998                                    4.5
                  19.90
1999                               31.2                                                                  1999                         3.2
               16.61
2000                          26.0                                                                       2000                       2.8
                                                                 58.77
2001                                                                                    92.1             2001                                                                       9.8
                                      38.44
2002                                                        60.2                                         2002                                                6.0


   Net Income Per Share (¥)
   (Basic and diluted EPS)




                                                                                               page   58
                                                                         Mitsubishi Corporation Annual Report 2002
                                            {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




   The following table presents net income in each of our business segments for the years ended March 31, 2001 and 2002.
                                                                                                                                         Millions of Yen, Except Percentages
Year ended March 31                                                                                                                    2001                           2002

New Business Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥ (3,912)    (4.2%)        ¥(20,290)         (33.7%)
Information Technology & Electronics Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             64,987     70.5             8,671           14.4
Energy Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            4,272      4.6            21,717           36.0
Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       7,243      7.9            13,856           23.0
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          4,326      4.7            12,201           20.3
Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (24,681)   (26.8)            6,545           10.9
Living Essentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         27,964     30.4            29,266           48.6
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥ 80,199     87.1%          ¥ 71,966         119.5%
Adjustments and Eliminations, and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        11,906     12.9             (11,741)        (19.5)
          Total net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥ 92,105    100.0%          ¥ 60,225         100.0%

New Business Initiative Group                                                                            deliver customer management, transaction management, billing
The New Business Initiative Group, established in April 2000, is                                         and other services which we believe will be in increasing demand
responsible for progressing our .Commerce (“dot Commerce”)                                               as broadcasting and communications converge.
initiative. It focuses on integrating four key “FILM” technologies—                                          Operating transactions for this group decreased ¥89.9 billion
financial technology, information technology, logistics technology                                       or 17.3%, to ¥428.4 billion in the fiscal year ended March 31,
and marketing technology—into our business groups as well as on                                          2002 from ¥518.3 billion in the fiscal year ended March 31,
creating and testing business models for use by our other busi-                                          2001. For the year ended March 31, 2002, gross profit for this
nesses. Earnings of this group are generated primarily from busi-                                        group amounted to ¥30,095 million and net income amounted
ness investment rather than trading transactions and many of its                                         to ¥8,671 million, compared to gross profit of ¥30,513 million
employees are dispatched to its 113 business investments with a                                          and net income of ¥64,987 million for the year ended March 31,
view to helping them maximize their respective corporate values.                                         2001. Gross profit decreased 1.4% during the year ended
The flagship projects of this group in fiscal 2001 and 2002 were                                         March 31, 2002 due primarily to decreases in electronic appli-
the Japanese convenience store operator LAWSON and IT Frontier                                           ances in overseas markets. Net income decreased 86.7% during
which provides end-to-end information technology and systems                                             the year ended March 31, 2002 due primarily to the absence of
integration services.                                                                                    capital gains from the sale of shares of Photonic Integration
   Operating transactions for this group increased ¥16.3 billion or                                      Research, Inc. and SDL, Inc. which we made during the year
11.1%, to ¥163.3 billion in the fiscal year ended March 31, 2002                                         ended March 31, 2001.
from ¥147.0 billion in the fiscal year ended March 31, 2001. For
the year ended March 31, 2002, gross profit for this group                                               Energy Business Group
amounted to ¥30,954 million and net loss amounted to ¥20,290                                             Working with major oil and gas producing countries and multina-
million, compared to gross profit of ¥28,583 million and a net loss                                      tional oil conglomerates, this group seeks to ensure stable, long-
of ¥3,912 million for the year ended March 31 2001. Gross profit                                         term energy supplies for customers in Japan, Asia and around the
increased 8.3% during the year ended March 31, 2002 due pri-                                             world. Principal products include crude oil, petroleum products,
marily to an increase in healthcare-related business. Net loss                                           LPG, LNG, natural gas, carbon materials and products. This group
increased 418.7% during the year ended March 31, 2002 due                                                has recently expanded its interests in upstream oil and gas projects,
primarily to the write-down of ¥18 billion in our investment in                                          particularly in Asia by, for example, acquiring an additional stake in
LAWSON, INC.                                                                                             the Sakhalin II Project, purchasing an interest in an Indonesian oil
                                                                                                         field, participating in the Malaysia III Project and acquiring all the
IT & Electronics Business Group                                                                          shares in Mitsubishi Petroleum Development Co., Ltd.
The IT & Electronics Business Group focuses on hardware, software                                            A core field for the Energy Business Group is LNG. In 200l, we
and related services for use within a range of industries including                                      invested in the Malaysia III Project and expanded production
telecommunications, broadcasting services and aerospace. There                                           facilities in an Australian LNG project known as the North West
are three key companies in this group: Net One Systems Co., Ltd.,                                        Shelf Project. Both projects are the first to be started in the Pacific
which is involved in network integration and sales of LAN/WAN                                            Rim in the 21st century and are expected to continue into the
systems and software with a particular focus on assisting in bringing                                    2020s. In the downstream sector, we are developing a nationwide
government administrative functions up to “net speed;” Space                                             network of service stations through our wholly-owned subsidiary,
Communications Corporation, which is involved in satellite commu-                                        Mitsubishi Shoji Sekiyu Co., Ltd., to deliver high-quality reliable
nications and broadband infrastructure; and PLAT-ONE CORPO-                                              services to motorists in Japan.
RATION, which uses a digital communications satellite—seek to



                                                                                               page   59
                                                      Mitsubishi Corporation Annual Report 2002
                                {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




  Operating transactions for this group increased ¥37.0 billion or             2002 from ¥2,281.4 billion in the fiscal year ended March 31,
1.1%, to ¥3,436.8 billion in the fiscal year ended March 31, 2002              2001 due to the decrease in market prices for non-ferrous metals
from ¥3,399.8 billion in the fiscal year ended March 31, 2001.                 such as aluminum and copper. For the year ended March 31,
For the year ended March 31, 2002, gross profit for this group                 2002, gross profit for this group amounted to ¥106,553 million
amounted to ¥49,932 million and net income amounted to                         and net income amounted to ¥13,856 million, compared to gross
¥21,717 million, compared to gross profit of ¥55,759 million and               profit of ¥92,694 million and net income of ¥7,243 million for the
a net income of ¥4,272 million for the year ended March 31                     year ended March 31 2001. Gross profit increased 15.0% during
2001. Gross profit decreased 10.5% during the year ended March                 the year ended March 31, 2002 due primarily to the equalization
31, 2002 due primarily to deterioration in LPG and other petro-                of our ownership interests in the coal mining joint ventures with
leum products markets. Net income increased 408.4% during the                  BHP Billiton. Net income increased 91.3% during the year ended
year ended March 31, 2002 due primarily to an increase in                      March 31, 2002 due primarily to strong performance of the group
dividends received from resource-related investments and the                   and other factors noted above.
absence of non-performing asset depreciation expenses which
we experienced during the year ended March 31, 2001.                           Machinery Group
                                                                               The Machinery Group engages in the planning, development,
Metals Group                                                                   co-ordination and construction of projects worldwide. Activities
The Metals Group participates in all business areas related to the             extend from large-scale power-generation, chemical and steel
iron and steel industries, as well as metal resources. Activities              plants to ship sales, automobiles and industrial machinery. This
extend from investments in the development of natural resources,               group consists of four divisions, namely, Power & Electric
to the manufacturing, marketing and distribution of metal prod-                Systems, Plant Projects, Environment & Project Development
ucts that are essential to principal industries all over the world.            and Motor Vehicles.
  In 2001, BHP Billiton and our wholly-owned subsidiary                            Primary areas of growth for this group are Asian automotive
Mitsubishi Development Pty., Ltd. announced an agreement to                    business focusing on Indonesia and Thailand and domestic and
form a joint venture by merging their respective interests in the              overseas electric power businesses. In particular, the overseas
Central Queensland Coal Associates Joint Venture and Gregory                   independent power producer business is expected to be a key
Joint Venture. This equalization is a further step in the coking coal          driver of growth.
strategic alliance that BHP Billiton and Mitsubishi Development                    Operating transactions for this group decreased ¥548.5 billion
announced at the time of launching the acquisition of QCT                      or 20.3%, to ¥2,147.2 billion in the fiscal year ended March 31,
Resources Ltd. in 2000 and follows the successful conclusion of                2002 from ¥2,695.7 billion in the fiscal year ended March 31,
this acquisition and the subsequent announcement to integrate                  2001 as a result of a change in our involvement with certain auto-
the Central Queensland Coal Associates Blackwater mine with the                mobile export transactions. For the year ended March 31, 2002,
QCT Resources South Blackwater mine. The agreement resulted                    gross profit for this group amounted to ¥122,829 million and net
in a transfer of approximately 18.3% of the Central Queensland                 income amounted to ¥12,201 million, compared to gross profit of
Coal Associates joint venture assets and approximately 30.3% of                ¥105,727 million and a net income of ¥4,326 million for the year
the Gregory Joint Ventures assets from BHP Billiton to Mitsubishi              ended March 31, 2001. Gross profit increased 16.2% during the
Development for A$1,005 million. BHP Billiton and Mitsubishi                   year ended March 31, 2002 due primarily to the full consolidation
Development have joint operational control of the Central                      of Nikken upon acquisition of additional shares. Net income
Queensland Coal Associates and Gregory Joint Venture assets                    increased 182.0% during the year ended March 31, 2002 due
and jointly market the coal produced.                                          primarily to capital gains from the sale of shares in overseas inde-
  On June 27, 2002, our shareholders approved the establish-                   pendent power producers, such as Orion Power Holdings, Inc.,
ment of a joint venture with Nissho Iwai Corporation in respect of             and the absence of net losses from Mitsubishi Motors Australia,
our steel products divisions. This joint venture is intended to cre-           which we no longer account for using the equity method.
ate a new company by corporate split on January 6, 2003. We will
hold 60% of the new company, and will contribute ¥90 billion, the              Chemicals Group
estimated fair value of the net assets to be contributed.                      The Chemicals Group is involved in production, marketing and
  In addition, we have a 25% equity interest in MOZAL S.A.R.L.,                distribution activities in virtually all areas of the global chemical
an aluminum smelter in the Republic of Mozambique and a 6%                     industry, from commodity chemicals such as synthetic fiber mate-
equity interest in the Escondida copper mine in northern Chile                 rials, petrochemicals and non-organic chemicals and fertilizers to
which has recently become the world’s largest copper mine with                 functional chemicals. This group also has investments in projects
an annual production capacity of one million tonnes of copper.                 including Eastern Petrochemical Company (SHARQ), a polyethylene
  Operating transactions for this group decreased ¥318.9 billion               and ethylene glycol concern in Saudi Arabia, Exportadora de Sal,
or 14.0%, to ¥1,962.5 billion in the fiscal year ended March 31,               S.A. de C.V. (ESSA), a solar salt-producer in Mexico and Venezuelan-




                                                                       page   60
                                                      Mitsubishi Corporation Annual Report 2002
                                {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




based Metanol de Oriente, METOR, S.A. (METOR), a producer                     7. LIQUIDITY AND CAPITAL RESOURCES
of methanol. Another project, P.T. Kaltim Parma Industi (KPI),
                                                                              General
started commercial production of ammonia in Indonesia. In
                                                                              Our approach to financing is characterized by low-cost funding
addition, this group has invested in MITENI S.p.A., an Italian
                                                                              without sacrificing availability, which results in diversity of
fluorinated intermediates production company.
                                                                              finance resources and sound financial conditions. Despite sig-
  Operating transactions for this group decreased ¥59.8 billion or
                                                                              nificant investment activities, our total assets have been steady
4.4%, to ¥1,298.4 billion in the fiscal year ended March 31, 2002
                                                                              at ¥8 trillion. We have controlled investments and capital expen-
from ¥1,358.1 billion in the fiscal year ended March 31, 2001.
                                                                              ditures within operating cash flow and used proceeds from sales
For the year ended March 31, 2002, gross profit for this group
                                                                              of existing non-performing assets and investments for working
amounted to ¥50,139 million and net income amounted to
                                                                              capital purposes. To maintain our financial stability, we also
¥6,545 million, compared to gross profit of ¥51,350 million and a
                                                                              endeavor to extend the maturities of our debt, from short-term
net loss of ¥24,681 million for the year ended March 31, 2001.
                                                                              borrowings and CPs to long-term borrowings and straight bonds.
Gross profit decreased 2.4% during the year ended March 31,
                                                                                  S&P downgraded our rating from A to BBB+ in April 2002
2002 due primarily to the weak conditions in the petrochemical
                                                                              mainly due to the continued decline in the Japanese economy.
market. Net loss improved 126.5% to net income during the year
                                                                              Despite this downgrade, we believe this will not have a material
ended March 31, 2002 due primarily to the absence of the capital
                                                                              impact on our ability to access sources of funds on terms that
loss on the sale of Aristech Chemical Corporation, a U.S. chemical
                                                                              are acceptable to us. Our current ratings by S&P (BBB+/A-2),
product manufacturing subsidiary, that we incurred during the
                                                                              R&I (AA–/a-1+) and Moody’s (A2/P-1) are the highest among
year ended March 31, 2001.
                                                                              our peer group.

Living Essentials Group                                                       • Alternative sources of liquidity. We have access to various
The Living Essentials Group consists of four divisions, namely,                   sources of funds including short term commercial paper in the
Foods (Commodity), Foods (Products), Textiles and General                         unlikely event we are not able to obtain funds from other
Merchandise. The group participates in food-related activities                    sources. In the event we are not able to obtain such funds, we
extending from trading of grain and other commodities as well as                  would rely on cash and cash equivalents, liquidation of time
processed foods to distribution. It also handles textiles and clothing,           deposits and other financial assets, and contractually commit-
lumber and paper, and other business fields closely tied to the                   ted Japanese yen and U.S. dollar denominated lending agree-
needs of consumers worldwide.                                                     ments of ¥510 billion and U.S.$1 billion, respectively. Our
  This group has been constructing and strengthening supply                       current indebtedness and agreements contain no material
chain management (SCM) systems that bring producers and                           financial covenants or ratings triggers.
retailers together using information and logistics technology. Our            • Japan’s lending market. After numerous years of poor
subsidiary Ryoshoku, Ltd., which is one of Japan’s largest whole-                 financial results and mounting non-performing loans, Japanese
salers of food products, plays a key role in our SCM strategy.                    banks are contemplating requiring higher margins in return for
Acquisitions have been a primary driver of growth in this business.               risk assumed. Lending margins in Japan’s commercial banks
In 2001, Ryoshoku acquired various small and mid-sized whole-                     have not necessarily reflected credit-worthiness differentials
salers in order to broaden the product lines it handles. In the UK,               among borrowers, however, Japanese banks are beginning to
our wholly owned food-manufacturing subsidiary, Princes Ltd.,                     raise margins or limit the amount of loans. None of our Group
also expands and diversifies its products through M&As in order                   companies have experienced increased margins or credit
to meet the needs of its UK customers.                                            tightening, therefore, we believe the impact of these changes in
  Operating transactions for this group increased ¥232.2 billion or               the banking sector is limited. In fact we consider such actions
6.5%, to ¥3,777.8 billion in the fiscal year ended March 31, 2002                 potentially beneficial as our widely-known name brand in
from ¥3,545.6 billion in the fiscal year ended March 31, 2001                     Japan’s capital market and our diversified funding sources give
due to increased transactions and acquisitions in our food-related                us a competitive advantage when the lending market changes
subsidiaries. For the year ended March 31, 2002, gross profit                     so as to realize a reasonable risk-return profile.
for this group amounted to ¥239,227 million and net income
amounted to ¥29,266 million, compared to gross profit of
¥235,959 million and a net income of ¥27,964 million for the year
ended March 31, 2001. Gross profit increased 1.4% during the
year ended March 31, 2002 due primarily to the performance of
Ryoshoku and Princes. Net income increased 4.7% during the
year ended March 31, 2002 due primarily to decreases in opera-
tional expenses and the provision for doubtful receivables.




                                                                      page   61
                                                                        Mitsubishi Corporation Annual Report 2002
                                           {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




   Our short and long term borrowing as of March 31, 2001 and 2002 consists of the following:
                                                                                                                                                                             Millions of
                                                                                                                                                Billions of Yen             U.S. Dollars
                                                                                                                                        2001                       2002        2002

Short-term:
  Loans, principally from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥ 445.7                    ¥ 384.0
  Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                608.8                      297.7
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥1,054.5                   ¥ 681.7


Long-term including current portion:
  Loans, principally from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥2,263.0                   ¥2,445.4
  Notes and bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                896.8                    1,138.7
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥3,159.8                   ¥3,584.1

   Mark to market adjustment due to the implementation of SFAS No. 133 is not included in the figures above. See Note 11 to consolidated
financial statements.


Cash flows
Overview. The following table sets forth certain information about our cash flows for the years ended March 31, 2001 and 2002.
                                                                                                                                                                             Millions of
                                                                                                                                               Millions of Yen              U.S. Dollars
                                                                                                                                        2001                      2002         2002

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          ¥ (37,471)             ¥ 161,651        $1,216
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      113,165                 38,057           286
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   (230,250)              (129,620)         (975)
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . .                                       4,279                 10,259            78
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .                              (150,277)                   80,347         605
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             465,157                   314,880       2,367
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       ¥ 314,880              ¥ 395,227        $2,972

   For the year ended March 31, 2002, our cash and cash equiva-                                         counter-party sales contracts. At March 31, 2002, the outstanding
lents increased by ¥80,347 million. Cash flow generated by opera-                                       long-term purchase commitments amounted to ¥4,280,348
tions increased from ¥37,471 million in 2001 to ¥161,651 million                                        million of which deliveries are at various dates through 2028.
in 2002, reflecting the absence of large increase in working capi-                                          We also had long-term financing commitments aggregating
tal in the previous year and continuous strong operating cash                                           ¥109,543 million at March 31, 2002 for loans, investments in
flows mainly from overseas natural resources operations. The net                                        equity capital and financing on a deferred-payment basis for the
cash provided by investing activities decreased from ¥113,165                                           cost of equipment to be purchased by customers.
million in 2001 to ¥38,057 million in 2002, due primarily to the                                            As of March 31, 2002, we had pledged as collateral for con-
decrease in proceeds from maturities of “held-to-maturity securities”                                   tingent liabilities and short-term and long-term borrowings with
at a financing subsidiary. Financing activities included dividends                                      banks and other financial institutions the following assets:
of ¥12,537 million in fiscal 2001 and 2002, in addition to net debt                                     ¥198,052 million in property and equipment (net of accumulated
repayments of ¥217,717 million and ¥116,982 million in fiscal                                           depreciation), ¥150,894 million in notes, loans and accounts
2001 and 2002, respectively.                                                                            receivable, ¥30,633 million in investment securities and ¥84,423
                                                                                                        million in other assets.
                                                                                                            We lease office space and certain other assets under operating
8. CONTRACTUAL OBLIGATIONS AND OTHER                                                                    leases. Total rental expenses under such leases for the years
   COMMITMENTS                                                                                          ended March 31, 2001 and 2002 were ¥30,105 million and
                                                                                                        ¥25,291 million, respectively.
We have entered into various contractual obligations and commer-
                                                                                                            Our contingent liabilities at March 31, 2002 as guarantor of
cial commitments. In the normal course of trading operations, we
                                                                                                        indebtedness of others aggregated ¥392,633 million, including
enter into substantial long-term purchase commitments for vari-
                                                                                                        ¥152,289 million relating to affiliated companies. These guaran-
ous commodities, principally LNG, non-ferrous metals and chemi-
                                                                                                        tees have been provided primarily to suppliers and customers as
cal products at fixed prices or basic prices adjustable to market.
                                                                                                        indirect financing arrangements.
Such purchase commitments are in most instances matched with




                                                                                              page   62
                                                       Mitsubishi Corporation Annual Report 2002
                                 {MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS}




9. RECENT ACCOUNTING PRONOUNCEMENTS                                                  In October 2001, FASB issued SFAS No. 144, “Accounting
                                                                                 for the Impairment or Disposal of Long-Lived Assets,” which
In July 2001, the Financial Accounting Standards Board, of FASB,
                                                                                 addresses financial accounting and reporting for the impairment
issued Statements of Financial Accounting Standards, or SFAS,
                                                                                 or disposal of long-lived assets and supersedes SFAS No. 121,
No. 141, “Business Combinations” and SFAS No. 142, “Goodwill
                                                                                 “Accounting for the Impairment of Long-Lived Assets and for
and Other Intangible Assets.” SFAS No. 141 supersedes Account-
                                                                                 Long-Lived Assets to be Disposed Of,” and the accounting and
ing Principles Board, or APB, Opinion No. 16, “Business Combi-
                                                                                 reporting provisions of APB Opinion No. 30, “Reporting the
nations.” The most significant changes made by SFAS No. 141
                                                                                 Results of Operations,” for a disposal of a segment of a business.
are that it a) requires that the purchase method of accounting be
                                                                                 SFAS No. 144 is effective for fiscal years beginning after December
used for all business combinations initiated after June 30, 2001,
                                                                                 15, 2001, with earlier application encouraged. We expect to adopt
b) establishes specific criteria for the recognition of intangible
                                                                                 SFAS No. 144 as of April 1, 2002 and are currently reviewing this
assets separately from goodwill, and c) requires unallocated nega-
                                                                                 statement to determine its impact.
tive goodwill to be written off immediately as an extraordinary gain
                                                                                     In April 2002, FASB issued SFAS No. 145, “Rescission of FASB
instead of being deferred and amortized.
                                                                                 Statements No. 4, 44, and 64, Amendment of FASB Statement
  SFAS No. 142 supersedes APB Opinion No. 17, “Intangible
                                                                                 No. 13 and Technical Corrections.” This statement rescinds SFAS
Assets.” SFAS No. 142 primarily addresses the accounting for
                                                                                 No. 4, “Reporting Gains and Losses from Extinguishment of
goodwill and intangible assets subsequent to their acquisition
                                                                                 Debt,” and an amendment of that Statement, SFAS No. 64,
and the provisions of SFAS No. 142 will be effective for fiscal
                                                                                 “Extinguishments of Debt Made to Satisfy Sinking-Fund Require-
years beginning after December 15, 2001. The most significant
                                                                                 ments.” This Statement also amends SFAS No. 13, “Accounting
changes made by SFAS No. 142 are that a) goodwill and
                                                                                 for Leases” to require certain lease modifications that have eco-
indefinite-lived intangible assets will no longer be amortized,
                                                                                 nomic effects that are similar to sale-leaseback transactions be
b) goodwill will be tested for impairment at least annually at the
                                                                                 accounted for in the same manner as sale-leaseback transactions.
reporting unit level, c) intangible assets deemed to have an
                                                                                 The provisions related to the rescission of Statement 4 shall be
indefinite life will be tested for impairment at least annually, and
                                                                                 applied in fiscal years beginning after May 15, 2002, the provisions
d) the amortization period of intangible assets with finite lives will
                                                                                 related to Statement 13 shall be effective for the transactions
no longer be limited to forty years.
                                                                                 occurring after May 15, 2002, and other provisions shall be effec-
  We believe this will have a favorable impact on results of opera-
                                                                                 tive for financial statements issued on or after May 15, 2002,
tions of approximately ¥6,000 million, net of tax, annually, as a
                                                                                 with early application encouraged. We do not expect the adoption
result of ceasing to amortize goodwill. In addition, we expect to
                                                                                 of this statement to have a material impact on our consolidated
recognize a favorable cumulative effect of a change in accounting
                                                                                 financial position or results of operations.
principle of approximately ¥8,500 million, net of tax, upon adoption.
  In August 2001, the FASB issued SFAS No. 143, “Accounting
for Asset Retirement Obligations.” SFAS No. 143 is effective for us
beginning April 1, 2003. SFAS No. 143 requires that obligations
associated with the retirement of a tangible long-lived asset to be
recorded as a liability when those obligations are incurred, with
the amount of the liability initially measured at fair value. Upon
initially recognizing a liability for an asset retirement obligations,
an entity must capitalize the cost by recognizing an increase in
the carrying amount of the related long-lived asset. We do not
expect the adoption of this pronouncement to have a material
impact on our financial position or results of operations.




