##### Table of Contents



UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

oREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)OF THE SECURITIES EXCHANGE ACT OF 1934

OR

þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2003

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
 to

Commission file number 0-9929

MITSUI BUSSAN KABUSHIKI KAISHA

(Exact name of Registrant as specified in its charter)


MITSUI & CO., LTD.

(Translation of Registrants name into English)


JAPAN

(Jurisdiction of incorporation or organization)


2-1, OHTEMACHI 1-CHOME, CHIYODA-KU, TOKYO 100-0004, JAPAN

(Address of principal executive offices)


Securities registered or to be registered pursuant to Section 12(b) of the Act.

None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Title of class
 
Common stock

Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuers classes
of capital or common stock as of the close of the period covered by the annual
report.



As of March 31, 2003, 1,581,376,992 shares of common stock were
outstanding including
4,114,840 shares represented by an aggregate of 205,742
American Depositary Shares.


---

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

|      |  |  |  |     
|----- |  |  |  | ----
|Yes þ |  |  |  | No o

Indicate by check mark which financial statement item the registrant has elected to follow.

|          |  |  |  |          
|--------- |  |  |  | ---------
|Item 17 o |  |  |  | Item 18 þ





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##### Table of Contents



Certain References and Information

As used in this report, Mitsui is used to refer to Mitsui & Co., Ltd.
(Mitsui Bussan Kabushiki Kaisha), we, us, and our are used to indicate
Mitsui & Co., Ltd. and subsidiaries, unless otherwise indicated. Share means
one share of Mitsuis common stock, ADS means an American Depositary Share
representing 20 shares, and ADR means an American Depositary Receipt
evidencing one or more ADSs. Also, dollar or $ means the lawful currency of
the United States of America, and yen or ¥ means the lawful currency of
Japan. Fiscal 2003 refer to our fiscal year ended March 31, 2003, and other
fiscal years are referred to in a corresponding manner.

All financial statements and information contained in this annual report
have been prepared in accordance with accounting principles generally accepted
in the United States, or U.S. GAAP, except where otherwise noted.

A Cautionary Note on Forward-Looking Statements

This annual report includes forward-looking statements based on our
current expectations, assumptions, estimates and projections about our
business, our industry and capital markets around the world. Generally, these
forward-looking statements can be identified by the use of forward-looking
terminology such as may, will, expect, anticipate, estimate, plan
or similar words. The forward-looking statements in this annual report are
subject to various risks, uncertainties and assumptions. These statements
discuss future expectations, identify strategies, contain projections of
results of operations or of our financial position, or state other
forward-looking information. Known and unknown risks, uncertainties and other
factors could cause our actual operating results to differ materially from
those contained or implied in any forward-looking statement. Our expectations
expressed in these forward-looking statements may not turn out to be correct,
and our actual results could materially differ from and be worse than our
expectations.

Important risks and factors that could cause our actual results to differ
materially from our expectations are discussed in this Item 3.D. Risk Factors
or elsewhere in this annual report and include, without limitation:



| |  | changes in economic conditions that may lead to unforeseen
developments in markets for products handled by us;                                                    
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | fluctuations in currency exchange rates that may cause unexpected
deterioration in the value of transactions;                                                     
|
| |  | adverse political developments in the various jurisdictions where we
operate, which among things, may create delays or postponements of
transactions and projects;
|
| |  | changes in laws, regulations, or policies in any of the countries
where we conduct our operations; and                                                            
|
| |  | significant changes in the competitive environment.                                                                                                               

We do not assume, and specifically disclaim, any obligation to update any
forward-looking statements which speak only as of the date made.

2



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TABLE OF CONTENTS



|         |                                                                                       |                                                            |  |  |  |  |  | 
|-------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|PART I  
|         | Item 1. Identity of Directors, Senior Management and Advisers.                       
|         | Item 2. Offer Statistics and Expected Timetable.                                     
|         | Item 3. Key Information.                                                             
|         |                                                                                       | A. Selected Financial Data.                               
|         |                                                                                       | B. Capitalization and Indebtedness.                       
|         |                                                                                       | C. Reasons for the Offer and Use of Proceeds.             
|         |                                                                                       | D. Risk Factors.                                          
|         | Item 4. Information on the Company.                                                  
|         |                                                                                       | A. History and Development of the Company.                
|         |                                                                                       | B. Business Overview.                                     
|         |                                                                                       | C. Organizational Structure.                              
|         |                                                                                       | D. Property, Plants and Equipment.                        
|         | Item 5. Operating and Financial Review and Prospects.                                
|         |                                                                                       | A. Operating Results.                                     
|         |                                                                                       | B. Liquidity and Capital Resources.                       
|         |                                                                                       | C. Research and Development, Patents and Licenses, etc.   
|         |                                                                                       | D. Trend Information.                                     
|         |                                                                                       | E. Off-balance Sheet Arrangements.                        
|         |                                                                                       | F. Tabular Disclosure of Contractual Obligations.         
|         | Item 6. Directors, Senior Management and Employees                                   
|         |                                                                                       | A. Directors and Senior Management                        
|         |                                                                                       | B. Compensation                                           
|         |                                                                                       | C. Board Practices                                        
|         |                                                                                       | D. Employees                                              
|         |                                                                                       | E. Share Ownership                                        
|         | Item 7. Major Shareholders and Related Party Transactions                            
|         |                                                                                       | A. Major Shareholders                                     
|         |                                                                                       | B. Related Party Transactions                             
|         |                                                                                       | C. Interests of Experts and Counsel                       
|         | Item 8. Financial Information                                                        
|         |                                                                                       | A. Consolidated Statements and Other Financial Information
|         |                                                                                       | B. Significant Changes                                    
|         | Item 9. The Offer and Listing                                                        
|         |                                                                                       | A. Offer and Listing Details                              
|         |                                                                                       | B. Plan of Distribution                                   
|         |                                                                                       | C. Markets                                                
|         |                                                                                       | D. Selling Shareholders                                   
|         |                                                                                       | E. Dilution                                               
|         |                                                                                       | F. Expenses of the Issue                                  
|         | Item 10. Additional Information                                                      
|         |                                                                                       | A. Share Capital                                          
|         |                                                                                       | B. Memorandum and Articles of Association                 
|         |                                                                                       | C. Material Contracts                                     
|         |                                                                                       | D. Exchange Controls                                      
|         |                                                                                       | E. Taxation                                               
|         |                                                                                       | F. Dividends and Paying Agents                            
|         |                                                                                       | G. Statement by Experts                                   
|         |                                                                                       | H. Documents on Display                                   
|         |                                                                                       | I. Subsidiary Information                                 
|         | Item 11. Quantitative and Qualitative Disclosures about Market Risk                  
|         | Item 12. Description of Securities Other Than Equity Securities                      
|PART II 
|         | Item 13. Defaults, Dividend Arrearages and Delinquencies                             
|         | Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
|         | Item 15. Controls and Procedures                                                     
|         | Item 16A. Audit Committee Financial Expert                                           
|         | Item 16B. Code of Ethics                                                             
|         | Item 16C. Principal Accountant Fees and Services                                     
|         | Item 16D. Exemptions from the Listing Standards for Audit Committees                 
|PART III
|         | Item 17. Financial Statements                                                        
|         | Item 18. Financial Statements                                                        
|         | Item 19. Exhibits                                                                    



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TABLE OF CONTENTS

|       |                                                               |                                                            |   |      |    | 
|------ | ------------------------------------------------------------- | ---------------------------------------------------------- | - | ---- | -- | 
|       |                                                               |                                                            |   | Page
|       |                                                               |                                                            |   |     
|PART I |                                                               |                                                            | 5 |     
|       | Item 1. Identity of Directors, Senior Management and Advisers |                                                            |   | 5    |   
|       | Item 2. Offer Statistics and Expected Timetable               |                                                            |   | 5    |   
|       | Item 3. Key Information                                       |                                                            |   | 5    |   
|       |                                                               | A. Selected Financial Data                                 |   |      | 5  | 
|       |                                                               | B. Capitalization and Indebtedness                         |   |      | 7  | 
|       |                                                               | C. Reasons for the Offer and Use of Proceeds               |   |      | 7  | 
|       |                                                               | D. Risk Factors                                            |   |      | 7  | 
|       | Item 4. Information on the Company                            |                                                            |   | 13   |   
|       |                                                               | A. History and Development of the Company                  |   |      | 13 | 
|       |                                                               | B. Business Overview                                       |   |      | 14 | 
|       |                                                               | C. Organizational Structure                                |   |      | 36 | 
|       |                                                               | D. Property, Plants and Equipment                          |   |      | 39 | 
|       | Item 5. Operating and Financial Review and Prospects          |                                                            |   | 41   |   
|       |                                                               | A. Operating Results                                       |   |      | 41 | 
|       |                                                               | B. Liquidity and Capital Resources                         |   |      | 56 | 
|       |                                                               | C. Research and Development, Patents and Licenses, etc.    |   |      | 60 | 
|       |                                                               | D. Trend Information                                       |   |      | 61 | 
|       |                                                               | E. Off-balance Sheet Arrangements                          |   |      | 62 | 
|       |                                                               | F. Tabular Disclosure of Contractual Obligations           |   |      | 62 | 
|       | Item 6. Directors, Senior Management and Employees            |                                                            |   | 63   |   
|       |                                                               | A. Directors and senior management                         |   |      | 63 | 
|       |                                                               | B. Compensation                                            |   |      | 72 | 
|       |                                                               | C. Board Practices                                         |   |      | 73 | 
|       |                                                               | D. Employees                                               |   |      | 77 | 
|       |                                                               | E. Share Ownership                                         |   |      | 77 | 
|       | Item 7. Major Shareholders and Related Party Transactions     |                                                            |   | 78   |   
|       |                                                               | A. Major Shareholders                                      |   |      | 78 | 
|       |                                                               | B. Related Party Transactions                              |   |      | 79 | 
|       |                                                               | C. Interests of Experts and Counsel                        |   |      | 80 | 
|       | Item 8. Financial Information                                 |                                                            |   | 80   |   
|       |                                                               | A. Consolidated Statements and Other Financial Information |   |      | 80 | 
|       |                                                               | B. Significant Changes                                     |   |      | 82 | 
|       | Item 9. The Offer and Listing                                 |                                                            |   | 82   |   
|       |                                                               | A. Offer and Listing Details                               |   |      | 82 | 
|       |                                                               | B. Plan of Distribution                                    |   |      | 83 | 
|       |                                                               | C. Markets                                                 |   |      | 83 | 
|       |                                                               | D. Selling Shareholders                                    |   |      | 83 | 
|       |                                                               | E. Dilution                                                |   |      | 83 | 
|       |                                                               | F. Expenses of the Issue                                   |   |      | 84 | 
|       | Item 10. Additional Information                               |                                                            |   | 84   |   
|       |                                                               | A. Share Capital                                           |   |      | 84 | 
|       |                                                               | B. Memorandum and Articles of Association                  |   |      | 84 | 
|       |                                                               | C. Material Contracts                                      |   |      | 92 | 
|       |                                                               | D. Exchange Controls                                       |   |      | 93 | 
|       |                                                               | E. Taxation                                                |   |      | 94 | 
|       |                                                               | F. Dividends and Paying Agents                             |   |      | 97 | 
|       |                                                               | G. Statement by Experts                                    |   |      | 97 | 
|       |                                                               | H. Documents on Display                                    |   |      | 97 | 
|       |                                                               | I. Subsidiary Information                                  |   |      | 97 | 

3



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##### Table of Contents



|         |                                                                                       |  |     |      |  | 
|-------- | ------------------------------------------------------------------------------------- |  | --- | ---- |  | 
|         |                                                                                       |  |     | Page
|         |                                                                                       |  |     |     
|         | Item 11. Quantitative and Qualitative Disclosures about Market Risk                   |  |     | 97   | 
|         | Item 12. Description of Securities Other Than Equity Securities                       |  |     | 101  | 
|PART II  |                                                                                       |  | 102 |     
|         | Item 13. Defaults, Dividend Arrearages and Delinquencies                              |  |     | 102  | 
|         | Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds |  |     | 102  | 
|         | Item 15. Controls and Procedures                                                      |  |     | 102  | 
|         | Item 16A. Audit Committee Financial Expert                                            |  |     | 102  | 
|         | Item 16B. Code of Ethics                                                              |  |     | 102  | 
|         | Item 16C. Principal Accountant Fees and Services                                      |  |     | 102  | 
|         | Item 16D. Exemptions from the Listing Standards for Audit Committees                  |  |     | 102  | 
|PART III |                                                                                       |  | 103 |     
|         | Item 17. Financial Statements                                                         |  |     | 103  | 
|         | Item 18. Financial Statements                                                         |  |     | 103  | 
|         | Item 19. Exhibits                                                                     |  |     | 103  | 

4



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##### Table of Contents






PART I




Item 1. Identity of Directors, Senior Management and Advisers.

Not applicable.




Item 2. Offer Statistics and Expected Timetable.

Not applicable.




Item 3. Key Information.




A. Selected Financial Data.

The selected consolidated statement of income data for the years ended
March 31, 2003, 2002 and 2001 and the selected consolidated balance sheet data
as of March 31, 2003 and 2002 set forth below are derived from our audited
consolidated financial statements prepared in accordance with U.S. GAAP, which
are included elsewhere in this annual report. The selected consolidated
statement of income data for the years ended March 31, 2000 and 1999 and
balance sheet data as of March 31, 2001, 2000 and 1999 are derived from our
previously published audited consolidated financial statements prepared in
accordance with U.S. GAAP, which are not included in this annual report. The
consolidated financial statements as of March 31, 2003 and 2002 and for the
years ended March 31, 2003, 2002 and 2001 have been audited by Deloitte Touche
Tohmatsu, independent auditors, whose report is filed as part of this annual
report.

The
selected consolidated financial statements have been prepared in
accordance with U.S. GAAP and should be read in conjunction
with, and are qualified in their entirety by reference to
Item 5. Operating and Financial Review and
Prospects, and our consolidated financial statements and notes thereto included elsewhere in this annual report.

5



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##### Table of Contents



|                                    |                                 |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |           |     | 
|----------------------------------- | ------------------------------- | ----------------------------------------------------- | ------- | - | ---------------------------------------------------------------------- | --- | ---- | - | --------- | --- | ---- | - | --------- | --- |  | - | --------- | --- |  | - | --------- | --- | 
|                                    |                                 |                                                       |         |   | As of or for the Year Ended March 31,                                 
|                                    |                                 |                                                       |         |   |                                                                       
|                                    |                                 |                                                       |         |   | 2003                                                                   |     | 2002 |   | 2001      |     | 2000 |   | 1999     
|                                    |                                 |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |          
|                                    |                                 |                                                       |         |   | (In
Millions of Yen, Except Amounts per ADS (2) and Common Stock Data)
|Consolidated Income Statement Data: |                                 |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |  
|                                    | Results of Operations:          |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |          
|                                    |                                 | RevenueGross Trading Profit(3)                       |         | ¥ | 569,802                                                                |     |      | ¥ | 546,549   |     |      | ¥ | 561,298   |     |  | ¥ | 528,219   |     |  | ¥ | 554,740   |    
|                                    |                                 | Income from Continuing
Operations(3)                  |         |   | 33,614                                                                 |     |      |   | 58,891    |     |      |   | 53,944    |     |  |   | 37,485    |     |  |   | 41,441    |    
|                                    |                                 | Net Income                                            |         |   | 31,138                                                                 |     |      |   | 55,371    |     |      |   | 51,588    |     |  |   | 34,837    |     |  |   | 39,971    |    
|                                    |                                 | Income from Continuing
Operations per ADS(2)(3):      |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |           |    
|                                    |                                 |                                                       | Basic   |   |                                                                        | 425 |      |   |           | 744 |      |   |           | 681 |  |   |           | 473 |  |   |           | 523 | 
|                                    |                                 |                                                       | Diluted |   |                                                                        | 403 |      |   |           | 698 |      |   |           | 640 |  |   |           | 439 |  |   |           | 464 | 
|                                    |                                 | Net Income per ADS(2):                                |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |           |    
|                                    |                                 |                                                       | Basic   |   |                                                                        | 394 |      |   |           | 699 |      |   |           | 651 |  |   |           | 440 |  |   |           | 505 | 
|                                    |                                 |                                                       | Diluted |   |                                                                        | 374 |      |   |           | 657 |      |   |           | 613 |  |   |           | 416 |  |   |           | 466 | 
|                                    |                                 | Cash Dividends Declared
per ADS(2)                    |         |   | 160                                                                    |     |      |   | 160       |     |      |   | 160       |     |  |   | 160       |     |  |   | 160       |    
|                                    |                                 | Cash Dividends Declared
per ADS in U.S. Dollars(1)(2) |         | $ | 1.32                                                                   |     |      | $ | 1.28      |     |      | $ | 1.48      |     |  | $ | 1.44      |     |  | $ | 1.24      |    
|                                    |                                 |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |          
|Consolidated Balance Sheet Data:    |                                 |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |  
|                                    | Financial Position
at Year End: |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |          
|                                    |                                 | Total Assets                                          |         | ¥ | 6,540,520                                                              |     |      | ¥ | 6,668,366 |     |      | ¥ | 6,710,107 |     |  | ¥ | 6,599,358 |     |  | ¥ | 6,818,393 |    
|                                    |                                 | Long-term Debt,
less Current Maturities               |         |   | 2,500,470                                                              |     |      |   | 2,619,867 |     |      |   | 2,708,608 |     |  |   | 2,462,724 |     |  |   | 2,565,591 |    
|                                    |                                 | Common Stock                                          |         |   | 192,487                                                                |     |      |   | 192,487   |     |      |   | 192,487   |     |  |   | 192,487   |     |  |   | 192,487   |    
|                                    |                                 | Total Shareholders Equity                            |         |   | 862,147                                                                |     |      |   | 914,970   |     |      |   | 834,427   |     |  |   | 795,852   |     |  |   | 770,760   |    
|                                    |                                 |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |          
|                                    | Other Information
at Year End  |                                                       |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |          
|                                    |                                 | Common Stock:                                         |         |   |                                                                        |     |      |   |           |     |      |   |           |     |  |   |           |     |  |   |           |    
|                                    |                                 | Number of shares
outstanding (in thousands)           |         |   | 1,581,377                                                              |     |      |   | 1,583,180 |     |      |   | 1,583,675 |     |  |   | 1,583,675 |     |  |   | 1,583,675 |    
|                                    |                                 | Number of shareholders                                |         |   | 115,267                                                                |     |      |   | 118,700   |     |      |   | 127,137   |     |  |   | 127,457   |     |  |   | 124,615   |    



| | (1) |  | The U.S. dollar amounts represent translations of the Japanese
yen amounts at the rates in effect on the respective dividend payment
dates.                                                                                                                                              
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | ADS means an American Depositary Share representing 20
shares of Mitsuis common stock.                                                                                                                                                                                                
|
| | (3) |  | As a result of the adoption of Statement of Financial
Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the prior year figures have been
reclassified to conform to the current year presentation of the
Statements of Consolidated Income.

6



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##### Table of Contents



Exchange Rate Information

The information set forth below with respect to exchange rates is based on
the official noon buying rates for Japanese yen of the Federal Reserve Bank of
New York. These rates are provided solely for the convenience of the reader and
are not the exchange rates used by us in the preparation of our consolidated
financial statements included in this annual report.

The official exchange rate on September 17, 2003, was ¥115.99 = U.S.$1.00.
The following table sets forth the high and low official noon buying rates for
Japanese yen of the Federal Reserve Bank of New York each month of the previous
six months.

|            |  |                       |        |     |  |   |        | 
|----------- |  | --------------------- | ------ | --- |  | - | ------ | 
|            |  | High                  |        | Low
|            |  |                       |        |    
|            |  | (Yen per U.S. dollar)
|August 2003 |  | ¥                     | 120.47 |     |  | ¥ | 116.71 | 
|July 2003   |  |                       | 120.55 |     |  |   | 117.24 | 
|June 2003   |  |                       | 119.87 |     |  |   | 117.46 | 
|May 2003    |  |                       | 119.50 |     |  |   | 115.94 | 
|April 2003  |  |                       | 120.55 |     |  |   | 118.25 | 
|March 2003  |  |                       | 121.42 |     |  |   | 116.47 | 

The following table sets forth the average exchange rate for each of the
last five fiscal years. We have calculated these average rates by using the
rate on the official noon buying rates for Japanese yen of the Federal Reserve
Bank of New York on the last business day of each month during the relevant
fiscal year.

|                     |  |                       |        | 
|-------------------- |  | --------------------- | ------ | 
|Year Ended March 31, |  | Average Rate         
|                     |  |                      
|                     |  | (Yen per U.S. dollar)
|2003                 |  | ¥                     | 121.10 | 
|2002                 |  |                       | 125.64 | 
|2001                 |  |                       | 111.65 | 
|2000                 |  |                       | 110.02 | 
|1999                 |  |                       | 128.10 | 

Fluctuations in the exchange rate between the yen and the U.S. dollar will
affect the U.S. dollar equivalent of the yen-denominated prices of our shares
and, as a result, will affect the market prices of our ADSs in the United
States.




B. Capitalization and Indebtedness.

Not applicable.




C. Reasons for the Offer and Use of Proceeds.

Not applicable.




D. Risk Factors.

You should carefully consider the risks and uncertainties described below
and the other information in this annual report, including the discussion set
forth in Item 5. Operating and Financial Review and Prospects, as well as our
consolidated financial statements and related notes included elsewhere in this
annual report.

7



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##### Table of Contents





| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The worldwide economic downturn causing a decrease in the volume of trade
and the flow of goods and materials, may adversely impact our business,
results of operations and financial condition.

We are engaged in diversified business transactions worldwide, having
expanded our scope of business transactions from traditional international and
domestic trading activities whereby we provide global import and export
services between our customers in various countries to the financing of and
investing in various business activities worldwide including, but not limited
to, the procurement of raw materials and industrial equipment, manufacturing of
wide range of commodities and providing logistics services.

Our global business activities, including our trading activities are
affected by the economic conditions of the countries in which we operate, and
we are particularly vulnerable to the marked downward economic trends in Japan.
An economic downturn, both globally and in any regions in which we operate may
cause, among other things, a reduction in flow of goods and materials, a
decline in private consumption and fixed investment, and subsequently a
decrease in demand of our customers for our products and services, which may
have an adverse impact on our business, results of operations and financial
condition.



| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Failure by our customers to satisfy their financial commitments to us could
have an adverse impact on our business, results of operations and
financial condition.

In conducting our business activities as a general trading company, we are
exposed to significant counterparty credit risks. We provide vendor financing
services and also act as guarantors to banks that provide financing to our
customers. In addition, many of our customers purchase products and services
from us on payment terms that do not provide for immediate payments. At Mach
31, 2003, current trade receivables (less unearned interest and allowance for
doubtful receivables) were ¥2,231 billion representing 34% of our total assets.
We also have counterparty payment risks from various derivative transactions we
enter into as part of our hedging activities.

Although we have implemented risk management policies to maintain
conservative positions with respect to the payment terms, vendor financing,
guarantees, amongst others, we cannot eliminate the risks relating to the
possibility of our customers experiencing financial difficulties. If our
customers, to whom we extend or guarantee vendor financing, or from whom we
have substantial accounts receivable, encounter financial difficulties and are
unable to satisfy their financial commitments to us in a timely manner, our
business, operating results and financial condition could be adversely
affected.



| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain of our operations are concentrated in a limited number of sectors,
which could harm our results of operations if activity levels in these
sectors decline.

We are engaged in various types of businesses worldwide which diversifies
our business portfolio. As a result, most of the fluctuation risks with respect
to commodity prices, the supply and demand of commodities, foreign exchange
rates and interest rates, in addition to regional political and economical
instabilities are diversified in our global portfolio of business
operations. However, we may be exposed to concentration risk in particular
industries or countries, where declining levels of trading activities or asset
volumes in these sectors or countries could have a disproportionately negative
effect on our results of operations. While management monitors our risk profile
including concentration risk on a continual basis, it is not possible to
eliminate concentration risk entirely.



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Intense competition from other Japanese general trading companies could have
an adverse effect on our results of operations.

The markets for many of the products and services we provide are highly competitive.
Our primary competition is with other Japanese general trading companies which
engage in similar business activities in various fields. Our competitors may
have stronger business associations and relationships with our customers,
suppliers and business partners in both the domestic and global markets. They
may also have stronger global network and regional
expertise, diversified global customer base, greater financial engineering skills and market insights.
Unless we can successfully continue to meet the changing needs of our customers
by providing them with innovative and integrated services in a cost effective
manner, we may lose our market share or relationships with our existing
customers in certain of our operating segments and be forced to reduce our
profit margins. Failure to successfully compete with our competitors may have
an adverse effect on our business, financial condition and results of
operations.

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| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | Fluctuations in commodity prices can adversely affect our results of
operations and financial conditions.

As a major participant in the global commodities market, we trade in a
variety of commodities including metal, energy, chemical and agricultural
products. Our trading activities in such commodities in particular, have
traditionally played a significant role in our business operations and have
also been our competitive strength over other Japanese general trading
companies. These commodity prices are subject to both short-term volatility and
cyclical fluctuations due to factors beyond our control, including periods of
excess supply due to increased industry productions, decreased demand due to
weakening economic conditions, inventory cutbacks by customers, changing energy
prices and exchange rate movements. These price movements can expose us to
risks of decreased revenues, margins and cash flows, either as a result of our
inventory cost being higher than a products ultimate sale price or, in the
case of forward delivery obligations, an increase in the cost of acquiring a
product for delivery.

In addition, in order to maintain our competitive strength in the
commodities trading of metal, energy, chemical and agricultural products, we
are starting to depart from our conventional role as an intermediary of trading
activities by participating in the production of such commodities by investing
in certain fixed assets. As such, we have increased our risk exposures in such
fields and a prolonged or cyclical price declines in such products or the
continuous rise in the prices of raw materials can have a long term adverse
effect on our results of operations and financial condition. Moreover, such
occurrences may also make it increasingly difficult for us to recover our
capital investments or from divesting our interests at prices acceptable to us

or even at all. Although we attempt to reduce our exposure to the volatility in
commodity prices, primarily by utilizing a variety of derivative instruments
for hedging purposes, we cannot insulate ourselves fully from the effect of
commodity price fluctuations.



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Our alliances by forming joint ventures with, and strategic investments
in, third parties may not result in successful operations.

We participate in various businesses directly or indirectly through joint
ventures or by making strategic investments in other companies and business
enterprises. The outcome of these joint ventures and strategic investments is
unpredictable because the operational success is critically dependent on
factors that are beyond our control such as the financial condition and
performance of the partner companies or the strategic investees. In certain
instances, we have recorded considerable losses in our associated companies
where we failed to exercise adequate control over the management, operations
and assets of the companies in which we invested or where we could not make
major decisions without the consent of other shareholders or participants.
Moreover, in the case of joint ventures, we have also encountered difficulties
when we did not share common business goals and strategic objectives with our
alliance partners. Any occurrence of these events could have a material adverse
effect on our business, results of operations or financial condition.



| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to successfully restructure or eliminate unprofitable
or poor performing subsidiaries or associated companies in a timely
manner and these efforts may not lead to improved results of operations.

We are in the process of restructuring our underperforming businesses. We
are also in the process of introducing a qualitative company-wide monitoring
system to assess the performance of our subsidiaries and associated companies.
If we fail to successfully restructure our underperforming subsidiaries and
associated companies in a timely manner or if these efforts fail to improve our
business operations as contemplated, we may
become less efficient compared to our competitors and our results of operations may be materially and adversely
affected.

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| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend on our ability to retain and recruit key personnel, and any
such failure could adversely affect our ability to effectively manage
our overall operations and execute our future strategies.

We believe that our success depends on our ability to retain our key
personnel. The loss of services of our key personnel could adversely affect our
ability to effectively manage our overall operations and execute current or
future business strategies. Our success depends on our continued ability to
recruit, retain, promote and effectively allocate our highly skilled,
knowledgeable and sophisticated technical, managerial, sales and professional
personnel. Competition for highly skilled personnel is intense. We cannot
assure that we will be successful in our ongoing ability to attract and retain
qualified employees.



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The Japanese equity securities market has been volatile and in decline,
which could negatively affect our investment portfolio.

A significant portion of our investment portfolio consists of marketable
equity securities of Japanese issuers. At March 31, 2003, our marketable equity
securities of Japanese issuers were carried at fair value of approximately ¥133
billion, representing 46% of the fair value of our total available-for-sale
securities and also representing 2% of our total assets. The Japanese equity
securities market has experienced both volatility and decline in recent years.
For the year ended March 31, 2003, our statements of consolidated income
reflected valuation losses on marketable securities of ¥16 billion, principally
on the stocks of banking institutions reflecting the overall decline of stock
prices in Japan. While we periodically review our equity portfolio, further
volatility and decline in the Japanese equity market could negatively impact
the value of our investment portfolio and our results of operations and
financial condition.



| |                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If the value of our certain assets in which we act as lessor, such as
real property and equipment, aircraft and vessels, continue to decline,
we may be forced to write down the value of such assets.

Certain of our assets in which we act as lessor such as real property and
equipment, aircraft, ocean transport vessels and rolling stock are exposed to
potential significant impairment losses due to the continuing decline in the
value of such assets. As of March 31, 2003, the value of such assets in which
we act as lessor, presented on our consolidated balance sheets as Property
leased to othersat cost, less accumulated
depreciation, was approximately ¥240 billion. These assets are reviewed
for impairment by using undiscounted future cash flows whenever events or
changes in circumstances indicate that the carrying amount of these assets may
not be recoverable and if the sum of the expected future cash flows is less
than the carrying amount of such asset, an impairment loss is recognized. The
carrying amount of certain assets in which we act as lessor are affected by
certain factors which are beyond our control such as their respective global
supply and demand, prevailing interest rates of the relevant currency, energy
prices, and regional and/or global cyclical trend. Impairment adjustments for
the year ended March 31, 2003 was partly due to the recognition of impairment
loss on aircraft as a result of the marked downturn in the airline industry and
the continued decline of the market value of aircraft. There can be no
assurance that additional adjustments for impairment losses with respect to
such assets will not be made. Any such adjustments may have an adverse effect
on our financial position and results of operations.

We cannot fully control or supervise the actions of our employees.

Due to our size, as well as the operational and geographic breadth of our
activities, our day-to-day operations are necessarily de-centralized, such that
we cannot ensure that our employees are complying with applicable laws and
regulations and our internal policies. Although we have established our
compliance program, and have taken certain measures to educate our employees,
officers and directors about applicable laws, regulations and ethical
considerations, there can be no assurance that we will succeed in preventing
misconduct
by our employees. Depending on its nature, employees misconduct
could have material negative effects on our results of operations and business reputation.

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| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Restrictions by environmental laws and regulations and any accidents relating
to our use of hazardous materials could negatively affect our business,
results of operations and financial condition.

As a global general trading company, we are involved in various projects
and business transactions worldwide that are subject to extensive environmental
laws and regulations. Before we invest in or commence new business projects, we
try to confirm that the new business venture will not be in violation of
applicable environmental laws and regulations. However, newly enacted
environmental laws and regulations or changes therein and protests by
environmental groups may materially impact the progress of these projects.
Moreover, any accidents relating to our use of hazardous materials in
connection with any projects or business operations may result in environmental
pollution or violation of environmental laws and regulations which may
negatively affect our business, results of operations and financial condition.



| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Despite our various funding methods, liquidity risk is inherent in our
business operations.

A downgrade in our credit ratings or a significant change in our
creditors lending or investment policies could result in an increase in our
interest expense and could adversely impact our ability to access the debt
markets, and could have an adverse effect on our financial position and
liquidity.

In the nature of a general trading companys business, we settle
considerably large amounts of payments on a day-to-day basis. In the case of
any failures of banks or the crush of money market, and if our payment
settlement is involved in the breakdown of banking payment system, it could
adversely affect our smooth payment settlement. And failure or delay of
settlement may drive us into technical default, even if we are solvent.

See
Item 5. B. Liquidity and Capital Resources.



| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to extensive laws and regulations in many countries and
in Japan in particular. Changes in these laws and regulations could
adversely affect our results of operations.

Our business operations are subject to extensive laws and regulations of
many countries including those of Japan. Our operations are subject to laws and
regulations governing, among other things, tariffs, business and
investment approvals, importing and exporting (including restrictions
based on national-security interests), antitrust, consumer and commercial
restrictions, currency exchange control, and environmental protection. If we
are unable to comply with these or any other new laws and regulations including
substantial changes in the regulatory or legal environments in which we
operate, our business, operating results and financial condition could be
adversely affected. Furthermore, we could incur substantial additional costs to
comply with any new laws and regulations.

Exchange rate fluctuations may adversely affect our operating results.

We are exposed to risks associated with foreign currency exchange rate
fluctuations. Although our reporting currency is the Japanese yen, a
significant portion of our business operations, consolidated revenue and
operating expenses is denominated in currencies other than the Japanese yen. As
a result, appreciation or depreciation in the value of other currencies as
compared to the Japanese yen could result in material transactional gains or
losses. In fiscal 2003, approximately 15% of our revenue-gross trading profit
and 10% of selling, general and administrative expense were those of
subsidiaries located in foreign countries. Additionally, we are also exposed to
translation risks with our assets and liabilities denominated in foreign
currencies. Although we implement conservative hedging policies attempting to
limit our exposure to exchange rate fluctuations, including the use of foreign
exchange forward contracts and currency swap agreements, it remains possible
that currency fluctuations may negatively affect our operating results.

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See
Item 3. A. Selected Financial DataExchange Rate
Information.



| |                                                                                 
| | --------------------------------------------------------------------------------
| | Changes in interest rates could have an adverse effect on our operating
results.

We are exposed to risks associated with interest rate fluctuations, which
may affect our overall operational costs and the value of our financial assets
and liabilities, in particular, our debt portfolio mainly in the form of debt
raised in the capital markets and bank loans. We utilize various financial and
derivative instruments which can be sensitive to interest rate changes. An
increase in interest rates, particularly in our yen-denominated financial
instruments, could increase our interest expense, which could adversely affect
our financial condition and results of operations.



| |                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Declines in the market value of equity and/or debt securities in Japan may
decrease the value of our pension assets which in turn may increase the
cost of satisfying our unfunded pension obligations.

Declines in the value of our pension assets which consist of Japanese
government bonds, other debt securities and marketable equity securities would
reduce the value of our pension plan assets. In addition, if it is determined
that a lower discount rate should be applied to calculate our benefit
obligations, our unfunded pension obligations may increase significantly which
in turn will result in the increase in pension expenses. Such decline in our
pension plan assets or increase in our unfunded pension obligations could
adversely affect our results of operations and financial condition.

See
Item 5. A. Operating Results and Note 12, Pension Costs
and Severance Indemnities to our consolidated financial statements.



| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because of daily price range limitations under Japanese stock exchange rules,
you may not be able to sell your shares of our common stock at a
particular price on any particular trading day, or at all.

Stock prices on Japanese stock exchanges are determined on a real-time
basis by the equilibrium between bids and offers. These exchanges are
order-driven markets without specialists or market makers to guide price
formation. To prevent excessive volatility, these exchanges set daily upward
and downward price range limitations for each stock, based on the previous
days closing price. Although transactions may continue at the upward or
downward limit price if the limit price is reached on a particular trading day,
no transactions may take place outside these limits on these exchanges. Consequently, an investor
wishing to sell at a price above or below the relevant daily limit on these
exchanges may not be able to effect a sale at such price on a particular
trading day, or at all.

See
Item 10.B. Memorandum and Articles of AssociationDaily Price Fluctuation Limits under Japanese Stock Exchange Rules.



| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | As a holder of ADSs, you will have fewer rights than a direct
shareholder and you will have to act through the depositary to exercise
those rights.

The rights of shareholders under Japanese law to take actions, including
voting shares, receiving dividends and distributions, bringing derivative
actions, examining our accounting books and records and exercising appraisal
rights are available only to holders of record on our register of shareholders.
Because the depositary, through its custodian agents, is the record holder of
the shares underlying the ADSs, only the depositary can exercise those rights
in connection with the deposited shares. The depositary will make efforts to
vote the shares underlying your ADSs as instructed by you and will pay to you
the dividends and distributions collected from us. However, as an ADS holder,
you will not be able to bring a derivative action, examine our accounting books
and records or exercise appraisal rights through the depositary.

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Item 4. Information on the Company.




A. History and Development of the Company.

History

Mitsui Bussan Kabusiki Kaisha (Mitsui & Co., Ltd. in English) was
incorporated on July 25, 1947, as Daiichi Bussan Kabushiki Kaisha, a
corporation (Kabushiki Kaisha) under the Commercial Code of Japan. On February
16, 1959, we changed the name to our current name. Our registered office is
located at 2-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan. Mitsuis
telephone number is +81-3-3285-1111.

We were originally listed on the Tokyo Stock Exchange in May 1949. During
the 1950s, we began establishing several subsidiaries and associated companies.
Many of these subsidiaries and associated companies are still in existence, for
example, Mitsui & Co. (Australia) Ltd. and Nihon Unisys, Ltd.

During the 1960s, we began to experience rapid growth and expansion. We
played a pivotal role in promoting the growth of certain basic industries by
developing raw material sources overseas, nurturing markets for Japanese
exports and introducing various new technologies. We established Mitsui & Co.
(U.S.A.), Inc. (Mitsui U.S.A.) in April 1966, and Mitsui Knowledge Industry
Co., Ltd. in October 1967. In May 1963, we issued American Depositary Shares
which were subsequently listed on the NASDAQ National Market in February 1971.

In the 1970s, as the world economy weathered two oil crises, we began to
diversify our business operations by entering into various new industries, such
as the information industry. Also during this period, we suffered losses with
respect to a joint venture project we entered into in connection with Iranian
petrochemicals. These losses were a result of the petrochemical manufacturing
complex being damaged by military attacks, causing the project to be dissolved
in the year ended March 31, 1992. Also during the 1970s, we purchased an equity
interest in Mikuni Coca-Cola Bottling Co., Ltd.

In the 1980s, Japans industrial structure moved increasingly towards the
production of high-value-added products such as products related to information
technology. Consequently, we began extending our business field towards the new
markets for such products. In October 1987, we merged with Bussan Fudosan K.K.,
one of our subsidiaries in Japan. In April 1988, we established Mitsui & Co. UK
PLC.

During the 1990s, the Asian economies experienced a recession. Although
the appreciation in real estate and stocks created a temporary economic boom in
Japan, its eventual collapse resulted in a wide-ranging economic slowdown.
These conditions necessitated the reorganization of our profit structures and
the development of new businesses. In July 1999, we established Mitsui & Co.
Europe PLC.

Recent Developments

In the recent years, while income from trade intermediary services has
remained our largest source of revenue, revenues from investment-related
activities, such as dividend income and equity in earnings of associated
companies, have been rapidly increasing.

Currently, we are reshaping our balance sheet by reducing certain of our
assets through various measures, such as the sale of assets and unprofitable
investments. Proceeds from these sales are to be allocated to the core business
areas such as raw material resources and energy development to strengthen
earnings. We also plan to use such proceeds to enter into new strategic areas.
We are allocating financial and human resources to our core businesses. We are
also moving forward to enter into and expand activities in biotechnology,
nanotechnology and other new technology businesses.

In March 2003, we reached an agreement on the acquisition of shares of
Valepar S.A. (the controlling shareholder of Companhia Vale do Rio Doce
(CVRD) in Brazil) and the sales of share of Caemi Mineração e
Metalurgia S.A. In May 2003, Sakhalin Energy Investment Company Ltd. announced that it would
begin the second phase of development of the Sakhalin II Project.

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In April 2002, we implemented an introduction of five major operating
groups within the head corporate office of Mitsui (the Head
Office) that delegated greater authority to the chief of
each operating group for his/her business decisions, investments and reorganizations with
respect to his/her group. However, from April 2003, the five operating group
system has been abolished to speed up implementation of business
strategy, where greater authority has been delegated to the Chief Operating
Officer of each business unit and the Chief Operating Officer of the
business unit
is responsible for the entire business operation conducted by such
business unit.

In April 2003, we realigned our operations in China with the aim of
creating a streamlined system to manage our business in China, including Hong
Kong. The realignment included establishment of three business units in
Beijing, Shanghai, and Hong Kong. Each unit reports to the general
representative in China who is authorized to manage each of the three units
business operations.

Capital Expenditures

Our
capital expenditures including the acquisition of interests in
NextCom K.K., Mitsui E&P
Middle East B.V., Komatsu Australia Pty Ltd., Acca Networks Co., Ltd.,
Ferrotec Corporation and other companies, and short term investments in debt
securities amounted to ¥486 billion, ¥292 billion and ¥301 billion for the
years ended March 31, 2003, 2002 and 2001, respectively.

The divestitures of the matured debt securities and short term investments
in debt securities amounted to ¥394 billion, ¥154 billion and ¥249 billion for
the years ended March 31, 2003, 2002 and 2001, respectively.

On
September 2, 2003, we acquired 15% of Valepar S.A. for $830
million and sold our shares
of Caemi Mineração e Metalurgia S.A. for $426 million.

See Item 5.B. Liquidity and Capital Resources for further discussions.




B. Business Overview.

Nature of our Operations and Principal Activities

We are a general trading company engaging in a range of global business
activities including general worldwide trading of various commodities,
arranging financing for customers and suppliers in connection with our trading
activities, organizing and coordinating industrial projects, participating in
financing and investing arrangements, assisting in the procurement of raw
materials and equipment, providing new technologies and processes for
manufacturing, and coordinating transportation and marketing of finished goods.
Our trading activities include the sale, distribution, purchase, marketing and
supply of wide variety of products including iron and steel, non-ferrous
metals, machinery, electronics, chemicals, energy-related commodity and
products, food products, textiles, general merchandise and real estate. We also
participate in the development of natural resources such as oil, gas, iron and
steel raw materials. In addition, we engage in strategic business investments
whereby we invest our own capital and provide management expertise in the
development of joint ventures and new enterprises in certain industries such as
information technology and biotechnology. We also provide financial services
whereby we assist our customers in minimizing their risk exposures associated
with their businesses through the use of derivatives and other hedging
instruments.

While
our activities continue to diversify, our core activity remains the
provision of transaction services. Specifically, we act as an intermediary
between buyers and sellers engaging in import, export, offshore, and domestic
trading activities. For example, we develop markets overseas for exporters and
locate raw materials or product sources that meet the needs of importers. To
facilitate smooth customer transactions, we draw upon our various capabilities
such as market information analysis, credit supervision, financing and
transportation logistics.

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Mitsui has 28 branches and offices located in Japan and 167 branches,
offices and trading subsidiaries located in other parts of the world (as of
July 1, 2003). They provide market information to each other and cooperate in
developing business. Each of our subsidiaries has its own marketing strategy
based on its particular business activities and customer relationships.

Seasonality of Our Business Activities

The trading of individual products such as heating oils, foods and
textiles is influenced by seasonality. For example, heating oil is traded more
frequently in the winter than summer months. In addition,
revenuegross trading
profit of Sanyu Koami Co., Ltd., our food wholesale subsidiary, increases from
October to December but decreases from January to March, reflecting the
seasonal demand in Japan. However, the seasonality of any product either
individually or in the aggregate would not significantly affect the
consolidated financial position and operating results.



|                                                                                    
|------------------------------------------------------------------------------------
|Dependence on Patents and Licenses and Industrial, Commercial or
Financial Contracts

We have various patents and licenses as well as industrial, commercial and
financial contracts (including contracts with customers or suppliers) to carry
on our business. These patents, licenses or contracts either individually or in
the aggregate are not material to our business operations or profitability.

Marketing Channels

Marketing channels vary by commodity, customer, and region. We have
established subsidiaries and associated companies for promotion and
distribution in response to individual business environment.

See
Products and Services and Principal Activities by Reportable
Operating Segments below. Special sales methods including financial arrangement provided
by our Machinery, Electronics & Information Segment and
development of supply chain management system conducted by various
operating segments are also described therein.

Competitive Position

We are engaged in various types of businesses worldwide. Our main
competitors are other Japanese general trading companies. Moreover, all of our
potential business partners could also be competitors. To ensure our
competitiveness, we strive to continue to successfully meet the changing needs
of our customers worldwide. Analysis of competitive position by operating
segment is provided in Products and Services and Principal Activities by
Reportable Operating Segments below and also see Item 3.D. Risk Factors.

Government Regulations

Our business activities are subject to various governmental regulations in
the countries in which we operate. These regulations generally relate to
obtaining business and investment approvals, and meeting the requirements of
export regulations including those related to national security considerations,
tariffs, antitrust, consumer and business taxation, exchange controls, and
environmental laws and regulations. Certain of our business transactions such
as our activities in the energy, mining, telecommunications, financing, food,
consumer products, machinery, chemicals, etc. are regulated and subject to the
relevant laws and regulations. Our businesses involving extraction and
production of natural resources subject us to environmental regulations. See
Item 3.D. Risk Factors.

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Products and Services and Principal Activities by Reportable
Operating Segments

We had undertaken a reorganization that included introduction of an
operating group system, effective from April 2002. The operating groups of our
Head Office, which were organized based on our products and services, plan
overall and worldwide strategies for their products and services and conduct
their worldwide operations. The operating groups also collaborate with branches
and offices that are located in Japan and overseas countries and with overseas
trading subsidiaries in planning and executing their strategies for products or
regions.

The branches, offices and overseas trading subsidiaries are separate
operating units, which are delegated the responsibilities of managing the
businesses of their regions as the centers of each particular regional strategy
and operate diversified businesses together with their affiliated companies in
collaboration with the operating groups. Therefore, our operating segments are
comprised of product and service focused operating segments and region-focused
operating segments. Our reportable operating segments as of March 31, 2003 were
comprised of below:

|  |                                                              |                                      
|- | ------------------------------------------------------------ | -------------------------------------
| | Our five product and service focused operating segments are:
|  |                                                              | Metal Products & Minerals;           
|  |                                                              | Machinery, Electronics & Information;
|  |                                                              | Chemical;                            
|  |                                                              | Energy;                              
|  |                                                              | Consumer Products & Services; and    
|  |                                                             
| | Our four region-focused operating segments are:             
|  |                                                              | Domestic Branches and Offices;       
|  |                                                              | Americas;                            
|  |                                                              | Europe; and                          
|  |                                                              | Other Overseas Areas.                

The operating segments have business units, which are further divided into
divisions. The divisions provide more focused products and services.

We have abolished the operating group system on April 1, 2003, to simplify
the organizational structure whereby the Chief Operating Officer of each
business unit is delegated more authority for their respective business
operations of the business unit and is responsible for operating results to the
Chief Executive Officer directly.

Metal Products & Minerals Segment

Our Metal Products & Minerals Segment is engaged in the overseas
development of raw materials for iron, steel and non-ferrous metals, and in the
domestic and global manufacturing, sale and trading of iron, steel and
non-ferrous products.

This segment is composed of Iron & Steel Products Unit, Iron & Steel Raw
Materials Unit, and Non-Ferrous Metals Unit, and has 50 subsidiaries including
Mitsui Bussan Raw Materials Development Corp. (Iron & Steel Raw Materials
Unit), Mitsui Bussan Futures Ltd. (Non-Ferrous Metals Unit), Mitsui Bussan
Construction Materials Co., Ltd. (Iron & Steel Products Unit), MBK Coil Center
Co., Ltd. (Iron & Steel Products Unit), Mitsui Iron Ore Development Pty., Ltd.
(Iron & Steel Raw Materials Unit) and Mitalco Inc. (Non-Ferrous Metals Unit),
and has 36 associated companies including BHP Mitsui Coal Pty., Ltd. (Iron &
Steel Raw Materials Unit).

An overview of each business unit within the segment is provided as
follows.

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Iron & Steel Products Unit

Our Iron & Steel Products Unit conducts trading, marketing, processing and
distributing of various iron and steel products to serve our customers in a
wide range of industries including the automobile, electronics, transportation,
construction and energy sectors. We have invested in steel processing centers
worldwide where we utilize our supply chain management (SCM) models that
employ our information technology and logistics technology expertise in order
to implement distribution arrangements for steel products for our
customers. Our
total annual steel processing capacity is about 4 million metric tons
worldwide. We also engage in strategic investments with our Japanese and
overseas business partners focusing on iron and steel processing and
manufacturing business in the United States, China and Southeast Asia. For
example, in China we built a network of steel products service centers with
Shanghai Baosteel Group Corporation, a Chinese iron and steel manufacturing
company.

Our Iron & Steel Products Unit established the Automotive Steel Division
and the China Business Promotion Department to satisfy the increasing demand
for iron and steel products in both the Chinese market and the automotive
industry worldwide. We strategically allocated human resources, and expanded
our steel sheet processing capacity in China, Southeast Asia, the United States and
Europe to meet the increasing global needs of our customers in various industry
sectors, and the automotive industry in particular.

We trade iron and steel products domestically and worldwide manufactured
primarily by Japanese steel producers. We handle approximately 22 million
tons of iron and steel products annually worldwide. To differentiate ourselves
in the changing competitive landscape, we draw upon the expertise of other
operating segments and business units, such as energy, automobile, shipbuilding, and
transportation-related segments and units to satisfy the evolving needs of our
customers worldwide.

Iron & Steel Raw Materials Unit

Our Iron & Steel Raw Materials Unit is engaged in various business
activities, including trading, investment, logistics management and
transportation services related to iron and steel raw materials, such as iron
ore, coal, steel scrap, ferro-alloys and other minerals.

More particularly, our Iron & Steel Raw Materials Unit acts as an agent to
various major Japanese steel makers for their procurement of iron ore, coal,
steel scrap and ferro-alloys, while at the same time, we also invest
in various iron ore and coal mines in Australia, Brazil and India. For
example, in April 2002, we entered into a strategic alliance with Anglo
American Plc to develop the Moura and German Creek coalmines in Australia,
which provided us with a solid foundation for future growth in the coal
business. In August 2002, we completed the construction of the West Angelas
iron ore mine in Australia (as a part of Robe River Joint Venture with Rio
Tinto plc), which began shipments of iron ore to customers worldwide. In March
2003, we agreed to purchase 15% of Valepar S.A., the controlling shareholder of
Companhia Vale do Rio Doce (CVRD) in Brazil. CVRD is a mining enterprise
that operates in mining of iron ore, and other raw non-ferrous
metals. This transaction was completed on September 2, 2003.

We also own and operate a steel scrap export terminal in the United
States, Pacific Coast Recycling, LLC through our subsidiary, Raw Materials
Development Co.

We have also entered into new joint venture projects to meet the
increasing demand for iron and steel raw materials in Japan and abroad. For
example, in January 2003, we established POSCO Terminal Co., Ltd., a joint
venture with POSCO (a steel maker in South Korea) whereby we provide logistics
service with respect to transactions involving iron and steel raw materials for
our various customers in Asia. We are also enhancing our involvement in the
general recycling business and the greenhouse gas emission trading business.

One of our traditional business activitiesserving as an agent for
Japanese steel makershas seen accelerated competition from other Japanese
trading companies. Due to the global trend to eliminate intermediaries with
respect to iron and steel trading activities, we are enhancing our investments
and promoting our participation in alliances with mining companies worldwide to
provide cross-border services to our clients, extending our services to both
suppliers and consumers. The competition among mining companies is fierce,
however, it is relatively hard for newcomers to enter this market due to the
large scale of investment and the required expertise.

17



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Our
major investments as of September 2, 2003 are as follows:

|                      |  |                                                                        |  |            |     |              |  |                                
|--------------------- |  | ---------------------------------------------------------------------- |  | ---------- | --- | ------------ |  | -------------------------------
|Type of Mineral       |  |                                                                        |  | Percentage |     |             
|Resources or          |  |                                                                        |  | of         |     | Other Major 
|Services Provided     |  | Joint Venture or Investee                                              |  | Interest   |     | Participants
|                     
|Iron Ore              |  |                                                                        |  |            |     |              |  |                                
|                      |  | Robe River Iron Ore Joint Venture (Australia)                          |  |            | 33  | %            |  | Rio Tinto plc/Rio Tinto Limited
|                      |  | Mt. Newman Iron Ore Joint Venture (Australia)                          |  |            | 7   | %            |  | BHP Billiton Limited           
|                      |  | Yandi Iron Ore Joint Venture (Australia)                               |  |            | 7   | %            |  | BHP Billiton Limited           
|                      |  | Mt. Goldsworthy Iron Ore Joint Venture (Australia)                     |  |            | 7   | %            |  | BHP Billiton Limited           
|                      |  | Valepar S.A. (Controlling shareholder of CVRD in Brazil)               |  |            | 15  | %            |  | Banco Bradesco S.A.            
|                      |  | Sesa Goa Limited (India)                                               |  |            | 51  | %            |  | (1)                            
|                     
|                      |  | (1) Sesa Goa Limited is publicly listed in India.                     
|Coal                  |  |                                                                        |  |            |     |              |  |                                
|                      |  | Moura Coal Mine (Australia)                                            |  |            | 49  | %            |  | Anglo American Plc             
|                      |  | German Creek Coal Mine (Australia)                                     |  |            | 30  | %            |  | Anglo American Plc             
|                      |  | Kestrel Coal Mine (Australia)                                          |  |            | 20  | %            |  | Rio Tinto plc/Rio Tinto Limited
|                      |  | Bengalla Coal Mine (Australia)                                         |  |            | 10  | %            |  | Rio Tinto plc/Rio Tinto Limited
|                     
|Ferrous Raw Materials |  |                                                                        |  |            |     |              |  |                                
|                      |  | Pacific Coast Recycling, LLC (U.S.A.)                                  |  |            | 100 | %            |  |                               
|                      |  | Advalloy (Proprietary) Limited (Ferro
Manganese maker in South Africa) |  |            | 50  | %            |  | BHP Billiton Limited           
|                      |  | Mitsui
Minerals Development South Africa (Proprietary) Limited         |  |            | 100 | %            |  |                               
|                      |  | (Ferro Chrome maker
in South Africa)                                   |  |            |     |              |  |                                
|                      |  | South Africa Japan Vanadium (Proprietary) Limited                      |  |            | 10  | %            |  | Highveld Steel & Vanadium      
|                      |  | (Ferro Vanadium maker in South Africa)                                 |  |            |     |              |  | Corporation Limited            
|                     
|Logistic Services     |  |                                                                        |  |            |     |              |  |                                
|                      |  | POSCO Terminal Co., Ltd. (South Korea)                                 |  |            | 49  | %            |  | POSCO                          

Production and reserves of the above
listed iron ore and coal companies (or joint ventures)(2) are set forth below:



| | (2) | The production and reserve of CVRD
are not included in the tables below,
because we acquired 15% of Valepar S.A. on September 2, 2003.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

|                                                                  |           |           |  |             |        |             |  |             |        |  |  |        |        |  |  | 
|----------------------------------------------------------------- | --------- | --------- |  | ----------- | ------ | ----------- |  | ----------- | ------ |  |  | ------ | ------ |  |  | 
|Production
Tonnage for the Each Fiscal Year (Unit: Thousand Tons)
|                                                                 
|                                                                  |           | Country   |  | Fiscal
2003 |        | Fiscal
2002 |  | Fiscal
2001
|                                                                  |           |           |  |             |        |             |  |            
|Iron ore                                                          | Australia |           |  | 18,004      |        |             |  | 15,253      |        |  |  | 14,818 |       
|                                                                  |           | India     |  |             | 3,449  |             |  |             | 2,899  |  |  |        | 3,128  | 
|                                                                  |           |           |  |             |        |             |  |             |        | 
|                                                                  |           | Total     |  |             | 21,453 |             |  |             | 18,152 |  |  |        | 17,946 | 
|                                                                  |           |           |  |             |        |             |  |             |        | 
|                                                                 
|                                                                 
|                                                                  |           | Country   |  | Fiscal
2003 |        | Fiscal
2002 |  | Fiscal
2001
|                                                                  |           |           |  |             |        |             |  |            
|Coal                                                              |           | Australia |  |             | 5,015  |             |  |             | 3,586  |  |  |        | 3,277  | 

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|                                                                       |           |           |  |             |     |             |  |             |     |  |  |     |     |  |  | 
|---------------------------------------------------------------------- | --------- | --------- |  | ----------- | --- | ----------- |  | ----------- | --- |  |  | --- | --- |  |  | 
|Reserve Tonnage as of the End
of Each Fiscal Year (Unit: Million Tons)
|                                                                      
|                                                                       |           | Country   |  | Fiscal 2003 |     | Fiscal 2002 |  | Fiscal 2001
|                                                                       |           |           |  |             |     |             |  |            
|Iron ore                                                               | Australia |           |  | 374         |     |             |  | 381         |     |  |  | 399 |    
|                                                                       |           | India     |  |             | 55  |             |  |             | 58  |  |  |     | 62  | 
|                                                                       |           |           |  |             |     |             |  |            
|                                                                       |           | Total     |  |             | 429 |             |  |             | 439 |  |  |     | 461 | 
|                                                                       |           |           |  |             |     |             |  |            
|                                                                      
|                                                                       |           | Country   |  | Fiscal 2003 |     | Fiscal 2002 |  | Fiscal 2001
|                                                                       |           |           |  |             |     |             |  |            
|Coal                                                                   |           | Australia |  |             | 125 |             |  |             | 91  |  |  |     | 94  | 
|                                                                      

Non-Ferrous Metals Unit

Our
Non-Ferrous Metals Unit is engaged in the businesses and operations
involving various non-ferrous metals, and our business activities in this unit
include, among other things, trading, transporting, and processing non-ferrous
metal ores and ingots as well as semi-fabricated products such as:



| |  |  | copper, lead, zinc, tin, nickel, aluminum, magnesium, cobalt,
titanium, zirconium, and other non-ferrous metals;
| |  | - | ----------------------------------------------------------------------------------------------------------------
|
| |  |  | precious metals, such as gold, silver, platinum, palladium, and rhodium;                                        
|
| |  |  | construction materials such as aluminum sashes and curtain walls; and                                           
|
| |  |  | nuclear fuels.                                                                                                  

We are also engaged in trading and promotion of a wide range of derivative
instruments in various precious metals as well as other non-ferrous metals,
crude oil, natural gas and weather.

The
following are examples of certain business transactions our
Non-Ferrous Metals Unit is
engaged in:



| |  |  | transport approximately 1,500 tons of nuclear fuels annually for
electric power companies in Japan, which represents approximately
one-half of the total requirements of Japan;                                                                                                             
| |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | import approximately 400,000 tons of primary aluminum ingots into
Japan, which represents approximately 18% of total requirements of
Japan and also carry out off-shore business transactions for
approximately 100,000 tons of primary aluminum ingots mainly in
South-East Asia and China;
|
| |  |  | import approximately 800,000 tons of copper concentrates annually
into Japan, which represents approximately one-fourth of the total
requirements of Japan;                                                                                                                                 
|
| |  |  | carry out domestic and export trading business of aluminum mill
products primarily for beverage container market in which our share in
this market is estimated at approximately 20% for the domestic market
and 6% for the export market; and                                              
|
| |  |  | handle approximately 45,000 metric tons of various forms of both
imported and domestic nickel in the Japanese market whereby our
trading market share of nickel and cobalt are approximately 25% and
40%, respectively.                                                                     

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We diversify our business through natural resource investments, global
trading and development and promotion of alternative investment products
through our subsidiary licensed by governmental regulators. In the natural
resource field, we decided to make an additional loan of U.S.$100 million to
the Collahuasi copper mining project in Chile, developed jointly with Anglo
American Plc and Falconbridge Ltd. so as to increase the capacity of the
project as one of the competitive copper suppliers in the world. The project is
moving to a new mining site from the existing ore body, and is
expected to expand its
milling capacity from the present 60,000 tons per day to 110,000 tons per day,
so that we may make additional transactions of 1.3 million tons in aggregate of copper
concentrates from the mine to Japanese copper smelters. We further enhanced our
resource investment activities by participating in a nickel-cobalt mining and
refining project at Rio Tuba area in the Republic of Philippines, to be
developed jointly with Sumitomo Metal Mining Co., Ltd., Nissho Iwai
Corporation, and a local partner in the country. This project will produce
nickel-cobalt mixed sulfide through a high-pressure acid leaching process, an
advanced processing technologies for nickel production.

In the global trading area, we broadened our copper and aluminum
operations, mainly through trading with China.

In
addition to our various spot trading and long term business transactions,
we steadily expanded our financial services and derivative trading operations under highly volatile market
conditions for precious metals. Mitsui & Co. Energy Risk Management Ltd., which
we established in March 2002, enjoyed growth in derivative trading operations,
mainly for crude oil and natural gas related commodities. Japan Alternative
Investment Co., Ltd. began operations in April 2002, acting as a placement
agent for alternative investment products, such as fund of funds for hedge
funds and private equity funds.

Machinery, Electronics & Information Segment

Machinery, Electronics & Information Segment engages in, amongst other
things, the following businesses: manufacturing, global marketing and sales,
financing, leasing, and services involving electric machineries, industrial
plants, transportation equipment and systems, industrial systems, construction
equipments, telecommunication systems, motor vehicles, marine and aerospace
systems. We are also involved in information technology (IT) and electronics
related solutions business, marketing and sales of IT/electronics related
products, components/materials, software and services. Such services provided
by each of our business units are sold primarily to industrial customers,
including original equipment manufacturers, industrial end users, utility
companies, constructors, as well as to distributors.

Project organization and implementation of worldwide infrastructure
related plants and projects; IT related marketing and consumer-related
business; mobile-related business and strategic investments are becoming
increasingly important to us besides existing trading transactions.

Our Machinery, Electronics & Information Segment consists of five business units as follows:



| |  |  | Electric Machinery, Plant &
Project Business Unit (the EMPPB Unit)                   
| |  | - | ---------------------------------------------------------------------------------------
|
| |  |  | Telecommunications, Transportation
& Industrial Systems Business Unit (the TTIS Unit)
|
| |  |  | Motor Vehicles, Marine & Aerospace Business Unit (the MoVMAB Unit)                   
|
| |  |  | Information Business Unit (the INFO Unit)                                            
|
| |  |  | Electronics Business Unit (the ELE Unit)                                             

Our Machinery, Electronics & Information Segment holds 82 subsidiaries
such as Mitsui Bussan Plant & Project Corporation (EMPPB Unit), The MBK Rail
Capital Companies, Inc. (TTIS Unit), Orient Marine Co., Ltd., Mitsui Bussan
Automotive Inc., Mitsui Bussan Aerospace Co., Ltd. (MoVMAB Unit), Mitsui &
Associates Telepark Corporation, BSI Co., Ltd., ADAM NET LTD., Kids Station
Inc., Toyo Officemation Inc. (INFO Unit), XION HOLDINGS, INC. (ELE Unit), and
80 associated companies such as Shin Nippon Air Technologies Co., Ltd., Kioritz
Corporation (TTIS Unit), Toyota Canada Inc. (MoVMAB Unit), Nihon Unisys Ltd.,
NextCom K.K., QVC Japan, Inc., Moshi Moshi Hotline Inc. (INFO Unit), Ferrotec
Corporation (ELE Unit).

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Electric Machinery, Plant & Project Business Unit

The business activities of the Electric Machinery, Plant & Project
Business Unit covers a wide range of fields, including power plants; power
transmission and substation facilities; oil refineries; LNG manufacturing
facilities; pipelines; infrastructure; iron; non-ferrous metals; chemical
plants; and water and sewer facilities. We are undertaking a number of projects
that may stimulate economic growth in certain developing countries and
countries rich in natural resources in which we operate, by focusing on the
needs of those countries and applying our comprehensive business engineering
capabilities, so as to devise optimum solutions that address the complex and
multifaceted issues facing those nations. The followings are some examples of
the projects we are engaged in:



| |  |  | Commonwealth of Independent States (CIS), Middle East Natural Gas Energy Projects;
| |  | - | ------------------------------------------------------------------------------------
|
| |  |  | Brazil Petrobras Projects;                                                          
|
| |  |  | U.S.A. Mid American Thermal Project;                                                
|
| |  |  | Indonesia lead-free gasoline production Project; and                                
|
| |  |  | Malaysia Port Dickson Combined Cycle Project.                                       

We own a
32.5% interest in P.T. Paiton Energy, an Indonesian power company,
which owns a 1,230 megawatt coal fired power plant in East Java, Indonesia.
P.T. Paiton Energy sells electricity to P.T. Perusahaan Listrik Negara (P.T.
PLN), an electric utility company owned by the Indonesian government, under a
power purchase agreement. In December 2002, an amendment to the original power
purchase agreement became effective, bringing to a close and resolving a series
of disputes between P.T. Paiton Energy and P.T. PLN, which was caused in large
part, by the effects of the regional financial crisis in Asia and Indonesia.

The Electric Machinery, Plant & Project Business Unit is increasing
activities to facilitate the implementation of projects that go beyond the
conventional engineering, procurement and construction approach of project
engineering and supplying equipment, and are considering investments in certain
related infrastructure projects. As a result of our new and innovative methods,
for example, we received an order to participate in the construction of power
plant and desalination facilities from the Abu Dhabi government during fiscal
2003.

The preservation of the natural environment is becoming an increasingly
pressing global issue. In response, we are participating in domestic recycling
businesses and are aggressively making proposals for solutions to various
environmental problems. Sales orders in fiscal 2003 rose steadily with respect
to polychloride biphenyl processing plants developed by us to clean up the
toxic chemical waste without extra damage to the environment, and we also
invested in Kitakyushu Eco-Energy, Inc., in northern Kyushu, a facility where
waste is incinerated to generate power. In our overseas markets, we are engaged
in the construction of waste processing facilities and other
environment-related projects.

Our business field is highly competitive. Competitors could be other
Japanese general trading firms, international financial institutions, global
engineering companies and construction companies. To succeed in this
competitive environment, we believe that making the best use of our core
competencies is essential, which include but are not limited to the following,
such as our global network, global customer base, global manufacturers base,
regional expertise, financial engineering skill, project engineering skill,
project development skills, and market insight. A key factor for us to remain
competitive is to maintain, promote and secure people who are highly skilled in
their field of expertise to perform and address such needs.



|                                                                     
|---------------------------------------------------------------------
|Telecommunications, Transportation & Industrial Systems Business
Unit

The Telecommunications, Transportation & Industrial Systems Business Unit
handles a wide range of products and is engaged in diversified activities,
which range from the implementation of large-scale projects to downstream
distribution businesses.

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In large-scale projects, we leverage our marketing capabilities, regional
expertise, and financial arrangement functions and build strategic alliances
with major domestic and overseas manufacturers in the field of communications
infrastructure projects, railway projects, and construction equipment as well
as mining equipment. In these activities, we have been expanding the
geographical scope of our business to include Greater China, which
includes mainland
China, Hong Kong and Taiwan, Russia, and CIS in
addition to our principal markets, such as Asia, Central America, and South
America. For example, we signed a contract for Chongqing Urban Railway
Construction Project, major trackworks in the Taiwan High-Speed Rail Project;
succeeded in obtaining a financing arrangement to Tele Norte Leste
Participacoes S.A., Brazil for their procurement of telecommunications equipment
from NEC Corporation and Siemens AG; and received an order for the
Telecommunications Network Expansion Project (II) in Uzbekistan under the
Japanese Yen denominated credit. With respect to our product distribution
activities, we started to carry out aggressive downstream development in
Australia, with Komatsu Australian Pty Ltd., and also expanded such business
model to other regions such as the United States and South East Asia.

The business sector in which the unit is engaged is experiencing
increasingly intense competition. Competitors could be financial institutions,
engineering companies, construction companies, manufacturers and service
providers. Namely, all of our potential partners could be
competitors. As such, our core competence becomes critical.
Our core competence lies in our
global network, global customer base, regional expertise, financial engineering
skill, project engineering skill, conception, and market insight
which may give us
a competitive advantage if we make the best use of those core competencies. We
can continue to remain competitive only if we can maintain and secure people
who are highly skilled in their field of expertise to perform and address such
needs.

Motor Vehicles, Marine & Aerospace Business Unit

Motor
Vehicles, Marine & Aerospace Business Unit has the following divisions:
First and Second Motor Vehicles Divisions, Ship & Marine Project
Division, and Aerospace Systems Division. Brief description of these divisions is set forth
below.

First and Second Motor Vehicles Divisions

In our motor vehicles business, our strength lies in our value added
services that we offer in our traditional and core fields such as assembly and
manufacturing, import and export, and distribution of motor vehicles and their
parts. For example, we have been exporting Toyota, Subaru, and other Japanese
manufacturers cars to various countries worldwide such as Canada (Toyota),
Chile (Toyota), Peru (Toyota), Italy (Subaru), Germany (Subaru and Yamaha),
Thailand (Hino) and Malaysia (Daihatsu). We have set up subsidiaries and
associated companies in these countries for distribution purposes. We continue
to proceed with the strategic allocation of our financial and human
resources to certain prioritized areas of our motor vehicles business worldwide
such as logistics and retail operations and retail finance and auction
business. For example, we have operated a retail finance company for Yamaha
motorcycles in Indonesia since 1997. Also, we have been handling the logistics
operations of automobile parts for Toyotas manufacturing operation in North
America and Europe area.

With regard to retail operations, we acquired a 7.8% interest in United
Auto Group, Inc., an American automobile retail company which has expertise for
retail operation in the United States and have been seeking an opportunity to develop joint
retail operations in various regions. We have also invested in an auction
business for used cars as a business partner of J.A.A., an auction
trader in Japan. In order to establish ourselves in the automobile
auction business, we, along with J.A.A., established an automobile auction joint
venture company in Germany.

Ship & Marine Project Division

We maintain our marine-related operations by continuous alliances with
various owners and operators of ships and also by providing multifunctional
services, which include purchase and sale of various types of ships including
bulk carriers, container carriers and tankers, financing activities, management
of ship construction and operations, as well as chartering services. In
addition, through our partnership with major petroleum companies such as
Chevron Texaco Corporation, we actively participate in business transactions
involving tankers, LPG and LNG carriers, as well as Floating Production Storage
and Offloading units for energy development operations. For example, we won
projects for Floating Storage and Offloading and Floating Production Storage
and Offloading projects with Chevron Angola and Conoco Vietnam, respectively.

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Aerospace Systems Division

We act as the sales consultant of Airbus for Japanese airlines. These
activities, together with aircraft leasing and the marketing of defense-related
systems and helicopters, are the strength of our aerospace operations.

The business sector in which we are engaged is highly competitive.
Competitors could be including, but not limited to, other Japanese general
trading firms, international financial institutions and manufacturers. In this
competitive environment, we believe that we have been maintaining our
reputation in the respective market by using our core competencies, which
include but are not limited to our global network,
global customer base, regional expertise, financial engineering skill, and
market insight.

Information Business Unit

Our Information Business Unit is involved in innovative information
technology services and solutions, which are delivered mainly to our customers
in Japan through the units 14 subsidiaries, and 11 associated companies.
Examples of services which we provide are television shopping services operated
by QVC Japan, Inc., a joint venture with QVC Inc., and an entertainment and
educational channel for children and parents
operated by Kids Station Inc., our wholly owned subsidiary, both of which
are delivered over cable or digital satellite broadcast networks.

Examples of information technology solutions which we provide are
integrated hardware and software solutions for corporate enterprises,
government organizations and telecommunication companies such as network
infrastructure devices, billing systems, enterprise applications, network
security and customer relationship management. Such solutions are provided
through subsidiaries and associated companies such as NextCom K.K., ADAMNET,
LTD., BSI Co., Ltd., and Nihon Unisys, Ltd.

Our unit is dependent on the operating results of our subsidiaries and
associated companies, most of which are located in Japan. We also rely on our
investments in overseas technology and business partners, which enable us to
provide competitive services and solutions in the domestic market.

Electronics Business Unit

Our Electronics Business Unit offers electronic materials, devices, and
products including IC chips, LCD panels, storage and opto-electronics devices
with respect to upstream and downstream operations as well as manufacturing
equipment and systems for semiconductor and flat panel display related
electronics devices. The operating environment in Japans semiconductor
industry has changed dramatically since the telecommunications bubble burst in
2001. In order to expand our sales activities, under Bussan Microelectronics
Corp., the core semiconductor trading subsidiary, we acquired another trading
house, TEKSEL Co., Ltd., to broaden our customer base and our product
portfolio. To maximize synergies of the combined operations, we established
Xion Holdings, Inc., as a holding company of the two subsidiaries.

The shift of electronic device productions to mainland China intensified
during fiscal 2003, prompting our Electronics Business Unit to allocate
additional human and capital resources to bolster our China business strategy.
Moreover, we have undertaken the following in China:



| |  |  | concluded a broad strategic partnership agreement with SVA
(GROUP) CO., LTD. (SVA), Chinese electronics manufacturer, and set up
a joint venture company in Shanghai to market SVAs strategic products
in China and worldwide; and                                                                                                                  
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | added manufacturing capacity through CMS (Contract Manufacturing
Services) at the Shanghai plant of Ferrotec Corporation, our
associated company in Japan which also manufactures ferrofluidic
products, starting with the relocation of the Japanese semiconductor
wafer production bases with a monthly production capacity of 400,000
5-inch wafers.

23



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In Japan, marketing and sales are conducted primarily through the
subsidiary companies such as Bussan Digital and MBK Microtek. International
marketing is done primarily through strategic marketing subsidiaries such as
newly established Mitsui Electronics Information (Shanghai) Co., Ltd., Mitsui
Comtek Corp., in the United States, and MEE Mitsui Electronics Europe, GmbH, in
Germany, and various corporate overseas branch offices, and in some cases
through the units own joint-venture companies with Japanese manufacturers such
as Shibaura Mechatronics Corp., Toyoda Gosei Co., Ltd., Senju Metal Industry
Co., Ltd. and various local partners.

The business area in which the unit is engaged is experiencing
increasingly intense competition. Competitors range from global corporations
to specialized companies. To survive and grow in this competitive environment,
the unit believes that the equipment, services and financing it handles must be
competitive in terms of price, technology, professional expertise, and quality
of services. We can remain competitive only if we can maintain and secure
people who are highly skilled in their field of expertise to perform and
address such needs.

Chemical Segment

The operations of our Chemical Segment include the production, trading,
and developing of chemical products both in Japan and overseas. We also promote
development of new technologies in the fields of nanotechnology and
biotechnology.

Our segment consists of the following units: Inorganic Chemicals Unit,
Performance Chemicals Unit, Petrochemicals Unit, and Plastics Unit. We have 57
consolidated subsidiaries including Daito Chemical Co., Ltd. (Inorganic
Chemicals Unit), Novus International, Inc. (Performance Chemicals Unit), Mitsui
Bussan Solvent & Coating Co., Ltd. (Petrochemicals Unit), and 47 associated
companies such as Advanced Composites Inc. (Plastics Unit), Honshu Chemical
Industries Co., Ltd. (Performance Chemicals Unit), Agenica Research Pte. Ltd.
(Performance Chemicals Unit).

Inorganic Chemicals Unit

The Inorganic Chemicals Unit is comprised of three divisions. The
Inorganic Raw Materials Division mainly handles basic inorganic
materials and operates logistic system and supply chain management
(SCM) system. The Inorganic Products Division
focuses on highly processed inorganic products; and the Nanotechnology and New
Technology Business Creation Division, as an incubator operation, concentrates
on developing and marketing new commercial materials. The Inorganic Raw
Materials Division trades inorganic basic materials for various industries in
Japan and overseas such as sulfur, sulfuric acid, salt, alkaline substance, and
mineral products. While leveraging our global trading capabilities to overcome
certain unfavorable economic conditions, we reinforced ties with subsidiaries
and associated companies such as Daito Chemical Co., Ltd. which manufactures
photographic chemicals and other industrial chemical products. In addition, we
strategically reallocated resources by restructuring logistics operations, and
built up our capabilities in sulfur, soda ash, and fiberglass materials in
China and elsewhere in Asia. In China, we expanded the operations of our salt
farm, an operation which complements a sea salt joint venture in Shark Bay,
Australia, that supplies Japan and other Asian markets.

Among new technologies, we particularly anticipate that nanotechnology
could be applicable to many fields. Our wholly owned subsidiary, Carbon
Nanotech Research Institute Inc., succeeded in developing technology to produce
high-quality carbon nanotube, and completed the construction of its production
facility. As the production facility has gone online, it has drawn attention
and generated expectations for the creation of new business opportunities.
Applications of carbon nanotubes are expected to include the development of
stronger plastic materials by compounding nanotubes with plastics and usage in
semiconductors to take advantage of their high degree of conductivity.

Moreover, to further broaden our capabilities in nanotechnology, the
Nanotechnology and New Technology Business Creation Division, in addition to
Device Nanotech Research Institute and Carbon Nanotech Research Institute Inc.,
established INRI Inc., which handles our intellectual properties. The Advanced
Technology Business Department within the Nanotechnology & New Technology Business
Creation Division installed proprietary diesel particulate filters for buses
and trucks in Tokyo and seven other prefectures and cities. We achieved further
progress in SCM by launching recycling operations at a
Chinese lens plant of Fuji Photo Film Co., Ltd., and by commencing full-scale
recycling of electronic flash units at Nankai Co., Ltd. through our Chinese
joint venture, Shenzhen Westnet Co., Ltd.

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Performance Chemicals Unit

The Performance Chemicals Unit engages in various business transactions
involving biotechnology, inorganic chemicals and specialty chemicals such as
food and feed additives, fertilizers and agricultural chemicals. The
Performance Chemicals Unit also engages in life-science related activities.

In the field of life sciences, we increased our investment in Beta-Chem,
Inc., in order to focus on pharmaceuticals manufacturing processes and to
expand the scope of that companys operations. We are involved in research,
development and marketing in the field of biotechnology and agricultural
chemicals. For example, our subsidiary Agenica Research Pte. Ltd. achieved
results in genetic profiling. In Singapore, we established an operation
to research antibodies, PharmaLogicals Research Pte. Ltd., with Chugai
Pharmaceutical Co., Ltd., and the Central Institute for Experimental Animals.
In the field of agricultural chemicals, we have been concentrating our effort
on distribution of certain of our agricultural chemical products through our
subsidiary company, Certis Europe which has a strong market position in
Benelux, France and UK. Furthermore, in 2002 we acquired Spiess-Urania Chemicals GmbH in Germany
to bolster our global sales network. We recently commenced our distribution of
agricultural chemicals in Japan.

China is strategically important to the future of the Performance
Chemicals Unit. As such, we look to expand our operations in that region. For
example, in the Life Science Division, we invested in a local amino acid
manufacturer. Moreover, in the field of sorbitol food additives, we concluded a
memorandum of understanding on creating a local joint venture with Hong Kongs
Global Bio-chem Technology Group Co., Ltd.

We maintain a competitive position in food and feed additives through our
global operation. In the specialty chemicals field, we have a strong presence
in detergent intermediates and urethane chemicals but are confronted with
fierce competition with global corporations in plastic additives. Even in a
commodity field like fertilizer, we maintain our competitive position by
focusing on imports to Japan through securing reliable sources and logistics.

Petrochemicals Unit

Our
Petrochemicals unit has four divisions, the Basic Petrochemicals Division,
the Synthetic Fiber Intermediates Division, the Organic Chemical Products Division,
and the Methanol & Ammonia Division. The main products are in the upstream field of
petrochemicals such as Olefins, Aromatics, Styrene Monomer, Vinyl Chloride
Monomer, Paraxylene, Terephthalic Acid, Etylene Glycol, Acrylonitrile, Phenol,
Bis-phenols, Acetone, Acetic Acid, Methanol and Ammonia.

The main activities lie in trading activities of the above mentioned
products in Japan and worldwide. We also invested in manufacturing facilities
and logistic facilities such as tank terminals in Houston, U.S.A.; Ningbo,
China; Bangkok, Thailand; Johor, Malaysia; Merak, Indonesia; and we also invested in
shipping companies in Japan and Singapore. Through long period of business
relationships with manufactures and customers such as Mitsui Chemicals, Inc.,
Toray Industries, Inc., Tosoh Corporation, The Dow Chemical Company, BP p.l.c.,
and Bayer Aktiengesellschaft, we have built a business presence worldwide.

The unit was successful in earning more revenue than the original sales
plan by obtaining bigger market share in certain products such as olefins and
Styrene Monomer as well as the steady growth of demand for petrochemicals in
the world, especially in China and other Asian countries. However the unit
posted a significant loss with respect to Trans Pacific Glycols Inc., Pacific
Ammonia Inc., and Vinyl Chloride Malaysia S.B., which suffered from high raw
material costs.

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During the past several years, most of our petrochemical companies have
been struggling to survive through drastic corporate restructuring which
include the reorganization of their sales forces and mergers and acquisitions.
However, despite the severely weakened petrochemical market, we remain
competitive with other Japanese trading companies and plan to strengthen our
market position by expanding our trade volume and market share. Our sales
channels to various customers in diverse geographic areas enable us to make
geographical and/or time swap arrangements which also give us better financial
terms in business transactions and also improve our chances for obtaining
opportunities for future transactions.

Plastics Unit

Our Plastics Unit traditionally handles various kinds of plastic raw
materials and plastic products in domestic and overseas markets. The Plastics
Unit also handles newly developed electronic materials and products as well as
SCM business services. The Plastics Unit consists of 3 divisions and
1 department, and has 46 subsidiaries and associated companies around the world.

The Industrial Material Division handles traditional industrial materials,
such as polyvinyl chloride and elastomers. The Molding Polymers
Division focuses on molding materials, such as polystyrene, ABS resin, and
engineering plastics, as well as polyolefins. The Advanced Materials Division
covers relatively new offeringsmainly electronic materials, such as
industrial films, carbon fiber, and optical fiber. The SCM
Business Development Department concentrates on SCM, an area with potential. We place top priority on
customer-oriented business and global developments. We expanded SCM in printer
and liquid crystal display (LCD) panels as well as reinforced our resin compound
operations in China, Southeast Asia, the United States, and Europe.

With the
focus of economic activity shifting to Asia, the Plastics Unit enhanced
its business in China in fiscal 2002 by establishing an engineering plastics
sales company in Shanghai and a high-performance paint manufacturer in Zuhou.
The Plastics Unit also set up a chemical etching company in Singapore for an
LCD panel project.

As for competition, we believe that we are keeping advantageous position
in the above mentioned fields because of our established global sales network
and sales force.

Energy Segment

Our Energy Segment is engaged in the general trading activities,
manufacturing, development and distribution of various energy-related products
including: crude oil and petroleum products such as gasoline, naphtha, jet
fuel, kerosene, diesel oil, fuel oil, asphalt, petroleum coke, lubricants and
liquefied petroleum gas, as well as liquefied natural gas
(LNG). Our segment
consists of one business unit, the Energy Business Unit, which has 7
business divisions as well as 21 consolidated companies such as Mitsui Oil &
Gas Co., Ltd. (MOGC) and Arcadia Petroleum Ltd., and 13 associated companies such as
Mitsui Oil Exploration Co., Ltd., Kyokuto Petroleum Industries, Ltd.
(KPI), Japan
Australia LNG (MIMI) PTY. Ltd. and Sakhalin Energy Investment Company Ltd. The
business divisions in the Energy Business Unit are: the E & P
Division, the Petroleum
Overseas Business Division, the Petroleum Downstream Business
Division, the Energy
Solution Division, the Natural Gas First Division, the Natural Gas Second Division and
the Sakhalin Development Division.

We are a major oil trader in the world based on our total daily trading
volume of crude oil and petroleum products (excluding derivative products)
which in fiscal 2002 amounted to approximately one third of Japans total
imports of 4.9 million barrels per day on a consolidated basis. We also engage
in the domestic marketing and refining of oil and gas related products through
KPI, a jointly owned refinery (50:50)
between a subsidiary of ExxonMobil Corp. and MOGC.

On March 25, 2003, we signed an offtake agreement of petroleum products as
well as financing agreements to provide a U.S.$200 million loan with PERUSAHAAN
PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA (PERTAMINA), the national oil and gas
company of Indonesia, which will utilize the funds to build a facility at
PERTAMINAs existing Balongan Refinery to produce 52,000 barrels per day of
unleaded gasoline. The objective of this national project, which has been
labeled the Blue Sky Project, will be to contribute to reducing atmospheric
pollution in Indonesias major cities. PERTAMINA will supply us with petroleum
products from its existing refineries, and the proceeds from the sale of these
products will be used as the source of debt service for the loan.

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Apart from short-term earnings from such activities as mentioned above,
the Energy Business Unit is engaged in numerous LNG and oil development projects that require long lead-times for their development and
implementation. We are involved in four LNG projects that are in operation: Abu
Dhabi Gas Liquefaction Limited (ADGAS) in Abu Dhabi, in which we hold a 15%
interest, has some 5 million tonnes per annum LNG production capacity,
Northwest Shelf JV (NWS JV) in Australia, in which we hold a 8.33% interest, has
some 7.5 million tonnes per annum production capacity, Qatar Liquefied Gas
Company Ltd. (Qatargas) in Qatar has some 7.7 million tonnes per annum
production capacity, and Oman LNG L.L.C. (OLNG) in Oman has some 6.6 million
tonnes production capacity. At the same time, we are also proceeding with our
fifth project, the Sakhalin II project in Russia. The majority of the LNG
produced by these ventures is sold to customers in Japan and Korea on long-term contracts
with remaining volumes sold to customers in various LNG markets on short-term
agreements. Nineteen million tonnes a year of LNG from these ventures are
supplied to Japanese utilities companies, which is about 35% of the total
amount of LNG imported to Japan.

In 2002, the NWS JV was awarded the supply contract for the first LNG
terminal in China, to be located in the Guangdong province in southeast China.
The contract volume is 3.3 million tonnes per annum and first deliveries are
scheduled for 2006. Also in the NWS JV, construction work has progressed on the
fourth LNG producing train, which has a capacity of 4.2 million tonnes per year
and is scheduled to begin in the latter half of 2004. In Qatar, the
modification work for debottlenecking on the existing LNG facilities is under
way in order to expand LNG production capabilities by
1.5 million tonnes per year
in 2005. These new LNG producing capacities will supply both existing and new
customers.

As for the Sakhalin II project, we hold a 25% interest in Sakhalin Energy
Investment Company Ltd. Since 1999, seasonal oil production continued from the
Molikpaq facility on the Astokhskoye field, offshore Sakhalin Island. In
addition, Sakhalin Energy announced on May 15, 2003, that it would begin second
phase of development of the Sakhalin II Project. This announcement marks the
beginning of the full-scale development of the Piltun-Astokhskoye oil field
aimed at year-round crude oil production, which is scheduled for 2006, and the
Lunskoye gas field, including construction of a two-train LNG plant in the
south of Sakhalin Island for export to the Asia Pacific LNG markets, which is
scheduled for 2007. At its peak, we believe the facility is expected to produce
60 million barrels of crude oil and 9.6 million tonnes of LNG per annum.

We have put high priority on expanding our oil and gas equity reserves
together with our associated company Mitsui Oil Exploration Co., Ltd (MOECO).
Identifying and implementing prospective oil and gas reserves are key factors
to success in this area. Our principal strategic region for this business is
Australia, South East Asia and the Middle East. In fiscal 2002, we acquired
exploration and production rights for the Block 9 oil and gas field in Oman and
participated in the Bass Gas Project in Australia. These newly acquired
properties helped boost our oil and gas reserves to 1.5 billion barrels oil
equivalent (boe) at the end of March 2003, despite the decrease in production
of 33 million boe of equity barrels during fiscal 2003.

We are also exploring the business potential of various newly emerging
business opportunities in the energy field, including power retailing,
environment-related business, gas to liquids (GTL) and di-methyl ether (DME).
Completion of the 45 megawatt power plant in Kashima in the Ibaraki Prefecture
of Japan, by the GTF Institute Co., Ltd., jointly owned with JGC Corp., and
Ishikawajima-Harima Heavy Industries Co., Ltd., was one of the important
milestones in this newly emerging business during fiscal
2002.

The international markets for crude oil and petroleum products are highly
competitive and volatile, as these commodities are traded on
exchanges such as NYMEX in New York, IPE in London, SIMEX in Singapore, and
TOCOM in Tokyo. In the worldwide trading business, we compete with
international oil companies, national oil companies in oil producing countries
and oil trading companies, including Japanese trading companies. In maintaining
our competitive edge under these circumstances, it is critical for us to
maintain good relationships with suppliers and customers
as well as to mitigate price risk by utilizing hedging tools in the futures
markets. We are also quite active in our efforts to secure long-term product
offtake contracts that would work as securities for the financing arrangements
of refining facilities construction projects in such oil producing countries as
Qatar and Indonesia.

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In the domestic refining and marketing business for oil and gas related
products, we face severe competition with domestic oil refining and
distributing companies due to the structural surplus situation of refining
capacities in Japan. KPI and MOGC, our core bodies for domestic business, are
in relatively sound financial situations owing to extensive restructuring of
inefficient assets and work force, and are pursuing efficient and competitive
operations.

For the oil and gas exploration and production (E&P) business, the key to
success is to constantly increase or at least keep certain volumes of
prospective oil and gas reserves as is the common practice with international
oil companies. In terms of recoverable reserves of oil and gas in hand, we are
in a strong position among the Japanese companies that engage in E&P business
owing to our managements intensive focus on expanding this line of business,
while our reserve base is still far less than that of national oil companies
in the oil producing countries and major oil companies.

In LNG business, a stable business environment has been established by
means of long-term sales contracts, based on take or pay conditions, with
customers such as Japanese utility companies. However, the
LNG business has been structurally changing since late 1990s because of
increasing spot LNG trading and emerging LNG markets in the United
States, China, and
India.

Consumer Products & Service Segment

The Consumer Products & Service Segment is engaged, in Japan and other
various overseas markets all over the world, in the business and operations of
trading various consumer-related products such as foods, textile and fashion,
general merchandise, building materials, real estate development including
construction, catering, uniform rental, building maintenance, services for
supporting retailers such as merchandising, logistics and inventory management
and investment to the above-mentioned business areas.

This segment is comprised of the Retail Unit, Foods Unit, Textile &
Fashion Unit, General Merchandise Unit and Service Business Unit, and owns 63
subsidiaries including Sanyu Koami Co., Ltd. (Foods Unit), Wilsey Foods Inc.
(Foods Unit), Bussan Real Estate Development Co., Ltd. (Service Business Unit),
Mitsui Bussan Inter-Fashion Ltd. (Textile & Fashion Unit) and
Vendor Service
Co., Ltd. (Retail Unit), and 89 associated companies including Mikuni Coca-Cola
Bottling Co., Ltd. (Foods Unit), Shin Mitsui Sugar Co., Ltd. (Foods Unit), AIM
Services Co., Ltd. (Service Business Unit), Alcantara S.p.A. (Textile & Fashion
Unit), Max Mara Japan Co., Ltd. (Textile & Fashion Unit) and Sumisho &
Mitsuibussan Kenzai Co., Ltd. (Service Business Unit).

Retail Unit

Our Retail Unit provides retailers with support services by offering them
distribution, inventory management, and planning capabilities as well as
customer-oriented manufacturing and production services, merchandising of foods,
beverages, and sundries, and procurement of packing and packaging materials that
allow the retailers to concentrate on their core activities of dealing with
customers and operating their stores. We also invest in the retail industry,
with the aim of providing our capabilities to retailers and assisting them in
enhancing their corporate value. We concentrate on the Japanese market as our
primary business target, operating various subsidiaries including Retail System
Service Co., Ltd., Vendor Service Co., Ltd. in Japan. One result of
this approach is our comprehensive alliance with the Ito-Yokado Group.

Our primary competitors are Japanese general trading companies. Our
success is basically dependent on whether we can provide our customers with
products and services to their satisfaction.

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Foods Unit

Our Foods Unit engages in general trading, production, marketing and
distribution of various goods including:



| |  |  | wheat, rice, soybeans, canola, corn, milo, alcohol, molasses,
animal and vegetable oils, wheat flour, feed, sugar, and starch; and            
| |  | - | ----------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | processed foods, fresh and frozen vegetables and fruits, marine
products, meat, tea, coffee, beverages, condiments, cocoa, and dairy
products.

At the retail and intermediate distribution levels, our Foods Unit
invests in supermarkets and restaurant chains, including those
owned by foreign companies.

We purchase grain, oilseeds, and raw sugar from the United States, Canada,
Brazil and Australia and sell them primarily to Japan and other Asian countries. We purchase coffee,
tea leaves, juice, marine products, dairy products from respective major supply
sources around the world and deliver them primarily to Japan. For
example, tuna cultivated in
the western Mediterranean Sea and meat products from the United States are generally
imported to Japan. We are also engaged in the domestic production and sale
of broiler chicken through Daiichi Broilers Co., Ltd., our subsidiary in Aomori
Prefecture, Japan.

In the wholesale sector, we have strengthened our sales to Ito-Yokado
Group and Seven-Eleven Group, and other local retailers throughout Japan by
bolstering the operating base of Sanyu Koami Co., Ltd., a nationwide food
wholesaler, which engages in various business transactions with
general merchandise stores,
convenience stores, and catering and restaurant chains. Sanyu Koami
Co., Ltd. plays a vital role in our Foods Units wholesale
operation.

In the
food-manufacturing sector, we have restructured our traditional food
product manufacturing process in order to
increase the value of our Foods Units subsidiaries and
associated companies, while aiming to
strengthen and expand our revenue base. We have also enacted measures to respond to
issues related to food safety management.

Our
strength lies in overseas procurement of food products. For example, our import of grain, oilseeds, tea leaves to Japan
maintain relatively large share in Japan due to our long lasting relationship
with overseas suppliers and major buyers in Japan. Moreover, as
demonstrated by our alliance with Cenex Harvest States Cooperative in the
United States, we continuously endeavor to arrange alliances with partners in
other regions, strengthen overseas product procurement capabilities, and
expand our position in major overseas production areas.

Competition
varies depending on the goods and is generally based on the price or
the quality of the goods. Many large Japanese general trading companies, international
producers and traders are competitors to varying degrees with respect to most
of the food products we handle. In the domestic food wholesale business,
competition among suppliers is becoming more severe partly due to
lower profitability because of deflation.

Textile & Fashion Unit

Our Textile & Fashion Unit engages in general trading, manufacturing and
distribution of various goods including textile raw materials, fabrics,
synthetic fibers, apparel, interior and industrial goods.

We actively provide innovative services to accommodate new developments in
the fashion and apparel market. Our main business activities are divided into
two categories: original equipment manufacturing (OEM) business for
domestic apparel manufacturer, and business transactions involving
brand name products from
Europe and the United States for the Japanese market.

We
regard China as an important manufacturing base and also a
significant consumers market as well. In order to promote and
manage our business operations in China, we have stationed several of
our staffs there. To further
strengthen our OEM business capabilities and our provision of support
services such as
manufacturing or exhibition management, we utilize our affiliated companies
such as Mitsui Bussan Inter-Fashion Ltd. and ALTA MODA INTERNATIONAL LTD.

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We invest actively in brand, trademark rights and development of new
material. As such, we have invested in HANAE MORI, Trussardi and the
manufacturing of dry-release
fabrics.

In the
OEM business for domestic apparel manufacturers, we have various
alliance
partners with respect to various goods. In this line of business, our
competitors include other apparel traders. That is,
apparel manufacturers form partnership with several traders separately at the
same time. As such, we strive to strengthen our support services for
OEM than those of our competitors to attract apparel manufacturer customers.

With
respect to brand-related businesses in Japan, we engage in business
transactions involving many brands from Europe
and the United States such as Burberry, Paul Stuart, Pierre Cardin, Trussardi,
Valentino, Max Mara and Mango. In this business area, our competitors are
other general trading companies and apparel specialty traders. Itochu
Corporation, Mitsubishi Corporation, and other Japanese general trading companies
competing in this business area have many brands like ours. The key components
of competitiveness are how to raise our brands value in the market, and the
number of valuable brands we have.

General Merchandise Unit

Our
General Merchandise Unit engages in the general trading, production,
processing and distribution of various merchandise goods such as light
industrial machinery and supplies, sporting and leisure goods, medical
equipment, office automation systems and general household and consumer goods.
Our traditional strength lies in transactions involving, amongst other
things, cement, paper and pulp, rubber, tires and cigarettes as set forth
below:



| |  |  | we actively imports cigarettes, sports and leisure goods, sonic
toothbrushes, and sundries, from various overseas countries mainly to
the Japanese market;                                                                                                                                        
| |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | we trade woodchip and pulp
worldwide, while we develop
several projects of afforestation in Australia, some of which are
jointly promoted with several Japanese partners including paper
manufacturing companies;                                                                                 
|
| |  |  | as for cement, paper and ceramic products, we closely partner
with Japanese manufacturers for such items respectively and
participate in joint venture production operations in China to sell
products there and export them from China, as well as handling their
products in and from Japan; and
|
| |  |  | partnering with a Japanese major manufacture, we export tires to
various countries, gradually trying to enhance our retail capability
in various overseas markets such as Russia, South Africa and the
Middle East.                                                                               

In the business area of consumer-related goods such as sporting and
leisure goods, continuous change in lifestyles worldwide require new business models which
reflect such changes. Accordingly, we seek to locate new materials and new
suppliers, to arrange effective logistics and distribution methods and develop
attractive brand names. Such efforts are realized through a combination of
our human and organizational network and industrial expertise.

Most domestic
and international general trading companies are generally our competitors. We also compete
with other product-specific business enterprises with respect to products such as cement, tires,
paper and pulp, and office equipment.

Service Business Unit



|                                                           
|-----------------------------------------------------------
|Major business areas of this unit consist of the following:



| |  |  | outsourcing services including catering, uniform rental, building
maintenance and nursing care-related services;  
| |  | - | ------------------------------------------------------------------------------------------------------------------
|
| |  |  | real estate development including construction, sale and leasing
of houses, condominiums and office buildings; and
|
| |  |  | trading of logs, plywood, woodworking products and housing
equipment.                                             

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Our catering service business is active through AIM Services Co., Ltd., an
associated company which provides food and catering services in Japan. In July 2002,
AIM Services acquired Atlas Corporation, which has a majority stake in MEFOS
Co., Ltd., a provider of hospital cafeteria food services in Japan. We
integrated the operations of AIM Services and MEFOS Co., Ltd. to serve as the
foundation for further business expansion in this business area in Japan. We are also in
the process of cultivating new opportunities in medical services
through our subsidiary, Medivance Co., Ltd. and in cleaning
services through our associated company, ISS-NESCO Ltd.

Our domestic property development business has added the management of
real estate investment trusts (REITs) to our current core activities of
condominium and commercial property development in the metropolitan area. MBK Real
Estate Ltd., in the United States, handles the sale of unit houses in the
southern California market, as well as commercial property on the
west coast of the United States.

In the
catering service business, a combination of cost and quality advantage of
both food and servicing management is the key factor for competition. Several
Japanese catering companies and a couple of foreign-affiliated companies are
our competitors in this area. Competition in the uniform rental business is
rather limited regionally, including some linen suppliers and dust control
companies. Our operation in medical
equipment rental business and nursing care business remains local, and
competition is limited from region to region thus far. Some general
trading companies are trying to participate in this area. In the real estate
development business area, competition is fierce. We usually form a consortium by partnering with major construction
companies and/or a developer to participate in certain transactions, but
members of a consortium vary depending on the business opportunity.

Domestic Branches and Offices Segment

In Japan we have domestic branches and offices in 27 cities to promote
our business with customers located in each area. This segment is comprised
of:



| |  |  | branches and offices located in
areas such as Osaka, Nagoya, Fukuoka, Sapporo,
Sendai, Hiroshima;                                                                                                                                                                                                                                                        
| |  | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 26 subsidiaries including Sadoshima Metal Co., Ltd., located in
Osaka whose business line is sales of non-ferrous metal products,
and Chita Futo Kaisha Ltd., located in Chita, Aichi Prefecture, whose
business line is warehousing and wharf-related business; and                                                                                     
|
| |  |  | 21 associated companies including Konan Utility Co., Ltd.,
located in Kobe, Hyogo Prefecture, whose business line is production
of steam for power generation and processing of wastewater, and Kanebo
Malaysia Spinning Mills Sdn. Bhd., located in Malaysia, whose business
line is spinning and dyeing of synthetic fiber and sales of processed
yarn.

Two
major offices in Japan which are located in Osaka and Nagoya are primarily
engaged in the products and/or services similar to that of our Head Offices.

Americas Segment

Americas Segment trades in various commodities and conducts related
business led by overseas trading subsidiaries in North, Central and South

America. Mitsui & Co. (U.S.A.), Inc. (Mitsui U.S.A.) manages the business of
the segment as the center of the regional strategy.

This segment consists of 10 trading subsidiaries including Mitsui U.S.A.,
Mitsui & Co. (Canada) Ltd., Mitsui Barsileira Importacao e
Exportacao S.A., Mitsui Chile Ltda., and other 32 subsidiaries owned by these trading
subsidiaries including Portac Inc., Channel Terminal Corp., Westport Petroleum
Inc., Mitsui Tubular Products, Inc., Bioproducts Inc. and Mitsui Comtek Corp.
and 5 associated companies including TAMCO.

The main
subsidiaries within our Americas segment and their respective
principal lines of business are as follows:



| |  |  | Westport Petroleum Inc. is engaged
in international trading of petroleum products and crude oil;                                                                         
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Mitsui Steel Development Co., Inc.
is engaged in investments in steel manufacturing and fabrication
projects and sales of steel products in the United States and
Canada;
|
| |  |  | Bioproducts Inc. is engaged in
manufacture and sales of animal feed additives;                                                                                           
|
| |  |  | Mitsui Comtek Corp. is engaged in
IT-related business;                                                                                                                   
|
| |  |  | Mitsui Foods Inc. is engaged in
sales of canned food; and                                                                                                                
|
| |  |  | Portac Inc. is engaged in
operation of lumber business.                                                                                                                  

Mitsui U.S.A. is our largest overseas subsidiary, and carries out many
diversified business activities together with our affiliated companies in
collaboration with the operating segments of the Head Office. Mitsui U.S.A. has
been leading our entry in the U.S. market, and we believe that Mitsui
U.S.A. is one of major exporters of
American products.

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Mitsui U.S.A. has its corporate head office in New York City. Other
offices are located in Chicago, Cleveland, Detroit, Houston, Los Angeles,
Nashville, Portland, San Francisco, Seattle and Washington, D.C. Mitsui U.S.A.s 10 operating divisions are: Steel and Coal, Metals, First
Machinery, Second Machinery, Electronic and Information Business, Chemicals,
Energy, Foods, General Merchandise-Property Development-Textile and
Transportation Logistics.

Mitsui U.S.A. engages in business transactions involving a full range of
chemical products, such as petrochemicals, specialty chemicals and crop
nutrients and protection chemicals. For example, we export various synthetic
fiber intermediates produced by U.S. manufacturers, including Union Carbide
Corporation, to Japan and other countries in Asia.

Mitsui U.S.A.s Steel department supplies the semi-processed steel used to
make specialty products for construction, automobiles, appliances, packaging,
cutlery, oil and storage terminals, among others. The core of its domestic
business is procuring high-tech products from U.S. suppliers such as Ispat
Inland Inc. and Wheeling-Nisshin, Inc. for automotive, appliance, heating and
air conditioning manufacturers. Mitsui U.S.A. exports raw
materials for base metals such as copper, lead and zinc to Japan. It also
handles transactions in refined copper, aluminum, tin, nickel, lead and zinc
ingots, and precious metals. It is also involved
in complicated trading transactions using various markets and entering into multiple
transactions between buyers and sellers in the Pacific Rim, the Americas and
Europe, based on the London Metal Exchange, and NYMEX prices.

The Aerospace, Marine & Motor Vehicle department of Mitsui U.S.A. handles
the sales and leasing of commercial aircraft, exports defense and aerospace
products to Japan and undertakes shipping and offshore oil and gas projects. Mitsui
U.S.A.s Electrical Machinery department focuses most of its activities on
exports from U.S.A. to the Japanese market, imports from Japan and other
countries, offshore trades and electric power wholesale business. We, together
with General Electric Company, have received orders from Tokyo Electric Power Company
Inc. for the supply of major equipment and services with respect to
its Advanced
Combined Cycle power projects at thermal power stations in Yokohama and Chiba.

Europe Segment

Europe
Segment trades in various commodities and conducts related businesses
led by overseas trading subsidiaries in Europe and Africa. Mitsui & Co. Europe
PLC (Mitsui Europe) is authorized to manage the business of this segment as
the center of its regional strategy. Also, this segment is responsible for
carrying out diversified business activities together with its affiliated
companies in collaboration with the operating segments of the Head Office.

This segment consists of 17 trading subsidiaries including Mitsui Europe, Mitsui & Co. UK PLC, Mitsui & Co. Deutschland GmbH, 10
subsidiaries including Cohen & Wilks International Ltd. and Plalloy MTD B.V.
and 8 associated companies including Companhia Industrial De Resinas
Sinteticas.

Mitsui Europe, our wholly owned subsidiary with its head office in London,
manages the overall business activities in Western Europe, Africa, Central and
Eastern Europe through its 14 operating subsidiaries, 10 branch offices and 13
liaison offices. Mitsui Europe collaborates with our subsidiaries and
associated companies of other operating segments to leverage our
comprehensive business engineering capabilities to meet ever changing needs
of our global customers.

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We engage in various trading, manufacturing, and logistics-related
activities in addition to making strategic investments. For example,



| |  |  | August 2002: Mitsui Europe
invested in RETAINA GROUP Limited, which is engaged in database-controlled automobile security and
identification systems. This strengthens our vehicle
security and parts-marking business.                                                                                                                                                                                            
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | November 2002: Mitsui Europe invested in Oxford Biosensors
Limited which increased our exposure to the industrial, governmental, and
academic biotechnology and nanotechnology sectors, including the
Universities of Oxford and Cambridge. Oxford Biosensors Limited makes
high-speed, hand-held medical diagnostic tools that accurately measure
various blood-based parameters using finger prick blood samples.
|
| |  |  | March 2003: Mitsui & Co. Southern Africa (Proprietary) Ltd.,
which is under the supervision of Mitsui Europe, invested in National
Auto Glass (Proprietary) Limited, a South African automobile
glassmaker, broadening business capabilities to include everything
from raw materials supply to end-product sales.                                                                                                 

Other Overseas Areas Segment

This segment includes all of our region-based subsidiaries, liaison
offices and affiliated companies excluding those in our Domestic Branches and
Offices, Americas and Europe Segments. The subsidiaries, liaison offices and
affiliated companies in this segment are located primarily in China, the member
countries of Association of Southeast Asian Nations (ASEAN), Oceania, the
Middle East and Southwest Asia. Our Overseas Areas Segment is engaged in
business activities that are essentially similar to that of Mitsui. We conduct
business activities in all industry sectors based on our specialized knowledge
particular to that region.

China

China has been a focus of recent global attention as an attractive market,
with 8% growth in GDP in 2002, accession to the WTO, and a growing reputation
as an efficient and cost effective manufacturer of goods. Based on our
assessment that there is a tremendous potential in Greater China
which includes mainland China, Hong Kong and Taiwan, we have considerably increased our presence in
the market there. We have been increasing our operations in, and shifting
management resources to, greater China in order to expand and strengthen our
business operations involving products such as automobiles, consumer products,
information technology, electronics, energy, and metals, while reinforcing our
transportation and logistics services.

Our
presence in China comprises of eight local subsidiaries, including
trading subsidiaries such as Mitsui & Co., (China) Ltd. in Beijing and Mitsui & Co.
(Hong Kong) Ltd., as well as subsidiaries in Shanghai and other strategic
areas. In addition, we have established representative offices in 16 other
cities in China. The number of our Japanese personnel stationed in our
operations in China (including those employed by our associated companies) is
147. Including locally hired employees in our subsidiaries,
associated companies and representative offices, our presence in
China is substantial.

In April 2003, we realigned our operations in China with the aim of
creating a streamlined system to manage our business in China, including Hong
Kong. The realignment included establishing three operating units in Beijing,
Shanghai and Hong Kong, each reporting to our single General Representative in
China. By centralizing decision-making authority for our Chinese operations, we
expect the new structure to be better equipped to respond to and effectively
address new business opportunities. The following are some examples of our
activities:



| |  |  | We supply steel products such as steel sheets for use in
automobiles, particularly those produced in Shanghai by U.S.
automobile makers. We have formed an alliance with Shanghai Baosteel
Group that enables us to maintain 7 steel service centers throughout
China, and are in the process of creating an expanded system
for distribution of our steel products.
| |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In October 2002, we entered into a long-term collaboration
agreement with New Hope Group, a privately-owned Chinese
company, through which we are planning a number of projects, including
housing, planting of trees in urban areas and businesses related
to the food industry.                                                                                   

33



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| |  |  | In March 2003, we entered into a comprehensive strategic
alliance with China Postal Logistics Co., Ltd. Through this alliance,
we are now in a position to utilize the facilities and distribution
networks of Chinas postal service, the China State Post Bureau.
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We are currently involved in a project to export liquid natural
gas (LNG) from Western Australia to provide gas and electricity in the Hong
Kong and Canton Province area.                                                                                       

Moreover, we believe that the relationships between China and member
countries of ASEAN will be further strengthened through the ASEAN Free Trade
Area (AFTA) framework. In view of this trend, we are moving forward with
strategies to build closer links between China and other regions, ASEAN in
particular, where we can take advantage of our business strength. For example,
through our experience working with Hino Motors Ltd., in retail, marketing,
manufacturing and other automobile related activities, we have developed
relationships with the automobile industry in Thailand.

ASEAN
Region

In the ASEAN region, overseas offices, trading subsidiaries and associated
companies jointly collaborate with the Head Office and engage in
various business activities involving, amongst other things, chemical
and metal products and industrial type projects. For example, in
Indonesia, several industrial projects that had been interrupted by the
1997-1998 financial crises have resumed. In fiscal 2003, we won an
approximately ¥32 billion contract for the engineering, procurement and
construction of a fertilizer plant with P.T. Pupuk Kujang, an Indonesian
fertilizer company in conjunction with the export credit facilities provided by
the Japan Bank for International Cooperation.

Oceania

In
Australia, Mitsui & Co. (Australia) Ltd. is active in the development of
minerals such as iron ore and coal, energy and agricultural exports in
collaboration with corresponding operating segments mainly in the Head Office.

Our strategy in Australia is based on forging alliances and joint ventures
with local partners. The following are some examples of our recent projects in
Australia:



| |  |  | In April 2002, we entered into an alliance with Anglo Coal
Australia Pty Ltd. whereby we acquired 49% equity in that companys
undeveloped deposit of coal at Theodore, Dawson and Taroom, as well as
30% equity in their operating mine at German Creek. In return, Anglo
Coal acquired 51% equity in our Moura mine and agreed to manage the
operations there.
| |  | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In July 2002, the Robe River Project, a joint venture with Rio
Tinto Limited, Nippon Steel Corporation and Sumitomo Metal Industries
Limited began shipments from a new iron ore mine in Western Australia,
West Angelas, to Japanese steel mills and other foreign customers.                                                                                  
|
| |  |  | We have entered into a joint venture project with Tarong Energy
Corporation Ltd. and Tokyo Electric Power Company Inc. to own and
operate the 450 megawatt Tarong North Coal Fired Power Plant.                                                                                                                                                                 

The Middle East

The Middle East is the source of approximately 45% of Japans energy
supply, as such, we have been actively developing our business there. We helped
secure supplies of LNG to Japan from Qatar, Abu Dahbi and Oman, and took
part in a U.S.$200 million joint contract with Tokyo Engineering Corporation for an
ethylene glycol manufacturing plant in Saudi Arabia and an order to supply
steel pipes for a gas pipeline in Abu Dahbi.

Southwest Asia

Our operations in India were traditionally handled by branch offices in
New Delhi, Calcutta, Madras and Bombay and were concentrated primarily in
exporting commodities, such as iron ore, finished iron and steel products,
textiles, and marine products, to Japan and other areas of the world. However,
with the increasing deregulation of the Indian economy, in March 2003 we
established Mitsui & Co., India Pvt. Ltd., which we believe will allow us to
create a more expansive business model. Through Mitsui & Co., India Pvt. Ltd,
we expect not only to engage in import and export-related transactions but also
to pursue investment opportunities in domestic distribution channels.

34



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Our current business activities in India are concentrated in iron and
steel, as well as machinery. In exports of iron and steel, we have expanded
from the Middle East, our traditional market for Indian commodities, to the
United States and China. We believe that China, in particular, will continue
to have a record demand for iron and steel products, and we have made
substantial progress there in exporting iron ore. In the machinery business, we
are currently in the process of building a facility for receiving and supplying
liquid natural gas for Petronet LNG Ltd., an energy company based in India.

Principal Markets

We are involved in the worldwide trading of various commodities.The
following table provides a breakdown of our revenue by commodity type for the
years ended March 31, 2003, 2002 and 2001.

|                                |                               |   |                      |         |      |                      |         |        |  |   |         |        | 
|------------------------------- | ----------------------------- | - | -------------------- | ------- | ---- | -------------------- | ------- | ------ |  | - | ------- | ------ | 
|                                |                               |   | Year Ended March 31,
|                                |                               |   |                     
|                                |                               |   | 2003                 |         | 2002 |                      | 2001   
|                                |                               |   |                      |         |      |                      |        
|RevenueGross Trading Profit(1) |                               |   |                      |         |      | (In Millions of Yen) |         |        |  |  
|Distribution by Commodity:      |                               |   |                      |         |      |                      |         |        |  |   |         |       
|                                | Iron and Steel                |   | ¥                    | 79,742  |      |                      | ¥       | 75,567 |  |   | ¥       | 68,543 | 
|                                | Non-Ferrous Metals            |   |                      | 20,884  |      |                      |         | 22,631 |  |   |         | 28,622 | 
|                                | Machinery                     |   |                      | 96,993  |      |                      |         | 87,178 |  |   |         | 87,487 | 
|                                | Electronics & Information     |   |                      | 48,261  |      |                      |         | 53,986 |  |   |         | 48,884 | 
|                                | Chemicals                     |   |                      | 100,654 |      |                      |         | 93,979 |  |   |         | 95,623 | 
|                                | Energy                        |   |                      | 61,047  |      |                      |         | 53,281 |  |   |         | 66,072 | 
|                                | Foods                         |   |                      | 63,216  |      |                      |         | 65,520 |  |   |         | 60,838 | 
|                                | Textiles                      |   |                      | 24,117  |      |                      |         | 22,887 |  |   |         | 24,366 | 
|                                | General Merchandise           |   |                      | 24,463  |      |                      |         | 25,306 |  |   |         | 32,482 | 
|                                | Property and Service Business |   |                      | 50,425  |      |                      |         | 46,214 |  |   |         | 48,381 | 
|                                |                               |   |                      |         |      |                      |         |        |  |   |         |        | 
|Consolidated Total              |                               | ¥ | 569,802              |         |      | ¥                    | 546,549 |        |  | ¥ | 561,298 |       
|                                |                               |   |                      |         |      |                      |         |        |  |   |         |       



| | (1) |  | Effective April 1, 2002, we
adopted Statement of Financial Accounting Standards (SFAS) No. 144, and
revenuegross trading profit from discontinued operations are
eliminated from each product amount and Consolidated Total. The
figures for the years ended March 31, 2002 and 2001 have been
reclassified to conform to the current year presentation.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table sets forth our total trading transactions in each
of our major markets for the years ended March 31, 2003, 2002
and 2001.(a),(b),
(c) and (d)

|                   |  |                      |            |      |  |      |            |  |  |   |            | 
|------------------ |  | -------------------- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                   |  | Year Ended March 31,
|                   |  |                     
|                   |  | 2003                 |            | 2002 |  | 2001
|                   |  |                      |            |      |  |     
|                   |  | (In Millions of Yen)
|                   |  |                      |            |      |  |      |            |  |  |   |            | 
|Japan              |  | ¥                    | 7,507,491  |      |  | ¥    | 7,394,468  |  |  | ¥ | 7,726,465  | 
|United States      |  |                      | 1,151,549  |      |  |      | 969,187    |  |  |   | 1,152,707  | 
|United Kingdom     |  |                      | 422,673    |      |  |      | 480,874    |  |  |   | 758,653    | 
|All Other          |  |                      | 4,154,970  |      |  |      | 3,790,157  |  |  |   | 3,390,628  | 
|                   |  |                      |            |      |  |      |            |  |  |   |            | 
|Consolidated Total |  | ¥                    | 13,236,683 |      |  | ¥    | 12,634,686 |  |  | ¥ | 13,028,453 | 
|                   |  |                      |            |      |  |      |            |  |  |   |            | 



| | (a) |  | With respect to total trading transactions, see Item 5.A.
Operating ResultsOperating Results by Operating SegmentTotal
Trading Transactions.                 
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Total trading transactions are attributed to countries based on the
location of customers.                                                                         
|
| | (c) |  | We provide total trading transactions instead of revenuegross
trading profit, as certain costs are not
attributed to countries based on the location of
customers.

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| | (d) |  | Effective April 1, 2002, we adopted SFAS No. 144, and total trading
transactions to external customers from discontinued operations are
eliminated from each geographic area amount and Consolidated Total.
The figures for the years ended March 31, 2002 and 2001 have been
reclassified to conform to the current year presentation.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




C. Organizational Structure.

We are a global general trading company and we conduct our business with
our subsidiaries and associated companies. As of March 31, 2003, we had 428
consolidated subsidiaries and 318 associated companies that are accounted for
by the equity method.

The table below sets forth our significant subsidiaries, including for
each subsidiary the name, country of incorporation or residence, the proportion
of ownership interest (directly or indirectly) and, if different, proportion
of Mitsuis voting power held as of March 31, 2003.

|                                         |  |                                                |  |               |  |                                                                                                                      |  |           |         |                  |  |       
|---------------------------------------- |  | ---------------------------------------------- |  | ------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | ---------------- |  | ------
|(*) If different from ownership interest
|                                        
|Operating                                |  |                                                |  |               |  |                                                                                                                      |  | Ownership |         |                 
|Segment                                  |  | Company                                        |  | Country       |  | Principal Business                                                                                                   |  | Interest  |         | Voting Power (*)
|                                         |  |                                                |  |               |  |                                                                                                                      |  | (%)       |         | (%)             
|                                        
|Metal Products
& Minerals                |  | Kanto Stainless Steel Center Co., Ltd.         |  | Japan         |  | Processing and sale of stainless steel                                                                               |  |           | 85.000  |                  |  |       
|                                         |  | Tsuda Corporation                              |  | Japan         |  | Sales of steel materials and secondary
processed iron and steel products                                             |  |           | 60.000  |                  |  |       
|                                         |  | Mitsui Bussan Raw Materials
Development Corp.  |  | Japan         |  | Production, distribution, and sales of ferrous
and non-ferrous scrap; marketing of
ferroalloys                       |  |           | 100.000 |                  |  |       
|                                         |  | Mitsui Bussan Coil Center Co., Ltd.            |  | Japan         |  | Sales of steel materials and secondary
processed iron and steel products                                             |  |           | 64.079  |                  |  |       
|                                         |  | Mitsui Bussan Construction Materials
Co., Ltd. |  | Japan         |  | Sales of construction materials and
semi-assembled steel products;
subcontracting, design, and installation          |  |           | 100.000 |                  |  |       
|                                         |  | Mitsui Bussan Metals Sales Co., Ltd.           |  | Japan         |  | Metal and products marketing                                                                                         |  |           | 100.000 |                  |  |       
|                                         |  | Mitsui Bussan Futures Ltd.                     |  | Japan         |  | Future commodities brokering                                                                                         |  |           | 100.000 |                  |  |       
|                                         |  | Mitalco Inc.                                   |  | United States |  | Manufacture and marketing of aluminum
metal in the United States                                                     |  |           | 100.000 |                  |  |       
|                                         |  | Mitsui Coal Holdings Pty. Ltd.                 |  | Australia     |  | Mining and sales of coal                                                                                             |  |           | 100.000 |                  |  |       
|                                         |  | Mitsui Iron Ore Development Pty. Ltd.          |  | Australia     |  | Mining and sales of iron ore                                                                                         |  |           | 100.000 |                  |  |       
|                                         |  | Mitsui Itochu Iron Pty. Ltd.                   |  | Australia     |  | Mining and sales of iron ore                                                                                         |  |           | 70.000  |                  |  |       
|                                         |  | Sesa Goa Limited                               |  | India         |  | Mining and sales of iron ore                                                                                         |  |           | 51.000  |                  |  |       
|                                        
|Machinery,
Electronics &
Information     |  | ADAM NET LTD.                                  |  | Japan         |  | Sales of communications equipment and
systems                                                                        |  |           | 92.346  |                  |  | 92.300
|                                         |  | Kids Station Inc.                              |  | Japan         |  | Broadcast channel specializing in childrens
entertainment carried via communications satellite and cable
television |  |           | 66.989  |                  |  |       
|                                         |  | Xion Holdings, Inc.                            |  | Japan         |  | Holding company of Bussan
Microelectronics Corp. and TEKSEL Co.,
Ltd.                                                |  |           | 79.000  |                  |  |       
|                                         |  | TOYO Officemation, Inc.                        |  | Japan         |  | Design, operation, and maintenance of
information systems                                                            |  |           | 58.542  |                  |  | 58.458
|                                         |  | Orient Marine Co., Ltd.                        |  | Japan         |  | Intermediary for ship management, ship
operations, and used ships                                                    |  |           | 100.000 |                  |  |       
|                                         |  | Toyo Valve Co., Ltd.                           |  | Japan         |  | Manufacture and sales of valves and system
equipment                                                                 |  |           | 88.857  |                  |  |       
|                                         |  | Paiton Power Investment Co., Ltd.              |  | Japan         |  | Investment vehicle which holds our
investment in P.T. Paiton Energy                                                  |  |           | 100.000 |                  |  |       
|                                         |  | BSI Co., Ltd.                                  |  | Japan         |  | Systems integration and packaged software
business                                                                   |  |           | 100.000 |                  |  |       

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|                             |  |                                                   |  |                |  |                                                                                                                          |  |           |              |                  |  |        
|---------------------------- |  | ------------------------------------------------- |  | -------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | --------- | ------------ | ---------------- |  | -------
|Operating                    |  |                                                   |  |                |  |                                                                                                                          |  | Ownership |              |                 
|Segment                      |  | Company                                           |  | Country        |  | Principal Business                                                                                                       |  | Interest  |              | Voting Power (*)
|                             |  |                                                   |  |                |  |                                                                                                                          |  | (%)       |              | (%)             
|                            
|                             |  | Mitsui Bussan Aerospace Co., Ltd.                 |  | Japan          |  | Sales of helicopters as well as related
component mounting equipment and ground
support equipment                        |  |           | 100.000      |                  |  |        
|                             |  | Mitsui Bussan Automotive Inc.                     |  | Japan          |  | Export, import, and sales of automobiles,
auto parts, and equipment                                                      |  |           | 100.000      |                  |  |        
|                             |  | Mitsui & Associates Telepark
Corporation          |  | Japan          |  | Subscription and sales promotion agency for
users of mobile and fixed
telecommunication lines                            |  |           | 98.188       |                  |  |        
|                             |  | Mitsui Bussan Plant & Project Corp.               |  | Japan          |  | Sales of chemical plants and heavy
machinery equipment                                                                   |  |           | 100.000      |                  |  |        
|                             |  | Lepta Shipping Co., Ltd.                          |  | Liberia        |  | Shipowner                                                                                                                |  |           | 100.000      |                  |  |        
|                             |  | The MBK Rail Capital Companies,
Inc.              |  | Unites States  |  | Investments in rail equipment and
development of railway-related business                                                |  |           | 100.000      |                  |  |        
|                             |  | Tombo Aviation Inc.                               |  | United States  |  | Purchase, sales, and leasing of aircraft                                                                                 |  |           | 100.000      |                  |  |        
|                            
|Chemical                     |  | Carbon Nanotech Research    Institute
Inc.        |  | Japan          |  | Research and development related to nanotechnology                                                                       |  |           | 100.000      |                  |  |        
|                             |  | Daito Chemical Co., Ltd.                          |  | Japan          |  | Production and sales of photographic and
industrial chemicals                                                            |  |           | 70.000       |                  |  |        
|                             |  | Japan-Arabia Methanol Co., Ltd.                   |  | Japan          |  | Investments in methanol production
facilities in Saudi Arabia                                                            |  |           | 55.000       |                  |  |        
|                             |  | Mitsui Bussan Solvent & Coating    Co., Ltd.      |  | Japan          |  | Domestic and overseas trade in solvents,
coating materials, inks and adhesives, as
well as the provision of coating work |  |           | 100.000      |                  |  |        
|                             |  | Fertilizantes Mitsui S.A.    Industria
e Comercio |  | Brazil         |  | Manufacture and sales of fertilizers                                                                                     |  |           | 99.995       |                  |  |        
|                             |  | P. T. Kaltim Pasifik Amoniak                      |  | Indonesia      |  | Production and sales of anhydrous ammonia                                                                                |  |           | 55.000       |                  |  |        
|                             |  | Novus International, Inc.                         |  | United States  |  | Manufacture of methionine-Alimet®,
other supplements, feed ingredients and
preservatives                                 |  |           | 65.000       |                  |  |        
|                             |  | Victory Chlor-Alkali and EDC    Company,
Inc.     |  | United States  |  | Investments in polyvinyl chloride
manufacturing businesses                                                               |  |           | 100.000      |                  |  |        
|                            
|Energy                       |  | Kokusai Oil & Chemical Co., Ltd.                  |  | Japan          |  | Sales of petroleum products in Japan                                                                                     |  |           | 100.000      |                  |  |        
|                             |  | Mitsui Sakhalin Development Co.,
Ltd.             |  | Japan          |  | Investment vehicle which holds our
investment in Mitsui Sakhalin Holdings
B.V.                                           |  |           | 100.000      |                  |  |        
|                             |  | Mitsui Oil & Gas Co., Ltd.                        |  | Japan          |  | Import and sales of petroleum products and
LPG in Japan                                                                  |  |           | 89.930       |                  |  |        
|                             |  | Wandoo Oil Development Co., Ltd.                  |  | Japan          |  | Investment vehicle which holds our
investment in Wandoo Petroleum Pty., Ltd.                                             |  |           | 65.367       |                  |  | 55.000 
|                             |  | Arcadia Petroleum Ltd.                            |  | United Kingdom |  | International trading of crude oil and
petroleum products                                                                |  |           | 100.000      |                  |  |        
|                             |  | Endeavour Resources Limited                       |  | United Kingdom |  | Coordinating functions for investments in
Japan Australia LNG (MIMI) Pty., Ltd.                                          |  |           | 100.000      |                  |  |        
|                             |  | Mitsui E&P Middle East B.V.                       |  | Netherlands    |  | Holding development rights for petroleum
and natural gas                                                                 |  |           | 73.823       |                  |  | 60.000 
|                             |  | Mitsui Gas Development Qatar B.V.                 |  | Netherlands    |  | Development and production of natural gas
and condensate                                                                 |  |           | 100.000      |                  |  |        
|                             |  | Mitsui Sakhalin Holdings B.V.                     |  | Netherlands    |  | Holding company of Sakhalin Energy
Investment Co., Ltd.                                                                  |  |           | 100.000      |                  |  |        
|                             |  | Wandoo Petroleum Pty., Ltd.                       |  | Australia      |  | Exploration, development and sales of oil
and natural gas resources                                                      |  |           | 67.099       |                  |  | 100.000
|                            
|Consumer Products &
Services |  | Sanyu Koami Co., Ltd.Daiichi Broilers Co., Ltd.   |  | JapanJapan     |  | Food wholesaleProduction, processing, and sales of broiler
chicken                                                       |  |           | 97.37472.333 |                  |  |        
|                             |  | Nisshi Co., Ltd.                                  |  | Japan          |  | Manufacture and sale of starch sweeteners                                                                                |  |           | 100.000      |                  |  |        
|                             |  | HANAE MORI ASSOCIATES    CO., LTD.                |  | Japan          |  | Licensing operations
for the HANAE MORI Brand                                                                            |  |           | 100.000      |                  |  |        

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|                              |  |                                                |  |                  |  |                                                                                                                             |  |           |         |                  |  |       
|----------------------------- |  | ---------------------------------------------- |  | ---------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | ---------------- |  | ------
|Operating                     |  |                                                |  |                  |  |                                                                                                                             |  | Ownership |         |                 
|Segment                       |  | Company                                        |  | Country          |  | Principal Business                                                                                                          |  | Interest  |         | Voting Power (*)
|                              |  |                                                |  |                  |  |                                                                                                                             |  | (%)       |         | (%)             
|                             
|                              |  | Bussan Real Estate    Development Co., Ltd.    |  | Japan            |  | Sales, leasing, management and
construction of buildings                                                                    |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Bussan Inter-Fashion    Ltd.            |  | Japan            |  | Processing orders for textile products
handled by Mitsui                                                                    |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Bussan House-Techno,    Inc.            |  | Japan            |  | Contract for home building and wood
construction                                                                            |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Bussan Rossignol Corporation            |  | Japan            |  | Sales of Rossignol brand skis, snowboards
and other sporting goods                                                          |  |           | 100.000 |                  |  |       
|                              |  | ALTA MODA    INTERNATIONAL LTD.                |  | Hong Kong,
China |  | Sales of fabric and secondary textile
products                                                                              |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Alimentos Ltda.                         |  | Brazil           |  | Roasting and domestic sales of coffee
beans, export of raw coffee beans and
prepared products, and import and sales of
food |  |           | 99.971  |                  |  |       
|                              |  | Wilsey Foods Inc.                              |  | United States    |  | Investment vehicle which holds our
investment in Ventura LLC                                                                |  |           | 90.000  |                  |  |       
|                             
|Domestic Branches
and Offices |  | Anzen Sakudo Co., Ltd.                         |  | Japan            |  | Manufacture and sale of elevated transport
systems and related equipment                                                    |  |           | 45.052  |                  |  |       
|                              |  | Konanfuto Co., Ltd.                            |  | Japan            |  | Warehousing and wharf-related business                                                                                      |  |           | 47.424  |                  |  | 46.000
|                              |  | Cosmo Textile Co., Ltd.                        |  | Japan            |  | Wholesaling of textile products                                                                                             |  |           | 80.000  |                  |  |       
|                              |  | Sadoshima Metal Co., Ltd.                      |  | Japan            |  | Sale of non-ferrous metal products                                                                                          |  |           | 51.122  |                  |  | 51.005
|                              |  | Chita Futo Kaisha Ltd.                         |  | Japan            |  | Warehousing and wharf-related business                                                                                      |  |           | 83.333  |                  |  |       
|                              |  | NITTA SHOJI                                    |  | Japan            |  | Sale of steel products                                                                                                      |  |           | 100.000 |                  |  |       
|                              |  | FUJISAKU                                       |  | Japan            |  | Processing and sales of steel, etc.                                                                                         |  |           | 97.960  |                  |  |       
|                              |  | P.T. Tiga Manunggal Synthetic Industries       |  | Indonesia        |  | Manufacture and sales of synthetic fiber
textile products                                                                   |  |           | 53.333  |                  |  |       
|                             
|Americas                      |  | Mitsui Argentina S.A.                          |  | Argentina        |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. (Canada) Ltd.                     |  | Canada           |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Chile Ltda.                             |  | Chile            |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Brasileira Importacao e
Exportacao S.A. |  | Brazil           |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. (U.S.A.), Inc.                    |  | United States    |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Bioproducts Inc.                               |  | United States    |  | Manufacture and sales of feed additives                                                                                     |  |           | 100.000 |                  |  |       
|                              |  | Channel Terminal Corp.                         |  | United States    |  | Operation of tanks                                                                                                          |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Comtek Corp.                            |  | United States    |  | IT-related businesses                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Plastics, Inc.                          |  | United States    |  | Sales of plastic resins and products                                                                                        |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Steel Development    Co., Inc.          |  | United States    |  | Promoting and investing in projects and the
sales of steel products in the United States
and Canada                         |  |           | 100.000 |                  |  |       
|                              |  | Mitsui Tubular Products, Inc.                  |  | United States    |  | Sale of steel pipes                                                                                                         |  |           | 100.000 |                  |  |       
|                              |  | Portac Inc.                                    |  | United States    |  | Operation of lumber business                                                                                                |  |           | 100.000 |                  |  |       
|                              |  | Westport Petroleum Inc.                        |  | United States    |  | International trading of petroleum products
and crude oil                                                                   |  |           | 100.000 |                  |  |       
|                             
|Europe                        |  | Mitsui & Co. Italia S.p.A                      |  | Italy            |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. UK PLC                            |  | United Kingdom   |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. Europe PLC                        |  | United Kingdom   |  | Management of business in Europe and
Africa                                                                                 |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. International    (Europe)
B.V.    |  | Netherlands      |  | Trade, investment, and financial services                                                                                   |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. Deutschland    GmbH               |  | Germany          |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. France S.A.                       |  | France           |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Mitsui & Co. Benelux S.A./N.V.                 |  | Belgium          |  | Trade                                                                                                                       |  |           | 100.000 |                  |  |       
|                              |  | Cohen & Wilks International    Ltd.            |  | United Kingdom   |  | Import and sales of textile secondary
products                                                                              |  |           | 94.000  |                  |  |       

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|                       |  |                                                                                                                                         |  |                                                  |  |                                                                                                                |  |           |                                     |                  |  |       
|---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------- |  | --------- | ----------------------------------- | ---------------- |  | ------
|Operating              |  |                                                                                                                                         |  |                                                  |  |                                                                                                                |  | Ownership |                                     |                 
|Segment                |  | Company                                                                                                                                 |  | Country                                          |  | Principal Business                                                                                             |  | Interest  |                                     | Voting Power (*)
|                       |  |                                                                                                                                         |  |                                                  |  |                                                                                                                |  | (%)       |                                     | (%)             
|                      
|                       |  | Plalloy MTD B.V.                                                                                                                        |  | Netherlands                                      |  | Production and sales of plastic compounds                                                                      |  |           | 60.000                              |                  |  |       
|                       |  | Yamaha Motor (UK) Ltd.                                                                                                                  |  | United Kingdom                                   |  | Import and sales of Yamaha motorcycles
and parts                                                               |  |           | 75.000                              |                  |  |       
|                      
|Other Overseas
Areas   |  | P.T. Mitsui IndonesiaMitsui & Co. (Australia) Ltd.Mitsui & Co., (Thailand) Ltd.
Mitsui & Co. (Taiwan) Ltd.Mitsui & Co. (Hong Kong) Ltd. |  | IndonesiaAustraliaThailandTaiwanHong Kong,
China |  | TradeTradeTradeTradeTrade                                                                                      |  |           | 100.000100.000100.000100.000100.000 |                  |  |       
|                       |  | Mitsiam International Ltd.                                                                                                              |  | Thailand                                         |  | Trade                                                                                                          |  |           | 52.909                              |                  |  | 52.128
|                      
|Corporate
Headquarters |  | Kinoshita & Co., Ltd.                                                                                                                   |  | Japan                                            |  | Real estate management services                                                                                |  |           | 100.000                             |                  |  |       
|                       |  | SuperNet Solutions Corporation                                                                                                          |  | Japan                                            |  | Provide online credit management, credit
insurance, payment and settlement, and
financing services             |  |           | 68.856                              |                  |  | 67.000
|                       |  | Nitto Logistics Co., Ltd.                                                                                                               |  | Japan                                            |  | Warehousing and transportation                                                                                 |  |           | 100.000                             |                  |  |       
|                       |  | BUSSAN ASSET MANAGEMENT CO., LTD.                                                                                                       |  | Japan                                            |  | Investment advisory services                                                                                   |  |           | 100.000                             |                  |  |       
|                       |  | Bussan Credit Co., Ltd.                                                                                                                 |  | Japan                                            |  | Financial services                                                                                             |  |           | 100.000                             |                  |  |       
|                       |  | Mitsui Knowledge Industry    Co., Ltd.                                                                                                  |  | Japan                                            |  | Planning, development, maintenance, and
operation of computer systems                                          |  |           | 67.602                              |                  |  | 67.372
|                       |  | Mitsui & Co., Asia Investment    Ltd.                                                                                                   |  | Singapore                                        |  | Investments and financial services                                                                             |  |           | 100.000                             |                  |  |       
|                       |  | Mitsui Global Strategic Studies    Institute                                                                                            |  | Japan                                            |  | Research and consultation on global
economies and industry, technology
management, and new business incubation |  |           | 100.000                             |                  |  |       




D. Property, Plants and Equipment.

The following table sets forth a list of our principal property, plants
and equipment as of March 31, 2003.

(Sft: Square feet, MT: Metric Ton, Bbl: Barrel)

|                                                          |  |                  |           |     |  |  |  |                 |  |                                     |  | 
|--------------------------------------------------------- |  | ---------------- | --------- | --- |  |  |  | --------------- |  | ----------------------------------- |  | 
|Description (Holder
or lessee other than Mitsui)/Location |  | Size
or Quantity |           |     |  |  |  | Use of property |  |                                    
|                                                          |  |                  |           |     |  |  |  |                
|                                                         
|In Japan:                                                 |  |                  |           |     |  |  |  |                 |  |                                     |  | 
|                                                         
|Mitsuibussan Building / Tokyo                             |  |                  | 1,163,685 | Sft |  |  |  |                 |  | Office use (Corporate Headquarters)
|Osaka Mitsuibussan Building / Osaka                       |  |                  | 336,492   | Sft |  |  |  |                 |  | Office use                         
|Nagoya Mitsuibussan Building / Nagoya                     |  |                  | 152,068   | Sft |  |  |  |                 |  | Office use                         
|Hibiya Central Building / Tokyo                           |  |                  | 509,845   | Sft |  |  |  |                 |  | Office building for lease          
|Bussan Building Annex / Tokyo                             |  |                  | 210,707   | Sft |  |  |  |                 |  | Office building for lease          
|Wakamatsu Building / Tokyo                                |  |                  | 148,210   | Sft |  |  |  |                 |  | Office building for lease          
|Shinsuna Bayside Building / Tokyo                         |  |                  | 129,943   | Sft |  |  |  |                 |  | Office building for lease          
|Meguro Techno Building / Tokyo                            |  |                  | 119,222   | Sft |  |  |  |                 |  | Office building for lease          
|Asakusa Building / Tokyo                                  |  |                  | 216,367   | Sft |  |  |  |                 |  | Office building for lease          
|Sun East Tatsumi Building / Tokyo                         |  |                  | 150,609   | Sft |  |  |  |                 |  | Office building for lease          
|Tojin Building / Tokyo                                    |  |                  | 127,769   | Sft |  |  |  |                 |  | Office use                         
|Company Housing & Dormitory / Chiba                       |  |                  | 130,011   | Sft |  |  |  |                 |  | Employees' residential facility    
|Human Resource Development Center/ Shizuoka               |  |                  | 83,874    | Sft |  |  |  |                 |  | Training facility                  

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|                                                              |  |                  |           |  |  |        |  |                                         |  |               |  | 
|------------------------------------------------------------- |  | ---------------- | --------- |  |  | ------ |  | --------------------------------------- |  | ------------- |  | 
|Description (Holder
or lessee other than Mitsui)/Location     |  | Size
or Quantity |           |  |  |        |  | Use of property                        
|                                                             
|Factory and Land (Toyo Valve Co., Ltd.)/Nagano                |  |                  | 31,457    |  |  | Sft    |  | Valve producing factory                
|Land
and equipment (Mitsui Oil & Gas Co., Ltd.)/Hokkaido      |  |                  | 1,911,751 |  |  | Sft    |  | Liquefied petroleum
gas import terminal
|Land
and building (Sanyu Koami Co., Ltd.)/Saitama             |  |                  | 550,654   |  |  | Sft    |  | Distribution center                    
|Aircraft (Tombo Capital Corporation)/Japan                    |  |                  | 3         |  |  |        |  |                                         |  | Leasing asset
|                                                             
|Overseas:                                                     |  |                  |           |  |  |        |  |                                         |  |               |  | 
|                                                             
|Office Building/U.K.                                          |  |                  | 103,571   |  |  | Sft    |  | Office use                             
|Office
Building (Mitsui & Co. (U.S.A.), Inc.)/U.S.A.          |  |                  | 183,386   |  |  | Sft    |  | Office space leased
from others        
|Land and plants (Mitalco Inc.)/U.S.A.                         |  |                  | 465,108   |  |  | Sft    |  | Aluminium smelting
factory             
|Land and plants (Novus International, Inc.)/U.S.A.            |  |                  | 636,843   |  |  | Sft    |  | Methionine production facility         
|Land and plants (P.T. Kaltim Pasific Amoniak)/Indonesia       |  |                  | 579,397   |  |  | Sft    |  | Ammonia manufacturing plant            
|Equipment (Wandoo Petroleum Pty., Ltd.)/Australia             |  |                  | 82,516    |  |  | Sft    |  | Offshore oil producing platform        
|Shopping centers (MBK Newport Inc.)/U.S.A.                    |  |                  | 708,876   |  |  | Sft    |  | Leasing asset                          
|Equipment (Mitsui Coal Holdings Pty. Ltd.)/Australia(1)       |  |                  | 5,649,000 |  |  | Mt(2)  |  | Mining equipment for coal              
|Equipment (Mitsui Iron Ore Development Pty
Ltd.)/Australia(1) |  |                  | 1,089,000 |  |  | Mt(2)  |  | Mining equipment for iron ore          
|Equipment (Mitsui-Itochu Iron Pty. Ltd.)/Australia(1)         |  |                  | 2,990,000 |  |  | Mt(2)  |  | Mining equipment for iron ore          
|Equipment (Mitsui E&P Middle East B.V.)/Oman                  |  |                  | 6,000,000 |  |  | Bbl(2) |  | Oil producing equipment                
|Aircraft (Tombo Aviation Netherlands B.V.)/Netherlands        |  |                  | 6         |  |  |        |  |                                         |  | Leasing asset
|Aircraft (Tombo Aviation Inc.)/U.S.A.                         |  |                  | 6         |  |  |        |  |                                         |  | Leasing asset
|Oil tanker (CM Maritaime Pacifice Corporation)/Liberia        |  |                  | 1         |  |  |        |  |                                         |  | Leasing asset
|Ocean vessels (Clio Marine Inc.)/Liberia                      |  |                  | 1         |  |  |        |  |                                         |  | Leasing asset
|Ocean vessels (Lepta Shipping Co., Ltd.)/Liberia              |  |                  | 3         |  |  |        |  |                                         |  | Leasing asset
|Ocean vessels (LPG Transport Service Ltd.)/Bermuda            |  |                  | 2         |  |  |        |  |                                         |  | Leasing asset



|(1) |  | Information on our mining activities related to Mitsui Coal Holdings Pty.
Ltd., Mitsui Iron Ore Development Pty. Ltd., and Mitsui-Itochu Iron Pty.
Ltd. that are located in Australia is shown in Iron and Steel Raw
Materials Unit of B. Business Overview in this Item.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The figure represents annual production capacity.                                                                                                                                                                                                                            

A portion of the land, buildings and equipment owned by us is subject to
mortgages or other liens. As of March 31, 2003, the aggregate amount of such
mortgages or other liens was ¥25,657 million. We know of no material defect in
our title to neither of any of the properties nor of any material adverse claim with
respect to them, either pending or contemplated.

We consider our office and other facilities to be well maintained and
believe that our plant capacity is adequate for our current requirements. We do
not have material plans to construct, expand or improve facilities. However,
production equipment for natural resources are likely to
increase, as we promote developing projects for iron and steel raw materials
and energy.

We do not believe there are any material environmental issues that would
affect the utilization of our assets.

40



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##### Table of Contents



Oil and Gas Producing Activities

The following table shows crude oil, condensate, natural gas liquids and
natural gas production from our own reserves for the three fiscal years
indicated:

Production Information

|            |  |                                              |   |                       |  |        |   |           |  |             |   |           |  |        |    |           |  |  |   |  |  |  |    |  |  |  |    |  |  |  |    | 
|----------- |  | -------------------------------------------- | - | --------------------- |  | ------ | - | --------- |  | ----------- | - | --------- |  | ------ | -- | --------- |  |  | - |  |  |  | -- |  |  |  | -- |  |  |  | -- | 
|            |  | Crude Oil Condensate and Natural Gas Liquids |   | Natural Gas          
|            |  |                                              |   |                      
|            |  | (Millions of Barrels)                        |   | (Millions of Barrels)
|            |  | Middle East                                  |   | Australia             |  | Others |   | Worldwide |  | Middle East |   | Australia |  | Others |    | Worldwide
|            |  |                                              |   |                       |  |        |   |           |  |             |   |           |  |        |    |          
|Fiscal 2003 |  |                                              | 2 |                       |  |        | 7 |           |  |             | 0 |           |  |        | 9  |           |  |  |  |  |  |  | 41 |  |  |  | 24 |  |  |  | 65 | 
|Fiscal 2002 |  |                                              | 0 |                       |  |        | 9 |           |  |             | 5 |           |  |        | 14 |           |  |  |  |  |  |  | 40 |  |  |  | 23 |  |  |  | 63 | 
|Fiscal 2001 |  |                                              | 0 |                       |  |        | 9 |           |  |             | 4 |           |  |        | 13 |           |  |  |  |  |  |  | 40 |  |  |  | 24 |  |  |  | 64 | 

The following tables show proved reserve and proved developed reserve of
crude oil, condensate, natural gas liquids and natural gas as of the ending
date of three fiscal years indicated:

Proved Reserve
Information:

Proved
Reserve

|                  |  |                                              |    |                       |  |        |    |           |  |             |    |           |  |        |     |           |  |  |   |  |  |  |       |  |  |  |     |  |  |  |       | 
|----------------- |  | -------------------------------------------- | -- | --------------------- |  | ------ | -- | --------- |  | ----------- | -- | --------- |  | ------ | --- | --------- |  |  | - |  |  |  | ----- |  |  |  | --- |  |  |  | ----- | 
|                  |  | Crude Oil Condensate and Natural Gas Liquids |    | Natural Gas          
|                  |  |                                              |    |                      
|                  |  | (Millions of Barrels)                        |    | (Millions of Barrels)
|                  |  | Middle East                                  |    | Australia             |  | Others |    | Worldwide |  | Middle East |    | Australia |  | Others |     | Worldwide
|                  |  |                                              |    |                       |  |        |    |           |  |             |    |           |  |        |     |          
|At March 31, 2003 |  |                                              | 28 |                       |  |        | 52 |           |  |             | 47 |           |  |        | 127 |           |  |  |  |  |  |  | 1,200 |  |  |  | 192 |  |  |  | 1,392 | 
|At March 31, 2002 |  |                                              | 9  |                       |  |        | 50 |           |  |             | 59 |           |  |        | 118 |           |  |  |  |  |  |  | 1,155 |  |  |  | 219 |  |  |  | 1,374 | 
|At March 31, 2001 |  |                                              | 9  |                       |  |        | 59 |           |  |             | 98 |           |  |        | 166 |           |  |  |  |  |  |  | 1,195 |  |  |  | 242 |  |  |  | 1,437 | 

Proved
Developed Reserve

|                  |  |                                              |    |                       |  |        |    |           |  |             |    |           |  |        |    |           |  |  |   |  |  |  |     |  |  |  |    |  |  |  |     | 
|----------------- |  | -------------------------------------------- | -- | --------------------- |  | ------ | -- | --------- |  | ----------- | -- | --------- |  | ------ | -- | --------- |  |  | - |  |  |  | --- |  |  |  | -- |  |  |  | --- | 
|                  |  | Crude Oil Condensate and Natural Gas Liquids |    | Natural Gas          
|                  |  |                                              |    |                      
|                  |  | (Millions of Barrels)                        |    | (Millions of Barrels)
|                  |  | Middle East                                  |    | Australia             |  | Others |    | Worldwide |  | Middle East |    | Australia |  | Others |    | Worldwide
|                  |  |                                              |    |                       |  |        |    |           |  |             |    |           |  |        |    |          
|At March 31, 2003 |  |                                              | 28 |                       |  |        | 26 |           |  |             | 18 |           |  |        | 72 |           |  |  |  |  |  |  | 364 |  |  |  | 58 |  |  |  | 422 | 
|At March 31, 2002 |  |                                              | 9  |                       |  |        | 28 |           |  |             | 18 |           |  |        | 55 |           |  |  |  |  |  |  | 370 |  |  |  | 66 |  |  |  | 436 | 
|At March 31, 2001 |  |                                              | 9  |                       |  |        | 33 |           |  |             | 49 |           |  |        | 91 |           |  |  |  |  |  |  | 380 |  |  |  | 73 |  |  |  | 453 | 

Information on our oil and gas producing activities is shown in the
Supplemental Information on Oil and Gas Producing Activities to the
consolidated financial statements included elsewhere in this annual report.




Item 5. Operating and Financial Review and Prospects.




A. Operating Results.

You should read the following discussion and analysis of our financial
condition and results of operations together with Selected Financial Data
under Item 3.A. and our consolidated financial statements, that appear
elsewhere in this annual report. This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions.
Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of factors including but not limited to
those set forth under Item 3.D. Risk Factors and elsewhere in this annual
report. Operations of a subsidiary that either has been disposed of or is
classified as held for sale have been accounted for as discontinued operations
under accounting principles generally accepted in the United States of America
(U.S. GAAP). This means that income statement and cash flow information are
reclassified for all years presented to separate the discontinued operations
from our continuing operations. This presentation is required by U.S. GAAP and
facilitates historical and future trend analysis of our continuing operations.

41



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##### Table of Contents



Results of Operations



| |                                                                        
| | -----------------------------------------------------------------------
| | Summary of Operations for the Year Ended March 31, 2003 (fiscal
2003)

In the business environment during fiscal 2003, although the global
economy seems to have bottomed out from the worst conditions after the events
of September 11, 2001, the recovery was not strong enough, except for some
areas in Asia. Deflation, weakening stock markets, and the situation in Iraq
prevented the global economy from quick recovery.

Amid this operating environment, our net income for fiscal 2003 was ¥31.1
billion, which was a ¥24.2 billion decrease from the year ended March 31, 2002
(fiscal 2002). Revenuegross trading profit increased ¥23.3 billion. On the
other hand, the sum of selling, general and administrative expenses and
provision for doubtful receivables increased by ¥4.9 billion from fiscal 2002. However,
the following factors lowered our net income: (1) the loss on impairment of
aircraft due to the continued decline of aircraft market after September 11,
2001, (2) continued asset deflation in Japan, particularly declines in the
values of real estate and listed equity securities in Japan, and (3) losses
associated with discontinued operations.

The main factors affecting our business volume during fiscal 2003 included
improved performances reported by the Energy Segment, due to active trading in
crude oil and petroleum products by overseas subsidiaries, and the Metal
Products & Minerals Segment, where we experienced increasing numbers of
transactions involving iron ore, coal and metal products. On the other hand,
such improved performances were offset by lack of business confidence and weak
domestic demand in a broad range of business areas and the divestiture of
construction materials sales operations which led to a lower number of
transactions in the Domestic Branches and Offices Segment, and a lower number
of transactions in the Machinery, Electronics & Information Segment which was
partially due to a decrease in plant exports.

Compared to fiscal 2002, our revenuegross trading profit rose ¥23.3
billion, to ¥569.8 billion. Selling, general and administrative expenses
increased by ¥11.8 billion, to ¥457.8 billion compared to fiscal 2002,
primarily due to early retirement severance benefit payouts. The provision for
doubtful receivables decreased by ¥6.9 billion, to ¥14.3 billion. Interest
expense, net of interest income, showed improvement compared to fiscal 2002
because of repeated interest rate cuts in the United States and in Europe.
Equity in earnings of associated companiesnet (after income tax effect)
decreased ¥10.4 billion from fiscal 2002, to ¥13.4 billion. This was due to the
write-down of domestic investments to reflect the other than temporary decline
in stock prices and facilities owned by overseas associated companies. As a
result of these developments, and after the deduction of a net loss of ¥2.5
billion from discontinued operations, net income was ¥31.1 billion.

The change in the value of the yen against other currencies decreased our
revenuegross trading profit by approximately ¥1.5 billion. The average
exchange rate for U.S. dollar to the Japanese yen for fiscal 2003 was
¥121.20=U.S.$1, compared with ¥122.21=U.S.$1 for fiscal 2002.