                                                                         page   63
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                                  {SIX-YEAR FINANCIAL SUMMARY}




Six-Year Financial Summary
Mitsubishi Corporation and subsidiaries
Years ended March 31


                                                                                                                                          1997           1998

Results of Operations:
Operating transactions* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ¥15,792,080   ¥15,825,653
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       590,664       588,225
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            44,385        47,636

Financial Position at Year End:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ¥ 9,659,955   ¥ 9,522,309
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           92,680       201,670
Long-term debt, less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2,830,038     2,893,111
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,099,585     1,009,383




Amounts per Share:
Net income per share**:
  Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥28.32         ¥30.40
  Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             28.24          30.40
Cash dividends declared for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         8.00           8.00




Common Stock:
Number of shares outstanding at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         1,567,176      1,567,176




Exchange Rates into U.S. Currency:
 (Per the Federal Reserve Bank of New York)
At year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥123.72        ¥133.20
Average for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             113.21         123.56
Range:
  Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        124.54         133.99
  High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       104.49         111.42

Note: The U.S. Dollar amounts represent translations, for convenience, of yen amounts at the rate of ¥133=$1.
 * Operating transactions are not meant to represent sales or revenues in accordance with U.S. GAAP. See Note 1 to consolidated financial statements.
** See Note 2 to consolidated financial statements.




                                                                                               page   64
                                              Mitsubishi Corporation Annual Report 2002
                                                     {SIX-YEAR FINANCIAL SUMMARY}




                                                                                                        Millions of
              Millions of Yen                                                                           U.S. Dollars
   1999                            2000                     2001                             2002          2002


¥13,700,556                     ¥13,112,801             ¥13,995,298                       ¥13,230,675   $99,479
    582,938                         575,058                 603,716                           643,922     4,842
     31,186                          26,023                  92,105                            60,225       453


¥ 8,843,388                     ¥ 8,097,435             ¥ 8,067,189                       ¥ 8,144,926   $61,240
    394,299                         168,996                 289,386                           694,282     5,220
  3,078,621                       2,794,438               2,798,152                         3,238,871    24,352
    949,514                         905,700                 969,356                         1,028,523     7,733



                   Yen                                                                                  U.S. Dollars




    ¥19.90                          ¥16.61                    ¥58.77                          ¥38.44        $0.29
     19.90                           16.61                     58.77                           38.44         0.29
      8.00                            8.00                      8.00                            8.00         0.06



          Thousands of Shares


  1,567,176                       1,567,176                1,567,172                        1,566,553



          Yen per U.S. Dollar




   ¥118.43                         ¥102.73                   ¥125.54                         ¥132.70
    128.10                          110.02                    111.65                          125.64

    147.14                          124.45                    125.54                          134.77
    108.83                          101.53                    104.19                          115.89




                                                              page   65
                                                                          Mitsubishi Corporation Annual Report 2002
                                                                                   {CONSOLIDATED BALANCE SHEETS}




Consolidated Balance Sheets
Mitsubishi Corporation and subsidiaries
March 31, 2001 and 2002
                                                                                                                                                                      Millions of
                                                                                                                                                                      U.S. Dollars
                                                                                                                                          Millions of Yen              (Note 1)
ASSETS                                                                                                                             2001                     2002         2002

Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥ 314,880            ¥ 395,227        $ 2,972
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            56,772               30,590            230
Short-term investments (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     243,484              242,345          1,822
Receivables—trade (Note 19):
  Notes and loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                544,249               483,150        3,633
  Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,856,176             1,870,365       14,063
  Affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 261,462               253,510        1,906
  Allowance for doubtful receivables (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (47,444)              (51,070)        (384)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          447,635               474,456        3,567
Advance payments to suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      228,807               133,770        1,006
Deferred income taxes (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         44,739                48,170          362
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                82,553                99,383          747
          Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             4,033,313             3,979,896       29,924




Investments and non-current receivables:
Investments in and advances to affiliated companies (Note 5) . . . . . . . . . . . . . . . . .                                     643,923               644,065        4,843
Other investments (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1,485,784             1,345,727       10,118
Non-current notes, loans and accounts receivable—trade (Note 19) . . . . . . . . . . . .                                           861,245               831,270        6,250
Allowance for doubtful receivables (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         (106,469)             (117,840)        (886)
          Total investments and non-current receivables . . . . . . . . . . . . . . . . . . . . . . .                            2,884,483             2,703,222       20,325




Property and equipment—Net (Notes 7 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               986,864              1,074,183         8,077




Other assets (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                162,529                   387,625      2,914




Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥8,067,189           ¥8,144,926       $61,240

See notes to consolidated financial statements.




                                                                                                 page   66
                                                                          Mitsubishi Corporation Annual Report 2002
                                                                                   {CONSOLIDATED BALANCE SHEETS}




                                                                                                                                                                        Millions of
                                                                                                                                                                        U.S. Dollars
                                                                                                                                          Millions of Yen                (Note 1)
LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                               2001                      2002          2002

Current liabilities:
Short-term debt (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥1,054,511           ¥ 681,745          $ 5,126
Current maturities of long-term debt (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             361,621             417,689            3,140
Payables—trade:
  Notes and acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    279,674               210,519          1,583
  Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,548,999             1,493,995         11,233
  Affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  50,669                62,145            467
Advances from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    159,160                99,829            751
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    45,482                31,928            240
Other accrued expenses (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         102,385                95,655            719
Other current liabilities (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    141,426               192,109          1,445
          Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3,743,927             3,285,614         24,704

Long-term liabilities:
Long-term debt (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2,798,152             3,238,871         24,352
Accrued pension and severance liabilities (Note 13) . . . . . . . . . . . . . . . . . . . . . . . .                                114,482               104,629            787
Deferred income taxes (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         61,131                33,735            254
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                296,725               319,162          2,399
          Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              3,270,490             3,696,397         27,792
          Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7,014,417             6,982,011         52,496

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             83,416                   134,392        1,011

Commitments and contingent liabilities (Note 21)

Shareholders’ equity (Notes 12, 14, 15 and 22):
Common stock—authorized, 2,500,000,000 shares;
 issued, 2001 and 2002—1,567,175,508 shares;
 outstanding, 2001—1,567,171,889 shares and
 2002—1,566,552,792 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        126,609                   126,609          952
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                179,491                   179,491        1,350
Retained earnings:
   Appropriated for legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    35,220                    35,524          267
   Unappropriated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               774,604                   821,988        6,180
Accumulated other comprehensive income (loss):
   Net unrealized gains on securities available for sale . . . . . . . . . . . . . . . . . . . . . . .                            122,552                     79,261          596
   Net unrealized losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                   (6,145)         (46)
   Minimum pension liability adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           (65,636)                  (78,623)        (591)
   Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           (203,481)                 (129,478)        (974)
          Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (146,565)                 (134,985)     (1,015)
Less treasury stock—at cost, 3,619 shares in 2001 and 622,716 shares in 2002 . .                                                          (3)                   (104)           (1)
          Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  969,356              1,028,523           7,733
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥8,067,189           ¥8,144,926         $61,240




                                                                                                 page   67
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                              {CONSOLIDATED STATEMENTS OF INCOME}




Consolidated Statements of Income
Mitsubishi Corporation and subsidiaries
Years Ended March 31, 2001 and 2002
                                                                                                                                                                         Millions of
                                                                                                                                                                         U.S. Dollars
                                                                                                                                            Millions of Yen               (Note 1)
                                                                                                                                     2001                     2002           2002
                                                                                                                                  As restated
                                                                                                                                   (Note 1)

Operating transactions (Notes 1, 5 and 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      ¥13,995,298               ¥13,230,675      $99,479

Revenues (Note 2):
Trading margins and commissions on trading transactions . . . . . . . . . . . . . . . . . . .                                 ¥     482,043             ¥     493,273    $ 3,709
Revenues from manufacturing and other activities . . . . . . . . . . . . . . . . . . . . . . . . .                                  717,026                   798,220      6,002
          Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,199,069                 1,291,493        9,711
Cost of revenues from manufacturing and other activities . . . . . . . . . . . . . . . . . . . . .                                  595,353                   647,571        4,869
Gross profit (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                603,716                   643,922        4,842

Expenses and other:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       511,272                   542,813        4,081
Provision for doubtful receivables (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            24,053                    32,920          248
Interest expense (net of interest income:
   2001—¥79,149 million;
   2002—¥51,201 million—$385 million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 11,406                   11,767           88
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  (32,555)                 (36,348)        (273)
Gain on marketable securities and investments—net (Note 4) . . . . . . . . . . . . . . . . .                                         (86,372)                 (34,908)        (262)
Loss on property and equipment—net (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                   24,483                    8,489           64
Litigation charge (Note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     16,602                   13,362          100
Other expense—net (Notes 9 and 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               2,929                    6,237           47
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         471,818                   544,332        4,093

Income from consolidated operations before income taxes . . . . . . . . . . . . . . . . . . . .                                     131,898                    99,590          749

Income taxes (Note 12):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           70,942                   45,542          342
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (19,844)                     333            3
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           51,098                   45,875          345

Income from consolidated operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           80,800                   53,715          404
Minority interests in income of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . .                                    (5,118)                 (2,136)         (16)
Equity in earnings of affiliated companies—net
 (less applicable income taxes) (Notes 5 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . .                                  16,423                    8,646           65

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥       92,105            ¥      60,225    $     453


                                                                                                                                                  Yen                    U.S. Dollars
Net income per share (Notes 2 and 16):
  Basic and diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     ¥58.77                   ¥38.44        $0.29
See notes to consolidated financial statements.




                                                                                               page   68
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                    {CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME}




Consolidated Statements of Comprehensive Income
Mitsubishi Corporation and subsidiaries
Years Ended March 31, 2001 and 2002
                                                                                                                                                                           Millions of
                                                                                                                                                                          U.S. Dollars
                                                                                                                                             Millions of Yen                (Note 1)
                                                                                                                                      2001                      2002         2002

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥ 92,105               ¥ 60,225         $ 453

Other comprehensive income (loss):
Net unrealized losses on securities available for sale (Note 4):
  Net unrealized holding gains (losses) during the year . . . . . . . . . . . . . . . . . . . . . . . . .                             29,709                   (30,421)       (229)
  Reclassification adjustments for net gains included in net income . . . . . . . . . . . . . . .                                    (76,081)                  (44,587)       (335)
       Net change during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    (46,372)                  (75,008)       (564)
   Income tax benefit (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 20,290                    31,717         239
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (26,082)                  (43,291)       (325)

Net unrealized losses on derivatives (Note 9):
  Net unrealized losses during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                 (6,612)        (50)
  Reclassification adjustments for net losses included in net income . . . . . . . . . . . . . .                                                                 5,819          44
       Net change during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                (793)           (6)
   Income tax benefit (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                               9
   Cumulative effect of adopting SFAS No. 133 on April 1, 2001
    (net of tax benefit of ¥1,473 million ($11 million)) . . . . . . . . . . . . . . . . . . . . . . . . . .                                                    (5,361)        (40)
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               (6,145)        (46)

Minimum pension liability adjustments (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (62,420)                  (22,455)       (169)
  Income tax benefit (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  26,310                     9,468          71
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (36,110)                  (12,987)        (98)

Foreign currency translation adjustments:
  Translation adjustments during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        35,225                    78,902          593
  Reclassification adjustments for net losses included in net income (Notes 3 and 5) . . .                                           18,893                     1,478           11
       Net change during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    54,118                    80,380          604
   Income tax expense (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    (7,835)                   (6,377)         (48)
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    46,283                    74,003          556
          Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        (15,909)                  11,580           87

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥ 76,196               ¥ 71,805         $ 540

See notes to consolidated financial statements.




                                                                                               page   69
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                     {CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY}




Consolidated Statements of Shareholders’ Equity
Mitsubishi Corporation and subsidiaries
Years Ended March 31, 2001 and 2002
                                                                                                                                                                           Millions of
                                                                                                                                                                           U.S. Dollars
                                                                                                                                              Millions of Yen               (Note 1)
                                                                                                                                       2001                     2002            2002

Common stock—Shares issued, 2001 and 2002—1,567,175,508 shares . . . . . . . . . .                                                ¥ 126,609              ¥ 126,609          $     952

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ¥ 179,491              ¥ 179,491          $ 1,350

Retained earnings appropriated for legal reserve:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥ 33,924               ¥       35,220     $     265
Transfer from unappropriated retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             1,296                          304             2
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥ 35,220               ¥       35,524     $     267

Unappropriated retained earnings:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥ 696,332              ¥ 774,604          $ 5,824
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           92,105                 60,225              453
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       788,437                   834,829         6,277

Deduct:
  Cash dividends paid (annual rate per share:
   2001—¥8.0;
   2002—¥8.0—$0.06) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        12,537                    12,537            95
  Transfer to retained earnings appropriated for legal reserve . . . . . . . . . . . . . . . . . . .                                    1,296                       304             2
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        13,833                    12,841            97
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥ 774,604              ¥ 821,988          $ 6,180

Accumulated other comprehensive loss (net of tax):
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥(130,656)             ¥ (146,565)        $(1,102)
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       (15,909)                 11,580              87
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥(146,565)             ¥ (134,985)        $(1,015)

Treasury stock:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥           (7)        ¥           (3)
Sales/(purchases)—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            4                   (101)   $       (1)
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥           (3)        ¥         (104)    $      (1)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ¥ 969,356              ¥1,028,523         $ 7,733

See notes to consolidated financial statements.




                                                                                               page   70
                                                                      Mitsubishi Corporation Annual Report 2002
                                                                        {CONSOLIDATED STATEMENTS OF CASH FLOWS}




Consolidated Statements of Cash Flows
Mitsubishi Corporation and subsidiaries
Years Ended March 31, 2001 and 2002
                                                                                                                                                                   Millions of
                                                                                                                                                                   U.S. Dollars
                                                                                                                                      Millions of Yen               (Note 1)
                                                                                                                               2001                      2002           2002

Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥ 92,105              ¥ 60,225         $     453
Adjustments to reconcile net income to net cash
 provided by (used in) operating activities:
  Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               84,349                   90,286           679
  Provision for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                24,053                   32,920           248
  Gain on marketable securities and investments—net . . . . . . . . . . . . . . . . . . . . . . . .                            (86,372)                 (34,908)         (262)
  Loss on property and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      24,483                    8,489            64
  Equity in earnings of affiliated companies, less dividends received . . . . . . . . . . . . . .                               (5,812)                   7,890            59
  Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (19,844)                     333             3
  Changes in operating assets and liabilities:
     Short-term investments—trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        (7,716)               17,675            133
     Notes and accounts receivable—trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    (128,913)              101,465            763
     Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (32,116)               27,394            206
     Notes, acceptances and accounts payable—trade . . . . . . . . . . . . . . . . . . . . . . . .                              25,184              (210,384)        (1,582)
     Advance payments to suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2,535               114,792            863
     Advances from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                12,541               (68,343)          (514)
     Other accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (108,425)                  493              3
     Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               23,540                15,989            120
     Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (34,161)                3,249             24
     Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          46,272                  (996)            (7)
     Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          17,211                 6,172             46
     Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        33,615               (11,090)           (83)
          Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . .                      (37,471)                 161,651         1,216

Investing activities:
Expenditures for property and equipment and other assets . . . . . . . . . . . . . . . . . . . . .                            (196,603)             (142,499)        (1,071)
Proceeds from sales of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         30,914                30,025            226
Investments in and advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . .                         (145,195)             (172,838)        (1,300)
Collection of advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    97,322               112,374            845
Purchases of available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (50,907)              (78,380)          (589)
Proceeds from sales and maturities of available-for-sale securities . . . . . . . . . . . . . . . .                            267,357               204,045          1,534
Purchases of held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (202,465)              (60,645)          (456)
Proceeds from maturities of held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . .                        347,089                60,009            451
Purchases of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (121,591)              (34,948)          (263)
Proceeds from sales of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    15,319                21,223            160
Increase in loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (105,278)             (110,313)          (830)
Collection of loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           132,147               176,507          1,327
Net decrease in time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             45,056                33,497            252
          Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               113,165                    38,057           286

Financing activities:
Net decrease in short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (136,437)             (228,456)        (1,718)
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               659,160               653,669          4,915
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (740,440)             (542,195)        (4,076)
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (12,537)              (12,537)           (95)
Sales (purchases) of treasury stock—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        4                  (101)            (1)
          Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               (230,250)             (129,620)            (975)

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . .                               4,279                   10,259            78
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .                        (150,277)                  80,347           605
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   465,157                  314,880         2,367
Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               ¥ 314,880             ¥ 395,227        $ 2,972

See notes to consolidated financial statements.




                                                                                           page   71
                                                   Mitsubishi Corporation Annual Report 2002
                                                  {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




Notes to Consolidated Financial Statements
Mitsubishi Corporation and subsidiaries




1. NATURE OF OPERATIONS AND BASIS OF FINANCIAL STATEMENTS
Nature of Operations —Mitsubishi Corporation (the “parent company”) and its consolidated domestic and foreign subsidiaries (together,
the “companies”) are engaged in worldwide trading in various commodities, arranging financing for customers and suppliers to facilitate
such trading activities, and organizing industrial projects on an international basis in connection with trading activities. The companies
have also diversified into a variety of other services such as the development of financing and investing arrangements, assistance in the
procurement of raw materials and equipment, introduction of new technologies and processes for manufacturing, and coordination of
finished goods transportation and marketing.
    The companies’ primary activity is providing transaction services—more specifically, acting as an intermediary between buyers and
sellers who want to import, export, or engage in offshore or domestic trading activities. For example, the companies cultivate markets
overseas for exporters and locate raw materials or product sources that meet the needs of importers. Typically, the companies are
involved throughout the course of the transactions, assuming risks accompanying the transfer of goods and collecting payments. To
facilitate smooth customer transactions, the companies draw upon capabilities which have become an integral part of their transaction
services, market information analysis, credit supervision, financing, and transportation logistics.
   In the performance of these activities, the companies act in the capacity of a distributor of goods and services, transfer agent for tech-
nology, financier, investor, project organizer, market developer, and resource developer. The companies also assist customers in hedging
against market risks through the use of derivatives and other hedging instruments.
Basis of Financial Statements —The accompanying consolidated financial statements are stated in Japanese yen, the currency of the
country in which the parent company is incorporated and principally operates. The translation of Japanese yen amounts into United
States dollar amounts with respect to the year ended March 31, 2002 is included solely for the convenience of readers outside Japan
and has been made at the rate of ¥133=$1, the rate of exchange on March 31, 2002. Such translation should not be construed as a
representation that the Japanese yen amounts could be converted into United States dollars at the above or any other rate.
   The parent company and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with
accounting principles generally accepted in Japan (“Japanese GAAP”) while its foreign subsidiaries maintain their records and prepare
their financial statements in conformity with accounting principles generally accepted in the countries of their respective domiciles.
Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements in order to
conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These adjustments have not been
recorded in the statutory books of account.
   Subsequent to the issuance of the consolidated financial statements for the year ended March 31, 2001, the companies’ management
determined certain revenue transactions with corresponding cost of revenues should be presented on a gross basis as required by the
recently issued Emerging Issues Task Force (EITF) No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” As a
result, trading margins and commissions on trading transactions and revenues from manufacturing and other activities have been pre-
sented separately on the face of the consolidated statements of income for all periods presented. The adoption of this principle and the
application to the consolidated financial statements had no impact on gross profits, net income or shareholders’ equity.
    “Operating transactions,” as presented in the consolidated statements of income, is a voluntary disclosure and represents 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. Operating transactions are not meant to represent sales or revenues in accordance with U.S. GAAP. Operating transactions
is a non-GAAP measure commonly used by similar Japanese trading companies and should not be construed as equivalent to, or a substi-
tute or proxy for, revenues, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing or
financing activities.
   Certain reclassifications of amounts for 2001 have been made to conform to the presentation for 2002.




                                                                   page   72
                                                     Mitsubishi Corporation Annual Report 2002
                                                    {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied in the preparation of the accompanying consolidated financial statements are summarized below:
a. Consolidation and Investments in Subsidiaries and Affiliated Companies—
The consolidated financial statements include the accounts of the parent company and its majority-owned domestic and foreign subsidiaries.
Affiliated companies consist of companies owned 20% to 50%, certain companies owned less than 20% over which the companies exert
significant influence, and corporate joint ventures. Investments in affiliated companies are accounted for by the equity method. All signifi-
cant intercompany accounts and transactions have been eliminated. The excess of cost of the companies’ investments in subsidiaries and
affiliated companies over their equity in the fair value of net assets at dates of acquisition (“goodwill”) is being amortized over its estimated
useful life, generally from 10 to 20 years. See Note 2.r which discusses new accounting pronouncements regarding goodwill.
     The accounts of certain subsidiaries have been included on the basis of fiscal periods ended three months or less prior to March 31. The
majority of these subsidiaries have fiscal years ending on December 31. Such date was used for consolidated financial reporting purposes as
it is not practicable for the subsidiaries to report their financial results as of March 31. There were no significant events that occurred during
the intervening period that would require adjustment to or disclosure in the accompanying consolidated financial statements.
   A subsidiary or affiliated company may issue its shares to third parties at amounts per share in excess of or less than the companies’
average per share carrying value. With respect to such transactions, the resulting gains or losses arising from the change in ownership are
recorded in income for the year in which such shares are issued.
b. Foreign Currency Translation—
Foreign currency financial statements have been translated in accordance with Statement of Financial Accounting Standards (“SFAS”)
No. 52, “Foreign Currency Translation.” Pursuant to this statement, the assets and liabilities of foreign subsidiaries and affiliated compa-
nies are translated into Japanese yen at the respective year-end exchange rates. All income and expense accounts are translated at aver-
age rates of exchange. The resulting translation adjustments, net of tax, are included in accumulated other comprehensive income (loss).
Foreign currency receivables and payables are translated into Japanese yen at year-end exchange rates and resulting exchange gains or
losses are recognized in earnings, which are included in “Other expense—net” in the consolidated statements of income.
c. Short-term Investments and Other Investments—
All debt securities and marketable equity securities are classified under the provisions of SFAS No. 115, “Accounting for Certain Invest-
ments in Debt and Equity Securities” as: (1) trading securities, which are accounted for at fair value with unrealized gains and losses
included in earnings, (2) available-for-sale securities, which are accounted for at fair value with unrealized gains and losses excluded from
earnings and reported, net of tax, in accumulated other comprehensive income (loss) until realized, or (3) held-to-maturity securities,
which are accounted for at amortized cost. The appropriateness of the classification is reassessed at each balance sheet date in accor-
dance with SFAS No. 115.
   The cost of securities sold is determined based on the average cost of the shares of each such security held at the time of sale.
    The companies review the fair value of held-to-maturity and available-for-sale investments on a regular basis to determine if the fair
value of any individual investment has declined below its cost and if such decline is other than temporary. If the decline in value is judged
to be other than temporary, the cost basis of the investment is written down to fair value. Other than temporary declines in value are
judged taking into consideration the guidance in Staff Accounting Bulletin (“SAB”) No. 59, “Noncurrent Marketable Equity Securities”
issued by the Securities and Exchange Commission (“SEC”). The resulting realized loss is included in the consolidated statements of
income in the period in which the decline was deemed to be other than temporary.
d. Allowance for Doubtful Receivables—
An allowance for doubtful receivables is established in amounts considered to be appropriate based primarily upon the companies’ past
credit loss experience and an evaluation of potential losses in the receivables outstanding.
    For loans receivables, an allowance for doubtful receivables is recognized when it is probable that the companies will be unable to
collect all amounts due according to the contractual terms of the agreement. The impairment is measured based on the present value of
expected future cash flows discounted at the loan’s effective interest rate (or, alternatively, at the observable market price of the receivable
or the fair value of the underlying collateral).
e. Inventories—
Inventories, which mainly consist of commodities and materials, are stated at the lower of cost (principally on a moving-average basis or a
specific-identification basis) or market (based on current replacement cost).
f. Property and Equipment—
Property and equipment are stated at cost. Depreciation of property and equipment is computed principally under the declining-balance
method for assets held by the parent company and domestic subsidiaries and under the straight-line method for assets held by foreign
subsidiaries, based on the estimated useful lives of the assets ranging principally from 10 to 50 years for buildings and from 5 to 20 years
for machinery and equipment. Leasehold improvements are amortized over the lesser of the useful life of the improvement or the term of
the underlying lease. Significant renewals and additions are capitalized at cost. Maintenance and repairs, and minor renewals and better-
ments are charged to income as incurred.




                                                                     page   73
                                                   Mitsubishi Corporation Annual Report 2002
                                                  {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




g. Long-lived Assets—
The companies review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recog-
nized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less costs to sell.
h. Employees’ Benefit Plans—
The companies have defined benefit pension plans and/or unfunded severance indemnity plans. The costs of pension plans are accrued
based on amounts determined using actuarial methods. The costs of severance indemnity plans are principally accrued based on the
vested benefit obligation, which is the amount required to be paid if all employees covered by the severance indemnity plans voluntarily
terminated their employment at each balance sheet date.
i. Stock-based Compensation—
SFAS No. 123, “Accounting for Stock-Based Compensation,” encourages, but does not require, companies to record compensation cost
for stock-based employee compensation plans at fair value. The companies account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related Inter-
pretations. Accordingly, the companies recognize compensation expense in an amount equal to the excess, if any, of the quoted market
price over the exercise price of the option at the grant date. For options with a vesting period, the compensation expense is charged to
operations ratably over the vesting period. The companies have not recognized any stock-based compensation expense for the years
ended March 31, 2001 and 2002 because the exercise price of the options exceeded the quoted market price on the grant date.
j. Revenue Recognition—
In December 1999, the SEC issued SAB No. 101, “Revenue Recognition in Financial Statements,” which provides guidance on account-
ing principles generally accepted in the United States of America to revenue recognition issues in financial statements. The companies
adopted SAB No. 101 effective April 1, 2000. Adoption of this guidance did not have a material effect on the companies’ financial position
and results of operations.
Trading margins and commissions on trading transactions
The companies derive revenues from margins and commissions related to various trading transactions in which they act as a principal or
an agent. Through the companies’ trading activities, they facilitate their customers’ purchases and sales of commodities and other prod-
ucts and charge a commission for this service. For some trading transactions, the companies act as principal, carry commodity inventory,
and make a profit or loss on the spread between bid and asked prices for commodities. Trading margins and commissions are recorded
when they are realized or realizable and earned, which generally occurs when the companies have (a) persuasive evidence of an arrange-
ment, (b) the goods have been delivered or the services have been rendered to the customer, (c) the sales price is fixed or determinable
and (d) collection is reasonably assured.
Revenues from manufacturing and other activities
Manufacturing and other activities include the manufacture of a wide variety of products, such as electronics, metals, machinery,
chemicals and general consumer merchandise, and performance of various services such as financial and logistics services, information
and communications, technical support, and developing natural resources. The companies are also engaged in certain rental activities,
such as for warehouse and as the finance lessor for equipment. These manufacturing and other activities are typically conducted
through consolidated subsidiaries.
      Product and manufacturing based businesses —Revenues from product based businesses are recognized at the time delivery
      conditions are met. These conditions are usually considered to have been met when the goods are received by the customer, title to
      the warehouse receipts are transferred, or the implementation testing is duly completed and any future obligation are perfunctory
      and do not affect the customer’s final acceptance of the arrangement. For long-term construction businesses, depending on the
      nature of the contract, revenues from long-term construction projects are accounted for by the completed contract method, unless
      costs to complete and extent of progress toward completion of long-term contracts are reasonably dependable, in which case the
      companies use the percentage-of-completion method.
      Service related businesses —Revenues from service related businesses are recorded as revenue when the contracted services are
      rendered to third-party customers pursuant to the agreement.
      Rental activities —Revenues from rental activities or the leasing properties, including office buildings, airplanes and other industrial
      assets are recognized over the terms of the underlying leases on a straight-line basis.
k. Advertising Costs—
Advertising costs are expensed when incurred. Advertising costs for the years ended March 31, 2001 and 2002 were ¥3,440 million and
¥3,105 million ($23 million), respectively.
l. Research and Development Costs—
Research and development costs are charged to expense when incurred. Research and development costs for the years ended March 31,
2001 and 2002 were ¥2,847 million and ¥3,781 million ($28 million), respectively.




                                                                   page   74
                                                                     Mitsubishi Corporation Annual Report 2002
                                                                     {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




m. Income Taxes—
The provision for income taxes is computed based on “Income from consolidated operations before income taxes” in the accompanying
consolidated statements of income. The tax effects of temporary differences between the financial statement and income tax basis of
assets and liabilities as well as operating loss carryforwards are recognized as deferred income taxes, using enacted tax rates applicable to
the periods in which the differences are expected to affect taxable income. A valuation allowance is provided for any portion of the
deferred tax assets where it is considered more likely than not that they will not be realized.
   No provision for income taxes is recognized on undistributed earnings of subsidiaries where the parent company considers that such
earnings are considered to be reinvested indefinitely or would not, under the present Japanese tax laws, be subject to additional taxation
should they be distributed as dividends.
n. Derivatives—
The companies utilize derivative instruments primarily to manage interest rate risks, reduce risk exposure to movements in foreign
exchange rates, and to hedge various inventory and trading commitments. Effective April 1, 2001, the companies adopted SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138 (collectively, “SFAS No. 133”), which
establish accounting and reporting standards for derivative instruments and for hedging activities. SFAS No. 133 requires that all deriva-
tive instruments be reported on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging rela-
tionships. The adoption of SFAS No. 133 resulted in an insignificant impact on reported earnings and an unrealized loss of ¥5,361 million
($40 million), net of related income tax of ¥1,473 million ($11 million) to accumulated other comprehensive income (“AOCI”). During the
year ended March 31, 2002, the after-tax transition adjustment loss recorded in AOCI of ¥4,259 million ($32 million) was reclassified to
earnings, which was offset by the net gain on items being hedged.
   Generally, on the date on which the derivative contract is executed, the companies designate a derivative as either a fair value hedge or
a cash flow hedge to the extent that hedging criteria are met. Changes in derivative fair values that are designated as fair value hedges are
recognized in earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments. Changes in the
derivative fair values that are designated as cash flow hedges are deferred and recorded as a component of AOCI until the hedged trans-
actions occur and are recognized in earnings. Changes in fair value of derivatives not designated as hedging instruments and for those
held or issued for trading purposes are recorded currently in earnings (see Note 9).
o. Use of Estimates in the Preparation of the Financial Statements—
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect amounts reported therein. Due to the inherent uncertainty involved in making estimates,
actual results could differ from those estimates. Significant estimates underlying the accompanying consolidated financial statements
include the allowance for doubtful accounts and valuation of investments.
p. Earnings per Share—
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding
during each year. Diluted EPS is computed by using the weighted average of common shares outstanding adjusted to include the poten-
tially dilutive effect of outstanding stock options. See Note 16, “EARNINGS PER SHARE” for additional information.
q. Consolidated Statements of Cash Flows—
For purposes of the consolidated statements of cash flows, cash equivalents are defined as highly liquid investments, including short-term
time deposits, which are readily convertible into cash and have no significant risk of changes in value.
    Additional cash flow information is as follows:
                                                                                                                                                                 Millions of
                                                                                                                                       Millions of Yen          U.S. Dollars
                                                                                                                                2001                     2002      2002
Cash paid during the year for:
  Interest (net of amounts capitalized) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ¥96,023              ¥71,200         $535
  Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    58,762               70,702          532

Non-cash investing and financing activities:
  Exchange of shares in connection with business combinations involving investees:
    Fair market value of shares received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               ¥25,168              ¥ 2,320         $ 18
    Cost of shares surrendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               883                1,159            9
  Contribution of marketable equity securities to employee retirement benefit trusts . . . . . .                                79,967               41,181          310

r. New Accounting Standards—
On July 20, 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations,” and SFAS
No. 142, “Goodwill and Other Intangible Assets.” The statements will change the accounting for business combinations and goodwill in
two significant ways. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after
June 30, 2001. Use of the pooling-of-interests method will be prohibited. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Thus, amortization of goodwill, including goodwill related to equity-method
investees and goodwill recorded in past business combinations, and indefinite-lived intangible assets will cease upon adoption of this
statement by the companies on April 1, 2002. Additionally, goodwill and indefinite-lived intangible assets acquired after June 30, 2001,




                                                                                          page   75
                                                  Mitsubishi Corporation Annual Report 2002
                                                  {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




will be subject immediately to the nonamortization and amortization provisions of SFAS No. 142. This will have a favorable impact on the
results of operations of approximately ¥6,000 million ($45 million) net of tax annually. Also, any unamortized negative goodwill existing at
the date SFAS No. 142 is adopted must be written off as the cumulative effect of a change in accounting principle. The companies expect
to recognize a favorable cumulative effect of a change in accounting principle of approximately ¥8,500 million ($64 million), net of tax
upon adoption. The companies are required to complete the initial step of a transitional impairment test within six months of adoption of
SFAS No. 142 and to complete the final step of the transitional impairment test by the end of the fiscal year. In accordance with the state-
ment, the companies have not yet determined the impact, if any, on their earnings and financial position of the required impairment tests
of goodwill and other indefinite-lived intangible assets.
   On August 16, 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligation,” which is effective for financial state-
ments issued for fiscal years beginning after June 15, 2002. The statement addresses the recognition and remeasurement of obligations
associated with the retirement of a tangible long-lived asset and the associated asset retirement costs. Management does not expect the
adoption of this statement to have a material impact on the companies’ consolidated financial position or results of operations.
    On October 3, 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which is
effective for financial statements issued for fiscal years beginning after December 15, 2001. SFAS No. 144 applies to all long-lived assets
(including discontinued operations) and it develops one accounting model for long-lived assets that are to be disposed of by sale. The
companies are currently reviewing this statement to determine its impact on future financial statements.
    In April 2002, FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13
and Technical Corrections.” This statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt,” and an
amendment of that statement, SFAS No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.” This statement
also amends SFAS No. 13, “Accounting for Leases” to require certain lease modifications that have economic effects that are similar to
sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. The provisions related to the rescission
of Statement No. 4 shall be applied in fiscal years beginning after May 15, 2002, the provisions related to Statement No. 13 shall be effec-
tive for the transactions occurring after May 15, 2002, and other provisions shall be effective for financial statements issued on or after
May 15, 2002, with early application encouraged. Management does not expect the adoption of this statement to have a material impact
on the companies’ consolidated financial position or results of operations.



3. ACQUISITIONS AND DIVESTITURES
QCT Resources Limited— In October 2000, the parent company, through its wholly owned subsidiary Mitsubishi Development Pty. Ltd.
(“MDP”), and BHP Billiton Limited (“BHP Billiton”) jointly acquired QCT Resources Limited (“QCT”), a company holding ownership inter-
ests in various coal-mining joint ventures in Australia including the CQCA (“CQCA”) and the Gregory (“Gregory”) joint ventures, by way of
a cash offer. MDP has already owned minority interests in these joint ventures. As a result, MDP paid a cash consideration of A$413
million, equivalent to ¥26,265 million, for a 50% ownership interest in QCT, and accounted for QCT under the equity method for the year
ended March 31, 2001. In June 2001, MDP acquired from BHP Billiton the remaining interests of QCT, as well as additional shares of
CQCA and Gregory for a total of A$1,005 million, equivalent to ¥67,104 million ($504 million). Subsequent to this acquisition, MDP and
BHP Billiton each held 50% of Gregory and 50% of CQCA. This acquisition has been accounted for as purchase. The operations of QCT
have been consolidated with the companies for the year ended March 31, 2002. The ownership interest, substantially consisting of mining
rights, was recorded as intangible assets and amortized using the units of production method.
Tangguh LNG Project — In July 2001, the parent company acquired Occidental Berau of Indonesia LLC (“OXY Berau”) from Occidental
International Oil and Gas Ltd. for $503 million, equivalent to ¥63,086 million in cash. OXY Berau holds a 22.856% participating interest in
the Berau Production Sharing Contract (“Berau PSC”) for LNG joint venture in Berau, Indonesia, and was participating in the Tangguh
LNG Project, which is scheduled to start producing LNG in 2006 from a gas field spread over three adjoining blocks: Berau, Muturi and
Wiriagar. In October 2001, OXY Berau assigned its interest in Berau PSC to MI Berau B.V. (“MI Berau,” a Netherlands corporation),
which is 56% owned by Diamond Gas Indonesia B.V. (“Diamond Gas”), a wholly owned subsidiary of the parent company, and 44%
owned by INPEX CORPORATION (“INPEX”). INPEX contributed $221 million in cash for its 44% ownership interest to MI Berau. OXY
Berau was dissolved after the assignment. The operations of OXY Berau and MI Berau have been consolidated with the companies from
the aquisition date for the year ended March 31, 2002. The participating interest in Berau PSC was recorded as an intangible asset and
will be amortized using the units of production method from its commencement of production.
Aristech Chemical Corporation —In January 2001, the parent company and its U.S. subsidiary sold their respective equity interests in
Aristech Chemical Corporation (“Aristech”), a U.S. petrochemical-manufacturing subsidiary, realizing a loss of ¥45,637 million during the
year ended March 31, 2001. This sale resulted in a reclassification of the related foreign currency translation adjustment to comprehen-
sive income of ¥7,489 million. The companies retained the acrylic business of Aristech.




                                                                   page   76
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




4. SHORT-TERM INVESTMENTS AND OTHER INVESTMENTS
Debt and Marketable Equity Securities —Pursuant to SFAS No. 115, substantially all of the companies’ debt securities, principally
corporate bonds and commercial paper, and marketable equity securities, were classified as available-for-sale or held-to-maturity securities,
except for certain items categorized as trading securities. Information regarding each category of the securities classified as trading,
available-for-sale and held-to-maturity at March 31, 2001 and 2002, including securities of which certain of the companies are the beneficial
owners under trust agreements with trust companies, is as follows:
                                                                                                                                                 Millions of Yen
                                                                                                                                            Gross             Gross
                                                                                                                                          Unrealized        Unrealized              Fair
March 31, 2001                                                                                                          Cost                Gains            Losses                Value
Securities classified as:
  Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              ¥ 40,745
  Available-for-sale:
    Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥437,233           ¥280,130           ¥(21,984)            695,379
    Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             45,412                 70                                 45,482
  Held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           541,650              2,439                  (657)         543,432

                                                                                                                                                 Millions of Yen
                                                                                                                                            Gross             Gross
                                                                                                                                          Unrealized        Unrealized              Fair
March 31, 2002                                                                                                          Cost                Gains            Losses                Value
Securities classified as:
  Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              ¥ 36,204
  Available-for-sale:
    Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥399,276           ¥213,775           ¥(31,403)            581,648
    Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            345,249                 79                 (1)            345,327
  Held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           245,129              6,012             (1,237)            249,904

                                                                                                                                             Millions of U.S. Dollars
                                                                                                                                              Gross             Gross
                                                                                                                                            Unrealized        Unrealized             Fair
March 31, 2002                                                                                                            Cost                Gains            Losses               Value
Securities classified as:
  Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                  $ 272
  Available-for-sale:
    Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             $3,002               $1,607            $ (236)              4,373
    Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              2,596                    1                                 2,597
  Held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,843                   45                     (9)         1,879

   SFAS No. 133 allowed, upon adoption, the reclassification of held-to-maturity security to the available-for-sale or trading portfolios
without tainting the remaining securities in the held-to-maturity portfolio. The companies reclassified ¥293,626 million ($2,208 million) of
held-to-maturity securities to available-for-sale securities as of April 1, 2001.
   The carrying values of debt securities classified as available-for-sale and held-to-maturity at March 31, 2002, by contractual maturity,
are as follows:
                                                                                                                                                                         Millions of
                                                                                                                               Millions of Yen                           U.S. Dollars
                                                                                                                       Available            Held to            Available           Held to
                                                                                                                        for Sale            Maturity           for Sale            Maturity
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥120,691           ¥ 48,689              $ 907               $ 366
Due after one year through five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    224,603            124,842               1,689                939
Due after five years through ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        33             70,815                   1                532
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 783                                      6
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥345,327           ¥245,129              $2,597              $1,843




                                                                                               page   77
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




   Proceeds from sales and gross realized gains and losses on available-for-sale securities for the years ended March 31, 2001 and 2002
are as follows:
                                                                                                                                                                       Millions of
                                                                                                                                             Millions of Yen          U.S. Dollars
                                                                                                                                      2001                     2002      2002
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥267,357            ¥204,045       $1,534
Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥ 75,787            ¥ 34,530       $ 259
Gross realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (257)             (1,243)         (9)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ¥ 75,530            ¥ 33,287       $ 250


   The changes in net unrealized holding gains and losses on trading securities that were included in earnings were gains of ¥856 million
and ¥120 million ($1 million) for the years ended March 31, 2001 and 2002, respectively.
   For the years ended March 31, 2001 and 2002, losses of ¥43,043 million and ¥14,926 million ($112 million), respectively, were
recognized on write-downs of available-for-sale securities to reflect the decline in market value considered to be other than temporary.
   In connection with certain business combinations undertaken by entities in which the parent company held shares, classified and
accounted for as available-for-sale securities, the parent company recognized gains on the exchange of its investment for the acquirer’s
shares, based on the difference between the fair value of the acquirer’s shares and the recorded basis of the shares surrendered, amount-
ing to ¥4,818 million and ¥1,161 million ($9 million) for the years ended March 31, 2001 and 2002, respectively.
   The companies recorded a non-cash gain of ¥81,406 million in connection with the June 2000 acquisition of the companies’ equity
investment in Photonic Integration Research, Inc. (“PIRI”), a 41% owned affiliated company in the United States, by SDL Inc. (“SDL”),
an unrelated third-party. This non-cash gain represents the difference between the companies’ recorded basis in the common stock of
PIRI prior to the acquisition and the fair value of equity securities received from the acquiring company, SDL. The resulting investment in
SDL was classified as available-for-sale as the companies no longer have the ability to exercise significant influence over the investee.
Subsequent to the transaction, the parent company sold all of its SDL shares resulting in a gain of ¥27,145 million included in “Gain on
marketable securities and investments—net” for the year ended March 31, 2001.
   In September 2000 and March 2002, the parent company contributed certain marketable equity securities classified as available-for-sale,
with fair values totaling ¥79,967 million and ¥41,181 million ($310 million), to employee retirement benefit trusts plan assets for the par-
ent company’s contributory and non-contributory pension plans, and recognized a non-cash gain of ¥43,187 million and ¥26,226 million
($197 million) for the years ended March 31, 2001 and 2002, respectively.
Investments Other than Debt and Marketable Equity Securities —Other investments include investments in non-traded and unaffiliated
customers, suppliers and certain financial institutions, which include certain preferred stocks, and non-current time deposits, amounting
to ¥406,012 million and ¥379,764 million ($2,855 million) at March 31, 2001 and 2002, respectively.
   Investments in non-traded and unaffiliated companies are carried at cost; however, if the value of an investment has declined and is
judged to be other than temporary, the investment is written down to its estimated fair value. Losses on write-downs of these investment
securities recognized to reflect the decline in value considered to be other than temporary were ¥29,271 million and ¥19,962 million
($150 million) for the years ended March 31, 2001 and 2002, respectively.



5. INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES
The affiliated companies operate mainly in the manufacturing, resource development and service industries, and substantially participate
in the companies’ operating transactions as either purchasers or suppliers. Such companies principally operate in Japan, Asia, Oceania,
Europe and North America.
    Investments in and advances to affiliated companies at March 31, 2001 and 2002 consisted of the following:
                                                                                                                                                                       Millions of
                                                                                                                                             Millions of Yen          U.S. Dollars
                                                                                                                                      2001                     2002      2002
Investments in capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥536,530            ¥557,417       $4,191
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       107,393              86,648          652
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥643,923            ¥644,065       $4,843


   Investments in capital stock in the above schedule include an investment in Exchangeable Bonds (“EB”) of ¥170,052 million at
March 31, 2001. The EB are mandatorily convertible into common stock of LAWSON, INC. (“LAWSON”). Through the EB and related
agreements, the companies had 20% of the voting rights of LAWSON at March 31, 2001. In addition, the companies acquired 8.02%
of equity shares in LAWSON for ¥36,651 million in February and March 2001.




                                                                                               page   78
                                                                        Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




   In August 2001, LAWSON acquired shares and subsequently retired the treasury stock, which resulted in an approximately 2%
increase in the companies’ ownership percentage. Additionally, the companies exchanged the EB into common stock of LAWSON. As of
March 31, 2002, the companies owned a 30.1% equity share of LAWSON.
   For the year ended March 31, 2002, considering all factors including recent stock market conditions, the companies recorded a
write-down of ¥18,151 million ($136 million), net of tax. The write-down is included in equity in earnings of affiliated companies in the
consolidated statement of income, and represents the difference between the carrying value of the LAWSON investment and its esti-
mated fair value. The fair value was determined using a discounted cash flow analysis prepared by independent appraisers, based on
management’s best estimates of future cash flows, the weighted average cost of capital of 7%, and the market price of LAWSON’s publicly
traded common stock.
    During the year ended March 31, 2001, Mitsubishi Motors Australia Ltd. (“MMAL”), an equity-method investee of the companies,
obtained additional equity contributions from its majority shareholder. The companies did not participate in this equity call and as such its
investment in MMAL was diluted from approximately 40% to 12%. In connection with this transaction, the companies lost the ability to exert
significant influence over the operations of MMAL, and therefore changed the method of accounting for this investee from the equity method
to the cost method. As a result of this change, the companies reclassified foreign currency translation adjustments of ¥10,092 million and
charged them to earnings.
   The carrying value of investments in affiliated companies at March 31, 2001 and 2002 includes ¥164,958 million and ¥136,784
million ($1,028 million), respectively, representing the unamortized balance of goodwill.
   Investments in common stock of affiliated companies included marketable equity securities in the carrying amounts of ¥256,997
million and ¥233,126 million ($1,753 million) at March 31, 2001 and 2002, respectively. Corresponding aggregate quoted market values
were ¥238,541 million and ¥231,496 million ($1,741 million), which included LAWSON of ¥122,319 million and ¥122,432 million ($921
million) at March 31, 2001 and 2002, respectively.
   Certain financial information with respect to the affiliated companies, which are accounted for by the equity method, for the years
ended March 31, 2001 and 2002 is presented below:
                                                                                                                                                                  Millions of
                                                                                                                                            Millions of Yen       U.S. Dollars
                                                                                                                                     2001                 2002        2002
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥1,628,795          ¥2,157,212   $16,220
Property and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1,335,668           1,528,275    11,491
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        554,625           1,446,317    10,874
          Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ¥3,519,088          ¥5,131,804   $38,585


Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥1,411,481          ¥2,294,463   $17,251
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           976,772           1,463,736    11,006
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2,279               4,387        33
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,128,556           1,369,218    10,295
          Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥3,519,088          ¥5,131,804   $38,585
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥3,631,125          ¥3,924,560   $29,508
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥ 814,319           ¥ 876,937    $ 6,594
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥   90,228          ¥ 106,499    $    801


   Operating transactions for the years ended March 31, 2001 and 2002 included ¥651,971 million and ¥588,250 million ($4,423 million),
respectively, in which affiliated companies participated as purchasers, and ¥770,894 million and ¥783,859 million ($5,894 million),
respectively, in which they participated as suppliers to the companies.
   Dividends received from affiliated companies for the years ended March 31, 2001 and 2002 were ¥10,611 million and ¥16,536 million
($124 million), respectively.




                                                                                               page   79
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




6. ALLOWANCE FOR DOUBTFUL RECEIVABLES
An analysis of the allowance for doubtful receivables is presented for the years ended March 31, 2001 and 2002 as follows:
                                                                                                                                                                               Millions of
                                                                                                                                                  Millions of Yen             U.S. Dollars
                                                                                                                                          2001                       2002         2002
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               ¥152,769                 ¥153,913          $1,157
Provision for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      24,053                    32,920          248
Net charge-offs:
  Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (23,628)                     (20,322)        (153)
  Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              481                        1,479           11
          Total net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (23,147)                     (18,843)        (142)
Foreign currency exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                238                        920               7
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥153,913                 ¥168,910          $1,270


   At March 31, 2001 and 2002, the total recorded investment in loans that were considered to be impaired under SFAS No. 114,
“Accounting by Creditors for Impairment of a Loan,” including those trade receivables with terms exceeding one year, was ¥132,611
million and ¥184,536 million ($1,387 million), respectively, and the related allowance for credit losses provided as at each year end was
¥118,953 million and ¥126,157 million ($949 million), respectively.
   Interest income on impaired loans recognized for each of the two years ended March 31, 2002 was not material. The companies
generally recognize interest income on impaired loans on a cash basis.



7. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2001 and 2002 consist of the following:
                                                                                                                                                                              Millions of
                                                                                                                                                 Millions of Yen              U.S. Dollars
                                                                                                                                       2001                        2002          2002
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥ 295,458               ¥ 297,070         $ 2,234
Buildings, including leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             477,594                 549,283           4,130
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     720,814                 789,617           5,937
Projects in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               93,122                  75,893             570
       Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,586,988                 1,711,863         12,871
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    (600,124)                 (637,680)        (4,794)
Property and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ¥ 986,864               ¥1,074,183        $ 8,077


    Depreciation expense for the years ended March 31, 2001 and 2002 was ¥72,218 million and ¥79,480 million ($598 million), respectively.
    Based on the continuing decline in land prices in Japan, the companies assessed the potential impairment of long-lived assets and, as
a result, certain properties maintained for corporate use, land and buildings held for leases, and land for development were deemed to be
impaired because the assets are not expected to recover their entire carrying value through future cash flows. Impairment losses included
in “Loss on property and equipment—net” in the consolidated statements of income for the years ended March 31, 2001 and 2002 were
applicable to the following segments:
                                                                                                                                                                               Millions of
                                                                                                                                                   Millions of Yen            U.S. Dollars
Segment                                                                                                                                   2001                        2002        2002
New Business Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                           ¥ 266           $ 2
Energy Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥   180                         530             4
Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          284
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8,140                        5,905            45
Living Essentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3,857                          686             5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      16,062
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ¥28,523                       ¥7,387          $56


    “Other” represents impairment losses attributable to assets for corporate use which have not been allocated to specific operating segments.
   These amounts were included in “Loss on property and equipment—net” in the accompanying consolidated statements of income and
were determined as the difference between the carrying value and the estimated fair value of these assets. Estimated fair value of assets
was primarily determined based on independent appraisals and discounted cash flows analyses.
    Capitalized interest was ¥1,098 million and ¥939 million ($7 million) for the years ended March 31, 2001 and 2002, respectively.


                                                                                               page   80
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                         {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




8. PLEDGED ASSETS
At March 31, 2002, assets pledged as collateral for short-term debt, long-term debt and contingent liabilities of the companies are
as follows:
                                                                                                                                                                                 Millions of
                                                                                                                                                              Millions of Yen   U.S. Dollars
Notes, loans and accounts receivable—trade (current and non-current) . . . . . . . . . . . . . . . . . . . . . . . . .                                         ¥150,894          $1,135
Non-current investment securities (carrying value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             30,633             230
Property and equipment (net of accumulated depreciation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    198,052           1,489
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      84,423             635
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥464,002          $3,489


    The above pledged assets are classified by type of liabilities to which they relate as follows:
                                                                                                                                                                                 Millions of
                                                                                                                                                              Millions of Yen   U.S. Dollars
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥     9,470       $      71
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             436,018           3,278
Contingent liabilities—guarantees of contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            18,514             140
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥464,002          $3,489


    Trust receipts issued under customary import financing arrangements give banks a security interest in the merchandise imported and/or
the accounts receivable or sales proceeds resulting from the sale of such merchandise. The companies follow the practice of repaying the
related notes and acceptances payable at maturity dates without applying the sales proceeds to the specific notes or acceptances. The large
number of transactions makes it impracticable to determine the aggregate amounts of assets covered by outstanding trust receipts.
   See Note 11 for a description of the right of the lending banks to require the companies to provide collateral (or additional collateral)
not included in pledged assets summarized in the first paragraph of this note.



9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Overall Risk Management —The companies, in the normal course of business, are exposed to market risks from changes in interest rates,
foreign exchange rates, and commodity and equity prices. To manage the exposures to these risks, the companies generally identify their
net exposures and take advantage of natural offsets. Additionally, the companies enter into various derivative transactions pursuant to the
companies’ risk management policies in counterparty exposure and hedge specific risks.
   The primary types of derivatives used by the companies are interest rate swaps, forward exchange contracts, currency swaps and
commodity future contracts. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding
changes in the fair value or cash flows of the underlying exposures being hedged. Whenever practical, designation is performed on a
specific exposure basis to qualify for hedge accounting. In these circumstances, the companies assess, both at the inception of the hedge
and on an on-going basis, whether the hedging derivatives are highly effective in offsetting changes in fair values or cash flows of hedged
items. Should it be determined that a derivative is not highly effective as a hedge, the companies will discontinue hedge accounting.
    The companies seek to minimize credit risk associated with derivative contracts by limiting counterparties to major international financial
institutions as well as avoiding concentration with certain counterparties, and also by making frequent credit reviews of these counterparties.
Interest Rate Risk Management —The companies’ financing, investing and cash management activities are exposed to market risk from
changes in interest rates. In order to manage these exposures, the companies have entered into interest rate swap contracts. Interest rate
swaps are used, in most instances, to convert fixed rate assets or debts to floating rate assets or debts, as well as convert some floating
rate assets or debts to a fixed basis. The objective of maintaining this mix of fixed and floating rate assets and debt allows the companies
to manage the overall value of cash flows attributable to certain assets and debt instruments.
Foreign Currency Risk Management —The companies operate globally and are exposed to foreign currency risks related to purchasing,
selling, financing and investing in currencies other than the local currencies in which the companies operate. The companies’ strategy to
manage foreign currency risks is to net foreign currency exposures on recognized assets, liabilities and unrecognized firm commitments
by taking advantage of natural offsets, and purchase forward exchange contracts and other contracts to preserve the economic value of
cash flows in non-functional currencies. The companies believe that in circumstances where these foreign currency contracts have not
been designated as hedging instruments under SFAS No. 133, such contracts effectively hedge the impact of the variability in exchange
rates. Principal currencies hedged include the U.S. dollar, Euro and Australian dollar.
Commodity Price Risk Management —The companies are exposed to price fluctuations of various commodities used in their trading and
other operating activities. The companies enter into commodity futures, forwards, options and swaps contracts, to hedge the variability in
commodity prices in accordance with their risk management procedures. Except in certain cases where these contracts have been desig-
nated as a cash flow hedge, they are generally not designated as hedging instruments under SFAS No. 133.




                                                                                                page   81
                                                     Mitsubishi Corporation Annual Report 2002
                                                    {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




Fair Value Hedge —Derivative instruments designated as fair value hedges primarily relate to interest rate swaps used to convert fixed
rate assets or debt obligations to floating rate assets or debts. Changes in fair values of hedged assets and debt obligations, and hedging
derivative instruments are recognized in earnings in “Other expense—net.” For the year ended March 31, 2002, the amount of hedge
ineffectiveness recognized on fair value hedges was ¥510 million ($4 million). During the same period, no fair value hedges for firm
commitments were derecognized.
Cash Flow Hedge —Derivative instruments designated as cash flow hedges include interest rate swaps to convert floating rate liabilities to
fixed rate liabilities and foreign currency swaps contracts to eliminate variability in functional-currency-equivalent cash flows on certain
debt obligations. Additionally commodity swaps and futures contracts with maturities of not more than 20 months are utilized and qualify
as cash flow hedges. Current open contracts hedge forecasted transactions until 2003. The amount of hedge ineffectiveness on cash flow
hedges and net gains or losses excluded from the assessment of hedge effectiveness, which was included in “Other expense—net,” was
¥107 million ($1 million) for the year ended March 31, 2002. Derivative gains and losses included in AOCI are reclassified into earnings at
the time that the associated hedged transactions impact the income statement. For the year ended March 31, 2002, net derivative losses
of ¥4,687 million ($35 million), net of related income tax of ¥1,132 million ($9 million), were reclassified into earnings. These net losses
were offset by the net gains on the transactions being hedged. Approximately ¥5,000 million ($38 million) of net derivative losses included
in AOCI at March 31, 2002 will be reclassified into earnings within 12 months from that date. During the same period, no cash flow
hedges for forecasted commitments were derecognized.
Derivative Instruments Used for Other than Hedging Activities —The parent company and certain subsidiaries enter into derivative financial
instruments as a part of their trading activities. The companies clearly distinguish derivatives used in trading activities from derivatives used
for risk management purposes. As part of their internal control policies, the companies have set strict limits on the positions which can be
taken in order to minimize potential losses for these derivative transactions and periodically monitor the open positions for compliance.



10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The companies, in the normal course of their business, are parties to various financial instruments. The companies engage in operat-
ing transactions with a significant number of customers in a wide variety of industries all over the world, and their receivables from and
guarantees to such parties are broadly diversified. Consequently, in management’s opinion, no significant concentration of credit risk
exists for the companies. Credit risk exposure of these financial instruments in the event of counterparty nonperformance is controlled
through credit approvals, limits and monitoring procedures based on the credit policies. The companies require collateral to the extent
considered necessary.
   The estimated fair value of financial instruments has been determined using available market information or valuation methodologies.
However, considerable judgment is required in interpreting market data to develop estimates of fair value; therefore, the estimates are not
necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of using different
market assumptions and/or estimation methodologies may be material to the estimated fair value amounts.
   The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
      Current Financial Assets and Current Financial Liabilities —The estimated fair values of cash and cash equivalents, time deposits,
      trade receivables and payables and short-term debt approximate their carrying amounts due to the relatively short maturities of
      these instruments.
      Short-term Investments and Other Investments —The fair values of marketable securities included in “Short-term investments” and
      “Other investments” are based on quoted market prices. The fair value information for each category of securities is set forth in
      Note 4. “Other investments” also include investments in common stock of non-traded and unaffiliated companies such as customers
      and suppliers, investments in non-listed preferred stock of certain financial institutions and non-current time deposits. The fair
      values of non-current time deposits are estimated based on the present value of estimated future cash flows; however, it is not
      practicable to estimate fair values of the remaining investments in non-traded and unaffiliated companies, which consist of approxi-
      mately one thousand small investments in customers and suppliers, as such estimation was not readily determinable.
      Non-current Notes, Loans, Accounts Receivable and Advances to Affiliated Companies —The fair values of these items are estimated
      by discounting estimated future cash flows using a rate which is commensurate with the risks involved.
      Long-term Debt —The fair values of the companies’ debt are estimated based on the present value of estimated future cash flows
      computed using interest rates that are currently available to the companies for debt with similar terms and remaining maturities.
      Derivative Financial Instruments —The fair values of the derivative financial instruments are estimated by obtaining quotes from
      brokers and other appropriate valuation techniques based on information available to the companies.




                                                                     page   82
                                                                        Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




           The following table presents the carrying amounts and estimated fair values of financial instruments valued under SFAS No. 107,
         “Disclosures about Fair Value of Financial Instruments” at March 31, 2001 and 2002. Accordingly, certain amounts which are not
         considered financial instruments are excluded from the table.
                                                                                                                                                                           Millions of
                                                                                                              Millions of Yen                                              U.S. Dollars
                                                                                             2001                                         2002                                   2002
                                                                                Carrying              Estimated               Carrying           Estimated           Carrying           Estimated
                                                                                Amount                Fair Value              Amount             Fair Value          Amount             Fair Value
Financial assets:
  Current financial assets other than
   short-term investments, net of
   allowance for doubtful receivables . . . . . . . . .                     ¥2,986,195             ¥2,986,195           ¥2,977,740              ¥2,977,740           $22,389        $22,389
  Short-term investments and
   other investments, for which it is:
    Practicable to estimate fair value . . . . . . . . .                      1,323,256               1,325,038          1,208,308               1,213,083             9,085              9,121
    Not practicable to estimate fair value . . . . . .                          406,012                                    379,764                                     2,855
  Non-current notes, loans and accounts
   receivable and advances to affiliated
   companies, net of allowance for
   doubtful receivables . . . . . . . . . . . . . . . . . . .                    782,916                782,193               732,441             704,798              5,507              5,299
  Derivative assets . . . . . . . . . . . . . . . . . . . . . . .                                       181,045               112,177             112,177                843                843

Financial liabilities:
  Current financial liabilities . . . . . . . . . . . . . . . .               3,081,840               3,081,840          2,571,137               2,571,137            19,332             19,332
  Long-term debt, including current
   maturities, and non-current trade
   payables included in “Other
   long-term liabilities” . . . . . . . . . . . . . . . . . . . .             3,381,156               3,464,432          3,871,403               3,793,154            29,108             28,520
  Derivative liabilities . . . . . . . . . . . . . . . . . . . . .                                       96,658             61,343                  61,343               461                461


11. SHORT-TERM AND LONG-TERM DEBT
Short-term debt at March 31, 2001 and 2002 consists of the following:
                                                                                                                          2001                                2002                        2002
                                                                                                                   Millions         Interest          Millions        Interest       Millions of
                                                                                                                   of Yen             Rate            of Yen            Rate        U.S. Dollars
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥ 445,676                 3.5%      ¥384,038            2.5%              $2,888
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               608,835                 0.6        297,707            0.2                2,238
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥1,054,511                          ¥681,745                              $5,126

    The interest rates represent weighted average rates of outstanding balances at March 31, 2001 and 2002.