Discussion and Analysis of Operating Results

|                               |                                                                        |       |         |                 |         |      |         |         |         |   |         |         |         | 
|------------------------------ | ---------------------------------------------------------------------- | ----- | ------- | --------------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                               |                                                                        |       |         | Millions of Yen
|                               |                                                                        |       |         |                
|                               |                                                                        |       |         | 2003            |         | 2002 |         | 2001   
|                               |                                                                        |       |         |                 |         |      |         |        
|Revenue  Gross Trading Profit |                                                                        | ¥     | 569,802 |                 |         | ¥    | 546,549 |         |         | ¥ | 561,298 |        
|Expenses and other:            |                                                                        |       |         |                 |         |      |         |         |         |   |         |        
|                               | Selling, general and administrative                                    |       |         | 457,803         |         |      |         | 446,013 |         |   |         | 462,435 |        
|                               | Provision for doubtful receivables                                     |       |         | 14,293          |         |      |         | 21,191  |         |   |         | 43,669  |        
|                               | Interest expense, net of interest income                               |       |         | 2,868           |         |      |         | 12,876  |         |   |         | 21,382  |        
|                               | Dividend income                                                        |       |         | (16,267         | )       |      |         | (18,192 | )       |   |         | (15,896 | )      
|                               | Gain on sales of securities  net                                      |       |         | (11,026         | )       |      |         | (31,308 | )       |   |         | (65,592 | )      
|                               | Gain on securities contributed
to an employee retirement benefit trust |       |         | (15,831         | )       |      |         | (29,242 | )       |   |         | (42,975 | )      
|                               | Loss on the write-down of securities                                   |       |         | 37,921          |         |      |         | 43,605  |         |   |         | 31,742  |        
|                               | Loss on disposal or sale of property and equipment  net               |       |         | 1,765           |         |      |         | 2,577   |         |   |         | 2,610   |        
|                               | Impairment loss of long-lived assets                                   |       |         | 24,558          |         |      |         | 24,732  |         |   |         | 34,519  |        
|                               | Other expense  net                                                    |       |         | 11,309          |         |      |         | 10,724  |         |   |         | 7,046   |        
|                               |                                                                        |       |         |                 |         |      |         |        
|                               |                                                                        | Total |         |                 | 507,393 |      |         |         | 482,976 |   |         |         | 478,940 | 
|                               |                                                                        |       |         |                 |         |      |         |        

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|                                                                                                 |  |                 |        |      |  |      |        |      |  |   |        |   |  | 
|------------------------------------------------------------------------------------------------ |  | --------------- | ------ | ---- |  | ---- | ------ | ---- |  | - | ------ | - |  | 
|(Continued)                                                                                      |  | Millions of Yen
|                                                                                                 |  |                 |        |     
|                                                                                                 |  |                 |        | 2003 |  | 2002 |        | 2001
|                                                                                                 |  |                 |        |      |  |      |        |     
|Income from Continuing Operations before Income Taxes,
Minority Interests and Equity in Earnings |  |                 | 62,409 |      |  |      | 63,573 |      |  |   | 82,358 |  
|Income Taxes                                                                                     |  |                 | 37,835 |      |  |      | 31,535 |      |  |   | 33,039 |  
|                                                                                                 |  |                 |        |      |  |      |        |     
|Income from Continuing Operations before Minority Interests
and Equity in Earnings               |  |                 | 24,574 |      |  |      | 32,038 |      |  |   | 49,319 |  
|Minority Interests in (Earnings) Losses of Subsidiaries                                          |  |                 | (4,365 | )    |  |      | 3,070  |      |  |   | (2,037 | )
|Equity in Earnings of Associated Companies
 Net (After Income Tax Effect)                       |  |                 | 13,405 |      |  |      | 23,783 |      |  |   | 6,662  |  
|                                                                                                 |  |                 |        |      |  |      |        |     
|Income from Continuing Operations                                                                |  |                 | 33,614 |      |  |      | 58,891 |      |  |   | 53,944 |  
|                                                                                                 |  |                 |        |      |  |      |        |     
|Loss from Discontinued Operations
 Net (After Income Tax Effect)                                |  |                 | (2,476 | )    |  |      | (3,520 | )    |  |   | (2,356 | )
|                                                                                                 |  |                 |        |      |  |      |        |     
|Net Income                                                                                       |  | ¥               | 31,138 |      |  | ¥    | 55,371 |      |  | ¥ | 51,588 |  
|                                                                                                 |  |                 |        |      |  |      |        |     

Changes of Subsidiaries Fiscal Year-Ends to March 31 in Fiscal 2002

During the year ended March 31, 2002, 231 subsidiaries changed their
fiscal year-ends to March 31, mainly from December 31, to increase the
timeliness of our consolidated financial position and results of operations.
The earnings or losses of the subsidiaries for the stub period (i.e., fiscal
periods that exceeded 12 months, such as the 3-month period from January 1, to
March 31, 2002, for the subsidiaries that changed their year-ends from December
31 to March 31) were directly credited or charged to unappropriated retained
earnings in order to maintain the comparability of periodic earnings. The other
comprehensive income (loss) and cash flows of the subsidiaries for the stub
period are separately presented in the Statements of Consolidated Shareholders
Equity and the Statements of Consolidated Cash Flows, respectively.

The aggregate net earnings or losses of subsidiaries for the stub period
amounted to a loss of ¥2.6 billion, which was directly charged to shareholders
equity, for the purpose of maintaining comparability with our periodic
earnings. Main subsidiaries that accounted for the loss in the stub period were
Global Octanes Holding Inc. and Global Octanes Investment Inc., which
experienced trouble in operations at certain plants; Mitalco Inc., which was
forced to stop production due to an electricity price increase; and certain
other subsidiaries that experienced losses due to the seasonality of their
businesses, such as Sanyu Koami Co., Ltd.

Other comprehensive income generated during the stub period by those
subsidiaries that changed their fiscal year-end amounted to a profit of ¥1.6
billion. Other comprehensive income during the stub period was mainly generated
from foreign currency translation adjustments and net unrealized gains on
derivatives, mainly foreign exchange forward contracts, reflecting yen
depreciation for the period.

RevenueGross Trading Profit

In fiscal 2003, we recorded revenuegross trading profit of ¥569.8
billion, which was a ¥23.3 billion or a 4.3% increase from ¥546.5 billion in
fiscal 2002. Market prices for petrochemical products, such as olefin,
recovered, reflecting increasing demand in Asia, which caused an increase in
revenuegross trading profit for the Chemical Segment. As for the Machinery,
Electronics & Information Segment, foreign subsidiaries in the automobile
distribution and ocean vessel leasing and financing business recorded strong
performances with increasing transactions, which offset a decline in revenue
from transactions involving electric machineries and industrial plants. In the
Energy Segment, a newly established subsidiary, Mitsui E & P Middle East B.V.,
acquired a new oil concession in the Middle East, which contributed to the
increase in revenuegross trading profit. The Energy Segment also reported
strong performance in trading oil products. The Metal Products & Minerals
Segment reported an increase in revenuegross trading profit where Australian
subsidiaries, Mitsui Iron Ore Development Pty., Ltd. and Mitsui Coal Holding
Pty., Ltd., in the iron and steel raw materials industries recorded growth, due
to the high level of production worldwide by steel mills, reflecting strong
demand in China and other Asian countries. However, the Domestic Branches and
Offices Segment recorded a decline in revenuegross trading profit because of
the continuously sluggish Japanese economy and a spin-off of domestic building
material business to Sumisho & Mitsuibussan Kenzai Co., Ltd. The Consumer
Products & Services Segment also experienced a decline in revenuegross
trading profit, primarily due to the decline in the profitability of the food
business conducted at Mitsui.

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During fiscal 2002, we recorded revenuegross trading profit of ¥546.5
billion, representing a ¥14.7 billion or a 2.6% decline from ¥561.3 billion in
the year ended March 31, 2001 (fiscal 2001). Increases in revenuegross
trading profit were reported for transactions involving commodities such as
iron and steel, including exports of steel pipe; iron and steel raw materials;
and for transactions involving information technology business, where domestic
subsidiaries showed strong performances. However, revenuegross trading profit
involving other commodities and industries generally showed declines. For
example, revenuegross trading profit for transactions involving energy
related commodities, such as crude oil, and chemical products declined compared
to fiscal 2001. The decline in revenuegross trading profit for transactions
involving chemical products was due to the effect of weak market conditions for
polyvinyl chloride and ammonia.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses in fiscal 2003
increased by 2.6%, or ¥11.8 billion, to ¥457.8 billion, compared with ¥446.0
billion in fiscal 2002. This was due primarily to a ¥7.1 billion increase of
expense for the Early Retirement Support Plan, which was recorded in its
entirety as personnel expenses, and additional costs in connection with newly
consolidated subsidiaries.

In fiscal 2002, SG&A expenses declined 3.6%, or ¥16.4 billion, due mainly
to the decrease of personnel expenses of the Early Retirement Support Plan
compared to fiscal 2001.

The ratio of SG&A expenses to revenuegross trading profit in fiscal 2003
was 80.3%, 1.3 percentage points lower than the 81.6% reported for fiscal 2002.
The ratio of SG&A expenses to revenuegross trading profit in fiscal 2002, in
turn, was 0.8 percentage point lower than the 82.4% in fiscal 2001.

Provision for Doubtful Receivables

The provision for doubtful receivables in fiscal 2003 decreased ¥6.9
billion, from ¥21.2 billion in fiscal 2002 to ¥14.3 billion. The provision in
fiscal 2003 mainly related to the deterioration of the business environment in
the airline industry in the United States and weak economic conditions in
Argentine Republic and Republic of Honduras.

The provision for doubtful receivables in fiscal 2002 declined ¥22.5
billion, from ¥43.7 billion in fiscal 2001 to ¥21.2 billion. The provision in
fiscal 2002 was made principally in connection with machinery, general
merchandise, foods, and certain other transactions but was substantially
smaller than that in fiscal 2001, when the provision was made stemming from the
negative outlook on the possibility of recovery and judgment from past
experiences, reflecting the prolonged slowdown of the Japanese economy.

Interest Expense, Net of Interest Income

The average of the month-end U.S. dollar three-month LIBOR was 1.6% for
fiscal 2003, which fell from 2.8% for fiscal 2002. The average of the month-end
Japanese yen three-month LIBOR was 0.07% and 0.08% in fiscal 2003 and 2002,
respectively. Under such circumstances, interest expenses of overseas
subsidiaries decreased, and our interest expense, net of interest income,
declined ¥10.0 billion, or 77.7%, from fiscal 2002, to ¥2.9 billion.

In fiscal 2002, interest expense, net of interest income, amounted to
¥12.9 billion, representing a decline of ¥8.5 billion, or 39.8%, from fiscal
2001. This decline was mainly accounted for by decreases in Mitsuis interest
payments due to the decline in overseas interest rates.

Dividend Income

Our dividend income for fiscal 2003 was ¥16.3 billion, which represented a
¥1.9 billion, or 10.6%, decrease from fiscal 2002. This was mainly due to the
decreased amount of dividends received by Mitsui & Co. (Hong Kong) Ltd., our
Hong Kong subsidiary. Dividends from investments in the Energy Segment,
principally LNG projects in the Middle East, were stable compared to fiscal
2002.

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In fiscal 2002, dividend income was ¥18.2 billion, which represented a
¥2.3 billion, or 14.4%, increase over fiscal 2001. This was primarily due to
higher dividends from investments in the Energy Segment, principally LNG
projects in the Middle East.

Gain on Sales of SecuritiesNet

The net realized gain on sales of securities decreased by ¥20.3 billion
compared to fiscal 2002 and amounted to ¥11.0 billion, which included a gain of
¥3.7 billion from the sale of information technology (IT)-related stock, and
a gain of ¥2.1 billion from the exchange of shares accompanying the merger of
Japan Airlines Company, Ltd., and Japan Air System Co., Ltd. The decrease from
fiscal 2002 was primarily due to the ¥16.2 billion gain in fiscal 2002 from the
exchange of shares accompanying the merger of The Sakura Bank, Ltd., and The
Sumitomo Bank, Ltd.

In fiscal 2002, a gain of ¥31.3 billion was reported, mainly in connection
with a gain of ¥16.2 billion from the exchange of shares accompanying the
merger of The Sakura Bank, Ltd., and The Sumitomo Bank, Ltd., and a gain of
¥2.1 billion from the sale of the stock of Mitsui Knowledge Industry Co., Ltd.,
an IT-related subsidiary on the occasion of an IPO. However, in fiscal 2001,
since a gain of ¥65.6 billion was reported, mainly in connection with the sale
of IT-related stocks, including AOL Japan, the gain in fiscal 2002 represented
a decline of ¥34.3 billion from the previous year.

Gains on Securities Contributed to an Employee Retirement Benefit Trust

In fiscal 2003, Mitsui made an additional contribution of certain
available-for-sale securities to an employee retirement benefit trust and
recorded a ¥15.8 billion gain from this transaction. This represented a decline
of ¥13.4 billion from the gain of ¥29.2 billion recognized on the contribution
made to the employee retirement benefit trust in fiscal 2002.

In fiscal 2002, Mitsui made a contribution of certain available-for-sale
securities to the employee retirement benefit trust and recorded a ¥29.2
billion gain from this transaction. This represented a decline of ¥13.7 billion
from the gain of ¥43.0 billion on the establishment of the employee retirement
benefit trust in fiscal 2001, when Mitsui contributed certain
available-for-sale securities and marketable equity securities of an associated
company.

Loss on the Write-Down of Securities

In fiscal 2003, the loss on the write-down of securities was ¥37.9
billion, including a ¥15.6 billion loss in marketable securities, which
primarily consisted of equity securities of banking institutions amounting to
¥9.0 billion, and a ¥22.3 billion loss in non-marketable securities, which
consisted of equity securities of IT-related companies amounting to ¥7.6
billion.

In fiscal 2002, valuation losses of ¥34.5 billion were reported on
marketable securities, including the equity securities of banking institutions
amounting to ¥28.8 billion, reflecting the fall in stock prices in Japan, of
which the decline in fair value was considered other than temporary, bringing
the total value of valuation losses on securities to ¥43.6 billion. This amount
was ¥11.9 billion higher than the ¥31.7 billion in such losses reported in
fiscal 2001.

Loss on Disposal or Sale of Property and EquipmentNet

The total loss in fiscal 2003 on the disposal of property and
equipmentnet decreased ¥0.8 billion, to ¥1.8 billion, from ¥2.6 billion in
fiscal 2002, due to a decrease in the disposal of fixed assets of domestic
subsidiaries.

In fiscal 2002, the loss on the disposal of property and equipmentnet
was ¥2.6 billion, a minimal change from fiscal 2001, representing the disposal
of fixed assets of domestic subsidiaries.

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Impairment Loss of Long-Lived Assets

The total impairment loss in fiscal 2003 decreased ¥0.2 billion, to ¥24.6
billion, from ¥24.7 billion in fiscal 2002, which was attributable to a decline
in the market value of leased aircraft and the decline in land value owned by
certain domestic subsidiaries of the Energy Segment.

In fiscal 2002, the impairment loss decreased ¥9.8 billion, to ¥24.7
billion, from ¥34.5 billion in fiscal 2001. We recognized impairment mainly on
the land held by Mitsui and land and equipment to be disposed of by Mitsui and
certain of its subsidiaries.

Other ExpenseNet

Other expensenet in fiscal 2003 was ¥11.3 billion, which is a slight
increase of ¥0.6 billion from fiscal 2002. The foreign exchange rate for yen
per U.S. dollar was lower in fiscal 2003 compared to fiscal 2002, which caused
an increase in the foreign exchange loss on net assets denominated in foreign
currencies. However, the decrease of the legal settlement expense in connection with the
lawsuits against Novus International Inc., one of our U.S. subsidiaries, that
existed in fiscal 2002 partially offset this increase in the foreign exchange
loss.

In fiscal 2002, other expensenet increased ¥3.7 billion from fiscal
2001, to ¥10.7 billion, including the expense related to the settlement of
class action lawsuits against Novus International Inc.

Income Taxes

In fiscal 2003, income taxes amounted to ¥37.8 billion, representing an
increase of ¥6.3 billion, from ¥31.5 billion in fiscal 2002, with ¥5.9 billion
of the ¥6.3 billion increased amount resulting from the valuation allowance
provided on deferred tax assets for operating losses of certain subsidiaries.

The normal effective statutory tax rate in Japan in fiscal 2003 was 42%,
the same as the rate in the previous fiscal year. On March 31, 2003, the tax
laws in Japan were amended, and an enterprise tax on the basis of the size of
business will be introduced for the year ending March 31, 2005. As a result,
the statutory tax rate for the year ending March 31, 2005, will be
approximately 41%, effective from April 1, 2004. The newly enacted statutory
tax rate was used in calculating the deferred tax assets and liabilities as of
March 31, 2003, which are expected to be realized or settled after March 31,
2004. The effect of the changes in the tax rates on the balance of deferred tax
assets and liabilities was insignificant.

Income taxes in fiscal 2002 decreased ¥1.5 billion, to ¥31.5 billion,
compared with fiscal 2001.

Minority Interests in (Earnings) Losses of Subsidiaries

Minority interests in earnings of subsidiaries increased by ¥7.4 billion
to ¥4.4 billion for fiscal 2003. Earnings of subsidiaries increased mainly due
to strong performances of overseas subsidiaries for energy development in the
Middle East and Australia.

In fiscal 2002, ¥3.1 billion of minority interests in losses of
subsidiaries was recorded, while minority interests in earnings of subsidiaries
in fiscal 2001 was ¥2.0 billion. This was mainly attributable to the declining
profit of a domestic subsidiary in the food industry and declining profit of a
chemical subsidiary in the United States, which was due to a decrease in demand
for its products and the expense incurred in connection with its lawsuits.

Equity in Earnings of Associated CompaniesNet (After Income Tax Effect)

Net equity in earnings of associated companies in fiscal 2003 decreased
¥10.4 billion, to ¥13.4 billion, compared with ¥23.8 billion in fiscal 2002.
This is attributable to the impairment of NextCom K.K., a domestic associated
information technology company, causing the sharp decline in its stock price;
and the recognition of an impairment loss on a production facility at Vinyl
Chloride (Malaysia) Sdn. Bhd., an associated overseas chemical company; and the
increase in reserve for possible loan losses at Furukawa Industrial S.A.
Produtos Eletricos, a telecommunications related overseas associated company in
Brazil.

Net equity in earnings of associated companies in fiscal 2002 increased
¥17.1 billion, to ¥23.8 billion, compared with ¥6.7 billion in fiscal 2001.
This was due to strong performances by associated companies in the energy
business, such as LNG projects, as well as in metals and certain other sectors.

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Loss from Discontinued OperationsNet (After Income Tax Effect)

We present the results of discontinued operations (including operations of
a subsidiary that either has been disposed of or is classified as held for
sale) as a separate line item in the Statements of Consolidated Income under
Loss from Discontinued OperationsNet (After Income Tax Effect). Amounts
presented in the Statements of Consolidated Income for the prior years related
to the discontinued operations have been reclassified to conform to the current
years presentation. The loss amounts for the years ended March 31, 2003, 2002,
and 2001 were ¥2,476 million, ¥3,520 million, and ¥2,356 million, respectively.
The primary discontinued operations for fiscal 2003 were Transpacific Glycols,
Inc., Pacific Ammonia Inc., and Bussan Promotion Co., Ltd.

Transpacific Glycols, Inc., a subsidiary partially reported in both the
Chemical and Americas segments, has been engaged in the sale of ethylene glycol, but has ceased
its sales operations during the year ended March 31, 2003 due to its declining
performance due to the overall market conditions.

Pacific Ammonia Inc., a subsidiary reported in the Chemical Segment, which
has been engaged in the manufacture and sale of ammonia primarily on the West
Coast of the United States, suffered from high natural gas costs as its main
raw material ingredient and a relatively weak ammonia price due to a worldwide
oversupply. Due to such business environment, Pacific Ammonia Inc. recognized
an impairment loss on fixed assets during the year ended March 31, 2003 based
on the plan to dispose of the operation by sale.

Bussan Promotion Co., Ltd. is a subsidiary in the business of promoting
cigarettes of a foreign manufacturer in the Consumer Products & Services
Segment. We were the sole agent for import and wholesale of Philip Morris
cigarettes in eastern Japan, and were promoting them to various retailers
through Bussan Promotion Co., Ltd. Philip Morris International Inc., however,
changed its strategy to directly manage its sales promotion operations, and
accordingly, we sold all of the shares of Bussan Promotion Co., Ltd. to FTR
HOLDINGS S.A., a member of Philip Morris Group, in April 2002.

Operating Results by Operating Segment

Mitsui undertook a reorganization that included the introduction of an
operating group system, effective from April 2002, through which larger groups
can access more management resources. The operating groups of the Head Office,
which are organized based on the products and services, plan overall and
worldwide strategies for their products and services and conduct their
worldwide operations. The operating groups also collaborate with branches and
offices that are located in Japan and overseas and with the overseas trading
subsidiaries in planning and executing their strategies for products or
regions. In addition, the branches, offices, and overseas trading subsidiaries
are separate operating units, which are delegated the businesses of their
region as centers for the implementation of regional strategies, and they
conduct diversified business operations together with associated companies in
collaboration with the operating groups. Therefore, our operating segments are
comprised of product-focused segments and region-focused segments.

Our reportable operating segments are five product-focused reportable
operating segments comprised of the operating groups of the Head Office and
four region-focused reportable operating segments, which have aggregated
branches, offices, and overseas trading subsidiaries based on their regions.

As a result of the reorganization discussed above, from April 1, 2002, the
Electronics & Information Segment was combined with the Machinery Segment; and
the Transportation Logistics business unit which was originally a part of the
Consumer Products & Services Segment, is now included in Corporate and
Eliminations.

We have
abolished the operating group system as of April 1, 2003, and are
now implementing a simplified organizational structure whereby the Chief
Operating Officer of each business unit is delegated more authority for
business operations of his/her business unit and directly reports the operating
results to the Chief Executive Officer.

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The operating segment information for the years ended March 31, 2002 and
2001, have been restated to conform to the presentation for the year ended
March 31, 2003.

Revenue-Gross Trading Profit

|                                     |  |                 |         |      |  |   |         | 
|------------------------------------ |  | --------------- | ------- | ---- |  | - | ------- | 
|                                     |  | Millions of Yen
|                                     |  |                
|                                     |  | 2003            |         | 2002
|                                     |  |                 |         |     
|Metal Products & Minerals            |  | ¥               | 70,674  |      |  | ¥ | 67,397  | 
|Machinery, Electronics & Information |  |                 | 117,987 |      |  |   | 112,425 | 
|Chemical                             |  |                 | 60,871  |      |  |   | 53,476  | 
|Energy                               |  |                 | 53,027  |      |  |   | 48,061  | 
|Consumer Products & Services         |  |                 | 105,947 |      |  |   | 108,610 | 
|Domestic Branches and Offices        |  |                 | 41,405  |      |  |   | 47,553  | 
|Americas                             |  |                 | 44,584  |      |  |   | 45,096  | 
|Europe                               |  |                 | 22,470  |      |  |   | 20,623  | 
|Other Overseas Areas                 |  |                 | 23,503  |      |  |   | 21,929  | 
|Corporate and Eliminations           |  |                 | 29,334  |      |  |   | 21,379  | 
|                                     |  |                 |         |     
|Consolidated Total                   |  | ¥               | 569,802 |      |  | ¥ | 546,549 | 
|                                     |  |                 |         |     

Note: RevenueGross Trading Profit for each reportable segment is included in
the measure of segment profit or loss reviewed by the chief operating decision
maker from fiscal 2002.

Net Income (Loss)

|                                     |  |                 |         |      |  |      |        |   |  |   |         |  
|------------------------------------ |  | --------------- | ------- | ---- |  | ---- | ------ | - |  | - | ------- | -
|                                     |  | Millions of Yen
|                                     |  |                
|                                     |  | 2003            |         | 2002 |  | 2001
|                                     |  |                 |         |      |  |     
|Metal Products & Minerals            |  | ¥               | 14,944  |      |  | ¥    | 9,449  |   |  | ¥ | 10,271  |  
|Machinery, Electronics & Information |  |                 | (4,916  | )    |  |      | 13,377 |   |  |   | 16,744  |  
|Chemical                             |  |                 | (5,850  | )    |  |      | (4,893 | ) |  |   | 5,493   |  
|Energy                               |  |                 | 22,605  |      |  |      | 22,152 |   |  |   | 12,299  |  
|Consumer Products & Services         |  |                 | 3,983   |      |  |      | 2,756  |   |  |   | (6,158  | )
|Domestic Branches and Offices        |  |                 | 6,994   |      |  |      | 6,773  |   |  |   | 6,149   |  
|Americas                             |  |                 | 3,291   |      |  |      | 6,461  |   |  |   | 9,991   |  
|Europe                               |  |                 | 2,845   |      |  |      | 3,911  |   |  |   | 3,876   |  
|Other Overseas Areas                 |  |                 | 6,193   |      |  |      | 5,271  |   |  |   | 4,882   |  
|Corporate and Eliminations           |  |                 | (18,951 | )    |  |      | (9,886 | ) |  |   | (11,959 | )
|                                     |  |                 |         |      |  |     
|Consolidated Total                   |  | ¥               | 31,138  |      |  | ¥    | 55,371 |   |  | ¥ | 51,588  |  
|                                     |  |                 |         |      |  |     

Total Trading Transactions

Our analysis of the financial results of our operating segments includes
the discussion of total trading transactions. Total trading transactions is a
voluntary disclosure and represents the gross transaction volume or the nominal
aggregate value of the sales contracts in which we act as principal and
transactions in which we serve as agent. Total trading transactions is not
meant to represent sales or revenues in accordance with U.S. GAAP. Total
trading transactions should not be construed as equivalent to, or a substitute
or proxy for, revenues, or as an indicator of our operating performance,
liquidity or cash flows generated by operating, investing or financing
activities. A substantial part of total trading transactions represents
transactions in which title to and payment for the goods pass through us
without physical acquisition and delivery through our inventories. We have
included the information concerning total trading transactions because it is
used by similar Japanese trading companies as an industry benchmark, and we
believe it is a useful supplement to results of operations data as a measure of
our performance compared to other similar Japanese trading companies. Total
trading transactions is included in the measure of segment profit and loss
reviewed by the chief operating decision maker. See Notes 2, Basis of
Financial Statements and Summary of Significant Accounting Policies and 15,
Segment Information accompanying the consolidated financial statements for
further discussion.

Operating Income (Loss)

Operating income (loss) mentioned in the discussion below reflects the
total of (a) revenuegross trading profit, (b) selling, general and
administrative expenses, and (c) provision for doubtful receivables. Operating
income (loss) is included in the measure of segment profit and loss reviewed by
the chief operating decision maker.

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Metal Products & Minerals Segment

Total trading transactions of the Metal Products & Minerals Segment in
fiscal 2003 increased ¥93 billion, or 5.2% over fiscal 2002, to ¥1,877 billion,
primarily due to the increase in steel products exported to China and other
Asian countries, where there has been consistent economic growth, and
increases
in the transactions involving iron ore and coal by Australian subsidiaries, Mitsui Coal
Holding Pty. Ltd. and Mitsui Iron Ore Development Pty. Ltd., reflecting the
high level of worldwide production in the steel industry. Revenuegross
trading profit rose ¥3.3 billion, or 4.9%, to ¥70.7 billion, which was mainly
attributable to contributions by the Australian iron ore and coal subsidiaries
resulting from the growth in total trading transactions as mentioned above and
newly acquired interests in mining sources. Operating income rose ¥5.9 billion,
or 29.6%, to ¥25.7 billion, reflecting an increase in revenue-gross trading
profit and a decrease in the provision for doubtful
receivables primarily with respect to domestic customers. Net income
increased ¥5.5 billion, or 58.2%, to ¥14.9 billion, which was attributable to
the increases of net income in Mitsui Coal Holding Pty. Ltd. and Mitsui Iron
Ore Development Pty. Ltd.

Total trading transactions of the Metal Products & Minerals Segment in
fiscal 2002 increased ¥139 billion, or 8.4% over fiscal 2001, to ¥1,785
billion, principally because of higher domestic and offshore transactions.
Revenuegross trading profit of the segment amounted to ¥67.4 billion, as the
performances of Australian subsidiaries in the iron and steel raw materials
industries were strong, despite a decline in revenuegross trading profit from
precious metals, and weak results in non-ferrous metals, reflecting the
stagnant commodities market for such metals. Net income, however, fell ¥0.8
billion, or 8.0%, to ¥9.4 billion, as the decline in the income from
transactions involving non-ferrous metals offset increases in the income from
transactions involving iron and steel raw materials and the improved
performances of subsidiaries in Australia.

Machinery, Electronics & Information Segment

Total trading transactions of the Machinery, Electronics & Information
Segment in fiscal 2003 declined ¥49 billion, or 2.0%, from fiscal 2002, to
¥2,457 billion, mainly due to a decrease of ¥125 billion in industrial plant
related transactions, which were offset by an increase of ¥114 billion in
automobile and vessel related transactions. Revenuegross trading profit rose
¥5.6 billion, to ¥118.0 billion, despite a decrease of ¥3.4 billion in
industrial plant related transactions, principally because of an increase of
¥9.2 billion in automobile and vessel related transactions. Operating income
increased ¥0.6 billion, to ¥10.6 billion, primarily because of an increase of
¥5.6 billion in revenuegross trading profit, which offset an increase in SG&A
expenses. This segment reported a net loss of ¥4.9 billion as profitability
declined ¥18.3 billion from fiscal 2002, owing to the recognition of an
impairment loss on aircraft at Tombo Aviation Inc., resulting from
deterioration of the business environment in the airline industry in the United
States; the recognition of an impairment loss of an investment in
NextCom K.K.,
a domestic associated company, due to a sharp decline in stock prices; and
deterioration in the performance of Furukawa Industrial S.A. Produtos
Eletricos, a telecommunications related overseas associated company, due to
financial difficulties of certain of our main customers.

In fiscal 2002, total trading transactions of the Machinery, Electronics &
Information Segment rose ¥395 billion, or 18.7% over fiscal 2001, to ¥2,506
billion, supported especially by exports of industrial plants, vessels,
including LNG carriers, and others. Revenuegross trading profit amounted to
¥112.4 billion, mainly due to an increase in revenuegross trading profit in
an aircraft-related subsidiary and domestic mobile phone business. Net income,
which increased in fiscal 2001 by capital gains from IT-related marketable
stocks, decreased ¥3.4 billion, or 20.1% from fiscal 2001, to ¥13.4 billion,
despite the improvement in the performances of overseas associated companies.

Chemical Segment

During fiscal 2003, we experienced a general recovery in market prices of
petrochemical materials due to the war in Iraq, and by an increase in demand
for such products in Asia. Transactions of basic petrochemicals, synthetic
fiber intermediates, methanol, and ammonia increased during fiscal 2003, which
caused total trading transactions of the Chemical Segment to rise ¥110 billion,
or 8.4% from fiscal 2002, to ¥1,422 billion. Revenuegross trading profit
increased ¥7.4 billion, to ¥60.9 billion, reflecting the recovery of the
chemical products market, and operating income increased ¥8.1 billion, to ¥16.2
billion, due to the increase in revenuegross trading profit and a decrease in
the provision for doubtful receivables. However, the net loss of this segment
increased ¥1.0 billion, to ¥5.9 billion due to the recognition of loss
associated with Pacific Ammonia Inc. and Transpacific Glycols Inc., both of
which are discontinued operations, and the impairment of production facilities
of Vinyl Chloride (Malaysia) Sdn. Bhd. The aforementioned losses relate to the
operations which have been showing negative profitability in recent
years which include the manufacture and sales of ammonia, ethylene glycol, and
other petrochemical materials in North America and Asia.

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In fiscal 2002, total trading transactions of this segment declined ¥64
billion, or 4.7% from fiscal 2001, to ¥1,312 billion. This was mainly due to
decreases in domestic and offshore transactions of basic petrochemicals and
synthetic fiber intermediates. Revenuegross trading profit amounted to ¥53.5
billion, which was influenced by the fall in market prices of ammonia and
polyvinyl chloride materials. This segment reported a net loss of ¥4.9 billion,
representing a sharp decline of ¥10.4 billion from net income in fiscal 2001,
due mainly to the deterioration in market conditions, and losses related to
expenses for litigation at a subsidiary in the United States.

Energy Segment

In fiscal 2003, the average oil price was $25 per barrel, while it was $26
per barrel in the previous year. Total trading transactions of the Energy
Segment in fiscal 2003 rose ¥451 billion, or 18.4% from fiscal 2002, to ¥2,906
billion, principally due to increases of crude oil and petroleum products
trading in Asian markets, reflecting strong demand in China. Revenuegross
trading profit in fiscal 2003 increased ¥5.0 billion, to ¥53.0 billion, due to
an increase in oil and LNG sales to domestic power companies which in turn was
because of the troubles and shutdowns of nuclear power plants in Japan. In
addition, newly acquired oil producing assets of Mitsui E&P Middle East B.V.
contributed to the increase of revenuegross trading profit. Operating income
increased ¥8.9 billion, to ¥25.5 billion, where ¥5.0 billion was from the
increase of revenuegross trading profit and ¥3.9 billion was from the
decrease of SG&A expenses. The decrease of SG&A expenses was the result of
expense reduction activities, especially with respect to salary and
transportation expenses in domestic operations. In fiscal 2003, impairment
losses of tangible fixed assets in domestic oil marketing subsidiaries were
recognized to reduce the carrying amounts of these assets. However, such losses
were partially offset by strong performances of LNG producing associated
companies which contributed to equity in earnings of associated companies. As a
result, net income increased ¥0.5 billion, or 2.0% from fiscal 2002, to ¥22.6
billion.

In fiscal 2002, total trading transactions of this segment fell ¥449
billion, or 15.5% from fiscal 2001, to ¥2,454 billion, principally because of
declines in offshore and import transactions of petroleum products due to lower
demand for jet fuel for airplanes after the events of September 11, 2001 in the
United States. Revenuegross trading profit amounted to ¥48.1 billion and was
adversely affected by the decline in gasoline prices of domestic operations and
a decrease in demand for aviation fuel. Net income rose ¥9.9 billion, or 80.1%
from fiscal 2001, to ¥22.2 billion, principally because of the decrease in SG&A
expenses of domestic subsidiaries that had recorded expenses for the write-down
of fixed assets and the early retirement program in fiscal 2001. The increase
in dividend income from LNG projects in fiscal 2002 also contributed to such
increase.

Consumer Products & Services Segment

Total trading transactions of the Consumer Products & Services Segment in
fiscal 2003 rose ¥31 billion, or 1.4% from fiscal 2002, to ¥2,205 billion,
despite the transfer of the building material business to Sumisho &
Mitsuibussan Kenzai Co., Ltd., our associated company, and a decrease in
transactions of food related business conducted by Mitsuis Head
Office. The increase in total trading transactions was primarily due
to increases in total trading transactions of retail-related
subsidiaries including Vendor Service Co., Ltd. and Retail System Service Co.,
Ltd. by ¥33.4 billion. Revenuegross trading profit decreased ¥2.7 billion, to
¥105.9 billion in fiscal 2003, despite strong performances by the textile and
other consumer products businesses, due mainly to decreases in revenue-gross
trading profit derived from transactions involving food-related businesses in
Mitsui by ¥2.1 billion. Operating income increased ¥14.8 billion, to ¥19.9
billion, due to a decrease in SG&A expenses with respect to the early retirement program
in the previous fiscal year. Net income increased ¥1.2 billion, to ¥4.0 billion
in fiscal 2003, despite impairment losses on marketable equity securities and
value of certain real estate holdings of Sanyu Koami Co., Ltd., a food-related
subsidiary, due to a decrease in the provision for doubtful receivables with
respect to the general merchandise and property development unit.

In fiscal 2002, total trading transactions of the Consumer Products &
Services Segment declined ¥18 billion, from fiscal 2001, to ¥2,174 billion,
primarily because of lower import transactions in foods, general merchandise,
and textiles as well as declines in domestic transactions. Revenuegross
trading profit amounted to ¥108.6 billion in fiscal 2002, including
contributions especially from foods, general merchandise, textiles, and certain
other categories. Net income rose ¥8.9 billion, to ¥2.8 billion in fiscal 2002,
from a loss of ¥6.2 billion in fiscal 2001, despite weak results from Sanyu
Koami Co., Ltd., and losses reported in connection with expenses for the early
retirement program and an increase in the provision for doubtful receivables,
as the divestiture of domestic subsidiaries in the previous fiscal year had a
positive effect on profitability in fiscal 2002.

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Domestic Branches and Offices Segment

Total trading transactions of the Domestic Branches and Offices Segment in
fiscal 2003 declined ¥121 billion, or 6.4% over fiscal 2002, to ¥1,784 billion,
because of lower domestic economic demand and the transfer of the building
materials business to an associated company. Revenuegross trading profit
declined ¥6.1 billion, to ¥41.4 billion, because of the decrease in the number
of domestic transactions. Operating income declined ¥2.1 billion, to ¥6.8
billion, despite a decrease in SG&A expenses, because of decreases in the
number of domestic transactions and revenuegross trading profit. However, net income rose
¥0.2 billion, to ¥7.0 billion, because of a gain on securities contributed to
an employee retirement benefit trust of the Nagoya Office.

In fiscal 2002, total trading transactions declined ¥138 billion, or 6.8%
compared with fiscal 2001, to ¥1,906 billion, mainly because of lower total
trading transactions reported by the Osaka Office and the Nagoya Office, which
decreased ¥47.2 billion and ¥19.9 billion, respectively. Net income rose ¥0.6
billion, or 10.1%, to ¥6.8 billion.

Americas Segment

Total trading transactions of the Americas Segment in fiscal 2003 rose ¥88
billion, or 7.5% from fiscal 2002, to ¥1,272 billion. This increase was mainly
driven by an increase in total trading transactions of an energy trading
subsidiary amounting to ¥97.2 billion due to higher oil prices in the United
States. In addition, our steel-related subsidiary experienced an increase in
total trading transactions amounting to ¥9.3 billion due mainly to higher steel
material prices caused by the credit impairment of steel mills in the United
States, and the start-up of a new Brazilian slab business line. Despite the
contribution of our energy trading subsidiary, Westport Petroleum Inc.,
revenuegross trading profit decreased ¥0.5 billion, to ¥44.6 billion in
fiscal 2003, as a result of a weaker performance in the machinery division due
primarily to decreased sales of machine tools. Operating income decreased ¥2.3
billion, to ¥9.5 billion, due to an increase in the provisions for doubtful
receivables associated with aircraft leases, which were impaired because of an
overall airline industry decline after September 11, 2001, and due to an
increase in SG&A expenses, mainly personnel expenditures, reflecting the
increase in expenses associated with U.S. subsidiaries increasing business
activities. Net income declined ¥3.2 billion, or 49.1%, to ¥3.3 billion, owing
to losses on the write-down of securities, mainly in IT-related venture capital
investments, and the withdrawal from chemical-related businesses in the United
States.

In fiscal 2002, total trading transactions of this segment declined ¥9
billion, or 0.8% from fiscal 2001, to ¥1,184 billion, due mainly to decline in
chemical and non-ferrous metal transactions of U.S. subsidiaries.
Revenuegross trading profit amounted to ¥45.1 billion in fiscal 2002, with
principal contributions from the chemical, iron and steel, and machinery
transactions of the U.S. subsidiary. Net income declined ¥3.5 billion, or
35.3%, to ¥6.5 billion in fiscal 2002, mainly due to the recognition of large
capital gains from venture capital and IT-related investments in the United
States in fiscal 2001.

Europe Segment

Total trading transactions in the Europe Segment in fiscal 2003 declined
¥15 billion, or 2.6% from fiscal 2002, to ¥579 billion, owing to a decrease in
the volume of trade in non-ferrous metals, including aluminum by Mitsui & Co.
UK PLC, a U.K. based subsidiary, which offset a region-wide increase in
chemicals business, especially organic chemicals and synthetic resin.
Revenuegross trading profit rose ¥1.8 billion, to ¥22.5 billion in fiscal
2003, mainly attributable to the growth in the volume of chemical related
business and also to the recovery in sales prices in the retail market of
automobile related transactions. Operating income remained the same as in the
previous year, at ¥4.2 billion, because of an increase in SG&A expenses,
including IT-related expenses. Net income decreased ¥1.1 billion, to ¥2.8
billion in fiscal 2003, which is attributable to the decline in the yield for
investment in corporate bonds.

In fiscal 2002, total trading transactions in the Europe Segment declined
¥146 billion, or 19.7% from fiscal 2001, to ¥595 billion, primarily because of
lower number of non-ferrous metal transactions by Mitsui & Co. UK PLC.
Revenuegross trading profit was ¥20.6 billion, and net income rose ¥35
million, or 0.9%, to ¥3.9 billion in fiscal 2002, because of strong
performances by Mitsui & Co. UK PLC and Mitsui & Co.
Deutschland GmbH, our German subsidiary.

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Other Overseas Areas Segment

Total trading transactions in the Other Overseas Areas Segment in fiscal
2003 declined ¥83 billion, or 5.9% from fiscal 2002, to ¥1,307 billion, owing
principally to lower non-ferrous metal transactions of Mitsui & Co. (Australia)
Ltd., our Australian subsidiary. Revenuegross trading profit rose ¥1.6
billion, to ¥23.5 billion in fiscal 2003, principally attributable to revenue
increases of Mitsui & Co. (Hong Kong) Ltd. and Mitsui & Co., (Thailand) Ltd.,
our Hong Kong and Thai subsidiaries, respectively, because of growth in total
trading transactions of steel products and chemicals resulting from expanding
economies in China and other Asian countries. This segment reported an
operating loss of ¥1.9 billion, representing an improvement of 58.9%, or ¥2.8
billion from a loss of ¥4.7 billion in fiscal 2002, due to decreases in
provisions for doubtful receivables of Mitsui & Co. (Hong Kong) Ltd. and Mitsui
& Co. (Australia) Ltd . In the meantime, because of a decrease in dividend
income of Mitsui & Co. (Hong Kong) Ltd., increase in net income was limited to
¥0.9 billion, or 17.5%, to ¥6.2 billion in fiscal 2003.

In fiscal 2002, total trading transactions of the segment rose ¥157
billion, or 12.7% over fiscal 2001, to ¥1,389 billion, owing to higher energy
and metals transactions by Mitsui & Co. (Australia) Ltd. Revenuegross trading
profit amounted to ¥21.9 billion in fiscal 2002, and net income rose ¥0.4
billion, or 8.0%, to ¥5.3 billion, principally because of increased dividends
received by Mitsui & Co. (Hong Kong) Ltd.

Inflation

Management believes that inflation did not have a significant effect on
the reported results of operations.

Critical Accounting Policies

Accounting policies are considered to be critical if it is important to
our financial condition and results of operations and requires managements
subjective or significant judgment, often as a result of estimates about the
effect of matters that are inherently uncertain. For a summary of our
significant accounting policies, including the critical accounting policies
discussed below, please see Note 2, Basis of Financial Statements and Summary
of Significant Accounting Policies to the consolidated financial statements.

The preparation of the consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. On
an ongoing basis, we evaluate the estimates that are based on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances. The results of these evaluations form the basis for
making judgments about the carrying values of assets and liabilities and the
reported amounts of revenues and expenses that are not readily apparent from
other sources. Actual results may differ from those estimates under different
assumptions. The following accounting policies require significant management
judgments and estimates.

Impairment of Long-Lived Assets

Our long-lived assets and certain identifiable intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. This review is
performed using estimates of future cash flows. If the carrying value of the
asset is considered impaired, an impairment loss is recorded for the amount by
which the carrying value of the asset exceeds its fair value. In developing
cash flow projections used in the impairment analysis, we assume, for example,
that the most recent selling prices of the real estate in the surrounding areas
will reasonably continue in the future, and the sales prices of the products
from the impaired facilities and equipment will remain consistent with current
year sales. Management believes that the estimates of future cash flows and
fair value are reasonable; however, changes in estimates resulting in lower
future cash flows and fair value due to unforeseen changes in business
assumptions could negatively affect the valuations of those long-lived assets.

Allowance for Doubtful Receivables

An allowance for doubtful receivables is recognized as amounts judged to
be adequate based primarily on our credit loss experience and an evaluation of
potential losses on the receivables, considering various factors, including
current economic conditions. In addition, an impairment loss for a specific
loan deemed to be impaired is measured based on the present value of expected
cash flows discounted at the loans original effective interest rate or the
fair value of the collateral if the loan is collateral dependent. Management
believes that the estimates of future cash flows and fair value are reasonable;
however, changes in estimates resulting in lower future cash flows and fair
value due to unforeseen changes in business assumptions could negatively affect
the valuations of those loans.

Impairment of Investment Securities

An impairment of investment securities is charged to earnings when a
decline in fair value below the cost is other than temporary. Management
principally considers that an other-than-temporary impairment has occurred if
the decline in fair value is 50% or more of the cost. If the decline is less
than 50%, various factorssuch as the extent to which the cost exceeds the
market value, the duration of the market decline, and the financial health of
the issuerare reviewed to judge whether it is temporary or not.

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Management believes that the criteria for evaluating the significance of
the decline in fair value are reasonable; however, changes in the market or
circumstances of each individual investment due to unforeseen changes in
economic and business assumptions could affect the valuations of the
investments.

Pension Benefit Costs

Employee pension benefit costs and obligations are dependent on
assumptions, including discount rates, retirement rates, and mortality rates,
which are based on the current statistical data, as well as the expected
long-term rate of return on plan assets and other factors. In accordance with
U.S. GAAP, the difference between actual results and the assumptions is
accumulated and amortized over future periods and, therefore, generally affects
the recognized expense and the recorded obligations in future periods.
Management believes that the assumptions used are appropriate; however,
differences in actual experience or changes in assumptions may affect our
pension future expenses and obligations.

To reflect declining current market interest rates in Japan,
Mitsui reduced the discount rate for its pension plans from 3% to 2.25% as of
March 31, 2003. This change resulted in increasing its projected benefit
obligation (PBO) as of March 31, 2003 and its net periodic pension costs
(NPPC) for the year ending March 31, 2004 (fiscal 2004) by approximately
¥26.0 billion and ¥4.2 billion, respectively.

The following table illustrates the sensitivity to changes in certain
assumptions for Mitsuis pension plans:

|                                                                            |  |                 |  |                     |  |  |  | 
|--------------------------------------------------------------------------- |  | --------------- |  | ------------------- |  |  |  | 
|                                                                            |  | Impact on NPPC  |  | Impact on PBO as of
|Change in Assumption                                                        |  | for fiscal 2004 |  | March 31, 2003     
|                                                                            |  |                 |  |                    
|50 basis point decrease in discount rate                                    |  | +¥3.2 billion   |  | +¥19.6 billion     
|50 basis point increase in discount rate                                    |  | -¥2.9 billion   |  | -¥17.7 billion     
|50 basis point decrease in expected
long-term rate of return on plan assets |  | +¥0.7 billion   |  |                     |  | 
|50 basis point increase in expected
long-term rate of return on plan assets |  | -¥0.7 billion   |  |                     |  | 

These changes in assumptions would have no impact on Mitsuis funding
requirements.

Also Mitsui recorded costs for termination benefit pursuant to
certain supplement payments based on pre-retirement compensation levels in
connection with Early Retirement Support Plan. The
provision is based on
comprehensive study of expected benefit payment.

Tax Asset Valuation

The valuation allowance for deferred tax assets is calculated based on all
available evidence, both positive and negative, including all currently
available information on future years and each companys ability to generate
sufficient taxable income prior to the expiration of loss carryforwards.
Although realization is not assured, management believes it is more likely than
not that all of the deferred tax assets, less the valuation allowance, will be
realized. However, the amount of realizable net deferred tax assets could
change in the near term if estimates of future taxable income during the
carryforward period are changed or if statutory tax rate are changed.

New Accounting Standards

Business Combinations

On April 1, 2002, we fully adopted Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations. SFAS No. 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. SFAS No. 141 also specifies the types of
acquired intangible assets that are required to be recognized and reported
separately from goodwill. Any excess of fair value of acquired net assets over
cost arising from a business combination is required to be recognized as an
extraordinary gain as described in APB Opinion No. 30, Reporting the Results
of OperationsReporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.

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The cumulative effect of a change in accounting principles on the
write-off of any unamortized deferred credit as of April 1, 2002 was immaterial.

Goodwill and Other Intangible Assets

On April 1, 2002, we fully adopted SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill no longer be amortized,
but instead tested for impairment annually or more frequently if impairment
indicators arise. SFAS No. 142 also requires identifiable intangible assets
with a finite useful life be amortized over their respective estimated useful
lives and reviewed for impairment in accordance with SFAS No. 144. Any
identifiable intangible asset determined to have an indefinite useful life is
not amortized, but instead tested for impairment in accordance with SFAS No.
142 until its useful life is determined to be no longer indefinite.

We completed the transitional impairment test for goodwill as of April 1,
2002 in accordance with SFAS No. 142 and determined that the fair value of the
reporting units including goodwill was in excess of their carrying amount.

We also completed the transitional reassessment of the useful lives of
identifiable intangible assets as of April 1, 2002 and the transitional
impairment test for intangible assets not subject to amortization and
determined that they are not impaired.

Asset Retirement Obligations

In June 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. When the liability
is initially recorded, the entity capitalizes the related cost by increasing
the carrying amount of the long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset.

SFAS No. 143 is effective for fiscal years beginning after June 15, 2002,
with earlier application encouraged. The effect of adoption of this statement
on our results of operations was ¥2.3 billion.

Impairment or Disposal of Long-Lived Assets

On April 1, 2002, we adopted SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 replaces SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed of and those provisions of APB Opinion No. 30, related to the
disposal of segments of a business. The statement also creates one accounting
model, based on the framework established in SFAS No. 121, to be applied to all
long-lived assets, including discontinued operations.

SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections"

In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishment of Debt, SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers, and SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements and amends
SFAS No. 13, Accounting for Leases, to require that certain lease
modifications with economic effects similar to sale-leaseback transactions be
accounted for in the same manner as sale-leaseback transactions.

We adopted the provisions of SFAS No. 145 related to SFAS No. 13 for
transactions occurring after May 15, 2002. All other provisions of SFAS No. 145
are effective for fiscal years beginning after May 15, 2002. The effect of
adoption of this statement on our financial position and results of operations
was immaterial.

Cost Associated with Exit or Disposal Activities

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which is effective for exit or
disposal activities initiated after December 31, 2002. SFAS No. 146 nullifies
EITF No. 94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (Including Certain Costs Incurred in
Restructuring). SFAS No. 146 requires that a liability
for an exit cost associated with an exit or disposal activity be
recognized when the liability is incurred, whereas EITF No. 94-3 required
recognition of a liability for an exit cost when an entity committed to an exit
plan.

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The effect of adoption of this statement on our financial position and
results of operations was immaterial.

Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Othersan Interpretation of FASB
Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34. FIN
No. 45 elaborates on the disclosures to be made by a guarantor in its interim
and annual financial statements about its obligations under certain guarantees
that it has issued, and clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. This interpretation also incorporates,
without change, the guidance in FIN No. 34, Disclosure of Indirect Guarantees
of Indebtedness of Others, which is being superseded.

The initial recognition and initial measurement provisions of FIN No. 45
are applicable to guarantees issued or modified after December 31, 2002. The
disclosure requirements in this interpretation are effective for financial
statements of interim or annual periods ended after December 15, 2002. The
effect of adoption of this interpretation on our financial position and results
of operations was immaterial. The future effect will depend upon whether we
enter into or modify any material guarantee arrangements.

Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities

In January 2003, the FASB Emerging Issues Task Force reached a final
consensus on Issue No. 03-2 (EITF No. 03-2), Accounting for the Transfer to
the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities.

EITF No. 03-2 addresses accounting for a transfer to the Japanese
government of a substitutional portion of an Employee Pension Fund Plan
(EPF), which is a defined benefit pension plan established under the Welfare
Pension Insurance Law. EITF No. 03-2 requires employers to account for the
entire separation process of a substitutional portion from an entire plan
(including a corporate portion) upon completion of the transfer to the
government of the substitutional portion of the benefit obligation and related
plan assets as the culmination of a series of steps in a single settlement
transaction. Under this approach, the difference between the fair value of the
obligation and the assets required to be transferred to the government should
be accounted for and separately disclosed as a subsidy.

EPF of Mitsui was approved by the Japanese government for an exemption
from the obligation to pay benefits for future employee service related to the
substitutional portion on October 1, 2002. In addition, the EPF will submit
another application to separate the remaining substitutional portion related to
past service by its employees. The EPF is expected to receive final approval
from the government for its second application during the year ending March 31,
2004. Upon receipt of the final approval, the EPF will be relieved of all
obligations pertaining to the substitutional portion by transferring the
benefit obligation and the related government-specified portion of the plan
assets, which will be computed by the government. The related gain or loss,
which will be recorded during the year ending March 31, 2004 based on
completion of the entire process, has not yet been determined because the
amount of the benefit obligation and the related plan assets to be transferred
to the government may change significantly.

Consolidation of Variable Interest Entities

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entitiesan Interpretation of ARB No. 51. This interpretation
addresses consolidation by a primary beneficiary of a variable interest entity
(VIE). A VIE is defined as an entity (1) that has an equity investment at
risk that is not sufficient to permit the entity to finance its activities
without additional subordinated financial support from other parties, or (2)
where equity investors do not have the ability to make significant decisions
about the entitys activities through voting or similar rights, or the
obligation to absorb the entitys expected losses, or the right to receive the
entitys expected residual returns.

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FIN No. 46 is effective for VIEs created after January 31, 2003, and for
VIEs in which an enterprise obtains an interest after that date. For VIEs in
which an enterprise holds a variable interest that it acquired before February
1, 2003, FIN No. 46 is effective for the first interim or annual reporting
period beginning after June 15, 2003.

We are evaluating the effect of the adoption of FIN No. 46 on our
financial position and results of operations. We have identified a VIE created
prior to February 1, 2003, which may be consolidated upon the adoption of FIN
No. 46, as discussed below.

At March 31, 2003, as lessees in operating lease contracts, certain
subsidiaries have issued residual value guarantees of leased vessels, and on
the date of expiration of operating lease contracts, such subsidiaries will
either purchase the leased assets at a fixed price or be responsible for making
up any shortfall between an actual sales price and the guaranteed value. The
lessor of the leased vessels is a VIE created prior to February 1, 2003, and it
is reasonably possible that we will consolidate the lessor when FIN No. 46
becomes effective. Total assets of the lessor as of March 31, 2003, were
¥14,762 million and the maximum exposure to a loss as a result of our
involvement with the lessor was ¥6,905 million. The amount of maximum exposure
to a loss represents a loss that we could incur from the variability in value
of the leased vessels or from other causes without consideration of possible
recoveries through insurance and the like. In addition, the amount bears no
relation to the loss anticipated to be incurred from our involvement with the
lessor and is considered to exceed greatly the anticipated loss.

Derivative Instruments and Hedging Activities

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133.

SFAS No. 149 is effective for contracts entered into or modified after
June 30, 2003 and for hedging relationships designated after June 30, 2003. The
effect of adoption of this statement on our financial position and results of
operations is not currently known and cannot be reasonably estimated until
further analysis is completed.

Certain Financial Instruments with Characteristics of both Liabilities and
Equity

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
SFAS No. 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. In accordance with this statement, an issuer is required to classify
certain financial instruments as liabilities, such as a financial instrument
issued in the form of shares that is mandatorily redeemable.

SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The effect of adoption of
this statement on our financial position and results of operations is not
currently known and cannot be reasonably estimated until further analysis is
completed.




B. Liquidity and Capital Resources.

Cash and cash equivalents were ¥660 billion, ¥608 billion, and ¥705
billion at March 31, 2003, 2002, and 2001, respectively. In addition to cash
and cash equivalents, we had time deposits and marketable securities of ¥38
billion and ¥99 billion, ¥78 billion and ¥103 billion, and ¥59 billion and ¥45
billion at March 31, 2003, 2002, and 2001, respectively. Our basic policy for
fund-raising activities is to secure stable, medium- to long-term funds and
liquidity for our operations.

During fiscal 2003, our principal strategies were to obtain long-term
borrowings from financial institutions, to issue long-term corporate bonds, and
to make use of other sources of financing available in the Japanese financial
markets, where interest rates were low and sufficient liquidity was available.
See Note 11, Short-Term Borrowings and Long-Term Debt, to the consolidated
financial statements for the interest rate structure and the maturity profile
of debt.

To secure sufficient liquidity, Mitsui maintains a ¥200 billion bond
shelf-registration statement and a ¥2,400 billion commercial paper (CP)
program in Japan. Mitsui & Co. (U.S.A.), Inc., has arranged a U.S.$1.5 billion
U.S. domestic CP program. Similarly, Mitsui & Co. (U.S.A.), Inc., Mitsui & Co.
International (Europe) B.V., Mitsui & Co., Asia Investment Ltd., Mitsui & Co.
UK PLC, and Mitsui & Co., Ltd., have arranged a joint Euro medium-term note
(MTN) program of U.S.$5 billion. In addition to these funding sources, in
some overseas markets, we have made arrangements for CP programs.

We employ certain derivative financial instruments to manage financial
exposure. The principal derivative financial instruments employed by us to
manage interest rate risk exposures are interest rate swap agreements, a large
part of which is used for the fair value hedging of fixed-rate interest-bearing
debt. The floating interest rates for interest rate swap agreements are
generally based on the three-month or six-month LIBOR (London Interbank Offered
Rate). Currency swap agreements are also used to manage the risks from changes
in foreign exchange rates. Foreign currency debts are principally denominated
in U.S. dollars. See Note 19, Derivative instruments and Hedging Activities,
to the consolidated financial statements for further description of our risk
management policies.

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We also had approximately ¥507.7 billion in unused lines of credit
available for short-term financing outside Japan as of March 31, 2003.

Moodys Investors Service, Inc., (Moodys), Standard & Poors Rating
Services (S&P) and Rating & Investment Information, Inc., (R&I) rate either certain of our
commercial paper (short-term) or certain of our senior unsecured long-term
debt (long-term) or both. Our ratings as of March 31, 2003 were as follows:

|                |  |         |     |     |  |     |      |  |  |  |      | 
|--------------- |  | ------- | --- | --- |  | --- | ---- |  |  |  | ---- | 
|                |  | Moodys |     | S&P |  | R&I
|                |  |         |     |     |  |    
|Short-term debt |  |         | P-2 |     |  |     | A-2  |  |  |  | a-1+ | 
|Long-term debt  |  |         | A3  |     |  |     | n.a. |  |  |  | AA-  | 

Debt ratings are an assessment by the rating agencies of the credit risk
associated with us and are based on information provided by us or other sources
that the rating agencies consider reliable. Lower ratings generally result in
higher borrowing costs and reduced access to capital markets.

Debt ratings are not a recommendation to buy, sell or hold securities.
Ratings may be subject to revision or withdrawal by the rating agencies at any
time. As rating agencies may have different criteria in evaluating the risks
associated with a company, you should evaluate each rating independently of
other ratings.

At March 31, 2003, we have given guarantees for obligations of various
customers in the ordinary course of business. Such guarantees are not expected
to require substantial use of our capital resources. We have not had any
material credit requirements resulting from these activities for the past three
years.

We had working capital of ¥806.4 billion, ¥797.1 billion, and ¥984.5
billion on March 31, 2003, 2002, and 2001, respectively. The ratio of current
assets to current liabilities was 1.27, 1.27, and 1.33 at March 31, 2003, 2002,
and 2001, respectively.

Management believes that we maintain sufficient liquidity to satisfy our
working capital and debt-service requirements for the foreseeable future
through existing cash and time deposits and the sale of certain assets in
parallel with outside borrowings from financial institutions as well as the
issuance of bonds and notes. We expect sizable capital expenditures for
investments in natural resource projects in fiscal 2004, specifically,
Companhia Vale do Rio Doce (CVRD) in Brazil and Sakhalin II in Russia, which
will not result in a material change in our working capital, and a required
fund for these investments will be managed under our current funding policy
mentioned above. Management also believes that our liquidity and capital
resources provide adequate flexibility to accelerate or retard the pace of
planned capital spending programs as appropriate to address the future business
environment.

There are no material contractual or legal restrictions on the ability of
our subsidiaries to transfer funds to us in the form of dividends (assuming
that they have sufficient distributable net assets or retained earnings as
provided under the local law of the relevant jurisdiction), loans or advances.
There are no material economic restrictions on payments of dividends, loans or
advances to us by our subsidiaries other than general withholding or other
taxes calculated at rates determined by the local tax law of the relevant
jurisdiction.

Off-Balance Sheet Arrangements

Our fund-raising activities are accomplished through long-term borrowings
from financial institutions, the issuance of corporate bonds, and CP. We do not
use off-balance sheet arrangements, such as asset securitization, except for an
immaterial volume of sales of trade receivables held by Mitsui & Co. (U.S.A.),
Inc. and Mitsui & Co. (Canada) Ltd. As lessees in operating lease contracts,
certain subsidiaries have issued residual value guarantees of the leased
aircraft and vessels, and on the date of expiration of such operating lease
contracts, such subsidiaries will either purchase the leased assets at a fixed
price or be responsible for making up any shortfall between an actual sales
price and the guaranteed value. The lessor of the leased vessels is a variable
interest entity. See Note 2, Basis of Financial Statements and Summary of
Significant Accounting Policies and Note 18, Commitments and Contingent
Liabilities to the consolidated financial statements.

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Contractual Obligations and Commercial Commitments

Contractual Obligations

The following table provides our contractual obligations as of March 31,
2003.

|                            |  |                 |       |            |  |                       |     |            |  |            |     |  |  |   |     |       |  |   |       | 
|--------------------------- |  | --------------- | ----- | ---------- |  | --------------------- | --- | ---------- |  | ---------- | --- |  |  | - | --- | ----- |  | - | ----- | 
|                            |  | Billions of Yen
|                            |  |                
|                            |  |                 |       |            |  | Payment Due by Period
|                            |  |                 |       |            |  |                      
|                            |  | Balance as of   |       |            |  |                       |     |            |  |            |     |  |  |   |     | After
|Contractual Obligations     |  | March 31, 2003  |       | March 2004 |  | March 2006            |     | March 2008 |  | March 2008
|                            |  |                 |       |            |  |                       |     |            |  |           
|Long-Term Debt              |  | ¥               | 2,900 |            |  | ¥                     | 486 |            |  | ¥          | 781 |  |  | ¥ | 565 |       |  | ¥ | 1,068 | 
|Operating Leases            |  |                 | 118   |            |  |                       | 24  |            |  |            | 37  |  |  |   | 25  |       |  |   | 32    | 
|Other Long-Term Obligations |  |                 | 1,191 |            |  |                       | 520 |            |  |            | 370 |  |  |   | 83  |       |  |   | 218   | 

The figures for Long-Term Debt include bank borrowings, bonds, and
long-term trade payables. Operating Leases represents the schedule of
payments for future minimum rental payments. Minimum rental payments have not
been reduced by minimum sublease rentals of ¥86 billion due in the future under
noncancelable subleases. Other Long-Term Obligations represents the schedule
of payments for long-term purchase obligations, net of advance payments of ¥31
billion made to suppliers as of March 31, 2003. The purchased items are
principally machinery and equipment, metals, ships, oil products, and chemical
materials, either at fixed prices or at basic purchase prices adjustable to the
market. In general, our customers, primarily large Japanese industrial
companies, are also parties to the contracts or by separate agreements are
committed to purchase the items from us.

For additional information regarding long-term debt, operating leases, and
other long-term obligations, see Note 11, Short-Term Borrowings and Long-Term
Debt, Note 7, Leases, and Note 18, Commitments and Contingent Liabilities,
to our consolidated financial statements, respectively.

Commitments

The following table sets forth our other commercial commitments as of
March 31, 2003.

|                                 |  |                 |     |            |  |                                            |    |            |  |            |    |  |  |   |    |       |  |   |     | 
|-------------------------------- |  | --------------- | --- | ---------- |  | ------------------------------------------ | -- | ---------- |  | ---------- | -- |  |  | - | -- | ----- |  | - | --- | 
|                                 |  | Billions of Yen
|                                 |  |                
|                                 |  |                 |     |            |  | Amount of Commitment Expiration per Period
|                                 |  |                 |     |            |  |                                           
|                                 |  | Balance as of   |     |            |  |                                            |    |            |  |            |    |  |  |   |    | After
|Other Commercial Commitments     |  | March 31, 2003  |     | March 2004 |  | March 2006                                 |    | March 2008 |  | March 2008
|                                 |  |                 |     |            |  |                                            |    |            |  |           
|Financial Guarantees             |  | ¥               | 250 |            |  | ¥                                          | 42 |            |  | ¥          | 38 |  |  | ¥ | 38 |       |  | ¥ | 132 | 
|Performance Guarantees           |  |                 | 25  |            |  |                                            | 2  |            |  |            | 23 |  |  |   |   |       |  |   |    | 
|Market Value Guarantees          |  |                 | 63  |            |  |                                            | 45 |            |  |            |   |  |  |   | 18 |       |  |   |    | 
|Commitments on Deferred Payments |  |                 | 4   |            |  |                                            | 4  |            |  |            |   |  |  |   |   |       |  |   |    | 

In the furtherance of our trading activities, it is a customary practice
for us to guarantee, severally or jointly with others, indebtedness of certain
of our customers and suppliers and of certain associated companies as well as
to guarantee the performance of contracts by such entities.

We also had financing commitments principally for financing on a deferred
payments basis, the cost of equipment to be purchased by our customers. This
information is provided under the heading Long-term purchase contracts and
financing commitments in Note 18, Commitments and Contingent Liabilities, to
the consolidated financial statements.

Non-exchange Traded Commodity Contracts at Fair Value

We perform trading activities of commodities that are listed on the
terminal (futures) markets. Trading consists of derivative instruments traded
in the commodity futures markets, as well as non-exchange traded commodity
contracts, including commodity derivatives. Non-exchange traded commodity
contracts are recorded at fair value based on prices actively quoted in the
terminal (futures) market for such commodities as precious metals. Some
non-exchange traded commodity contracts that are recorded at fair value based
on the prices provided by other external sources do exist, such as non-exchange
traded derivatives of crude oil and oil products, but their effect on earnings
and financial position is immaterial.

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Transactions with Related Parties

When conducting our business operations involving a broad range of
products throughout the world, we have formed alliances with leading partner
companies in Japan and overseas, including manufacturers and companies in the
raw materials resources fields, such as energy and ferrous materials. In
addition to investing in associated companies where we are a minority
shareholder, we conduct selling and purchasing transactions of various products
on a continuing basis with such associated companies.

Our principal associated companies include Japan Australia LNG (MIMI) Pty.
Ltd. (50.00%), Mitsui Leasing & Development, Ltd. (44.67%), Nihon Unisys, Ltd.
(27.85%), Sakhalin Energy Investment Company Ltd. (25.00%), NextCom K.K.
(33.25%), among others.

Prices applied in transactions with associated companies are computed in
the same way that such prices would be calculated in transactions with
unrelated third parties. In addition, when associated companies are
counterparties in transactions with us and we conduct such business under
long-term procurement and/or sales contracts, in general, we conclude a
corresponding sales contract with the purchasers (unrelated parties) of goods
procured by us and/or with suppliers (unrelated parties) of the goods we sell
to associated companies. In addition, as of March 31, 2003, we were the
guarantor for ¥79.7 billion in funds borrowed and other obligations of
associated companies. Regarding any other commitments related to transactions
with associated companies, we do not normally assume risk in excess of its
percentage of share ownership in an associated company.

Assets, Liabilities, and Shareholders Equity

Total assets decreased ¥128 billion, to ¥6,541 billion. Current assets
increased ¥48 billion, to ¥3,832 billion, due mainly to increases in trade
receivables of foreign subsidiaries primarily caused by a rise in the price of
oil. Total investments and non-current receivables decreased ¥253 billion, to
¥1,885 billion, with approximately ¥100 billion out of the decreased amount
resulting from declines in the current value of marketable securities held by
Mitsui, reflecting weak stock prices.

Current liabilities increased ¥39 billion, to ¥3,025 billion, primarily
because of an increase in short-term loans, which were partially offset by a
decrease in trade payables because of falling domestic transactions. Long-term
debt decreased ¥119 billion, to ¥2,500 billion, with approximately ¥80 billion
of the decreased amount resulting from the decrease in long-term loans of
Mitsui.

Shareholders equity decreased ¥53 billion, to ¥862 billion, primarily
because of a decline in net unrealized holding gains on available-for-sale
securities and a decrease of foreign currency translation adjustments resulting
from the appreciation of the yen.

Cash Flows

The following table provides our cash flow information for fiscal 2003,
fiscal 2002, and fiscal 2001.

|                                                             |  |                 |         |      |  |      |          |   |  |   |          |  
|------------------------------------------------------------ |  | --------------- | ------- | ---- |  | ---- | -------- | - |  | - | -------- | -
|                                                             |  | Millions of Yen
|                                                             |  |                
|                                                             |  | 2003            |         | 2002 |  | 2001
|                                                             |  |                 |         |      |  |     
|Net cash provided by operating activities                    |  | ¥               | 52,148  |      |  | ¥    | 133,712  |   |  | ¥ | 95,573   |  
|Net cash (used in) provided by investing activities          |  |                 | (13,244 | )    |  |      | (108,212 | ) |  |   | 45,621   |  
|Net cash provided by (used in) financing activities          |  |                 | 17,824  |      |  |      | (126,076 | ) |  |   | (190,915 | )
|Effect of exchange rate changes on cash and
cash equivalents |  |                 | (4,499  | )    |  |      | 9,433    |   |  |   | 22,927   |  
|Effect of change in fiscal year-end of certain subsidiaries  |  |                 |        |      |  |      | (6,201   | ) |  |   |         |  
|                                                             |  |                 |         |      |  |     
|Net increase (decrease) in cash and cash equivalents         |  |                 | 52,229  |      |  |      | (97,344  | ) |  |   | (26,794  | )
|Cash and cash equivalents at beginning of year               |  |                 | 607,987 |      |  |      | 705,331  |   |  |   | 732,125  |  
|Cash and cash equivalents at end of year                     |  | ¥               | 660,216 |      |  | ¥    | 607,987  |   |  | ¥ | 705,331  |  
|                                                             |  |                 |         |      |  |     

Our cash and cash equivalents as of the end of fiscal 2003 were ¥660.2
billion, representing an increase of ¥52.2 billion, or 8.6%, from the end of
fiscal 2002.

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Net cash provided by operating activities during fiscal 2003 was ¥52.1
billion, compared to ¥133.7 billion for fiscal 2002. One reason for the
decrease in net cash inflows from operating activities was the repayment of
trade payables in advance during fiscal 2003. In order to respond to the cash
needs of our various suppliers, our domestic financing subsidiary purchased
trade receivables (Mitsuis trade payables) held by suppliers with appropriate
discounts. This caused early payments of our trade payables, which, in turn,
reduced net cash inflows from operating activities. An increase in trade
receivables and inventories also contributed to the
decrease in net cash inflows from operating activities compared with the
previous year.

Net cash used in investing activities during fiscal 2003 was ¥13.2
billion, which included expenditures for investments in the resource business
(e.g., iron and steel raw materials, oil, and gas) and information business,
and proceeds from sales of leased property, compared to ¥108.2 billion for
fiscal 2002. The primary factors related to the ¥95.0 billion decrease from
fiscal 2002 were a decrease in time deposits and an increase of proceeds from
maturities of debt securities classified as available-for-sale securities.

Net cash provided by financing activities during fiscal 2003 was ¥17.8
billion, compared to ¥126.1 billion in cash outflows for fiscal 2002. During
fiscal 2003, the borrowings in Mitsui decreased, while the borrowings of our
domestic financing subsidiary increased. The ¥143.9 billion change from fiscal
2002 was due primarily to a relatively large cash out flows in fiscal 2002
related to repayment of CP and certain borrowings.

In addition, the effect of exchange rate changes decreased cash and cash
equivalents by ¥4.5 billion in fiscal 2003.




C. Research and Development, Patents and Licenses, etc.

Research and development expenses for the year ended March 31, 2003 were
¥3,415 million. Research and development activities were mainly related to
nanotechnology and biotechnology in the Chemical Segment and information
technology in the Machinery, Electronics & Information Segment amounting to
¥1,968 million, ¥1,196 million, respectively.

In the nanotechnology area, we have been performing research and
development activities for production techniques and the utilization of carbon
nanotubes, with technology uses expected to be developed in the future. In
October 2002, we completed the construction of a production plant and started
producing carbon nanotubes. We have continued to research and explore through
industry-university cooperation, providing the nanotubes to affiliated
university laboratories and companies.

We are also making efforts on the development and experiments of ethanol
separation technology using nanofilteration membranes. Our experimental plant
in Brazil started operations in May 2003. Biomass ethanol is considered as an
additive to automobile gasoline and power plant fuel for environmental
protection in Japan. Production of biomass ethanol using nanofilteration
membranes shows a significant increase in energy efficiency which may assist us
in developing products for the Japanese market with lower environmental burden
and cost. We are planning to actively continue research and development in this
field.

In IT areas, BSI Co., Ltd. (a wholly owned subsidiary), developed
packaging systems and carried out experiments for technologies for the mobile
phone business, making use of know-how fostered in communications, broadcast
and media, and systems integration businesses. Furthermore, in the web
application development area, BSI is developing web content management systems.

In fiscal 2002, Research and Development expenses were ¥2,949 million
which mainly related to biotechnology and nanotechnology in the Chemical
Segment and IT in the Machinery, Electronics & Information Segment which
amounted to ¥1,521 million, ¥1,149 million, respectively.

In fiscal 2001, Research and Development expenses were ¥1,698 million
which mainly related to biotechnology and nanotechnology in the Chemical
Segment and IT in the Machinery, Electronics & Information Segment which
amounted to ¥998 million, ¥585 million, respectively.

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D. Trend Information.

In fiscal 2003, our consolidated net income decreased by ¥24.2 billion
from fiscal 2002. This 43.8% decrease in net income was mainly due to the
losses associated with impairment of aircraft; write-down of listed equity
securities and impairment on long lived assets under continued asset deflation
in Japan; and discontinued operations.

With respect to the current fiscal year ending March 31, 2004 (fiscal
2004) thus far, we have seen the following:



| |  |  | We are continuously reviewing our company-wide asset and risk
exposure. That is, we are focusing on businesses that generate
higher returns or have increasing growth potential, while reducing
businesses that are not profitable or are under-performing. For
example, we have been increasing our investments with various
projects with Companhia Vale do Rio Doce (the CVRD), a Brazilian
mining company, engaging in businesses involving iron ore, copper,
aluminum, magnesium, steel alloys, steel manufacturing, railways,
marine transport and electric power. We have also been proceeding
with the Sakhalin II project engaging in exploration, development,
and sales of oil and natural gas resources in Russia.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Apart from above, we observe the
following developments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|



| |  |  | The Machinery, Electronics & Information Segment is currently
experiencing increase in transactions involving electric power
generation plants from companies in the infrastructure and energy
sectors partly due to the recovering Asian market and the relative
geopolitical stability in the Middle East.                                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The global market for the Chemical Segment is gradually improving as
both the trading volume and demand for our petroleum and other
chemical related products are increasing in Asia and certain other
parts of the world. Furthermore, we are starting to see the affects of
cost cutting measures and realignment of our operations we implemented
in prior years.
|
| |  |  | Due to the turnaround of Sanyu Koami Co., Ltd., a subsidiary engaged
in wholesale of food, the Foods Unit of the Consumer Products and
Services Segment is beginning to show some improvement.                                                                                                                                                                      

With respect to our results of operations for the first quarter ended June
30, 2003, revenue-gross trading profit and consolidated net income increased
compared to the same period last year mainly due to the improved performances
in the Machinery, Electronics & Information; Chemical; and Metal Products &
Minerals Segments. Specifically, in the Machinery, Electronics & Information
Segment, we experienced higher profitability due to the increase in the number
of transactions involving automobiles, vessels and industrial plants; in the
Chemical Segment, transactions involving ammonia and petroleum related chemical
products increased; and in the Metal Products & Minerals Segment, the
continuing strong performances by overseas subsidiaries engaging in mineral
resource related businesses contributed to the increase in the segments
profitability. The increase in revenue-gross trading profit by such segments
were partially offset by (i) the decrease in the gain on sale of securities and
(ii) the increase in selling, general and administrative expenses such as the
expected increase in pension related expenses. Despite the improvement in
results of operations for the first quarter ended June 30, 2003, compared to
the same period last year, we have some concern that the prolonged slowdown in
the global economy may have a negative impact on our net income for the
remainder of fiscal 2004 as we have experienced in fiscal 2003.

Class Action Antitrust Lawsuit Against Mitsui, Mitsui U.S.A., and Bioproducts

Bioproducts Inc., Mitsui and Mitsui U.S.A. are close to reaching an
agreement to settle the U.S. antitrust lawsuit with the class plaintiffs.
There can be no assurance of the outcome, however, based upon the information
currently available to us, the settlement amount may affect our consolidated
financial position, results of operations, or cash flows. See
Item 8.A. Consolidated Statements and Other Financial
Information  Legal Proceeding  Antitrust Suits Against Mitsui, Mitsui U.S.A., and Bioproducts.

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E. Off-balance Sheet Arrangements.

Not applicable.




F. Tabular Disclosure of Contractual Obligations.

Not applicable.

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Item 6. Directors, Senior Management and Employees.




A.     Directors and Senior Management.

We are managed by a Board of Directors and executive officers. Currently,
we have eleven Directors and forty executive officers including nine of which
are also Directors. In accordance with our Articles of Incorporation and
Regulations of the Board of Directors, each Director was elected for a term of
two years ending at the close of the ordinary general meeting of shareholders
relating to the last closing of accounts. Each executive officer has been
appointed by the Board of Directors.

The Board of Directors is our decision-making body. The Board of Directors
determines our basic guidelines and policies by: establishing our corporate
strategy; reviewing our business plans; and supervising and monitoring the
activities of our executive officers.

The executive officers are responsible for the execution of our corporate
activities. They must follow and enforce the general guidelines and policies
established by the Board of Directors and our Articles of Incorporation.

Our executive officers consist of one President, three Executive Vice
Presidents, five Senior Executive Managing Officers, seven Executive Managing
Officers, seven Senior Managing Officers and seventeen Managing Officers.

The execution by the Directors of their functions are audited by the
Corporate Auditors. Each Corporate Auditor is elected by Mitsuis shareholders.
As of June 2003, we have five Corporate Auditors. In performing their auditing
activities, they act independent of each other while they constitute and act
through the board of Corporate Auditors which the applicable Japanese laws and
regulations require.

Directors, Corporate Auditors and Executive Officers

Our Directors, Corporate Auditors and executive officers as of the end of
June 2003 are:

Directors

|                 |  |                                                                           
|---------------- |  | --------------------------------------------------------------------------
|Name             |  | Position                                                                  
|                 |  |                                                                           
|Nobuo Ohashi     |  | Chairman and Executive Director                                           
|Shoei Utsuda     |  | Executive Director                                                        
|Hiroshi Nagata   |  | Executive Director                                                        
|Kazumi Nakagawa  |  | Executive Director                                                        
|Norio Shoji      |  | Director                                                                  
|Tasuku Kondo     |  | Executive Director                                                        
|Katsuto Momii    |  | Executive Director                                                        
|Tetsuya Matsuoka |  | Executive Director                                                        
|Yasuo Hayashi    |  | Executive Director                                                        
|Masataka Suzuki  |  | Executive Director                                                        
|Akishige Okada   |  | Director (1), Chairman of the Board of Sumitomo Mitsui
Banking Corporation



|(1) |  | Mr. Akishige Okada is an external director as defined in the Commercial Code of Japan. See Item 6.C. Board Practices.
|--- |  | -----------------------------------------------------------------------------------------------------------------------

Corporate Auditors

|                 |  |                                                                     
|---------------- |  | --------------------------------------------------------------------
|Name             |  | Position                                                            
|                 |  |                                                                     
|Makoto Ejima     |  | Corporate Auditor                                                   
|Ko Matsukata     |  | Corporate Auditor (1)                                               
|Minoru Suzuki    |  | Corporate Auditor (1)                                               
|Yasutaka Okamura |  | Corporate Auditor (1), Corporate Auditor of Toyota Motor Corporation
|Hiroshi Matsuura |  | Corporate Auditor                                                   



|(1) |  | Mr. Ko Matsukata, Mr. Minoru Suzuki and Mr. Yasutaka Okamura are external Corporate Auditors as defined in the Law for Special
Exceptions to the Commercial Code concerning Audit, etc. of joint stock corporations. See Item 6.C. Board Practices.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Executive Officers

|                   |  |                                                                                                                 
|------------------ |  | ----------------------------------------------------------------------------------------------------------------
|Name               |  | Position                                                                                                        
|                   |  |                                                                                                                 
|Shoei Utsuda       |  | President and Chief Executive Officer                                                                           
|Hiroshi Nagata     |  | Executive Vice President                                                                                        
|Kazumi Nakagawa    |  | Executive Vice President;
Chief Compliance Officer                                                              
|Norio Shoji        |  | Executive Vice President;
Managing Director, Mitsui & Co. Europe PLC                                            
|Tasuku Kondo       |  | Senior Executive Managing Officer;
Chief Financial Officer                                                      
|Katsuto Momii      |  | Senior Executive Managing Officer                                                                               
|Tetsuya Matsuoka   |  | Senior Executive Managing Officer                                                                               
|Yasuo Hayashi      |  | Senior Executive Managing Officer                                                                               
|Masataka Suzuki    |  | Senior Executive Managing Officer                                                                               
|Toshihiko Sasahira |  | Executive Managing Officer;
General Manager, Osaka Office                                                       
|Gempachiro Aihara  |  | Executive Managing Officer;
General Representative of Mitsui & Co., Ltd. in China                               
|Yushi Nagata       |  | Executive Managing Officer;
Chief Operating Officer, Electric Machinery, Plant & Project Business Unit          
|Jun Moriyama       |  | Executive Managing Officer;
General Manager, Nagoya Office                                                      
|Hiroshi Tada       |  | Executive Managing Officer;
Chairman for the Americas                                                           
|Motokazu Yoshida   |  | Executive Managing Officer;
Chief Operating Officer, Motor Vehicles, Marine & Aerospace Business Unit           
|Yoshiyuki Kagawa   |  | Executive Managing Officer;
Chief Operating Officer, Energy Business Unit                                       
|Yasunori Yokote    |  | Senior Managing Officer;
General Representative of Mitsui & Co., Ltd. in Indonesia                              
|Yoshiyuki Izawa    |  | Senior Managing Officer;
Chief Operating Officer, Information Business Unit                                     
|Osamu Mori         |  | Senior Managing Officer;
General Manager, Finance Division                                                      
|Motohiro Yano      |  | Senior Managing Officer;
Chief Operating Officer, Inorganic Chemicals Unit                                      
|Kazuya Imai        |  | Senior Managing Officer                                                                                         
|Toshihiro Soejima  |  | Senior Managing Officer;
General Manager, Corporate Planning & Strategy Division                                
|Satoru Miura       |  | Senior Managing Officer;
Chief Operating Officer, Iron & Steel Products Unit                                    
|Junichi Masuda     |  | Managing Officer;
Chief Operating Officer, Transportation Logistics Unit                                        
|Masayoshi Sato     |  | Managing Officer;
Chief Operating Officer, Foods Unit                                                           
|Kenji Dewa         |  | Managing Officer;
Chief Operating Officer, Petrochemicals Unit                                                  
|Michio Matsuda     |  | Managing Officer;
Chief Operating Officer, Telecommunications, Transportation & Industrial
Systems Business Unit
|Takeshi Ohyama     |  | Managing Officer;
General Manager, Personnel Division                                                           
|Takao Sunami       |  | Managing Officer;
General Manager, Fukuoka Office                                                               
|Hirokazu Mizukami  |  | Managing Officer;
Chief Operating Officer, Retail Unit                                                          
|Ken Abe            |  | Managing Officer;
Chief Operating Officer, Iron & Steel Raw Materials Unit                                      
|Junichi Matsumoto  |  | Managing Officer;                                                                                               

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|                   |  |                                                                                                
|------------------ |  | -----------------------------------------------------------------------------------------------
|Name               |  | Position                                                                                       
|                   |  |                                                                                                
|                   |  | Deputy General Representative of Mitsui & Co., Ltd. in China                                   
|Kazuo Tasaka       |  | Managing Officer;
Chief Operating Officer, Non-Ferrous Metals Unit                             
|Shunichi Miyazaki  |  | Managing Officer;
General Manager, Consumer Products & Services Administrative Division        
|Shinjiro Ogawa     |  | Managing Officer;
General Manager, Machinery, Electronics & Information Administrative Division
|Toshimasa Furukawa |  | Managing Officer;
President, Mitsui & Co., (Taiwan) Ltd.                                       
|Akio Ikeda         |  | Managing Officer;
Chief Operating Officer, General Merchandise Unit                            
|Hiroshi Ito        |  | Managing Officer;
Chief Operating Officer, Service Business Unit                               
|Jitsuro Terashima  |  | Managing Officer;
President, Mitsui Global Strategic Studies Institute                         
|Motonori Murakami  |  | Managing Officer;
General Manager, General Accounting Division                                 

Set forth below are the date of birth, the current position and the prior
positions of our Directors, Corporate Auditors, and Executive Officers.

Directors

|                 |  |                                                               |  |                                                                                                                                                                             
|---------------- |  | ------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Nobuo Ohashi                                                  | 
|Date of Birth    |  | September 13, 1938                                            |  |                                                                                                                                                                             
|Current Position |  | Chairman and Executive Director (since October 1, 2002)      
|Prior Positions  |  |  1994                                                        |  | A member of Board of Directors (Director, General Manager of Seoul Office)                                                                                                  
|                 |  |  1996                                                        |  | Director, Chief Operating Officer of Foods Unit                                                                                                                             
|                 |  |  1997                                                        |  | Executive Managing Director, Chief Operating Officer of Foods Unit                                                                                                          
|                 |  |  1998                                                        |  | Executive Managing Director, General Manager of Corporate Planning Division                                                                                                 
|                 |  |  1999                                                        |  | Senior Executive Managing Director, General Manager of Corporate Planning Division                                                                                          
|                 |  |  2000                                                        |  | Executive Vice President                                                                                                                                                    
|                 |  |  2002                                                        |  | Executive Vice President, President of Consumer Products & Services Group                                                                                                   
|                 |  |                                                               |  |                                                                                                                                                                             
|Name             |  | Shoei Utsuda                                                  | 
|Date of Birth    |  | February 12, 1943                                             | 
|Current Position |  | President and Chief Executive Officer (since October 1, 2002)
|Prior Positions  |  |  1997                                                        |  | A member of Board of Directors (Director, General Manager of Machinery, Electronics & Information Administrative Division)                                                  
|                 |  |  1998                                                        |  | Director, Chief Operating Officer of Information Business Unit                                                                                                              
|                 |  |  2000                                                        |  | Executive Managing Director, General Manager of Corporate Planning Division                                                                                                 
|                 |  |  2002                                                        |  | Senior Executive Managing Officer, Chief Strategic Officer, Responsible for Administration Division                                                                         
|                 |  |                                                               |  |                                                                                                                                                                             
|Name             |  | Hiroshi Nagata                                                | 
|Date of Birth    |  | February 22, 1941                                             | 
|Current Position |  | Executive Vice President (since April 1, 2002)               
|Prior Positions  |  |  1996                                                        |  | A member of Board of Directors (Director, Chief Operating Officer of Inorganic Fertilizer Business Unit)                                                                    
|                 |  |  1999                                                        |  | Executive Managing Director, Managing Director of Mitsui & Co. Europe PLC,
Managing Director of Mitsui & Co. UK PLC and Chairman of Mitsui & Co. International (Europe) B.V.
|                 |  |  2001                                                        |  | Senior Executive Managing Director                                                                                                                                          
|                 |  |  2002                                                        |  | Executive Vice President, President of Chemical Group                                                                                                                       
|                 |  |                                                               |  |                                                                                                                                                                             

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|                 |  |                                                                                                           |  |                                                                                                                                                                                   
|---------------- |  | --------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Kazumi Nakagawa                                                                                           | 
|Date of Birth    |  | April 9, 1941                                                                                             | 
|Current Position |  | Executive Vice President, Chief Compliance Officer (since October 1, 2002)                               
|Prior Positions  |  |  1997                                                                                                    |  | A member of Board of Directors (Director, General Manager of Personnel Division)                                                                                                  
|                 |  |  2000                                                                                                    |  | Executive Managing Director, General Manager of Osaka Office                                                                                                                      
|                 |  |  2002                                                                                                    |  | Senior Executive Managing Officer & Chief Administrative Officer,
Responsible for Personnel Division, Legal Division, General Affairs Division and Chief Compliance Officer       
|                 |  |                                                                                                           |  |                                                                                                                                                                                   
|Name             |  | Norio Shoji                                                                                               | 
|Date of Birth    |  | September 17, 1940                                                                                        | 
|Current Position |  | Executive Vice President and Chairman, Managing Director of Mitsui & Co. Europe PLC (since April 1, 2003)
|Prior Positions  |  |  1996                                                                                                    |  | A member of Board of Directors (Director, Chief Operating Officer of Energy
Business Unit)                                                                                        
|                 |  |  1999                                                                                                    |  | Executive Managing Director, Chief Operating Officer of Energy Business Unit                                                                                                      
|                 |  |  2001                                                                                                    |  | Senior Executive Managing Director                                                                                                                                                
|                 |  |  2002/4                                                                                                  |  | Senior Executive Managing Officer and President of Energy Group                                                                                                                   
|                 |  |  2002/10                                                                                                 |  | Senior Executive Managing Officer, Managing Director of Mitsui & Co. Europe
PLC, Managing Director of Mitsui & Co. UK PLC and Chairman of Mitsui & Co.
International (Europe) B.V.
|                 |  |                                                                                                           |  |                                                                                                                                                                                   
|Name             |  | Tasuku Kondo                                                                                              | 
|Date of Birth    |  | August 12, 1942                                                                                           | 
|Current Position |  | Senior Executive Managing Officer and Chief Financial Officer (since April 1, 2002)                      
|Prior Positions  |  |  1996                                                                                                    |  | A member of Board of Directors (Director, General Manager of Finance Division)                                                                                                    
|                 |  |  1998                                                                                                    |  | Executive Managing Director                                                                                                                                                       
|                 |  |  2002                                                                                                    |  | Senior Executive Managing Officer and Chief Financial Officer,
Responsible for General Accounting Division, Finance Division and Corporate Risk Management Division               
|                 |  |                                                                                                           |  |                                                                                                                                                                                   
|Name             |  | Katsuto Momii                                                                                             |  |                                                                                                                                                                                   
|Date of Birth    |  | March 4, 1943                                                                                             | 
|Current Position |  | Senior Executive Managing Officer (since April 1, 2003)                                                  
|Prior Positions  |  |  1997                                                                                                    |  | A member of Board of Directors
(Director, Operating Officer of Iron & Steel Raw Materials Unit)                                                                                   
|                 |  |  1998                                                                                                    |  | Director, Chief Operating Officer of Iron & Steel Raw Materials Unit                                                                                                              
|                 |  |  2000                                                                                                    |  | Executive Managing Director, Chairman for the Americas,
and President and Chief Executive Officer of Mitsui & Co. (U.S.A.), Inc.                                                  
|                 |  |  2002                                                                                                    |  | Senior Executive Managing Officer, Chairman for the Americas,
and President and Chief Executive Officer of Mitsui & Co. (U.S.A.), Inc.                                            
|                 |  |                                                                                                           |  |                                                                                                                                                                                   
|Name             |  | Tetsuya Matsuoka                                                                                          | 
|Date of Birth    |  | January 5, 1945                                                                                           | 
|Current Position |  | Senior Executive Managing Officer and Chief Operating Officer of Business Process                        
|                 |  | Re-Engineering Project Headquarters (since October 1, 2002)                                              
|Prior Positions  |  |  1998                                                                                                    |  | A member of Board of Directors (Director, General Manager of Metals Administrative Division)                                                                                      
|                 |  |  1999                                                                                                    |  | Director, Chief Operating Officer of Non-Ferrous Metals Unit                                                                                                                      
|                 |  |  2001                                                                                                    |  | Executive Managing Director, Managing Director of Mitsui & Co. Europe PLC,
Managing Director of Mitsui & Co. UK PLC and Chairman of Mitsui & Co. International (Europe) B.V.      
|                 |  |  2002                                                                                                    |  | Senior Executive Managing Officer & Chief Strategic Officer, Responsible for Administration Division                                                                              
|                 |  |                                                                                                           |  |                                                                                                                                                                                   

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|                   |  |                                                         |  |                                                                                                                                                     
|------------------ |  | ------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Name               |  | Yasuo Hayashi                                           | 
|Date of Birth      |  | August 5, 1942                                          | 
|Current Position   |  | Senior Executive Managing Officer (since April 1, 2003)
|Prior Positions    |  |  2000                                                  |  | A member of Board of Directors (Executive Managing Director)                                                                                        
|                   |  |  2001                                                  |  | Executive Managing Director, Chief Operating Officer of Electric Machinery, Plant & Project Business Unit, Machinery
Electronics & Information Group
|                   |  |  2002                                                  |  | Executive Managing Director, President of Machinery Electronics & Information Group                                                                 
|                   |  |                                                         |  |                                                                                                                                                     
|Name               |  | Masataka Suzuki                                         | 
|Date of Birth      |  | April 2, 1944                                           | 
|Current Position   |  | Senior Executive Managing Officer (since April 1, 2003)
|Prior Positions    |  |  1999                                                  |  | A member of Board of Directors (Director, Chief Operating Officer of Textile & Fashion Unit)                                                        
|                   |  |  2002                                                  |  | Executive Managing Director, Chief Operating Officer of Textile & Fashion Unit, Consumer Products & Services Group                                  
|                   |  |  2002                                                  |  | Executive Managing Director, President of Consumer Products & Services Group                                                                        
|                   |  |                                                         |  |                                                                                                                                                     
|Name               |  | Akishige Okada                                          | 
|Date of Birth      |  | April 9, 1938                                           | 
|Current Position   |  | Director (since June 27, 2003)                         
|Prior Positions    |  |  2001                                                  |  | Director, Chairman of Sumitomo Mitsui Banking Corporation (remaining as the same position on June 30, 2003)                                         
|                   |  |  2002                                                  |  | Director, Chairman of Sumitomo Mitsui Financial Group (remaining as the same position on June 30, 2003)                                             
|Corporate
Auditors |  |                                                        
|                   |  |                                                         |  |                                                                                                                                                     
|Name               |  | Makoto Ejima                                            | 
|Date of Birth      |  | April 23, 1937                                          | 
|Current Position   |  | Corporate Auditor                                      
|Prior Positions    |  |  1992                                                  |  | Director, Chief Operating Officer of Non-Ferrous Metals Unit                                                                                        
|                   |  |  1995                                                  |  | Executive Managing Director, General Manager of Osaka Office                                                                                        
|                   |  |  1997                                                  |  | Senior Executive Managing Director, General Manager of Osaka Office                                                                                 
|                   |  |  2000                                                  |  | Executive Vice President                                                                                                                            
|                   |  |                                                         |  |                                                                                                                                                     
|Name               |  | Ko Matsukata                                            | 
|Date of Birth      |  | March 27, 1933                                          | 
|Current Position   |  | Corporate Auditor                                      
|Prior Positions    |  |  1996                                                  |  | Vice Chairman of Mitsui Marine and Fire Insurance Co., Ltd.                                                                                         
|                   |  |                                                         |  |                                                                                                                                                     
|Name               |  | Minoru Suzuki                                           | 
|Date of Birth      |  | March 14, 1932                                          | 
|Current Position   |  | Corporate Auditor                                      
|Prior Positions    |  |  1994                                                  |  | President of Sakura Securities Co., Ltd.                                                                                                            
|                   |  |                                                         |  |                                                                                                                                                     

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|                 |  |                   |  |                                                      
|---------------- |  | ----------------- |  | -----------------------------------------------------
|Name             |  | Yasutaka Okamura  | 
|Date of Birth    |  | June 13, 1929     | 
|Current Position |  | Corporate Auditor
|Prior Positions  |  |  1992            |  | Prosecutor, General                                  
|                 |  |  1997            |  | Corporate Auditor of Toyota Motor Corporation        
|                 |  |                   |  |                                                      
|Name             |  | Hiroshi Matsuura  | 
|Date of Birth    |  | May 24, 1946      | 
|Current Position |  | Corporate Auditor
|Prior Positions  |  |  1996            |  | General Manager of Corporate Risk Management Division

Executive Officers (excluding
Executive Officers who are also a Director)

|                 |  |                                                                                                                                  |  |                                                                                                                                                                            
|---------------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Toshihiko Sasahira                                                                                                               | 
|Date of Birth    |  | February 2, 1941                                                                                                                 | 
|Current Position |  | Executive Managing Officer, General Manager of Osaka Office (since June 27, 2002)                                               
|Prior Positions  |  |  1997                                                                                                                           |  | A member of Board of Directors (Director, General Manager of Chemical
Administrative Division)                                                                             
|                 |  |  1998                                                                                                                           |  | Director, Executive Vice President of Mitsui & Co. (U.S.A), Inc.                                                                                                           
|                 |  |  2000                                                                                                                           |  | Director, Chief Operating Officer of Petrochemicals & Polymers Unit                                                                                                        
|                 |  |  2001                                                                                                                           |  | Executive Managing Director, Chief Operating Officer of Petrochemicals &
Polymers Unit                                                                                     
|                 |  |  2002/4                                                                                                                         |  | Executive Managing Director, Executive Managing Officer, General Manager of
Osaka Office                                                                                   
|                 |  |                                                                                                                                  |  |                                                                                                                                                                            
|Name             |  | Gempachiro Aihara                                                                                                                | 
|Date of Birth    |  | October 3, 1943                                                                                                                  | 
|Current Position |  | Executive Managing Officer, General Representative of Mitsui & Co., Ltd. in China (since June 27, 2002)                         
|Prior Positions  |  |  2000                                                                                                                           |  | A member of Board of Directors (Director, Chief Operating Officer of
Performance Chemicals Unit)                                                                           
|                 |  |  2002/4                                                                                                                         |  | Executive Managing Director, Executive Managing Officer, General Representative
of Mitsui & Co., Ltd. in China                                                             
|                 |  |                                                                                                                                  |  |                                                                                                                                                                            
|Name             |  | Yushi Nagata                                                                                                                     | 
|Date of Birth    |  | August 30, 1946                                                                                                                  | 
|Current Position |  | Executive Managing Officer, Chief Operating Officer of Electric Machinery, Plant & Project Business Unit (since October 1, 2002)
|Prior Positions  |  |  2000                                                                                                                           |  | A member of Board of Directors (Director, Chief Operating Officer of Plant &
Project Business Unit)                                                                        
|                 |  |  2001                                                                                                                           |  | Director, Operating Officer of Electric Machinery, Plant & Project Business Unit                                                                                           
|                 |  |  2002/4                                                                                                                         |  | Executive Managing Director, Executive Managing Officer, Operating Officer of
Electric Machinery, Plant & Project Business Unit, Machinery, Electronics &
Information Group
|                 |  |  2002/6                                                                                                                         |  | Executive Managing Officer, Operating Officer of Electric Machinery, Plant &
Project Business Unit, Machinery, Electronics & Information Group                             
|                 |  |                                                                                                                                  |  |                                                                                                                                                                            
|Name             |  | Jun Moriyama                                                                                                                     | 
|Date of Birth    |  | December 7, 1946                                                                                                                 | 
|Current Position |  | Executive Managing Officer, General Manager of Nagoya Office (since April 1, 2003)                                              
|Prior Positions  |  |  1999                                                                                                                           |  | A member of Board of Directors (Director, Chief Operating Officer of Iron &
Steel Products Unit)                                                                           
|                 |  |  2001                                                                                                                           |  | Director, General Manager of Nagoya Office                                                                                                                                 
|                 |  |  2002/4                                                                                                                         |  | Director, Senior Managing Officer, General Manager of Nagoya Office                                                                                                        
|                 |  |  2002/6                                                                                                                         |  | Senior Managing Officer, General Manager of Nagoya Office                                                                                                                  
|                 |  |                                                                                                                                  |  |                                                                                                                                                                            

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|                 |  |                                                                                                                                                       |  |                                                                                                                                                          
|---------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Hiroshi Tada                                                                                                                                          | 
|Date of Birth    |  | March 3, 1945                                                                                                                                         | 
|Current Position |  | Executive Managing Officer, Chairman for the Americas, and President and Chief Executive Officer of Mitsui & Co. (U.S.A.), Inc.
(since April 1, 2003)
|Prior Positions  |  |  2000                                                                                                                                                |  | A member of Board of Directors (Director, Chief Operating Officer of Iron &
Steel Raw Materials Unit)                                                    
|                 |  |  2002/4                                                                                                                                              |  | Director, Senior Managing Officer, Chief Operating Officer of Iron & Steel Raw
Materials Unit, Metals Group                                              
|                 |  |  2002/6                                                                                                                                              |  | Senior Managing Officer, Chief Operating Officer of Iron & Steel Raw Materials
Unit, Metals Group                                                        
|                 |  |                                                                                                                                                       |  |                                                                                                                                                          
|Name             |  | Motokazu Yoshida                                                                                                                                      | 
|Date of Birth    |  | January 7, 1948                                                                                                                                       | 
|Current Position |  | Executive Managing Officer, Chief Operating Officer of Motor Vehicles, Marine & Aerospace Business Unit (since April 1, 2003)                        
|Prior Positions  |  |  2001                                                                                                                                                |  | A member of Board of Directors (Director, Chief Operating Officer of Motor
Vehicles, Marine & Aerospace Business Unit)                                   
|                 |  |  2002/4                                                                                                                                              |  | Director, Senior Managing Officer Chief Operating Officer of Motor Vehicles,
Marine & Aerospace Business Unit, Machinery, Electronics & Information Group
|                 |  |  2002/6                                                                                                                                              |  | Senior Managing Officer, Chief Operating Officer of Motor Vehicles, Marine &
Aerospace Business Unit, Machinery, Electronics & Information Group         
|                 |  |                                                                                                                                                       |  |                                                                                                                                                          
|Name             |  | Yoshiyuki Kagawa                                                                                                                                      | 
|Date of Birth    |  | November 22, 1946                                                                                                                                     | 
|Current Position |  | Executive Managing Officer, Chief Operating Officer of Energy Business Unit (since April 1, 2003)                                                    
|Prior Positions  |  |  2002                                                                                                                                                |  | Managing Officer, Chief Operating Officer of Energy Business Unit, Energy Group                                                                          
|                 |  |                                                                                                                                                       |  |                                                                                                                                                          
|Name             |  | Yasunori Yokote                                                                                                                                       | 
|Date of Birth    |  | June 23, 1946                                                                                                                                         | 
|Current Position |  | Senior
Managing Officer, General Representative of Mitsui & Co., Ltd. in Indonesia (since June 27, 2002)                                             
|Prior Positions  |  |  2000                                                                                                                                                |  | A member of Board of Directors (Director, General Manager of Personnel Division)                                                                         
|                 |  |  2002/4                                                                                                                                              |  | Director, Senior
Managing Officer, General Representative of Mitsui & Co., Ltd.
in Indonesia                                                             
|                 |  |                                                                                                                                                       |  |                                                                                                                                                          
|Name             |  | Yoshiyuki Izawa                                                                                                                                       | 
|Date of Birth    |  | February 10, 1948                                                                                                                                     | 
|Current Position |  | Senior Managing Officer, Chief Operating Officer of Information Business Unit (since June 27, 2002)                                                  
|Prior Positions  |  |  2000                                                                                                                                                |  | A member of Board of Directors (Director, Chief Operating Officer of
Information Business Unit)                                                          
|                 |  |  2002/4                                                                                                                                              |  | Director, Senior Managing Officer, Chief Operating Officer of Information
Business Unit, Machinery, Electronics & Information Group                      
|                 |  |                                                                                                                                                       |  |                                                                                                                                                          
|Name             |  | Osamu Mori                                                                                                                                            | 
|Date of Birth    |  | January 1, 1949                                                                                                                                       | 
|Current Position |  | Senior Managing Officer, General Manager of Finance Division (since June 27, 2002)                                                                   
|Prior Positions  |  |  2000                                                                                                                                                |  | A member of Board of Directors (Director, General Manager of Finance Division)                                                                           
|                 |  |  2002/4                                                                                                                                              |  | Director, Senior Managing Officer, General Manager of Finance Division                                                                                   
|                 |  |                                                                                                                                                       |  |                                                                                                                                                          

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|                 |  |                                                                                                            |  |                                                                                                                                    
|---------------- |  | ---------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Motohiro Yano                                                                                              | 
|Date of Birth    |  | June 30, 1944                                                                                              | 
|Current Position |  | Senior Managing Officer, Chief Operating Officer of Inorganic Chemicals Unit (since June 27, 2002)        
|Prior Positions  |  |  2001                                                                                                     |  | A member of Board of Directors (Director, Chief Operating Officer of Fertilizer
& Inorganic Chemicals Unit)                        
|                 |  |  2002/4                                                                                                   |  | Director, Senior Managing Officer, Chief Operating Officer of Inorganic
Chemicals Unit, Chemical Group                             
|                 |  |                                                                                                            |  |                                                                                                                                    
|Name             |  | Kazuya Imai                                                                                                | 
|Date of Birth    |  | April 20, 1946                                                                                             | 
|Current Position |  | Senior Managing Officer (since June 27, 2002)                                                             
|Prior Positions  |  |  2001                                                                                                     |  | A member of Board of Directors (Director, Executive Vice President of Mitsui &
Co. (U.S.A.), Inc.)                                 
|                 |  |  2002/1                                                                                                   |  | Director                                                                                                                           
|                 |  |  2002/4                                                                                                   |  | Director, Senior Managing Officer                                                                                                  
|                 |  |                                                                                                            |  |                                                                                                                                    
|Name             |  | Toshihiro Soejima                                                                                          | 
|Date of Birth    |  | November 10, 1946                                                                                          | 
|Current Position |  | Senior Managing Officer, General Manager of Corporate Planning & Strategy Division (since January 1, 2003)
|Prior Positions  |  |  2001                                                                                                     |  | A member of Board of Directors (Director, Chief Operating Officer of
Electronics Devices Business Unit)                            
|                 |  |  2002/4                                                                                                   |  | Director, Senior Managing Officer, Chief Operating Officer of Electronics
Business Unit, Machinery, Electronics & Information Group
|                 |  |  2002/6                                                                                                   |  | Senior Managing Officer, Chief Operating Officer of Electronics Business Unit,
Machinery, Electronics & Information Group          
|                 |  |                                                                                                            |  |                                                                                                                                    
|Name             |  | Satoru Miura                                                                                               | 
|Date of Birth    |  | March 2, 1947                                                                                              | 
|Current Position |  | Senior Managing Officer, Chief Operating Officer of Iron & Steel Products Unit (since June 27, 2002)      
|Prior Positions  |  |  2001                                                                                                     |  | A member of Board of Directors (Director, Chief Operating Officer of Iron &
Steel Products Unit)                                   
|                 |  |  2002/4                                                                                                   |  | Director, Senior Managing Officer, Chief Operating Officer of Iron & Steel
Products Unit, Metals Group                             
|                 |  |                                                                                                            |  |                                                                                                                                    
|Name             |  | Junichi Masuda                                                                                             | 
|Date of Birth    |  | September 7, 1945                                                                                          | 
|Current Position |  | Managing Officer, Chief Operating Officer of Transportation Logistics Unit (since June 27, 2002)          
|                 |  |                                                                                                            |  |                                                                                                                                    
|Name             |  | Masayoshi Sato                                                                                             | 
|Date of Birth    |  | November 30, 1945                                                                                          | 
|Current Position |  | Managing Officer, Chief Operating Officer of Foods Unit (since April 1, 2002)                             
|                 |  |                                                                                                            |  |                                                                                                                                    
|Name             |  | Kenji Dewa                                                                                                 | 
|Date of Birth    |  | June 17, 1946                                                                                              | 
|Current Position |  | Managing Officer, Chief Operating Officer of Petrochemicals Unit (since April 1, 2002)                    
|                 |  |                                                                                                            |  |                                                                                                                                    

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|                 |  |                                                                                                                                            |  |                                                                                                                                     
|---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Michio Matsuda                                                                                                                             | 
|Date of Birth    |  | October 3, 1946                                                                                                                            |  |                                                                                                                                     
|Current Position |  | Managing Officer, Chief Operating Officer of Telecommunications, Transportation & Industrial Systems Business Unit (since January
1, 2003)
|Prior Positions  |  |  2002/4                                                                                                                                   |  | Managing Officer, Operating Officer of Electric Machinery, Plant & Project
Business Unit, Machinery, Electronics & Information Group
|                 |  |  2002/9                                                                                                                                   |  | Managing Officer, Chief Operating Officer of Communications, Transportation &
Industrial Project Business Unit                      
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Takeshi Ohyama                                                                                                                             | 
|Date of Birth    |  | May 18, 1947                                                                                                                               | 
|Current Position |  | Managing Officer, General Manager of Personnel Division (since April 1, 2002)                                                             
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Takao Sunami                                                                                                                               | 
|Date of Birth    |  | August 22, 1947                                                                                                                            | 
|Current Position |  | Managing Officer, General Manager of Fukuoka Office (since January 1, 2003)                                                               
|Prior Positions  |  |  2002                                                                                                                                     |  | Managing Officer, General Manager of eMitsui Business Division                                                                      
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Hirokazu Mizukami                                                                                                                          | 
|Date of Birth    |  | August 24, 1947                                                                                                                            | 
|Current Position |  | Managing Officer, Chief Operating Officer of Retail Unit (since April 1, 2002)                                                            
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Ken Abe                                                                                                                                    | 
|Date of Birth    |  | September 19, 1947                                                                                                                         | 
|Current Position |  | Managing Officer, Chief Operating Officer of Iron & Steel Raw Materials Unit (since April 1, 2003)                                        
|Prior Positions  |  |  2002                                                                                                                                     |  | Managing Officer, General Manager of Metals Administrative Division                                                                 
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Junichi Matsumoto                                                                                                                          | 
|Date of Birth    |  | September 25, 1947                                                                                                                         | 
|Current Position |  | Managing Officer, Deputy General Vice Representative of Mitsui & Co., Ltd. in China (since January 1, 2003)                               
|Prior Positions  |  |  2002                                                                                                                                     |  | Managing Officer, General Manager of Corporate Planning Division                                                                    
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Kazuo Tasaka                                                                                                                               | 
|Date of Birth    |  | December 27, 1947                                                                                                                          | 
|Current Position |  | Managing Officer, Chief Operating Officer of Non-Ferrous Metals Unit (since April 1, 2002)                                                
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Shunichi Miyazaki                                                                                                                          | 
|Date of Birth    |  | February 11, 1948                                                                                                                          | 
|Current Position |  | Managing Officer, General Manager of Consumer Products & Services Administrative Division (since April 1, 2002)                           
|                 |  |                                                                                                                                            |  |                                                                                                                                     
|Name             |  | Shinjiro Ogawa                                                                                                                             | 
|Date of Birth    |  | September 17, 1948                                                                                                                         |  |                                                                                                                                     
|Current Position |  | Managing Officer, General Manager of Machinery, Electronics & Information Administrative Division (since April 1, 2002)                   
|                 |  |                                                                                                                                            |  |                                                                                                                                     

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|                 |  |                                                                                                |  | 
|---------------- |  | ---------------------------------------------------------------------------------------------- |  | 
|Name             |  | Toshimasa Furukawa                                                                             | 
|Date of Birth    |  | December 25, 1948                                                                              | 
|Current Position |  | Managing
Officer, President of Mitsui & Co. (Taiwan) Ltd. (since April 1, 2002)               
|                 |  |                                                                                                |  | 
|Name             |  | Akio Ikeda                                                                                     | 
|Date of Birth    |  | January 1, 1947                                                                                | 
|Current Position |  | Managing Officer, Chief Operating Officer of General Merchandise Unit (since April 1, 2003)   
|                 |  |                                                                                                |  | 
|Name             |  | Hiroshi Ito                                                                                    | 
|Date of Birth    |  | February 8, 1947                                                                               | 
|Current Position |  | Managing Officer, Chief Operating Officer of Service Business Unit (since April 1, 2003)      
|                 |  |                                                                                                |  | 
|Name             |  | Jitsuro Terashima                                                                              | 
|Date of Birth    |  | August 11, 1947                                                                                | 
|Current Position |  | Managing
Officer, President of Mitsui Global Strategic Studies Institute (since April 1, 2003)
|                 |  |                                                                                                |  | 
|Name             |  | Motonori Murakami                                                                             
|Date of Birth    |  | November 19, 1948                                                                              | 
|Current Position |  | Managing Officer, General Manager of General Accounting Division (since April 1, 2003)        

There is no family relationship between any Directors, Corporate Auditors,
Executive Officers and any other persons named above. There is no arrangement
or understanding between any of the above and any other person pursuant to
which they were selected as a Director, a Corporate Auditor or a member of the
senior management.




B.     Compensation.

The aggregate amount of compensation, including benefits from Directors,
Auditors and Executive Officers Pension Plan, paid to Directors, Corporate
Auditors and Executive Officers during the year ended March 31, 2003, was
¥2,473 million.

In accordance with customary Japanese business practices, a retiring
Director or Corporate Auditor receives a retirement allowance, which is subject
to an approval by shareholders at a general meeting of the shareholders. The
amount of the retirement allowance generally reflects the number of years of
service, rank at the time of retirement, special contributions to our
performance.

Retirement allowances, including benefits from Directors, Auditors and
Executive Officers Pension Plan, paid to retired individual Directors,
Corporate Auditors and Executive Officers totaled ¥1,160 million, and the
annual bonuses paid to Directors, Corporate Auditors and Executive Officers
during the year ended March 31, 2003 was ¥105 million, both of which were
included in the ¥2,473 million aggregate compensation discussed above.

The amount set aside by us for Directors, Corporate Auditors and
Executive Officers Pension Plan to provide part of pension benefit to the
retired Directors, Corporate Auditors, and Executive Officers was ¥813 million
as of March 31, 2003.

Since the retirement allowance is subject to the approval of shareholders
at the general meeting of shareholders, there are no retirement allowances to
be accrued for the Directors, Corporate Auditors, and Executive officers as of
March 31, 2003.

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C.     Board Practices.

The information set forth in Item 6. A. Directors and Senior Management
is incorporated into this section by reference.

Our Directors have not entered into any service contracts with us
providing for benefits upon termination of his or her employment.

Our Directors and Corporate Auditors are elected at the general meetings
of shareholders. In accordance with Mitsuis Articles of Incorporation,
Regulations of the Board of Directors and Regulations of the Corporate
Auditors, the normal term of office for its Directors is two years and for its
Corporate Auditors is four years(1). However, they may both serve any number
of consecutive terms. The following table sets forth our Directors, Corporate
Auditors and Executive Officers terms of office and their
shareholdings as of June 30, 2003.



|(1) |  | In accordance with a supplementary provision to amendments of the
Commercial Code of Japan, the term of Corporate Auditors who were
elected prior to the ordinary general meeting of shareholders held on
June 27, 2003 remains three years.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|          |                    |  |                        |  |                   |  |                     |        |  |  |  |  | 
|--------- | ------------------ |  | ---------------------- |  | ----------------- |  | ------------------- | ------ |  |  |  |  | 
|          |                    |  |                        |  |                   |  | Length of Time      |        |  |  | 
|          |                    |  |                        |  |                   |  | Served in Office    |        |  |  | 
|          |                    |  | Date of Expiration of  |  | (From Appointment |  | Shareholdings as of
|          |                    |  | Current Term of Office |  | to June 2003)     |  | June 30, 2003      
|          |                    |  |                        |  |                   |  |                    
|Director: |                    |  |                        |  |                   |  |                     |        |  |  |  | 
|          | Nobuo Ohashi       |  | June 2004              |  | 9 years           |  |                     | 33,000 | 
|          | Shoei Utsuda       |  | June 2005              |  | 6 years           |  |                     | 18,103 | 
|          | Hiroshi Nagata     |  | June 2004              |  | 7 years           |  |                     | 20,000 | 
|          | Kazumi Nakagawa    |  | June 2005              |  | 6 years           |  |                     | 46,330 | 
|          | Norio Shoji        |  | June 2004              |  | 7 years           |  |                     | 20,283 | 
|          | Tasuku Kondo       |  | June 2004              |  | 7 years           |  |                     | 19,000 | 
|          | Katsuto Momii      |  | June 2005              |  | 6 years           |  |                     | 12,163 | 
|          | Tetsuya Matsuoka   |  | June 2005              |  | 5 years           |  |                     | 12,283 | 
|          | Yasuo Hayashi      |  | June 2005              |  | 3 years           |  |                     | 19,000 | 
|          | Masataka Suzuki    |  | June 2005              |  | 4 years           |  |                     | 11,000 | 
|          | Akishige Okada (2) |  | June 2005              |  | Less than 1 year  |  |                     | 0      | 



|(2) |  | Mr. Akishige Okada is an external director as defined in the
Commercial Code of Japan.
|--- |  | --------------------------------------------------------------------------------------

|                   |                      |  |                        |  |                   |  |                     |        |  |  |  |  | 
|------------------ | -------------------- |  | ---------------------- |  | ----------------- |  | ------------------- | ------ |  |  |  |  | 
|                   |                      |  |                        |  |                   |  | Length of Time      |        |  |  | 
|                   |                      |  |                        |  |                   |  | Served in Office    |        |  |  | 
|                   |                      |  | Date of Expiration of  |  | (From Appointment |  | Shareholdings as of
|                   |                      |  | Current Term of Office |  | to June 2003)     |  | June 30, 2003      
|                   |                      |  |                        |  |                   |  |                    
|Corporate Auditor: |                      |  |                        |  |                   |  |                     |        |  |  |  | 
|                   | Makoto Ejima         |  | June 2005              |  | 1 year            |  |                     | 40,900 | 
|                   | Ko Matsukata (3)     |  | June 2005              |  | 7 years           |  |                     | 10,000 | 
|                   | Minoru Suzuki (3)    |  | June 2004              |  | 5 years           |  |                     | 16,000 | 
|                   | Yasutaka Okamura (3) |  | June 2007              |  | Less than 1 year  |  |                     | 0      | 
|                   | Hiroshi Matsuura     |  | June 2007              |  | Less than 1 year  |  |                     | 7,000  | 



|(3) |  | Mr. Ko Matsukata, Mr. Minoru Suzuki and Mr. Yasutaka
Okamura are external Corporate Auditors as defined in the Law for
Special Exceptions to the Commercial Code of Japan Concerning
Audit, etc. of Joint Stock Corporations.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|                                                                          |                                                                              |  |                        |  |                   |  |                     |        |  |  |  |         | 
|------------------------------------------------------------------------- | ---------------------------------------------------------------------------- |  | ---------------------- |  | ----------------- |  | ------------------- | ------ |  |  |  | ------- | 
|                                                                          |                                                                              |  |                        |  |                   |  | Length of Time      |        |  |  | 
|                                                                          |                                                                              |  |                        |  |                   |  | Served in Office    |        |  |  | 
|                                                                          |                                                                              |  | Date of Expiration of  |  | (From Appointment |  | Shareholdings as of
|                                                                          |                                                                              |  | Current Term of Office |  | to June 2003)     |  | June 30, 2003      
|                                                                          |                                                                              |  |                        |  |                   |  |                    
|Executive
Officer (excluding Executive Officers who are also a Director): |                                                                              |  |                        |  |                   |  |                     |        |  |  |  |        
|                                                                          | Toshihiko Sasahira                                                           |  | March 2004             |  | 6 years           |  |                     | 9,293  | 
|                                                                          | Gempachiro Aihara                                                            |  | March 2004             |  | 3 years           |  |                     | 5,000  | 
|                                                                          | Yushi Nagata                                                                 |  | March 2004             |  | 3 years           |  |                     | 11,000 | 
|                                                                          | Jun Moriyama                                                                 |  | March 2004             |  | 4 years           |  |                     | 14,103 | 
|                                                                          | Hiroshi Tada                                                                 |  | March 2004             |  | 3 years           |  |                     | 14,000 | 
|                                                                          | Motokazu Yoshida                                                             |  | March 2004             |  | 2 years           |  |                     | 6,000  | 
|                                                                          | Yoshiyuki Kagawa                                                             |  | March 2004             |  | 1 year            |  |                     | 8,133  | 
|                                                                          | Yasunori Yokote                                                              |  | March 2004             |  | 3 years           |  |                     | 7,000  | 
|                                                                          | Yoshiyuki Izawa                                                              |  | March 2004             |  | 3 years           |  |                     | 6,000  | 
|                                                                          | Osamu Mori                                                                   |  | March 2004             |  | 3 years           |  |                     | 15,166 | 
|                                                                          | Motohiro Yano                                                                |  | March 2004             |  | 2 years           |  |                     | 11,000 | 
|                                                                          | Kazuya Imai                                                                  |  | March 2004             |  | 2 years           |  |                     | 8,266  | 
|                                                                          | Toshihiro Soejima                                                            |  | March 2004             |  | 2 years           |  |                     | 9,000  | 
|                                                                          | Satoru Miura                                                                 |  | March 2004             |  | 2 years           |  |                     | 6,206  | 
|                                                                          | Junichi Masuda                                                               |  | March 2004             |  | 1 year            |  |                     | 9,000  | 
|                                                                          | Masayoshi Sato                                                               |  | March 2004             |  | 1 year            |  |                     | 7,334  | 
|                                                                          | Kenji Dewa                                                                   |  | March 2004             |  | 1 year            |  |                     | 4,000  | 
|                                                                          | Michio Matsuda                                                               |  | March 2004             |  | 1 year            |  |                     | 2,000  | 
|                                                                          | Takeshi Ohyama                                                               |  | March 2004             |  | 1 year            |  |                     | 8,339  | 
|                                                                          | Takao Sunami                                                                 |  | March 2004             |  | 1 year            |  |                     | 4,755  | 
|                                                                          | Hirokazu Mizukami                                                            |  | March 2004             |  | 1 year            |  |                     | 1,532  | 
|                                                                          | Ken Abe                                                                      |  | March 2004             |  | 1 year            |  |                     | 6,000  | 
|                                                                          | Junichi Matsumoto                                                            |  | March 2004             |  | 1 year            |  |                     | 14,000 | 
|                                                                          | Kazuo Tasaka                                                                 |  | March 2004             |  | 1 year            |  |                     | 19,948 | 
|                                                                          | Shunichi Miyazaki                                                            |  | March 2004             |  | 1 year            |  |                     | 6,000  | 
|                                                                          | Shinjiro Ogawa                                                               |  | March 2004             |  | 1 year            |  |                     | 7,000  | 
|                                                                          | Toshimasa Furukawa                                                           |  | March 2004             |  | 1 year            |  |                     | 10,000 | 
|                                                                          | Akio Ikeda                                                                   |  | March 2005             |  | Less than 1 year  |  |                     | 2,000  | 
|                                                                          | Hiroshi Ito                                                                  |  | March 2005             |  | Less than 1 year  |  |                     | 7,000  | 
|                                                                          | Jitsuro Terashima                                                            |  | March 2005             |  | Less than 1 year  |  |                     | 9,000  | 
|                                                                          | Motonori Murakami                                                            |  | March 2005             |  | Less than 1 year  |  |                     | 12,769 | 
|                                                                          |                                                                              |  |                        |  |                   |  |                     |        |  |  |  |        
|                                                                          |                                                                              |  |                        |  |                   |  |                     |        | 
|                                                                          |                                                                              |  |                        |  |                   |  |                     |        | 
|                                                                          | Total Shareholdings by Directors,
Corporate Auditors,
and Executive Officers |  |                        |  |                   |  |                     |        |  |  |  | 545,906 | 
|                                                                          |                                                                              |  |                        |  |                   |  |                     |        |  |  |  |        

Mitsuis Articles of Incorporation provide that the Board of Directors
shall elect from among its members Representative Directors, one of whom shall
be the President. Under the Commercial Code of Japan, each of the
Representative Directors has statutory authority and power to represent and act
on behalf of the company in all respects.

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At least one of the Corporate Auditors(4) should be a person who has not
been a director, general manager or employee of a company or any of its
subsidiaries during the five-year period(5) prior to his/her election as a
corporate auditor. Each Corporate Auditor has a statutory duty to examine
financial statements, in collaboration with independent certified public
accountants, and business reports to be submitted by the Board of Directors at
the general meeting of shareholders and also to supervise the administration
executed by the Directors of the companys affairs. Corporate Auditors are required to
participate in meeting of the Board of Directors but are not entitled to vote.



|(4) |  | In accordance with amendments of the Law for Special
Exceptions to the Commercial Code of Japan Concerning Audit, etc. of Joint
Stock Corporations, the number of external Corporate Auditors after
the conclusion of the first ordinary general meeting of shareholders
held with respect to the fiscal year ending on and after May 1, 2005, is
required to be at least half the number of Corporate Auditors of a
large company whose capital is not less than ¥500 million, or whose
total debt amount is not less than ¥20 billion.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(5) |  | In accordance with the same amendment as (4), an external
Corporate Auditor who is elected at the first ordinary general
meeting of shareholders held with respect to the fiscal year ending on
and after May 1, 2005, is defined as any person who has not at any
time been an employee, manager or director of the company or of any
of its subsidiaries.                                                                                                                                                                             

The Corporate Auditors constitute the Board of Corporate Auditors. The
Board of Corporate Auditors has a statutory duty to prepare and submit its
audit report to the Board of Directors each year. A Corporate Auditor may note
his/her opinion in the audit report if his/her opinion is different from the
opinion expressed in the independent auditors report. The Board of Corporate
Auditors is empowered to establish audit principles, methods of examination by
the Corporate Auditors of the companys affairs and financial position and
other matters concerning the performance of the Corporate Auditors duties. The
Corporate Auditors may not at the same time be directors, managers or employees
of the company or any of its subsidiaries or executive officers of
any of its subsidiaries.

Pursuant to home country practices exemptions granted to us by the NASDAQ
National Market, we are permitted to follow certain corporate governance
practices complying with relevant Japanese laws and Japanese stock exchange
rules, which are different from those required for U.S. domestic companies
under NASDAQs listing standards. NASDAQ rules and our current practices
relating to corporate governance have the following significant differences:



| |  |  | Audit Committee. NASDAQ requires that a U.S. domestic company
registered with NASDAQ have an audit committee consisting of at least
three independent directors, and that the audit committee be charged
with the responsibility of selecting, monitoring and communicating
with the outside auditor of the company. We do not have an audit
committee with functions called for by NASDAQ rules.                                                                                                                                                                                                                                                                                                                                                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Shareholder Approval Policy. Pursuant to the amendment to the
corporate governance standards that was approved by the Securities and
Exchange Commission on June 30, 2003, NASDAQ requires, with limited
exceptions, that shareholder approval be obtained with respect to any
stock option or purchase plan and any other equity-compensation plan
pursuant to which options or stock may be acquired by officers,
directors, employees or consultants. We follow relevant Japanese laws
which, as discussed in Voting Rights under Item 10.B. Memorandum
and Articles of Associations of this annual report, generally require
us to obtain shareholder approval only if stock options are to be
issued with specially favorable conditions.

NASDAQ also requires that, with certain exceptions specified in its rules,
in connection with acquisition of stock or assets of another company,
shareholder approval be obtained prior to issuance of common stock or
securities convertible into or exercisable for common stock (1) if any
director, and officer or substantial shareholder has a 5% interest, or all of
them collectively have a 10% interest, in the stock or assets and the issuance
would increase the outstanding common shares or voting power of these parties
by more than 5%, and (2) if due to the issuance, the voting power of the common
stock held by these parties equals or exceeds 20% of the voting power
outstanding before the issuance or if the number of shares of the common stock
held by these parties equals or exceeds 20% of the number of shares outstanding
before the issuance. As permitted by home country practices
exemptions granted to us by the NASDAQ National Market, we follow relevant Japanese laws which, as discussed in
Voting Rights under Item 10.B. Memorandum and Articles of Associations of
this annual report, generally require us to obtain shareholder approval with
respect to the issuance of new shares at a specially favorable price or
issuance of bond with share acquisition right with specially favorable terms
or of acquisition right with specially favorable terms to person other than
shareholders.

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On October 9, 2002, the National Association of Securities Dealers, Inc.,
through its subsidiary, The NASDAQ Stock Market, Inc., filed with the
Securities and Exchange Commission proposed changes to its corporate governance
standards. The areas of corporate governance covered by the proposed changes
include the definition and role of independent directors, the responsibilities
of the audit committee and codes of conduct. Subsequently, on March 11, 2003,
NASDAQ filed with the Securities and Exchange Commission Amendment No. 1 to its
proposed rule changes. Also, in April 2003, the Securities and Exchange
Commission promulgated Rule 10A-3 pursuant to Section 301 of the Sarbanes-Oxley
Act, requiring self-regulatory organizations and NASDAQ to implement the
provisions of that rule regarding listed company audit committees. In addition,
on June 30, 2003, the Securities and Exchange Commission approved the amendment
to NASDAQs corporate governance standards relating to shareholder approval of
equity-compensation plans, which is described under Shareholder Approval
Policy above. NASDAQ may further amend its proposed rule changes in order to
reflect the requirements of Rule 10A-3. The proposed rule changes, as amended,
will become effective upon the Securities and Exchange Commissions approval.

The proposed rule changes, as amended, will generally continue to grant
home country practices exemptions to non-U.S. companies listed on NASDAQ,
including us, but, pursuant to the requirements of Rule 10A-3, those provisions
of the amended corporate governance standards that implement the requirements
of Rule 10A-3 will be applicable to listed non-U.S. companies. Among such
requirements, a foreign private issuer listed on NASDAQ will be required to
have an audit committee consisting of at least three directors all of whom must
be independent under the standards set forth in paragraph (b) of Rule 10A-3,
and the audit committee will be required to be directly responsible for the
appointment, compensation, retention and oversight of the work of the
accounting firm engaged (including resolution of disagreements between
management and the auditor regarding financial reporting) for the purpose of
preparing or issuing an audit report or performing other audit, review or
attest services for the issuer, unless one or more of the exemptions set forth
in Rule 10A-3 apply. We expect that, pursuant to paragraph (a)(5) of Rule
10A-3, the amended corporate governance standards of NASDAQ implementing the
requirements of the rule will become applicable to foreign private issuers
listed on NASDAQ on July 31, 2005.

As described in this Item 6.C. Board Practices, we have a Board of
Corporate Auditors who examine our financial statements and business reports
which are submitted by the Board of Directors to the general meeting of
shareholders and supervise the administration of our affairs by the directors.
We plan to take appropriate steps with respect to our corporate governance
system by July 31, 2005 so that our Board of Corporate Auditors would fully
satisfy the conditions set forth in paragraph (c)(3) of Rule 10A-3, for the
purpose of availing ourselves of the general exemption provided by that
paragraph from the amended corporate governance standards of NASDAQ
implementing the requirements of Rule 10A-3, including the requirements
relating to the independence of the audit committee members and
responsibilities of the audit committee.

The rights of ADS holders, including their rights relating to corporate
governance practices, are provided in the deposit agreement which is an exhibit
to this annual report.

Limitation of Liabilities of Directors and Corporate Auditors

The Articles of Incorporation of Mitsui provide that Mitsui may, by
resolution of the Board of Directors, limit the liabilities of Directors and
Corporate Auditors to the extent as permitted by Japanese laws. The Articles of
Incorporation of Mitsui also provide that Mitsui may conclude a contract with
external Directors to limit the liability of such Directors to the extent as
permitted by Japanese laws. In accordance with such provision of the Articles
of Incorporation, Mitsui has concluded with Mr. Akishige Okada, an external
Director, a contract dated June 27, 2003 to limit his liability to the extent
as permitted by Japanese laws.

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D.     Employees.

As of the years ended March 31, 2003, 2002 and 2001, we had 37,734, 36,116
and 33,712 employees, respectively. The average number of temporary employees
during the year ended March 31, 2003 was 8,851.

The following table sets forth the number of employees by operating
segment as of the years ended March 31, 2003, 2002 and 2001.

|                                         |  |                      |        |      |  |      |        |  |  |  |        | 
|---------------------------------------- |  | -------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                         |  | Year Ended March 31,
|                                         |  |                     
|                                         |  | 2003                 |        | 2002 |  | 2001
|                                         |  |                      |        |      |  |     
|Operating Segment:                       |  |                      |        |      |  |      |        |  |  |  |        | 
|Metals Products & Minerals               |  |                      | 4,033  |      |  |      | 4,213  |  |  |  | 3,922  | 
|Machinery, Electronics &
Information (1) |  |                      | 6,565  |      |  |      | 6,187  |  |  |  | 5,427  | 
|Chemical                                 |  |                      | 3,075  |      |  |      | 2,742  |  |  |  | 3,595  | 
|Energy                                   |  |                      | 1,303  |      |  |      | 1,349  |  |  |  | 841    | 
|Consumer
Products & Services             |  |                      | 9,796  |      |  |      | 9,242  |  |  |  | 8,397  | 
|Domestic
Branches and Offices            |  |                      | 2,945  |      |  |      | 3,309  |  |  |  | 3,242  | 
|Americas                                 |  |                      | 2,637  |      |  |      | 2,567  |  |  |  | 2,130  | 
|Europe                                   |  |                      | 1,173  |      |  |      | 1,263  |  |  |  | 1,196  | 
|Other
Overseas Areas                     |  |                      | 3,182  |      |  |      | 3,064  |  |  |  | 2,811  | 
|Corporate                                |  |                      | 3,025  |      |  |      | 2,180  |  |  |  | 2,151  | 
|                                         |  |                      |        |      |  |      |        |  |  |  |        | 
|Total                                    |  |                      | 37,734 |      |  |      | 36,116 |  |  |  | 33,712 | 
|                                         |  |                      |        |      |  |      |        |  |  |  |        | 



|(1) |  | From the fiscal year beginning April 1, 2002,
Electronics & Information is combined with
Machinery. The operating segment information for the
years ended March 31, 2002 and 2001 has been restated to conform to the presentation
for the year ended March 31, 2003.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We consider the relationship between management and our labor unions to be
good.




E.     Share Ownership.

Directors, Corporate Auditors and Executive Officers

As of June 30, 2003, the members of Mitsuis Board of Directors, Corporate
Auditors and Executive Officers held as a group, 599,415 shares of our common
stock, representing 0.04% of the shares outstanding. This number of shares
includes 53,509 shares held by Mitsui Executives Shareholding Association.

None of Mitsuis Directors, Corporate Auditors nor Executive Officers is
the beneficial owner of more than 1% of Mitsuis common stock. The number of
shares held by Mitsuis Directors, Corporate Auditors and Executive Officers,
on an individual basis, is set forth in Item 6.C. Board Practices, and is
incorporated herein by reference.

Employees Shareholding Association

Mitsui operates an Employees Shareholding Association (hereinafter,
Association) which, as of June 30, 2003, has 3,388 employee member
participants.

Employee members declare monthly the amount to be deducted from their
salary to be used to purchase Mitsuis shares (common stock) through the
Association. Employee members receive from Mitsui a monthly subsidy equivalent
to 10% of the declared amount, such that they may purchase shares equivalent to
110% of the declared amount. Employee members are entitled to dividends which
are applied towards the purchase of additional shares through the Association.
Employee members are able to sell part of their shares that have been reserved
for them under Associations plan, in the multiples of 1,000 shares, once every
month. As of June 30, 2003, the total amount of shares having voting rights
owned by the Association was 14,911,502, representing 0.94% of the total shares
issued and outstanding.

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Mitsui does not have any other arrangements for involving its employees in
the capital of Mitsui, including any arrangement that involves the issue or
grant of options, shares or securities of Mitsui.




Item 7. Major Shareholders and Related Party Transactions.




A.     Major Shareholders.

As of March 31, 2003, there were 1,583,674,837 shares of our common stock
issued (including 2,297,845 shares of treasury stock), of which 4,114,840
shares were in the form of ADSs, representing 0.26% of our then outstanding
common stock, and 47,070,395 shares, representing 2.97% of our then outstanding
common stock, were held of record in the form of common stock by residents in
the United States. The number of registered ADS holders was 44, and the number
of registered holders of shares of common stock in the United States
was 108.

As of March 31, 2003, The Master Trust Bank of Japan, Ltd. which owned
127,980,000 shares, or 8.08% of our then outstanding common stock and Japan
Trustee Services Bank, Ltd. which owned 118,735,000 shares, 7.49% of our then
outstanding common stock are shareholders that are the beneficial owners of 5%
or more of our voting securities. To our knowledge, the following table shows
our major beneficial shareholders as of March 31, 2003, including beneficial
shareholders who owned less than 5% of our then outstanding common stock,
disclosed under the Security and Exchange Law of Japan.

|                                                                   |  |                     |         |               |  |  |      |  
|------------------------------------------------------------------ |  | ------------------- | ------- | ------------- |  |  | ---- | -
|                                                                   |  | Number of shares of |         | Percentage of
|                                                                   |  | common stock owned  |         | common stock 
|Shareholders                                                       |  | (thousands)         |         | outstanding  
|                                                                   |  |                     |         |              
|The Master Trust Bank of Japan, Ltd. (trust account)               |  |                     | 127,980 |               |  |  | 8.08 | %
|Japan Trustee Services Bank, Ltd. (trust account)                  |  |                     | 118,735 |               |  |  | 7.49 |  
|The Chuo Mitsui Trust and Banking Company, Limited                 |  |                     | 61,597  |               |  |  | 3.88 |  
|Mitsui Mutual Life Insurance Co.                                   |  |                     | 57,411  |               |  |  | 3.62 |  
|Sumitomo Mitsui Banking Corporation                                |  |                     | 57,357  |               |  |  | 3.62 |  
|Mizuho Corporate Bank, Ltd.                                        |  |                     | 48,083  |               |  |  | 3.03 |  
|Nippon Life Insurance Co.                                          |  |                     | 36,025  |               |  |  | 2.27 |  
|Mitsui Sumitomo Insurance Co., Ltd.                                |  |                     | 33,600  |               |  |  | 2.12 |  
|The Bank of Tokyo-Mitsubishi, Ltd.                                 |  |                     | 31,532  |               |  |  | 1.99 |  
|The Chase Manhattan Bank, N.A. London Sees
Lending Omnibus Account |  |                     | 28,894  |               |  |  | 1.82 |  

Under the Securities and Exchange Law of Japan, any person that becomes a
holder (together with its related persons) of 5% of the total issued voting
shares of a company listed on any Japanese stock exchange (including ADSs
representing such shares) must file a report with the Director of the relevant
Local Finance Bureau and send a copy of such report to the company. A similar
report must also be filed if the percentage holding of a holder of more than 5%
of the total issued voting shares of a company increases or decreases by 1% or
more.

78



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##### Table of Contents



Based on such reports we have received, we are aware that each of the
following persons, together with its affiliates, was the beneficial owner of
our common stock in the amounts and as of the dates shown in the following
tables:

|                                            |                     |                    |             |                      |  |  |       | 
|------------------------------------------- | ------------------- | ------------------ | ----------- | -------------------- |  |  | ----- | 
|Schroder Investment Management (Japan) Ltd. | Number of shares of |                    |             |                      | 
|                                            |                     | common stock owned |             | Percentage of common
|Ownership as of                             |                     | (thousands)        |             | stock outstanding   
|                                            |                     |                    |             |                     
|March 31, 2001                              |                     |                    | 83,594,724  |                      |  |  | 5.28  | 
|December 31, 2001                           |                     |                    | 109,646,132 |                      |  |  | 6.92  | 
|March 31, 2002                              |                     |                    | 128,384,568 |                      |  |  | 8.10  | 
|September 30, 2002                          |                     |                    | 150,816,435 |                      |  |  | 9.52  | 
|November 28, 2002                           |                     |                    | 167,083,785 |                      |  |  | 10.55 | 

|                                            |                     |                    |             |                      |  |  |      | 
|------------------------------------------- | ------------------- | ------------------ | ----------- | -------------------- |  |  | ---- | 
|Mitsui Asset Trust Banking Company, Limited | Number of shares of |                    |             |                      | 
|                                            |                     | common stock owned |             | Percentage of common
|Ownership as of                             |                     | (thousands)        |             | stock outstanding   
|                                            |                     |                    |             |                     
|March 31, 2002                              |                     |                    | 110,312,214 |                      |  |  | 6.96 | 

|                            |  |                     |            |                      |  |  |      | 
|--------------------------- |  | ------------------- | ---------- | -------------------- |  |  | ---- | 
|Mizuho Corporate Bank, Ltd. |  | Number of shares of |            |                      |  | 
|                            |  | common stock owned  |            | Percentage of common
|Ownership as of             |  | (thousands)         |            | stock outstanding   
|                            |  |                     |            |                     
|April 30, 2002              |  |                     | 86,611,342 |                      |  |  | 5.46 | 
|July 31, 2002               |  |                     | 84,466,738 |                      |  |  | 5.32 | 
|January 31, 2003            |  |                     | 85,155,623 |                      |  |  | 5.37 | 
|April 30, 2003              |  |                     | 76,810,314 |                      |  |  | 4.84 | 

|                                       |  |                     |            |                      |  |  |      | 
|-------------------------------------- |  | ------------------- | ---------- | -------------------- |  |  | ---- | 
|Mitsubishi Tokyo Financial Group, Ltd. |  | Number of shares of |            |                      |  | 
|                                       |  | common stock owned  |            | Percentage of common
|Ownership as of                        |  | (thousands)         |            | stock outstanding   
|                                       |  |                     |            |                     
|April 30, 2001                         |  |                     | 82,623,664 |                      |  |  | 5.20 | 
|October 31, 2001                       |  |                     | 83,178,527 |                      |  |  | 5.24 | 
|October 31, 2002                       |  |                     | 78,749,296 |                      |  |  | 4.97 | 

|                    |  |                     |            |                      |  |  |      | 
|------------------- |  | ------------------- | ---------- | -------------------- |  |  | ---- | 
|The Fuji Bank, Ltd. |  | Number of shares of |            |                      |  | 
|                    |  | common stock owned  |            | Percentage of common
|Ownership as of     |  | (thousands)         |            | stock outstanding   
|                    |  |                     |            |                     
|October 31, 2001    |  |                     | 98,542,194 |                      |  |  | 6.20 | 
|January 31, 2002    |  |                     | 88,498,432 |                      |  |  | 5.57 | 

The voting rights of our major shareholders do not differ from the voting
rights of other shareholders.

To our knowledge, we are not directly or indirectly owned or controlled by
any other corporations, by any foreign government or by any other natural or
legal persons severally or jointly.

We know of no arrangements which may, at a subsequent date, result in a
change in control of Mitsui.




B.     Related Party Transactions.

In conducting our business operations involving a broad range of products
throughout the world, we have, in the ordinary course of business, formed
alliances with leading partner companies in Japan and overseas, including
manufacturers and companies in the field of natural resources, such as energy
and ferrous materials. Moreover, in the ordinary course of business, from time
to time, we make minority investments in, or provide loans to, amongst others,
our customers, manufacturers, alliance partners, distributors or suppliers. We
conduct our global business operations on a continuing basis with such
associated companies. Our principal associated companies include Japan
Australia LNG (MIMI) Pty. Ltd. (50.00%), Mitsui Leasing & Development, Ltd.
(44.67%), Nihon Unisys, Ltd. (27.85%), Sakhalin Energy Investment Company Ltd.
(25.00%), NextCom K.K. (33.25%), among others.

79



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##### Table of Contents



The following tables set forth information regarding account balances and
transactions with associated companies:

|                                 |  |                      |         |      |  |   |         |  | 
|-------------------------------- |  | -------------------- | ------- | ---- |  | - | ------- |  | 
|                                 |  | As of March 31,     
|                                 |  |                     
|                                 |  | 2003                 |         | 2002
|                                 |  |                      |         |     
|                                 |  | (In Millions of Yen)
|Accounts
receivable, trade       |  | ¥                    | 195,411 |      |  | ¥ | 152,537 | 
|Advances to associated companies |  |                      | 170,038 |      |  |   | 98,490  | 
|Accounts payable, trade          |  |                      | 77,033  |      |  |   | 68,926  | 

Dividends received from associated companies for the years ended March 31,
2003, 2002 and 2001 amounted to ¥13,037 million, ¥9,590 million and ¥7,876
million, respectively.

Prices applied in transactions with associated companies are computed in
the same way that such prices would be calculated in transactions with
unrelated third parties. In addition, when associated companies are
counterparties in transactions with us and we conduct such business under
long-term procurement and/or sales contracts, in general, we conclude a
corresponding sales contract with the purchasers (unrelated parties) of goods
procured by us and/or with suppliers (unrelated parties) of the goods we sell
to associated companies. Regarding any other commitments related to
transactions with associated companies, we do not normally assume risk in
excess of its percentage of share ownership in an associated company.

In furtherance of our trading and business activities, it is customary
practice for us to loan or guarantee, severally and jointly with others,
indebtedness of certain customers and suppliers and of certain associated
companies as well as to guarantee the performance of contracts by such
entities. At March 31, 2003, the aggregate amount of loans (including ¥79,674
million guarantees of any kind) made to associated companies was ¥261,491
million. The largest amount outstanding as of March 31, 2003 was a ¥43,935
million loan to Sakhalin Energy Investment Company Ltd., which was formed in
1994 to develop the Piltun Astokhskoye oil field and the Lunskoye gas field in
the Sea of Okhotsk, offshore Sakhalin Island in the Russian far east. The loan
was mainly from Mitsui Sakhalin Holdings B.V., which is a wholly owned
subsidiary engaged in the investing and financing for Sakhalin Energy
Investment Company Ltd. The interest rate on the loan was determined on an
arms length transaction basis. Other major loans to associated companies are
related to the power plant project and the projects in the development of
natural resources jointly invested with other partners.

In the ordinary course of our business, we have entered into transactions
with various organizations with which certain of our Directors and Senior
Management are associated but, no material transactions have been entered into
for the three-year period ended March 31, 2003.

As of March 31, 2003, no person was the beneficial owner of more than 10%
of our common stock which might give that individual significant influence over
us.




C.     Interests of Experts and Counsel.

Not applicable.




Item 8. Financial Information.




A.     Consolidated Statements and Other Financial Information.

The information required for this item is set forth in our audited
consolidated financial statements included elsewhere in this annual report.

80



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Export Sales

Our
total revenuegross trading profit from export transactions
constitutes a significant portion of our total revenuegross trading profit.
The total amount of revenuegross trading profit from export transactions
for the year ended March 31, 2003 was ¥94,412 million or 17% of total
revenuegross trading profit of ¥569,802 million.

Legal Proceedings

Antitrust Suits against Mitsui, Mitsui U.S.A. and Novus International

Since July 1999, Mitsui, Mitsui & Co. (U.S.A.), Inc. (Mitsui U.S.A.) and
Novus International, Inc., our consolidated subsidiary, have been defendants
in a series of lawsuits in the U.S. by methionine purchasers, who are claiming
that there was a violation of the U.S. antitrust laws regarding methionine, an
animal feed additive. In 2002, Mitsui, Mitsui U.S.A. and Novus International,
Inc. reached agreements for settlement with the federal class action plaintiffs
and the plaintiffs who opted out of that class action. Under these settlements,
Novus International, Inc. paid U.S.$96 million as settlement amount. All other
related lawsuits are pending. The settlement did not have a significant adverse
effect on our consolidated results of operations for the year ended March 31,
2003.

Criminal proceedings relating to Kunashiri bid-rigging allegations

On July 3, 2002, Japanese authorities arrested three of our employees of
Industrial Systems Division of the Machinery, Electronics & Information
Segment, based on allegations that in 2000 they had interfered in the bidding
process for the construction of a power generation facility on the Russian-held
island of Kunashiri. On July 24, 2002, the Tokyo District Public Prosecutors
Office indicted two of these individuals, the General Manager of the Fourth
Project Department and the Manager of the Third Project Department. On February
25, 2003, these two individuals were convicted of improper conduct in the
related bidding activities. Mitsui was not a defendant and did not anticipate
being named as a defendant in these criminal proceedings. However, in order to
express Mitsuis regret over the alleged misconduct of our employees, senior
officials, including Mr. Shigeji Ueshima, the Chairman of the Board of
Directors, and Mr. Shinjiro Shimizu, the President and Chief Executive Officer,
resigned effective September 30, 2002.

Antitrust Suits against Mitsui, Mitsui U.S.A. and Bioproducts

Our wholly-owned U.S. subsidiary, Bioproducts Inc., which produces choline
chloride, an ingredient used in animal feed and pet foods, was named as a
defendant in currently pending lawsuits in the United States, together with
other third-party choline chloride manufacturers. In these cases, manufacturers
of choline chloride allegedly violated U.S. antitrust laws. Although Mitsui and
Mitsui U.S.A. are neither a manufacturer nor a seller of choline
chloride in
the U.S. market, Mitsui and Mitsui U.S.A. were also named as defendants,
together with the manufacturers in a class action lawsuit and the
other lawsuits, based on the
plaintiffs allegation that Mitsui and Mitsui U.S.A. were involved in the
violation of the antitrust laws. During the course of the legal proceedings,
Mitsui and Mitsui U.S.A. have consistently denied any wrongdoing. However, on
June 13, 2003 in the trial of the class action lawsuit before the Federal District Court of the District of
Columbia, the jury rendered a verdict stating that the defendants participated
in the violation of the antitrust laws and that the damages suffered
by the class plaintiffs are U.S.$49.5 million, subject to trebling pursuant to the U.S.
antitrust laws. So far, judgment has not yet been entered. Giving consideration
to the circumstances, Bioproducts Inc., Mitsui and Mitsui U.S.A. are close to
reaching an agreement for settlement with the class plaintiffs. This settlement
is subject to court approval. There can be no assurance of the outcome,
however, based upon the information currently available to us, the settlement
amount may affect our consolidated financial position, results of operations,
or cash flows. All other related lawsuits, where Mitsui, Mitsui U.S.A. and
Bioproducts Inc. are named as defendant, are still pending.

81



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In addition, various other legal proceedings are pending against us with
respect to contractual obligations and other matters arising in connection with
the conduct or the alleged conduct of our business. Based upon the information
currently available to us, we believe that the outcome of such legal
proceedings will not have a material effect on our consolidated financial
position, results of operations, or cash flows.

Dividend Policy

We determine our dividend amount based on our earnings, financial
condition, future earnings prospects and other factors. Based on this policy,
at the ordinary general meeting of shareholders held on June 27, 2003, a
year-end cash dividend was approved at the rate of ¥4 per share (¥80 per ADS).
This was in addition to the ¥4 per share (¥80 per ADS) that we had already paid
to each shareholder as an interim dividend, which was declared on November 13,
2002. Thus the annual cash dividend per share was ¥8 (¥160 per ADS).

See Item 10.B. Memorandum and Articles of Association.




B.     Significant Changes.

Except as disclosed in this annual report, there have not been any
significant changes since the date of the latest annual financial statements
included elsewhere in this annual report.




Item 9. The Offer and Listing.




A.     Offer and Listing Details.

The primary market for our common stock is the Tokyo Stock Exchange
(TSE). Our common stock is traded on the First Section of the TSE and is also
listed on four other stock exchanges in Japan (Osaka, Nagoya, Fukuoka and
Sapporo Stock Exchanges).

Our ADSs, each representing 20 shares of common stock, are traded on the
National Market of NASDAQ under the symbol MITSY. In addition, our common stock
is listed on the Luxembourg Stock Exchange, in the form of European Depositary
Receipts, each representing 20 shares; on the Frankfurt Stock Exchange, in the
form of co-ownership shares, each representing 1 share, in Global Bearer
Certificates; and on the Amsterdam Stock Exchange through the Amsterdam
Securities Account System.

There may from time to time be a differential between our common stocks
price on exchanges outside the United States and the market price of ADSs in
the United States. The majority of our common stock traded outside of Japan is
traded on the National Market of NASDAQ.

ADRs, each evidencing one or more ADSs, were originally issued pursuant to
a Deposit Agreement in May 1963, as amended from time to time, that we entered
into with Citibank N.A. of New York as Depositary, and the holders of the ADRs.