                                                                                               page   83
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    Long-term debt at March 31, 2001 and 2002 comprised the following:
                                                                                                                                                                           Millions of
                                                                                                                                               Millions of Yen             U.S. Dollars
                                                                                                                                        2001                     2002          2002
Long-term debt with collateral (see Note 8):
  Banks and insurance companies, maturing serially through 2015—
   principally 0.7%–2.9% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                ¥    77,237           ¥       48,437   $     364
  Government-owned banks and government agencies,
   maturing serially through 2018—principally 2%–6.9% . . . . . . . . . . . . . . . . . . . . . . .                                     110,856                   91,470         688
  Banks and others, maturing serially through 2016
   (payable in foreign currencies)—principally 1%–8.9% . . . . . . . . . . . . . . . . . . . . . . .                                     68,581                  174,022       1,308
  Government-owned bank, maturing serially through 2016
   (payable in foreign currency)—principally 4%–8.9% . . . . . . . . . . . . . . . . . . . . . . . .                                     14,610                   39,749         299
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       271,284                  353,678       2,659
Long-term debt without collateral:
  Banks and insurance companies, maturing serially through 2027—
   principally 0.1%–4.9% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1,288,481              1,357,244        10,205
  Government-owned banks and government agencies,
   maturing serially through 2024—principally 1%–2.9% . . . . . . . . . . . . . . . . . . . . . . .                                      75,633                   83,975         631
  Government-owned bank, maturing serially through 2015
   (payable in foreign currency)—principally 2%–6.9% . . . . . . . . . . . . . . . . . . . . . . . .                                    164,063                  206,590       1,553
  Banks and others, maturing serially through 2016
   (payable in foreign currencies)—principally 2.0%–7.9% . . . . . . . . . . . . . . . . . . . . .                                      463,492                  443,943       3,338
  Japanese yen callable bonds (adjustable fixed rate 2.0%, due 2008) . . . . . . . . . . . . .                                           26,000                   26,000         195
  Japanese yen callable bonds (floating rate 0.79% as of March 31, 2002, due 2008) . . .                                                  5,000                    5,000          38
  Japanese yen callable bonds (adjustable fixed rate 1.5%, due 2010) . . . . . . . . . . . . .                                           10,000                   10,000          75
  Japanese yen callable bonds (adjustable fixed rate 1.23%, due 2013) . . . . . . . . . . . .                                                                     10,000          75
  Japanese yen callable bonds (adjustable fixed rate 1.3%, due 2013) . . . . . . . . . . . . .                                                                    10,000          75
  Japanese yen extensible bonds
   (floating rate 0.395% as of March 31, 2002, due 2005) . . . . . . . . . . . . . . . . . . . . .                                       55,000                   35,000         263
  Japanese yen bonds (floating rate 0.546% as of March 31, 2002, due 2004) . . . . . .                                                   10,000                   10,000          75
  Japanese yen bonds (fixed rate 0.89% to 1.04%, due 2004) . . . . . . . . . . . . . . . . . . .                                         20,000                   20,000         150
  Japanese yen bonds (fixed rate 1.35% to 2.3%, due 2002–2006) . . . . . . . . . . . . . . .                                            110,000                  110,000         827
  Japanese yen bonds (fixed rate 2.11% to 2.125%, due 2008) . . . . . . . . . . . . . . . . . .                                          60,000                   60,000         451
  Japanese yen bonds (fixed rate 2.08% to 2.58%, due 2009) . . . . . . . . . . . . . . . . . . .                                        120,000                  120,000         903
  Japanese yen bonds (fixed rate 2.07% to 3.18%, due 2010–2019) . . . . . . . . . . . . . .                                             117,000                  117,000         880
  Japanese yen bonds (floating rate 2.616%–2.823% as of March 31, 2002, due 2010) . .                                                    57,000                   57,000         429
  Japanese yen bonds
   (fixed rate 1.5% to 2.1%, subject to change to floating rate, due 2013–2014) . . . . .                                                                         45,000         338
  Japanese yen bonds
   (floating rate 0.846%–1.097% as of March 31, 2002, due 2013–2014) . . . . . . . . . .                                                                          20,000         150
  U.S. dollar bonds (fixed rate 3.6%, due 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                       19,987         150
  Reverse dual currency yen/U.S. dollar bonds (fixed rate 3.0%, due 2009) . . . . . . . . .                                              15,000                   15,000         113
  Dual currency Japanese yen/Australia dollar bonds (fixed rate 3.17%, due 2007) . . .                                                    2,708                    3,114          23
  Medium-term notes (payable in Japanese yen),
   due 2001–2019—0.87%–7.8% in 2001 and
   due 2002–2019—0.87%–7.8% in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                   234,595                  182,824       1,375
  Medium-term notes (payable in U.S. dollar),
   due 2001–2011—5.71%–8.0% in 2001 and
   due 2002–2011—2.15%–8.0% in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    50,037                   52,743         397
  Medium-term notes (payable in Australia dollar), due 2003—8.92% in 2001 . . . . . .                                                     2,786
  Medium-term notes (payable in British pound), due 2001—7.41% in 2001 . . . . . . .                                                        333
  Commercial paper (payable in Japanese yen), with average interest rate of 0.06% . . .                                                                          210,000       1,579
  Other debentures and bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        1,361
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2,888,489              3,230,420        24,288
        Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,159,773              3,584,098        26,947
Add mark to market adjustment* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                               72,462           545
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         3,159,773              3,656,560        27,492
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (361,621)              (423,305)       (3,182)
Less mark to market adjustment related to “current maturities”* . . . . . . . . . . . . . . . . . .                                                             5,616            42
Long-term debt, less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   ¥2,798,152            ¥3,238,871       $24,352

* Effective April 1, 2001, the companies began recording their hedged debt at fair value on the balance sheet due to the implementation of SFAS No. 133.




                                                                                               page   84
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    Annual maturities of long-term debt as of March 31, 2002, based on their contractual terms, are as follows:
                                                                                                                                                                                Millions of
                                                                                                                                                              Millions of Yen   U.S. Dollars
Year ending March 31:
2003 (included in current liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                ¥ 423,305         $ 3,182
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       378,760          2,848
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       414,210          3,114
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       678,114          5,099
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       278,765          2,096
2008 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,410,944         10,608
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥3,584,098        $26,947


    The companies entered into interest rate swap and currency swap contracts for certain short-term and long-term debt to manage
interest rate exposure and foreign currency exposure. The effective interest rates for long-term bank loans of ¥1,116,677 million ($8,396
million), notes and bonds of ¥651,650 million ($4,900 million), and medium-term notes and commercial paper of ¥96,497 million ($726
million) outstanding at March 31, 2002 after giving effect to such swap agreements were generally based on LIBOR (London Interbank
Offered Rate). Most swap agreements entered into by the companies used the three-month LIBOR.
   The companies maintain lines of credit with various banks, including Japanese yen facilities of ¥510,000 million ($3,835 million) and
a U.S. dollar facility of $1,000 million which the parent company and a U.S. subsidiary held at March 31, 2002. The parent company and
the U.S. subsidiary compensate banks for the facilities above in the form of commitment fees, which were insignificant in each of the past
two years. Certain commitment fees on the lines of credit are based on the parent company’s current debt rating. The short-term and
long-term portions of unused lines of credit, including over draft contracts as well as the above committed lines, totaled ¥1,158,121
million ($8,708 million) and ¥210,000 million ($1,579 million), respectively, at March 31, 2002, compared with ¥1,235,079 million and
¥210,000 million, respectively, at March 31, 2001.
   On October 7, 2001, the parent company designated unused long-term lines of credit, discussed above, totaling ¥210,000 million
and maturing in October 2006, to be used solely in support of the parent company’s commercial paper program of ¥210,000 million as of
March 31, 2002. The commercial paper program is used from time to time to fund working capital and other general corporate require-
ments. The outstanding commercial paper of ¥210,000 million is classified as long-term debt on the consolidated balance sheet as of
March 31, 2002 since the parent company has the intent and ability to refinance these borrowings on a long-term basis through contin-
ued commercial paper borrowings, supported by the available lines of credit.
    Substantially all of the short-term and long-term loans from banks are made under agreements which, as is customary in Japan,
provide that the bank may, under certain conditions, require the borrower to provide collateral (or additional collateral) or guarantors
with respect to the loans, and that the bank may treat any collateral, whether furnished as security for short-term or long-term loans or
otherwise, as collateral for all indebtedness to such bank. Certain agreements relating to long-term bank loans provide that the bank
may require the borrower to submit proposals as to the payment of dividends and other appropriations of earnings for the bank’s
review and approval before presentation to the shareholders. Default provisions of certain agreements grant certain rights of possession
to the banks. Under certain agreements, principally with Government-owned financial institutions, the borrower is required, upon
request of the lender, to reduce outstanding loans before scheduled maturity dates when the lender considers that the companies are
able to reduce such loans through increased earnings or by additional cash-flow raised through stock issuances or bond offerings.
During the years ended March 31, 2001 and 2002, the companies have not received any request of the kind described above and do
not expect that any such request will be made.




                                                                                                page   85
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




12. INCOME TAXES
Income taxes in Japan applicable to the companies, imposed by the national, prefectural and municipal governments, in the aggregate,
result in a normal effective statutory rate of approximately 42% for the years ended March 31, 2001 and 2002. Foreign subsidiaries are
subject to income taxes of the countries in which they operate.
   A reconciliation of the combined statutory tax rates for the years ended March 31, 2001 and 2002 to the effective rates of income
taxes reflected in the accompanying consolidated statements of income is as follows:
                                                                                                                                                                       2001       2002
Combined statutory income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   42.0%      42.0%
Expenses not deductible for income tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          11.6        5.2
Operating losses of certain subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  5.2        6.3
Tax benefits on losses of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (4.4)      (1.1)
Lower income tax rates applicable to income in certain foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                   (3.6)      (7.0)
Effect of taxation on dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (1.8)       1.4
Tax benefits realized on foreign tax credits carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        (10.5)
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       0.2        (0.7)
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          38.7%      46.1%

    Amounts provided for income taxes for the years ended March 31, 2001 and 2002 are allocated as follows:
                                                                                                                                                                                Millions of
                                                                                                                                                  Millions of Yen              U.S. Dollars
                                                                                                                                          2001                       2002         2002
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥ 51,098                  ¥ 45,875          $ 345
Equity in earnings of affiliated companies, including impairment loss . . . . . . . . . . . . . . .                                     (9,836)                  (17,610)          (132)
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     (38,765)                  (36,290)          (273)
Total income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ¥ 2,497                   ¥ (8,025)         $ (60)


    Significant components of deferred tax assets and liabilities at March 31, 2001 and 2002 are as follows:
                                                                                                                                                                                Millions of
                                                                                                                                                  Millions of Yen              U.S. Dollars
                                                                                                                                          2001                       2002         2002
Assets:
  Allowance for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     ¥ 43,425                   ¥ 52,299        $ 393
  Accrued pension and severance liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          57,151                     56,892          428
  Foreign currency translation adjustments pertaining
   to investments in affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         16,219                        9,386          71
  Impairment loss on property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               24,468                       15,929         120
  Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      28,692                       36,629         275
  Accruals and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                31,250                       51,119         384
       Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   201,205                      222,254       1,671
   Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (34,670)                     (37,008)       (278)
          Deferred tax assets—less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . .                             166,535                      185,246       1,393


Liabilities:
   Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           13,805                       22,474         169
   Valuation of debt and equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       100,432                       63,401         477
   Deferred gain on sales of property for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . .                              34,465                       29,528         222
   Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        25,366                       25,090         189
          Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               174,068                      140,493       1,057
   Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥ (7,533)                   ¥ 44,753        $ 336


   A valuation allowance is established to reduce certain deferred tax assets with respect to deductible temporary differences and net
operating loss carryforwards where it is more likely than not that they will not be realized. The total valuation allowance decreased by
¥3,787 million and increased by ¥2,338 million ($18 million) for the years ended March 31, 2001 and 2002, respectively.




                                                                                               page   86
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    Net deferred tax assets (liabilities) are included in the consolidated balance sheets at March 31, 2001 and 2002 as follows:
                                                                                                                                                                                              Millions of
                                                                                                                                                     Millions of Yen                         U.S. Dollars
                                                                                                                                             2001                         2002                     2002
Current assets—Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             ¥ 44,739                    ¥ 48,170                      $ 362
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             16,100                      33,019                        248
Current liabilities—Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        (7,241)                     (2,701)                       (20)
Long-term liabilities—Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             (61,131)                    (33,735)                      (254)
Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥ (7,533)                    ¥ 44,753                      $ 336


    At March 31, 2002, the amount of undistributed earnings of subsidiaries on which a deferred tax liability has not been recognized in
the accompanying consolidated financial statements aggregated ¥313,640 million ($2,358 million). Most of the undistributed earnings of
domestic subsidiaries are not considered to be a taxable temporary difference as described in Note 2.m. Determination of the deferred tax
liability related to the undistributed earnings of foreign subsidiaries is not practicable.
   At March 31, 2002, the companies had aggregate operating loss carryforwards of approximately ¥103,921 million ($781 million)
which may be used as a deduction in the determination of taxable income in future periods. If not utilized, such loss carryforwards
expire as follows:
                                                                                                                                                                                              Millions of
                                                                                                                                                                   Millions of Yen           U.S. Dollars
Year ending March 31:
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥     1,758                    $ 13
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8,212                      62
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3,018                      23
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               21,575                     162
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               30,563                     230
2008 through 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        18,890                     142
2013 through 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           824                       6
2018 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      19,081                     143
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ¥103,921                       $781


    Income from consolidated operations before income taxes for the years ended March 31, 2001 and 2002 comprised the following:
                                                                                                            Millions of Yen                                             Millions of U.S. Dollars
                                                                                       The Parent                                                               The Parent
                                                                                     Company and                                                              Company and
                                                                                      Its Domestic              Foreign                                        Its Domestic   Foreign
                                                                                      Subsidiaries            Subsidiaries               Total                 Subsidiaries Subsidiaries            Total
Year ended March 31, 2001 . . . . . . . . . . . . . . . . . . . . .                     ¥68,759                ¥63,139               ¥131,898
Year ended March 31, 2002 . . . . . . . . . . . . . . . . . . . . .                     ¥34,488                ¥65,102               ¥ 99,590                    $259             $490             $749


    Income taxes for the years ended March 31, 2001 and 2002 comprised the following:
                                                                                                            Millions of Yen                                             Millions of U.S. Dollars
                                                                                       The Parent                                                               The Parent
                                                                                     Company and                                                              Company and
                                                                                      Its Domestic              Foreign                                        Its Domestic   Foreign
                                                                                      Subsidiaries            Subsidiaries               Total                 Subsidiaries Subsidiaries            Total
Year ended March 31, 2001:
  Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ¥ 55,436                ¥15,506                ¥ 70,942
  Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (25,266)                 5,422                 (19,844)
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥ 30,170                ¥20,928                ¥ 51,098


Year ended March 31, 2002:
  Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ¥ 22,503                ¥23,039                ¥ 45,542                   $169             $173             $342
  Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            5,139                 (4,806)                    333                     39              (36)               3
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥ 27,642                ¥18,233                ¥ 45,875                   $208             $137             $345




                                                                                                page   87
                                                                   Mitsubishi Corporation Annual Report 2002
                                                                  {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




13. ACCRUED PENSION AND SEVERANCE LIABILITIES
The parent company and certain of its subsidiaries have non-contributory defined benefit pension plans covering substantially all employees
other than directors. The plans provide benefits based upon years of service, compensation at the time of severance and other factors.
The parent company also has a contributory defined benefit pension plan which covers substantially all of its employees and provides for
lifetime annuity payments commencing at age 60. In addition, certain subsidiaries and affiliated companies participate in a contributory
defined benefit pension plan (Dia Union Pension Fund) which covers substantially all of their employees and provides for lifetime annuity
payments commencing at age 60.
    Each of the contributory pension funds is administered by a board of trustees comprised of management and employee representa-
tives as required by government regulations. Employee benefits under the plans consist of a portion specified by government regulations
and an additional portion from the parent company’s or its subsidiaries’ sponsored plans. The plan assets for both portions are managed
and invested as one asset pool. Both the companies and their employees are required to contribute to the pension funds; however, the
companies have obligations to fund the plans in a manner sufficient to satisfy the plans benefit obligations.
    The companies’ funding policy is mainly to contribute an amount deductible for income tax purposes. Contributions are intended to
provide not only for benefits attributable to service to date but also for those expected to be earned in the future. As discussed in Note 4,
in September 2000 and March 2002, the parent company contributed certain marketable equity securities to employee retirement benefit
trusts plan assets for the parent’s contributory and non-contributory pension plans.
   In addition to the pension plans, most of the domestic subsidiaries have unfunded severance indemnity plans under which their
employees, other than directors, are entitled, under most circumstances, upon mandatory retirement at normal retirement age or earlier
termination of employment, to lump-sum severance indemnities based on compensation at the time of severance, years of service and
other factors.
  Net periodic pension costs of the parent company’s and its subsidiaries’ pension and indemnities plans for the years ended March 31,
2001 and 2002 include the following components:
                                                                                                                                                            Millions of
                                                                                                                                  Millions of Yen          U.S. Dollars
                                                                                                                           2001                     2002      2002
Contributory pension plans:
  Service cost—benefits earned during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥ 6,766               ¥ 6,919         $ 52
  Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            9,421                 9,785           74
  Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (9,965)               (8,331)         (63)
  Recognized net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7,886                 7,594           57
  Amortization of unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  643                   117            1
  Amortization of unrecognized obligation at transition . . . . . . . . . . . . . . . . . . . . . . . . .                    163                   163            1
   Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥14,914               ¥16,247         $122


Non-contributory pension plans:
  Service cost—benefits earned during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ¥ 6,955               ¥ 6,755         $ 51
  Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,979                 2,725           21
  Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (1,865)               (1,960)         (15)
  Recognized net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,281                 4,029           30
  Amortization of unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  245                   242            2
  Amortization of unrecognized net asset at transition . . . . . . . . . . . . . . . . . . . . . . . . . .                   (23)                  (20)
   Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ¥ 8,572               ¥11,771         $ 89




                                                                                       page   88
                                                                      Mitsubishi Corporation Annual Report 2002
                                                                      {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    The following table sets forth the reconciliation of benefit obligation, plan assets and funded status of the plans:
                                                                                                                                                             Millions of
                                                                                                       Millions of Yen                                       U.S. Dollars
                                                                                       2001                                    2002                               2002
                                                                                               Non-                                   Non-                               Non-
                                                                           Contributory     contributory         Contributory      contributory       Contributory    contributory
                                                                          Pension Plans    Pension Plans        Pension Plans     Pension Plans      Pension Plans   Pension Plans
Change in benefit obligation:
  Benefit obligation at beginning of year . . . . . . .                    ¥313,813            ¥102,823         ¥326,185              ¥100,136         $2,452            $ 753
  Service cost . . . . . . . . . . . . . . . . . . . . . . . . . .            6,766               6,955            6,919                 6,755             52               51
  Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . .           9,421               1,979            9,785                 2,725             74               21
  Employee contributions . . . . . . . . . . . . . . . . . .                  2,306                                2,205                                   17
  Plan amendments . . . . . . . . . . . . . . . . . . . . . .                (2,489)
  Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . .               4,559                  3,734            (954)                 2,454           (7)               18
  Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . .            (8,191)                (3,187)         (8,904)                (4,448)         (67)              (34)
  Lump-sum payments . . . . . . . . . . . . . . . . . . .                                           (7,598)                                (6,135)                           (46)
  Acquisitions/divestitures and other—net . . . . .                                                 (5,362)                                 5,402                             41
  Change in foreign currency exchange rates . . .                                                      792                                  1,125                              8
   Benefit obligation at end of year . . . . . . . . . . .                  326,185             100,136           335,236                 108,014       2,521               812


Change in plan assets:
  Fair value of plan assets at beginning of year . .                        221,435                57,580         253,641                  65,116       1,907               490
  Actual return on plan assets . . . . . . . . . . . . . .                  (38,272)               (8,534)        (16,970)                 (5,274)       (128)              (39)
  Employer contributions . . . . . . . . . . . . . . . . . .                 76,363                28,093          45,537                   9,352         342                70
  Employee contributions . . . . . . . . . . . . . . . . . .                  2,306                                 2,205                                  17
  Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . .            (8,191)                (1,376)        (8,904)                 (2,396)        (67)               (18)
  Lump-sum payments . . . . . . . . . . . . . . . . . . .                                           (7,598)                                (6,135)                           (46)
  Acquisitions/divestitures and other—net . . . . .                                                 (3,929)                                 3,228                             24
  Change in foreign currency exchange rates . . .                                                      880                                  1,084                              8
   Fair value of plan assets at end of year . . . . . .                     253,641                65,116         275,509                  64,975       2,071               489


Reconciliation of funded status and net amount
 recognized in the consolidated balance sheets:
  Funded status at March 31, 2001 and 2002 . .                              (72,544)               (35,020)       (59,727)                (43,039)       (450)              (323)
  Unrecognized net actuarial loss . . . . . . . . . . . .                   127,525                 21,716        144,278                  28,241       1,086                212
  Unrecognized prior service cost . . . . . . . . . . . .                       117                  1,493                                  1,245                              9
  Unrecognized net obligation
   (asset) at transition . . . . . . . . . . . . . . . . . . . .                 482                   (39)              319                  (23)           2
   Net amount recognized . . . . . . . . . . . . . . . . . .               ¥ 55,580            ¥ (11,850)       ¥ 84,870              ¥ (13,576)       $ 638             $(102)


Amounts recognized in the consolidated
 balance sheets consist of:
  Prepaid pension cost included
   in other current assets . . . . . . . . . . . . . . . . . .                                 ¥     3,013                            ¥     3,306                        $ 25
  Accrued pension liability . . . . . . . . . . . . . . . . .              ¥ (58,664)              (29,017)     ¥ (46,389)                (36,053)     $ (349)            (271)
  Intangible asset included in other assets . . . . .                            599                 1,392            319                   1,161           2                9
  Accumulated other comprehensive loss,
   before tax . . . . . . . . . . . . . . . . . . . . . . . . . . .         113,645                12,762         130,940                  18,010          985              135
   Net amount recognized . . . . . . . . . . . . . . . . . .               ¥ 55,580            ¥ (11,850)       ¥ 84,870              ¥ (13,576)       $ 638             $(102)


   The aggregate projected benefit obligation, aggregate accumulated benefit obligation and aggregate fair value of plan assets for the
contributory pension plans where accumulated benefit obligations exceeded plan assets were ¥326,185 million, ¥312,305 million and
¥253,641 million, respectively, as of March 31, 2001 and ¥335,236 million ($2,521 million), ¥321,898 million ($2,420 million) and
¥275,509 million ($2,071 million), respectively, as of March 31, 2002.
   The aggregate projected benefit obligation, aggregate accumulated benefit obligation and aggregate fair value of plan assets for the
non-contributory pension plans where accumulated benefit obligations exceeded plan assets were ¥95,452 million, ¥85,755 million and
¥59,093 million, respectively, as of March 31, 2001 and ¥102,154 million ($768 million), ¥92,340 million ($694 million) and ¥58,310
million ($438 million), respectively, as of March 31, 2002.