The following table sets forth for the periods indicated the reported high
and low closing sales prices of our common stock on the TSE, and the reported
high and low closing bid price quotations per ADS on the National Market of
NASDAQ:

82



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|                            |                |  |                    |       |                   |  |      |     |     |  |   |        |  |  |   |        | 
|--------------------------- | -------------- |  | ------------------ | ----- | ----------------- |  | ---- | --- | --- |  | - | ------ |  |  | - | ------ | 
|                            |                |  | TSE                |       | NASDAQ           
|                            |                |  |                    |       |                  
|                            |                |  | Price per Share of |       |                   |  |      |     |     |  |  
|                            |                |  | Common Stock       |       | Price per ADS    
|                            |                |  | (Yen)              |       | (U.S. dollars)(1)
|                            |                |  |                    |       |                  
|                            |                |  | High               |       | Low               |  | High |     | Low
|                            |                |  |                    |       |                   |  |      |     |    
|Year ended March 31:        |                |  |                    |       |                   |  |      |     |     |  |   |        |  |  |   |       
|                            | 1999           |  | ¥                  | 874   |                   |  | ¥    | 480 |     |  | $ | 137.50 |  |  | $ | 77.00  | 
|                            | 2000           |  |                    | 1,019 |                   |  |      | 670 |     |  |   | 164.75 |  |  |   | 122.38 | 
|                            | 2001           |  |                    | 851   |                   |  |      | 605 |     |  |   | 161.50 |  |  |   | 98.00  | 
|                            | 2002           |  |                    | 926   |                   |  |      | 575 |     |  |   | 152.13 |  |  |   | 91.00  | 
|                            | 2003           |  |                    | 910   |                   |  |      | 531 |     |  |   | 146.75 |  |  |   | 89.40  | 
|                           
|Year ended March 31, 2002:  |                |  |                    |       |                   |  |      |     |     |  |   |        |  |  |   |       
|                            | First quarter  |  | ¥                  | 846   |                   |  | ¥    | 641 |     |  | $ | 138.90 |  |  | $ | 106.00 | 
|                            | Second quarter |  |                    | 926   |                   |  |      | 628 |     |  |   | 152.13 |  |  |   | 106.00 | 
|                            | Third quarter  |  |                    | 762   |                   |  |      | 575 |     |  |   | 125.75 |  |  |   | 91.00  | 
|                            | Fourth quarter |  |                    | 829   |                   |  |      | 627 |     |  |   | 126.25 |  |  |   | 96.10  | 
|                           
|Year ended March 31, 2003:  |                |  |                    |       |                   |  |      |     |     |  |   |        |  |  |   |       
|                            | First quarter  |  | ¥                  | 910   |                   |  | ¥    | 756 |     |  | $ | 146.75 |  |  | $ | 113.50 | 
|                            | Second quarter |  |                    | 825   |                   |  |      | 603 |     |  |   | 135.00 |  |  |   | 100.42 | 
|                            | Third quarter  |  |                    | 636   |                   |  |      | 531 |     |  |   | 103.01 |  |  |   | 89.40  | 
|                            | Fourth quarter |  |                    | 679   |                   |  |      | 550 |     |  |   | 111.50 |  |  |   | 91.40  | 
|                           
|Year ending March 31, 2004: |                |  |                    |       |                   |  |      |     |     |  |   |        |  |  |   |       
|                            | First quarter  |  | ¥                  | 629   |                   |  | ¥    | 541 |     |  | $ | 106.59 |  |  | $ | 90.90  | 
|                           
|Month of:                   |                |  |                    |       |                   |  |      |     |     |  |   |        |  |  |   |       
|                            | March 2003     |  | ¥                  | 642   |                   |  | ¥    | 574 |     |  | $ | 109.41 |  |  | $ | 98.04  | 
|                            | April 2003     |  |                    | 620   |                   |  |      | 541 |     |  |   | 102.75 |  |  |   | 90.90  | 
|                            | May 2003       |  |                    | 600   |                   |  |      | 542 |     |  |   | 103.12 |  |  |   | 92.52  | 
|                            | June 2003      |  |                    | 629   |                   |  |      | 565 |     |  |   | 106.59 |  |  |   | 94.91  | 
|                            | July 2003      |  |                    | 696   |                   |  |      | 620 |     |  |   | 116.98 |  |  |   | 106.76 | 
|                            | August 2003    |  |                    | 772   |                   |  |      | 650 |     |  |   | 131.51 |  |  |   | 109.13 | 

On September 17, 2003, the closing sales price per share of our common
stock on the TSE was ¥800, and the closing sales price per ADS on the NASDAQ
National Market was U.S.$137.50.



|(1) |  | All fractional figures of the prices per ADS are rounded to the
nearest two decimal points.
|--- |  | -------------------------------------------------------------------------------------------




B.     Plan of Distribution.

Not applicable.




C.     Markets.

See Item 9.A. Offer and Listing Details.




D.     Selling Shareholders.

Not applicable.




E.     Dilution.

Not applicable.

83



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F.     Expenses of the Issue.

Not applicable.




Item 10. Additional Information.




A.     Share Capital.

Not applicable.




B.     Memorandum and Articles of Association.

Organization

Mitsui is a corporation (kabushiki kaisha) incorporated in Japan under the
Commercial Code of Japan (the Commercial Code). It is registered in the
Commercial Register (shogyo tokibo) maintained by the Tokyo Legal Affairs
Bureau and several other registry offices of the Ministry of Justice.

Objects
and Purposes

Article 2 of Mitsuis Articles of Incorporation provides that our objects
are to engage in the following business:



| | 1. |  | Foreign trading business, purchasing and selling business,
wholesaling business, agency business and brokerage business,
relating to the following commodities:
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (1)  |  | Ferrous and non-ferrous metals and their raw materials
and manufactured goods, and minerals.                                                                                                                                                                                                                
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2)  |  | Coal, petroleum, natural gas and other fuels and their
by-products.                                                                                                                                                                                                                                         
|
| | (3)  |  | All kinds of machines and appliances (including measuring
instruments and medical apparatus), equipment including
manufacturing equipment, communications equipment and
antipollution equipment, rolling stock and vehicles, ships and
boats, aerospace equipment and aircraft, and parts for the
foregoing.
|
| | (4)  |  | All kinds of chemical products, salt, fertilizers,
high-pressure gas, explosives, pharmaceuticals (including
medicines, non-medicinal drugs, medicine for veterinary use,
narcotics, powerful poison and poison), radio isotope, toilet
preparations and their raw materials.                               
|
| | (5)  |  | Cereals, sugar, oils and fats, feeds and their raw
materials; livestocks, agricultural, dairy and marine products,
processed foods, alcoholic beverage and other foodstuffs and
drinks.                                                                                                                     
|
| | (6)  |  | All kinds of textile products and their raw materials.                                                                                                                                                                                                                                                      
|
| | (7)  |  | All kinds of fur products and raw fur.                                                                                                                                                                                                                                                                      
|
| | (8)  |  | Lumber, cement and other building materials.                                                                                                                                                                                                                                                                
|
| | (9)  |  | Rubber, pulp, paper and their manufactured goods;
tobacco, cigars, cigarettes and sundry goods.                                                                                                                                                                                                             
|
| | (10) |  | Industrial water and drinking water.                                                                                                                                                                                                                                                                        



| | 2. |  | Exploration, development, manufacturing, processing,
scrapping and recycling business relating to the above-mentioned
commodities.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------

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| | 3.  |  | Acquisition, planning, preservation, utilization and
disposition of copyrights, patent rights, other intellectual
property rights, know-how, system technology, and other software and
acting as intermediary in such transactions.            
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 4.  |  | Information processing and supply, telecommunications
business, broadcasting business, advertising business, publishing
business, printing, translation, and production and sales of audio
and visual copyright products.                      
|
| | 5.  |  | Forestry business, sawing business and lumber processing
business.                                                                                                                                                                             
|
| | 6.  |  | Movable assets leasing business.                                                                                                                                                                                                               
|
| | 7.  |  | Secondhand goods business.                                                                                                                                                                                                                     
|
| | 8.  |  | Freight forwarding and agency business, land transportation
business, marine transportation business, port transportation
business, freight forwarding business, customs brokerage business,
shipping agency business and warehousing business.
|
| | 9.  |  | Intermediary business for life insurance, non-life insurance
and also for insurance under the Automobile Liability Law.                                                                                                                        
|
| | 10. |  | Business as contractor, design of building, supervision and
management of various construction works.                                                                                                                                          
|
| | 11. |  | Acquisition, disposition, leasing, utilization in any other
manner and development of real estate and acting as intermediary in
such transactions.                                                                                             
|
| | 12. |  | Surveying and researching business relating to land, sea and
sky.                                                                                                                                                                              
|
| | 13. |  | Investment in, purchasing, selling and handling as
intermediary of negotiable instruments, etc.                                                                                                                                                
|
| | 14. |  | Lending moneys, guaranteeing and assuming debts, engaging in
the sale and purchase of various credits, dealing in foreign
exchange transactions, and conducting any other financing business.                                                  
|
| | 15. |  | Operation and management of medical facilities, sports
facilities and restaurants, and hotel business and travel business.                                                                                                                     
|
| | 16. |  | Planning, administration and implementation of various
events.                                                                                                                                                                                 
|
| | 17. |  | Temporary personnel placement service business, training of
personnel for development of appropriate job skills and
qualifications, personnel guidance and training business.                                                                  
|
| | 18. |  | Maintenance and management of real estate.                                                                                                                                                                                                     
|
| | 19. |  | Business as investor, commodities investment dealer,
commodities investment adviser, trustee for investment trusts, asset
manager for investment corporations.                                                                                 
|
| | 20. |  | Generation, supply, and sale or purchase of electricity.                                                                                                                                                                                       
|
| | 21. |  | Provision of accountancy services.                                                                                                                                                                                                             
|
| | 22. |  | Buying, selling, and derivative transactions for greenhouse
effect gas emissions rights and related intermediary services.                                                                                                                     
|
| | 23. |  | Agent and intermediary for credit cards application.                                                                                                                                                                                           

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| | 24. |  | Consultancy business relating to the foregoing items.          
| | --- |  | ---------------------------------------------------------------
|
| | 25. |  | Other lines of business relating to any of the foregoing
items.

Directors

Mitsuis Articles of Incorporation do not have provisions with respect to:
(a) a Directors power to vote on a proposal, arrangement or contract in which
the Director is materially interested; (b) the Directors power, in the absence
of an independent quorum, to vote compensation to themselves or any members of
their body; (c) the borrowing powers exercisable by the Directors and how such
borrowing powers can be varied; (d) the retirement or non-retirement of
Directors under an age limit requirement, or (e) the number of shares, if any,
required for Directors qualification.

Under the Commercial Code, unless approved by the Board of Directors, the
Directors must refrain from effecting any transaction with a company on his or her
behalf or on that of a third person or otherwise effecting with a person other
than the Director a transaction in which interests are contrary between a company
and the Director, and any Director who has a material interest in the subject
matter of a resolution to be taken by the Board of Directors cannot vote in
such resolution. The total amounts of remuneration to Directors and that to
Corporate Auditors are subject to the approval of the general meeting of
shareholders and within such authorized amounts, the Board of Directors and the
Board of Corporate Auditors are respectively authorized to determine the
compensation to each Director and Corporate Auditor.

The Commercial Code specifically requires the approval of the Board of
Directors for a company to borrow a large amount of money. The Commercial Code
does not specifically provide for what constitutes a large amount in these
contexts. It has been the general practice of Mitsuis Board of Directors to
adopt an individual resolution for a borrowing in excess of certain amount
determined by the Board of Directors to be a large amount for Mitsui. The
Commercial Code has no provision with respect to: retirement or non-retirement
of directors under an age limit requirement; and the Commercial Code prohibits
any corporation from requiring a qualification share for a Director.

Common
Stock

Set forth below is information relating to Mitsuis common stock,
including brief summaries of the relevant provisions of Mitsuis Articles of
Incorporation and Share Handling Regulations adopted by Mitsuis Board of
Directors, as currently in effect, and of the Commercial Code and related
legislation.

Authorized capital

Article 5 of the Mitsuis Articles of Incorporation provides that the
total number of shares authorized to be issued by Mitsui is two billion five
hundred million (2,500,000,000) shares.

Under Mitsuis Articles of Incorporation, currently in effect, only shares
of common stock are issuable and 1,583,674,837 shares of common stock
(including treasury stock of 2,297,845 shares) were issued, fully paid as of
March 31, 2003.

Dividends

The Mitsuis Articles of Incorporation provide that dividends, if any,
shall be paid to shareholders, beneficial shareholders or pledgees of record as
of the end of the Mitsuis fiscal year, i.e., March 31. After the close of the
fiscal period, the Board of Directors prepares, among other things, a proposed
allocation of profits for dividends and other purposes; this proposal is
submitted to Mitsuis Corporate Auditors and to independent certified public
accountants and then submitted for approval to shareholders at the ordinary
general meeting, which is normally held in June of each year. In addition to
provisions for dividends, if any, and for the legal reserve and other reserves,
the allocation of profits customarily includes a bonus to Directors. In
addition to year-end dividends, the Board of Directors may, by its resolution,
declare a cash distribution pursuant to Article 293-5 of the Commercial Code
(an interim dividend) to shareholders, beneficial shareholders or pledgees of
record as of each September 30, without shareholders approval, but subject to
the limitations described below.

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The Commercial Code provides that a company may not make any distribution
of profit by way of dividends or interim dividends for any fiscal period unless
it has set aside in its legal reserve an amount equal to at least one-tenth of
the amount paid by way of appropriation of retained earnings for such fiscal
period until the aggregate amount of capital surplus and legal reserve reaches
one-quarter of its stated capital. Under the Commercial Code, a company is
permitted to distribute profits by way of year-end or interim dividends out of
the excess of its net assets over the aggregate of:



| | (i)   |  | its stated capital;                                                                                                                                                                                                      
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | its capital surplus;                                                                                                                                                                                                     
|
| | (iii) |  | its accumulated legal reserve;                                                                                                                                                                                           
|
| | (iv)  |  | the legal reserve to be set aside in respect of the fiscal period concerned;                                                                                                                                             
|
| | (v)   |  | the excess, if any, of unamortized expenses incurred in
preparation for commencement of business and in connection with
research and development over the aggregate of amounts referred to
in (ii), (iii) and (iv) above;
|
| | (vi)  |  | the subscription price or the security deposit for the
subscription price of new shares issued by the company; and                                                                                                       
|
| | (vii) |  | if certain assets of the company are stated at market value
pursuant to the provisions of the Commercial Code, the aggregate
amount by which their market value exceeds acquisition cost.                                

In the case of interim dividends, the net assets are calculated by
reference to the balance sheet as at the last closing of Mitsuis accounts, but
adjusted to reflect any subsequent payment by way of appropriation of retained
earnings and transfer to legal reserve in respect thereof, provided that
interim dividends may not be paid where there is a risk that at the end of the
fiscal year there might not be any excess of net assets over the aggregate of
the amounts referred to in (i) through (vii) above. In addition, if Mitsuis
shareholders have adopted a resolution for its purchase of its own shares, the
total amount of purchase price authorized by such resolution shall, whether or
not such purchase has been effected, be deducted from the amount available for
interim dividend. The resolution of Mitsuis ordinary general meeting of
shareholders held on June 27, 2003 authorizes Mitsui to acquire up to
70,000,000 shares and ¥50,000 million by the closing of Mitsuis ordinary
general meeting of shareholders held in 2004.

Under certain loan agreements with government-owned banks, the lenders may
require us to submit proposals as to the payment of dividends and other
appropriations of earnings for the lenders review and approval before
presentation to the shareholders. Certain of such agreements require the
borrower, upon the request of the lender, to reduce outstanding loans before
scheduled maturity dates when the lender considers that Mitsui is able to
reduce such loans through increased earnings or through the proceeds from the
sale of common stock or bonds and notes. During the fiscal years ended March
31, 2003 and 2002, Mitsui did not receive any such requests, and there is no
expectation that any such requests will be made.

In Japan the ex-dividend date and the record date for dividends precede
the date of determination of the amount of the dividends to be paid.

Under the Articles of Incorporation, Mitsui is not obligated to pay any
dividends or interim dividends which are left unclaimed for a period of three
years after the date on which they first became payable.

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Shareholders Meetings

Mitsui normally holds its ordinary general meeting of shareholders in June
of each year in Tokyo, Japan. In addition, Mitsui may hold an extraordinary
general meeting of shareholders whenever necessary by giving at least two weeks
advance notice to shareholders.

Under the Commercial Code, notice of a shareholders meeting setting forth
the place, time, purpose thereof and providing a summary of the matters to be
acted upon, must be mailed to each shareholder having voting rights (or, in the
case of a non-resident shareholder, to his or her resident proxy or mailing
address in Japan) at least two weeks prior to the date set for the meeting. The
record date for any ordinary general meeting of shareholders of
Mitsui is March 31.

Any shareholder or group of shareholders holding at least 3% of the total
outstanding voting rights, for a continuous period of six months or longer, may
require the convocation of a general meeting of shareholders for a particular
purpose. Unless such shareholders meeting is convened promptly or a
convocation notice of a meeting which is to be held not later than eight weeks
from the day such demand is dispatched, the requiring shareholders may, upon
obtaining court approval, convene such shareholders meeting.

Any shareholder or group of shareholders holding at least 300 voting
rights, or 1% of the total outstanding voting rights, for a continuous
period of six months or longer, may propose a matter to be considered at a
general meeting of shareholders by submitting a written request to a
Representative Director at least eight weeks prior to the date set for such
meeting.

To attend a shareholders meeting in person or by proxy, shareholders must
provide proof of identity upon request. Shareholders may be represented by
proxies in writing appointed for the meeting. The representative must be
Mitsuis shareholder holding voting rights. The President of Mitsui acts as a
chairman of the general meeting of shareholders pursuant to Mitsuis Articles
of Incorporation.

Voting rights

A shareholder is entitled to one vote per unit subject to the limitations
on voting rights set forth in the following paragraph and Unit share
systemVoting rights under the unit share system below. Except as otherwise
provided by law or by the Articles of Incorporation, a resolution can be
adopted at a general meeting of shareholders by a majority of the voting rights
represented at the meeting. The Commercial Code and Mitsuis Articles of
Incorporation provide, however, that the quorum for the election of Directors
and Corporate Auditors shall not be less than one-third of the total voting
rights. Mitsuis shareholders are not entitled to cumulative voting in the
election of Directors. A corporate shareholder, more than one-quarter of whose
outstanding shares are directly or indirectly owned by Mitsui, may not exercise
its voting rights with respect to shares of Mitsui that it owns. Shareholders
may exercise their voting rights through proxies, provided that the proxies are
also Mitsuis shareholders holding voting rights. Mitsuis shareholders also
may cast their votes in writing.

The Commercial Code provides that in order for a company to amend the Articles of
Incorporation and in certain other instances, including a reduction of stated
capital, the removal of a Director or Corporate Auditor, dissolution, merger or
consolidation requiring shareholders resolution, the transfer of the whole or
an important part of the business, the taking over of the whole of the business
of any other corporation requiring shareholders resolution, share exchange or
share transfer requiring shareholders resolution for the purpose of
establishing 100% parent-subsidiary relationships, splitting of the corporation
into two or more corporations requiring shareholders resolution, any offering
of new shares at a specially favorable price (or any offering of the rights
to subscribe for, or acquire its shares at a specially favorable
conditions) to any persons other than shareholders, the quorum shall be at
least one-third of the total voting rights and the approval of the holders of
at least two-thirds of the voting rights represented at the meeting is required
(the special shareholders resolutions); provided that any amendment to the
Articles of Incorporation reducing the number of shares constituting a unit or
eliminating the provisions for the unit of shares may be made by the resolution
of the Board of Directors rather than by the special shareholders resolution,
as set forth in Unit share systemVoting rights under the unit share
system.

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Subscription rights

Holders of Mitsuis shares of common stock have no pre-emptive rights
under its Articles of Incorporation. Authorized but unissued shares may be
issued at such times and upon such terms as the Board of Directors determines,
subject to the limitations as to the offering of new shares at a specially
favorable price mentioned under Voting rights above. The Board of Directors
may, however, determine that shareholders shall be given subscription rights
regarding a particular issue of new shares, in which case such rights must be
given on uniform terms to all shareholders as at a record date of which not less
than two weeks prior public notice must be given. Each of the shareholders to
whom such rights are given must also be given notice of the expiration thereof
at least two weeks prior to the date on which such rights expire.

Under the amendments to the Commercial Code which became effective on
April 1, 2002, Mitsui may also issue the rights to subscribe for or acquire
Mitsuis shares. Subscription rights and the rights to subscribe for or acquire
shares may be made transferable or nontransferable by the Board of Directors.
Whether or not Mitsui will make such rights generally transferable in future
rights offerings will depend upon the circumstances at the time of such
offerings.

Liquidation rights

In the event of Mitsuis liquidation, the assets remaining after payment
of all debts and liquidation expenses and taxes will be distributed among
shareholders in proportion to the respective number of shares of common stock
held.

Record date

March 31 is the record date for Mitsuis year-end dividends. The
shareholders and beneficial shareholders who are registered as the holders of
the number of shares constituting 1 unit or more whole units in Mitsuis
register of shareholders and/or beneficial shareholders at the end of each
March 31 are also entitled to exercise shareholders voting rights at the
ordinary general meeting of shareholders with respect to the fiscal year ending
on such March 31. September 30 is the record date for interim dividends. In
addition, Mitsui may set a record date for determining the shareholders and/or
beneficial shareholders entitled to other rights and for other purposes by
giving at least two weeks prior public notice.

The price of shares generally goes ex-dividends or ex-rights on Japanese
stock exchanges on the third business day prior to a record date (or if the
record date is not a business day, the fourth business day prior thereto), for
the purpose of dividends or rights offerings.

Repurchase
by Mitsui of its Common Stock

Except as otherwise permitted by the Commercial Code, in order for Mitsui
to purchase its own shares a resolution of shareholders at an ordinary general
meeting is required with respect to (i) the total number of shares and the
total acquisition price which Mitsui may purchase during the period ending the
conclusion of the next ordinary general meeting of shareholders, and (ii) if
the purchase(s) is/are to be made from a specified person or persons, the
identity of such person(s). The total amount of purchase price referred to
above cannot exceed the amount which can be distributed as dividends as
described under Dividends above less the sum of dividends to be approved by
such ordinary general meeting of shareholders and the amounts to be transferred
to stated capital. The shareholders resolution for (ii) above shall be by a
special shareholders resolution and any shareholder who received a convocation
notice of the general meeting of shareholders where the resolution on item (ii)
above is sought may require Mitsui in writing not later than five days prior to
the date set for the meeting to include him/her as the seller of his/her shares
in the proposed purchase. Any purchase by Mitsui of its shares pursuant to the
shareholders resolutions except in the case of (ii) above should be made either
on the stock exchange or by way of tender offer. Shares so purchased may be
retired by a resolution of the Board of Directors or held by Mitsui as treasury
shares.

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Mitsui may acquire its own shares in response to a shareholders request
for purchase of his/her shares representing less than 1 unit. See Unit share
systemRepurchase by the company of shares constituting less than a full unit
below.

Transfer of shares

Under the Commercial Code, the transfer of shares is effected by delivery
of share certificates but, in order to assert shareholders rights against
a company, the transferee must have its name and address registered
on a companys
register of shareholders. For this purpose, Mitsuis
shareholders are required to file
their names, addresses and seal with The Chuo Mitsui Trust and Banking Company, Limited, which is the
transfer agent for Mitsuis shares. Foreign shareholders may file specimen
signatures in lieu of seals. Non-resident shareholders are required to appoint
a standing proxy in Japan or designate a mailing address in Japan.

The central clearing system of share certificates under the Law Concerning
Central Clearing of Share Certificates and Other Securities in Japan applies to
the shares. Pursuant to this system, a holder of the share is able to choose,
at his discretion, to participate in this system and all certificates of the
shares elected to be put into this system are deposited with the Japan
Securities Depository Center, Inc. (JASDEC) (through a participating
institution having a clearing account with JASDEC, if the holder is not such a
participating institution) and all such shares are registered in the name of
JASDEC, on Mitsuis register of shareholders. Each participating shareholder
(beneficial shareholder) will, in turn, be registered in the register of
Mitsuis beneficial shareholders, and be treated in the same way as
shareholders registered on Mitsuis register of shareholders. In connection
with the transfer of the shares held under this system, entry of the share
transfer in the book maintained by JASDEC for the participating institutions
shall have the same effect as delivery of share certificates.

Unit share system

Pursuant to the Commercial Code, Mitsui has adopted 1,000 shares (50 ADSs)
as 1 unit of shares. This unit share system is called tangen-kabu-system.

Any amendment to the Articles of Incorporation reducing the number of
shares constituting a unit or eliminating the provisions for the unit of shares
may be made by a resolution of the Board of Directors rather than by a special
shareholders resolution. The number of shares constituting 1 unit cannot exceed
1,000 or one two-hundredth (1/200) of all issued shares.

Voting rights under the unit share system

Under the unit share system, shareholders shall have one voting right for
each unit of shares that they hold. Any number of shares less than a full unit
will carry no voting rights.

Share certificates for less than a unit of shares

Under its Article of Incorporation, except as otherwise provided in the
Share Handling Regulations, Mitsui will not issue share certificates for less
than a unit of shares. Thus, unless Mitsuis Board of Directors takes a
resolution to eliminate the provision for the unit shares from the Articles of
Incorporation or the shareholders amend the Articles of Incorporation by a
special shareholders resolution to eliminate the provision for not to issue
share certificates for less than a unit of shares, a share certificate for any
number of shares less than a full unit will in general not be issued. As the
transfer of shares normally requires the delivery of the share certificates
therefore, any fraction of a unit for which no share certificates are issued is
not transferable.

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Repurchase by Mitsui of shares constituting less than a full unit

A holder of shares constituting less than 1 unit may require Mitsui to
purchase such shares at their market value.

Increase in purchase of the shares to make one unit

By the resolution of Mitsuis ordinary general meeting of shareholders
held on June 27, 2003, Mitsui amended the Articles of Incorporation to add a
new provision as Article 7. Under this Article, any shareholder who holds
shares less than one unit, may request Mitsui to sell such number of shares
owned by Mitsui as are necessary to make one unit by adding the number of shares owned by such
shareholder in accordance with the Share Handling Regulations and the
Commercial Code.

Effect of the unit share system on holders of ADSs

A holder who owns ADSs evidencing less than 1,000 common shares will
indirectly own less than a whole unit. Although, as discussed above, under the
unit share system holders of less than a unit have the right to require Mitsui
to purchase their shares or sell such number of shares owned by Mitsui as are necessary to make one unit by adding the number of their shares, holders of ADSs that represent other than integral
multiples of whole units are unable to withdraw the underlying shares of
capital stock representing less than a unit and, therefore, are unable, as a
practical matter, to exercise the rights to require Mitsui to purchase nor sell such
underlying shares, unless Mitsuis Articles of Incorporation are amended to
eliminate the provision not to issue share certificates for the numbers of
shares less than a whole unit. As a result, access to the Japanese markets by
holders of ADSs through the withdrawal mechanism will not be available for
dispositions of shares in lots less than a unit. The unit share system does not
affect the transferability of ADSs, which may be transferred in lots of any
size.

Reporting of Substantial Shareholdings

The Securities and Exchange Law of Japan and its related regulations
require any person who has become, beneficially and solely or jointly, a holder
of more than 5% of the total issued shares of a company listed on any Japanese
stock exchange or whose shares are traded on an over-the-counter market in
Japan, to file a report concerning such shareholdings with the director of the
relevant Local Finance Bureau of the Ministry of Finance within five business
days. With certain exceptions, a similar report must also be made in respect of
any subsequent change of 1% or more in any such holding or of any change in
material matters set out in any previously-filed reports. For this purpose,
shares issuable or transferable to such person upon exercise of exchangeable
securities, conversion of convertible securities or exercise of warrants or
stock acquisition rights (including those incorporated in bonds with share
subscription rights) are taken into account in determining both the number of
shares held by such holder and the issuers total issued share capital. Copies
of each report must also be furnished to the issuer of the shares and to all
Japanese stock exchanges on which the shares are listed or, in the case of
shares traded over-the-counter, to the Japan Securities Dealers Association.

Exercise of Voting Rights

Except for the general limitation under Japanese anti trust and anti
monopoly regulations against holding of shares of capital stock of a Japanese
corporation which leads or may lead to a restraint of trade or monopoly, and
except for general limitations under the Commercial Code or Mitsuis Articles
of Incorporation on the rights of shareholders applicable regardless of
residence or nationality, there is no limitation under Japanese laws and
regulations applicable to Mitsui or under its Articles of Incorporation on the
rights of non-resident or foreign shareholders to hold or exercise voting
rights on the shares of common stock of Mitsui.

Change in Control

There is no provision in Mitsuis Articles of Incorporation that would
have an effect of delaying, deferring or preventing a change in control of
Mitsui and that would operate only with respect to merger, consolidation,
acquisition or corporate restructuring involving Mitsui.

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Daily
Price Fluctuation Limits under Japanese Stock Exchange Rules

Share prices on Japanese stock exchanges are determined on a real-time
basis by the equilibrium between bids and offers. These exchanges are
order-driven markets without specialists or market makers to guide price
formation. To prevent excessive volatility, these exchanges set daily upward
and downward price fluctuation limits for each share, based on the previous
days closing price. Although transactions may continue at the upward or
downward limit price if the limit price is reached on a particular trading day,
no transactions may take place outside these limits. Consequently, an investor
wishing to sell at a price above or below the relevant daily limit may not be
able to sell his or her shares at such price on a particular trading day, or at
all.

On September 17, 2003, the closing price of our shares on the Tokyo Stock
Exchange was ¥800 per share. The following table shows the daily price limit
for a stock on the Tokyo Stock Exchange with a closing price of between ¥500
and ¥1,000 per share, as well as the daily price limit if our per share price
were to rise to between ¥1,000 and ¥1,500, or fall to between ¥200 and ¥500.
Other daily price limits would apply if our per share price moved to other
ranges.

Selected Daily Price Limits

|                                              |  |                |       |  |  |           |  |   |       |  |  |   |     |               |  | 
|--------------------------------------------- |  | -------------- | ----- |  |  | --------- |  | - | ----- |  |  | - | --- | ------------- |  | 
|                                              |  |                |       |  |  |           |  |   |       |  |  |   |     | Maximum Daily
|Previous Day's Closing Price or Special Quote |  | Price Movement
|                                              |  |               
|Greater or equal                              |  | ¥              | 200   |  |  | Less than |  | ¥ | 500   |  |  | ¥ | 80  |              
|Greater or equal                              |  |                | 500   |  |  | Less than |  |   | 1,000 |  |  |   | 100 |              
|Greater or equal                              |  |                | 1,000 |  |  | Less than |  |   | 1,500 |  |  |   | 200 |              

For a history of the trading price of our shares on the Tokyo Stock
Exchange, see Item 9.A. Offer and Listing Details of this annual report.




C.     Material Contracts.

Other than as set forth below, we have not entered into any material
contracts, other than in the ordinary course of business.

Corporate Separation Contract

On December 7, 2001, Mitsui entered into a corporate separation (kaisha
bunkatsu) contract with Sumisho Building Material Co., Ltd. (hereinafter,
Sumisho) which is a wholly-owned subsidiary of Sumitomo Corporation,
involving the transfer of Mitsuis construction material sales business to
Sumisho. The contract contemplates the formation of an integrated construction
materials trading company to be equally owned by both Mitsui and Sumitomo
Corporation.

The contract provides for Sumisho to issue 800,000 of its shares of common
stock, which are to be allocated to Mitsui, as consideration for the ¥4,085
million worth of our net assets which we transferred to Sumisho.

Pursuant to the contracts terms, the separation occurred on February 1,
2002 in accordance with the corporate separation procedures set forth under
the Commercial Code of Japan. Certain employees in our construction material
sales business moved to the successor company. The successor business will be
engaged in the sales of construction materials, including among other things,
lumber products, interior construction materials, exterior wall materials,
equipment for wooden housing and various other interior and exterior products.

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D.     Exchange Controls.

Foreign Exchange Regulations

The Foreign Exchange and Foreign Trade Law of Japan, as currently in
effect, and the cabinet orders and ministerial ordinances thereunder (the
Foreign Exchange Regulations) govern certain matters relating to the
acquisition and holding of the shares or the ADSs, by Non-Residents of Japan
and by Foreign Investors as hereinafter defined.

Non-Residents of Japan are defined as individuals who are not resident
in Japan and corporations whose principal offices are located outside Japan.
Branches and other offices of Japanese corporations located outside Japan are
regarded as Non-Residents of Japan, and branches and other offices located
within Japan of foreign corporations are regarded as residents of Japan.
Foreign Investors are defined to be (i) individuals not resident in Japan,
(ii) corporations which are organized under the laws of foreign countries or
whose principal
offices are located outside Japan, and (iii) other corporations of which
(a) 50% or more of the shares are held directly or indirectly by (i) or (ii)
above, (b) a majority of officers consists of Non-Residents of Japan or (c) a
majority of officers having the power of representation consists of
Non-Residents of Japan.

Acquisition of Shares

In general, acquisition of shares of stock of a Japanese company listed on
any Japanese stock exchange or traded in any over-the-counter market in Japan
(Listed Shares) by a Non-Resident of Japan from a resident of Japan is not
subject to any prior filing requirements except as described below. However,
the Minister of Finance of Japan (the MOF) and other Ministers having
jurisdiction over the business of the subject company (together, the
Ministers) may require a prior approval for any such acquisition in certain
exceptional circumstances. The resident of Japan who transferred the shares of
a Japanese company to a Non-Resident of Japan must file a report concerning
such transfer with the MOF within 20 days after the transfer unless such
transfer is made through a bank, securities company or financial futures trader
licensed under the relevant Japanese law or consideration of such transfer is
¥100 million or less.

If the number of Listed Shares to be acquired, or the number of Listed
Shares that will be held as a result of such acquisition, by a Foreign Investor
(whether from a resident of Japan, another Foreign Investor or from or through
security companies) is 10% or more of the total outstanding shares of the
subject company, the Foreign Investor must file a post facto report with the
Ministers within 15 days of the date of acquisition. In certain exceptional
cases, a prior notification is required in respect of such an acquisition.

Acquisition of Shares upon Exercise of Subscription Rights Attached to Bonds

The acquisition by a Non-Resident of Japan of shares upon exercise of
his/her rights under the bonds with rights for subscription of new shares
offered overseas is exempted from the notification and reporting requirements
described under this Item 10. D. Exchange Controls-Acquisition of Shares
above.

ADRs

The deposit of the shares by a Non-Resident of Japan, the issuance of the
ADRs, in exchange therefor and the withdrawal of the underlying shares upon
surrender of the ADRs are not subject to any formalities referred to under
Acquisition of Shares above, except where as a result of such deposit (or
withdrawal) the aggregate number of shares held by the depositary (or its
nominee) or the holder surrendering the ADRs, as the case may be, would be
certain percentage of the total outstanding shares, in which event the relevant
report is required as outlined under Item 10. B. Memorandum and Articles of
Association-Reporting of Substantial Shareholdings and/or under this Item 10.
D. Exchange Controls-Acquisition of Shares.

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Dividends and Proceeds of Sales

Dividends paid on, and the proceeds of sales in Japan of the shares held
by Non-Residents of Japan may be convertible into any foreign currency and
repatriated abroad with no limit on the amount under the Foreign Exchange
Regulations currently in effect. The acquisition of the shares by Non-Residents
of Japan by way of stock splits is not subject to any of the aforesaid
notification and confirmation requirements.




E.     Taxation.

Japanese Taxes

The following is a summary of the principal Japanese tax consequences to
owners of our shares or ADSs who are non-resident individuals or non-Japanese
corporations without a permanent establishment in Japan to which income from
our shares is attributable. The tax treatment is subject to possible changes in
the applicable Japanese laws or double taxation conventions occurring after that date.
This summary is not exhaustive of all possible tax considerations that may
apply to a particular investor. Investors should consult their own tax advisers
as to:



| |  |  | the overall tax consequences of the acquisition, ownership and
disposition of shares or ADSs, including specifically the tax
consequences under Japanese law;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the laws of the jurisdiction of which they are resident; and                                                                                                 
|
| |  |  | any tax treaty between Japan and their country of residence.                                                                                                 

Generally, a non-resident holder of shares or ADSs is subject to Japanese
withholding tax on dividends paid by us. In the absence of any applicable tax
treaty, convention or agreement reducing the maximum rate of withholding tax,
the rate of Japanese withholding tax applicable to dividends paid by us to
non-resident holders is 10% for dividends to be paid between April 1, 2003 and
December 31, 2003, 7% for dividends to be paid between January 1, 2004 and
March 31, 2008, and 15% thereafter, except for dividends paid to any individual
shareholder who holds 5% or more of the issued shares of Mitsui. Japan has
income tax treaties, conventions or agreements whereby the maximum withholding
tax rate for dividend payment is set at, in most cases, 15% for portfolio
investors, with, among other countries, Australia, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and
the United States. Japanese tax law provides in general that if the Japanese
statutory rate is lower than the maximum rate applicable under tax treaties,
conventions or agreements, the Japanese statutory rate shall be applicable.

Stock splits are not subject to Japanese income or corporate tax. A
capitalization of retained earnings or legal reserve by Japanese corporations
is not subject to Japanese income or corporate tax as constructive dividends
in case of no cash payment or assets delivery. A capitalization of capital
surplus is not subject to Japanese income or corporate tax.

Non-resident holders who are entitled to a reduced rate of Japanese
withholding tax on payments of dividends on the shares by us are required to
submit an Application Form for the Income Tax Convention regarding Relief from
Japanese Income Tax on Dividends in advance through us to the relevant tax
authority before the payment of dividends. A standing proxy for non-resident
holders may provide the application. With respect to ADSs, this reduced rate is
applicable if the depositary or its agent submits two Application Forms for
Income Tax Convention (one prior to payment of dividends, the other within
eight months after our fiscal year-end). To claim this reduced rate, a
non-resident holder of ADSs will be required to file proof of taxpayer status,
required by the depositary. Non-resident holders who do not submit an
application in advance will generally be entitled to claim a refund from the
relevant Japanese tax authority of withholding taxes withheld in excess of the
rate of an applicable tax treaty. Gains derived from the sale outside Japan of
Mitsuis shares or the ADSs by Non-Residents of Japan, including non-Japanese
corporations, will not be subject to Japanese taxes on income. Gains derived
from the sale in Japan of Mitsuis shares or the ADSs by a Non-Resident of
Japan or a non-Japanese corporation not having a permanent establishment in
Japan to which such income is attributable are, in general, not subject to
Japanese income or corporate tax.

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In the case of United States investors, under the Tax Convention, gains
derived from the sale in Japan of Mitsuis shares or the ADSs by a United
States resident individual or by a United States corporation are exempt from
Japanese income or corporation taxes, unless the resident of the United States
has a permanent establishment in Japan and such gains are effectively connected
therewith.

Japanese inheritance and gift taxes, at progressive rates, may be payable
by an individual who acquire the shares or the ADSs as a legatee, heir or
donee.

United States Taxes

General

This discussion of certain U.S. federal tax consequences only applies to
U.S. holders who hold our ADSs or common shares as capital assets for tax
purposes and are not members of a special class of holders subject to special
rules, including: dealers in securities; traders in securities who elect to use
a mark-to-market method of accounting for their securities holdings; tax-exempt
organizations; insurance companies; persons liable for alternative minimum tax;
persons who actually or constructively own 10% or more of Mitsui voting stock;
persons who hold shares or ADSs as part of a hedging or straddle or conversion
transaction; or U.S. holders whose functional currency is not the U.S. dollar.
A U.S. holder is a beneficial owner of shares or ADSs that is: a citizen or
resident of the United States; a domestic corporation; an estate whose income
is subject to U.S. federal income tax regardless of its source; or a trust, if
a U.S. court can exercise primary supervision over the trusts administration
and one or more U.S. persons are authorized to control all substantial
decisions of the trust.

Moreover, the effect of any applicable U.S. state or local tax laws is not
discussed in this annual report.

For U.S. federal income tax purposes, if a person holds ADRs evidencing
ADSs, that person will be treated as the owner of the underlying shares
represented by those ADSs. Exchanges of common shares for ADRs, and ADRs for
ordinary shares, will not be subject to U.S. federal income tax.

Taxation of Dividends

Subject to the passive foreign investment company (PFIC) rules discussed
below, the gross amount of any dividend paid by Mitsui out of its current or
accumulated earnings and profits (as determined for U.S. federal income tax
purposes) is subject to tax. For noncorporate U.S. holders, dividends paid in
taxable years beginning after December 31, 2002 and before January 1, 2009 that
constitute qualified dividend income will be taxable at a maximum tax rate of
15% provided that shares or ADSs were held for more than 60 days during the
120-day period beginning 60 days before the ex-dividend date and other holding
period requirements are met. Dividends Mitsui pays with respect to its shares
or ADSs generally will be qualified dividend income. Dividends are taxable to
U.S. holders when they, in the case of shares, or the depositary, in the case
of ADSs, receive them, either actually or constructively. The dividend will not
be eligible for the dividends-received deduction generally allowed to U.S.
corporations in respect of dividends received from other U.S. corporations. Any
distribution in excess of current and accumulated earnings and profits (as
determined for U.S. federal income tax purposes) will be treated as a
non-taxable return of capital to the extent of a holders basis in the ADSs or
common shares and thereafter as capital gain.

The amount of the dividend distribution that a holder must include in his
or her income will be the U.S. dollar value of the Japanese yen payments made,
determined at the spot Japanese yen/U.S. dollar rate on the date such dividend
distribution is includible in such holders income, regardless of whether the
payment is in fact converted into U.S. dollars. Generally, any gain or loss
resulting from currency exchange fluctuations during the period from the date a
holder includes the dividend payment in income to the date such payment is
converted into U.S. dollars will be treated as ordinary income or loss and will
not be eligible for the special tax rate applicable to qualified dividend
income. Such gain or loss will generally be income or loss from sources within
the United States for foreign tax credit limitation purposes.

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For foreign tax credit purposes, the dividend will be income from sources
outside the United States, but generally will be passive income or financial
services income which is treated separately from other types of income for
purposes of computing the foreign tax credit allowable to a holder. No U.S.
foreign tax credit will be allowed to U.S. holders of common shares or ADSs in
respect of any personal property or similar tax imposed by Japan (or any taxing
authority thereof or therein). Special rules apply in determining the foreign
tax credit limitation with respect to dividends that are subject to the maximum
15% tax rate.

Distributions of additional shares or rights to subscribe for additional
shares to U.S. holders with respect to their common shares or ADSs that are
made as part of a pro rata distribution to all shareholders generally will not
be subject to U.S. federal income tax.

Taxation of Capital Gains

Subject to the PFIC rules discussed below, a U.S. holder who sells or
otherwise disposes of common shares or ADSs will recognize gain or loss for
U.S. federal income tax purposes in an amount equal to the difference between
the U.S. dollar value of the amount realized and his or her tax basis
(determined in U.S. dollars) in such shares or ADSs. Capital gain of a
noncorporate U.S. holder that is recognized on or after May 6, 2003 and before
January 1, 2009 is generally taxed at a maximum rate of 15% where the holder
has a holding period greater than one year. The gain or loss will generally be
income or loss from sources within the U.S. for foreign tax credit limitation
purposes.

PFIC Rules

Mitsui does not believe that the common shares or ADSs will be treated as
stock of a PFIC for United States federal income tax purposes, but this
conclusion is a factual determination that is made annually and thus is subject
to change. If Mitsui were treated as a PFIC, unless a U.S. holder elected to be
taxed annually on a mark-to-market basis with respect to the common shares or
ADSs, gain realized on the sale or other disposition of the shares or ADSs
would in general not be treated as capital gain. Instead a U.S. holder would be
treated as if he or she had realized such gain and certain excess
distributions ratably over the holding period for the shares or ADSs and would
be taxed at the highest tax rate in effect for each such year to which the gain
was allocated, in addition to which an interest charge in respect of the tax
attributable to each such year would apply. In addition, dividends received
from Mitsui would not be eligible for the special tax rates applicable to
qualified dividend income if Mitsui were a PFIC either in the taxable year of
the distribution or the preceding taxable year, but instead would be taxable at
rates applicable to ordinary income.

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F.     Dividends and Paying Agents.

Not applicable.




G.     Statement by Experts.

Not applicable.




H.     Documents on Display.

We are subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, we will file annual reports
on Form 20-F within six months of our fiscal year-end and other reports and
information on Form 6-K with the Securities and Exchange Commission. These
reports and other information can be inspected at the public reference room at
the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can also obtain copies of such material by mail form the
public reference room of the Securities and Exchange Commission at prescribed
fees. You may obtain information on the operation of the Securities and
Exchange Commission public reference room by calling the Securities and
Exchange Commission in the United States at 1-800-SEC-0330. You can also access
to the documents filed via the Electronic Data Gathering, Analysis (EDGAR),
and Retrieval system on the SECs website (http://www.sec.gov).




I.     Subsidiary Information.

Not applicable.




Item 11. Quantitative and Qualitative Disclosures about Market Risk.

In the normal course of business, we are exposed to many risks arising
from the potential change in financial and other instruments values caused by
fluctuations in interest rates, foreign currency exchange rates, commodity
prices and equity prices. In order to manage these risks, we apply a consistent
risk management policy to use derivative financial and commodity instruments,
including foreign exchange forward contracts, currency and interest rate swap
agreements, commodity futures, forwards, options and swap agreements. To a
lesser degree, Mitsui and certain subsidiaries also enter into derivative
financial and commodity instruments for trading purposes within position limits
and loss limits (trading limits) strictly set under the risk management
structure, which is described below.

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We have established market risk management procedures at several levels
throughout the organization. Chief Operating Officers of operating segments
have the first line of responsibility for managing market risk within
prescribed limits. These officers have in-depth knowledge of the primary
sources of risk in their individual markets and the instruments available to
hedge their exposures.

We also have the Corporate Risk Management Division (hereinafter CRM)
within our headquarter, which monitors the company-wide process of risk
management and compliance with trading limits set for
operating segments. The CRM also provides general oversight with respect
to the operating segments market risk management process.

Interest Rate Risk

Our normal business activities expose us to market risk arising from
changes in interest rates. To manage our interest rate risk, we enter into
interest rate swap agreements and interest rate and currency swap agreements in
order to modify and match the interest rate characteristics of our assets and
liabilities.

Foreign Currency Exchange Rate Risk

Our global operations in many countries generate foreign currency
exposures related to imports, exports and financing in currencies other than
the local currency. We use derivative instruments such as foreign exchange
forward contracts, currency swap agreement, and interest rate and currency swap
agreements to hedge market risk arising from the changes in foreign exchange
rates associated with existing assets, obligations, future cash flows from
receivables and payables resulting from selling and purchasing activities,
long-term financing transactions, identifiable commitments and forecasted
transactions denominated in foreign currencies.

Commodity Price Risk

As major participants in global commodities markets, we trade in physical
precious and base metals, energy products (crude oil and refined oil products)
and agricultural products (wheat, coffee, sugar and others), and utilize a
variety of derivatives related to these commodities, such as futures, forwards,
swaps and options. Derivatives on those commodities are often used to hedge
price movements in the underlying physical inventory or future inventory needs
and to fix the expected future cash flows from forecasted transactions. To
facilitate hedging, we are often required to take positions in the commodity
markets in the form of future, forward, swap and option contracts involving
those commodities.

Equity Price Risk

We hold stocks issued by our business partners including, amongst others,
our customers and suppliers as marketable securities for the promotion of
business and strategic objectives. We also hold other marketable securities,
such as of banking institutions, for investment purposes. We are exposed to
equity price risk inherent in these stocks. We do not take continuous hedging
measures against the market exposures on those securities.

Risk Management of Derivative Financial Instruments and Other Financial
Instruments

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As an independent monitoring and advisory division for currency and
interest rate risks to which we are exposed, CRM obtains and analyzes detailed
information on financial transactions, measures the risks and reports them
directly to a member of senior management. For financial instruments entered
into for trading purposes, such as interest rate swap transactions, foreign
exchange forward contracts, interest rate futures and others, CRM measures
daily Value-at-Risk (VaR) and conducts back-testing, validating their risk
model by comparing its assumptions with actual results semi-annually.

In addition to a policy that the counterparties in most derivative
transactions are strictly limited to highly rated financial institutions, CRM
continuously evaluates the creditworthiness and the level of transactions with
individual institutions. CRM also estimates our current and potential exposure,
or the cost of replacing existing swaps and other transactions, in the event
that the counterparty is unable to meet its obligations.

Risk Management of Derivative Commodity Instruments

Each of our operating segments has a general framework for measuring
portfolio risk which is based on aggregate risk limits approved by our
management and credit risk of counterparties. The transactions are confirmed
with counterparties and are recorded by independent risk management sections.
The results of trading are periodically reported to our executive officers in
charge of risk management.

In order to strengthen our risk monitoring process, particularly by
sharing and exchanging information on newly developed risk measurement methods,
we periodically hold company-wide conferences among the concerned operating
segments and related divisions in the corporate headquarters.

VaR

We use the VaR method to measure market risk. VaR is a statistical measure
of the potential maximum loss in the fair value of a portfolio resulting from
adverse market movements in underlying risk factors, over a defined period,
within a certain confidence level. As VaR incorporates historical data
regarding changes in market risk factors, our actual results may differ
materially from the calculations below. The sum of the VaRs for the risk
categories do not represent our aggregate VaR, because market risk factors such
as interest rates and currency exchange rates are partially correlated to
offset a portion of the simple sum of the VaRs. At March 31, 2003 and 2002, we
estimated VaR in one day with respect to the interest rate, foreign currency
exchange rate and commodity price risks (with some exceptions to certain
commodity price risks in which case VaRs in five days are used) using a
variance-covariance method and a historical simulation approach with a
confidence level of 97.7%.

VaRs for Non-Trading Activities

The following table sets forth the year-end, high, low and average VaR
figures of interest rate risk, foreign currency exchange rate risk and
commodity price risk for non-trading purposes, for the years ended March 31,
2003 and 2002.

The following VaR figures do not reflect the full effect of the hedging
activities related to all of the underlying exposures such as the effect of
receivables, payables and cash flows from anticipated transactions that are
hedged items.

Interest rate risk consists of the net risk position based on the
management of our assets and liabilities. Foreign exchange rate risk consists
of the net risk position of transactions denominated in foreign currencies, but
mainly in U.S. dollars. We used an assumption of correlation among currencies
for the year ended March 31, 2003 for the purpose of improving our risk
measurement. VaR figures for fiscal 2003 were reduced by about 30% when taking
into account of such change in the assumption regarding correlation. Commodity
price risk consists of the net risk position of commodity positions and
commodity derivative instruments utilized to hedge the commodity price risk
associated with physical commodity inventories and firm commitments.

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|                                    |  |                   |          |             |  |     |          |         |  |          |        |      |  |     |          |         |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|----------------------------------- |  | ----------------- | -------- | ----------- |  | --- | -------- | ------- |  | -------- | ------ | ---- |  | --- | -------- | ------- |  | - | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                    |  | (Millions of Yen)
|                                    |  | Fiscal 2003       |          | Fiscal 2002
|                                    |  |                   |          |            
|                                    |  | Year End          |          | High        |  | Low |          | Average |  | Year End |        | High |  | Low |          | Average
|                                    |  |                   |          |             |  |     |          |         |  |          |        |      |  |     |          |        
|Interest rate risk                  |  | ¥                 | 245      |             |  | ¥   | 392      |         |  | ¥        | 210    |      |  | ¥   | 293      |         |  | ¥ | 253   |  |  | ¥ | 253   |  |  | ¥ | 134   |  |  | ¥ | 190   | 
|Foreign currency
exchange rate risk |  |                   | 921      |             |  |     | 1,134    |         |  |          | 660    |      |  |     | 876      |         |  |   | 1,533 |  |  |   | 1,891 |  |  |   | 1,034 |  |  |   | 1,396 | 
|                                    |  |                   | (*)1,139 |             |  |     | (*)1,911 |         |  |          | (*)892 |      |  |     | (*)1,294 |         |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|Commodity
price risk                |  |                   | 866      |             |  |     | 1,256    |         |  |          | 693    |      |  |     | 936      |         |  |   | 778   |  |  |   | 778   |  |  |   | 452   |  |  |   | 562   | 



|* |  | VaR figures for fiscal 2003 disregard the correlation among currencies.
|- |  | -----------------------------------------------------------------------

VaRs for Trading Activities

Mitsui and certain trading subsidiaries conduct trading activities within
well-defined position limits and loss limits strictly set under the risk
management structure mentioned above. The results of the transactions and
positions are confirmed, monitored daily and reported to management by
independent sections to eliminate or reduce unacceptable losses from the
trading activities. The items traded by Mitsui and certain subsidiaries are
principally foreign exchange contracts, interest rate swap agreements and
commodity futures, forwards, swaps and options related to base metals and
agricultural products.

The following table sets forth the year end, high, low, and average VaR
figures of interest rate risk, foreign exchange rate risk and commodity price
risk, for trading purposes, for the years ended March 31, 2003 and 2002.

|                                    |  |                   |       |             |  |     |       |         |  |          |       |      |  |     |       |         |  |   |       |  |  |   |       |  |  |   |     |  |  |   |       | 
|----------------------------------- |  | ----------------- | ----- | ----------- |  | --- | ----- | ------- |  | -------- | ----- | ---- |  | --- | ----- | ------- |  | - | ----- |  |  | - | ----- |  |  | - | --- |  |  | - | ----- | 
|                                    |  | (Millions of Yen)
|                                    |  | Fiscal 2003       |       | Fiscal 2002
|                                    |  |                   |       |            
|                                    |  | Year End          |       | High        |  | Low |       | Average |  | Year End |       | High |  | Low |       | Average
|                                    |  |                   |       |             |  |     |       |         |  |          |       |      |  |     |       |        
|Interest rate risk                  |  | ¥                 | 44    |             |  | ¥   | 84    |         |  | ¥        | 36    |      |  | ¥   | 61    |         |  | ¥ | 60    |  |  | ¥ | 204   |  |  | ¥ | 54  |  |  | ¥ | 90    | 
|Foreign currency
exchange rate risk |  |                   | 0     |             |  |     | 201   |         |  |          | 0     |      |  |     | 89    |         |  |   | 49    |  |  |   | 191   |  |  |   | 27  |  |  |   | 76    | 
|Commodity price risk                |  |                   | 2,337 |             |  |     | 2,376 |         |  |          | 1,979 |      |  |     | 2,170 |         |  |   | 1,666 |  |  |   | 1,666 |  |  |   | 969 |  |  |   | 1,388 | 

Tabular Presentation of Equity Price Risk

The cost, fair value and unrealized holding net gains (losses) on
marketable equity securities by industry at March 31, 2003 and 2002 were as
follows:

|                                    |  |                   |        |                |  |          |        |      |  |            |        |          |  |   |        |  |  |   |         |            |  |   |        |  
|----------------------------------- |  | ----------------- | ------ | -------------- |  | -------- | ------ | ---- |  | ---------- | ------ | -------- |  | - | ------ |  |  | - | ------- | ---------- |  | - | ------ | -
|                                    |  | (Millions of Yen)
|                                    |  | March 31, 2003    |        | March 31, 2002
|                                    |  |                   |        |               
|                                    |  |                   |        |                |  |          |        |      |  | Unrealized |        |          |  |   |        |  |  |   |         | Unrealized
|                                    |  |                   |        |                |  |          |        |      |  | Holding    |        |          |  |   |        |  |  |   |         | Holding   
|                                    |  |                   |        |                |  |          |        |      |  | Net Gains  |        |          |  |   |        |  |  |   |         | Net Gains 
|                                    |  | Cost              |        | Fair Value     |  | (Losses) |        | Cost |  | Fair Value |        | (Losses)
|                                    |  |                   |        |                |  |          |        |      |  |            |        |         
|Manufacturing                       |  | ¥                 | 80,046 |                |  | ¥        | 91,326 |      |  | ¥          | 11,280 |          |  | ¥ | 86,179 |  |  | ¥ | 131,118 |            |  | ¥ | 44,939 |  
|Commercial, finance and
real estate |  |                   | 22,508 |                |  |          | 21,185 |      |  |            | (1,323 | )        |  |   | 52,085 |  |  |   | 49,839  |            |  |   | (2,246 | )
|Transport and
telecommunication     |  |                   | 17,160 |                |  |          | 18,527 |      |  |            | 1,367  |          |  |   | 16,936 |  |  |   | 30,689  |            |  |   | 13,753 |  

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|                           |  |                   |         |                |  |          |         |      |  |            |        |          |  |   |         |  |  |   |         |            |  |   |        | 
|-------------------------- |  | ----------------- | ------- | -------------- |  | -------- | ------- | ---- |  | ---------- | ------ | -------- |  | - | ------- |  |  | - | ------- | ---------- |  | - | ------ | 
|                           |  | (Millions of Yen)
|                           |  | March 31, 2003    |         | March 31, 2002
|                           |  |                   |         |               
|                           |  |                   |         |                |  |          |         |      |  | Unrealized |        |          |  |   |         |  |  |   |         | Unrealized
|                           |  |                   |         |                |  |          |         |      |  | Holding    |        |          |  |   |         |  |  |   |         | Holding   
|                           |  |                   |         |                |  |          |         |      |  | Net Gains  |        |          |  |   |         |  |  |   |         | Net Gains 
|                           |  | Cost              |         | Fair Value     |  | (Losses) |         | Cost |  | Fair Value |        | (Losses)
|                           |  |                   |         |                |  |          |         |      |  |            |        |         
|Energy, service and others |  |                   | 20,761  |                |  |          | 25,108  |      |  |            | 4,347  |          |  |   | 22,635  |  |  |   | 54,433  |            |  |   | 31,798 | 
|                           |  |                   |         |                |  |          |         |      |  |            |        |          |  |   |         |  |  |   |         |            |  |   |        | 
|Total                      |  | ¥                 | 140,475 |                |  | ¥        | 156,146 |      |  | ¥          | 15,671 |          |  | ¥ | 177,835 |  |  | ¥ | 266,079 |            |  | ¥ | 88,244 | 
|                           |  |                   |         |                |  |          |         |      |  |            |        |          |  |   |         |  |  |   |         |            |  |   |        | 

For the year ended March 31, 2003, the decline in unrealized holding gains
(except for the commercial, finance and real estate industry-related
securities) compared to the year ended March 31, 2002 was due to the overall
decline in Japanese stock prices. The decrease in cost and fair value of the
manufacturing sector was due to the contribution of securities in the
industries such as motor vehicles, electronics and chemical to an employee
retirement benefit trust. Decline in stock prices of those industries reduced
the fair value as well. In addition, recognition of loss on the write-down of
securities in chemical industry reduced its cost. The commercial, finance and
real estate sector showed the decrease in cost and fair value mainly due to
sales and recognition of loss on the write-down of securities categorized as
finance industry. The net unrealized gain in the transport and
telecommunication sector decreased mainly due to the decline in stock prices of
the telecommunication industry. The net unrealized gain in the energy, service and others sector decreased
due to the decline in stock prices of the satellite service industry.

Maturities and fair values of debt securities classified as
available-for-sale and held-to-maturity at March 31, 2003 were as follows:

|                        |                                |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |        |        | 
|----------------------- | ------------------------------ | ----- | - | ------------------ | ------- | ---------------- | - | -------- | ------- | ---------- | - | ------ | ------ |  | - | ------ | ------ | 
|                        |                                |       |   | (Millions of Yen) 
|                        |                                |       |   | Available-for-sale |         | Held-to-maturity
|                        |                                |       |   |                    |         |                 
|                        |                                |       |   | Carrying           |         | Aggregate        |   | Carrying |         | Aggregate 
|                        |                                |       |   | Amount             |         | Fair Value       |   | Amount   |         | Fair Value
|                        |                                |       |   |                    |         |                  |   |          |         |           
|Contractual maturities: |                                |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |       
|                        | Within 1 year                  |       | ¥ | 86,695             |         |                  | ¥ | 86,796   |         |            | ¥ | 11,806 |        |  | ¥ | 11,806 |       
|                        | After 1 year through 5 years   |       |   | 35,234             |         |                  |   | 35,203   |         |            |   | 1,936  |        |  |   | 1,950  |       
|                        | After 5 years through 10 years |       |   | 8,157              |         |                  |   | 8,171    |         |            |   | 3,051  |        |  |   | 3,048  |       
|                        | After 10 years                 |       |   | 5                  |         |                  |   | 5        |         |            |   |       |        |  |   |       |       
|                        |                                |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |       
|                        |                                | Total |   | ¥                  | 130,091 |                  |   | ¥        | 130,175 |            |   | ¥      | 16,793 |  |   | ¥      | 16,804 | 
|                        |                                |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |       




Item 12. Description of
Securities Other than Equity Securities.

Not applicable.

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PART II




Item 13. Defaults, Dividend Arrearages and Delinquencies.

None.




Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.

None.




Item 15. Controls and Procedures.

Our management, with the participation of its principal executive and
principal financial officers, evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the U.S. Securities
Exchange Act of 1934) within 90 days of the filing of this report. Based on
that evaluation, our principal executive and principal financial officers
concluded that the disclosure controls and procedures were effective in all
material respects as of that date.

There was no change in our internal control over financial reporting that
occurred subsequent to the date of the evaluation date referred to above that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.




Item 16A. Audit Committee Financial Expert.

Not applicable.




Item 16B. Code of Ethics.

Not applicable.




Item 16C. Principal Accountant Fees and Services.

Not applicable.




Item 16D. Exemptions from the Listing Standards for Audit Committees.

Not applicable.



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PART III




Item 17. Financial Statements.

Not applicable.




Item 18. Financial Statements.

The information required by this item has been provided elsewhere in this annual report.




Item 19. Exhibits.

Exhibits

|        |  |                                                                                                                                                         
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                         
|Number  |  | Document                                                                                                                                                
|        |  |                                                                                                                                                         
|1.1     |  | The Articles of Incorporation of Mitsui & Co., Ltd., as
of June 27, 2003 (English-language translation).                                                
|        |  |                                                                                                                                                         
|1.2     |  | The Share Handling Regulation of Mitsui & Co., Ltd., as amended
on June 27, 2003 (English-language translation).                                        
|        |  |                                                                                                                                                         
|1.3     |  | The Rules of the Board of Directors of Mitsui & Co., Ltd., as
amended on June 27, 2003 (English-language translation).                                  
|        |  |                                                                                                                                                         
|1.4     |  | The Rules of the Board of Corporate Auditors of Mitsui & Co., Ltd.,
as amended on April 1, 2002 (English-language translation).                         
|        |  |                                                                                                                                                         
|2.1*    |  | Deposit Agreement, dated October 1, 1982 among Mitsui & Co., Ltd.,
Citibank, N.A., and holders of ADRs and European Depositary Receipts.                
|        |  |                                                                                                                                                         
|4.1*    |  | Corporate Separation Contract, dated December 7, 2001, among Mitsui
& Co., Ltd. and Sumisho Building Materials Co., Ltd. (English-language
translation).
|        |  |                                                                                                                                                         
|8.1     |  | List of Subsidiaries of Mitsui & Co., Ltd.                                                                                                              
|        |  |                                                                                                                                                         
|12.1    |  | Certification of the principal executive officer of Mitsui
& Co., Ltd. required by Rule 13a-14(a).                                                      
|        |  |                                                                                                                                                         
|12.2    |  | Certification of the principal financial officer of Mitsui
& Co., Ltd. required by Rule 13a-14(a).                                                      
|        |  |                                                                                                                                                         
|13.1    |  | Certification required by Rule 13a-14(b) and Section 1350 of
Chapter 63 of Title 18 of the United States Code.                                          



---

|* |  | Incorporated by reference to the corresponding exhibit to our
annual report on Form 20-F (File No. 0-9929) filed on September 27,
2002.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------

We have not included as exhibits certain instruments with respect to our
long-term debt, the amount of debt authorized under each of which does not
exceed 10% of our total assets, and we agree to furnish a copy of any such
instrument to the Securities and Exchange Commission upon request.

103



---



##### Table of Contents



MITSUI & CO., LTD. (MITSUI
BUSSAN KABUSHIKI KAISHA) AND SUBSIDIARIESINDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

The audited consolidated financial statements of Mitsui & Co.,
Ltd. (Mitsui Bussan Kabushiki Kaisha) and subsidiaries, together
with the report of Deloitte Touche Tohmatsu as of March 31, 2003 and
2002, and for the years ended March 31, 2003, 2002 and 2001, filed
as part of this annual reports are as follows:

|                                                                                                  |  |      |      | 
|------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                                  |  | Page
|                                                                                                  |  |     
|Independent Auditors Report                                                                      |  |      | F-2  | 
|Consolidated Balance Sheets, March 31, 2003 and 2002                                              |  |      | F-3  | 
|Statements of Consolidated Income for the Years Ended March 31, 2003, 2002 and 2001               |  |      | F-5  | 
|Statements of Consolidated Shareholders Equity for the Years
Ended March 31, 2003, 2002 and 2001 |  |      | F-6  | 
|Statements of Consolidated Cash Flows for the Years Ended March 31, 2003, 2002 and 2001           |  |      | F-8  | 
|Notes to Consolidated Financial Statements                                                        |  |      | F-9  | 
|Supplemental Information on Oil and Gas Producing Activities                                      |  |      | F-57 | 

Supplemental Information:



| |  |  | Schedules for the Years Ended March 31, 2003, 2002 and 2001:                                                                                                                                             
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | (Schedules are omitted because of the absence of the
conditions under which they are required or because
the required information is included in the
consolidated financial statements or notes thereto.)

Financial statements of majority-owned subsidiaries of the
registrant not consolidated and of 50% or less owned persons accounted for by the
equity method have been omitted because Mitsui & Co., Ltd.s proportionate share of
the income from continuing operations before income taxes,
and total assets of each such company is less than 20% of the respective
consolidated amounts, and the investment in and advances to each
company is less than 20% of consolidated total assets.

F-1



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareholders of
Mitsui & Co., Ltd. (Mitsui Bussan Kabushiki Kaisha):

We have audited the accompanying consolidated balance sheets of Mitsui & Co.,
Ltd. (Mitsui Bussan Kabushiki Kaisha) and subsidiaries as of March 31, 2003 and
2002, and the related statements of consolidated income, consolidated
shareholders equity, and consolidated cash flows for each of the three years
in the period ended March 31, 2003 (all expressed in Japanese yen). These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these 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 financial position of Mitsui & Co., Ltd. and
subsidiaries as of March 31, 2003 and 2002, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
2003, in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 2 to the consolidated financial statements, effective
April 1, 2001, the Company changed its method of accounting for derivative
instruments and hedging activities to conform to Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities.

Our audits also comprehended the translation of Japanese yen amounts into U.S.
dollar amounts and, in our opinion, such translation has been made in
conformity with the basis stated in Note 2. Such U.S. dollar amounts are
presented solely for the convenience of readers outside Japan.

/s/ DELOITTE TOUCHE TOHMATSU

---

May 9, 2003, except for the litigation issues described in Note 18, and Note 22, as to which the dates are June 13 and June 27, 2003, respectively

F-2



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##### Table of Contents



Consolidated Balance Sheets
Mitsui & Co., Ltd. and subsidiaries
March 31, 2003 and 2002

|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                  |        | 
|-------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------- | -------- | --------------- | --------- | ---------------- | -------- | --------- | --------- | - | ------ | ---------------- | ------ | 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        | Millions of U.S.
|                                                                                 |                                                       |                                               |          | Millions of Yen |           | Dollars (Note 2)
|                                                                                 |                                                       |                                               |          |                 |           |                 
|                                                                                 |                                                       |                                               |          | 2003            |           | 2002             |          | 2003     
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |          
|ASSETS                                                                           |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Current Assets:                                                                  |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Cash and cash equivalents (Note 2)                                               |                                                       | ¥                                             | 660,216  |                 |           | ¥                | 607,987  |           |           | $ | 5,595  |                 
|Time deposits                                                                    |                                                       |                                               | 37,702   |                 |           |                  | 78,211   |           |           |   | 320    |                 
|Marketable securities (Notes 2 and 5)                                            |                                                       |                                               | 99,084   |                 |           |                  | 102,664  |           |           |   | 840    |                 
|Trade receivables (Note 8):                                                      |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|                                                                                 | Notes and loans, less unearned interest               |                                               |          | 467,820         |           |                  |          | 532,708   |           |   |        | 3,965            |       
|                                                                                 | Accounts (Note 7)                                     |                                               |          | 1,589,379       |           |                  |          | 1,560,041 |           |   |        | 13,469           |       
|                                                                                 | Associated companies                                  |                                               |          | 195,411         |           |                  |          | 152,537   |           |   |        | 1,656            |       
|                                                                                 | Allowance for doubtful receivables (Notes 2, 6 and 7) |                                               |          | (21,236         | )         |                  |          | (20,625   | )         |   |        | (180             | )     
|Inventories (Note 2)                                                             |                                                       |                                               | 488,672  |                 |           |                  | 485,147  |           |           |   | 4,141  |                 
|Advance payments to suppliers                                                    |                                                       |                                               | 57,090   |                 |           |                  | 66,785   |           |           |   | 484    |                 
|Deferred
tax assetscurrent (Notes 2 and 17)                                     |                                                       |                                               | 35,819   |                 |           |                  | 31,120   |           |           |   | 303    |                 
|Other current assets                                                             |                                                       |                                               | 221,787  |                 |           |                  | 187,182  |           |           |   | 1,879  |                 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|                                                                                 |                                                       | Total
current assets                          |          |                 | 3,831,744 |                  |          |           | 3,783,757 |   |        |                  | 32,472 | 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Investments and Non-current Receivables(Notes 2 and 8):                          |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Investments in and advances to associated companies (Note 5)                     |                                                       |                                               | 584,511  |                 |           |                  | 459,797  |           |           |   | 4,954  |                 
|Other investments (Note 5)                                                       |                                                       |                                               | 525,063  |                 |           |                  | 741,934  |           |           |   | 4,450  |                 
|Non-current receivables, less unearned interest (Note 7)                         |                                                       |                                               | 674,681  |                 |           |                  | 805,243  |           |           |   | 5,718  |                 
|Allowance for doubtful receivables (Notes 6 and 7)                               |                                                       |                                               | (139,793 | )               |           |                  | (139,478 | )         |           |   | (1,185 | )               
|Property leased to othersat cost, less accumulated depreciation (Notes 7 and 9) |                                                       |                                               | 240,304  |                 |           |                  | 270,274  |           |           |   | 2,036  |                 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|                                                                                 |                                                       | Total
investments and non-current receivables |          |                 | 1,884,766 |                  |          |           | 2,137,770 |   |        |                  | 15,973 | 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Property and Equipmentat Cost(Notes 2, 8 and 9):                                |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Land, land improvements and timberlands                                          |                                                       |                                               | 232,469  |                 |           |                  | 230,577  |           |           |   | 1,970  |                 
|Buildings, including leasehold improvements                                      |                                                       |                                               | 347,408  |                 |           |                  | 334,445  |           |           |   | 2,944  |                 
|Equipment and fixtures                                                           |                                                       |                                               | 342,012  |                 |           |                  | 330,426  |           |           |   | 2,899  |                 
|Vessels                                                                          |                                                       |                                               | 19,970   |                 |           |                  | 19,075   |           |           |   | 169    |                 
|Projects in progress                                                             |                                                       |                                               | 20,801   |                 |           |                  | 35,791   |           |           |   | 176    |                 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|                                                                                 | Total                                                 |                                               |          | 962,660         |           |                  |          | 950,314   |           |   |        | 8,158            |       
|                                                                                
|Accumulated depreciation                                                         |                                                       |                                               | (391,733 | )               |           |                  | (364,873 | )         |           |   | (3,320 | )               
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|                                                                                 |                                                       | Net
property and equipment                    |          |                 | 570,927   |                  |          |           | 585,441   |   |        |                  | 4,838  | 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Intangible Assets, less Accumulated Amortization(Notes 2, 10 and 12)             |                                                       |                                               | 71,179   |                 |           |                  | 45,155   |           |           |   | 603    |                 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Deferred Tax AssetsNon-current(Notes 2 and 17)                                  |                                                       |                                               | 53,527   |                 |           |                  | 24,668   |           |           |   | 454    |                 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|Other Assets(Note 12)                                                            |                                                       |                                               | 128,377  |                 |           |                  | 91,575   |           |           |   | 1,088  |                 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 
|                                                                                 |                                                       | Total                                         |          | ¥               | 6,540,520 |                  |          | ¥         | 6,668,366 |   |        | $                | 55,428 | 
|                                                                                 |                                                       |                                               |          |                 |           |                  |          |           |           |   |        |                 

See notes to consolidated financial statements.

F-3



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##### Table of Contents



|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |     |                  |        |  
|------------------------------------------------------------------------------------------------------ | ---------------- | ----------------------------------------------------------------------------- | ------------------------------------------ | ------ | --------------- | --------- | ---------------- | ------ | --------- | --------- | ------ | --- | ---------------- | ------ | -
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |     | Millions of U.S.
|                                                                                                       |                  |                                                                               |                                            |        | Millions of Yen |           | Dollars (Note 2)
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                 
|                                                                                                       |                  |                                                                               |                                            |        | 2003            |           | 2002             |        | 2003     
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |          
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                   |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Current Liabilities:                                                                                   |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Short-term loans (Notes 8 and 11)                                                                      |                  | ¥                                                                             | 612,645                                    |        |                 | ¥         | 567,413          |        |           | $         | 5,192  |    
|Current maturities of long-term debt (Notes 8 and 11)                                                  |                  |                                                                               | 495,299                                    |        |                 |           | 454,787          |        |           |           | 4,198  |    
|Trade payables:                                                                                        |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       |                  | Notes and acceptances                                                         |                                            |        | 124,276         |           |                  |        | 179,129   |           |        |     | 1,053            |       
|                                                                                                       |                  | Accounts                                                                      |                                            |        | 1,417,472       |           |                  |        | 1,407,512 |           |        |     | 12,012           |       
|                                                                                                       |                  | Associated companies                                                          |                                            |        | 77,033          |           |                  |        | 68,926    |           |        |     | 653              |       
|Accrued expenses:                                                                                      |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       |                  | Income taxes (Notes 2 and 17)                                                 |                                            |        | 23,076          |           |                  |        | 18,588    |           |        |     | 196              |       
|                                                                                                       |                  | Interest                                                                      |                                            |        | 23,633          |           |                  |        | 27,004    |           |        |     | 200              |       
|                                                                                                       |                  | Other                                                                         |                                            |        | 39,681          |           |                  |        | 41,735    |           |        |     | 336              |       
|Advances from customers                                                                                |                  |                                                                               | 73,155                                     |        |                 |           | 79,387           |        |           |           | 620    |    
|Other current liabilities (Notes 2, 17 and 18)                                                         |                  |                                                                               | 139,060                                    |        |                 |           | 142,195          |        |           |           | 1,178  |    
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       |                  |                                                                               | Total
current liabilities                  |        |                 | 3,025,330 |                  |        |           | 2,986,676 |        |     |                  | 25,638 |  
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Long-term Debt, less Current Maturities(Notes 8 and 11)                                                |                  |                                                                               | 2,500,470                                  |        |                 |           | 2,619,867        |        |           |           | 21,191 |    
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Accrued Pension Costs and Liability for Severance Indemnities                                          |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       | (Notes 2 and 12) |                                                                               |                                            | 53,148 |                 |           |                  | 41,561 |           |           |        | 450 |                 
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Deferred Tax LiabilitiesNon-current(Notes 2 and 17)                                                   |                  |                                                                               | 31,459                                     |        |                 |           | 47,093           |        |           |           | 267    |    
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Commitments and Contingent Liabilities(Notes 8 and 18)                                                 |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                      
|Minority Interests                                                                                     |                  |                                                                               | 67,966                                     |        |                 |           | 58,199           |        |           |           | 576    |    
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Shareholders Equity(Note 13):                                                                         |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Common
stockno par value Authorized, 2,500,000,000 shares; Issued, 2003 and 20021,583,674,837 shares |                  |                                                                               | 192,487                                    |        |                 |           | 192,487          |        |           |           | 1,631  |    
|Capital surplus                                                                                        |                  |                                                                               | 287,756                                    |        |                 |           | 287,756          |        |           |           | 2,439  |    
|Retained earnings:                                                                                     |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       |                  | Appropriated for legal reserve                                                |                                            |        | 36,382          |           |                  |        | 35,873    |           |        |     | 308              |       
|                                                                                                       |                  | Unappropriated (Notes 2, 5, 11, 17 and 22)                                    |                                            |        | 494,038         |           |                  |        | 476,074   |           |        |     | 4,187            |       
|Accumulated other comprehensive income (loss) (Note 2):                                                |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       |                  | Unrealized holding gains and losses on available-for-sale securities (Note 5) |                                            |        | 3,405           |           |                  |        | 44,246    |           |        |     | 28               |       
|                                                                                                       |                  | Foreign currency translation adjustments                                      |                                            |        | (141,053        | )         |                  |        | (118,669  | )         |        |     | (1,195           | )     
|                                                                                                       |                  | Minimum pension liability adjustment (Note 12)                                |                                            |        | (6,731          | )         |                  |        | (373      | )         |        |     | (57              | )     
|                                                                                                       |                  | Net unrealized gains and losses on derivatives (Note 19)                      |                                            |        | (2,759          | )         |                  |        | (2,122    | )         |        |     | (23              | )     
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|                                                                                                       |                  |                                                                               | Total
accumulated other comprehensive loss |        |                 | (147,138  | )                |        |           | (76,918   | )      |     |                  | (1,247 | )
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Treasury stock, at cost:2,297,845 shares in 2003, 494,860 shares in 2002 (Note 22)                     |                  | (1,378                                                                        | )                                          |        |                 | (302      | )                |        |           | (12       | )     
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Total
shareholders equity                                                                             |                  |                                                                               | 862,147                                    |        |                 |           | 914,970          |        |           |           | 7,306  |    
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    
|Total                                                                                                  |                  | ¥                                                                             | 6,540,520                                  |        |                 | ¥         | 6,668,366        |        |           | $         | 55,428 |    
|                                                                                                       |                  |                                                                               |                                            |        |                 |           |                  |        |           |           |        |    

F-4



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##### Table of Contents



Statements of Consolidated
IncomeMitsui & Co., Ltd. and subsidiaries
Years Ended March 31, 2003, 2002 and 2001

|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |       | 
|------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------- | ------- | --------------- | ------- | ---------------- | ------- | ------ | ------- | ---- | ------- | ------ | ------- | - | ----- | ---------------- | ----- | 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       | Millions of U.S.
|                                                                                            |                                                    |                                             |         | Millions of Yen |         | Dollars (Note 2)
|                                                                                            |                                                    |                                             |         |                 |         |                 
|                                                                                            |                                                    |                                             |         | 2003            |         | 2002             |         | 2001   |         | 2003
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |     
|RevenueGross Trading Profit(Notes 2, 7 and 15)                                             |                                                    | ¥                                           | 569,802 |                 |         | ¥                | 546,549 |        |         | ¥    | 561,298 |        |         | $ | 4,829 |                 
|                                                                                            | Total Trading Transactions (Notes 2 and 15):       |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |      
|                                                                                            |                                                    | 2003, ¥13,236,683 million-$112,175 million; |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |       | 
|                                                                                            |                                                    | 2002, ¥12,634,686 million;                  |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |       | 
|                                                                                            |                                                    | 2001, ¥13,028,453 million                   |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |       | 
|Expenses and Other:                                                                         |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Selling, general and administrative (Notes 2, 7, 10, 12 and 16)                             |                                                    |                                             | 457,803 |                 |         |                  | 446,013 |        |         |      | 462,435 |        |         |   | 3,880 |                 
|Provision for doubtful receivables (Notes 2 and 6)                                          |                                                    |                                             | 14,293  |                 |         |                  | 21,191  |        |         |      | 43,669  |        |         |   | 121   |                 
|Interest expense, net of interest income:                                                   |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            | 2003, ¥44,512 million$377 million;                |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |      
|                                                                                            | 2002, ¥59,812 million;                             |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                  |      
|                                                                                            | 2001, ¥76,001 million                              |                                             |         | 2,868           |         |                  |         | 12,876 |         |      |         | 21,382 |         |   |       | 24               |      
|Dividend income                                                                             |                                                    |                                             | (16,267 | )               |         |                  | (18,192 | )      |         |      | (15,896 | )      |         |   | (138  | )               
|Gain on sales of securitiesnet (Notes 2 and 5)                                             |                                                    |                                             | (11,026 | )               |         |                  | (31,308 | )      |         |      | (65,592 | )      |         |   | (93   | )               
|Gain on securities contributed to an employee retirement
benefit trust (Notes 5 and 12)     |                                                    |                                             | (15,831 | )               |         |                  | (29,242 | )      |         |      | (42,975 | )      |         |   | (134  | )               
|Loss on the write-down of securities (Note 2)                                               |                                                    |                                             | 37,921  |                 |         |                  | 43,605  |        |         |      | 31,742  |        |         |   | 321   |                 
|Loss on disposal or sale of property and equipment-net                                      |                                                    |                                             | 1,765   |                 |         |                  | 2,577   |        |         |      | 2,610   |        |         |   | 15    |                 
|Impairment loss of long-lived assets (Notes 2 and 9)                                        |                                                    |                                             | 24,558  |                 |         |                  | 24,732  |        |         |      | 34,519  |        |         |   | 208   |                 
|Other expensenet (Notes 2, 16 and 18)                                                      |                                                    |                                             | 11,309  |                 |         |                  | 10,724  |        |         |      | 7,046   |        |         |   | 96    |                 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            |                                                    | Total                                       |         |                 | 507,393 |                  |         |        | 482,976 |      |         |        | 478,940 |   |       |                  | 4,300 | 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Income from Continuing Operations before Income Taxes,                                      |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            | Minority Interests and Equity in Earnings(Note 17) |                                             |         | 62,409          |         |                  |         | 63,573 |         |      |         | 82,358 |         |   |       | 529              |      
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Income Taxes(Notes 2 and 17):                                                               |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Current                                                                                     |                                                    |                                             | 39,208  |                 |         |                  | 32,545  |        |         |      | 60,494  |        |         |   | 332   |                 
|Deferred                                                                                    |                                                    |                                             | (1,373  | )               |         |                  | (1,010  | )      |         |      | (27,455 | )      |         |   | (11   | )               
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            |                                                    | Total                                       |         |                 | 37,835  |                  |         |        | 31,535  |      |         |        | 33,039  |   |       |                  | 321   | 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Income from Continuing Operations before Minority Interests
and Equity in Earnings          |                                                    |                                             | 24,574  |                 |         |                  | 32,038  |        |         |      | 49,319  |        |         |   | 208   |                 
|Minority Interests in (Earnings) Losses of Subsidiaries                                     |                                                    |                                             | (4,365  | )               |         |                  | 3,070   |        |         |      | (2,037  | )      |         |   | (37   | )               
|Equity in Earnings of Associated CompaniesNet
(After Income Tax Effect)(Notes 2, 5 and 17) |                                                    |                                             | 13,405  |                 |         |                  | 23,783  |        |         |      | 6,662   |        |         |   | 114   |                 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Income from Continuing Operations                                                           |                                                    |                                             | 33,614  |                 |         |                  | 58,891  |        |         |      | 53,944  |        |         |   | 285   |                 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Loss from Discontinued OperationsNet
(After Income Tax Effect)(Notes 2 and 4)              |                                                    |                                             | (2,476  | )               |         |                  | (3,520  | )      |         |      | (2,356  | )      |         |   | (21   | )               
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Net Income                                                                                  |                                                    | ¥                                           | 31,138  |                 |         | ¥                | 55,371  |        |         | ¥    | 51,588  |        |         | $ | 264   |                 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                           
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       | U.S. Dollars    
|                                                                                            |                                                    |                                             |         | Yen             |         | (Note 2)        
|                                                                                            |                                                    |                                             |         |                 |         |                 
|Net Income per ADS(Notes 2 and 14):                                                         |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Basic:                                                                                      |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            | Continuing Operations                              |                                             | ¥       | 425             |         |                  | ¥       | 744    |         |      | ¥       | 681    |         |   | $     | 3.60             |      
|                                                                                            | Discontinued Operations                            |                                             |         | (31             | )       |                  |         | (45    | )       |      |         | (30    | )       |   |       | (0.26            | )    
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            |                                                    | Total                                       |         | ¥               | 394     |                  |         | ¥      | 699     |      |         | ¥      | 651     |   |       | $                | 3.34  | 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|Diluted:                                                                                    |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            | Continuing Operations                              |                                             | ¥       | 403             |         |                  | ¥       | 698    |         |      | ¥       | 640    |         |   | $     | 3.42             |      
|                                                                                            | Discontinued Operations                            |                                             |         | (29             | )       |                  |         | (41    | )       |      |         | (27    | )       |   |       | (0.25            | )    
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 
|                                                                                            |                                                    | Total                                       |         | ¥               | 374     |                  |         | ¥      | 657     |      |         | ¥      | 613     |   |       | $                | 3.17  | 
|                                                                                            |                                                    |                                             |         |                 |         |                  |         |        |         |      |         |        |         |   |       |                 

See notes to consolidated financial statements.

F-5



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##### Table of Contents



Statements of Consolidated Shareholders Equity
Mitsui & Co., Ltd. and subsidiaries
Years Ended March 31, 2003, 2002 and 2001

|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------- | - | --------------- | ------- | --------------------- | - | -------- | ------- | ---- | - | -------- | ------- | - | - | ----------- | ----- | -
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   | Millions of
|                                                                                           |                                                                                        |   | Millions of Yen |         | U.S. Dollars (Note 2)
|                                                                                           |                                                                                        |   |                 |         |                      
|                                                                                           |                                                                                        |   | 2003            |         | 2002                  |   | 2001     |         | 2003
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |     
|Common Stock(Note

13):                                                                    |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|Balance at beginning of

year                                                              |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|                                                                                           | Shares issued: 2003, 2002 and

20011,583,674,837 shares                               |   | ¥               | 192,487 |                       |   | ¥        | 192,487 |      |   | ¥        | 192,487 |   |   | $           | 1,631 |  
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Balance at end of

year                                                                    |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|                                                                                           | Shares issued: 2003, 2002 and

20011,583,674,837 shares                               |   | ¥               | 192,487 |                       |   | ¥        | 192,487 |      |   | ¥        | 192,487 |   |   | $           | 1,631 |  
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Capital Surplus(Note

13):                                                                 |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|Balance at beginning of

year                                                              |                                                                                        | ¥ | 287,756         |         |                       | ¥ | 287,756  |         |      | ¥ | 287,756  |         |   | $ | 2,439       |      
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Balance at end of

year                                                                    |                                                                                        | ¥ | 287,756         |         |                       | ¥ | 287,756  |         |      | ¥ | 287,756  |         |   | $ | 2,439       |      
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Retained Earnings(Note

13):                                                               |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|                                                                                           | Appropriated for Legal

Reserve:                                                       |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|                                                                                           | Balance at beginning of year                                                           |   | ¥               | 35,873  |                       |   | ¥        | 34,341  |      |   | ¥        | 32,859  |   |   | $           | 304   |  
|                                                                                           | Transfer from unappropriated retained

earnings                                        |   |                 | 509     |                       |   |          | 1,532   |      |   |          | 1,482   |   |   |             | 4     |  
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|                                                                                           | Balance at end of year                                                                 |   | ¥               | 36,382  |                       |   | ¥        | 35,873  |      |   | ¥        | 34,341  |   |   | $           | 308   |  
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|                                                                                           | Unappropriated(Notes 5, 11, 17 and

22):                                               |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|                                                                                           | Balance at beginning of year                                                           |   | ¥               | 476,074 |                       |   | ¥        | 437,548 |      |   | ¥        | 400,111 |   |   | $           | 4,034 |  
|                                                                                           | Net income                                                                             |   |                 | 31,138  |                       |   |          | 55,371  |      |   |          | 51,588  |   |   |             | 264   |  
|                                                                                           | Cash dividends paid (annual rate per share: 2003,

¥8.06.8 ¢;
2002, ¥8.0; 2001, ¥8.0) |   |                 | (12,665 | )                     |   |          | (12,669 | )    |   |          | (12,669 | ) |   |             | (107  | )
|                                                                                           | Transfer to retained earnings appropriated for

legal
reserve                          |   |                 | (509    | )                     |   |          | (1,532  | )    |   |          | (1,482  | ) |   |             | (4    | )
|                                                                                           | Effect of change in fiscal year-end of certain

subsidiaries
(Note 2)                  |   |                 |        |                       |   |          | (2,644  | )    |   |          |        |   |   |             |      |  
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|                                                                                           | Balance at end of year                                                                 |   | ¥               | 494,038 |                       |   | ¥        | 476,074 |      |   | ¥        | 437,548 |   |   | $           | 4,187 |  
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Accumulated Other Comprehensive

Income (Loss)
(After Income Tax Effect)(Notes 13 and 17): |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|Balance at beginning of

year                                                              |                                                                                        | ¥ | (76,918         | )       |                       | ¥ | (117,705 | )       |      | ¥ | (117,361 | )       |   | $ | (652        | )    
|Unrealized holding gains and losses on

available-for-sale securities
(Note
5)             |                                                                                        |   | (40,841         | )       |                       |   | (51,384  | )       |      |   | (19,520  | )       |   |   | (346        | )    
|Foreign currency translation

adjustments                                                  |                                                                                        |   | (22,384         | )       |                       |   | 69,057   |         |      |   | 28,406   |         |   |   | (190        | )    
|Minimum pension liability adjustment

(Note 12)                                            |                                                                                        |   | (6,358          | )       |                       |   | 24,514   |         |      |   | (9,230   | )       |   |   | (54         | )    
|Net unrealized gains and losses on

derivatives (Note 19)                                  |                                                                                        |   | (637            | )       |                       |   | (2,950   | )       |      |   |         |         |   |   | (5          | )    
|Effect of change in fiscal year-end of

certain subsidiaries (Note 2)                      |                                                                                        |   |                |         |                       |   | 1,550    |         |      |   |         |         |   |   |            |      
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Balance at end of year                                                                     |                                                                                        | ¥ | (147,138        | )       |                       | ¥ | (76,918  | )       |      | ¥ | (117,705 | )       |   | $ | (1,247      | )    
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Treasury Stock, at Cost(Notes

13 and 22):                                                 |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|Balance at beginning of

year                                                              |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|                                                                                           | Shares in treasury: 2003494,860 shares;
2002 and 20010
shares                        |   | ¥               | (302    | )                     |   |          |        |      |   |          |        |   |   | $           | (3    | )
|Purchase of treasury

stock                                                                |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|                                                                                           | Shares purchased:20031,802,985 shares;
2002494,860 shares;        20010
shares      |   |                 | (1,076  | )                     |   | ¥        | (302    | )    |   |          |        |   |   |             | (9    | )
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  
|Balance at end of

year                                                                    |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |      
|                                                                                           | Shares in treasury:20032,297,845 shares;
2002494,860 shares;        20010
shares    |   | ¥               | (1,378  | )                     |   | ¥        | (302    | )    |   |          |        |   |   | $           | (12   | )
|                                                                                           |                                                                                        |   |                 |         |                       |   |          |         |      |   |          |         |   |   |             |       |  

F-6



---



##### Table of Contents



(Continued)

|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |      |  
|----------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | - | --------------- | ------- | --------------------- | - | ------ | ------- | ---- | - | ------ | ------- | - | - | ----------- | ---- | -
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   | Millions of
|                                                                                                      |                                                                               |   | Millions of Yen |         | U.S. Dollars (Note 2)
|                                                                                                      |                                                                               |   |                 |         |                      
|                                                                                                      |                                                                               |   | 2003            |         | 2002                  |   | 2001   |         | 2003
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |     
|Summary of Changes in Equity from Nonowner Sources
(Comprehensive Income (Loss))(Notes 2, 13 and 17): |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Before the Effect of Change in Fiscal Year-End of
Certain Subsidiaries                                |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Net income                                                                                            |                                                                               | ¥ | 31,138          |         |                       | ¥ | 55,371 |         |      | ¥ | 51,588 |         |   | $ | 264         |     
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Other comprehensive income (loss) (after income tax effect):                                          |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|                                                                                                      | Unrealized holding gains and losses on available-for-sale
securities (Note 5) |   |                 | (40,841 | )                     |   |        | (51,384 | )    |   |        | (19,520 | ) |   |             | (346 | )
|                                                                                                      | Foreign currency translation adjustments                                      |   |                 | (22,384 | )                     |   |        | 69,057  |      |   |        | 28,406  |   |   |             | (190 | )
|                                                                                                      | Minimum pension liability adjustment (Note 12)                                |   |                 | (6,358  | )                     |   |        | 24,514  |      |   |        | (9,230  | ) |   |             | (54  | )
|                                                                                                      | Net unrealized gains and losses on derivatives (Note 19)                      |   |                 | (637    | )                     |   |        | (2,950  | )    |   |        |        |   |   |             | (5   | )
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Changes in equity from nonowner sources                                                               |                                                                               | ¥ | (39,082         | )       |                       | ¥ | 94,608 |         |      | ¥ | 51,244 |         |   | $ | (331        | )   
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|The
effect of change in fiscal year-end of certain subsidiaries                                       |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Net loss directly charged to retained earnings                                                        |                                                                               |   |                |         |                       | ¥ | (2,644 | )       |      |   |       |         |   |   |            |     
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Other comprehensive income (loss) (after income tax effect):                                          |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|                                                                                                      | Unrealized holding gains and losses on available-for-sale
securities (Note 5) |   |                 |        |                       |   |        | (176    | )    |   |        |        |   |   |             |     |  
|                                                                                                      | Foreign currency translation adjustments                                      |   |                 |        |                       |   |        | 944     |      |   |        |        |   |   |             |     |  
|                                                                                                      | Minimum pension liability adjustment (Note 12)                                |   |                 |        |                       |   |        | (46     | )    |   |        |        |   |   |             |     |  
|                                                                                                      | Net unrealized gains and losses on derivatives (Note 19)                      |   |                 |        |                       |   |        | 828     |      |   |        |        |   |   |             |     |  
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Changes in equity from nonowner sources                                                               |                                                                               |   |                |         |                       | ¥ | (1,094 | )       |      |   |       |         |   |   |            |     
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|After the effect of change in fiscal year-end of certain
subsidiaries                                 |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Net income                                                                                            |                                                                               | ¥ | 31,138          |         |                       | ¥ | 55,371 |         |      | ¥ | 51,588 |         |   | $ | 264         |     
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Net loss directly charged to retained earnings                                                        |                                                                               |   |                |         |                       |   | (2,644 | )       |      |   |       |         |   |   |            |     
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Other comprehensive income (loss) (after income tax effect):                                          |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|                                                                                                      | Unrealized holding gains and losses on available-for-sale
securities (Note 5) |   |                 | (40,841 | )                     |   |        | (51,560 | )    |   |        | (19,520 | ) |   |             | (346 | )
|                                                                                                      | Foreign currency translation adjustments                                      |   |                 | (22,384 | )                     |   |        | 70,001  |      |   |        | 28,406  |   |   |             | (190 | )
|                                                                                                      | Minimum pension liability adjustment (Note 12)                                |   |                 | (6,358  | )                     |   |        | 24,468  |      |   |        | (9,230  | ) |   |             | (54  | )
|                                                                                                      | Net unrealized gains and losses on derivatives (Note 19)                      |   |                 | (637    | )                     |   |        | (2,122  | )    |   |        |        |   |   |             | (5   | )
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     
|Changes in equity from nonowner sources                                                               |                                                                               | ¥ | (39,082         | )       |                       | ¥ | 93,514 |         |      | ¥ | 51,244 |         |   | $ | (331        | )   
|                                                                                                      |                                                                               |   |                 |         |                       |   |        |         |      |   |        |         |   |   |             |     

See notes to consolidated financial statements.

F-7



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##### Table of Contents



Statements of Consolidated Cash Flows
Mitsui & Co., Ltd. and subsidiaries
Years Ended March 31, 2003, 2002 and 2001

|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                  |      |  
|--------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------- | -------- | --------------- | ------- | ---------------- | -------- | -------- | -------- | ---- | -------- | ------- | -------- | - | ------ | ---------------- | ---- | -
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        | Millions of U.S.
|                                                                                  |                                                                             |                                                     |          | Millions of Yen |         | Dollars (Note 2)
|                                                                                  |                                                                             |                                                     |          |                 |         |                 
|                                                                                  |                                                                             |                                                     |          | 2003            |         | 2002             |          | 2001     |          | 2003
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |     
|Operating Activities(Note 21):                                                    |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Net income                                                                        |                                                                             | ¥                                                   | 31,138   |                 |         | ¥                | 55,371   |          |          | ¥    | 51,588   |         |          | $ | 264    |                 
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|                                                                                  | Loss from discontinued operationsnet (after income tax effect)             |                                                     |          | 2,476           |         |                  |          | 3,520    |          |      |          | 2,356   |          |   |        | 21               |     
|                                                                                  | Depreciation and amortization                                               |                                                     |          | 58,547          |         |                  |          | 56,974   |          |      |          | 60,079  |          |   |        | 496              |     
|                                                                                  | Provision for doubtful receivables                                          |                                                     |          | 14,293          |         |                  |          | 21,191   |          |      |          | 43,669  |          |   |        | 121              |     
|                                                                                  | Equity in earnings of associated companies, less dividends received         |                                                     |          | (368            | )       |                  |          | (14,193  | )        |      |          | 1,214   |          |   |        | (3               | )   
|                                                                                  | Deferred income taxes                                                       |                                                     |          | (1,373          | )       |                  |          | (1,010   | )        |      |          | (27,455 | )        |   |        | (11              | )   
|                                                                                  | Gain on sales of securitiesnet                                             |                                                     |          | (11,026         | )       |                  |          | (31,308  | )        |      |          | (65,592 | )        |   |        | (93              | )   
|                                                                                  | Gain on securities contributed to an employee retirement benefit trust      |                                                     |          | (15,831         | )       |                  |          | (29,242  | )        |      |          | (42,975 | )        |   |        | (134             | )   
|                                                                                  | Loss on the write-down of securities                                        |                                                     |          | 37,921          |         |                  |          | 43,605   |          |      |          | 31,742  |          |   |        | 321              |     
|                                                                                  | Loss on disposal or sale of property and equipmentnet                      |                                                     |          | 1,765           |         |                  |          | 2,577    |          |      |          | 2,610   |          |   |        | 15               |     
|                                                                                  | Impairment loss of long-lived assets                                        |                                                     |          | 24,558          |         |                  |          | 24,732   |          |      |          | 34,519  |          |   |        | 208              |     
|                                                                                  | (Increase) decrease in trade receivables                                    |                                                     |          | (42,115         | )       |                  |          | 148,412  |          |      |          | (47,042 | )        |   |        | (357             | )   
|                                                                                  | (Increase) decrease in inventories                                          |                                                     |          | (27,512         | )       |                  |          | 32,586   |          |      |          | (19,928 | )        |   |        | (233             | )   
|                                                                                  | (Decrease) increase in trade payables                                       |                                                     |          | (12,703         | )       |                  |          | (166,813 | )        |      |          | 54,620  |          |   |        | (108             | )   
|                                                                                  | Net change in accrued pension costs and liability for severance indemnities |                                                     |          | (9,660          | )       |                  |          | (1,725   | )        |      |          | 2,820   |          |   |        | (82              | )   
|                                                                                  | Othernet                                                                   |                                                     |          | 2,038           |         |                  |          | (10,965  | )        |      |          | 13,348  |          |   |        | 17               |     
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|                                                                                  |                                                                             | Net
cash provided by operating activities           |          |                 | 52,148  |                  |          |          | 133,712  |      |          |         | 95,573   |   |        |                  | 442  |  
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Investing Activities(Note 21):                                                    |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Net decrease (increase) in time deposits                                          |                                                                             |                                                     | 40,220   |                 |         |                  | (17,102  | )        |          |      | 64,409   |         |          |   | 341    |                 
|Investments in and advances to associated companies                               |                                                                             |                                                     | (63,769  | )               |         |                  | (38,008  | )        |          |      | (54,561  | )       |          |   | (540   | )               
|Collection of advances to associated companies                                    |                                                                             |                                                     | 10,111   |                 |         |                  | 25,377   |          |          |      | 36,708   |         |          |   | 86     |                 
|Acquisition of available-for-sale securities                                      |                                                                             |                                                     | (243,238 | )               |         |                  | (121,319 | )        |          |      | (73,914  | )       |          |   | (2,061 | )               
|Proceeds from sales of available-for-sale securities                              |                                                                             |                                                     | 66,106   |                 |         |                  | 28,419   |          |          |      | 74,226   |         |          |   | 560    |                 
|Proceeds from maturities of available-for-sale securities                         |                                                                             |                                                     | 224,555  |                 |         |                  | 17,007   |          |          |      | 18,376   |         |          |   | 1,903  |                 
|Acquisition of held-to-maturity debt securities                                   |                                                                             |                                                     | (4,231   | )               |         |                  |         |          |          |      | (3,772   | )       |          |   | (36    | )               
|Proceeds from maturities of held-to-maturity debt securities                      |                                                                             |                                                     | 10,560   |                 |         |                  | 20,202   |          |          |      | 17,989   |         |          |   | 89     |                 
|Acquisition of other investments                                                  |                                                                             |                                                     | (39,838  | )               |         |                  | (43,365  | )        |          |      | (91,998  | )       |          |   | (338   | )               
|Proceeds from sales of other investments                                          |                                                                             |                                                     | 30,242   |                 |         |                  | 37,632   |          |          |      | 92,621   |         |          |   | 256    |                 
|Increase in long-term loan receivables                                            |                                                                             |                                                     | (56,169  | )               |         |                  | (40,424  | )        |          |      | (78,538  | )       |          |   | (476   | )               
|Collection of long-term loan receivables                                          |                                                                             |                                                     | 84,445   |                 |         |                  | 61,472   |          |          |      | 75,131   |         |          |   | 716    |                 
|Additions to property leased to others and property and equipment                 |                                                                             |                                                     | (123,216 | )               |         |                  | (89,060  | )        |          |      | (76,436  | )       |          |   | (1,044 | )               
|Proceeds from sale of property leased to others and property and equipment        |                                                                             |                                                     | 62,186   |                 |         |                  | 50,957   |          |          |      | 45,380   |         |          |   | 527    |                 
|Acquisition of a subsidiary, net of cash acquired                                 |                                                                             |                                                     | (11,208  | )               |         |                  |         |          |          |      |         |         |          |   | (95    | )               
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|                                                                                  |                                                                             | Net
cash (used in) provided by investing activities |          |                 | (13,244 | )                |          |          | (108,212 | )    |          |         | 45,621   |   |        |                  | (112 | )
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Financing Activities(Note 21):                                                    |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Net increase (decrease) in short-term borrowings                                  |                                                                             |                                                     | 54,972   |                 |         |                  | (89,672  | )        |          |      | (165,228 | )       |          |   | 466    |                 
|Proceeds from long-term debt                                                      |                                                                             |                                                     | 587,753  |                 |         |                  | 404,629  |          |          |      | 531,908  |         |          |   | 4,981  |                 
|Repayment of long-term debt                                                       |                                                                             |                                                     | (611,150 | )               |         |                  | (428,227 | )        |          |      | (544,926 | )       |          |   | (5,180 | )               
|Acquisition of treasury stock                                                     |                                                                             |                                                     | (1,086   | )               |         |                  | (137     | )        |          |      |         |         |          |   | (9     | )               
|Payment of cash dividends                                                         |                                                                             |                                                     | (12,665  | )               |         |                  | (12,669  | )        |          |      | (12,669  | )       |          |   | (107   | )               
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|                                                                                  |                                                                             | Net
cash provided by (used in) financing activities |          |                 | 17,824  |                  |          |          | (126,076 | )    |          |         | (190,915 | ) |        |                  | 151  |  
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Effect of Exchange Rate Changes on Cash and Cash Equivalents                      |                                                                             |                                                     | (4,499   | )               |         |                  | 9,433    |          |          |      | 22,927   |         |          |   | (38    | )               
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Effect of Change in Fiscal Year-End of Certain Subsidiaries(Note 2)               |                                                                             |                                                     |         |                 |         |                  | (6,201   | )        |          |      |         |         |          |   |       |                 
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Net Increase (Decrease) in Cash and Cash Equivalents                              |                                                                             |                                                     | 52,229   |                 |         |                  | (97,344  | )        |          |      | (26,794  | )       |          |   | 443    |                 
|Cash and Cash Equivalents at Beginning of Year                                    |                                                                             |                                                     | 607,987  |                 |         |                  | 705,331  |          |          |      | 732,125  |         |          |   | 5,152  |                 
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 
|Cash and Cash Equivalents at End of Year                                          |                                                                             | ¥                                                   | 660,216  |                 |         | ¥                | 607,987  |          |          | ¥    | 705,331  |         |          | $ | 5,595  |                 
|                                                                                  |                                                                             |                                                     |          |                 |         |                  |          |          |          |      |          |         |          |   |        |                 

See notes to consolidated financial statements.

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Notes to Consolidated Financial Statements


Mitsui & Co., Ltd. and Subsidiaries


1. NATURE OF OPERATIONS

Mitsui & Co., Ltd. (Mitsui Bussan Kabushiki Kaisha), and subsidiaries (the
companies), as sogo shoshaor general trading companies, are engaged in
business activities, such as worldwide trading in various commodities,
financing for customers and suppliers relating to such trading activities in
Japan, North America and other areas in the world, and organizing and
coordinating industrial projects through their worldwide business networks.

The companies conduct export, import, offshore and domestic trades through
the sale and manufacture of products in the areas of Metal Products &
Minerals, Machinery, Electronics & Information, Chemical, Energy and
Consumer Products & Services (foods, textiles, property and service business,
and general merchandise), while providing services for retailing, information
and communications, technical support, transportation and logistics and
financing.

Further, the companies are also engaged in development of natural
resources such as oil and gas, and iron and steel raw materials.

In addition to the above, the companies are engaged in strategic business
investments in new areas such as information technology, biotechnology and
nanotechnology.

2. BASIS OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

I. BASIS OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements are stated in Japanese yen,
the currency of the country in which Mitsui & Co., Ltd. (the Company) is
incorporated and principally operates. The translation of Japanese yen amounts
into U.S. dollar amounts for the year ended March 31, 2003 is included solely
for the convenience of readers outside Japan and has been made at the rate of
¥118=U.S.$1, the approximate rate of exchange at March 31, 2003. The
translation should not be construed as a representation that the Japanese yen
amounts could be converted into U.S. dollars at the above or any other rate.

The accompanying consolidated financial statements have been prepared on
the basis of accounting principles generally accepted in the United States of
America (U.S. GAAP). Effect has been given in the consolidated financial
statements to adjustments which have not been entered in the companies general
books of account maintained principally in accordance with accounting practices
prevailing in the countries of incorporation. Major adjustments include those
relating to accounting for derivative instruments and hedging activities,
recognition of expected losses on purchase and sale commitments, accounting for
certain investments including non-monetary exchange of investments, accounting
for warrants, accounting for pension costs and severance indemnities,
recognition of installment sales on the accrual basis of accounting, accounting
for business combinations and accounting for goodwill and other intangible
assets.

During the year ended March 31, 2002, 231 subsidiaries changed their
fiscal year-ends to March 31, mainly from December 31, in order to conform the
subsidiaries year-ends with that of the Company. The earnings or losses of the
subsidiaries for the stub period of the fiscal year exceeding 12 months were
directly credited or charged to unappropriated retained earnings in order to
maintain the comparability of periodic earnings. The other comprehensive income
(loss) and cash flows of the subsidiaries for the stub period of the fiscal
year
exceeding 12 months are separately presented in the Statements of Consolidated
Shareholders Equity and the Statements of Consolidated Cash Flows,
respectively. Major subsidiaries that changed their fiscal year-ends were
Mitsui & Co. (U.S.A.), Inc., Mitsui & Co. UK PLC, Mitsui & Co., (Hong Kong)
Ltd., Mitsui & Co. (Thailand) Ltd., Novus International, Inc., Mitsui Oil & Gas
Co., Ltd. and Sanyu Koami Co., Ltd.

II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The consolidated financial statements include the accounts of the Company, its
majority-owned domestic and foreign subsidiaries, and its proportionate shares
of the assets, liabilities, revenues and expenses of certain of its oil and
gas, and mining joint ventures in which the companies own an undivided interest
in the assets, and pursuant to the joint venture agreements, are severally
liable for their share of each liability. The excess of the cost of investments
in subsidiaries over the equity in the fair value of the net assets at the
dates of acquisition is accounted for as goodwill.

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Certain subsidiaries with a fiscal year-end on or after December 31, but
prior to the parent companys fiscal year-end of March 31, are included on the
basis of the subsidiaries respective fiscal year-end.

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 associated companies are translated into Japanese yen at the
respective year-end exchange rates. All income and expense accounts are
translated at average rates of exchange. The resulting translation adjustments
are included in accumulated other comprehensive income.

Foreign-currency-denominated receivables and payables are translated into
Japanese yen at year-end exchange rates and resulting foreign exchange gains
and losses are recognized in earnings.

Cash equivalents

Cash equivalents are defined as short-term (original maturities of three months
or less), highly liquid investments, including short-term time deposits, which
are readily convertible into cash and have no significant risk of change in
value.

Allowance for doubtful receivables

In accordance with SFAS No. 114, Accounting by Creditors for Impairment of a
Loanan amendment of FASB Statements No. 5 and 15, an impairment loss for a
specific loan deemed to be impaired is measured based on the present value of
expected cash flows discounted at the loans original effective interest rate
or the fair value of the collateral if the loan is collateral dependent.

An allowance for doubtful receivables is recognized for all receivables
not subject to the accounting requirement of SFAS No. 114 based primarily upon
the companies credit loss experiences and an evaluation of potential losses in
the receivables.

Inventories

Inventories, consisting mainly of commodities and materials for resale, are
stated at the lower of cost, principally on the specific-identification basis,
or market.

Derivative instruments and hedging activities

In accordance with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activitiesan amendment of FASB
Statement No. 133, all derivative instruments are recognized and measured at
fair value as either assets or liabilities in the Consolidated Balance Sheets.
The accounting for changes in the fair value depends on the intended use of the
derivative instruments and its resulting hedge designation.

The companies enter into derivative commodity instruments, such as future,
forward, option and swap contracts, as a means of hedging the exposure to
changes in the fair value of inventories and unrecognized firm commitments and
the exposure to variability in the expected future cash flows from forecasted
transactions, principally for non-ferrous metals, crude oil and agricultural
products.

Changes in the fair value of derivative commodity instruments, designated
and effective as fair value hedges, are recognized in revenuegross trading
profit as offsets to changes in the fair value of the hedged items. Changes in
the fair value of derivative commodity instruments, designated and effective as
cash flow hedges, are initially recorded as other comprehensive income and
reclassified into earnings as revenuegross trading profit when the hedged
transactions affect earnings. Changes in the fair value of the ineffective
portion are recognized in revenuegross trading profit immediately.

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Changes in the fair value of derivative commodity instruments, for which
hedge requirements are not met under SFAS No. 133, are currently recognized in
revenuegross trading profit without any offsetting changes in the fair value
of the hedged items.

The Company and certain subsidiaries also enter into agreements for
derivative commodity instruments as a part of their trading activities. These
derivative instruments are marked to market, and gains or losses resulting from
these contracts are reported in revenuegross trading profit.

Changes in the fair value of all open positions of certain commodities
such as precious metals traded in terminal (future) markets are recognized in
revenuegross trading profit in order to reflect the fair value of commodity
trading transactions consisting of inventories, unrecognized firm commitments
and derivative commodity instruments as a whole.

The companies enter into derivative financial instruments such as interest
rate swap agreements, foreign exchange forward contracts, currency swap
agreements, and interest rate and currency swap agreements as a means of
hedging their interest rate and foreign exchange exposure.

Changes in the fair value of interest rate swap agreements, designated and
effective as fair value hedges for changes in the fair value of fixed-rate
financial assets or liabilities attributable to changes in the designated
benchmark interest rate, are recognized in interest expense as offsets to
changes in the fair value of hedged items. Changes in the fair value of
interest rate swap agreements, designated and effective as cash flow hedges for
changes in the cash flows of floating-rate financial assets or liabilities
attributable to changes in the designated benchmark interest rate, are
initially recorded in other comprehensive income and reclassified into earnings
as interest expense when the hedged transactions affect earnings. Changes in
the fair value of the ineffective portion are recognized in interest expense
immediately.

Changes in the fair value of foreign exchange forward contracts and
currency swap agreements, designated and effective as cash flow hedges for
changes in the cash flows of foreign-currency-denominated assets or
liabilities, unrecognized firm commitments and forecasted transactions
attributable to changes in the related
foreign currency exchange rate, are initially recorded in other comprehensive
income and reclassified into earnings as foreign exchange gains or losses when
the hedged transactions affect earnings. Changes in the fair value of the
ineffective portion are recognized in foreign exchange gains or losses
immediately.

Changes in the fair value of interest rate and currency swap agreements,
designated and effective as fair value hedges or cash flow hedges for changes
in the fair values or cash flows of foreign-currency-denominated assets or
liabilities attributable to changes in the designated benchmark interest rate
or the related foreign currency exchange rate are recorded as either earnings
or other comprehensive income depending on the treatment of foreign currency
hedges as fair value hedges or cash flow hedges.

Changes in the fair value of derivative financial instruments, for which
hedge requirements are not met under SFAS No. 133, are currently recognized in
interest expense for interest rate swap agreements and in foreign exchange
gains or losses for foreign exchange forward contracts, currency swap
agreements and interest rate and currency swap agreements.

The Company and certain subsidiaries also enter into agreements for
certain derivative financial instruments as a part of their trading activities.
These derivative instruments are marked to market and the related gains or
losses are reported in interest expense for interest rate swap agreements and
in revenuegross trading profit for foreign exchange forward contracts.

For the Statements of Consolidated Cash Flows, cash flows from derivative
commodity instruments and derivative financial instruments that qualify for
hedge accounting are included in the same category as the items being hedged.

Debt and marketable equity securities and investments in associated companies

The companies classify debt and marketable equity securities, at acquisition,
into one of three categories: held-to-maturity, available-for-sale or trading
under provisions of SFAS No. 115, Accounting for Certain Investments in Debt
and Equity Securities.

Trading securities are carried at fair value and unrealized holding gains
and losses are included in earnings.

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Debt securities are classified as held-to-maturity and measured at
amortized cost in the Consolidated Balance Sheets only if the companies have
the positive intent and ability to hold those securities to maturity. Premiums
and discounts amortized in the period are included in interest income.

Debt and marketable equity securities other than those classified as
trading or held-to-maturity securities are classified as available-for-sale
securities and carried at fair value with such unrealized holding gains and
losses reported in accumulated other comprehensive income in shareholders
equity on a net-of-tax basis.

For other than a temporary decline in the value of debt and marketable
equity securities below their cost or amortized cost, the investment is reduced
to its fair value, which becomes the new cost basis of the investment. The
amount of the reduction is reported as a loss for the year in which such
determination is made.

The cost of securities sold is determined based on the moving-average cost
method.

Investments in associated companies (investees owned 20% to 50%, corporate
joint ventures and other investees over which the companies have the ability to
exercise significant influence) are accounted for under the equity method,
after appropriate adjustments for intercompany profits and dividends. The
differences between the cost of such investments and the companies equity in
the underlying fair value of the net assets of associated companies at the
dates of acquisition are recognized as equity method goodwill.

For other than a temporary decline in the value of investments in
associated companies below the carrying
amount, the investment is reduced to its fair value and an impairment loss is
recognized.

Non-marketable equity securities

Non-marketable equity securities are carried at cost. When other than a
temporary decline in the value of such securities below their cost occurs, an
impairment loss is recognized.

Issuance of stock by subsidiaries and associated companies

A subsidiary or an associated company may issue its shares to third parties at
amounts per share in excess of or less than the Companys average per share
carrying value. With respect to such transactions, the resulting gains or
losses arising from the change in interest are recorded in income for the year
in which such shares are issued.

Leasing

The companies are engaged in lease financing consisting of direct financing
leases, leveraged leases and property on operating leases. For direct financing
leases, unearned income is amortized to income over the lease term at a
constant periodic rate of return on the net investment. Income on leveraged
leases is recognized over the life of the lease at a constant rate of return on
the positive net investment. Initial direct costs are deferred and amortized
using the interest method over the lease period. Operating lease income is
recognized over the term of underlying leases on a straight-line basis.

The companies are also lessees of various assets. Rental expenses on
operating leases are recognized over the respective lease terms using the
straight-line method.

Depreciation

Depreciation of property and equipment (including property leased to others) is
computed principally under the declining-balance method for assets located in
Japan and under the straight-line method for assets located outside Japan,
using rates based upon the estimated useful lives of the related property and
equipment.

Leasehold improvements are amortized over the lessor of the useful life of
the improvement or the term of the underlying lease.

Long-lived assets

On April 1, 2002, the companies adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 replaces SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of and those provisions of APB Opinion No. 30,
Reporting the Results of OperationsReporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, related to the disposal of segments of a business.

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The statement also creates one accounting model, based on the framework
established in SFAS No. 121, to be applied to all long-lived assets including
discontinued operations.

Long-lived assets to be held and used or to be disposed of other than by
sale are reviewed, by using future cash flows which are undiscounted, for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. If the sum of the
expected future cash flows is less than the carrying amount of the asset, an
impairment loss is recognized. Such impairment loss is measured as the amount
by which the carrying amount of the asset exceeds the fair value of the asset.
Long-lived assets to be disposed of by sale are reported at the lower of
carrying amount or fair value less cost to sell.

Business combinations

On April 1, 2002, the companies fully adopted SFAS No. 141, Business
Combinations. SFAS No. 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001. SFAS No. 141
also specifies the types of acquired intangible assets that are required to be
recognized and reported separately from goodwill. Any excess of fair value of
acquired net assets over cost arising from a business combination is required
to be recognized as an extraordinary gain as described in APB Opinion No. 30.

The cumulative effect of a change in accounting principles on the
write-off of any unamortized deferred credit as of April 1, 2002 was
immaterial.

Goodwill and other intangible assets

On April 1, 2002, the companies fully adopted SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill no longer be amortized,
but instead tested for impairment annually or more frequently if impairment
indicators arise. SFAS No. 142 also requires identifiable intangible assets
with a finite useful life be amortized over their respective estimated useful
lives and reviewed for impairment in accordance with SFAS No. 144. Any
identifiable intangible asset determined to have an indefinite useful life is
not amortized, but instead tested for impairment in accordance with SFAS No.
142 until its useful life is determined to be no longer indefinite.

Equity method goodwill is reviewed for impairment as a part of other than
a temporary decline in the value of investments in associated companies below
the carrying amount in accordance with APB Opinion No. 18, The Equity Method
of Accounting for Investments in Common Stock.

The goodwill and equity method goodwill were amortized over periods of
less than 20 years using the straight-line method for the years ended March 31,
2002 and 2001, except that ones recognized after June 30, 2001 were not
amortized in accordance with SFAS No. 142. Any goodwill and equity method
goodwill are no longer amortized for the year ended March 31, 2003.

The companies completed the transitional impairment test for goodwill as
of April 1, 2002 in accordance with SFAS No. 142 and determined that the fair
value of the reporting units including goodwill was in excess of their carrying
amount.

Intangible assets subject to amortization mainly consist of mining and oil
concessions, software, trademarks and patents. Mining and oil concessions are
amortized over their respective estimated useful lives using the straight-line
method or the unit-of-production method. Software, trademarks and patents are
amortized over their respective estimated useful lives using the straight-line
method. Intangible assets not subject to amortization mainly consist of land
rights.

The companies completed the transitional reassessment of the useful lives
of identifiable intangible assets as of April 1, 2002. The companies also
completed the transitional impairment test for intangible assets not subject to
amortization and determined that they are not impaired.

Oil and gas exploration and development

Oil and gas exploration and development costs are accounted for using the
successful efforts method of accounting. The costs of acquiring properties,
costs of drilling and equipping exploratory wells and costs of development
wells and related plant and equipment are capitalized, and amortized using the
unit-of-production method. Exploratory well costs are expensed, if economically
recoverable reserves are not found. Other exploration costs, such as geological
and geophysical costs, are expensed as incurred. Proved properties are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Unproven
properties are assessed annually for impairment, with any impairment charged to
expense.

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Pension and severance indemnities plans

The companies have pension plans and/or severance indemnities plans covering
substantially all employees other than directors. The costs of the pension
plans and severance indemnities plans are accrued based on amounts determined
using actuarial methods, in accordance with SFAS No. 87, Employers Accounting
for Pensions.

Revenue recognition

The companies act as principal or agent in the legal form of trading
transactions to earn trading profits. Total trading transactions, as presented
in the accompanying Statements of Consolidated Income, are a voluntary
disclosure as permitted by Financial Accounting Standards Board (FASB)
Emerging Issues Task Force Issue (EITF) No. 99-19, Reporting Revenue Gross
as a Principal versus Net as an Agent, and represent the gross transaction
volume or the aggregate nominal value of the sales contracts in which the
companies act as principal and transactions in which the companies serve as
agent. Total trading transactions should not be construed as equivalent to, or
a substitute or a proxy for, revenues, or as an indicator of the companies
operating performance, liquidity or cash flows generated by operating,
investing or financing activities. The companies have included the gross
transaction volume information because similar Japanese trading companies have
historically used it as an industry benchmark. As such, management believes
that total trading transactions are a useful supplement to the results of
operations information for users of the consolidated financial statements.

A substantial part of total trading transactions represents transactions
in which title to and payment for goods pass through the companies without
physical acquisition and delivery through the companies inventories.

Revenuegross trading profit represents gross margin with respect to
purchase and sale transactions, in which the companies act as principal in the
legal form, and compensation, in the form of commissions, in which the
companies act as agent in the legal form.

The companies recognize revenuegross trading profit when it is realized
or realizable and earned. Revenuegross trading profit is realized or
realizable and earned when the companies have persuasive evidence of an
arrangement, the goods have been delivered or the services have been rendered
to the customer, the sales price is fixed or determinable and collectibility is
reasonably assured. In addition to this general policy, the following are
specific revenue recognition policies:

Revenuegross trading profit is recognized at the time the delivery
conditions agreed to with customers 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.

Revenuegross trading profit from service related agency transactions is
recognized when the contracted services are rendered to third-party customers.
The services are considered to have been rendered pursuant to the arrangements
when the contracts between manufacturers and customers are made if the services
are related to conclusion of the contract or when deliveries for the goods are
made if the services are related to those deliveries.

See accounting policies for leasing and derivative instruments and hedging
activities for revenue recognition
policies regarding leasing and derivative instruments entered into as a means
of hedging transactions and as a part of trading activities, respectively.

Research and development expenses

Research and development costs are charged to expenses when incurred.

Advertising expenses

Advertising costs are charged to expenses when incurred.

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Income taxes

Income tax expense is based on reported earnings before income taxes. Deferred
income taxes reflect the impact of temporary differences between assets and
liabilities recognized for financial reporting purposes and such amounts
recognized for tax purposes and tax loss carryforwards. These deferred taxes
are measured using the currently enacted tax rates in effect for the year in
which the temporary differences or tax loss carryforward are expected to
reverse. Valuation allowances are established when it is more likely than not
that some or all of the deferred tax assets will not be realized.

Net income per ADS

The Companys American Depositary Shares (ADSs), each representing 20 shares
of common stock, are traded on the NASDAQ National Market System.

Basic net income per ADS is computed by dividing net income by the
weighted average number of common shares outstanding for the period, multiplied
by 20. Diluted net income per ADS reflects the potential dilution as a result
of issuance of shares upon conversion of the companies convertible bonds.

III. RECLASSIFICATION

Certain reclassifications and format changes have been made to prior year
amounts to conform to the current year presentation.

IV. NEW ACCOUNTING STANDARDS

Asset retirement obligations

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes the
related cost by increasing the carrying amount of the long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset.

SFAS No. 143 is effective for fiscal years beginning after June 15, 2002,
with earlier application encouraged. The effect of adoption of this statement
on the companies financial position and results of operations is not known and
cannot be reasonably estimated until further analysis is completed.

SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections

In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishment of Debt, SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers, and
SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements and amends SFAS No. 13, Accounting for Leases, to require that
certain lease modifications with economic effects similar to sale-leaseback
transactions be accounted for in the same manner as sale-leaseback
transactions.

The companies adopted the provisions of SFAS No. 145 related to SFAS No.
13 for transactions occurring after May 15, 2002. All other provisions of SFAS
No. 145 are effective for fiscal years beginning after May 15, 2002. The effect
of adoption of this statement on the companies financial position and results
of operations was immaterial.

Cost associated with exit or disposal activities

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which is effective for exit or disposal
activities initiated after December 31, 2002. SFAS No. 146 nullifies EITF No.
94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (Including Certain Costs Incurred in
Restructuring). SFAS No. 146 requires that a liability for an exit cost
associated with an exit or disposal activity be recognized when the liability
is incurred, whereas EITF No. 94-3 required recognition of a liability for an
exit cost when an entity is committed to an exit plan. The effect of adoption
of this statement on the companies financial position and results of
operations was immaterial.

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Guarantors accounting and disclosure requirements for guarantees, including
indirect guarantees of indebtedness of others

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Othersan Interpretation of FASB
Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34. FIN
No. 45 elaborates on the disclosures to be made by a guarantor in its interim
and annual financial statements about its obligations under certain guarantees
that it has issued, and clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. This interpretation also incorporates,
without change, the guidance in FIN No. 34, Disclosure of Indirect Guarantees
of Indebtedness of Others, which is being superseded.

The initial recognition and initial measurement provisions of FIN No. 45
are applicable to guarantees issued or modified after December 31, 2002. The
disclosure requirements in this interpretation are effective for financial
statements of interim or annual periods ended after December 15, 2002. The
effect of adoption of this interpretation on the companies financial position
and results of operations was immaterial. The future effect will depend upon
whether the companies enter into or modify any material guarantee arrangements.

Accounting for the transfer to the Japanese government of the substitutional
portion of employee pension fund liabilities

In January 2003, the FASB Emerging Issues Task Force reached a final consensus
on Issue No. 03-2 (EITF No. 03-2), Accounting for the Transfer to the
Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities.

EITF No. 03-2 addresses accounting for a transfer to the Japanese
government of a substitutional portion of an Employee Pension Fund Plan
(EPF), which is a defined benefit pension plan established under the Welfare
Pension Insurance Law. EITF No. 03-2 requires employers to account for the
entire separation process of a substitutional portion from an entire plan
(including a corporate portion) upon completion of the transfer to the
government of the substitutional portion of the benefit obligation and related
plan assets as the culmination of a series of steps in a single settlement
transaction. Under this approach, the difference between the fair value of the
obligation and the assets required to be transferred to the government should
be accounted for and separately disclosed as a subsidy.

EPF of the Company was approved by the government for an exemption from
the obligation to pay benefits for future employee service related to the
substitutional portion on October 1, 2002. In addition, the EPF will submit
another application to separate the remaining substitutional portion related to
past service by its employees. The EPF is expected to receive final approval
from the government for its second application during the year ending March 31,
2004. Upon receipt of the final approval, the EPF will be relieved of all
obligations pertaining to the substitutional portion by transferring the
benefit obligation and the related government-specified portion of the plan
assets, which will be computed by the government. The related gain or loss,
which will be recorded during the year ending March 31, 2004 based on
completion of the entire process, has not yet been determined because the
amount of the benefit obligation and the related plan assets to be transferred
to the government may change significantly.

Consolidation of variable interest entities

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entitiesan Interpretation of ARB No. 51. This interpretation
addresses consolidation by a primary beneficiary of a variable interest entity
(VIE). A VIE is defined as an entity (1) that has an equity investment at
risk that is not sufficient to permit the entity to finance its activities
without additional subordinated financial support from other parties, or (2)
where equity investors do not have the ability to make significant decisions
about the entitys activities through voting or similar rights, or the
obligation to absorb the entitys expected losses, or the right to receive the
entitys expected residual returns.

FIN No. 46 is effective for VIEs created after January 31, 2003, and for
VIEs in which an enterprise obtains an interest after that date. For VIEs in
which an enterprise holds a variable interest that it acquired before February
1, 2003, FIN No. 46 is effective for the first interim or annual reporting
period beginning after June 15, 2003.

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The companies are evaluating the effect of adoption of FIN No. 46 on the
companies financial position and results of operations. The companies have
identified a VIE created prior to February 1, 2003, which may be consolidated
upon the adoption of FIN No. 46, as discussed below.

At March 31, 2003, as lessees in operating lease contracts, certain
subsidiaries have issued residual value guarantees of leased vessels, and on
the date of expiration of operating lease contracts, such subsidiaries will
either purchase the leased assets at a fixed price or be responsible for making
up any shortfall between an actual sales price and the guaranteed value. The
lessor of the leased vessels is a VIE created prior to February 1, 2003, and it
is reasonably possible that the companies will consolidate the lessor when FIN
No. 46 becomes effective. Total assets of the lessor as of March 31, 2003 were
¥14,762 million and the maximum exposure to a loss as a result of the
companies involvement with the lessor was ¥6,905 million. The amount of
maximum exposure to a loss represents a loss that the companies could incur
from the variability in value of the leased vessels or from other causes
without consideration of possible recoveries through insurance and the like. In
addition, the amount bears no relation to the loss anticipated to be incurred
from the companies involvement with the lessor and is considered to exceed
greatly the anticipated loss.

Derivative instruments and hedging activities

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133.

SFAS No. 149 is effective for contracts entered into or modified after
June 30, 2003 and for hedging relationships designated after June 30, 2003. The
effect of adoption of this statement on the companies
financial position and results of operations is not currently known and cannot
be reasonably estimated until further analysis is completed.

Certain financial instruments with characteristics of both liabilities and
equity

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. In
accordance with this statement, an issuer is required to classify certain
financial instruments as liabilities such as a financial instrument issued in
the form of shares that is mandatorily redeemable.

SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The effect of adoption of
this statement on the companies financial position and results of operations
is not currently known and cannot be reasonably estimated until further
analysis is completed.

V. USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

The preparation of consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

3. BUSINESS COMBINATIONS

The following is a primary business combination, which was completed during the
year ended March 31, 2003. There were no individually or collectively material
business combinations during the year ended March 31, 2002.

Mitsui & Co. (E&P) B.V. (a wholly owned Dutch subsidiary of the Company)
and MOECO International B.V. (a wholly owned Dutch subsidiary of Mitsui Oil
Exploration Co., Ltd., a 34.178%-owned associated
company of the Company) acquired all the outstanding shares of Fortum (E&P) B.V.,
a wholly owned Dutch subsidiary of Fortum Finance B.V., which is also a wholly
owned subsidiary of a Finnish energy company, Fortum Oyj. Fortum (E&P) B.V.
held a 35% participating interest in the oil-producing Block 9 area in Oman. In
the first quarter of the year ended March 31, 2003, Mitsui & Co. (E&P) B.V. and
MOECO International B.V. paid the equivalent amount to the fair value of the
net assets acquired and completed the acquisition of Fortum (E&P) B.V. The
proportion of acquired shares of Fortum (E&P) B.V. is 60% for Mitsui & Co.
(E&P) B.V. and 40% for MOECO International B.V. The companies changed the name
of Fortum (E&P) B.V. into Mitsui E&P Middle East B.V.

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Block 9, the second largest oil field in Oman, is located onshore about
300 kilometers west of the capital city, Muscat, and is operated by Occidental
Petroleum Corporation, which holds the remaining 65% participating interest of
the Block 9. Block 9 has had a proven track record of production since 1984,
and is expected to continue producing crude oil for approximately 25 years. The
companies consider the acquisition to be an excellent addition to their
upstream portfolios, providing stable cash inflows immediately after the
acquisition over the long term.

This acquisition is consistent with the companies core strategy, which
places the strategic investments in energy and natural resources and aims to
acquire excellent upstream assets for the purpose of maintaining a stable
earnings structure.

The consolidated financial statements include the operating results of
Mitsui E&P Middle East B.V. from the beginning of the year ended March 31,
2003.

The companies acquired an oil concession in the Block 9 area as an
intangible asset for ¥9,051 million which is being amortized using the
unit-of-production method.

The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition:

|                       |                           |   |                 |        |  
|---------------------- | ------------------------- | - | --------------- | ------ | -
|                       |                           |   | Millions of Yen
|                       |                           |   |                
|Current assets         |                           | ¥ | 3,104           |       
|Property and equipment |                           |   | 8,528           |       
|Intangible assets      |                           |   | 9,051           |       
|                       |                           |   |                 |       
|                       | Total assets acquired     |   | ¥               | 20,683 |  
|                       |                           |   |                 |       
|Current liabilities    |                           | ¥ | (2,514          | )     
|Minority interest      |                           |   | (5,822          | )     
|                       |                           |   |                 |       
|                       | Total liabilities assumed |   | ¥               | (8,336 | )
|                       |                           |   |                 |       
|                       | Net assets acquired       |   | ¥               | 12,347 |  
|                       |                           |   |                 |       

Pro forma results of operations for the above business combination have not
been presented because the effects were not material to the consolidated
financial statements.

4. DISCONTINUED OPERATIONS

In accordance with SFAS No. 144, the companies present the results of
discontinued operations (including operations of a subsidiary that either has
been disposed of or is classified as held for sale) as a separate line item in
the Statements of Consolidated Income under Loss from Discontinued
OperationsNet (After Income Tax Effect). Amounts presented in the Statements
of Consolidated Income and the Statements of Consolidated Cash Flows for the
prior years related to the discontinued operations have been reclassified to
conform to the current year presentation.

The carrying amounts of assets and liabilities of a disposal group
classified as held for sale are immaterial for the year ended March 31, 2003.

Summarized selected financial information for the years ended March 31,
2003, 2002 and 2001 for the discontinued operations reclassified during the
year ended March 31, 2003 is as follows:

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|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|-------------------------------------------------------------------------------------------------- |  | --------------- | ------- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                                                   |  | Millions of Yen
|                                                                                                   |  |                
|                                                                                                   |  | 2003            |         | 2002 |  | 2001
|                                                                                                   |  |                 |         |      |  |     
|Petrochemicals subsidiaries in North America
(Transpacific Glycols, Inc. and Pacific Ammonia Inc.) |  |                 |         |      |  |      |        |   |  |   |        |  
|Revenuegross trading loss                                                                         |  | ¥               | (461    | )    |  | ¥    | (2,516 | ) |  | ¥ | (106   | )
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Loss from discontinued operations before income taxes                                              |  | ¥               | (12,776 | )    |  | ¥    | (2,637 | ) |  | ¥ | (954   | )
|Loss on disposal                                                                                   |  |                 | (1,724  | )    |  |      |       |   |  |   |       |  
|Income tax benefit (expense)                                                                       |  |                 | 8,171   |      |  |      | 235    |   |  |   | (89    | )
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Loss
from discontinued operationsnet                                                              |  | ¥               | (6,329  | )    |  | ¥    | (2,402 | ) |  | ¥ | (1,043 | )
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Other subsidiaries                                                                                
|Revenuegross trading profit                                                                       |  | ¥               | 847     |      |  | ¥    | 10,087 |   |  | ¥ | 10,945 |  
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Loss from discontinued operations before income taxes                                              |  | ¥               | (1,912  | )    |  | ¥    | (438   | ) |  | ¥ | (1,787 | )
|Gain on disposalnet                                                                               |  |                 | 3,425   |      |  |      |       |   |  |   |       |  
|Income tax benefit
(expense)                                                                       |  |                 | 2,340   |      |  |      | (680   | ) |  |   | 474    |  
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Income (loss) from
discontinued
operationsnet                                                     |  | ¥               | 3,853   |      |  | ¥    | (1,118 | ) |  | ¥ | (1,313 | )
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Total                                                                                              |  |                 |         |      |  |      |        |   |  |   |        |  
|Revenuegross trading
profit                                                                       |  | ¥               | 386     |      |  | ¥    | 7,571  |   |  | ¥ | 10,839 |  
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Loss from discontinued operations before income taxes                                              |  | ¥               | (14,688 | )    |  | ¥    | (3,075 | ) |  | ¥ | (2,741 | )
|Gain on
disposalnet                                                                               |  |                 | 1,701   |      |  |      |       |   |  |   |       |  
|Income tax benefit
(expense)                                                                       |  |                 | 10,511  |      |  |      | (445   | ) |  |   | 385    |  
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  
|Loss from discontinued
operationsnet                                                              |  | ¥               | (2,476  | )    |  | ¥    | (3,520 | ) |  | ¥ | (2,356 | )
|                                                                                                   |  |                 |         |      |  |      |        |   |  |   |        |  

The primary discontinued operations for the year ended March 31, 2003 are as
follows:

Petrochemicals subsidiaries in North America (Transpacific Glycols, Inc. and
Pacific Ammonia Inc.)

Transpacific Glycols, Inc., a subsidiary partially reported in both the
Chemical and Americas segments, has been engaged in the sale of ethylene
glycol, but has ceased its sales operations during the year ended March 31,
2003 due to its declining performance caused by the overall market conditions.

Pacific Ammonia Inc., a subsidiary reported in the Chemical Segment, which
has been engaged in the manufacture and sale of ammonia primarily on the West
Coast of the United States, suffered from high natural gas costs as its main
raw material ingredient and a relatively weak ammonia price due to a worldwide
oversupply situation. Considering this business environment, Pacific Ammonia
Inc. recognized an impairment loss on fixed assets during the year ended March
31, 2003 based on the plan to dispose of the operation by sale.

Other subsidiaries

The main subsidiary in this category is Bussan Promotion Co., Ltd.

The Company was the sole agent for import and wholesale of Philip Morris
cigarettes in eastern Japan, and was promoting them to various retailers
through Bussan Promotion Co., Ltd., a subsidiary reported in the Consumer
Products & Services Segment. Philip Morris International Inc., however, changed
its strategy to directly manage their sales promotion operations, and
accordingly, the Company sold all of the shares of Bussan Promotion Co., Ltd.
to FTR HOLDINGS S.A., a member of Philip Morris Group, in April 2002, resulting
in a gain on disposal of ¥2,398 million for the year ended March 31, 2003.

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Revenuegross trading profit reported by Bussan Promotion Co., Ltd. for
the years ended March 31, 2002 and 2001 was ¥7,453 million and ¥7,586 million,
respectively. The income from discontinued operations before income taxes for
the years ended March 31, 2002 and 2001 was ¥129 million and ¥109 million,
respectively. No revenuegross trading profit or income from discontinued
operations before income taxes was recognized for the year ended March 31,
2003.

5. MARKETABLE SECURITIES AND OTHER INVESTMENTS

Debt and equity securities

At March 31, 2003 and 2002, the cost, fair value and gross unrealized holding
gains and losses on available-for-sale securities and held-to-maturity debt
securities were as follows:

|                                                                               |                                                                |  |                 |         |            |  |        |         |        |  |                                   |        |  |  |     |         |   |  |    |        | 
|------------------------------------------------------------------------------ | -------------------------------------------------------------- |  | --------------- | ------- | ---------- |  | ------ | ------- | ------ |  | --------------------------------- | ------ |  |  | --- | ------- | - |  | -- | ------ | 
|                                                                               |                                                                |  | Millions of Yen
|                                                                               |                                                                |  |                
|                                                                               |                                                                |  |                 |         |            |  |        |         |        |  | Unrealized holding gains (losses)
|                                                                               |                                                                |  |                 |         |            |  |        |         |        |  |                                  
|                                                                               |                                                                |  | Cost            |         | Fair value |  | Gains  |         | Losses |  | Net                              
|                                                                               |                                                                |  |                 |         |            |  |        |         |        |  |                                  
|March 31, 2003:                                                                |                                                                |  |                 |         |            |  |        |         |        |  |                                   |        |  |  |     |         |   |  |    |       
|Available-for-sale:                                                            |                                                                |  |                 |         |            |  |        |         |        |  |                                   |        |  |  |     |         |   |  |    |       
|                                                                               | Marketable equity
securities                                   |  | ¥               | 140,475 |            |  | ¥      | 156,146 |        |  | ¥                                 | 31,037 |  |  | ¥   | (15,366 | ) |  | ¥  | 15,671 | 
|                                                                               | Foreign debentures, commercial paper
and other debt
securities |  |                 | 130,091 |            |  |        | 130,175 |        |  |                                   | 131    |  |  |     | (47     | ) |  |    | 84     | 
|Held-to-maturity debt securities,
consisting principally of foreign
debentures |                                                                |  | 16,793          |         |            |  | 16,804 |         |        |  | 16                                |        |  |  | (5  | )       |   |  | 11 |       
|March 31, 2002:                                                                |                                                                |  |                 |         |            |  |        |         |        |  |                                   |        |  |  |     |         |   |  |    |       
|Available-for-sale:                                                            |                                                                |  |                 |         |            |  |        |         |        |  |                                   |        |  |  |     |         |   |  |    |       
|                                                                               | Marketable equity
securities                                   |  | ¥               | 177,835 |            |  | ¥      | 266,079 |        |  | ¥                                 | 98,855 |  |  | ¥   | (10,611 | ) |  | ¥  | 88,244 | 
|                                                                               | Foreign debentures, commercial paper
and other debt
securities |  |                 | 155,639 |            |  |        | 156,339 |        |  |                                   | 738    |  |  |     | (38     | ) |  |    | 700    | 
|Held-to-maturity debt securities,
consisting principally of foreign
debentures |                                                                |  | 23,356          |         |            |  | 23,381 |         |        |  | 97                                |        |  |  | (72 | )       |   |  | 25 |       

Investments other than investments in marketable equity securities and debt
securities were carried at costs of ¥320,301 million and ¥394,527 million at
March 31, 2003 and 2002, respectively. The corresponding fair values at those
dates were not computed as such estimation was not readily determinable.

The portion of trading losses for the year that relates to trading
securities still held at March 31, 2003 and 2002 were ¥136 million and ¥44
million, respectively. And the change in net unrealized holding gains and
losses on trading securities was a loss of ¥37 million for the year ended March
31, 2001.

The proceeds from sales of available-for-sale securities and the gross
realized gains and losses on those sales for the years ended March 31, 2003,
2002 and 2001 are shown below:

|                      |                    |   |                 |       |      |   |        |       |  |   |        |        | 
|--------------------- | ------------------ | - | --------------- | ----- | ---- | - | ------ | ----- |  | - | ------ | ------ | 
|                      |                    |   | Millions of Yen
|                      |                    |   |                
|                      |                    |   | 2003            |       | 2002 |   | 2001  
|                      |                    |   |                 |       |      |   |       
|Proceeds from
sales   |                    | ¥ | 66,106          |       |      | ¥ | 28,419 |       |  | ¥ | 74,226 |       
|                      |                    |   |                 |       |      |   |        |       |  |   |        |       
|                      |                    |   |                 |       |      |   |        |       |  |   |        |       
|Gross realized
gains  |                    | ¥ | 9,661           |       |      | ¥ | 8,915  |       |  | ¥ | 40,363 |       
|Gross realized
losses |                    |   | (4,628          | )     |      |   | (1,030 | )     |  |   | (357   | )     
|                      |                    |   |                 |       |      |   |        |       |  |   |        |       
|                      | Net realized
gains |   | ¥               | 5,033 |      |   | ¥      | 7,885 |  |   | ¥      | 40,006 | 
|                      |                    |   |                 |       |      |   |        |       |  |   |        |       

During the year ended March 31, 2003, the Company contributed certain
available-for-sale securities with a fair value of ¥27,343 million to an
employee retirement benefit trust and recognized a realized gain of ¥15,831
million, which is included in the gain on securities contributed to an employee
retirement benefit trust.

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On October 2, 2002, in connection with the foundation of Japan Airlines
System Corporation, the Company exchanged shares of Japan Air System Co., Ltd. for those of Japan Airlines
System Corporation. In accordance with FASB EITF No. 91-5 Nonmonetary Exchange
of Cost-Method Investments, a non-cash gain of ¥2,055 million was recorded for
the year ended March 31, 2003, and is included in the gain on sales of
securitiesnet in the Statements of Consolidated Income.

During the year ended March 31, 2002, the Company contributed certain
available-for-sale securities to an employee retirement benefit trust at fair
value of ¥45,770 million and recognized ¥29,242 million in a realized gain,
which is included in the gain on securities contributed to an employee
retirement benefit trust.

On April 1, 2001, in connection with the merger of The Sakura Bank, Ltd.
and The Sumitomo Bank, Ltd., the Company exchanged shares of The Sakura Bank,
Ltd. for those of Sumitomo Mitsui Banking Corporation. In accordance with EITF
No. 91-5, a non-cash gain of ¥16,168 million was recorded for the year ended
March 31, 2002 as a result of the exchange, which is included in the gain on
sales of securitiesnet in the Statements of Consolidated Income.

During the year ended March 31, 2001, the Company contributed certain
available-for-sale securities and marketable equity securities of an associated
company to an employee retirement benefit trust at fair value of ¥53,285
million and recognized ¥42,975 million in a realized gain, which is included in
the gain on securities contributed to an employee retirement benefit trust. The
fair value of marketable equity securities of an associated company at the time
of contribution was ¥19,871 million and the corresponding gain was ¥19,683
million.

Debt securities classified as available-for-sale and held-to-maturity at
March 31, 2003 mature as follows:

|                               |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |        |        | 
|------------------------------ | ----- | - | ------------------ | ------- | ---------------- | - | -------- | ------- | ---------- | - | ------ | ------ |  | - | ------ | ------ | 
|                               |       |   | Millions of Yen   
|                               |       |   |                   
|                               |       |   | Available-for-sale |         | Held-to-maturity
|                               |       |   |                    |         |                 
|                               |       |   | Carrying           |         | Aggregate        |   | Carrying |         | Aggregate 
|                               |       |   | amount             |         | fair value       |   | amount   |         | fair value
|                               |       |   |                    |         |                  |   |          |         |           
|Contractual maturities:        |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |        |       
|Within 1
year                  |       | ¥ | 86,695             |         |                  | ¥ | 86,796   |         |            | ¥ | 11,806 |        |  | ¥ | 11,806 |       
|After 1 year through 5
years   |       |   | 35,234             |         |                  |   | 35,203   |         |            |   | 1,936  |        |  |   | 1,950  |       
|After 5 years through
10
years |       |   | 8,157              |         |                  |   | 8,171    |         |            |   | 3,051  |        |  |   | 3,048  |       
|After 10
years                 |       |   | 5                  |         |                  |   | 5        |         |            |   |       |        |  |   |       |       
|                               |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |        |       
|                               | Total |   | ¥                  | 130,091 |                  |   | ¥        | 130,175 |            |   | ¥      | 16,793 |  |   | ¥      | 16,804 | 
|                               |       |   |                    |         |                  |   |          |         |            |   |        |        |  |   |        |       

For the year ended March 31, 2002, certain subsidiaries transferred part of
their securities classified as held-to-maturity to the available-for-sale
category at the date of initial application of SFAS No. 133. The carrying
amount of the transferred securities at the time of transfer was ¥15,322
million, and the amount of the related unrealized gain or loss was immaterial.

Investments in and advances to associated companies

Investments in associated companies (investees owned 20% to 50%, corporate
joint ventures and other investees over which the companies have the ability to
exercise significant influence) are accounted for under the equity method. Such
investments include but are not limited to the companies investments in Japan
Australia LNG (MIMI) Pty. Ltd. (50.00%), Mitsui Leasing & Development, Ltd.
(44.67%), Nihon Unisys, Ltd. (27.85%), Sakhalin Energy Investment Company Ltd.
(25.00%) and NextCom K.K. (33.25%). Associated companies mainly engage in the
development of natural resources and manufacturing and distribution of various
kinds of products. The major geographic areas of activities of such entities
are Japan, the Americas, Asia and Oceania.

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Investments in and advances to associated companies at March 31, 2003 and
2002 consisted of the following:

|                             |       |   |                 |         |      |   |         |         | 
|---------------------------- | ----- | - | --------------- | ------- | ---- | - | ------- | ------- | 
|                             |       |   | Millions of Yen
|                             |       |   |                
|                             |       |   | 2003            |         | 2002
|                             |       |   |                 |         |     
|Investments in capital stock |       | ¥ | 414,473         |         |      | ¥ | 361,307 |        
|Advances                     |       |   | 170,038         |         |      |   | 98,490  |        
|                             |       |   |                 |         |      |   |         |        
|                             | Total |   | ¥               | 584,511 |      |   | ¥       | 459,797 | 
|                             |       |   |                 |         |      |   |         |        

The carrying value of the investments in associated companies exceeded the
companies equity in the underlying net assets of such associated companies by
¥34,431 million and ¥30,229 million at March 31, 2003 and 2002, respectively.
The excess is attributed first to certain fair value adjustments on a
net-of-tax basis at the time of the initial and subsequent investments in those
companies with the remaining portion considered as equity method goodwill. The
fair value adjustments are generally attributed to intangible assets subject to
amortization.

Investments in common stock of associated companies include marketable
equity securities carried at ¥86,409 million and ¥78,030 million at March 31,
2003 and 2002, respectively. Corresponding aggregate quoted market values were
¥65,852 million and ¥75,542 million, respectively.

Summarized financial information for associated companies at March 31,
2003 and 2002 and for the years ended March 31, 2003, 2002 and 2001 was as
follows:

|                                                            |                                            |   |                 |           |      |   |           |           | 
|----------------------------------------------------------- | ------------------------------------------ | - | --------------- | --------- | ---- | - | --------- | --------- | 
|                                                            |                                            |   | Millions of Yen
|                                                            |                                            |   |                
|                                                            |                                            |   | 2003            |           | 2002
|                                                            |                                            |   |                 |           |     
|Current assets                                              |                                            | ¥ | 2,434,282       |           |      | ¥ | 2,052,553 |          
|Property
and equipmentnet of accumulated depreciation      |                                            |   | 2,028,094       |           |      |   | 1,951,055 |          
|Other assets                                                |                                            |   | 916,754         |           |      |   | 870,220   |          
|                                                            |                                            |   |                 |           |      |   |           |          
|                                                            | Total assets                               |   | ¥               | 5,379,130 |      |   | ¥         | 4,873,828 | 
|                                                            |                                            |   |                 |           |      |   |           |          
|Current liabilities                                         |                                            | ¥ | 2,119,214       |           |      | ¥ | 1,782,001 |          
|Long-term liabilities and minority interests                |                                            |   | 1,986,221       |           |      |   | 1,944,236 |          
|Shareholders equity                                        |                                            |   | 1,273,695       |           |      |   | 1,147,591 |          
|                                                            |                                            |   |                 |           |      |   |           |          
|                                                            | Total liabilities and shareholders equity |   | ¥               | 5,379,130 |      |   | ¥         | 4,873,828 | 
|                                                            |                                            |   |                 |           |      |   |           |          
|The companies equity in net assets of associated companies |                                            | ¥ | 380,042         |           |      | ¥ | 331,078   |          

|                             |  |                 |           |      |  |      |           |  |  |   |           | 
|---------------------------- |  | --------------- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                             |  | Millions of Yen
|                             |  |                
|                             |  | 2003            |           | 2002 |  | 2001
|                             |  |                 |           |      |  |     
|Total trading transactions   |  | ¥               | 4,983,091 |      |  | ¥    | 3,797,813 |  |  | ¥ | 3,534,008 | 
|Revenuegross trading profit |  |                 | 730,929   |      |  |      | 650,092   |  |  |   | 569,363   | 
|Net income                   |  |                 | 92,593    |      |  |      | 92,132    |  |  |   | 25,108    | 

The companies total trading transactions with associated companies during
the years ended March 31, 2003, 2002 and 2001 were as follows:

|                      |  |                 |         |      |  |      |         |  |  |   |         | 
|--------------------- |  | --------------- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                      |  | Millions of Yen
|                      |  |                
|                      |  | 2003            |         | 2002 |  | 2001
|                      |  |                 |         |      |  |     
|Sale transactions     |  | ¥               | 866,522 |      |  | ¥    | 840,041 |  |  | ¥ | 838,385 | 
|Purchase transactions |  |                 | 795,802 |      |  |      | 780,872 |  |  |   | 657,540 | 

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Dividends received from associated companies for the years ended March 31,
2003, 2002 and 2001 amounted to ¥13,037 million, ¥9,590 million and ¥7,876
million, respectively.

Consolidated unappropriated retained earnings at March 31, 2003 and 2002
included the companies equity in net undistributed earnings of associated
companies in the amount of ¥70,502 million and ¥61,122 million, respectively.