                                                                                        page   89
                                                                   Mitsubishi Corporation Annual Report 2002
                                                                  {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    Assumptions used for 2001 and 2002 are as follows:
                                                                                                                                                       2001   2002
Contributory pension plans:
  Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3.0%   3.0%
  Average rate of increase in future compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               2.3%   2.3%
  Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           4.5%   4.0%

Non-contributory pension plans:
  Weighted-average discount rate* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.3%   3.3%
  Average rate of increase in future compensation levels* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              4.1%   4.1%
  Expected long-term rate of return on plan assets* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            4.7%   4.5%
* Includes those of foreign subsidiaries.

   The parent company has offered an early retirement program to its employees. The program provides additional benefit payments for
employees who are age 50 or older with more than 15 years of service and elect early retirement benefit before the mandatory retirement
age of 60. As a result of an announcement in November 1998 that the program would be amended so that a portion of additional benefits
would not be provided for employees who apply for the program after April 1, 2000, a large number of employees applied for the program
during the year ended March 31, 2000. At March 31, 2001 and 2002, the liability for applicants to the program, discounted to reflect the
present value of the expected cash flows, was ¥39,478 million and ¥29,631 million ($223 million), respectively. Such liability is allocated
between “Other accrued expenses” and “Accrued pension and severance liabilities” in the accompanying consolidated balance sheets,
depending on when the additional benefit payment is expected to be made. Related expenses recognized by the parent company for the
years ended March 31, 2001 and 2002, included in selling, general and administrative expenses in the accompanying consolidated
statements of income, were ¥2,970 million and ¥4,387 million ($33 million), respectively.



14. COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
Japanese companies are subject to the Japanese Commercial Code (the “Code”) to which certain amendments became effective from
October 1, 2001.
    Effective October 1, 2001, the Code was revised whereby common stock par value was eliminated and at least 50% of the issue price
of new shares is required to be recorded as common stock and the remaining net proceeds as additional paid-in capital. Prior to the revi-
sion, the Code required companies to record, at least, the greater of par value or 50% of the issue price of new shares to common stock.
   Prior to October 1, 2001, the Code imposed certain restrictions on the repurchase and use of treasury stock. Effective October 1, 2001,
the Code eliminated these restrictions allowing Japanese companies to repurchase treasury stock by a resolution of the shareholders at the
general shareholders meeting and dispose of such treasury stock by resolution of the Board of Directors beginning April 1, 2002. The
repurchased amount of treasury stock cannot exceed the amount available for future dividend plus amount of common stock, additional
paid-in capital or legal reserve to be reduced in the case where such reduction was resolved at the general shareholders meeting.
   The Code permits, upon approval of the Board of Directors, transfers of amounts from additional paid-in capital to the common
stock account.
   The Code also permits Japanese companies, upon approval by the Board of Directors, to issue shares to existing shareholders without
consideration as a stock split. Such issuance of shares generally does not give rise to changes within the shareholders’ accounts. Prior to
October 1, 2001, the amount calculated by dividing the total amount of shareholders’ equity by the number of outstanding shares after
the stock split could not be less than ¥50. The revised Code eliminated this restriction.



15. RETAINED EARNINGS AND DIVIDENDS
Retained Earnings Appropriated for Legal Reserve—Prior to October 1, 2001, the Code provided that an amount at least equal to 10% of
the aggregate amount of cash dividends and certain other cash payments which are made as an appropriation of retained earnings appli-
cable to each fiscal period shall be appropriated and set aside as a legal reserve until such reserve equals 25% of the common stock
account. Effective October 1, 2001, the revised Code allows for such appropriations to be set aside as a legal reserve until the total addi-
tional paid-in capital and legal reserve equals 25% of the common stock account. The amount of total additional paid-in capital and legal
reserve which exceeds 25% of the common stock account can be transferred to retained earnings by resolution of the shareholders,
which may be available for dividends. In addition, the Code permits to transfer a portion of legal reserve to the common stock account by
resolution of the Board of Directors.
Unappropriated Retained Earnings and Dividends—The amount of retained earnings available for dividends under the Code was ¥281,470
million ($2,116 million) as of March 31, 2002, that is based on the amount recorded in the parent company’s general books of account
maintained in accordance with generally accepted Japanese accounting practices. The adjustments included in the accompanying consoli-
dated financial statements to conform with U.S. GAAP but not recorded in the books have no effect on the determination of retained earnings
available for dividends under the Code. In addition to the provision that requires an appropriation for a legal reserve in connection with the
cash payment as described above, the Code imposes certain limitations on the amount of retained earnings available for dividends.



                                                                                       page   90
                                                                      Mitsubishi Corporation Annual Report 2002
                                                                      {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    The Code permits transfers, upon approval of the shareholders, of a portion of unappropriated retained earnings available for dividends
to the common stock account.
   Dividends are approved by the shareholders at the annual meeting held subsequent to the fiscal year to which the dividends are
applicable. In addition, a semiannual interim dividend payment may be made by a resolution of the Board of Directors, subject to limitations
imposed by the Code.
   In the accompanying consolidated statements of shareholders’ equity, dividends and appropriations to the legal reserve shown for each
year represent dividends paid out during the year and the appropriation to the legal reserve made in relation to the respective dividends.



16. EARNINGS PER SHARE
The following table presents the reconciliation of the numerators and the denominators of the basic and diluted EPS computations:
                                                                                                                                                                      Millions of
                                                                                                                                            Millions of Yen          U.S. Dollars
                                                                                                                                    2001                      2002      2002
Numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ¥92,105                ¥60,225         $453

                                                                                                                                      Thousands of Shares
                                                                                                                                   2001                   2002
Denominator:
  Weighted-average common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         1,567,170              1,566,881
  Effect of dilutive stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        6
Total weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,567,170              1,566,887

                                                                                                                                                  Yen                U.S. Dollars
                                                                                                                                     2001                     2002      2002
Net income per share:
  Basic and diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ¥58.77                 ¥38.44        $0.29



17. SEGMENT INFORMATION
SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” establishes standards for reporting information
about operating segments in financial statements. Operating segments are defined as components of an enterprise of which separate
financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources
and in assessing performance.
   The operating segments were determined based on the nature of the products and services offered. The companies’ reportable
operating segments consist of the following seven business groups:
        New Business Initiative —The New Business Initiative Group identifies and invests in new companies, develops new business mod-
        els and supports other business groups through the use of financial, information, logistics and marketing technologies.
        IT & Electronics Business —The IT & Electronics Business Group identifies and invests in technology related companies and focuses
        its trading activities on hardware and software products.
        Energy Business —The Energy Business Group identifies and invests in oil and gas projects and focuses its trading activities on
        crude oil, petroleum products, liquefied petroleum gas, liquefied natural gas, and carbon materials and products.
        Metals —The Metals Group is mainly engaged in developing, manufacturing, marketing and distribution of metal and non-ferrous
        metal products such as steel, aluminum and copper.
        Machinery —The Machinery Group is engaged in planning, developing and coordinating construction projects for customers in a
        variety of industries such as power-generation, shipbuilding and automobiles, construction equipment and industrial machinery.
        This group also develops real estate and earns income from rental activities.
        Chemicals —The Chemicals Group identifies and invests in chemical development projects and focuses its trading activities on
        basic chemicals such as synthetic fiber materials, petrochemicals, non-organic chemicals, fertilizers and specialty chemicals.
        Living Essentials —The Living Essentials Group invests in companies and focuses its trading activities on products such as foods,
        textiles, lumber and general merchandise.




                                                                                            page   91
                                                                                    Mitsubishi Corporation Annual Report 2002
                                                                                    {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




    Management evaluates segment performance based on several factors, of which the primary financial measure is net income (loss)
determined in accordance with Japanese GAAP. In addition, management utilizes internally developed mechanisms for the purpose of
internal operating decisions.
      Intersegment transactions are priced with reference to prices applicable to transactions with unaffiliated parties.
      The companies’ operating segment information at and for the years ended March 31, 2001 and 2002 is as follows:
                                                                                                                        Millions of Yen
                                             New             IT &                                                                                                                            Adjustments
                                           Business       Electronics     Energy                                                             Living                                               and
2001                                       Initiative      Business      Business           Metals        Machinery       Chemicals        Essentials           Total          Other(1)      Eliminations(2) Consolidated

Operating transactions:
  External customers . . . ¥ 147,032                      ¥518,340 ¥3,399,796          ¥2,281,360 ¥2,695,665            ¥1,358,082        ¥3,545,589       ¥13,945,864        ¥ 76,786       ¥ (27,352) ¥13,995,298
  Intersegment . . . . . . .   4,449                         2,087     36,902               4,626     11,637                 1,558             2,545            63,804               1         (63,805)
         Total . . . . . . . . . . ¥ 151,481              ¥520,427 ¥3,436,698          ¥2,285,986 ¥2,707,302            ¥1,359,640        ¥3,548,134       ¥14,009,668        ¥ 76,787       ¥ (91,157) ¥13,995,298

Gross profit . . . . . . . . . . . ¥ 28,583 ¥ 30,513 ¥ 55,759                          ¥      92,694 ¥ 105,727          ¥    51,350 ¥ 235,959              ¥     600,585      ¥ 13,305       ¥ (10,174) ¥ 603,716
Net income (loss) . . . . . .          (3,912)  64,987   4,272                                 7,243      4,326             (24,681)    27,964                    80,199        14,845          (2,939)     92,105
Segment assets . . . . . . .        1,148,379  346,221 741,111                             1,083,009  2,061,219             596,924  1,408,208                 7,385,071       915,721        (233,603)  8,067,189
Depreciation and
 amortization . . . . . . . . .        10,228    7,194  11,581                                   7,546       17,747            1,960           14,360             70,616        12,412              1,321        84,349
Capital expenditures
 for long-lived assets . . .           16,500   46,161   8,247                                   6,626         52,666        10,930            19,764           160,894             8,569        25,689         195,152


                                                                                                                        Millions of Yen
                                             New             IT &                                                                                                                            Adjustments
                                           Business       Electronics     Energy                                                             Living                                               and
2002                                       Initiative      Business      Business           Metals        Machinery       Chemicals        Essentials           Total          Other(1)      Eliminations(2) Consolidated

Operating transactions:
  External customers . . . ¥ 163,333                      ¥428,435 ¥3,436,847          ¥1,962,462 ¥2,147,173            ¥1,298,371        ¥3,777,821       ¥13,214,442        ¥ 31,694       ¥ (15,461) ¥13,230,675
  Intersegment . . . . . . .   5,853                         1,889     36,527               4,545     11,356                 2,108             3,271            65,549             724         (66,273)
         Total . . . . . . . . . . ¥ 169,186              ¥430,324 ¥3,473,374          ¥1,967,007 ¥2,158,529            ¥1,300,479        ¥3,781,092       ¥13,279,991        ¥ 32,418       ¥ (81,734) ¥13,230,675

Gross profit . . . . . . . . . . . ¥ 30,954 ¥ 30,095 ¥ 49,932                          ¥ 106,553 ¥ 122,829              ¥    50,139       ¥ 239,227        ¥     629,729      ¥ 12,144 ¥ 2,049 ¥ 643,922
Net income (loss) . . . . . .         (20,290)   8,671  21,717                             13,856    12,201                   6,545           29,266              71,966        (9,502)   (2,239)    60,225
Segment assets . . . . . . .        1,047,290  311,521 834,524                          1,211,116 1,950,836                 554,036        1,463,152           7,372,475       971,769  (199,318) 8,144,926
Depreciation and
 amortization . . . . . . . . .         9,958    8,298   9,201                                  13,097         17,701          2,480           15,602             76,337            5,076           8,873        90,286
Capital expenditures
 for long-lived assets . . .           15,938    1,016   8,070                                  11,671         64,530        10,253            16,211           127,689             8,498        10,513         146,700


                                                                                                                   Millions of U.S. Dollars
                                               New            IT &                                                                                                                            Adjustments
                                             Business      Electronics     Energy                                                               Living                                             and
                                                                                                                                                                                       (1)
2002                                         Initiative     Business      Business           Metals        Machinery        Chemicals         Essentials          Total         Other         Eliminations(2) Consolidated

Operating transactions:
  External customers . . . . . .              $1,228        $3,222        $25,841           $14,756        $16,144           $9,762           $28,405           $99,358         $ 238           $ (117)         $99,479
  Intersegment . . . . . . . . . .                44            14            275                34             86               16                24               493             6             (499)
         Total . . . . . . . . . . . . .      $1,272        $3,236        $26,116           $14,790        $16,230           $9,778           $28,429           $99,851         $ 244           $ (616)         $99,479

Gross profit . . . . . . . . . . . . . .      $ 233         $ 226         $     375         $      801     $      924        $ 377            $ 1,799           $ 4,735         $   91          $       16      $ 4,842
Net income (loss) . . . . . . . . .             (153)           65              163                104             92            49               220               540            (71)                (16)         453
Segment assets . . . . . . . . . .             7,874         2,342            6,275              9,106         14,668         4,166            11,001            55,432          7,307              (1,499)      61,240
Depreciation and
 amortization . . . . . . . . . . . .              75            62             69                   99           133             19               117                  574           38               67            679
Capital expenditures
 for long-lived assets . . . . . .                120              8            61                   88           485             77               122                  961           64               78          1,103
(1)
    “Other” represents corporate departments which primarily provide services and operational support to the companies and affiliated companies. This column also
    includes certain revenue 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” were ¥915,721 million and ¥971,769 million ($7,307 million) at March 31, 2001 and 2002,
    respectively, which consist primarily of cash, time deposits and securities for financial and investment activities.
(2)
    “Adjustments and eliminations” include certain income and expense items that are not allocated to reportable operating segments, and certain adjustments and
    reclassifications which have been incorporated in the accompanying consolidated financial statements to conform with U.S. GAAP and intersegment eliminations.




                                                                                                           page   92
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




Geographic Information
Operating transactions are attributed to geographic areas based on the location of the assets producing such revenues. Operating trans-
actions, gross profit and long-lived assets at and for the years ended March 31, 2001 and 2002 are as follows:
                                                                                                                                                                            Millions of
                                                                                                                                               Millions of Yen              U.S. Dollars
                                                                                                                                        2001                     2002          2002
Operating transactions:
  Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ¥12,143,130         ¥11,148,925         $83,827
  U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            757,912             674,560           5,072
  United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    234,796             291,374           2,191
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             859,460           1,115,816           8,389
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥13,995,298         ¥13,230,675         $99,479

Gross profit:
  Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ¥   460,857         ¥        472,377    $ 3,552
  U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             35,168                   37,508        282
  United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     29,512                   34,260        258
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              78,179                   99,777        750
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥   603,716         ¥        643,922    $ 4,842

Long-lived assets:
  Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ¥   624,383         ¥        616,074    $ 4,632
  Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               63,705                   65,726        494
  Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              18,038                   58,034        437
  U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             40,650                   52,398        394
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             240,088                  281,951      2,120
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥   986,864         ¥ 1,074,183         $ 8,077

   Neither the companies nor any of their segments depended on any single customer, small group of customers, or government for more
than 10% of their operating transactions for the years ended March 31, 2001 and 2002.



18. OTHER EXPENSE— NET
“Other expense—net” for the years ended March 31, 2001 and 2002 consists of the following:
                                                                                                                                                                             Millions of
                                                                                                                                                 Millions of Yen            U.S. Dollars
                                                                                                                                          2001                     2002         2002
Net foreign currency transaction gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        ¥(11,688)                ¥(3,749)        $(28)
Provision for purchase commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             6,083                   3,212           24
Loss on write-down of golf membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              5,706                     293            2
Financial support for an unaffiliated company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                      6,460           49
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                2,828                      21
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥ 2,929                  ¥ 6,237         $ 47


   During the year ended March 31, 2002, the parent company provided financial and managerial support to Kinsho Corporation (“Kin-
sho”), a 9.2% owned company, in order to support Kinsho’s on-going restructuring plan and, accordingly, recorded a charge of ¥6,460
million ($49 million) as “Financial support for an unaffiliated company.”




                                                                                               page   93
                                                                         Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




19. LEASES
Lessor
The companies lease vehicles, retailing and service equipment, and other industrial machinery and equipment which are classified as
direct financing leases under SFAS No. 13, “Accounting for Leases.”
   Net investments in direct financing leases at March 31, 2001 and 2002, included in “Receivables—trade” and “Non-current notes,
loans and accounts receivable—trade” in the accompanying consolidated balance sheets, are as follows:
                                                                                                                                                                                  Millions of
                                                                                                                                                     Millions of Yen             U.S. Dollars
                                                                                                                                             2001                      2002         2002
Gross investments in direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           ¥ 38,203                ¥ 99,848           $ 751
Less—unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      (10,577)                (31,663)           (238)
Net investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ¥ 27,626                ¥ 68,185           $ 513


    The companies also lease airplanes, office buildings and other industrial assets under operating leases. The cost and accumulated depre-
ciation of the leased property at March 31, 2002, are ¥285,507 million ($2,147 million) and ¥116,322 million ($875 million), respectively.
    Future minimum lease payments to be received as of March 31, 2002 are as follows:
                                                                                                                                                                                  Millions of
                                                                                                                                      Millions of Yen                            U.S. Dollars
                                                                                                                 Direct
                                                                                                               Financing                 Operating
                                                                                                                Leases                    Leases                       Total        Total
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ¥21,666                   ¥ 17,785                ¥ 39,451          $ 297
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         15,549                     16,494                  32,043            241
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          9,700                     14,122                  23,822            179
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          7,612                     12,201                  19,813            149
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6,982                     10,359                  17,341            130
2008 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                38,339                     47,178                  85,517            643
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ¥99,848                   ¥118,139                ¥217,987          $1,639


Lessee
The companies lease office space and certain other assets under operating leases. Total rental expenses under such leases for the years
ended March 31, 2001 and 2002 were ¥30,105 million and ¥25,291 million ($190 million), respectively.
    Future minimum lease payments under noncancelable leases as of March 31, 2002 are as follows:
                                                                                                                                                                                  Millions of
                                                                                                                                                               Millions of Yen   U.S. Dollars
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ¥ 15,961             $120
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        10,998               83
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        10,301               77
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         9,849               74
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7,417               56
2008 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               77,366              582
          Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ¥131,892             $992




                                                                                                page   94
                                                                        Mitsubishi Corporation Annual Report 2002
                                                                        {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




20. STOCK-BASED COMPENSATION
The parent company has introduced stock option plans for directors and associate directors. Under the plans, the right is granted to
purchase the shares of the parent company at an exercise price determined based on the greater of the quoted price of the shares on the
Tokyo Stock Exchange on the grant date or the average quoted price for a month prior to the grant date. Under the stock option plans in
the years ended March 31, 2001 and 2002, the options vest 100% over a 23 month service period starting August 2000 and August
2001, respectively. Exercisable periods are eight years from the end of June 2002 and 2003, respectively. On June 27, 2002, the share-
holders approved an additional grant of stock options for 1,204,000 shares during the year ending March 31, 2003.
   The companies’ net income and basic and diluted EPS would have been reduced to the pro forma amounts indicated below if com-
pensation cost for the parent company’s stock option plan had been determined based on the fair value at the grant date for awards in
accordance with the provisions of SFAS No. 123.
                                                                                                                                                                                          Millions of
                                                                                                                                                    Millions of Yen                      U.S. Dollars
                                                                                                                                           2001                       2002                  2002
Net income:
  As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ¥92,105                    ¥60,225                   $453
  Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          92,084                     60,114                    452

                                                                                                                                                            Yen                          U.S. Dollars
                                                                                                                                            2001                       2002                 2002
Basic EPS:
  As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ¥58.77                      ¥38.44                $0.29
  Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            58.76                       38.37                 0.29

Diluted EPS:
  As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             58.77                      38.44                 0.29
  Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             58.76                      38.36                 0.29

    The fair value of these stock options was estimated using the binomial option pricing model under the following assumptions:
                                                                                                                                                                      2001                2002
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.74%                1.01%
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             32.09%               33.60%
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    0.94%                0.82%
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         9.92 years           9.92 years

    The weighted-average fair values of options granted in 2001 and 2002 were ¥330 and ¥357 ($2.68) per share, respectively.
    The following table summarizes information about stock option activity for the years ended March 31, 2001 and 2002:
                                                                                                                                                                             Weighted Average
                                                                                                                                        Number                               Exercisable Price
                                                                                                                                        of Shares                       Yen              U.S. Dollars
Outstanding at April 1, 2000
  Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           313,000                       ¥ 903                  $6.8
Outstanding at March 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      313,000                           903                     6.8
  Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,091,000                         1,002                     7.5
Outstanding at March 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    1,404,000                        ¥ 980                  $7.4


    None of the options were exercisable at March 31, 2001 and 2002.




                                                                                               page   95
                                                   Mitsubishi Corporation Annual Report 2002
                                                   {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




   Summary information about the parent company’s stock options outstanding at March 31, 2002 is as follows:
                                                                                                   Outstanding
                                                                                                    Weighted                       Weighted
        Range of                                       Number of                                    Average                         Average
      Exercise Price                                    Shares                                    Remaining Life                 Exercise Price
           Yen                                                                                        Years                           Yen
             ¥ 903                                      313,000                                       8.25                          ¥ 903
              1,002                                   1,091,000                                       9.25                           1,002
    ¥903 to ¥1,002                                    1,404,000                                       9.03                          ¥ 980

                                                                                                   Outstanding
                                                                                                    Weighted                         Weighted
          Range of                                     Number of                                    Average                           Average
        Exercise Price                                  Shares                                    Remaining Life                   Exercise Price
         U.S. Dollars                                                                                 Years                         U.S. Dollars
                 $6.8                                   313,000                                       8.25                             $6.8
                  7.5                                 1,091,000                                       9.25                              7.5
       $6.8 to $7.5                                   1,404,000                                       9.03                             $7.4



21. COMMITMENTS AND CONTINGENT LIABILITIES
The companies, in the normal course of trading operations, enter into substantial long-term purchase commitments for various com-
modities, principally LNG, non-ferrous metals and chemical products at fixed prices or basic prices adjustable to market. Such purchase
commitments are in most instances matched with counterparty sales contracts. At March 31, 2002, the outstanding long-term purchase
commitments amounted to ¥4,280,348 million ($32,183 million) of which deliveries are at various dates through 2028.
   The companies’ contingent liabilities at March 31, 2002 as guarantor of indebtedness of others aggregated ¥392,633 million ($2,952
million), including ¥152,289 million ($1,145 million) relating to affiliated companies. Such guarantees have been provided primarily to
suppliers and customers as indirect financing arrangements.
   The companies also had long-term financing commitments aggregating ¥109,543 million ($824 million) at March 31, 2002 for loans,
investments in equity capital and financing on a deferred-payment basis for the cost of equipment to be purchased by customers.
    On January 19, 2000, the parent company was indicted on one count of aiding and abetting a price-fixing conspiracy with respect to
sales of graphite electrodes in violation of the Sherman Act by the U.S. Department of Justice. In May 2001, the U.S. District Court
announced its decision on sentencing in accordance with the Sentencing Agreement and the parent company paid a fine in the amount
of $134 million. The provision of ¥16,602 million was recorded as “litigation charge” in the accompanying consolidated statement of
income for the year ended March 31, 2001. There are no further commitments or contingent liabilities in connection with this criminal
investigation in the United States.
    The parent company and/or a U.S. subsidiary have been sued in several civil lawsuits brought by users of artificial graphite electrodes
in the United States and Canada for damages in connection with taking part in the price-fixing conspiracy noted above. Four of these
cases have been resolved between the parties, while four others remain active, including two new lawsuits filed by users in Europe. With
respect to these cases, the parent company has recorded a “litigation charge” of ¥13,362 million ($100 million) in the accompanying
consolidated statements of income for the year ended March 31, 2002. Other civil lawsuits concerning the artificial graphite electrode-related
transactions are still in the process of litigation in the United States and Canada. As of March 31, 2002, the parent company and/or the
U.S. subsidiary cannot predict what, if any, financial liabilities may be incurred as a result of these actions.
    The parent company and the U.S. subsidiary are also defendants in a lawsuit brought by UCAR International Inc. (“UCAR”), in the
United States, a company in which the parent company owned 50% from 1991 until January 1995 when this interest was sold. In the
case, UCAR seeks the return of $406 million paid by UCAR for the parent company’s stock in January 1995, together with interest. UCAR
alleges that the amount paid to the parent company by UCAR was illegal under Delaware General Corporation Law. UCAR also seeks
other unspecified damages for alleged aiding and abetting breaches of fiduciary duty and unjust enrichment, together with interest. On
June 9, 2000, the parent company and the U.S. subsidiary moved to dismiss the complaint for failure to state a claim.
   The motion was fully briefed as of September 1, 2000. Arguments were heard on April 2, 2001, and the Court reserved judgment.
Discovery in the matter has been stayed until September 2002, by which time the Court has advised the parties to expect a decision on
the motion to dismiss. In the event the motion to dismiss is denied, the parent company and the U.S. subsidiary plan to contest the case
vigorously. At this time, the parent company and the U.S. subsidiary cannot predict what, if any, financial liability it may be incurred in
connection with this case, because there has been no significant progress to date.
    The companies are also parties to other litigation arising in the ordinary course of business. In the opinion of management and legal
counsel, the companies’ liability, if any, when ultimately determined from settlement of other litigation will not have a materially adverse
effect on the companies’ financial position or results of operations.




                                                                    page   96
                                                                       Mitsubishi Corporation Annual Report 2002
                                                                      {NOTES TO CONSOLIDATED FINANCIAL STATEMENTS}




22. SUBSEQUENT EVENTS
Dividends —On June 27, 2002 the shareholders authorized payment of a cash dividend of ¥4 ($0.03) per share, or a total of ¥6,268
million ($47 million) to shareholders of record on March 31, 2002.
Bond Offering —On June 17, 2002, the parent company completed an offering of ¥150,000 million ($1,128 million) zero coupon con-
vertible bonds with stock acquisition rights due 2011. The bonds are convertible, at the option of the holder, into the parent company’s
common stock at a conversion price of ¥1,188 per share, exercisable on or after July 1, 2002, subject to adjustments under certain
defined events. The bonds may be redeemed at the option of the parent company under certain defined redemption events. The bonds
were sold at a premium of ¥3,750 million ($28 million) which has been recorded as part of the bond payable and will be amortized to
income using the interest method over the term of the bonds. The parent company paid ¥3,750 million ($28 million) for debt issuance
costs related to the bonds. The debt issuance costs have been included in other assets and amortized to interest expense using the
interest method over the term of the bonds. The parent company expects to use ¥149,910 million ($1,127 million) of the net proceeds
from the bonds for the repayment of short-term debt incurred in connection with strategic investments including energy and natural
resources projects and project development areas. Had these bonds been issued as of the beginning of the year ended March 31,
2002, diluted EPS would have been ¥35.57.
Joint Venture —On June 27, 2002, the shareholders approved the plan to carve out and contribute its steel products operations, which
had net assets of approximately ¥90 billion ($677 million) as of March 31, 2002, to a Joint Venture (“JV”) with Nissho Iwai Corporation.
Under the terms of the agreement, the parent company will hold a 60% controlling interest in the JV. The transaction is subject to
several conditions, including the approval of Fair Trade Commission of Japan. The transaction is expected to close in January of 2003.
Treasury Stock —On June 27, 2002, the shareholders approved a measure that will allow the parent company to purchase treasury stock
not to exceed the lesser of 100 million shares or ¥100 billion.



Supplemental Oil and Gas Information (unaudited)
The companies’ oil and gas exploration, development and production activities are conducted primarily through equity method investees
in offshore and onshore areas of the Pacific Rim. Supplementary information on the companies’ share of affiliated companies presented
below is prepared in accordance with requirements prescribed by SFAS No. 69, “Disclosures about Oil and Gas Producing Activities,” as
of and for the year ended March 31, 2002:
                                                                                                                                                                                      Millions of
                                                                                                                                                             Millions of Yen         U.S. Dollars
Costs incurred in oil and gas property acquisition, exploration and development*1 . . . . . . . . . . . . . . . . . . . .                                      ¥11,804                   $ 89
Capitalized costs relating to oil and gas producing activities*1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          76,755                    577
Results of operations*2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         13,023                     98


                                                                                                                                                                Crude oil and        Natural gas
                                                                                                                                                              natural gas liquids    (Billions of
                                                                                                                                                             (Millions of barrels)   cubic feet)
Proved reserve quantity information:
Reserves at April 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                115                1,195
  Revision of previous estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   (28)
  Improved recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1
  Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (9)                  (40)
Reserves at March 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     79               1,155



                                                                                                                                                                                      Millions of
                                                                                                                                                             Millions of Yen         U.S. Dollars
Standardized measure of discounted future net cash flows relating to proved oil and gas reserves*2*3 . . . . .                                                ¥111,162                   $836

*1 Natural gas activities include costs related to the production of LNG.
*2 Natural gas activities include revenues and costs related to the production of LNG.
*3 Future net cash flows were computed using year-end prices and costs and year-end statutory tax rates that relate to existing proved oil and gas reserves in which the
   companies have interests.




                                                                                             page   97
                                             Mitsubishi Corporation Annual Report 2002
                                                   {INDEPENDENT AUDITORS’ REPORT}




Independent Auditors’ Report



     Tohmatsu & Co.
     MS Shibaura Building
     13-23, Shibaura 4-chome
     Minato-ku, Tokyo 108-8530




     To the Board of Directors and Shareholders of Mitsubishi Corporation
     (Mitsubishi Shoji Kabushiki Kaisha):


     We have audited the accompanying consolidated balance sheets of Mitsubishi Corporation (Mitsubishi Shoji
     Kabushiki Kaisha) and subsidiaries as of March 31, 2001 and 2002, and the related consolidated statements of
     income, comprehensive income, shareholders’ equity, and cash flows for the years then ended (all expressed in
     Japanese yen). These consolidated financial statements are the responsibility of the Company’s management. Our
     responsibility is to express 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 States of
     America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
     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 audit also 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 a reasonable basis for our opinion.
        In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated
     financial position of Mitsubishi Corporation and subsidiaries as of March 31, 2001 and 2002, and the consolidated
     results of their operations and their cash flows for the years then ended in conformity with accounting principles
     generally accepted in the United States of America.
        As discussed in Note 1, the accompanying consolidated statement of income for the year ended March 31, 2001
     has been restated.
        As discussed in Note 2 to the consolidated financial statements, effective April 1, 2001, Mitsubishi Corporation
     and subsidiaries changed their method of accounting for derivative instruments and hedging activities to conform to
     Statement of Financial Accounting Standards No. 133.
        Our audits also comprehended the translation of Japanese yen amounts into United States dollar amounts
     included in the consolidated financial statements with respect to the year ended March 31, 2002 and, in our
     opinion, such translation has been made in conformity with the basis stated in Note 1. Such United States dollar
     amounts are presented solely for the convenience of readers outside Japan.




     June 27, 2002




                                                             page   98
              Mitsubishi Corporation Annual Report 2002
                         {CORPORATE SECTION}




Corporate Section


Principal Subsidiaries and Affiliates                     100

General Information                                       104

Organizational Structure                                  106

Corporate Data/Network                                    107




                              page   99
                                                        Mitsubishi Corporation Annual Report 2002
                                                          {PRINCIPAL SUBSIDIARIES AND AFFILIATES}




Principal Subsidiaries and Affiliates (As of March 31, 2002)

NEW BUSINESS INITIATIVE                                                                                                                      (57 companies)
COMPANY NAME                                      SHAREHOLDING (%)    MAIN BUSINESS
Diamond Lease Co., Ltd. (Japan)                        15.19          Equipment leasing, installment sales and other financial services
IT Frontier Corporation (Japan)                        80.00          Total IT solutions company
Kentucky Fried Chicken Japan Ltd. (Japan)              31.12          Fast-food restaurant chain
LAWSON, INC. (Japan)                                   30.10          Franchisor of LAWSON convenience store chain
MC Capital Inc. (U.S.A.)                              100.00          Investment and related activities
MC Finance International B.V. (The Netherlands)       100.00          Financial investment company
MC Macro Fund Inc. (Cayman Islands)                    98.92          Financial investment company
MC Terminal Co., Ltd. (Japan)                         100.00          Tankyard operation and coordination
MC Trans International Inc. (Japan)                   100.00          Total logistics solutions company
Mitsubishi Corporation Finance PLC (U.K.)             100.00          Financial investment company
Nihon Hospital Service, Inc. (Japan)                  100.00          Marketing of JITS (Just in time & stockless) medical supplies services
Nippon Care Supply Co., Ltd. (Japan)                   75.75          Marketing, rental and leasing of equipment for nursing, healthcare and medical treatment
                                                                      and nursing items
Ryoko Logistics Corporation (Japan)                   100.00          Warehousing and distribution
Seto Futo Co., Ltd. (Japan)                            41.65          Maritime transportation and warehousing businesses
Sodexho Japan Co., Ltd. (Japan)                        20.01          Contract food service
(42 other companies)

IT & ELECTRONICS BUSINESS                                                                                                                    (28 companies)
COMPANY NAME                            SHAREHOLDING (%)              MAIN BUSINESS
JAPAN SPACE IMAGING CORPORATION (Japan)      94.90                    Processing and sales of digital satellite images
MC Silicon Valley Inc. (U.S.A.)             100.00                    Management of venture investment
Memory-Tech Corporation (Japan)              29.21                    Manufacturing of CDs, CD-ROMs and DVDs
MS Communications Co., Ltd. (Japan)                    50.00          Mobile communications services and handsets, other communication services, and
                                                                      services and equipment for communications broadcasting
Net One Systems Co., Ltd. (Japan)                      20.27          Network integration, and sales of LAN/WAN-related equipment and software
PLAT-ONE CORPORATION (Japan)                           35.00          Platform service provider for broadcasters using a digital communications satellite (CS)
                                                                      situated in the 110-degree east orbital slot
Space Communications Corporation (Japan)               28.41          Domestic and international telecommunications business and broadcasting business via
                                                                      Superbird satellites
UNIDUX Inc. (Japan)                                    27.94          Import and domestic sales of semiconductors and electronics components
(20 other companies)

ENERGY BUSINESS                                                                                                                              (71 companies)
COMPANY NAME                                       SHAREHOLDING (%)   MAIN BUSINESS
Brunei LNG Sendirian Berhad (Brunei)                    25.00         Manufacturing and sales of LNG
Dia Shoseki Co., Ltd. (Japan)                           50.00         Marketing of petroleum products
Japan Australia LNG (MIMI) Pty., Ltd. (Australia)       50.00         Development of resources (LNG, LPG, condensate and crude oil)
MC BITOR Ltd. (China)                                   50.00         Marketing of Orimulsion®
MC Carbon Co., Ltd. (Japan)                            100.00         Marketing of carbon products
MC Energy, Inc. (Japan)                                100.00         Marketing of asphalt and petroleum products
MC Kaiun Co., Ltd. (Japan)                              70.00         Coastal marine transportation
MC Marine Co., Ltd. (Japan)                            100.00         Tanker operation
MCX New Ventures, Ltd. (U.S.A.)                        100.00         Exploration and development of crude oil and gas
Mitsubishi Liquefied Petroleum Gas Co., Ltd. (Japan)    52.50         Marketing of LPG and LPG equipment
Mitsubishi Shoji Sekiyu Co., Ltd. (Japan)              100.00         Marketing of petroleum products
Onahama Petroleum Co., Ltd. (Japan)                     80.00         Oil import, storage and sales as well as land and facility leasing
Petro-Diamond Inc. (U.S.A.)                            100.00         Marketing of petroleum products
Petro-Diamond Japan Corporation (Japan)                100.00         Marketing of petroleum products
Petro-Diamond Singapore (Pte) Ltd. (Singapore)         100.00         Marketing of crude oil and petroleum products
Sakhalin Energy Investment Co., Ltd. (Russia)           20.00         Exploration of crude oil and gas
Sekiyu Cokes Kogyo Co., Ltd. (Japan)                   100.00         Storage of petroleum coke
TOHO Sekiyu K.K. (Japan)                                33.33         Refining, production and sales of petroleum products
(53 other companies)




                                                                       page   100
                                                           Mitsubishi Corporation Annual Report 2002
                                                              {PRINCIPAL SUBSIDIARIES AND AFFILIATES}




METALS                                                                                                                                       (129 companies)
COMPANY NAME                                        SHAREHOLDING (%)      MAIN BUSINESS
ASAHI KIZAI K.K. (Japan)                                 62.43            Sales and leasing of construction machinery
Asahi Steel K.K. (Japan)                                 78.10            Sales of specialty steel
Coilplus Holdings, Inc. (U.S.A.)                         97.59            Processing of steel sheets
Fugen Corporation (Japan)                                60.76            Sales of aluminum, copper and metal products
Heisei Minerals Corporation (U.S.A.)                     40.00            Mining, smelting and sales of copper
Iron Ore Company of Canada (Canada)                      25.00            Iron ore mining
Isuzu Corporation (Japan)                                70.00            Processing and sales of steel sheets
JECO Corporation (Japan)                                 60.00            Investment company for Minera Escondida Ltda. copper mines
Keiyou Blanking Kogyo K.K. (Japan)                       40.41            Processing of metal
Kyushu Steel Center Co., Ltd. (Japan)                    55.29            Steel materials warehousing and processing of steel sheets
M.C. Aluminum Co., Ltd. (Japan)                         100.00            Manufacturing of secondary aluminum alloy ingots
M.C. Inversiones Limitada (Chile)                       100.00            Investment company for Chilean iron ore mine
MC Metal Service Asia (Thailand) Co., Ltd. (Thailand)   100.00            Processing and sales of steel sheets
MC Metaltech Corporation (Japan)                        100.00            Sales of steel materials and products
MC Metal Urgent Service and Solution House Inc. (Japan) 100.00            Sales of stainless steel
MC Nishinihon Tekko Center Co., Ltd. (Japan)            100.00            Processing and sales of metal
MC Non-Ferrous Metal Products Co., Ltd. (Japan)         100.00            Sales of aluminum, copper and metal products, and metal building products installation
MC Steel Trade Center Pte Ltd. (Singapore)              100.00            Sales of steel products
MC Steel Trade Inc. (Japan)                             100.00            Export sales of steel products
Mitsubishi Development Pty., Ltd. (Australia)           100.00            Investment company for coal mining projects
Mitsubishi International Steel Inc. (U.S.A.)            100.00            Sales of steel products
Mitsubishi Shoji Light Metal Sales Corporation (Japan) 100.00             Sales of aluminum and non-ferrous metals
NOVA ERA SILICON S/A (Brazil)                            25.50            Producer of ferro-silicon
Ohno Kogyo K.K. (Japan)                                  67.00            Sales of steel products
OTOFUJI Corporation (Japan)                              71.03            Sales of steel piping and related products
Ryowa Development Pty., Ltd. (Australia)                100.00            Investment in aluminum smelting operations and sales of aluminum
Shenzhen Baoling Tongli Ltd., Corporation (China)        70.00            Processing and sales of steel sheets
Sus Tech Corporation (Japan)                             57.90            Processing and sales of stainless steel products
Ultra Clean Technology Systems & Service, Inc. (U.S.A.)   100.00          Designing, manufacturing, and marketing of sub-systems for semiconductor manufacturing
                                                                          tools, primarily customized ultra-clean gas control panels and gas delivery systems
(100 other companies)

MACHINERY                                                                                                                                    (194 companies)
COMPANY NAME                                         SHAREHOLDING (%)     MAIN BUSINESS
Diamond City Co., Ltd. (Japan)                             33.38          Development and management of shopping complexes
Diamond Generating Corporation (U.S.A.)                   100.00          Independent power producer
Isuzu Engine Manufacturing Co., (Thailand) Ltd. (Thailand) 15.00          Manufacturing of automotive engines
Isuzu Motors Co., (Thailand) Ltd. (Thailand)               47.93          Manufacturing of automobiles
Isuzu Philippines Corporation (Philippines)                35.00          Manufacturing and distribution of automobiles
MAC Funding Corporation (U.S.A.)                          100.00          Financing for machine tools and printing presses
MC Machinery Systems, Inc. (U.S.A.)                       100.00          Distribution and servicing of industrial machinery
MC Realty, Inc. (U.S.A.)                                  100.00          Real estate consulting and asset management
Mitsubishi Auto Credit-Lease Corp. (Japan)                 43.25          Car loan arranging and, leasing and rental
Mitsubishi Corporation Technos (Japan)                     70.00          Machine tool sales
Mitsubishi Motors de Portugal, S.A. (Portugal)             50.00          Distribution of automobiles
MKG Kreditbank GmbH (Germany)                              45.00          Dealer finance, leasing and consumer finance of automobiles
MSK Tokyu Machinery Co., Ltd. (Japan)                     100.00          Construction, sales and service of agricultural machinery and facilities
Nikken Corporation (Japan)                                 63.76          Rental and sales of construction machinery and other equipment
Nittoh Urban Development Corporation (Japan)               95.00          Construction, planning, operation and management of commercial facilities
P.T. Dipo Star Finance (Indonesia)                         85.00          Leasing and consumer finance
Spitalgate Dealer Services Ltd. (U.K.)                     51.00          Dealer finance of automobiles
Thai Auto Sales Co., Ltd. (Thailand)                       93.50          Car leasing and consumer finance
The Colt Car Company Ltd. (U.K.)                           49.00          Distribution of automobiles
Tri Petch Isuzu Sales Co., Ltd. (Thailand)                 98.67          Distribution of automobiles
(174 other companies)




                                                                           page   101
                                                                Mitsubishi Corporation Annual Report 2002
                                                                    {PRINCIPAL SUBSIDIARIES AND AFFILIATES}




 CHEMICALS                                                                                                                                                   (58 companies)
 COMPANY NAME                                         SHAREHOLDING (%)           MAIN BUSINESS
 Aristech Acrylics Limited Liability Company (U.S.A.)      90.00                 Acrylic manufacturer
 Aromatics Malaysia Sdn. Bhd. (Malaysia)                   20.00                 Manufacturing and marketing of benzene and paraxylene
 C&M Fine Pack, Inc. (U.S.A.)                              20.00                 Manufacturing of food containers
 Chuo Kasei Co., Ltd. (Japan)                             100.00                 Manufacturing and marketing of chemical products
 Exportadora de Sal, S.A. de C.V. (Mexico)                 49.00                 Manufacturing of solar salt
 Meiwa Corporation (Japan)                                 32.93                 Trading company
 Metanol de Oriente, METOR, S.A. (Venezuela)               25.00                 Manufacturing and marketing of methanol
 MITENI S.p.A. (Italy)                                     91.11                 Manufacturing of fluorochemicals
 Mitsubishi Shoji Agri-Service Corp. (Japan)              100.00                 A leading national wholesaler for fertilizers, other farm supplies, rice and produce
 Mitsubishi Shoji Chemical Corporation (Japan)                100.00             Marketing of aromatic solvents, aliphatic solvents, coating materials, flame retardants
                                                                                 and monomers
 Mitsubishi Shoji Plastics Corp. (Japan)                      100.00             Marketing of synthetic raw materials and plastics
 P.T. Kaltim Parna Industri (Indonesia)                        55.00             Manufacturing of ammonia
 Tosoh Hellas A.I.C. (Greece)                                  35.00             Production and sales of electrolitic manganese dioxide (EMD)
 Towa Chemical Industry Co., Ltd. (Japan)                      34.34             Manufacturing and marketing of sugar alcohol
 (44 other companies)

 LIVING ESSENTIALS                                                                                                                                          (178 companies)
  COMPANY NAME                                         SHAREHOLDING (%)          MAIN BUSINESS
  AGREX, Inc. (U.S.A.)                                     100.00                Storage and marketing of grain
  Aitex Co., Ltd. (Japan)                                   99.95                Real estate management and leasing
  Alpac Forest Products Inc. (Canada)                       70.00                Manufacturing and sales of wood pulp
  California Oils Corporation (U.S.A.)                     100.00                Manufacturing of specialty vegetable oils
  Coca-Cola Central Japan Co., Ltd. (Japan)                 23.60                Manufacturing and sales of soft drinks
  Dai-Nippon Meiji Sugar Co., Ltd. (Japan)                 100.00                Manufacturing and wholesale of sugar products
  Green Houser Co., Ltd. (Japan)                           100.00                Sales of wood products, construction materials and housing equipment
  Indiana Packers Corporation (U.S.A.)                      80.00                Processing and sales of pork
  Japan Farm Ltd. (Japan)                                   40.00                Manufacturing and marketing of pork and poultry products
  Life Gear Corporation (Japan)                            100.00                Marketing of footwear and other products
  Matsutani Chemical Industry Co., Ltd. (Japan)             30.00                Processing of starch
  MCC Development Corporation (U.S.A.)                      30.00                Holding company of ready-mixed concrete companies
  MC Foods Ltd. (Japan)                                     91.50                Wholesale of coffee and foods
  MC Forest Products Inc. (Canada)                         100.00                Marketing of wood pulp
  Mitsubishi Cement Corporation (U.S.A.)                    28.71                Manufacturing and marketing of cement and concrete
  Mitsubishi Paper Sales Co., Ltd. (Japan)                  20.00                Wholesaling of paper
  Mitsubishi Shoji Construction Materials Ltd. (Japan)     100.00                Marketing of construction materials
  Mitsubishi Shoji Packaging Corporation (Japan)            88.21                Marketing of packaging materials and paper
  Nihon Nosan Kogyo K.K. (Japan)                            20.80                Manufacturing and marketing of animal feed, stockbreeding and marine farming and sales
  Nihon Shokuhin Kako Co., Ltd. (Japan)                     30.63                Manufacturing of corn starch and related processed products
  Nitto Flour Milling Co., Ltd. (Japan)                     40.90                Flour miller
  Princes Ltd. (U.K.)                                      100.00                Wholesale of food products
* Rinoru Oil Mills Co., Ltd. (Japan)                        60.00                Manufacturing of vegetable oils
  Ryochiku Inc. (Japan)                                     95.26                Sales of meat products
  Ryoshoku Ltd. (Japan)                                     50.50                Wholesale of food products
  Sanyo Foods Co., Ltd. (Japan)                            100.00                Processing and sales of marine products
  Toyo Reizo Co., Ltd. (Japan)                              80.82                Marketing and sales of frozen and fresh marine products
  Tredia Fashion Co., Ltd. (China)                         100.00                Overseas textile goods operations
  (150 other companies)

* Rinoru Oil Mills Co., Ltd. was merged with two other companies on April 1, 2002 to form Nisshin Oillio, Ltd. Mitsubishi Corporation’s shareholding in the new company is 16.63%.