6. ALLOWANCE FOR DOUBTFUL RECEIVABLES

An analysis of the change in the allowance for doubtful receivables is as
follows:

|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |         | 
|---------------------------- |  | ----- | ------- | --------------- | ------- | ----------- | ------- | ----------- | ------- | ------------- | ------ | ----------- | ------ | - | ------ | - | ------ | - | ------- | - | ------- | 
|                             |  |       |         | Millions of Yen
|                             |  |       |         |                
|                             |  |       |         | Balance at      |         |             |         |             |         | Provision for |        | Charged to  |        |   |        |  
|                             |  |       |         | beginning of    |         | Credits     |         | doubtful    |         | other         |        | Balance at 
|                             |  |       |         | year            |         | charged off |         | receivables |         | accounts*1    |        | end of year
|                             |  |       |         |                 |         |             |         |             |         |               |        |            
|Year ended March 31, 2003:   |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |  
|Current                      |  | ¥     | 20,625  |                 |         | ¥           | (3,974  | )           |         | ¥             | 6,077  |             |        | ¥ | (1,492 | ) |        | ¥ | 21,236  |  
|Non-current                  |  |       | 139,478 |                 |         |             | (10,163 | )           |         |               | 8,216  |             |        |   | 2,262  |   |        |   | 139,793 |  
|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |        
|                             |  | Total |         | ¥               | 160,103 |             |         | ¥           | (14,137 | )             |        | ¥           | 14,293 |   |        | ¥ | 770    |   |         | ¥ | 161,029 | 
|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |        
|Year ended March 31, 2002*2: |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |  
|Current                      |  | ¥     | 43,930  |                 |         | ¥           | (25,899 | )           |         | ¥             | 2,584  |             |        | ¥ | 10     |   |        | ¥ | 20,625  |  
|Non-current                  |  |       | 121,684 |                 |         |             | (11,141 | )           |         |               | 18,607 |             |        |   | 10,328 |   |        |   | 139,478 |  
|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |        
|                             |  | Total |         | ¥               | 165,614 |             |         | ¥           | (37,040 | )             |        | ¥           | 21,191 |   |        | ¥ | 10,338 |   |         | ¥ | 160,103 | 
|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |        
|Year ended March 31, 2001:   |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |  
|Current                      |  | ¥     | 24,867  |                 |         | ¥           | (6,292  | )           |         | ¥             | 25,346 |             |        | ¥ | 9      |   |        | ¥ | 43,930  |  
|Non-current                  |  |       | 112,281 |                 |         |             | (17,536 | )           |         |               | 18,323 |             |        |   | 8,616  |   |        |   | 121,684 |  
|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |        
|                             |  | Total |         | ¥               | 137,148 |             |         | ¥           | (23,828 | )             |        | ¥           | 43,669 |   |        | ¥ | 8,625  |   |         | ¥ | 165,614 | 
|                             |  |       |         |                 |         |             |         |             |         |               |        |             |        |   |        |   |        |   |         |   |        



|*1 |  | Principally reclassification to discontinued operations and effect of
changes in foreign exchange rates.
|-- |  | --------------------------------------------------------------------------------------------------------
|  
|*2 |  | The effect of the change in the fiscal year-end of certain subsidiaries was
immaterial.                 

At March 31, 2003 and 2002, the carrying values of such impaired loans, as
defined in SFAS No. 114, were ¥195,028 million and ¥168,346 million,
respectively, while the total allowance for doubtful receivables related to
such loans was ¥130,996 million and ¥127,307 million, respectively.

The amounts of the impaired loans include those without allowance for
doubtful receivables, which were ¥5,391 million and ¥3,238 million at March 31,
2003 and 2002, respectively.

The average investment in impaired loans for the years ended March 31,
2003, 2002 and 2001 were ¥181,687 million, ¥170,206 million and ¥163,983
million, respectively.

Interest income on impaired loans has been recognized mainly using the
cash-basis method of accounting during the period that the loans were impaired.
For the years ended March 31, 2003, 2002 and 2001, the companies recognized
interest income on impaired loans of ¥1,800 million, ¥2,855 million and ¥3,346
million, respectively.

7. LEASES

Lessor

The companies lease real estate and equipment, aircraft, ocean transport
vessels and rolling stock.

Certain leases of aircraft and rolling stock are classified as direct
financing leases or leveraged leases, and the net investments are included as
part of trade receivables-accounts and non-current receivables, less unearned
interest in the accompanying Consolidated Balance Sheets. The companies have no
general obligation for principal and interest on notes and other instruments
related to third-party participation in leveraged leases. Such notes and other
instruments have not been included in liabilities but have been offset against
the related lease receivables. The residual values represent the estimate of
the values of the leased assets at the end of the lease contracts and are initially recorded based on
appraisals and estimates. Realization of the residual values is dependent on
the companies future ability to sell
the related assets under then prevailing market conditions.

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Other leases are classified as operating leases and the related assets are
presented as property leased to othersat cost, less accumulated depreciation
in the accompanying Consolidated Balance Sheets.

The following comprises the components of the net investment in direct
financing leases as of March 31, 2003 and 2002:

|                                                       |                                           |   |                 |        |      |   |         |        | 
|------------------------------------------------------ | ----------------------------------------- | - | --------------- | ------ | ---- | - | ------- | ------ | 
|                                                       |                                           |   | Millions of Yen
|                                                       |                                           |   |                
|                                                       |                                           |   | 2003            |        | 2002
|                                                       |                                           |   |                 |        |     
|Total minimum lease payments to be received            |                                           | ¥ | 86,502          |        |      | ¥ | 98,624  |       
|Estimated unguaranteed residual value of leased assets |                                           |   | 15,942          |        |      |   | 16,131  |       
|Deferred initial direct costs                          |                                           |   | 10              |        |      |   | 11      |       
|Less unearned income                                   |                                           |   | (34,070         | )      |      |   | (35,843 | )     
|                                                       |                                           |   |                 |        |      |   |         |       
|Investment in direct financing leases                  |                                           |   | 68,384          |        |      |   | 78,923  |       
|Less allowance for doubtful receivables                |                                           |   | (903            | )      |      |   | (703    | )     
|                                                       |                                           |   |                 |        |      |   |         |       
|                                                       | Net investment in direct financing leases |   | ¥               | 67,481 |      |   | ¥       | 78,220 | 
|                                                       |                                           |   |                 |        |      |   |         |       

The following is a schedule by years of future minimum lease payments to
be received from direct financing leases as of March 31, 2003:

|                      |       |   |                 |        | 
|--------------------- | ----- | - | --------------- | ------ | 
|                      |       |   | Millions of Yen
|                      |       |   |                
|Year ending March 31: |       |   |                 |       
|2004                  |       | ¥ | 11,578          |       
|2005                  |       |   | 6,755           |       
|2006                  |       |   | 6,808           |       
|2007                  |       |   | 6,621           |       
|2008                  |       |   | 6,228           |       
|Thereafter            |       |   | 48,512          |       
|                      |       |   |                 |       
|                      | Total |   | ¥               | 86,502 | 
|                      |       |   |                 |       

The following represents the components of the net investment in leveraged
leases as of March 31, 2003 and 2002:

|                                                                                                            |                                    |   |                 |       |      |   |        |       | 
|----------------------------------------------------------------------------------------------------------- | ---------------------------------- | - | --------------- | ----- | ---- | - | ------ | ----- | 
|                                                                                                            |                                    |   | Millions of Yen
|                                                                                                            |                                    |   |                
|                                                                                                            |                                    |   | 2003            |       | 2002
|                                                                                                            |                                    |   |                 |       |     
|Total
minimum lease payments to be received (net of principal and interest
on third-party nonrecourse debt) |                                    | ¥ | 5,242           |       |      | ¥ | 4,756  |      
|Estimated unguaranteed residual value of leased assets                                                      |                                    |   | 9,495           |       |      |   | 9,913  |      
|Less unearned income                                                                                        |                                    |   | (4,074          | )     |      |   | (4,421 | )    
|                                                                                                            |                                    |   |                 |       |      |   |        |      
|Investment in leveraged leases                                                                              |                                    |   | 10,663          |       |      |   | 10,248 |      
|Less deferred tax liabilities arising from leveraged leases                                                 |                                    |   | (4,791          | )     |      |   | (3,405 | )    
|                                                                                                            |                                    |   |                 |       |      |   |        |      
|                                                                                                            | Net investment in leveraged leases |   | ¥               | 5,872 |      |   | ¥      | 6,843 | 
|                                                                                                            |                                    |   |                 |       |      |   |        |      

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##### Table of Contents



The following schedule provides an analysis of the companies investment
in property on operating leases and property held for lease by classes as of
March 31, 2003 and 2002:

|                          |       |   |                 |         |              |   |             |         |      |   |              |         |     |   |         |         |             |   |         |          |   |   |         |         | 
|------------------------- | ----- | - | --------------- | ------- | ------------ | - | ----------- | ------- | ---- | - | ------------ | ------- | --- | - | ------- | ------- | ----------- | - | ------- | -------- | - | - | ------- | ------- | 
|                          |       |   | Millions of Yen
|                          |       |   |                
|                          |       |   | 2003            |         | 2002        
|                          |       |   |                 |         |             
|                          |       |   |                 |         |              |   | Accumulated |         |      |   |              |         |     |   |         |         | Accumulated |   |         |          |  
|                          |       |   | Cost            |         | depreciation |   | Net         |         | Cost |   | depreciation |         | Net
|                          |       |   |                 |         |              |   |             |         |      |   |              |         |    
|Real estate
and equipment |       | ¥ | 220,333         |         |              | ¥ | (72,873     | )       |      | ¥ | 147,460      |         |     | ¥ | 234,576 |         |             | ¥ | (77,599 | )        |   | ¥ | 156,977 |        
|Aircraft                  |       |   | 73,890          |         |              |   | (13,601     | )       |      |   | 60,289       |         |     |   | 99,608  |         |             |   | (15,994 | )        |   |   | 83,614  |        
|Ocean transport vessels   |       |   | 40,872          |         |              |   | (8,317      | )       |      |   | 32,555       |         |     |   | 42,312  |         |             |   | (12,629 | )        |   |   | 29,683  |        
|                          |       |   |                 |         |              |   |             |         |      |   |              |         |     |   |         |         |             |   |         |          |   |   |         |        
|                          | Total |   | ¥               | 335,095 |              |   | ¥           | (94,791 | )    |   | ¥            | 240,304 |     |   | ¥       | 376,496 |             |   | ¥       | (106,222 | ) |   | ¥       | 270,274 | 
|                          |       |   |                 |         |              |   |             |         |      |   |              |         |     |   |         |         |             |   |         |          |   |   |         |        

The following is a schedule by years of minimum future rentals on
noncancelable operating leases as of March 31, 2003:

|                      |       |   |                 |        | 
|--------------------- | ----- | - | --------------- | ------ | 
|                      |       |   | Millions of Yen
|                      |       |   |                
|Year ending March 31: |       |   |                 |       
|2004                  |       | ¥ | 17,041          |       
|2005                  |       |   | 13,281          |       
|2006                  |       |   | 10,571          |       
|2007                  |       |   | 8,338           |       
|2008                  |       |   | 6,890           |       
|Thereafter            |       |   | 41,546          |       
|                      |       |   |                 |       
|                      | Total |   | ¥               | 97,667 | 
|                      |       |   |                 |       

Lessee

The companies lease ocean transport vessels, aircraft, real estate and
equipment. All of the ocean transport vessels and aircraft under operating
leases are subleased to third parties. Most other leases are classified as
operating leases. Leased assets under capital leases were not significant in
any period presented.

The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of March 31, 2003. Minimum payments have
not been reduced by minimum sublease rentals of ¥86,310 million due in the
future under noncancelable subleases:

|                      |       |   |                 |         | 
|--------------------- | ----- | - | --------------- | ------- | 
|                      |       |   | Millions of Yen
|                      |       |   |                
|Year ending March 31: |       |   |                 |        
|2004                  |       | ¥ | 23,825          |        
|2005                  |       |   | 20,190          |        
|2006                  |       |   | 17,003          |        
|2007                  |       |   | 14,341          |        
|2008                  |       |   | 10,724          |        
|Thereafter            |       |   | 31,448          |        
|                      |       |   |                 |        
|                      | Total |   | ¥               | 117,531 | 
|                      |       |   |                 |        

Rental expenses incurred for operating leases for the years ended March 31,
2003, 2002 and 2001 were ¥35,420 million, ¥32,896 million and ¥25,353 million,
respectively. Sublease rental income for the years ended March 31, 2003, 2002
and 2001 were ¥20,184 million, ¥13,165 million and ¥7,663 million,
respectively.

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8. PLEDGED ASSETS AND FINANCIAL ASSETS ACCEPTED AS COLLATERAL

Pledged assets

At March 31, 2003 and 2002, the following assets (exclusive of assets covered
by trust receipts discussed below) were pledged as collateral for certain
liabilities of the companies:

|                                            |       |   |                 |         |      |   |        |         | 
|------------------------------------------- | ----- | - | --------------- | ------- | ---- | - | ------ | ------- | 
|                                            |       |   | Millions of Yen
|                                            |       |   |                
|                                            |       |   | 2003            |         | 2002
|                                            |       |   |                 |         |     
|Trade receivables (current and non-current) |       | ¥ | 47,240          |         |      | ¥ | 40,936 |        
|Investments                                 |       |   | 12,399          |         |      |   | 37,515 |        
|Property leased to others (net book value)  |       |   | 14,047          |         |      |   | 15,328 |        
|Property and equipment (net book value)     |       |   | 25,657          |         |      |   | 30,333 |        
|Other                                       |       |   | 1,202           |         |      |   | 1,462  |        
|                                            |       |   |                 |         |      |   |        |        
|                                            | Total |   | ¥               | 100,545 |      |   | ¥      | 125,574 | 
|                                            |       |   |                 |         |      |   |        |        

The distribution of such collateral among short-term bank loans, long-term
debt and guarantees of contracts, etc. was as follows:

|                              |       |   |                 |         |      |   |        |         | 
|----------------------------- | ----- | - | --------------- | ------- | ---- | - | ------ | ------- | 
|                              |       |   | Millions of Yen
|                              |       |   |                
|                              |       |   | 2003            |         | 2002
|                              |       |   |                 |         |     
|Short-term bank loans         |       | ¥ | 7,005           |         |      | ¥ | 11,904 |        
|Long-term debt                |       |   | 73,351          |         |      |   | 88,531 |        
|Guarantees of contracts, etc. |       |   | 20,189          |         |      |   | 25,139 |        
|                              |       |   |                 |         |      |   |        |        
|                              | Total |   | ¥               | 100,545 |      |   | ¥      | 125,574 | 
|                              |       |   |                 |         |      |   |        |        

Trust receipts issued under customary import financing arrangements
(short-term bank loans and bank acceptances) give banks a security interest in
the merchandise imported and/or the accounts receivable resulting from the sale
of such merchandise. Because of the companies large volume of import
transactions, it is not practicable to determine the total amount of assets
covered by outstanding trust receipts.

Financial assets accepted as collateral

At March 31, 2003 and 2002, the fair values of financial assets that the
companies accepted as security for trade receivables and that they are
permitted to sell or repledge consisted of the following:

|                 |  |                 |        |      |  |   |        | 
|---------------- |  | --------------- | ------ | ---- |  | - | ------ | 
|                 |  | Millions of Yen
|                 |  |                
|                 |  | 2003            |        | 2002
|                 |  |                 |        |     
|Bank deposits    |  | ¥               | 2,451  |      |  | ¥ | 3,694  | 
|Stocks and bonds |  |                 | 7,169  |      |  |   | 9,170  | 
|Promissory notes |  |                 | 42,617 |      |  |   | 50,624 | 

Promissory notes of ¥9,191 million and ¥13,365 million which have been
provided as collateral were repledged at March 31, 2003 and 2002, respectively.

At March 31, 2003 and 2002, under security repurchase agreements, the
companies accepted corporate bonds of ¥3,599 million and Japanese government
and corporate bonds of ¥17,931 million, from the counterparties, respectively.
These financial assets were not sold or repledged as of March 31, 2003 and
2002.

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9. IMPAIRMENT LOSS OF LONG-LIVED ASSETS

The companies recognized the impairment loss of long-lived assets in accordance
with the provisions of SFAS No. 144 during the year ended March 31, 2003, and
under SFAS No. 121 for the years ended March 31, 2002 and 2001. See Note 4,
DISCONTINUED OPERATIONS, for the impairment loss on long-lived assets
reported in discontinued operations.

The impairment loss on long-lived assets consists principally of property
leased to others and real estate owned by subsidiaries in the Machinery,
Electronics & Information, Energy and Consumer Products & Services operating
segments for the year ended March 31, 2003, real estate and production
facilities in the Corporate, Metal Products & Minerals and Energy operating
segments for the year ended March 31, 2002, and real estate and production
facilities owned by subsidiaries in the Chemical, Energy and Consumer Products
& Services operating segments for the year ended March 31, 2001. The
impairments for the year ended March 31, 2003 mainly related to operating
cutbacks by the airline industry in the United States resulting from
deterioration of its business environment, and to land in Japan resulting from
significant decreases in market value. The impairments for the years ended
March 31, 2002 and 2001, mainly related to land in Japan resulting from
significant decreases in market value, and to production facilities of certain
subsidiaries resulting from operating losses. The fair value of the assets is
calculated based on market value or on the discounted future cash flows
whichever management considers the most appropriate.

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets subject to amortization at March 31, 2003 and 2002 consisted
of the following:

|                           |       |   |                 |        |              |   |          |        |              |   |        |        |  |   |        |        | 
|-------------------------- | ----- | - | --------------- | ------ | ------------ | - | -------- | ------ | ------------ | - | ------ | ------ |  | - | ------ | ------ | 
|                           |       |   | Millions of Yen
|                           |       |   |                
|                           |       |   | 2003            |        | 2002        
|                           |       |   |                 |        |             
|                           |       |   | Gross           |        |              |   |          |        | Gross        |   |        |        | 
|                           |       |   | carrying        |        | Accumulated  |   | carrying |        | Accumulated 
|                           |       |   | amount          |        | amortization |   | amount   |        | amortization
|                           |       |   |                 |        |              |   |          |        |             
|Mining and oil concessions |       | ¥ | 29,306          |        |              | ¥ | 5,248    |        |              | ¥ | 4,214  |        |  | ¥ | 1,433  |       
|Software                   |       |   | 23,123          |        |              |   | 10,407   |        |              |   | 24,703 |        |  |   | 12,881 |       
|Trademarks                 |       |   | 10,061          |        |              |   | 5,732    |        |              |   | 9,367  |        |  |   | 4,795  |       
|Patents                    |       |   | 9,906           |        |              |   | 9,711    |        |              |   | 10,906 |        |  |   | 10,483 |       
|Other                      |       |   | 26,856          |        |              |   | 17,031   |        |              |   | 19,201 |        |  |   | 12,789 |       
|                           |       |   |                 |        |              |   |          |        |              |   |        |        |  |   |        |       
|                           | Total |   | ¥               | 99,252 |              |   | ¥        | 48,129 |              |   | ¥      | 68,391 |  |   | ¥      | 42,381 | 
|                           |       |   |                 |        |              |   |          |        |              |   |        |        |  |   |        |       

The aggregate amortization expense of intangible assets for the years
ended March 31, 2003 and 2002 was ¥11,984 million and ¥7,190 million,
respectively. The estimated aggregate amortization expense of intangible assets
at March 31, 2003 for each of the next five years is as follows:

|                      |  |                 |       | 
|--------------------- |  | --------------- | ----- | 
|                      |  | Millions of Yen
|                      |  |                
|Year ending March 31: |  |                 |       | 
|2004                  |  | ¥               | 9,039 | 
|2005                  |  |                 | 8,118 | 
|2006                  |  |                 | 7,184 | 
|2007                  |  |                 | 4,428 | 
|2008                  |  |                 | 2,990 | 

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Total carrying amount of intangible assets not subject to amortization
(excluding goodwill) at March 31, 2003 and 2002 consisted of:

|            |       |   |                 |        |      |   |       |        | 
|----------- | ----- | - | --------------- | ------ | ---- | - | ----- | ------ | 
|            |       |   | Millions of Yen
|            |       |   |                
|            |       |   | 2003            |        | 2002
|            |       |   |                 |        |     
|Land rights |       | ¥ | 8,947           |        |      | ¥ | 9,213 |       
|Other       |       |   | 3,152           |        |      |   | 3,098 |       
|            |       |   |                 |        |      |   |       |       
|            | Total |   | ¥               | 12,099 |      |   | ¥     | 12,311 | 
|            |       |   |                 |        |      |   |       |       

Intangible assets which are subject to amortization acquired during the
year ended March 31, 2003 totaled ¥35,859 million, and consist primarily of
mining and oil concessions of ¥25,107 million and software of ¥5,204 million.
The weighted average amortization periods for mining and oil concessions and
software are 17 years and 5 years, respectively. Acquisition of intangible
assets not subject to amortization during the year ended March 31, 2003 was
immaterial.

No impairment loss was recorded for intangible assets subject to
amortization and not subject to amortization for the year ended March 31, 2003.

In addition to the intangible assets shown in the above tables, intangible
assets in the Consolidated Balance Sheets at March 31, 2003 and 2002 also
included unrecognized prior service costs totaling ¥180 million and ¥128
million, respectively, which were recorded under SFAS No. 87 as discussed in
Note 12, PENSION COSTS AND SEVERANCE INDEMNITIES.

The changes in the carrying amount of goodwill by operating segment for
the year ended March 31, 2003 were as follows:

|                                         |  |                 |       |               |  |          |       |          |  |            |     |       |  |   |       |              |  |   |     |   |  |   |       |  
|---------------------------------------- |  | --------------- | ----- | ------------- |  | -------- | ----- | -------- |  | ---------- | --- | ----- |  | - | ----- | ------------ |  | - | --- | - |  | - | ----- | -
|                                         |  | Millions of Yen
|                                         |  |                
|                                         |  | Metal           |       | Machinery,    |  |          |       |          |  | Consumer   |     |       |  |   |       |              |  |  
|                                         |  | Products &      |       | Electronics & |  |          |       |          |  | Products & |     |       |  |   |       | Consolidated
|                                         |  | Minerals        |       | Information   |  | Chemical |       | Services |  | Americas   |     | Total
|                                         |  |                 |       |               |  |          |       |          |  |            |     |      
|Balance at beginning of year             |  | ¥               | 3,228 |               |  | ¥        | 1,012 |          |  | ¥          | 919 |       |  | ¥ | 1,068 |              |  | ¥ | 479 |   |  | ¥ | 6,706 |  
|Acquisition                              |  |                 |      |               |  |          | 1,557 |          |  |            |    |       |  |   |      |              |  |   |    |   |  |   | 1,557 |  
|Foreign currency translation adjustments |  |                 | (316  | )             |  |          | 17    |          |  |            | (90 | )     |  |   | (51   | )            |  |   | (46 | ) |  |   | (486  | )
|                                         |  |                 |       |               |  |          |       |          |  |            |     |       |  |   |       |              |  |   |     |   |  |   |       |  
|Balance at end of year                   |  | ¥               | 2,912 |               |  | ¥        | 2,586 |          |  | ¥          | 829 |       |  | ¥ | 1,017 |              |  | ¥ | 433 |   |  | ¥ | 7,777 |  
|                                         |  |                 |       |               |  |          |       |          |  |            |     |       |  |   |       |              |  |   |     |   |  |   |       |  

No impairment loss was recorded for goodwill during the year ended March 31,
2003.

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Net income and basic and diluted net income per ADS adjusted to exclude
goodwill amortization and equity method goodwill amortization for the years
ended March 31, 2003, 2002 and 2001 were as follows:

|                                              |  |                 |        |      |  |      |        |  |  |   |        |  
|--------------------------------------------- |  | --------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | -
|                                              |  | Millions of Yen
|                                              |  |                
|                                              |  | 2003            |        | 2002 |  | 2001
|                                              |  |                 |        |      |  |     
|Reported net income                           |  | ¥               | 31,138 |      |  | ¥    | 55,371 |  |  | ¥ | 51,588 |  
|Add back: Goodwill amortization               |  |                 |       |      |  |      | 202    |  |  |   | 181    |  
|Add back: Equity method goodwill amortization |  |                 |       |      |  |      | 136    |  |  |   | (6     | )
|                                              |  |                 |        |      |  |      |        |  |  |   |        |  
|Adjusted net income                           |  | ¥               | 31,138 |      |  | ¥    | 55,709 |  |  | ¥ | 51,763 |  
|                                              |  |                 |        |      |  |      |        |  |  |   |        |  
|                                             
|                                              |  | Yen            
|                                              |  |                
|                                              |  | 2003            |        | 2002 |  | 2001
|                                              |  |                 |        |      |  |     
|Basic net income per ADS:                     |  |                 |        |      |  |      |        |  |  |   |        |  
|Reported net income                           |  | ¥               | 394    |      |  | ¥    | 699    |  |  | ¥ | 651    |  
|Add back: Goodwill amortization               |  |                 |       |      |  |      | 3      |  |  |   | 3      |  
|Add back: Equity method goodwill amortization |  |                 |       |      |  |      | 2      |  |  |   | 0      |  
|                                              |  |                 |        |      |  |      |        |  |  |   |        |  
|Adjusted net income                           |  | ¥               | 394    |      |  | ¥    | 704    |  |  | ¥ | 654    |  
|                                              |  |                 |        |      |  |      |        |  |  |   |        |  
|Diluted net income per ADS:                   |  |                 |        |      |  |      |        |  |  |   |        |  
|Reported net income                           |  | ¥               | 374    |      |  | ¥    | 657    |  |  | ¥ | 613    |  
|Add back: Goodwill amortization               |  |                 |       |      |  |      | 2      |  |  |   | 2      |  
|Add back: Equity method goodwill amortization |  |                 |       |      |  |      | 2      |  |  |   | 0      |  
|                                              |  |                 |        |      |  |      |        |  |  |   |        |  
|Adjusted net income                           |  | ¥               | 374    |      |  | ¥    | 661    |  |  | ¥ | 615    |  
|                                              |  |                 |        |      |  |      |        |  |  |   |        |  

11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings

Short-term borrowings at March 31, 2003 and 2002 were comprised of the
following:

|                                     |       |       |         |                 |         |      |     |          |  |   |         |         |         |          |     |   |  | 
|------------------------------------ | ----- | ----- | ------- | --------------- | ------- | ---- | --- | -------- |  | - | ------- | ------- | ------- | -------- | --- | - |  | 
|                                     |       |       |         | Millions of Yen
|                                     |       |       |         |                
|                                     |       |       |         | 2003            |         | 2002
|                                     |       |       |         |                 |         |     
|                                     |       |       |         |                 |         |      |     | Interest |  |   |         |         |         | Interest
|                                     |       |       |         |                 |         |      |     | rate*1   |  |   |         |         |         | rate*1  
|                                     |       |       |         |                 |         |      |     |          |  |   |         |         |         |         
|Short-term bank loans and others     |       | ¥     | 516,470 |                 |         |      | 1.3 | %        |  | ¥ | 482,631 |         |         |          | 2.1 | %
|Commercial paper                     |       |       | 96,187  |                 |         |      | 0.3 |          |  |   | 84,546  |         |         |          | 0.4 |  
|                                     |       |       |         |                 |         |      |     |          |  |   |         |         |         |          |     |  
|                                     | Total |       |         | 612,657         |         |      |     |          |  |   |         | 567,177 |         |          |     |   | 
|SFAS No. 133 fair value adjustment*2 |       |       | (12     | )               |         |      |     |          |  |   | 236     |         |         |          |     |  
|                                     |       |       |         |                 |         |      |     |          |  |   |         |         |         |          |     |  
|                                     |       | Total |         | ¥               | 612,645 |      |     |          |  |   |         | ¥       | 567,413 |          |     |   |  | 
|                                     |       |       |         |                 |         |      |     |          |  |   |         |         |         |          |     |  



|*1 |  | The interest rates represent weighted average rates in effect at March
31, 2003 and 2002, regardless of borrowing currencies, though the range of
the interest rates varies by borrowing currency.                                                                                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|*2 |  | In accordance with the requirements of SFAS No. 133, the portion of the
companies fixed-rate debt obligations that is designated and effective as
a fair value hedge is reflected in the Consolidated Balance Sheets as an
amount equal to the sum of the debts carrying value plus a SFAS No. 133
fair value adjustment representing changes recorded in the fair value of
the hedged debt obligations attributable to movements in the designated
benchmark interest rates during the term of the hedge.

Unused lines of credit, for short-term financing outside Japan, aggregated
¥507,667 million at March 31, 2003. Certain foreign subsidiaries compensate
banks for these facilities in the form of commitment fees, which were not
material in each of the past two years.

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Long-term debt

Long-term debt at March 31, 2003 and 2002 consisted of the following:

|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |         |           |        |           | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | --------- | --------------- | --------- | ------- | --------- | ------ | --------- | 
|                                         |                                                                                                     |                                                                                                               |                                            |        |           | Millions of Yen
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                
|                                         |                                                                                                     |                                                                                                               |                                            |        |           | 2003            |           | 2002   
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |        
|Long-term debt with collateral (Note 8): |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |        
|                                         | Banks and insurance companies,
maturing serially through 2012principally 0.1% to 7%                |                                                                                                               | ¥                                          | 79,307 |           |                 | ¥         | 146,469 |          
|                                         | Government-owned banks and government agencies,
maturing serially through 2055principally 1% to 6% |                                                                                                               |                                            | 36,448 |           |                 |           | 64,467  |          
|                                         | Other, maturing serially through 2018principally 2%                                                |                                                                                                               |                                            | 5,889  |           |                 |           | 5,623   |          
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     |                                                                                                               |                                            | Total  |           | ¥               | 121,644   |         |           | ¥      | 216,559   | 
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |         |          
|Long-term debt without collateral:       |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |        
|                                         | Banks and others (principally insurance companies):                                                 |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     | Principally 0.1% to 7%, maturing serially through
2020                                                        |                                            | ¥      | 1,573,410 |                 |           | ¥       | 1,702,163 |       
|                                         |                                                                                                     | Principally 1% to 8%,
maturing serially through 2013(payable in foreign
currencies)                          |                                            |        | 359,277   |                 |           |         | 233,142   |       
|                                         | Bonds and notes:                                                                                    |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     | Japanese yen convertible bonds (fixed rate 1.5%, due
2003)                                                    |                                            |        |          |                 |           |         | 16,390    |       
|                                         |                                                                                                     | Japanese yen convertible bonds (fixed rate 1.05%, due
2009)                                                   |                                            |        | 92,786    |                 |           |         | 92,786    |       
|                                         |                                                                                                     | Euro yen bonds (fixed rate 3.0%, due
2002)                                                                    |                                            |        |          |                 |           |         | 4,224     |       
|                                         |                                                                                                     | Japanese yen bonds with early redemption clause
(fixed rate 1.1% to 1.4%, due
2013)                           |                                            |        | 35,000    |                 |           |         | 35,000    |       
|                                         |                                                                                                     | Japanese yen bonds (fixed rate 1.0% to 3.6%, due
2002-2019)                                                   |                                            |        | 220,000   |                 |           |         | 205,000   |       
|                                         |                                                                                                     | Japanese yen bonds (fixed and floating rate:                                                                  |                                            |        |           |                 |           |         |           |       
|                                         |                                                                                                     |                                                                                                               | floating rate 1.2% to 1.9%, due
2003-2013) |        |           | 48,500          |           |         |           | 20,000 |          
|                                         |                                                                                                     | Japanese yen bonds (fixed and floating rate:                                                                  |                                            |        |           |                 |           |         |           |       
|                                         |                                                                                                     |                                                                                                               | fixed rate 2.0% to 2.5%, due
2013-2014)    |        |           | 33,000          |           |         |           | 50,500 |          
|                                         |                                                                                                     | Japanese yen bonds (floating rate 1.4% to 2.9%, due
2010)                                                     |                                            |        | 62,000    |                 |           |         | 62,000    |       
|                                         |                                                                                                     | Reverse dual currency yen/U.S. dollar bonds
(fixed rate 3.0% to 3.25%, due
2007-2012)                         |                                            |        | 30,000    |                 |           |         | 30,000    |       
|                                         |                                                                                                     | Notes under global medium-term note programme
(fixed rate 0.15% to 4.6%, due
2002-2014)                       |                                            |        | 40,573    |                 |           |         | 78,149    |       
|                                         |                                                                                                     | Notes under euro medium-term note programme
(fixed and floating rate: fixed rate 0.06% to 7.9%,due
2002-2023) |                                            |        | 127,422   |                 |           |         | 70,362    |       
|                                         |                                                                                                     | Others                                                                                                        |                                            |        |          |                 |           |         | 6,404     |       
|                                         | Account payables, derivative liabilities and others due through 2017:                               |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     | Interest
bearing                                                                                              |                                            |        | 43,295    |                 |           |         | 57,244    |       
|                                         |                                                                                                     | Non-interest
bearing                                                                                          |                                            |        | 113,012   |                 |           |         | 134,844   |       
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     |                                                                                                               |                                            | Total  |           |                 | 2,778,275 |         |           |        | 2,798,208 | 
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     |                                                                                                               |                                            | Total  |           |                 | 2,899,919 |         |           |        | 3,014,767 | 
|SFAS No. 133 fair value
adjustment*      |                                                                                                     |                                                                                                               | 95,850                                     |        |           |                 | 59,887    |        
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |         |          
|                                         |                                                                                                     |                                                                                                               |                                            | Total  |           |                 | 2,995,769 |         |           |        | 3,074,654 | 
|Less current maturities                  |                                                                                                     |                                                                                                               | 495,299                                    |        |           |                 | 454,787   |        
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |        
|Long-term debt, less current maturities  |                                                                                                     | ¥                                                                                                             | 2,500,470                                  |        |           | ¥               | 2,619,867 |        
|                                         |                                                                                                     |                                                                                                               |                                            |        |           |                 |           |        



|* |  | In accordance with the requirements of SFAS No. 133, the portion of the
companies fixed-rate debt obligations that is designated and effective as
a fair value hedge is reflected in the Consolidated Balance Sheets as an
amount equal to the sum of the debts carrying value plus a SFAS No. 133
fair value adjustment representing changes recorded in the fair value of
the hedged debt obligations attributable to movements in the designated
benchmark interest rates during the term of the hedge.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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The companies have entered into currency swap agreements and interest rate
swap agreements in connection with certain bonds, notes and other long-term
borrowings. The floating interest rates for interest rate swap agreements are
generally based on the three-month or six-month LIBOR (London Interbank Offered
Rate). The three-month and six-month LIBORs for U.S. dollar as of March 31,
2003 were 1.28% and 1.23%, respectively. (See Note 19, DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, and Note 20, FINANCIAL INSTRUMENTS.)

The 1.05% Convertible Bonds due 2009 may be converted into common stock at
¥881.00 per share, at the option of the holder and may be redeemed at the
option of the Company at specified percentages of the principal.

The indenture, under which the bonds were issued, does not require
maintenance of a prescribed amount of net assets, a minimum debt/equity ratio
or limits on the payment of cash dividends by the Company.

Substantially all short-term and long-term bank borrowings are made under
agreements which, as is customary in Japan, provide that under certain
conditions a bank may require the borrower to provide collateral (or additional
collateral) or guarantors with respect to the borrowings 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. Default
provisions of certain loan agreements grant certain rights of possession to the
lenders.

Under certain loan agreements with government-owned banks, the creditors
may require the companies to submit proposals as to the payment of dividends
and other appropriations of earnings for the creditors review and approval
before presentation to the shareholders. Certain of those agreements require
the borrower, upon the 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 through the
proceeds from the sale of common stock or bonds and notes. During the years
ended March 31, 2003 and 2002, the companies did not receive any such requests,
and there is no expectation that any such requests will be made.

Maturities of long-term debt outstanding at March 31, 2003 were as
follows, excluding the effect of the SFAS No. 133 fair value adjustment:

|                      |       |   |                 |           | 
|--------------------- | ----- | - | --------------- | --------- | 
|                      |       |   | Millions of Yen
|                      |       |   |                
|Year ending March 31: |       |   |                 |          
|2004                  |       | ¥ | 485,953         |          
|2005                  |       |   | 477,519         |          
|2006                  |       |   | 303,200         |          
|2007                  |       |   | 277,118         |          
|2008                  |       |   | 288,417         |          
|Thereafter            |       |   | 1,067,712       |          
|                      |       |   |                 |          
|                      | Total |   | ¥               | 2,899,919 | 
|                      |       |   |                 |          

12. PENSION COSTS AND SEVERANCE INDEMNITIES

The Company and certain subsidiaries have non-contributory defined benefit
pension plans and contributory defined benefit pension plans, covering
substantially all employees other than directors.

The primary pension plan is the Companys contributory defined benefit
Japanese government welfare pension program for its employees (the Employees
Pension Fund, EPF). EPF is composed of a substitutional portion of Japanese
Pension Insurance and a corporate portion of a contributory defined benefit
plan. For the former, the benefits are based on a standard remuneration
schedule under the Welfare Pension

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Insurance Law and the length of participation. For the latter, the benefits are
based on the length of service.

Effective April 1, 1997, the Company merged a non-contributory defined
benefit pension plan (the Tax Qualified Pension Plan, TQPP) into EPF. Only
retired employees with vested benefits as of March 31, 1997, remained in the
TQPP.

The Company and certain subsidiaries have unfunded severance indemnities
plans. Benefits under the plans are based on the level of compensation at
retirement, or earlier termination of employment, and the length of service.

The measurement date used for the Companys pension plans was changed for
the year ended March 31, 2002 from December 31 to March 31. The change in the
measurement date did not have a material effect on the consolidated financial
statements.

Net periodic pension costs of the companies defined benefit pension plans
for the years ended March 31, 2003, 2002 and 2001 included the following
components:

|                                                                                                            |                            |   |                 |        |      |   |        |        |  |   |        |        | 
|----------------------------------------------------------------------------------------------------------- | -------------------------- | - | --------------- | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                            |                            |   | Millions of Yen
|                                                                                                            |                            |   |                
|                                                                                                            |                            |   | 2003            |        | 2002 |   | 2001  
|                                                                                                            |                            |   |                 |        |      |   |       
|Service
costbenefits earned during the period                                                              |                            | ¥ | 11,582          |        |      | ¥ | 12,834 |        |  | ¥ | 13,019 |       
|Interest cost on projected benefit obligation                                                               |                            |   | 7,234           |        |      |   | 7,528  |        |  |   | 7,427  |       
|Expected return on plan assets                                                                              |                            |   | (5,815          | )      |      |   | (5,004 | )      |  |   | (4,800 | )     
|Amortization of unrecognized obligation existing at transition                                              |                            |   |                |        |      |   |       |        |  |   | 3,726  |       
|Amortization of unrecognized prior service cost                                                             |                            |   | (171            | )      |      |   | (53    | )      |  |   | 298    |       
|Amortization of unrecognized net amount resulting
from changes in plan experience and actuarial assumptions |                            |   | 8,809           |        |      |   | 8,867  |        |  |   | 5,801  |       
|                                                                                                            |                            |   |                 |        |      |   |        |        |  |   |        |       
|                                                                                                            | Net periodic pension costs |   | ¥               | 21,639 |      |   | ¥      | 24,172 |  |   | ¥      | 25,471 | 
|                                                                                                            |                            |   |                 |        |      |   |        |        |  |   |        |       

The following table sets forth the reconciliation of benefit obligations, plan
assets and funded status of the plans:

|                                         |                                   |   |         |                 |  |      |         |         |  | 
|---------------------------------------- | --------------------------------- | - | ------- | --------------- |  | ---- | ------- | ------- |  | 
|                                         |                                   |   |         | Millions of Yen
|                                         |                                   |   |         |                
|                                         |                                   |   |         | 2003            |  | 2002
|                                         |                                   |   |         |                 |  |     
|Change in benefit obligations:           |                                   |   |         |                 |  |      |         |        
|Benefit obligation at beginning of year  |                                   | ¥ | 253,885 |                 |  | ¥    | 245,195 |        
|Service cost                             |                                   |   | 11,582  |                 |  |      | 12,834  |        
|Interest cost                            |                                   |   | 7,234   |                 |  |      | 7,528   |        
|Plan participants contributions         |                                   |   | 829     |                 |  |      | 1,418   |        
|Plan amendments                          |                                   |   | (620    | )               |  |      | (2,082  | )      
|Actuarial loss                           |                                   |   | 32,509  |                 |  |      | 10,761  |        
|Benefits paid from plan assets           |                                   |   | (12,651 | )               |  |      | (14,606 | )      
|Direct benefit payments                  |                                   |   | (5,344  | )               |  |      | (4,317  | )      
|Settlements                              |                                   |   | (160    | )               |  |      | (3,479  | )      
|Acquisitions and divestitures            |                                   |   | (544    | )               |  |      | (1,281  | )      
|Foreign currency translation adjustments |                                   |   | (645    | )               |  |      | 1,914   |        
|                                         |                                   |   |         |                 |  |      |         |         | 
|                                         | Benefit obligation at end of year |   |         | 286,075         |  |      |         | 253,885 | 
|                                         |                                   |   |         |                 |  |      |         |         | 

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(Continued)

|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |         | 
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ---------------------------------------- | ------- | --------------- | ------- | ---- | ------- | ------- | ------- | 
|                                                                                            |                                                                 |                                          |         | Millions of Yen
|                                                                                            |                                                                 |                                          |         |                
|                                                                                            |                                                                 |                                          |         | 2003            |         | 2002
|                                                                                            |                                                                 |                                          |         |                 |         |     
|Change in plan assets:                                                                      |                                                                 |                                          |         |                 |         |      |         |        
|                                                                                            | Fair value of plan assets at beginning of
year                  |                                          |         | 233,229         |         |      |         | 188,711 |        
|                                                                                            | Actual loss on plan
assets                                      |                                          |         | (46,372         | )       |      |         | (7,119  | )      
|                                                                                            | Employer
contribution                                           |                                          |         | 53,298          |         |      |         | 67,203  |        
|                                                                                            | Plan participants
contributions                                |                                          |         | 829             |         |      |         | 1,418   |        
|                                                                                            | Benefits paid from plan
assets                                  |                                          |         | (12,651         | )       |      |         | (14,606 | )      
|                                                                                            | Settlements                                                     |                                          |         | (101            | )       |      |         | (3,479  | )      
|                                                                                            | Acquisitions and
divestitures                                   |                                          |         | 620             |         |      |         |        |        
|                                                                                            | Foreign currency translation
adjustments                        |                                          |         | (434            | )       |      |         | 1,101   |        
|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |        
|                                                                                            |                                                                 | Fair value of plan assets at end of
year |         |                 | 228,418 |      |         |         | 233,229 | 
|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |        
|Funded status at end of
year                                                                |                                                                 |                                          | (57,657 | )               |         |      | (20,656 | )      
|Unrecognized prior service
cost                                                             |                                                                 |                                          | (7,754  | )               |         |      | (7,268  | )      
|Unrecognized net amount resulting from changes
in plan experience and actuarial
assumptions |                                                                 |                                          | 145,833 |                 |         |      | 69,980  |        
|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |        
|                                                                                            |                                                                 | Net amount
recognized                    |         | ¥               | 80,422  |      |         | ¥       | 42,056  | 
|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |        
|Amounts recognized in the Consolidated Balance Sheets consist of:                           |                                                                 |                                          |         |                 |         |      |         |        
|                                                                                            | Intangible
assets                                               |                                          | ¥       | 180             |         |      | ¥       | 128     |        
|                                                                                            | Other assets (prepaid pension
costs)                            |                                          |         | 119,727         |         |      |         | 80,410  |        
|                                                                                            | Accrued pension costs and liability for severance
indemnities   |                                          |         | (53,148         | )       |      |         | (41,561 | )      
|                                                                                            | Accumulated other comprehensive loss (before income tax
effect) |                                          |         | 13,663          |         |      |         | 3,079   |        
|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |        
|                                                                                            |                                                                 | Net amount
recognized                    |         | ¥               | 80,422  |      |         | ¥       | 42,056  | 
|                                                                                            |                                                                 |                                          |         |                 |         |      |         |         |        

The aggregate projected benefit obligation and aggregate fair value of
plan assets for plans with projected benefit obligations in excess of plan
assets were ¥286,075 million and ¥228,418 million at March 31, 2003 and ¥80,526
million and ¥38,731 million at March 31, 2002. The aggregate accumulated
benefit obligation and aggregate fair value of plan assets for plans with
accumulated benefit obligations in excess of plan assets were ¥49,461 million
and ¥22,405 million at March 31, 2003 and ¥36,233 million and ¥23,988 million
at March 31, 2002.

The prior service cost is amortized over the average remaining service
period of employees expected to receive related benefits.

The amortization periods of the unrecognized net amount resulting from
changes in plan experience and actuarial assumptions are seven years for EPF
and the average remaining service period for other defined benefit pension
plans.

The impact of the change in the fiscal year-end of certain subsidiaries
for the year ended March 31, 2002 on benefit obligations and plan assets was
immaterial.

Assumptions used in the accounting for the companies defined benefit
pension plans for the years ended March 31, 2003, 2002 and 2001 are set forth
as follows:

|                                                                   |  |      |     |      |  |      |     |   |  |  |     |  
|------------------------------------------------------------------ |  | ---- | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                                                                   |  | 2003 |     | 2002 |  | 2001
|                                                                   |  |      |     |      |  |     
|Weighted-average discount
rates                                    |  |      | 2.5 | %    |  |      | 3.2 | % |  |  | 3.2 | %
|Weighted-average expected long-term rates of
return on plan assets |  |      | 2.6 | %    |  |      | 2.9 | % |  |  | 3.0 | %

The rate of increase in future compensation levels was not applied in
determining the projected benefit obligation of the corporate portion of EPF
because the benefit formulas of the Companys plans do not contain factors
relating to compensation levels.

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The rates of increase in future compensation levels applied for the other
defined benefit pension plans for the years ended March 31, 2003, 2002 and 2001
were 1.5% to 10.0%, 1.5% to 7.0% and 2.0% to 7.0%, respectively.

The companies funding policies with respect to pension plans are
generally to contribute amounts calculated based on the plans contribution
formula. Plan assets, including assets in pension trust funds managed by
certain trust banks, life insurance companies and investment consulting
companies, consist of Japanese government bonds, other debt securities and
marketable equity securities. Plan assets managed by insurance companies are
included in pooled investment portfolios of such insurance companies.

The Company established the employee retirement benefit trust for
retirement obligations by contributing certain available-for-sale securities
during the years ended March 31, 2003 and 2002, and by contributing certain
available-for-sale securities and marketable equity securities of an associated
company during the year ended March 31, 2001.

As stated in Note 5, MARKETABLE SECURITIES AND OTHER INVESTMENTS, fair
value at contribution of these securities for the years ended March 31, 2003
and 2002 were ¥27,343 million and ¥45,770 million, respectively. The fair value
of securities held in the employee retirement benefit trust is included in the
fair value of plan assets at March 31, 2003 and 2002. The fair value of
marketable equity securities of an associated company included in plan assets
is ¥10,313 million and ¥21,139 million at March 31, 2003 and 2002,
respectively.

In addition to the above defined benefit pension plans, the Company
provides the Early Retirement Support Plan to eligible employees, which
guarantees, prior to normal retirement age, certain supplemental payments based
on preretirement compensation levels. During the years ended March 31, 2003,
2002 and 2001, the Company recorded ¥12,687 million, ¥5,595 million and ¥14,796
million of periodic payments in excess of previous projections and projected
benefits based on factors including the history of benefit payments as selling,
general and administrative expenses, respectively.

Certain subsidiaries recorded ¥5,836 million of additional costs of
offering early retirement programs to their employees for the year ended March
31, 2001. These benefit costs were immaterial for the years ended March 31,
2003 and 2002.

13. SHAREHOLDERS
EQUITYCommon stock and capital surplus

Prior to October 1, 2001, under the Commercial Code of Japan (the Code),
certain issuances of common stock, including conversions of bonds and notes and
exercises of warrants issued, were required to be credited to the common stock
account for at least the greater of par value or 50% of the proceeds. An
amendment to the Code, which became effective on October 1, 2001, required that
the stated par value be eliminated resulting in all of the outstanding shares
having no par value as of October 1, 2001. After the amendment, the issuances
of common stock are required to be credited to the common stock account for at
least 50% of the proceeds.

At March 31, 2003, 105,318,956 shares of common stock were reserved for
the conversion of outstanding bonds.

The Code permits, upon approval by the Board of Directors, transfers of
amounts from capital surplus to the common stock account. The amounts available
for transfer are based on capital surplus as defined by accounting practices
prevailing in Japan. Additional amounts recorded as capital surplus to conform
with U.S. GAAP may not be transferred. Such additional amounts primarily relate
to accounting for warrants and business combinations and amounted to
¥69,049
million at March 31, 2003.

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 appropriations
of retained earnings associated with cash outlays applicable to each period
shall be appropriated as a legal reserve until such reserve equals 25% of
common stock. The amendment to the Code, which became effective on October 1,
2001, provides that the amount to be

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appropriated as a legal reserve shall be up to the total amount of capital
surplus and the legal reserve being equal to 25% of common stock. The retained
earnings so appropriated may be used to eliminate or reduce a deficit by
resolution of the shareholders or may be transferred to capital stock by
resolution of the Board of Directors. The amendment to the Code also provides
that to the extent that the sum of capital surplus and the legal reserve
exceeds 25% of common stock, the excess, if any, is available for
appropriations by resolution of the shareholders.

Retained earnings
unappropriated
The amount of retained earnings available for dividends under the Code is based
on the amount of retained earnings recorded in the Companys general books of
account in accordance with accepted Japanese accounting practices. The
adjustments included in the accompanying consolidated financial statements for
U.S. GAAP purposes but not recorded in the general books of account have no
effect on the determination of retained earnings available for dividends under
the Code.

Retained earnings, exclusive of retained earnings appropriated for the
legal reserve, shown in the Companys general books of account amounted to
¥197,169 million at March 31, 2003. The amount does not include any retained
earnings to be appropriated for the legal reserve as a part of appropriations
of retained earnings associated with cash outlays and any amount restricted as
to the payment of dividends under the Code. See Note 11, SHORT-TERM BORROWINGS
AND LONG-TERM DEBT, for the rights of certain creditors to review and approve
the companies proposal for the payment of dividends and other appropriations
of earnings. Dividends are approved by shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable. A mid-year
interim dividend may be paid by resolution of the Board of Directors, subject
to limitations imposed by the Code.

The Code permits transfers, upon approval
of shareholders, of a portion of unappropriated retained earnings, available
for dividends, to the common stock account.

Purchase by the Company of
shares
Prior to October 1, 2001, the Company was generally prohibited from acquiring
its own shares except, among others, by means of retirement of shares or grant
of stock option for employees, in the manner as provided in the Code, and the
purchased shares had to be sold or otherwise transferred to a third party
within a reasonable period thereafter.

The amendment to the Code, which became effective on October 1, 2001,
permits the Company to purchase and hold its own shares. The Company is allowed
to decide the total number and amount of the shares to be acquired, not to
exceed the amount of retained earnings available for dividends, subject to the
prior approval of the shareholders at an ordinary general meeting of
shareholders. Public companies are generally required to purchase the shares
through market transactions or tender offer and dispose of them, subject to the
approval of the Board of Directors, unless otherwise specified in the Code, or
as far as the Articles of Incorporation do not require a resolution of the
shareholders at the shareholders meeting. As an example of the disposal of its
own shares, the Company sells the shares or chooses to transfer the shares
instead of issuing new shares in case of merger, stock transfer or exchange, or
spin-off. In addition, the Code enables the Company to retire its own shares by
resolution of the Board of Directors.

At the ordinary general meeting of shareholders held on June 27, 2002, it
was approved that the Company may acquire up to 70 million outstanding shares
of its common stock at an amount not exceeding ¥70,000 million until the
conclusion of the ordinary general meeting of shareholders on June 27, 2003.

It was approved on May 9, 2003 that the Board of Directors propose a
resolution at the ordinary general meeting of shareholders to be held on June
27, 2003 that the Company may acquire up to a total not exceeding 70 million
outstanding shares of its common stock at an amount in a total not exceeding
¥50,000 million until the conclusion of the next ordinary general meeting of
shareholders.

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Accumulated other comprehensive income (loss)

Changes in each component of accumulated other comprehensive income (loss) for
the years ended March 31, 2003, 2002 and 2001 are as follows:

|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |         |   | 
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | - | -------- | --------------- | - | ---- | -------- | -------- | - | - | -------- | ------- | - | 
|                                                                      |                                                                                        |   |          | Millions of Yen
|                                                                      |                                                                                        |   |          |                
|                                                                      |                                                                                        |   |          | 2003            |   | 2002 |          | 2001    
|                                                                      |                                                                                        |   |          |                 |   |      |          |         
|Unrealized Holding Gains and Losses
on Available-for-Sale Securities: |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|Balance at beginning of
year                                          |                                                                                        | ¥ | 44,246   |                 |   | ¥    | 95,806   |          |   | ¥ | 115,326  |        
|                                                                      | Pre-tax amount of unrealized holding gains and losses
on available-for-sale securities |   |          | (85,488         | ) |      |          | (119,796 | ) |   |          | (12,033 | )
|                                                                      | Deferred income
taxes                                                                  |   |          | 34,673          |   |      |          | 49,085   |   |   |          | 7,578   |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax
effect)                                         |   |          | (50,815         | ) |      |          | (70,711  | ) |   |          | (4,455  | )
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Pre-tax amount of reclassification
adjustments                                         |   |          | 10,540          |   |      |          | 28,272   |   |   |          | (28,577 | )
|                                                                      | Deferred income
taxes                                                                  |   |          | (566            | ) |      |          | (8,945   | ) |   |          | 13,512  |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax
effect)                                         |   |          | 9,974           |   |      |          | 19,327   |   |   |          | (15,065 | )
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|The effect of change in fiscal year-end of certain
subsidiaries:      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Pre-tax amount of unrealized holding gains and losses
on available-for-sale
securities |   |          |                |   |      |          | (290     | ) |   |          |        |  
|                                                                      | Deferred income
taxes                                                                  |   |          |                |   |      |          | 122      |   |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax
effect)                                         |   |          |                |   |      |          | (168     | ) |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Pre-tax amount of reclassification
adjustments                                         |   |          |                |   |      |          | (8       | ) |   |          |        |  
|                                                                      | Deferred income
taxes                                                                  |   |          |                |   |      |          |         |   |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax
effect)                                         |   |          |                |   |      |          | (8       | ) |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|Balance at end of
year                                                |                                                                                        | ¥ | 3,405    |                 |   | ¥    | 44,246   |          |   | ¥ | 95,806   |        
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|Foreign Currency Translation Adjustments:                             |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|Balance at beginning of year                                          |                                                                                        | ¥ | (118,669 | )               |   | ¥    | (188,670 | )        |   | ¥ | (217,076 | )      
|                                                                      | Pre-tax amount of translation adjustments                                              |   |          | (26,957         | ) |      |          | 73,838   |   |   |          | 29,393  |  
|                                                                      | Deferred income taxes                                                                  |   |          | 1,032           |   |      |          | (5,421   | ) |   |          | (3,161  | )
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax effect)                                         |   |          | (25,925         | ) |      |          | 68,417   |   |   |          | 26,232  |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Pre-tax amount of reclassification adjustments                                         |   |          | 4,721           |   |      |          | 818      |   |   |          | 2,377   |  
|                                                                      | Deferred income taxes                                                                  |   |          | (1,180          | ) |      |          | (178     | ) |   |          | (203    | )
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax effect)                                         |   |          | 3,541           |   |      |          | 640      |   |   |          | 2,174   |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|The effect of change in fiscal year-end of certain subsidiaries:      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Pre-tax amount of translation adjustments                                              |   |          |                |   |      |          | 954      |   |   |          |        |  
|                                                                      | Deferred income taxes                                                                  |   |          |                |   |      |          | (10      | ) |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax effect)                                         |   |          |                |   |      |          | 944      |   |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Pre-tax amount of reclassification adjustments                                         |   |          |                |   |      |          |         |   |   |          |        |  
|                                                                      | Deferred income taxes                                                                  |   |          |                |   |      |          |         |   |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|                                                                      | Adjustments for year (after income tax effect)                                         |   |          |                |   |      |          |         |   |   |          |        |  
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        
|Balance at end of year                                                |                                                                                        | ¥ | (141,053 | )               |   | ¥    | (118,669 | )        |   | ¥ | (188,670 | )      
|                                                                      |                                                                                        |   |          |                 |   |      |          |          |   |   |          |        

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(Continued)

|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |         |  
|---------------------------------------------------------------- | ------------------------------------------------------------------------------- | - | --------------- | -------- | ---- | - | -------- | ------- | - | - | -------- | ------- | -
|                                                                 |                                                                                 |   | Millions of Yen
|                                                                 |                                                                                 |   |                
|                                                                 |                                                                                 |   | 2003            |          | 2002 |   | 2001    
|                                                                 |                                                                                 |   |                 |          |      |   |         
|Minimum Pension Liability Adjustment:                            |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Balance at beginning of year                                     |                                                                                 | ¥ | (373            | )        |      | ¥ | (24,841  | )       |   | ¥ | (15,611  | )      
|                                                                 | Pre-tax amount                                                                  |   |                 | (10,584  | )    |   |          | 48,577  |   |   |          | (15,914 | )
|                                                                 | Deferred income taxes                                                           |   |                 | 4,226    |      |   |          | (24,063 | ) |   |          | 6,684   |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Adjustments for year (after income tax effect)                                  |   |                 | (6,358   | )    |   |          | 24,514  |   |   |          | (9,230  | )
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|The effect of change in fiscal year-end of certain subsidiaries: |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Pre-tax amount                                                                  |   |                 |         |      |   |          | (73     | ) |   |          |        |  
|                                                                 | Deferred income taxes                                                           |   |                 |         |      |   |          | 27      |   |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Adjustments for year (after income tax effect)                                  |   |                 |         |      |   |          | (46     | ) |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Balance at end of year                                           |                                                                                 | ¥ | (6,731          | )        |      | ¥ | (373     | )       |   | ¥ | (24,841  | )      
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Net Unrealized Gains and Losses on Derivatives:                  |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Balance at beginning of year                                     |                                                                                 | ¥ | (2,122          | )        |      |   |         |         |   |   |         |        
|                                                                 | Pre-tax amount of net unrealized gains
and losses on derivatives                |   |                 | (3,782   | )    |   | ¥        | (7,545  | ) |   |          |        |  
|                                                                 | Deferred income taxes                                                           |   |                 | 1,621    |      |   |          | 2,787   |   |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Adjustments for year (after income tax effect)                                  |   |                 | (2,161   | )    |   |          | (4,758  | ) |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Pre-tax amount of reclassification adjustments                                  |   |                 | 2,762    |      |   |          | 3,015   |   |   |          |        |  
|                                                                 | Deferred income taxes                                                           |   |                 | (1,238   | )    |   |          | (1,207  | ) |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Adjustments for year (after income tax effect)                                  |   |                 | 1,524    |      |   |          | 1,808   |   |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|The effect of change in fiscal year-end of certain subsidiaries: |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Pre-tax amount of net unrealized gains
and losses on derivatives                |   |                 |         |      |   |          | 1,016   |   |   |          |        |  
|                                                                 | Deferred income taxes                                                           |   |                 |         |      |   |          | (353    | ) |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Adjustments for year (after income tax effect)                                  |   |                 |         |      |   |          | 663     |   |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Pre-tax amount of reclassification adjustments                                  |   |                 |         |      |   |          | 257     |   |   |          |        |  
|                                                                 | Deferred income taxes                                                           |   |                 |         |      |   |          | (92     | ) |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Adjustments for year (after income tax effect)                                  |   |                 |         |      |   |          | 165     |   |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Balance at end of year                                           |                                                                                 | ¥ | (2,759          | )        |      | ¥ | (2,122   | )       |   |   |         |        
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Accumulated
Other Comprehensive Income (Loss)  Total:           |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Balance at beginning of year                                     |                                                                                 | ¥ | (76,918         | )        |      | ¥ | (117,705 | )       |   | ¥ | (117,361 | )      
|                                                                 | Pre-tax amount                                                                  |   |                 | (108,788 | )    |   |          | 27,179  |   |   |          | (24,754 | )
|                                                                 | Deferred income taxes                                                           |   |                 | 38,568   |      |   |          | 12,058  |   |   |          | 24,410  |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Other comprehensive income (loss) for year
(after income tax effect)            |   |                 | (70,220  | )    |   |          | 39,237  |   |   |          | (344    | )
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|The effect of change in fiscal year-end of certain subsidiaries: |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Pre-tax amount                                                                  |   |                 |         |      |   |          | 1,856   |   |   |          |        |  
|                                                                 | Deferred income taxes                                                           |   |                 |         |      |   |          | (306    | ) |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|                                                                 | Other comprehensive income (loss) for the stub period
(after income tax effect) |   |                 |         |      |   |          | 1,550   |   |   |          |        |  
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        
|Balance at end of year                                           |                                                                                 | ¥ | (147,138        | )        |      | ¥ | (76,918  | )       |   | ¥ | (117,705 | )      
|                                                                 |                                                                                 |   |                 |          |      |   |          |         |   |   |          |        

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14. NET INCOME PER ADS

The following is a reconciliation of basic net income per ADS to diluted net
income per ADS for the years ended March 31, 2003, 2002 and 2001:

|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|-------------------------------------------------------------------------------- |  | --------------- | ------ | ------------- |  | ------- | --------- |  |  | - | --- | -
|                                                                                 |  | 2003           
|                                                                                 |  |                
|                                                                                 |  | Net income      |        | Shares        |  | Per ADS
|                                                                                 |  | (numerator)     |        | (denominator) |  | amount 
|                                                                                 |  |                 |        |               |  |        
|                                                                                 |  | Millions of Yen |        | In Thousands  |  | Yen    
|                                                                                 |  |                 |        |               |  |        
|Basic Net Income per ADS:                                                        |  |                 |        |               |  |         |           |  |  |   |     |  
|Income from continuing
operations                                                |  | ¥               | 33,614 |               |  |         | 1,582,278 |  |  | ¥ | 425 |  
|Loss from discontinued operations-net
(after income tax effect)                  |  |                 | (2,476 | )             |  |         | 1,582,278 |  |  |   | (31 | )
|Net income available to common
shareholders                                      |  |                 | 31,138 |               |  |         | 1,582,278 |  |  |   | 394 |  
|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|Effect of Dilutive Securities:                                                   |  |                 |        |               |  |         |           |  |  |   |     |  
|1.5% Convertible Bonds due
2003                                                  |  |                 | 189    |               |  |         | 19,266    |  |  |   |     |  
|1.05% Convertible Bonds due
2009                                                 |  |                 | 581    |               |  |         | 105,319   |  |  |   |     |  
|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|Diluted Net Income per ADS:                                                      |  |                 |        |               |  |         |           |  |  |   |     |  
|Income from continuing
operations                                                |  |                 | 34,384 |               |  |         | 1,706,863 |  |  |   | 403 |  
|Loss from discontinued operations-net
(after income tax effect)                  |  |                 | (2,476 | )             |  |         | 1,706,863 |  |  |   | (29 | )
|Net income available
to common share-holders after effect of dilutive securities |  | ¥               | 31,908 |               |  |         | 1,706,863 |  |  | ¥ | 374 |  

|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|-------------------------------------------------------------------------------- |  | --------------- | ------ | ------------- |  | ------- | --------- |  |  | - | --- | -
|                                                                                 |  | 2002           
|                                                                                 |  |                
|                                                                                 |  | Net income      |        | Shares        |  | Per ADS
|                                                                                 |  | (numerator)     |        | (denominator) |  | amount 
|                                                                                 |  |                 |        |               |  |        
|                                                                                 |  | Millions of Yen |        | In Thousands  |  | Yen    
|                                                                                 |  |                 |        |               |  |        
|Basic Net Income per ADS:                                                        |  |                 |        |               |  |         |           |  |  |   |     |  
|Income from continuing
operations                                                |  | ¥               | 58,891 |               |  |         | 1,583,427 |  |  | ¥ | 744 |  
|Loss from discontinued operations-net
(after income tax effect)                  |  |                 | (3,520 | )             |  |         | 1,583,427 |  |  |   | (45 | )
|Net income available to common
shareholders                                      |  |                 | 55,371 |               |  |         | 1,583,427 |  |  |   | 699 |  
|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|Effect of Dilutive Securities:                                                   |  |                 |        |               |  |         |           |  |  |   |     |  
|1.5% Convertible Bonds due
2003                                                  |  |                 | 150    |               |  |         | 19,266    |  |  |   |     |  
|1.05% Convertible Bonds due
2009                                                 |  |                 | 581    |               |  |         | 105,319   |  |  |   |     |  
|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|Diluted Net Income per ADS:                                                      |  |                 |        |               |  |         |           |  |  |   |     |  
|Income from continuing
operations                                                |  |                 | 59,622 |               |  |         | 1,708,012 |  |  |   | 698 |  
|Loss from discontinued operations-net
(after income tax effect)                  |  |                 | (3,520 | )             |  |         | 1,708,012 |  |  |   | (41 | )
|Net income available to common share-holders
after effect of dilutive
securities |  | ¥               | 56,102 |               |  |         | 1,708,012 |  |  | ¥ | 657 |  

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|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|-------------------------------------------------------------------------------- |  | --------------- | ------ | ------------- |  | ------- | --------- |  |  | - | --- | -
|                                                                                 |  | 2001           
|                                                                                 |  |                
|                                                                                 |  | Net income      |        | Shares        |  | Per ADS
|                                                                                 |  | (numerator)     |        | (denominator) |  | amount 
|                                                                                 |  |                 |        |               |  |        
|                                                                                 |  | Millions of Yen |        | In Thousands  |  | Yen    
|                                                                                 |  |                 |        |               |  |        
|Basic Net Income per ADS:                                                        |  |                 |        |               |  |         |           |  |  |   |     |  
|Income from continuing
operations                                                |  | ¥               | 53,944 |               |  |         | 1,583,675 |  |  | ¥ | 681 |  
|Loss from discontinued operations-net
(after income tax effect)                  |  |                 | (2,356 | )             |  |         | 1,583,675 |  |  |   | (30 | )
|Net income available to common
shareholders                                      |  |                 | 51,588 |               |  |         | 1,583,675 |  |  |   | 651 |  
|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|Effect of Dilutive Securities:                                                   |  |                 |        |               |  |         |           |  |  |   |     |  
|1.5% Convertible Bonds due
2003                                                  |  |                 | 150    |               |  |         | 19,266    |  |  |   |     |  
|1.05% Convertible Bonds due
2009                                                 |  |                 | 581    |               |  |         | 105,319   |  |  |   |     |  
|                                                                                 |  |                 |        |               |  |         |           |  |  |   |     |  
|Diluted Net Income per ADS:                                                      |  |                 |        |               |  |         |           |  |  |   |     |  
|Income from continuing
operations                                                |  |                 | 54,675 |               |  |         | 1,708,260 |  |  |   | 640 |  
|Loss from discontinued operations-net
(after income tax effect)                  |  |                 | (2,356 | )             |  |         | 1,708,260 |  |  |   | (27 | )
|Net income available to common share-holders
after effect of dilutive
securities |  | ¥               | 52,319 |               |  |         | 1,708,260 |  |  | ¥ | 613 |  

15. SEGMENT INFORMATION

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, requires disclosure of financial and descriptive information
about operating segments, which are components of an enterprise whose operating
results are regularly reviewed by the enterprises chief operating decision
maker in deciding about resources to be allocated to the segment and assessing
its performance.

The Company undertook a reorganization that included introduction of an
operating group system, effective from April 2002, through which larger groups
can access more management resources. The operating groups of the companies
Head Office, which are organized based on the products and services, plan
overall and worldwide strategies for their products and services and conduct
their worldwide operations. The operating groups also collaborate with branches
and offices that are located in Japan and overseas countries and with overseas
trading subsidiaries in planning and executing their strategies for products or
regions. The branches, offices and overseas trading subsidiaries are separate
operating units, which are delegated the business of their regions as the
centers of each particular regional strategy and operate diversified business
together with their affiliated companies in collaboration with the operating
groups. Therefore, the Companys operating segments are comprised of
product-focused operating segments and region-focused operating segments.

The companies reportable operating segments are five product-focused
operating segments comprised of the operating groups of the Head Office and
four region-focused reportable operating segments which have aggregated
branches, offices and overseas trading subsidiaries based on characteristics of
their regions.

Based on the change in new management organization, including the
introduction of an operating group system, from the year beginning April 1,
2002, Electronics & Information was combined with Machinery, and
Transportation Logistics, which had been included in Consumer Products &
Services before, is included in Corporate and Eliminations. The operating
segment information for the years ended March 31, 2002 and 2001 has been
restated to conform to the presentation for the year ended March 31, 2003.

Further, starting from the year ended March 31, 2002, revenuegross
trading profit and operating income (loss) have been disclosed, since these two
items of each reportable segment are newly included in the measure of segment
profit or loss reviewed by the chief operating decision maker.

A description of reportable operating segments of the Company follows.

Metal Products & Minerals develops raw material resources of iron or
non-ferrous metals in other countries, and manufactures, sells and trades
products in Japan and abroad.

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Machinery, Electronics & Information manufactures, sells and trades
machinery products and electronics and information related products and
services, and executes projects such as the construction of plants and
infrastructure, in Japan and abroad.

Chemical manufactures, sells and trades chemical products in Japan and
abroad.

Energy develops energy resources overseas and manufactures, sells and
trades oil and gas products in Japan and abroad.

Consumer Products & Services manufactures, constructs, sells and trades
consumer-related products, such as foods, textiles, general merchandise and
houses, and also provides logistics services concerning those consumer-related
products.

Domestic Branches and Offices trade in various commodities and conduct
related business in branches and offices in Japan, such as in the Kansai and
Chubu districts.

Americas, Europe and Other Overseas Areas trade in various commodities and
conduct related business led by overseas trading subsidiaries or offices
located in each region.