                                                                                   page   102
                                                             Mitsubishi Corporation Annual Report 2002
                                                                {PRINCIPAL SUBSIDIARIES AND AFFILIATES}




 CORPORATE STAFF SECTION                                                                                                                              (28 companies)
 COMPANY NAME                                        SHAREHOLDING (%)        MAIN BUSINESS
 Fullerene International Corporation (U.S.A.)                33.33           Commercialization of fullerenes and carbon nanotubes, and intellectual property
                                                                             management
 Kohjin Co., Ltd. (Japan)                                    30.00           Production and sales of chemical products, and real estate activities
 Mitsubishi Corporation Financial & Management
 Services (Japan) Ltd. (Japan)                             100.00            Accounting, financial and foreign exchange services, credit control and management consulting
 Natsource Japan Co., Ltd. (Japan)                           24.76           Trading and advisory services for energy- and environment-related commodities
 Shintoa Corporation (Japan)                                 25.00           Trading company
 (23 other companies)

 MAIN REGIONAL SUBSIDIARIES                                                                                                                           (37 companies)
 COMPANY NAME                                        SHAREHOLDING (%)        MAIN BUSINESS
 Mitsubishi Australia Limited (Australia)                100.00              Trading
 Mitsubishi Canada Limited (Canada)                      100.00              Trading
 Mitsubishi Corporation do Brasil, S.A. (Brazil)         100.00              Trading
 Mitsubishi Corporation (Hong Kong) Ltd. (China)         100.00              Trading
 Mitsubishi Corporation International N.V. (U.K.)        100.00              Holding company for European subsidiaries
 Mitsubishi Corporation (UK) PLC (U.K.)                  100.00              Trading
 Mitsubishi de Mexico S.A. de C.V. (Mexico)              100.00              Trading
 Mitsubishi International Corporation (U.S.A.)           100.00              Trading
 Mitsubishi International G.m.b.H. (Germany)             100.00              Trading
 Thai MC Company Limited (Thailand)                       65.80              Trading
 (27 other companies)

 * Excludes non-consolidated subsidiaries and non-consolidated equity-method affiliates.
** Subsidiaries consist of majority-owned (over 50%) domestic and foreign companies. Affiliated companies consist of companies owned 20% to 50%, certain companies owned
   less than 20%, and corporate joint ventures. Investments in affiliated companies, with minor exceptions, are accounted for by the equity method.




                                                                               page   103
                                                     Mitsubishi Corporation Annual Report 2002
                                                               {GENERAL INFORMATION}




General Information

 AUTHORIZED AND ISSUED SHARE CAPITAL
 The Company’s authorized share capital, as defined in the Articles of Incorporation, is 2,500,000,000 shares of common stock. There is only
 one class of share in the issued share capital of the Company. Each issued share is fully paid and non-assessable and is in registered form.
 At March 31, 2002, a total of 1,567,175,508 shares were in issue.
    At the ordinary general meeting of shareholders held on June 27, 2002, the Company was authorized to purchase the Company’s common
 stock up to limits of 100 million shares and ¥100 billion by the close of the ordinary general meeting of shareholders in 2003.


 PRINCIPAL SHAREHOLDERS
 The ten largest shareholders of the Company and their respective holdings of shares at March 31, 2002, were as follows:

                                                                                                                 Number of       Percentage of total
                                                                                                                shares held      shares outstanding
                                                                                                                (thousands)             (%)

 The Tokio Marine and Fire Insurance Company, Limited                                                              95,753               6.11
 Japan Trustee Services Bank, Ltd. (Trust Account)                                                                 86,618               5.53
 Meiji Life Insurance Company                                                                                      80,552               5.14
 The Mitsubishi Trust and Banking Corporation                                                                      73,629               4.70
 The Mitsubishi Trust and Banking Corporation (Trust Account)                                                      61,807               3.94
 The Bank of Tokyo-Mitsubishi, Ltd.                                                                                61,543               3.93
 Mitsubishi Heavy Industries, Ltd.                                                                                 48,920               3.12
 The Dai-Ichi Kangyo Bank, Limited                                                                                 41,602               2.65
 UFJ Trust Bank Limited (Trust Account A)                                                                          33,879               2.16
 Nippon Life Insurance Company                                                                                     32,573               2.08
         Total                                                                                                    616,878              39.36

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


 DIRECTORS’ AND CORPORATE AUDITORS’ SHAREHOLDINGS
 The following is a list of Directors and Corporate Auditors with their shareholdings in the Company at June 27, 2002. At the same date,
 Directors and Corporate Auditors owned a total of 305 thousand shares in the Company.

                               Number of                                            Number of                                            Number of
                              shares held                                          shares held                                          shares held
                             (thousands)                                          (thousands)                                          (thousands)

 Minoru Makihara                   36                Yukio Masuda                      16                Tatsuo Arima                         1
 Mikio Sasaki                      35                Susumu Kani                       24                Yuzo Shinkai                        15
 Hironori Aihara                   10                Takeshi Hashimoto                  8                Tsuneo Wakai                         3
 Koji Furukawa                     20                Takeru Ishibashi                  10                Koukei Higuchi                       3
 Naohisa Tonomura                  25                Shunichi Inai                     14                Yoshihiro Ogura                      8
 Yorihiko Kojima                   14                Hidetoshi Kamezaki                11                Manabu Ueno                          6
 Kanji Yamaguchi                   22                Nobuyuki Masuda                    6
 Masayuki Takashima                13                Ichiro Taniguchi                   3

   The Company has adopted stock option plans. Please see Notes to Consolidated Financial Statements for details.




                                                                    page   104
                                                           Mitsubishi Corporation Annual Report 2002
                                                                       {GENERAL INFORMATION}




GENERAL MEETING OF SHAREHOLDERS

The ordinary general meeting of the Company’s shareholders is usually held in Tokyo in June each 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 must be mailed to each shareholder (or, in the case of
a non-resident shareholder, to a standing proxy in Japan) at least two weeks prior to the date set for the meeting.


SHARE DEALINGS AND SETTLEMENT

In accordance with the Commercial Code of Japan, the transfer of shares is effected by delivery of 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 transfer agent for the shares. Non-resident shareholders are required to appoint a standing proxy
in Japan for the purpose of communicating with the Company. Japanese commercial banks and securities 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, 11-1, Nagatacho 2-chome, Chiyoda-ku, Tokyo 100-8212, Japan.


DIVIDENDS

Following shareholders’ approval, final dividends are distributed to shareholders on record at March 31 in each year in proportion to the
number of shares held by each shareholder in cash. The Articles of Incorporation permit the payment of interim cash dividends (i.e. cash
distributions made pursuant to Articles of the Commercial Code of Japan) to the shareholders on record at September 30 in each year by
resolution of the Board of Directors.
   Under its Articles of Incorporation, the Company is not obliged to pay any final or interim dividends unclaimed for a period of three years
after the date on which they are first made available by the Company.

FOREIGN EXCHANGE CONTROLS

If a non-resident of Japan acquires shares in a listed Japanese company with the result that such non-resident holds 10% or more of the total
outstanding shares, notice of this fact is generally required to be made to the Minister of Finance shortly after the transaction, and in some
cases to other Ministers as well. If a non-resident of Japan acquires shares in a listed Japanese company with the result that such non-resident
holds less than 10% of the total outstanding shares, such a notification is generally not required.
   Cash dividends and the proceeds of a sale of shares in Japan may be converted into foreign currency and repatriated abroad. The
acquisition of shares by non-resident shareholders by way of stock splits is not subject to a notification requirement.
   If the number of listed shares to be held by an investor (including a foreign investor) is 5% or more of the total outstanding shares of the
corporation, such investor requires a notification to the Ministry of Finance under the Securities and Exchange Law.


JAPANESE TAXATION

As a general rule, the Japanese withholding tax applicable to cash dividends made by a Japanese corporation to a non-resident of Japan is
20%. However, Japan has income tax treaties, conventions or agreements with many countries under which such tax rate is reduced for
portfolio investors.
  In general, stock splits are not subject to Japanese income tax.

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 controls and Japanese taxation.




                                                                            page   105
                                                    Mitsubishi Corporation Annual Report 2002
                                                             {ORGANIZATIONAL STRUCTURE}




Organizational Structure (As of July 1, 2002)

 General Meeting of Shareholders                                                                       Strategic Planning Office
                                                                                                       Business Creation Unit
                                                                                                      • IT Projects Division
                                                                            New Business Initiative   • Consumer Business Division
                                                                            Group
                                                                                                      • Financial Services Division
        Board of Corporate Auditors
                                      Assistant to Corporate                                          • Logistics Services Division
                                      Auditor                                                          Healthcare Business Unit
        Corporate Auditors

                                                                                                       IT & Electronics Business Group CEO Office
                                                                                                       IT & Electronics Business Group Internal
                                                                            IT & Electronics           Audit Office
                                                                            Business Group
                                                                                                      • Telecommunication & Broadcasting Division
                                      International Advisory                                          • Aerospace Division
                                      Committee
 Board of Directors
                                                                                                       Energy Business Group Planning &
                                      Governance Committee                                             Coordination Dept.
                                                                                                       Exploration & Production Unit
                                                                            Energy Business Group      Energy Business Development Unit
                                                                                                      • Natural Gas Business Division
 President and CEO                                                                                    • Petroleum Business Division
                                                                                                      • Carbon & LPG Business Division
 Executive Committee
                                                                                                       Metals Administration Dept.
                                                                                                       Metals Group CEO Office
                                      Corporate Planning Dept.
                                                                                                       IT Planning & Coordination Office
                                      Internal Audit Dept.
                                                                                                       Metals & Resources Investment
                                      Technology & Business                 Metals Group               Administration Unit
                                      Development Dept.                                                Steel Products Business Unit
                                      ITS Project Planning Dept.                                       Components Business Development Unit
                                      Corporate                                                       • Iron & Steel Division
                                      Communications Dept.
                                                                                                      • Non-Ferrous Metals Division
                                      Corporate Real Estate
                                      Planning Dept.
                                                                                                       Machinery Group CEO Office
                                      HR & Administration Dept.
                                                                                                       Machinery New Business Initiative Unit
                                      Legal Dept.                                                      Procurement Solution Business Unit
                                      Regional Strategy &                   Machinery Group           • Power & Electrical Systems Division
                                      Coordination Dept.
                                                                                                      • Plant Project Division
                                      Corporate Strategy &
                                                                                                      • Environment & Project Development Division
                                      Research Dept.
                                                                                                      • Motor Vehicle Business Division
                                      Controller Office
                                      Treasurer Office
                                                                                                       Chemicals Group CEO Office
                                      Investor Relations Office                                        Aristech Project Unit
                                                                            Chemicals Group            Phoenix Project Unit
                                                                                                      • Commodity Chemicals Division
                                                                                                      • Functional Chemicals Division


                                                                                                       Living Essentials Group Internal Audit Office
                                                                                                       Strategic IT Planning and Solution
                                                                                                       Business Unit—Living Essentials Group
                                                                            Living Essentials Group   • Foods (Commodity) Division
                                                                                                      • Foods (Products) Division
                                                                                                      • Textiles Division
                                                                                                      • General Merchandise Division




                                                                    page   106
Corporate Data                 (As of March 31, 2002)


Mitsubishi Corporation
Date Established: April 1, 1950                    Number of Shareholders:                              Depositary:
Capital: ¥126,608,712,734                          54,943                                                 The Bank of New York
                                                   Stock Listings:                                        101 Barclay Street,
Shares of Common Stock Issued:                                                                            New York, NY 10286, U.S.A.
1,567,175,508                                      Tokyo, Osaka, Nagoya, Fukuoka,
                                                   Sapporo, London                                        Telephone: (212) 815-2042
Head Office:                                                                                              U.S. toll free: 888-269-2377
6-3, Marunouchi 2-chome,                           Transfer Agent for the Shares:                                        (888-BNY-ADRS)
Chiyoda-ku, Tokyo 100-8086, Japan                  The Mitsubishi Trust and
                                                   Banking Corporation                                  For further information, please contact:
Number of Employees:                               11-1, Nagatacho 2-chome,
Parent company: 6,628                                                                                   Investor Relations Office,
                                                   Chiyoda-ku, Tokyo 100-8212, Japan                    Mitsubishi Corporation
Consolidated:      44,034
                                                   American Depositary Receipts:                        6-3, Marunouchi 2-chome,
Independent Auditors:                              Ratio (ADR:ORD): 1:2                                 Chiyoda-ku, Tokyo 100-8086, Japan
Deloitte Touche Tohmatsu/                          Exchange: OTC (Over-the-Counter)                     Telephone: +81-3-3210-2121
Tohmatsu & Co.                                     Symbol: MSBHY                                        Facsimile: +81-3-3210-8583
                                                   CUSIP: 606769305                                     URL: www.mitsubishi.co.jp/En/investor/


Network       (As of September 1, 2002)
Offices
  In Japan: 39
  Overseas: 109 (In addition, there are 38 regional subsidiaries in various countries around the world.
                 Together, the main and branch offices of these subsidiaries total 69.)


Overseas Network*                                                                                                                                      Domestic Network*
NORTH AND                    Mitsubishi Argentina         Mitsubishi Italia S.p.A.      Mitsubishi International    Sinar Berlian Sdn. Bhd.            Head Office
CENTRAL AMERICA              S.A.C. y R.                    Milano                      Corp. (Iran), Ltd.             Kuala Lumpur                    Tokyo
■ Offices                      Buenos Aires               Mitsubishi Hellas A.E.E.        Tehran                    Mitsubishi Corporation
  Guatemala                  Mitsubishi Corporation do      Athens                                                  (China) Investment Co., Ltd.       Hokkaido Block
  San Salvador               Brasil, S.A.                                                                              Shanghai                        Sapporo
                               São Paulo                                                ASIA                        Mitsubishi Corporation             Tomakomai
■ Subsidiaries                 Rio de Janeiro                                                                       (Guangzhou) Ltd.
Mitsubishi International                                  AFRICA                        ■ Offices                      Guangzhou                       Tohoku Block
Corporation                                               ■ Offices                        Karachi                  Mitsubishi Corporation
  New York                                                   Johannesburg                  Kuala Lumpur                                                Sendai
                             EUROPE                                                                                 (Tianjin) Ltd.                     Hachinohe
  Portland                                                   Dakar                         Singapore                   Tianjin
  San Francisco              ■ Offices                       Casablanca                    Manila                                                      Morioka
                                                                                                                    Mitsubishi Corporation             Koriyama
  Seattle                       London                       Algiers                       Colombo                  (Shanghai) Ltd.
  Palo Alto                     Warsaw                       Tunis                         Dhaka                       Shanghai
  Los Angeles                   Istanbul                     Harare                        Hanoi                       Nanjing                         Chubu Block
  Dallas                        Ankara                       Maputo                        Ho Chi Minh City         Mitsubishi Corporation             Nagoya
  Houston                       Prague                       Nairobi                       Beijing                  (Dalian) Ltd.                      Niigata
  Chicago                       Sofia                        Dar es Salaam                 Tianjin                     Dalian                          Toyama
  Huntsville                    Moscow                       Abidjan                       Qingdao                  Mitsubishi Corporation             Nagano
  Pittsburgh                    Yuzhno-Sakhalinsk         ■ Subsidiaries                   Dalian                   (Hong Kong) Ltd.                   Shizuoka
  Washington, D.C.              Kiev                      Mitsubishi Shoji Kaisha,         Shenyang                    Hong Kong
  Boston                        Baku                      (Nigeria) Ltd.                   Shanghai                    Xiamen                          Kansai Block
Mitsubishi Canada Limited       Tbilisi                      Abuja                         Chengdu                     Shenzhen                        Osaka
  Vancouver                     Tashkent                     Lagos                         Guangzhou                Mitsubishi Corporation             Kobe
  Toronto                       Almaty                    Mitsubishi Ethiopia Trading      Islamabad                (Taiwan) Ltd.                      Okayama
  Montreal                      Oslo                      Private Limited Company          Lahore                      Taipei                          Takamatsu
Mitsubishi de Mexico S.A.       Stockholm                    Addis Ababa                   Bombay                      Kaohsiung
de C.V.                      ■ Subsidiaries                                                Cochin                   Mitsubishi Corporation             Chugoku Block
  Mexico City                Mitsubishi Corporation                                        New Delhi                (Korea) Ltd.                       Hiroshima
  Monterrey                  International N.V.           MIDDLE EAST                      Bangalore                   Seoul                           Fukuyama
Mitsubishi International,       London                                                     Madras                      Kwangyang                       Tokuyama
S.A.P.H.                     Mitsubishi Corporation de    ■ Offices                        Calcutta
                                                             Amman                                                     Ulsan                           Ube
  Panama                     Portugal, Lda                                                 Yangon                      Pohang
                                Lisboa                       Baghdad                       Phnom Penh
                                                             Tripoli                       Jakarta                                                     Kyushu Block
                             Mitsubishi España S.A.                                                                                                    Fukuoka
SOUTH AMERICA                   Madrid                       Riyadh                        Surabaya
                                                             Jeddah                        Bandar Seri Begawan      OCEANIA                            Kitakyushu
■ Offices                    Mitsubishi Corporation                                                                                                    Nagasaki
                             (UK) PLC                        Al Khobar                     Kathmandu                ■ Offices
  Quito                                                      Doha                                                     Noumea                           Oita
  La Paz                        London                                                  ■ Subsidiaries                                                 Kagoshima
                             Mitsubishi France S.A.          Cairo                      MC International India      ■ Subsidiaries
  Asunción                                                   Ramallah                                                                                  Naha
                                Paris                                                   Private Ltd.                Mitsubishi Australia
■ Subsidiaries               Mitsubishi Nederland B.V.       Damascus                      New Delhi                Limited
Mitsubishi Peru S.A.            Rotterdam                    Abu Dhabi                  Mitsubishi Company            Sydney
  Lima                       Mitsubishi International        Dubai                      (Thailand), Ltd.              Perth
Mitsubishi Colombia Ltda.    G.m.b.H.                        Tel Aviv                      Bangkok                    Melbourne
  Santafé de Bogotá             Düsseldorf                   Muscat                        Haadyai                  Mitsubishi New Zealand Ltd.
Mitsubishi Chile Ltda.          Berlin                    ■ Subsidiaries                Thai MC Company Limited       Auckland
  Santiago                      Frankfurt                 Al-Masat Al-Thalath              Bangkok
Mitsubishi Venezolana C.A.      Hamburg                   Trading Company                  Haadyai
  Caracas                                                 (Mitsubishi) K.S.C.
  Puerto Ordaz                                               Kuwait                                                 * Project offices are not included in this data.
                                                                                                                      www.mitsubishi.co.jp/En/corpo/global/
This Annual Report is printed on recycled paper using aroma-free soybean oil ink.


                                                                                page    107
www.mitsubishi.co.jp/En/




                           Printed in Japan

				
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