The companies operating segment information, product information and
geographic area information for the years ended March 31, 2003, 2002 and 2001
presented in conformity with SFAS No. 131 are as follows:

OPERATING SEGMENT INFORMATION

|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |           | 
|------------------------------ | ------------------ | ---------- | ------- | --------------- | --------- | ------------- | --------- | ---------- | --------- | -------- | ------- | --------- | --------- | - | ------- | ---------- | --------- | ------------ | ------- | --------- | --------- | - | ------- | --------- | --------- | 
|                               |                    |            |         | Millions of Yen
|                               |                    |            |         |                
|                               |                    |            |         |                 |           |               |           | Machinery, |           |          |         |           |           |   |         |            |           | Consumer     |         | Domestic 
|                               |                    |            |         | Metal Products  |           | Electronics & |           |            |           |          |         |           |           |   |         | Products & |           | Branches and
|Year ended March 31, 2003:     |                    | & Minerals |         | Information     |           | Chemical      |           | Energy     |           | Services |         | Offices  
|                               |                    |            |         |                 |           |               |           |            |           |          |         |          
|Total trading transactions:    |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |          
|                               | External customers |            | ¥       | 1,612,401       |           |               | ¥         | 2,294,414  |           |          | ¥       | 1,099,142 |           |   | ¥       | 2,837,166  |           |              | ¥       | 2,077,329 |           |   | ¥       | 1,547,002 |          
|                               | Intersegment       |            |         | 265,050         |           |               |           | 162,294    |           |          |         | 322,658   |           |   |         | 68,397     |           |              |         | 127,811   |           |   |         | 237,165   |          
|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |          
|                               |                    | Total      |         | ¥               | 1,877,451 |               |           | ¥          | 2,456,708 |          |         | ¥         | 1,421,800 |   |         | ¥          | 2,905,563 |              |         | ¥         | 2,205,140 |   |         | ¥         | 1,784,167 | 
|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |          
|Revenue-gross trading profit   |                    | ¥          | 70,674  |                 |           | ¥             | 117,987   |            |           | ¥        | 60,871  |           |           | ¥ | 53,027  |            |           | ¥            | 105,947 |           |           | ¥ | 41,405  |          
|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |          
|Operating income (loss)        |                    | ¥          | 25,722  |                 |           | ¥             | 10,607    |            |           | ¥        | 16,248  |           |           | ¥ | 25,541  |            |           | ¥            | 19,897  |           |           | ¥ | 6,760   |          
|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |          
|Net income (loss)              |                    | ¥          | 14,944  |                 |           | ¥             | (4,916    | )          |           | ¥        | (5,850  | )         |           | ¥ | 22,605  |            |           | ¥            | 3,983   |           |           | ¥ | 6,994   |          
|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |          
|Total assets
at March 31, 2003 |                    | ¥          | 887,517 |                 |           | ¥             | 1,250,695 |            |           | ¥        | 484,628 |           |           | ¥ | 572,660 |            |           | ¥            | 803,842 |           |           | ¥ | 488,026 |          
|                               |                    |            |         |                 |           |               |           |            |           |          |         |           |           |   |         |            |           |              |         |           |           |   |         |           |          

|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |            | 
|------------------------------ | ------------------ | -------- | ------- | --------------- | --------- | ----- | ------- | ------------ | ------- | ----- | ------- | -------------- | --------- | ------------- | --------- | ------------ | ---------- | - | --------- | ---------- | ---------- | 
|                               |                    |          |         | Millions of Yen
|                               |                    |          |         |                
|                               |                    |          |         |                 |           |       |         |              |         |       |         | Other Overseas |           | Corporate and |           | Consolidated
|Year ended March 31, 2003:     |                    | Americas |         | Europe          |           | Areas |         | Eliminations |         | Total
|                               |                    |          |         |                 |           |       |         |              |         |      
|Total trading transactions:    |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |           
|                               | External
customers |          | ¥       | 786,707         |           |       | ¥       | 355,061      |         |       | ¥       | 577,425        |           |               | ¥         | 50,036       |            |   | ¥         | 13,236,683 |           
|                               | Intersegment       |          |         | 485,566         |           |       |         | 224,247      |         |       |         | 729,116        |           |               |           | (2,622,304   | )          |   |           |           |           
|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |           
|                               |                    | Total    |         | ¥               | 1,272,273 |       |         | ¥            | 579,308 |       |         | ¥              | 1,306,541 |               |           | ¥            | (2,572,268 | ) |           | ¥          | 13,236,683 | 
|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |           
|Revenuegross trading profit   |                    | ¥        | 44,584  |                 |           | ¥     | 22,470  |              |         | ¥     | 23,503  |                |           | ¥             | 29,334    |              |            | ¥ | 569,802   |           
|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |           
|Operating income (loss)        |                    | ¥        | 9,485   |                 |           | ¥     | 4,163   |              |         | ¥     | (1,931  | )              |           | ¥             | (18,786   | )            |            | ¥ | 97,706    |           
|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |           
|Net income
(loss)              |                    | ¥        | 3,291   |                 |           | ¥     | 2,845   |              |         | ¥     | 6,193   |                |           | ¥             | (18,951   | )            |            | ¥ | 31,138    |           
|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |           
|Total assets
at March 31, 2003 |                    | ¥        | 412,659 |                 |           | ¥     | 218,304 |              |         | ¥     | 208,318 |                |           | ¥             | 1,213,871 |              |            | ¥ | 6,540,520 |           
|                               |                    |          |         |                 |           |       |         |              |         |       |         |                |           |               |           |              |            |   |           |            |           

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##### Table of Contents



|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |           | 
|------------------------------ | ------------------ | -------------- | ------- | --------------- | --------- | -------- | --------- | ---------- | --------- | -------- | ------- | --------- | --------- | ---------- | ------- | ------------ | --------- | -------- | ------- | --------- | --------- | - | ------- | --------- | --------- | 
|                               |                    |                |         | Millions of Yen
|                               |                    |                |         |                
|                               |                    |                |         |                 |           |          |           | Machinery, |           |          |         |           |           |            |         |              |           | Consumer |         | Domestic 
|Year ended March 31, 2002      |                    | Metal Products |         | Electronics &   |           |          |           |            |           |          |         |           |           | Products & |         | Branches and
|(As restated):                 |                    | & Minerals     |         | Information     |           | Chemical |           | Energy     |           | Services |         | Offices  
|                               |                    |                |         |                 |           |          |           |            |           |          |         |          
|Total trading transactions:    |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |          
|                               | External
customers |                | ¥       | 1,501,933       |           |          | ¥         | 2,335,049  |           |          | ¥       | 1,019,745 |           |            | ¥       | 2,367,078    |           |          | ¥       | 2,034,648 |           |   | ¥       | 1,633,061 |          
|                               | Intersegment       |                |         | 282,948         |           |          |           | 170,725    |           |          |         | 292,098   |           |            |         | 87,215       |           |          |         | 139,398   |           |   |         | 272,492   |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|                               |                    | Total          |         | ¥               | 1,784,881 |          |           | ¥          | 2,505,774 |          |         | ¥         | 1,311,843 |            |         | ¥            | 2,454,293 |          |         | ¥         | 2,174,046 |   |         | ¥         | 1,905,553 | 
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|Revenue-gross trading
profit   |                    | ¥              | 67,397  |                 |           | ¥        | 112,425   |            |           | ¥        | 53,476  |           |           | ¥          | 48,061  |              |           | ¥        | 108,610 |           |           | ¥ | 47,553  |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|Operating income
(loss)        |                    | ¥              | 19,847  |                 |           | ¥        | 10,027    |            |           | ¥        | 8,185   |           |           | ¥          | 16,661  |              |           | ¥        | 5,082   |           |           | ¥ | 8,873   |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|Net income
(loss)              |                    | ¥              | 9,449   |                 |           | ¥        | 13,377    |            |           | ¥        | (4,893  | )         |           | ¥          | 22,152  |              |           | ¥        | 2,756   |           |           | ¥ | 6,773   |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|Total assets
at March 31, 2002 |                    | ¥              | 935,835 |                 |           | ¥        | 1,419,375 |            |           | ¥        | 511,248 |           |           | ¥          | 459,226 |              |           | ¥        | 863,005 |           |           | ¥ | 538,853 |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          

|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |            | 
|------------------------------ | ------------------ | -------- | ------- | --------------- | --------- | ----- | ------- | ------------ | ------- | -------------- | ------- | ------------- | --------- | ------------ | --------- | ---------- | ---------- | - | --------- | ---------- | ---------- | 
|                               |                    |          |         | Millions of Yen
|                               |                    |          |         |                
|Year ended March 31, 2002      |                    |          |         |                 |           |       |         |              |         | Other Overseas |         | Corporate and |           | Consolidated
|(As restated):                 |                    | Americas |         | Europe          |           | Areas |         | Eliminations |         | Total         
|                               |                    |          |         |                 |           |       |         |              |         |               
|Total trading transactions:    |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |           
|                               | External
customers |          | ¥       | 691,271         |           |       | ¥       | 414,857      |         |                | ¥       | 590,622       |           |              | ¥         | 46,422     |            |   | ¥         | 12,634,686 |           
|                               | Intersegment       |          |         | 492,620         |           |       |         | 179,837      |         |                |         | 798,560       |           |              |           | (2,715,893 | )          |   |           |           |           
|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |           
|                               |                    | Total    |         | ¥               | 1,183,891 |       |         | ¥            | 594,694 |                |         | ¥             | 1,389,182 |              |           | ¥          | (2,669,471 | ) |           | ¥          | 12,634,686 | 
|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |           
|Revenue-gross trading
profit   |                    | ¥        | 45,096  |                 |           | ¥     | 20,623  |              |         | ¥              | 21,929  |               |           | ¥            | 21,379    |            |            | ¥ | 546,549   |           
|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |           
|Operating income
(loss)        |                    | ¥        | 11,750  |                 |           | ¥     | 4,484   |              |         | ¥              | (4,700  | )             |           | ¥            | (864      | )          |            | ¥ | 79,345    |           
|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |           
|Net income
(loss)              |                    | ¥        | 6,461   |                 |           | ¥     | 3,911   |              |         | ¥              | 5,271   |               |           | ¥            | (9,886    | )          |            | ¥ | 55,371    |           
|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |           
|Total assets
at March 31, 2002 |                    | ¥        | 400,387 |                 |           | ¥     | 232,656 |              |         | ¥              | 241,271 |               |           | ¥            | 1,066,510 |            |            | ¥ | 6,668,366 |           
|                               |                    |          |         |                 |           |       |         |              |         |                |         |               |           |              |           |            |            |   |           |            |           

|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |           | 
|------------------------------ | ------------------ | -------------- | ------- | --------------- | --------- | -------- | --------- | ---------- | --------- | -------- | ------- | --------- | --------- | ---------- | ------- | ------------ | --------- | -------- | ------- | --------- | --------- | - | ------- | --------- | --------- | 
|                               |                    |                |         | Millions of Yen
|                               |                    |                |         |                
|                               |                    |                |         |                 |           |          |           | Machinery, |           |          |         |           |           |            |         |              |           | Consumer |         | Domestic 
|Year ended March 31, 2001      |                    | Metal Products |         | Electronics &   |           |          |           |            |           |          |         |           |           | Products & |         | Branches and
|(As restated):                 |                    | & Minerals     |         | Information     |           | Chemical |           | Energy     |           | Services |         | Offices  
|                               |                    |                |         |                 |           |          |           |            |           |          |         |          
|Total trading transactions:    |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |          
|                               | External
customers |                | ¥       | 1,472,694       |           |          | ¥         | 1,991,724  |           |          | ¥       | 1,114,765 |           |            | ¥       | 2,883,984    |           |          | ¥       | 2,039,260 |           |   | ¥       | 1,772,143 |          
|                               | Intersegment       |                |         | 173,549         |           |          |           | 118,698    |           |          |         | 261,357   |           |            |         | 18,873       |           |          |         | 152,317   |           |   |         | 271,424   |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|                               |                    | Total          |         | ¥               | 1,646,243 |          |           | ¥          | 2,110,422 |          |         | ¥         | 1,376,122 |            |         | ¥            | 2,902,857 |          |         | ¥         | 2,191,577 |   |         | ¥         | 2,043,567 | 
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|Net income
(loss)              |                    | ¥              | 10,271  |                 |           | ¥        | 16,744    |            |           | ¥        | 5,493   |           |           | ¥          | 12,299  |              |           | ¥        | (6,158  | )         |           | ¥ | 6,149   |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          
|Total assets
at March 31, 2001 |                    | ¥              | 890,575 |                 |           | ¥        | 1,494,449 |            |           | ¥        | 540,482 |           |           | ¥          | 422,648 |              |           | ¥        | 913,356 |           |           | ¥ | 628,996 |          
|                               |                    |                |         |                 |           |          |           |            |           |          |         |           |           |            |         |              |           |          |         |           |           |   |         |           |          

F-41



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##### Table of Contents



|                              |                    |          |         |         |           |       |         |              |         |                |         |                 |           |              |         |            |            |   |           |            |            | 
|----------------------------- | ------------------ | -------- | ------- | ------- | --------- | ----- | ------- | ------------ | ------- | -------------- | ------- | --------------- | --------- | ------------ | ------- | ---------- | ---------- | - | --------- | ---------- | ---------- | 
|                              |                    |          |         |         |           |       |         |              |         |                |         | Millions of Yen |           |              |         |           
|                              |                    |          |         |         |           |       |         |              |        
|Year ended March 31, 2001     |                    |          |         |         |           |       |         |              |         | Other Overseas |         | Corporate and   |           | Consolidated
|(As restated):                |                    | Americas |         | Europe  |           | Areas |         | Eliminations |         | Total         
|                              |                    |          |         |         |           |       |         |              |         |               
|Total trading transactions:   |                    |          |         |         |           |       |         |              |         |                |         |                 |           |              |         |            |            |   |           |           
|                              | External
customers |          | ¥       | 649,921 |           |       | ¥       | 532,299      |         |                | ¥       | 537,678         |           |              | ¥       | 33,985     |            |   | ¥         | 13,028,453 |           
|                              | Intersegment       |          |         | 543,274 |           |       |         | 208,389      |         |                |         | 694,451         |           |              |         | (2,442,332 | )          |   |           |           |           
|                              |                    |          |         |         |           |       |         |              |         |                |         |                 |           |              |         |            |            |   |           |            |           
|                              |                    | Total    |         | ¥       | 1,193,195 |       |         | ¥            | 740,688 |                |         | ¥               | 1,232,129 |              |         | ¥          | (2,408,347 | ) |           | ¥          | 13,028,453 | 
|                              |                    |          |         |         |           |       |         |              |         |                |         |                 |           |              |         |            |            |   |           |            |           
|Net income
(loss)             |                    | ¥        | 9,991   |         |           | ¥     | 3,876   |              |         | ¥              | 4,882   |                 |           | ¥            | (11,959 | )          |            | ¥ | 51,588    |           
|                              |                    |          |         |         |           |       |         |              |         |                |         |                 |           |              |         |            |            |   |           |            |           
|Total assets
at March 31,2001 |                    | ¥        | 371,276 |         |           | ¥     | 270,604 |              |         | ¥              | 255,970 |                 |           | ¥            | 921,751 |            |            | ¥ | 6,710,107 |           
|                              |                    |          |         |         |           |       |         |              |         |                |         |                 |           |              |         |            |            |   |           |            |           



|Notes:(1) |  | Electronics & Information included in
Machinery, Electronics & Information for the year
ended March 31, 2003 is as follows: (millions of yen)
|--------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  |  |         |  
|---------------------------- |  |  | ------- | -
|Total trading transactions   |  |  | 437,884 |  
|Revenuegross trading profit |  |  | 46,552  |  
|Operating income             |  |  | 3,506   |  
|Net loss                     |  |  | (3,130  | )
|Total assets                 |  |  | 230,164 |  



|(2) |  | Effective April 1, 2002, the companies adopted SFAS No. 144. The
figures of Consolidated Total for the years ended March 31, 2002 and
2001 have been reclassified to conform to the current year
presentation. The reclassifications to Loss from Discontinued
OperationsNet (After Income Tax Effect) are included in Corporate
and Eliminations.                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Net loss of Corporate and Eliminations for the year ended March
31, 2003 included a) a charge of ¥7,485 million for an early retirement
support program, b) ¥5,814 million in losses on the write-down of
marketable securities, and c) ¥3,142 million in losses on sale of
marketable securities (all amounts are after income tax effects).                                                                                                                                                                               
|   
|    |  | Net loss of Corporate and Eliminations for the year ended March 31,
2002 included a) ¥16,200 million in losses on the write-down of
marketable securities, b) ¥10,084 million in impairment losses of
long-lived assets, c) a gain of ¥9,375 million from a non-monetary
exchange of shares in connection with a business combination of
certain financial institutions, and d) a gain of ¥8,895 million from
contribution of securities to an employee retirement benefit trust
(all amounts are after income tax effects).
|   
|    |  | Net loss of Corporate and Eliminations for the year ended March 31,
2001 included ¥4,627 million in losses (after income tax effect) on
the write-down of marketable securities.                                                                                                                                                                                                                                                                                                                                            
|   
|(4) |  | Total assets of Corporate and Eliminations at March 31, 2003,
2002 and 2001 include corporate assets, consisting primarily of cash
and cash equivalents and time deposits maintained with regard to
corporate finance activities and assets of certain subsidiaries
operating with corporate departments.                                                                                                                                                                                                                   
|   
|(5) |  | Transfers between operating segments are made at cost plus a
markup.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(6) |  | Operating income (loss) reflects the companies a) Revenuegross
trading profit, b) Selling, general and administrative expenses, and c)
Provision for doubtful receivables.                                                                                                                                                                                                                                                                                                                                                  

F-42



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##### Table of Contents



PRODUCT INFORMATION

|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|------------------------------------------------ |  | --------------- | --------- | ------ |  | --------- | ----------- | ----------- |  | --------- | --------- | ------ | ------------- | - | ------- |  |  | - | --------- |  |  | - | --------- | 
|                                                 |  | Millions of Yen
|                                                 |  |                
|                                                 |  |                 |           |        |  |           | Non-Ferrous |             |  |           |           |        | Electronics & |   |         |  |  |   |           |  | 
|                                                 |  | Iron and Steel  |           | Metals |  | Machinery |             | Information |  | Chemicals |           | Energy
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |       
|Year ended March 31, 2003:                      
|Total trading transactions
to external customers |  | ¥               | 1,658,873 |        |  | ¥         | 865,378     |             |  | ¥         | 2,333,360 |        |               | ¥ | 427,117 |  |  | ¥ | 2,078,551 |  |  | ¥ | 3,297,179 | 
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|RevenueGross trading profit                     |  | ¥               | 79,742    |        |  | ¥         | 20,884      |             |  | ¥         | 96,993    |        |               | ¥ | 48,261  |  |  | ¥ | 100,654   |  |  | ¥ | 61,047    | 
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|Year ended March 31, 2002:                       |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|Total trading transactions
to external customers |  | ¥               | 1,537,113 |        |  | ¥         | 953,378     |             |  | ¥         | 2,325,343 |        |               | ¥ | 450,160 |  |  | ¥ | 1,913,051 |  |  | ¥ | 2,777,259 | 
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|RevenueGross trading profit                     |  | ¥               | 75,567    |        |  | ¥         | 22,631      |             |  | ¥         | 87,178    |        |               | ¥ | 53,986  |  |  | ¥ | 93,979    |  |  | ¥ | 53,281    | 
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|Year ended March 31, 2001:                       |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|Total trading transactions
to external customers |  | ¥               | 1,519,731 |        |  | ¥         | 1,049,652   |             |  | ¥         | 2,074,962 |        |               | ¥ | 388,258 |  |  | ¥ | 2,082,181 |  |  | ¥ | 3,182,472 | 
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 
|RevenueGross trading profit                     |  | ¥               | 68,543    |        |  | ¥         | 28,622      |             |  | ¥         | 87,487    |        |               | ¥ | 48,884  |  |  | ¥ | 95,623    |  |  | ¥ | 66,072    | 
|                                                 |  |                 |           |        |  |           |             |             |  |           |           |        |               |   |         |  |  |   |           |  |  |   |           | 

|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|------------------------------------------------ |  | --------------- | --------- | -------- |  | ----------- | ------- | -------- |  | ------- | ------- | ------- |  | ------------ | ------- |  |  | - | ---------- | 
|                                                 |  | Millions of Yen
|                                                 |  |                
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  | Property and |         |  |  |  
|                                                 |  |                 |           |          |  |             |         |          |  | General |         | Service |  | Consolidated
|                                                 |  | Foods           |           | Textiles |  | Merchandise |         | Business |  | Total  
|                                                 |  |                 |           |          |  |             |         |          |  |        
|Year ended March 31, 2003:                      
|Total trading transactions
to external customers |  | ¥               | 1,448,702 |          |  | ¥           | 379,278 |          |  | ¥       | 533,876 |         |  | ¥            | 214,369 |  |  | ¥ | 13,236,683 | 
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|RevenueGross trading profit                     |  | ¥               | 63,216    |          |  | ¥           | 24,117  |          |  | ¥       | 24,463  |         |  | ¥            | 50,425  |  |  | ¥ | 569,802    | 
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|Year ended March 31, 2002:                       |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|Total trading transactions
to external customers |  | ¥               | 1,458,686 |          |  | ¥           | 367,663 |          |  | ¥       | 623,208 |         |  | ¥            | 228,825 |  |  | ¥ | 12,634,686 | 
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|RevenueGross trading profit                     |  | ¥               | 65,520    |          |  | ¥           | 22,887  |          |  | ¥       | 25,306  |         |  | ¥            | 46,214  |  |  | ¥ | 546,549    | 
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|Year ended March 31, 2001:                       |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|Total trading transactions
to external customers |  | ¥               | 1,352,486 |          |  | ¥           | 386,615 |          |  | ¥       | 690,925 |         |  | ¥            | 301,171 |  |  | ¥ | 13,028,453 | 
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 
|RevenueGross trading profit                     |  | ¥               | 60,838    |          |  | ¥           | 24,366  |          |  | ¥       | 32,482  |         |  | ¥            | 48,381  |  |  | ¥ | 561,298    | 
|                                                 |  |                 |           |          |  |             |         |          |  |         |         |         |  |              |         |  |  |   |            | 

Note: Effective April 1, 2002, the companies adopted SFAS No. 144 and total
trading transactions to external customers and revenuegross trading profit
from discontinued operations are eliminated from each product amount and
Consolidated Total. The figures for the years ended March 31, 2002 and 2001
have been reclassified to conform to the current year presentation.

F-43



---



##### Table of Contents



GEOGRAPHIC AREA INFORMATION

|                                                 |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 
|------------------------------------------------ |  | --------------- | --------- | ------------- |  | ------- | --------- | --------- |  | ------ | ------- |  |  | - | --------- | ------------ |  | - | ---------- | 
|                                                 |  | Millions of Yen
|                                                 |  |                
|                                                 |  |                 |           |               |  |         |           |           |  | United |         |  |  |   |           | Consolidated
|                                                 |  | Japan           |           | United States |  | Kingdom |           | All Other |  | Total 
|                                                 |  |                 |           |               |  |         |           |           |  |       
|Year
ended March 31, 2003:                       |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 
|Total trading transactions
to external customers |  | ¥               | 7,507,491 |               |  | ¥       | 1,151,549 |           |  | ¥      | 422,673 |  |  | ¥ | 4,154,970 |              |  | ¥ | 13,236,683 | 
|                                                 |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 
|Year ended March 31, 2002:                       |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 
|Total trading transactions
to external
customers |  | ¥               | 7,394,468 |               |  | ¥       | 969,187   |           |  | ¥      | 480,874 |  |  | ¥ | 3,790,157 |              |  | ¥ | 12,634,686 | 
|                                                 |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 
|Year ended March 31, 2001:                       |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 
|Total trading transactions
to external
customers |  | ¥               | 7,726,465 |               |  | ¥       | 1,152,707 |           |  | ¥      | 758,653 |  |  | ¥ | 3,390,628 |              |  | ¥ | 13,028,453 | 
|                                                 |  |                 |           |               |  |         |           |           |  |        |         |  |  |   |           |              |  |   |            | 



|Notes: | (1) | Total trading transactions are attributed to countries based on the
location of customers.                                                                                                                                                                                                                                                         
|------ | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|       | (2) | The Company provides total trading transactions instead of
revenuegross trading profit, as certain costs are not attributed to
countries based on the location of customers.                                                                                                                                                                      
|      
|       | (3) | Effective April 1, 2002, the companies adopted SFAS No. 144 and
total trading transactions to external customers from discontinued
operations are eliminated from each geographic area amount and
Consolidated Total. The figures for the years ended March 31, 2002
and 2001 have been reclassified to conform to the current year
presentation.

|                   |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 
|------------------ |  | --------------- | ------- | ------------- |  | --------- | ------- | ------------------ |  | - | ------- |  |  | - | ------- | 
|                   |  | Millions of Yen
|                   |  |                
|                   |  | Japan           |         | United States |  | All Other |         | Consolidated Total
|                   |  |                 |         |               |  |           |         |                   
|At
March 31, 2003: |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 
|Long-lived
assets  |  | ¥               | 497,110 |               |  | ¥         | 113,433 |                    |  | ¥ | 200,688 |  |  | ¥ | 811,231 | 
|                   |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 
|At March 31, 2002: |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 
|Long-lived
assets  |  | ¥               | 524,247 |               |  | ¥         | 124,404 |                    |  | ¥ | 207,064 |  |  | ¥ | 855,715 | 
|                   |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 
|At March 31, 2001: |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 
|Long-lived
assets  |  | ¥               | 564,615 |               |  | ¥         | 114,634 |                    |  | ¥ | 192,918 |  |  | ¥ | 872,167 | 
|                   |  |                 |         |               |  |           |         |                    |  |   |         |  |  |   |         | 

There are no individual material customers with respect to total trading
transactions and revenue-gross trading profit for the years ended March 31,
2003, 2002 and 2001.

16. SUPPLEMENTAL INCOME STATEMENT INFORMATION

Supplemental information related to the Statements of Consolidated Income is as
follows:

|                                       |  |                 |        |      |  |      |        |  |  |   |        | 
|-------------------------------------- |  | --------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                       |  | Millions of Yen
|                                       |  |                
|                                       |  | 2003            |        | 2002 |  | 2001
|                                       |  |                 |        |      |  |     
|Depreciation of
property and equipment |  | ¥               | 47,798 |      |  | ¥    | 50,869 |  |  | ¥ | 51,893 | 
|Research and
development
expenses      |  |                 | 3,415  |      |  |      | 2,949  |  |  |   | 1,698  | 
|Advertising
expenses                   |  |                 | 6,898  |      |  |      | 6,671  |  |  |   | 8,437  | 
|Foreign exchange
gainsnet             |  |                 | 3,154  |      |  |      | 10,975 |  |  |   | 11,393 | 

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17. INCOME TAXES

Income taxes in Japan applicable to the companies, imposed by the national,
prefectural and municipal governments, in the aggregate resulted in the normal
effective statutory tax rate of approximately 42% for the years ended March 31,
2003, 2002 and 2001. Foreign subsidiaries are subject to income taxes of the
countries in which they operate.

On March 31, 2003, the local tax laws in Japan were amended, and an
enterprise tax on the basis of the size of business will be introduced for the
year ending March 31, 2005. As a result, the statutory tax rate for the year
ending March 31, 2005 will be approximately 41% effective April 1, 2004. The
newly enacted statutory tax rate was used in calculating the deferred tax
assets and liabilities as of March 31, 2003 which are expected to be realized or settled after March 31, 2004. The effect of the changes in
the tax rates on the balance of deferred tax assets and liabilities was
insignificant.

A reconciliation between taxes on income from continuing operations
calculated at the normal statutory rate in Japan and the companies provision
for income taxes on income from continuing operations for the years ended March
31, 2003, 2002 and 2001 is summarized as follows:

|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |       |        |         |         |       |        | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ----------- | ------------------------------------------------------- | ------- | --------------- | ------ | ------- | ------ | ----- | ------ | ------- | ------- | ----- | ------ | 
|                                                                                                                                                         |                                                                                |             |                                                         |         | Millions of Yen
|                                                                                                                                                         |                                                                                |             |                                                         |         |                
|                                                                                                                                                         |                                                                                |             |                                                         |         | 2003            |        | 2002    |        | 2001 
|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |      
|Taxes calculated at the normal rate in Japan applied to income
from continuing operations before income taxes,
minority interests and equity in
earnings |                                                                                | ¥           | 26,212                                                  |         |                 | ¥      | 26,701  |        |       | ¥      | 34,590  |        
|Increases (decreases) in taxes resulting from:                                                                                                           |                                                                                |             |                                                         |         |                 |        |         |        |       |        |         |        
|                                                                                                                                                         | Expenses not deductible for tax purposes
and income not                        |             |                                                         |         |                 |        |         |        |       |        |         |         |      
|                                                                                                                                                         |                                                                                | taxablenet |                                                         |         | 2,918           |        |         |        | 2,676 |        |         |         | 3,443 |       
|                                                                                                                                                         | Application of lower tax rates to certain taxable
income                       |             |                                                         | (6,444  | )               |        |         | (4,429 | )     |        |         | (4,963  | )    
|                                                                                                                                                         | Effect of taxation on dividends from subsidiaries
and corporate joint
ventures |             |                                                         | 6,738   |                 |        |         | 4,422  |       |        |         | 4,660   |      
|                                                                                                                                                         | Operating losses of certain
subsidiaries                                       |             |                                                         | 10,947  |                 |        |         | 5,038  |       |        |         | 7,944   |      
|                                                                                                                                                         | Tax benefits on losses of
subsidiaries                                         |             |                                                         | (3,156  | )               |        |         | (2,193 | )     |        |         | (12,046 | )    
|                                                                                                                                                         | Othernet                                                                      |             |                                                         | 620     |                 |        |         | (680   | )     |        |         | (589    | )    
|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |       |        |         |        
|                                                                                                                                                         |                                                                                |             | Total income taxes on income from continuing
operations |         | ¥               | 37,835 |         |        | ¥     | 31,535 |         |         | ¥     | 33,039 | 
|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |       |        |         |        
|                                                                                                                                                        
|Amounts provided for income taxes for the years ended March 31, 2003, 2002
and 2001 are allocated as follows:                                           
|                                                                                                                                                        
|                                                                                                                                                         |                                                                                |             |                                                         |         | Millions of Yen
|                                                                                                                                                         |                                                                                |             |                                                         |         |                
|                                                                                                                                                         |                                                                                |             |                                                         |         | 2003            |        | 2002    |        | 2001 
|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |      
|Income taxes on
income from
continuing
operations                                                                                                        |                                                                                | ¥           | 37,835                                                  |         |                 | ¥      | 31,535  |        |       | ¥      | 33,039  |        
|Loss from
discontinued
operationsnet                                                                                                                    |                                                                                |             | (10,511                                                 | )       |                 |        | 445     |        |       |        | (385    | )      
|Equity in earnings
of associated
companies                                                                                                               |                                                                                |             | 26                                                      |         |                 |        | 1,876   |        |       |        | (1,212  | )      
|Other comprehensive
income
(loss)                                                                                                                        |                                                                                |             | (38,568                                                 | )       |                 |        | (12,058 | )      |       |        | (24,410 | )      
|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |       |        |         |        
|                                                                                                                                                         | Total                                                                          |             | ¥                                                       | (11,218 | )               |        | ¥       | 21,798 |       |        | ¥       | 7,032   |      
|                                                                                                                                                         |                                                                                |             |                                                         |         |                 |        |         |        |       |        |         |        

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The tax effects of significant temporary differences and carryforwards
which result in deferred tax assets and liabilities at March 31, 2003 and 2002
are as follows:

|                                                                                   |                           |   |                 |         |      |   |        |         |  
|---------------------------------------------------------------------------------- | ------------------------- | - | --------------- | ------- | ---- | - | ------ | ------- | -
|                                                                                   |                           |   | Millions of Yen
|                                                                                   |                           |   |                
|                                                                                   |                           |   | 2003            |         | 2002
|                                                                                   |                           |   |                 |         |     
|Deferred Tax Assets:                                                               |                           |   |                 |         |      |   |        |        
|Accrued pension costs and liability for
severance indemnities                      |                           | ¥ | 29,133          |         |      | ¥ | 26,567 |        
|Allowance for doubtful
receivables                                                 |                           |   | 29,515          |         |      |   | 26,894 |        
|Estimated
losses                                                                   |                           |   | 43,161          |         |      |   | 43,928 |        
|Loss carryforwards of subsidiaries and
associated companies                        |                           |   | 60,516          |         |      |   | 72,750 |        
|Unrealized intercompany
profit                                                     |                           |   | 28,249          |         |      |   | 27,337 |        
|Foreign currency
translation                                                       |                           |   | 17,131          |         |      |   | 18,271 |        
|Other                                                                              |                           |   | 14,841          |         |      |   | 18,365 |        
|                                                                                   |                           |   |                 |         |      |   |        |        
|                                                                                   | Total deferred tax
assets |   |                 | 222,546 |      |   |        | 234,112 |  
|                                                                                   | Valuation
allowance       |   |                 | (22,855 | )    |   |        | (43,301 | )
|                                                                                   |                           |   |                 |         |      |   |        |        
|                                                                                   | Deferred tax
assetsnet   |   |                 | 199,691 |      |   |        | 190,811 |  
|                                                                                   |                           |   |                 |         |      |   |        |        
|Deferred Tax Liabilities:                                                          |                           |   |                 |         |      |   |        |        
|Property                                                                           |                           |   | 64,576          |         |      |   | 57,731 |        
|Investment
securities                                                              |                           |   | 32,929          |         |      |   | 78,203 |        
|Undistributed earnings of associated
companies
other than corporate joint ventures |                           |   | 39,867          |         |      |   | 35,573 |        
|Other                                                                              |                           |   | 8,523           |         |      |   | 16,687 |        
|                                                                                   |                           |   |                 |         |      |   |        |        
|                                                                                   | Deferred tax
liabilities  |   |                 | 145,895 |      |   |        | 188,194 |  
|                                                                                   |                           |   |                 |         |      |   |        |        
|                                                                                   | Net deferred tax
assets   |   | ¥               | 53,796  |      |   | ¥      | 2,617   |  
|                                                                                   |                           |   |                 |         |      |   |        |        

Net deferred tax assets at March 31, 2003 and 2002 are included in the
Consolidated Balance Sheets as follows:

|                                              |                         |   |                 |        |      |   |         |       | 
|--------------------------------------------- | ----------------------- | - | --------------- | ------ | ---- | - | ------- | ----- | 
|                                              |                         |   | Millions of Yen
|                                              |                         |   |                
|                                              |                         |   | 2003            |        | 2002
|                                              |                         |   |                 |        |     
|Current AssetsDeferred tax
assetscurrent    |                         | ¥ | 35,819          |        |      | ¥ | 31,120  |      
|Deferred Tax
AssetsNon-current               |                         |   | 53,527          |        |      |   | 24,668  |      
|Current LiabilitiesOther current
liabilities |                         |   | (4,091          | )      |      |   | (6,078  | )    
|Deferred Tax
LiabilitiesNon-current          |                         |   | (31,459         | )      |      |   | (47,093 | )    
|                                              |                         |   |                 |        |      |   |         |      
|                                              | Net deferred tax
assets |   | ¥               | 53,796 |      |   | ¥       | 2,617 | 
|                                              |                         |   |                 |        |      |   |         |      

The valuation allowance is provided principally on deferred tax assets for
loss carryforwards of certain subsidiaries for which it is more likely that a
tax benefit will not be realized. During the years ended March 31, 2003, 2002
and 2001, the valuation allowances were decreased by ¥20,446 million, increased
by ¥16,595 million and decreased by ¥7,239 million, respectively. With respect
to the remaining deferred tax assets, the Company believes it is more likely
than not that such benefits will be realized through the reduction of future
taxable income.

Income taxes or foreign withholding taxes are not provided on
undistributed earnings of foreign subsidiaries and foreign corporate joint
ventures which are considered to be indefinitely reinvested in the operations
of such subsidiaries and corporate joint ventures. At March 31, 2003 and 2002,
the amounts of undistributed earnings of such foreign subsidiaries and foreign
corporate joint ventures were ¥259,502 million and ¥252,236 million,
respectively. Determination of the amount of unrecognized deferred income taxes
with respect to these foreign earnings is not practicable. The domestic
undistributed earnings would not, under present Japanese tax laws, be subject
to additional taxation.

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At March 31, 2003, certain subsidiaries had aggregate operating loss
carryforwards of ¥61,038 million, which are available to reduce taxable income
in subsequent periods. If not utilized, such loss carryforwards expire as
follows:

|                     |       |   |                 |        | 
|-------------------- | ----- | - | --------------- | ------ | 
|                     |       |   | Millions of Yen
|                     |       |   |                
|Within 5
years       |       | ¥ | 36,654          |       
|After 5 to 10
years  |       |   | 2,178           |       
|After 10 to 15
years |       |   | 662             |       
|After 15
years       |       |   | 21,544          |       
|                     |       |   |                 |       
|                     | Total |   | ¥               | 61,038 | 
|                     |       |   |                 |       

Income from continuing operations before income taxes, minority interests
and equity in earnings for the years ended March 31, 2003, 2002 and 2001
comprised the following:

|                          |  |                  |        |              |  |       |        |  |  |   |        | 
|------------------------- |  | ---------------- | ------ | ------------ |  | ----- | ------ |  |  | - | ------ | 
|                          |  | Millions of Yen 
|                          |  |                 
|                          |  | The Company      |        |              |  |       |        |  |  |  
|                          |  | and its domestic |        | Foreign      |  |       |        | 
|                          |  | subsidiaries     |        | subsidiaries |  | Total
|                          |  |                  |        |              |  |      
|Year ended March 31,
2003 |  | ¥                | 7,687  |              |  | ¥     | 54,722 |  |  | ¥ | 62,409 | 
|Year ended March 31,
2002 |  | ¥                | 22,462 |              |  | ¥     | 41,111 |  |  | ¥ | 63,573 | 
|Year ended March 31,
2001 |  | ¥                | 28,234 |              |  | ¥     | 54,124 |  |  | ¥ | 82,358 | 

Income taxes on income from continuing operations for the years ended
March 31, 2003, 2002 and 2001 comprised the following:

|                           |          |       |   |                  |        |              |   |        |        |  |   |         |        | 
|-------------------------- | -------- | ----- | - | ---------------- | ------ | ------------ | - | ------ | ------ |  | - | ------- | ------ | 
|                           |          |       |   | Millions of Yen 
|                           |          |       |   |                 
|                           |          |       |   | The Company      |        |              |   |        |        |  |   |        
|                           |          |       |   | and its domestic |        | Foreign      |   |        |        | 
|                           |          |       |   | subsidiaries     |        | subsidiaries |   | Total 
|                           |          |       |   |                  |        |              |   |       
|Year ended March 31, 2003: |          |       |   |                  |        |              |   |        |        |  |   |        
|                           | Current  |       | ¥ | 20,627           |        |              | ¥ | 18,581 |        |  | ¥ | 39,208  |       
|                           | Deferred |       |   | (7,467           | )      |              |   | 6,094  |        |  |   | (1,373  | )     
|                           |          |       |   |                  |        |              |   |        |        |  |   |         |       
|                           |          | Total |   | ¥                | 13,160 |              |   | ¥      | 24,675 |  |   | ¥       | 37,835 | 
|                           |          |       |   |                  |        |              |   |        |        |  |   |         |       
|Year ended March 31, 2002: |          |       |   |                  |        |              |   |        |        |  |   |        
|                           | Current  |       | ¥ | 16,198           |        |              | ¥ | 16,347 |        |  | ¥ | 32,545  |       
|                           | Deferred |       |   | 736              |        |              |   | (1,746 | )      |  |   | (1,010  | )     
|                           |          |       |   |                  |        |              |   |        |        |  |   |         |       
|                           |          | Total |   | ¥                | 16,934 |              |   | ¥      | 14,601 |  |   | ¥       | 31,535 | 
|                           |          |       |   |                  |        |              |   |        |        |  |   |         |       
|Year ended March 31, 2001: |          |       |   |                  |        |              |   |        |        |  |   |        
|                           | Current  |       | ¥ | 39,269           |        |              | ¥ | 21,225 |        |  | ¥ | 60,494  |       
|                           | Deferred |       |   | (24,565          | )      |              |   | (2,890 | )      |  |   | (27,455 | )     
|                           |          |       |   |                  |        |              |   |        |        |  |   |         |       
|                           |          | Total |   | ¥                | 14,704 |              |   | ¥      | 18,335 |  |   | ¥       | 33,039 | 
|                           |          |       |   |                  |        |              |   |        |        |  |   |         |       

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18. COMMITMENTS AND CONTINGENT LIABILITIES

I. LONG-TERM PURCHASE CONTRACTS AND FINANCING COMMITMENTS

The companies customarily enter into long-term purchase contracts for certain
items, principally machinery and equipment, ocean transport vessels, metals,
oil products and chemical materials, either at fixed prices or at basic
purchase prices adjustable to market. In general, customers of the companies
are also parties to the contracts or by separate agreements are committed to
purchase the items from the companies; such customers are generally large
Japanese industrial companies. Long-term purchase contracts at fixed or basic
purchase prices amounted to ¥1,221,715 million at March 31, 2003. Scheduled
deliveries are at various dates through 2021.

The companies had financing commitments totaling ¥4,471 million at March
31, 2003, principally for financing, on a deferred-payment basis, the cost of
equipment to be purchased by their customers through July 2003.

II. GUARANTEES

The table below summarizes the companies guarantees as defined in FIN No. 45
at March 31, 2003. The maximum potential amount of future payments represents
the amounts without consideration of possible recoveries under recourse
provision or from collateral held or pledged that the companies could be
obliged to pay if there were defaults by guaranteed parties or there were
changes in an underlying which would cause triggering events under market value
guarantees and indemnification contracts. Such amounts bear no relationship to
the anticipated losses on these guarantees and indemnifications, and they
greatly exceed anticipated losses.

|                        |  |                 |         |        |  |              |         |             |  |          |         |           |  |   |        |  |  |           |         | 
|----------------------- |  | --------------- | ------- | ------ |  | ------------ | ------- | ----------- |  | -------- | ------- | --------- |  | - | ------ |  |  | --------- | ------- | 
|                        |  | Millions of Yen
|                        |  |                
|                        |  |                 |         |        |  |              |         |             |  |          |         |           |  |   |        |  |  | Maximum  
|                        |  |                 |         |        |  |              |         |             |  |          |         |           |  |   |        |  |  | potential
|                        |  | Expire          |         | Expire |  |              |         |             |  | Recourse |         | amount of
|                        |  | within          |         | after  |  | Total amount |         | provisions/ |  | future  
|Type of guarantees      |  | 1 year          |         | 1 year |  | outstanding  |         | collateral  |  | payments
|                        |  |                 |         |        |  |              |         |             |  |         
|Financial
guarantees    |  | ¥               | 41,925  |        |  | ¥            | 208,363 |             |  | ¥        | 250,288 |           |  | ¥ | 46,596 |  |  | ¥         | 284,237 | 
|Performance
guarantees  |  |                 | 1,652   |        |  |              | 23,757  |             |  |          | 25,409  |           |  |   |       |  |  |           | 25,530  | 
|Market value
guarantees |  |                 | 45,423  |        |  |              | 17,976  |             |  |          | 63,399  |           |  |   | 38,077 |  |  |           | 63,399  | 
|Derivative
instruments  |  |                 | 268,741 |        |  |              | 5,243   |             |  |          | 273,984 |           |  |   |       |  |  |           | 273,984 | 

FIN No. 45 requires the recognition, at the inception of a guarantee, of a
liability for the fair value of an obligation assumed in issuing and modifying
a guarantee on or after January 1, 2003. The liabilities recognized for the
guarantees issued or modified on or after January 1, 2003 and the corresponding
fair values at March 31, 2003 were immaterial for the year ended March 31,
2003.

(1)  Financial guarantees

The companies provide various types of guarantees to the benefit of third
parties and related parties principally to enhance their credit standings, and
would be required to execute payments if a guaranteed party failed to fulfill
its obligation with respect to a borrowing or trade payable.

Categories of financial guarantees are as follows:

Guarantees for Third Parties

It is a customary practice for the companies to guarantee, severally or jointly
with others, indebtedness of certain customers and suppliers in the furtherance
of their trading activities. At March 31, 2003, the outstanding balance of such
guarantees issued for third parties, the carrying amount of the liabilities
relating to estimated losses from the guarantees, and the maximum potential
amount of future payments under the guarantees were ¥147,496 million, ¥64
million and ¥154,918 million, respectively. The guarantees will expire no later
than 2021. The aggregate amount of recourse provisions and collateral at March
31, 2003 was ¥31,506 million.

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Guarantees for Associated Companies

The companies, severally or jointly with others, issue guarantees for
associated companies for the purpose of furtherance of their trading activities
and credit enhancement of associated companies. At March 31, 2003, the
outstanding balance of guarantees issued for associated companies, the carrying
amount of the liabilities with respect to estimated losses under the
guarantees, and the maximum potential amount of future payments under the
guarantees were ¥79,674 million, ¥3,636 million and ¥87,931 million,
respectively. The guarantees will expire no later than 2017. The aggregate
amount of recourse provisions and collateral at March 31, 2003 was ¥15,090
million.

Guarantees to Financial Institutions for Employees Housing Loans

As a part of the benefits program for its employees, the Company issues
guarantees to financial institutions for employees housing loans. The maximum
duration of the guarantees is 25 years. The Company obtains a mortgage on the
employees assets, if necessary. The outstanding balance of the guarantees at
March 31, 2003 was ¥23,118 million, and no liabilities relating to the
guarantees were recorded in the consolidated financial statements. The Company
has obtained lines of credit from several financial institutions for this
program and the maximum potential amount of future payments as the sum of these
lines was ¥41,388 million.

At March 31, 2003, the following table sets forth the major parties who
have received the companies financial guarantees. The amounts shown below were
calculated by offsetting the recourse provisions and collateral against
outstanding balance of the guarantee provided to each guaranteed party.

|                                    |       |   |                 |         | 
|----------------------------------- | ----- | - | --------------- | ------- | 
|                                    |       |   | Millions of Yen
|                                    |       |   |                
|Guaranteed party:                   |       |   |                 |        
|Tokyo Telecommunication
Network     |       | ¥ | 21,813          |        
|Usinas Siderurgicas de Minas
Gerais |       |   | 10,863          |        
|Qatar LNG
Investment                |       |   | 9,865           |        
|Hutchison 3G
UK                     |       |   | 9,553           |        
|Project Finance
BLRE                |       |   | 6,146           |        
|Sakhalin Energy
Investment          |       |   | 5,856           |        
|Telefonos De
Mexico                 |       |   | 5,693           |        
|Siam
Cement                         |       |   | 5,550           |        
|Vinyl Chloride
(Malaysia)           |       |   | 5,289           |        
|Bontang Train G Project
Finance     |       |   | 4,644           |        
|Others                              |       |   | 118,420         |        
|                                    |       |   |                 |        
|                                    | Total |   | ¥               | 203,692 | 
|                                    |       |   |                 |        

(2)  Performance guarantees

Main items of performance guarantees are contractual guarantees of Toyo
Engineering Corporation regarding plant construction contracts executed under
the name of the guaranteed party in the Middle East and other regions. The
Company has pledged bank guarantees and performance bonds to the project
owners, and in case that Toyo Engineering Corporation failed to fulfill the
contractual obligation, the project owners would execute bank guarantees and
performance bonds to claim compensation for damages.

The outstanding balance of these performance guarantees at March 31, 2003
was ¥25,409 million, and the maximum potential amount of future payments was
¥25,530 million. The performance guarantees will expire no later than 2005. No
liabilities were recorded in the consolidated financial statements because the
Company believes that its potential for loss under these guarantees is remote.

(3)  Market value guarantees

In connection with export transactions, the Company issues bills of exchange,
some of which are discounted by its negotiating banks. If a customer failed to fulfill its obligation with
respect to the bills, the Company would be obligated to repurchase the bills
based on the banking transaction agreement. At March 31, 2003, the maximum
potential amount of future payments represented by the aggregate par value of
the bills discounted by the banks was ¥45,472 million. The guarantees will
expire no later than 2004. Of these discounted bills, ¥38,077 million were
backed by letters of credit from the issuing banks of the customers. No amounts
were recognized as liabilities with respect to these guarantees.

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The companies provide marketing services of aircraft for domestic and
overseas airline companies, and as a part of such businesses the companies
issue market value guarantees of the aircraft for certain customers. These
guarantees will expire in 2013 and the maximum potential amount of future
payments at March 31, 2003 was ¥3,606 million. No liabilities were recorded
with respect to the estimated losses from these market value guarantees.

As lessees in operating lease contracts, certain subsidiaries have issued
residual value guarantees of the leased aircraft and ocean transport vessels,
and on the date of expiration of operating lease contracts, such subsidiaries
will either purchase the leased assets at a fixed price or be responsible for
making up any shortfall between an actual sales price and the guaranteed price.
Those guarantees will remain in effect no later than 2008, and the maximum
potential amount of future payments at March 31, 2003 was ¥14,321 million. No
amounts were recognized as liabilities with respect to these guarantees.

(4)  Derivative instruments

Certain derivative contracts, including written put options and credit default
swaps, meet the accounting definition of guarantees under FIN No. 45. While the
companies do not specifically identify whether the counterparties of such
derivative contracts have underlying assets and liabilities, the companies
disclose all the derivative contracts that could meet the definition under FIN
No. 45.

The companies have written put options as a part of their various
derivative transactions related to non-ferrous metals, energy and grain. At
March 31, 2003, the maximum potential amount of future payments and the fair
value of such written options recorded in the consolidated financial statements
were ¥273,984 million and ¥9,907 million, respectively. The aggregation of
notional amounts computed based on the strike prices and quantities of written
options are disclosed as the maximum potential amount of future payments.

The companies manage the market and credit risks on these derivative
instruments by monitoring fair values against loss limits and credit lines, and
generally the maximum potential amount of future payments as stated above
greatly overstates the companies exposure to market and credit risks.

(5)  Indemnification contracts

Indemnification Issued through Corporate Reorganization

The companies divested certain of their businesses through a sale to a
third-party purchaser and a spin-off to an associated company. In connection
with these transactions, the Company has provided certain indemnities and the
terms and conditions of indemnifications differ by contracts. The maximum
potential amount of future payments could not be quantified because the limits
of those indemnifications are often indefinite. At March 31, 2003, the
companies recognized liabilities of ¥1,205 million for estimated losses for
their indemnifications where the companies obligations are probable and
estimable.

Joint Obligation under Membership Agreement in Commodity Exchanges

The companies are members of major commodity exchanges in Japan and overseas.
In connection with these memberships, the companies provide guarantees to the
exchanges. Under the membership agreements, if a member becomes unable to
satisfy its obligations to the exchange, the other members would be required to
meet such shortfalls apportioned among the non-defaulting members in the
prescribed manner. The companies maximum potential amount of future payments
related to these joint obligations is not quantifiable and the probability of
being required to make any payments under these obligations is remote.

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(6) Product warranties

Certain subsidiaries provide product warranties, in relation to their sales of
assets, including machinery, equipment and residential houses, for the
performance of such products during specified warranty periods, and they are
responsible for mending or payments of compensation against the claims by the
customers regarding defects in performance or function. Estimated warranty
costs are accrued at the time the products are sold based on the historical
claim experiences.

A tabular reconciliation of changes in such liabilities for the product
warranties for the year ended March 31, 2003 is as follows:

|                                                                   |  |                 |       |  
|------------------------------------------------------------------ |  | --------------- | ----- | -
|                                                                   |  | Millions of Yen
|                                                                   |  |                
|Balance at beginning of
year                                       |  | ¥               | 2,356 |  
|Payments made in cash or in
kind                                   |  |                 | (419  | )
|Accrual for warranties issued during the year ended March
31, 2003 |  |                 | 956   |  
|Changes in accrual related to pre-existing warranties              |  |                 | (763  | )
|                                                                   |  |                 |       |  
|Balance at end of
year                                             |  | ¥               | 2,130 |  
|                                                                   |  |                 |       |  

III. LITIGATION

The Company and two of its subsidiaries, together with other third-party
methionine manufacturers, were named as defendants in approximately 20 class
action lawsuits in the United States, filed by direct and indirect customers.
In these cases, manufacturers of methionine allegedly violated federal and/or
state antitrust laws by conspiring to fix the prices of methionine.

The lawsuits seek compensatory and treble damages in unspecified amounts.
The cases filed by direct customers were consolidated in the U.S. District
Court for the Northern District of California, which certified the class in
December 2000.

In May 2002, the Company and the subsidiaries reached an agreement for
settlement with the class action plaintiffs. Under this settlement, Novus
International, Inc., the Companys 65%-owned subsidiary, paid U.S.$37.8 million
as a settlement amount.

In November 2002, the Company and the subsidiaries reached an agreement
for settlement with the plaintiffs who opted out of the class action. Under
this settlement, Novus International, Inc. paid U.S.$58.2 million as a
settlement amount.

This did not affect the Companys consolidated results of operations for
the year ended March 31, 2003, since Novus International, Inc. had previously
recorded an estimated provision for the full settlement amount that was
recorded in the Statements of Consolidated Income (other expensenet) for the
year ended March 31, 2002.

All other lawsuits related to methionine are pending.

The Companys wholly owned U.S. subsidiary, Bioproducts Inc., which
produces choline chloride, an ingredient used in animal feed and pet foods, was
named as a defendant in currently pending lawsuits in the United States,
together with other third-party choline chloride manufacturers. In these cases,
manufacturers of choline chloride allegedly violated U.S. antitrust laws.

Although the Company and its wholly owned U.S. subsidiary, Mitsui & Co.
(U.S.A.), Inc., are neither a manufacturer nor a seller of choline chloride in
the U.S. market, they were also named as defendants together with the
manufacturers in a class action lawsuit, based on the plaintiffs allegation
that the Company and Mitsui & Co. (U.S.A.), Inc. were involved in the violation
of the antitrust laws. During the course of legal proceedings, the Company and
Mitsui & Co. (U.S.A.), Inc. have consistently denied any wrongdoing. However,
on June 13, 2003, in the trial before the Federal District Court of the
District of Columbia, the jury rendered a verdict stating that the defendants
participated in the violation of the antitrust laws and that the damages
suffered by the plaintiff are U.S.$49.5 million, subject to trebling pursuant
to the U.S. antitrust laws. So far, judgment has not yet been issued.

The Company and Mitsui & Co. (U.S.A.), Inc. continue to argue that the
allegations in this case are completely without merit and have been in process
of preparation for asking the Court to overrule the verdict. There can be no
assurance of the outcome, but the management believes that this litigation will
not materially affect the consolidated financial position, results of
operations or cash flows of the Company.

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All other related lawsuits, where the Company, Mitsui & Co. (U.S.A.), Inc.
and Bioproducts Inc. are named as defendants, are pending.

Various other claims and legal actions are pending against the companies
in respect of contractual obligations and other matters arising out of the
conduct of the companies business.

Appropriate provision has been recorded for the estimated losses on those
claims and legal actions. In the opinion of management, any additional
liability will not materially affect the consolidated financial position,
results of operations or cash flows of the Company.

19. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The companies are exposed to market risks of foreign currency exchange rates,
interest rates and commodity prices in the ordinary course of business.

In order to offset or reduce these risks, the companies use derivative
instruments, such as foreign exchange forward contracts, currency swap
agreements, interest rate swap agreements, commodity future contracts and
commodity forward contracts, to hedge the exposure to changes in the fair value
or expected future cash flows of recognized assets and liabilities,
unrecognized firm commitments and forecasted transactions.

Foreign currency exchange rate risk hedging activities

The companies use derivative instruments, such as foreign exchange forward
contracts, currency swap agreements and interest rate and currency swap
agreements, in order to fix the expected future cash flows from
foreign-currency-denominated receivables and payables resulting from selling
and purchasing activities in currencies other than the local currency and
long-term financing transactions as part of the companies global operations in
many countries.

Interest rate risk hedging activities

The companies use interest rate swap agreements and interest rate and currency
swap agreements in order to diversify the sources of fund raising, reduce
fund-raising costs, fix the expected future cash flows from long-term financial
assets and liabilities with floating interest rates and reduce the exposure to
changes in the fair value of long-term financial assets and liabilities with
fixed interest rates.

Commodity price risk hedging activities

The companies use derivative instruments, such as commodity future, forward,
option and swap contracts, in order to reduce the exposure to changes in the
fair value of inventories and unrecognized firm commitments and to fix the
expected future cash flows from forecasted transactions, resulting from the
business activities related to marketable commodities, such as non-ferrous
metals, crude oil and agricultural products.

Risk management policy

The companies have strictly separated the trading sections from independent
sections which record the results and positions of derivative instruments and
are responsible for cash settlement and account confirmation with
counterparties. Risk management sections classify the derivative transactions
into trading transactions and hedging transactions. The classification between
trading transactions and hedging transactions is strictly managed by affirming
the correspondence with the hedged items for transactions for hedging purposes.
Furthermore, these risk management sections comprehensively monitor, evaluate
and analyze the positions of derivative instruments and report the results
periodically to the Companys executive officers in charge of the risk
management. Based on these reports, the executive officers assess derivative
instruments and the market risks surrounding these instruments, and establish
the companies policy regarding derivative instruments.

Fair value hedges

Changes in the fair value of derivative instruments designated as hedging
instruments to hedge the exposure to changes in the fair value of recognized
assets or liabilities or unrecognized firm commitments are recorded in earnings
together with changes in the fair value of the corresponding hedged items.

The net gain or loss recognized in earnings representing the amount of the
hedges ineffectiveness and the component of the derivative instruments gain
or loss excluded from the assessment of hedge effectiveness
were immaterial for the years ended March 31, 2003 and 2002.

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The amount of net gain or loss recognized in earnings when a hedged firm
commitment no longer qualifies as a fair value hedge was immaterial for the
years ended March 31, 2003 and 2002.

Cash flow hedges

Changes in the fair value of foreign exchange forward contracts, currency swap
agreements and interest rate and currency swap agreements designated as hedging
instruments to hedge the exposure to variability in expected future cash flows
of recognized assets or liabilities, unrecognized firm commitments and
forecasted transactions denominated in foreign currencies are initially
recorded as other comprehensive income. The amounts in accumulated other
comprehensive income are reclassified into earnings when earnings are affected
by the hedged items.

Changes in the fair value of interest rate swap agreements designated as
hedging instruments to reduce the exposure to variability in expected future
cash flows of floating-rate financial assets and liabilities are initially
recorded as other comprehensive income. The amounts in accumulated other
comprehensive income are reclassified into earnings as interest expense when
earnings are affected by the hedged items.

Changes in the fair value of commodity forward and swap contracts
designated as hedging instruments to hedge the exposure to variability in
expected future cash flows of the marketable commodities are initially recorded
as other comprehensive income. The amounts in accumulated other comprehensive
income are reclassified into earnings as revenuegross trading profit when
earnings are affected by the hedged transactions.

The ineffective portion of the hedging instruments gain or loss and the
component of the derivative instruments gain or loss excluded from the
assessment of hedge effectiveness are reported in earnings immediately. If the
hedged forecasted transaction will not occur by the end of the originally
specified time period, gain or loss on the hedging instrument reported in
accumulated other comprehensive income is reclassified into earnings. These
amounts were immaterial for the years ended March 31, 2003 and 2002.

Net gains of ¥1,156 million, relating to the transition adjustment
included in accumulated other comprehensive income upon adoption of SFAS No.
133 on April 1, 2001, were reclassified from accumulated other comprehensive
income into earnings because earnings were affected by the hedged items.

The estimated net amount of the existing gains or losses in accumulated
other comprehensive income at March 31, 2003 that is expected to be
reclassified into earnings within the next 12 months is a net loss of ¥194
million.

The maximum length of time over which the companies are hedging their
exposure to the variability in expected future cash flows for forecasted
transactions (excluding those forecasted transactions related to the payment of
variable interest on existing financial instruments) is 31 months. Commodity
swap contracts are used as hedging instruments for the forecasted transactions.

Derivative instruments for trading purposes and risk management policy

The Company and certain subsidiaries use derivative instruments such as foreign
exchange forward contracts, interest rate swap agreements and commodity future,
forward and option contracts for trading purposes. The Companys executive
officers in charge of risk management have set strict position limits and loss
limits for these instruments. Independent back offices and middle offices
strictly separated from trading sections (front offices) monitor, evaluate and
analyze the position of trading transactions and market risks. Those results
are periodically reported to the executive officers. Among others, VaR (Value
at Risk: Statistical measure of the potential maximum loss in the fair value of
a portfolio resulting from adverse market movements in the underlying risk
factors such as foreign currency exchange rates, interest rates and commodity
prices, over a defined period, within a certain confidence level) is used to
measure the market risks of derivative instruments for trading purposes.

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20. FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with the requirements of SFAS No. 107, Disclosures about Fair
Value of Financial Instruments, the companies have provided the following fair
value estimates and information about valuation methodologies.

Quoted market prices, where available, are used to estimate fair values of
financial instruments. However, quoted market prices are not available for a
substantial portion of the financial instruments. Accordingly, fair values for
such financial instruments are estimated using discounted cash flow analysis or
other valuation techniques.

Current financial assets other than marketable securities and current financial
liabilities

The carrying amount is believed to approximate the fair value of the majority
of these instruments because of their short maturities.

Marketable securities and other investments

See Note 5, MARKETABLE SECURITIES AND OTHER INVESTMENTS.

Non-current receivables and advances to associated companies

The fair values of non-current receivables, including fixed rate, long-term
loans receivable, are estimated by discounted cash flow analysis, using
interest rates currently being offered for loans or accounts receivable with
similar terms to borrowers or customers of similar credit quality and remaining
maturities. It is believed that the carrying amounts of loans with floating
rates approximate the fair value.

Long-term debt

The fair values for long-term debt, except for debt with floating rates whose
carrying amounts approximate fair value, are estimated by discounted cash flow
analysis, using rates currently available for similar types of borrowings with
similar terms and remaining maturities.

Financial guarantees and financing commitments

As a result of the adoption of FIN No. 45, the fair values of financial
guarantees are estimated based on the present values of expected future cash
flows, considering the remaining terms of the arrangements and the
counterparties credit standings. See Note 18, COMMITMENTS AND CONTINGENT
LIABILITIES for fair value information on financial guarantees written by the
companies.

The companies have not estimated the fair values of financing commitments
because management does not believe it is practicable to estimate the fair
values due to uncertainty involved in attempting to assess the likelihood and
timing of commitments being drawn upon, coupled with the lack of an established
market. However, management believes the likelihood is remote that material
payments will be required under these financing commitments.

Currency and interest rate swap agreements

The fair values of currency and interest rate swap agreements are estimated by
discounted cash flow analysis, using rates currently available for similar
types of swap agreements at the reporting date.

Currency swap agreements
include certain derivatives with both foreign exchange and interest rate
exposures. Fair values of those agreements consist of foreign exchange and
interest rate factors.

Foreign exchange forward contracts

The fair values of foreign exchange forward contracts are estimated based on
market prices for contracts with similar terms.

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The estimated fair values of certain financial instruments and derivative
financial instruments at March 31, 2003 and 2002 were as follows:

|                                                                                                       |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------------ |  | --------------- | ---------- | ---------- |  | ------ | ---------- | ---------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                       |  | Millions of Yen
|                                                                                                       |  |                
|                                                                                                       |  | 2003            |            | 2002      
|                                                                                                       |  |                 |            |           
|                                                                                                       |  | Carrying        |            |            |  |        |            | Carrying   |  |   |            |  
|                                                                                                       |  | amount          |            | Fair value |  | amount |            | Fair value
|                                                                                                       |  |                 |            |            |  |        |            |           
|Financial Assets:                                                                                      |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|(other
than Derivative Financial Instruments)                                                          |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|Current financial assets other than marketable
securities                                              |  | ¥               | 3,078,772  |            |  | ¥      | 3,078,772  |            |  | ¥ | 3,047,305  |   |  | ¥ | 3,047,305  |  
|Non-current receivables and advances to associated
companies (less allowance for doubtful
receivables) |  |                 | 578,794    |            |  |        | 586,749    |            |  |   | 622,961    |   |  |   | 627,656    |  
|Financial Liabilities:                                                                                 |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|(other than Derivative Financial Instruments)                                                          |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|Current financial
liabilities                                                                          |  |                 | (2,371,506 | )          |  |        | (2,371,506 | )          |  |   | (2,415,602 | ) |  |   | (2,415,602 | )
|Long-term debt (including current
maturities)                                                          |  |                 | (2,970,336 | )          |  |        | (3,001,991 | )          |  |   | (3,038,530 | ) |  |   | (3,079,706 | )
|Derivative Financial Instruments (Assets):                                                             |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|Interest rate swap
agreements                                                                          |  |                 | 96,247     |            |  |        | 96,247     |            |  |   | 89,990     |   |  |   | 89,990     |  
|Currency swap
agreements                                                                               |  |                 | 10,909     |            |  |        | 10,909     |            |  |   | 7,135      |   |  |   | 7,135      |  
|Foreign exchange forward
contracts                                                                     |  |                 | 30,192     |            |  |        | 30,192     |            |  |   | 51,163     |   |  |   | 51,163     |  
|Derivative Financial Instruments (Liabilities):                                                        |  |                 |            |            |  |        |            |            |  |   |            |   |  |   |            |  
|Interest rate swap
agreements                                                                          |  |                 | (6,027     | )          |  |        | (6,027     | )          |  |   | (8,796     | ) |  |   | (8,796     | )
|Currency swap
agreements                                                                               |  |                 | (9,346     | )          |  |        | (9,346     | )          |  |   | (36,509    | ) |  |   | (36,509    | )
|Foreign exchange forward
contracts                                                                     |  |                 | (11,879    | )          |  |        | (11,879    | )          |  |   | (21,641    | ) |  |   | (21,641    | )

CONCENTRATION OF CREDIT RISK

The companies global operations include a variety of businesses with diverse
customers and suppliers which reduces concentrations of credit risks. The
companies deal with selective international financial institutions to minimize
the credit risk exposure of derivative financial instruments. Credit risk
represents the likelihood that the counterparties may be unable to meet the
terms of the agreements. Management does not expect any losses as a result of
counterparty default on financial instruments. Credit risk is managed through
the credit line approved by management and by periodically monitoring the
counterparties.

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21. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental information related to the Statements of Consolidated Cash Flows
is as follows:

|                                             |                                                                                                     |                                                   |   |                 |        |      |   |        |        |  |   |        |   | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------------------------------- | - | --------------- | ------ | ---- | - | ------ | ------ |  | - | ------ | - | 
|                                             |                                                                                                     |                                                   |   | Millions of Yen
|                                             |                                                                                                     |                                                   |   |                
|                                             |                                                                                                     |                                                   |   | 2003            |        | 2002 |   | 2001  
|                                             |                                                                                                     |                                                   |   |                 |        |      |   |       
|Cash paid during the year for:               |                                                                                                     |                                                   |   |                 |        |      |   |        |        |  |   |       
|                                             | Interest                                                                                            |                                                   | ¥ | 55,211          |        |      | ¥ | 79,614 |        |  | ¥ | 98,572 |  
|                                             | Income taxes (Note
17)                                                                              |                                                   |   | 31,002          |        |      |   | 59,017 |        |  |   | 52,642 |  
|Non-cash investing and financing activities: |                                                                                                     |                                                   |   |                 |        |      |   |        |        |  |   |       
|                                             | Exchange of shares in connection with a business combination
of investees (EITF No. 91-5) (Note 5): |                                                   |   |                 |        |      |   |        |        |  |   |        |  
|                                             |                                                                                                     | Fair market value of shares
received              |   |                 | 7,110  |      |   |        | 35,874 |  |   |        |  | 
|                                             |                                                                                                     | Cost of shares
surrendered                        |   |                 | 2,635  |      |   |        | 18,649 |  |   |        |  | 
|                                             | Acquisition of a subsidiary (Note 3):                                                               |                                                   |   |                 |        |      |   |        |        |  |   |        |  
|                                             |                                                                                                     | Fair value of assets
acquired                     |   |                 | 20,683 |      |   |        |       |  |   |        |  | 
|                                             |                                                                                                     | Fair value of liabilities
assumed                 |   |                 | 8,336  |      |   |        |       |  |   |        |  | 
|                                             |                                                                                                     | Cash
acquired                                     |   |                 | 1,139  |      |   |        |       |  |   |        |  | 
|                                             |                                                                                                     | Acquisition of a subsidiary, net of cash
acquired |   |                 | 11,208 |      |   |        |       |  |   |        |  | 
|                                             | Acquisition of investment by business split-off:                                                    |                                                   |   |                 |        |      |   |        |        |  |   |        |  
|                                             |                                                                                                     | Transferred
assets                                |   |                 |       |      |   |        | 43,450 |  |   |        |  | 
|                                             |                                                                                                     | Transferred
liabilities                           |   |                 |       |      |   |        | 39,365 |  |   |        |  | 
|                                             |                                                                                                     | Acquired
investments                              |   |                 |       |      |   |        | 4,085  |  |   |        |  | 
|                                             | Contribution of securities to an employee retirement
benefit trust
(Notes 5 and
12)                 |                                                   |   | 27,343          |        |      |   | 45,770 |        |  |   | 53,285 |  

22. SUBSEQUENT EVENT

On June 27, 2003, the shareholders approved the payment of a cash dividend to
shareholders of record on March 31, 2003 of ¥4 per share (¥80 per ADS), or a
total of ¥6,327 million at the ordinary general meeting of shareholders.

The shareholders also approved the purchase by the Company of up to 70
million outstanding shares of its own common stock at an amount not exceeding
¥50,000 million during the period up to the conclusion of the next ordinary
general meeting of shareholders.

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Supplemental Information on Oil and Gas Producing Activities (Unaudited)

In accordance with Statement of Financial Accounting Standards (SFAS) No. 69,
Disclosures about Oil and Gas Producing Activities, this section provides
supplemental information on oil and gas exploration and producing activities of
the companies in five separate tables. Tables 1 through 3 provide historical
cost information pertaining to costs incurred for property acquisitions,
exploration and development; capitalized costs; and results of operations.
Tables 4 and 5 present information on the companies estimated net proved
reserve quantities and standardized measure of estimated discounted future net
cash flows related to proved reserves. The amounts for investments that are
accounted for by the equity method are separately presented as Associated
Companies, for which the companies share of the investees information on oil
and gas producing activities is presented in the following tables. The
Consolidated Companies column includes activities in Australia and the Middle
East. The Associated Companies column includes activities in the Pacific Rim
which consists of Australia, Sakhalin (Russia) and Thailand. The Associated
Companies column of the following tables includes information on LNG producing
activities as an integral part of natural gas producing activities.

TABLE 1. COSTS INCURRED FOR PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT*

|                                   |  |                 |        |            |  |           |        |  |  |   |        | 
|---------------------------------- |  | --------------- | ------ | ---------- |  | --------- | ------ |  |  | - | ------ | 
|                                   |  | Millions of Yen
|                                   |  |                
|                                   |  | Consolidated    |        | Associated |  |           |        | 
|                                   |  | Companies       |        | Companies  |  | Worldwide
|                                   |  |                 |        |            |  |          
|Year Ended March 31, 2003:         |  |                 |        |            |  |           |        |  |  |   |        | 
|Acquisition of Proved
Properties   |  | ¥               | 17,430 |            |  | ¥         | 44     |  |  | ¥ | 17,474 | 
|Acquisition of Unproved
Properties |  |                 |       |            |  |           | 441    |  |  |   | 441    | 
|Exploration                        |  |                 | 1,223  |            |  |           | 1,496  |  |  |   | 2,719  | 
|Development                        |  |                 | 5,807  |            |  |           | 22,593 |  |  |   | 28,400 | 
|                                   |  |                 |        |            |  |           |        |  |  |   |        | 
|Total Costs
Incurred               |  | ¥               | 24,460 |            |  | ¥         | 24,574 |  |  | ¥ | 49,034 | 
|                                   |  |                 |        |            |  |           |        |  |  |   |        | 
|Year Ended March 31, 2002:         |  |                 |        |            |  |           |        |  |  |   |        | 
|Acquisition of Proved
Properties   |  |                 |       |            |  | ¥         | 437    |  |  | ¥ | 437    | 
|Acquisition of Unproved
Properties |  |                 |       |            |  |           | 663    |  |  |   | 663    | 
|Exploration                        |  | ¥               | 1,049  |            |  |           | 1,200  |  |  |   | 2,249  | 
|Development                        |  |                 |       |            |  |           | 14,943 |  |  |   | 14,943 | 
|                                   |  |                 |        |            |  |           |        |  |  |   |        | 
|Total Costs
Incurred               |  | ¥               | 1,049  |            |  | ¥         | 17,243 |  |  | ¥ | 18,292 | 
|                                   |  |                 |        |            |  |           |        |  |  |   |        | 
|Year Ended March 31, 2001:         |  |                 |        |            |  |           |        |  |  |   |        | 
|Acquisition of Proved
Properties   |  |                 |       |            |  | ¥         | 61     |  |  | ¥ | 61     | 
|Acquisition of Unproved
Properties |  |                 |       |            |  |           | 915    |  |  |   | 915    | 
|Exploration                        |  | ¥               | 7      |            |  |           | 1,168  |  |  |   | 1,175  | 
|Development                        |  |                 | 923    |            |  |           | 6,993  |  |  |   | 7,916  | 
|                                   |  |                 |        |            |  |           |        |  |  |   |        | 
|Total Costs
Incurred               |  | ¥               | 930    |            |  | ¥         | 9,137  |  |  | ¥ | 10,067 | 
|                                   |  |                 |        |            |  |           |        |  |  |   |        | 

|* | Includes costs incurred whether capitalized or expensed.
|- | --------------------------------------------------------

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TABLE 2. CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES

|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|-------------------------------------------------------------------------- |  | --------------- | ------ | ---------- |  | --------- | ------- |  |  | - | ------- | 
|                                                                           |  | Millions of Yen
|                                                                           |  |                
|                                                                           |  | Consolidated    |        | Associated |  |           |         | 
|                                                                           |  | Companies       |        | Companies  |  | Worldwide
|                                                                           |  |                 |        |            |  |          
|Year Ended March 31, 2003:                                                 |  |                 |        |            |  |           |         |  |  |   |         | 
|Proved
Properties                                                          |  | ¥               | 37,846 |            |  | ¥         | 177,223 |  |  | ¥ | 215,069 | 
|Unproved
Properties                                                        |  |                 |       |            |  |           | 33,424  |  |  |   | 33,424  | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Gross Capitalized
Properties                                               |  |                 | 37,846 |            |  |           | 210,647 |  |  |   | 248,493 | 
|Accumulated Depreciation, Depletion, Amortization
and Valuation
Allowances |  |                 | 14,753 |            |  |           | 102,103 |  |  |   | 116,856 | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Net Capitalized
Costs                                                      |  | ¥               | 23,093 |            |  | ¥         | 108,544 |  |  | ¥ | 131,637 | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Year Ended March 31, 2002:                                                 |  |                 |        |            |  |           |         |  |  |   |         | 
|Proved
Properties                                                          |  | ¥               | 16,754 |            |  | ¥         | 163,792 |  |  | ¥ | 180,546 | 
|Unproved
Properties                                                        |  |                 |       |            |  |           | 27,980  |  |  |   | 27,980  | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Gross Capitalized
Properties                                               |  |                 | 16,754 |            |  |           | 191,772 |  |  |   | 208,526 | 
|Accumulated Depreciation, Depletion, Amortization
and Valuation
Allowances |  |                 | 11,123 |            |  |           | 89,602  |  |  |   | 100,725 | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Net Capitalized
Costs                                                      |  | ¥               | 5,631  |            |  | ¥         | 102,170 |  |  | ¥ | 107,801 | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Year Ended March 31, 2001:                                                 |  |                 |        |            |  |           |         |  |  |   |         | 
|Proved
Properties                                                          |  | ¥               | 16,875 |            |  | ¥         | 147,030 |  |  | ¥ | 163,905 | 
|Unproved
Properties                                                        |  |                 |       |            |  |           | 18,301  |  |  |   | 18,301  | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Gross Capitalized
Properties                                               |  |                 | 16,875 |            |  |           | 165,331 |  |  |   | 182,206 | 
|Accumulated Depreciation, Depletion, Amortization
and Valuation
Allowances |  |                 | 8,051  |            |  |           | 77,765  |  |  |   | 85,816  | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 
|Net Capitalized
Costs                                                      |  | ¥               | 8,824  |            |  | ¥         | 87,566  |  |  | ¥ | 96,390  | 
|                                                                           |  |                 |        |            |  |           |         |  |  |   |         | 

TABLE 3. RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES

The
companies results of operations from oil and gas producing activities are
shown in the following table. In accordance with SFAS No. 69, income taxes are
based on statutory tax rates. Interest income and expense are excluded from the
results reported.

|                                                               |  |                 |        |            |  |           |        |  |  |   |        | 
|-------------------------------------------------------------- |  | --------------- | ------ | ---------- |  | --------- | ------ |  |  | - | ------ | 
|                                                               |  | Millions of Yen
|                                                               |  |                
|                                                               |  | Consolidated    |        | Associated |  |           |        | 
|                                                               |  | Companies       |        | Companies  |  | Worldwide
|                                                               |  |                 |        |            |  |          
|Year Ended March 31, 2003:                                     |  |                 |        |            |  |           |        |  |  |   |        | 
|Sales to Unaffiliated
Enterprises                              |  | ¥               | 8,833  |            |  | ¥         | 48,645 |  |  | ¥ | 57,478 | 
|Transfers to Affiliated
Enterprises                            |  |                 | 8,039  |            |  |           | 7,351  |  |  |   | 15,390 | 
|                                                               |  |                 |        |            |  |           |        |  |  |   |        | 
|Total
Revenues                                                 |  |                 | 16,872 |            |  |           | 55,996 |  |  |   | 72,868 | 
|Production
Cost                                                |  |                 | 4,616  |            |  |           | 19,269 |  |  |   | 23,885 | 
|Exploration
Expenses                                           |  |                 | 932    |            |  |           | 1,849  |  |  |   | 2,781  | 
|Depreciation, Depletion, Amortization
and Valuation
Allowances |  |                 | 2,802  |            |  |           | 9,487  |  |  |   | 12,289 | 
|Income Tax
Expense                                             |  |                 | 3,689  |            |  |           | 11,559 |  |  |   | 15,248 | 
|                                                               |  |                 |        |            |  |           |        |  |  |   |        | 
|Results of Operations for Oil and
Gas Producing Activities     |  | ¥               | 4,833  |            |  | ¥         | 13,832 |  |  | ¥ | 18,665 | 
|                                                               |  |                 |        |            |  |           |        |  |  |   |        | 

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(Continued)

|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 
|-------------------------------------------------------------- |  | --------------- | ----- | ---------- |  | --------- | ------ |  |  | - | ------ | 
|                                                               |  | Millions of Yen
|                                                               |  |                
|                                                               |  | Consolidated    |       | Associated |  |           |        | 
|                                                               |  | Companies       |       | Companies  |  | Worldwide
|                                                               |  |                 |       |            |  |          
|Year Ended March 31, 2002:                                     |  |                 |       |            |  |           |        |  |  |   |        | 
|Sales to Unaffiliated
Enterprises                              |  | ¥               | 1,291 |            |  | ¥         | 48,020 |  |  | ¥ | 49,311 | 
|Transfers to Affiliated
Enterprises                            |  |                 | 6,881 |            |  |           | 6,677  |  |  |   | 13,558 | 
|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 
|Total Revenues                                                 |  |                 | 8,172 |            |  |           | 54,697 |  |  |   | 62,869 | 
|Production
Cost                                                |  |                 | 2,653 |            |  |           | 20,001 |  |  |   | 22,654 | 
|Exploration
Expenses                                           |  |                 | 744   |            |  |           | 1,160  |  |  |   | 1,904  | 
|Depreciation, Depletion, Amortization
and Valuation
Allowances |  |                 | 3,245 |            |  |           | 9,649  |  |  |   | 12,894 | 
|Income Tax
Expense                                             |  |                 | 338   |            |  |           | 9,271  |  |  |   | 9,609  | 
|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 
|Results of Operations for Oil and
Gas Producing Activities     |  | ¥               | 1,192 |            |  | ¥         | 14,616 |  |  | ¥ | 15,808 | 
|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 
|Year Ended March 31, 2001:                                     |  |                 |       |            |  |           |        |  |  |   |        | 
|Sales to Unaffiliated
Enterprises                              |  | ¥               | 1,331 |            |  | ¥         | 43,139 |  |  | ¥ | 44,470 | 
|Transfers to Affiliated
Enterprises                            |  |                 | 5,780 |            |  |           | 7,038  |  |  |   | 12,818 | 
|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 
|Total
Revenues                                                 |  |                 | 7,111 |            |  |           | 50,177 |  |  |   | 57,288 | 
|Production
Cost                                                |  |                 | 1,784 |            |  |           | 18,004 |  |  |   | 19,788 | 
|Exploration
Expenses                                           |  |                 | 7     |            |  |           | 2,034  |  |  |   | 2,041  | 
|Depreciation, Depletion, Amortization
and Valuation
Allowances |  |                 | 1,201 |            |  |           | 9,228  |  |  |   | 10,429 | 
|Income Tax
Expense                                             |  |                 | 1,408 |            |  |           | 7,549  |  |  |   | 8,957  | 
|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 
|Results of Operations for Oil and
Gas Producing Activities     |  | ¥               | 2,711 |            |  | ¥         | 13,362 |  |  | ¥ | 16,073 | 
|                                                               |  |                 |       |            |  |           |        |  |  |   |        | 

TABLE 4. PROVED RESERVE QUANTITY INFORMATION

The following table describes
proved oil and gas reserves and changes thereto for the years ended March 31,
2003, 2002 and 2001. The definitions used herein are in accordance with SFAS
No. 25, Suspension of Certain Accounting Requirements for Oil and Gas
Producing Companies.

Proved Developed and Undeveloped Reserves:

|                          |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |   |   |  |  |       |     |   |  |       |     |  
|------------------------- | ----------------------------------------------------------- |  | ------------------------- | -- | ---------------------- |  | --------- | --- | --------- |  | ------------ | --- | ---------- |  | - | - |  |  | ----- | --- | - |  | ----- | --- | -
|                          |                                                             |  | Crude Oil, Condensate and |    |                        |  |           |     |           |  |              |     |            |  |  
|                          |                                                             |  | Natural Gas Liquids       |    | Natural Gas           
|                          |                                                             |  |                           |    |                       
|                          |                                                             |  | Millions of Barrels       |    | Billions of Cubic Feet
|                          |                                                             |  |                           |    |                       
|                          |                                                             |  | Consolidated              |    | Associated             |  |           |     |           |  | Consolidated |     | Associated |  |   |   | 
|                          |                                                             |  | Companies                 |    | Companies              |  | Worldwide |     | Companies |  | Companies    |     | Worldwide 
|                          |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |           
|Reserves at April 1, 2000 |                                                             |  | 26                        |    |                        |  | 107       |     |           |  | 133          |     |            |  |  |   |  |  | 1,476 |     |   |  | 1,476 |    
|Changes Attributable to:  |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |   |   |  |  |       |     |   |  |       |    
|                          | Revision of Previous Estimates
(includes improved recovery) |  |                           |   |                        |  |           | 46  |           |  |              | 46  |            |  |   |  |  |  |       | 20  |   |  |       | 20  |  
|                          | Extensions and Discoveries                                  |  |                           |   |                        |  |           |    |           |  |              |    |            |  |   |  |  |  |       | 5   |   |  |       | 5   |  
|                          | Purchases                                                   |  |                           |   |                        |  |           |    |           |  |              |    |            |  |   |  |  |  |       |    |   |  |       |    |  
|                          | Sales                                                       |  |                           |   |                        |  |           |    |           |  |              |    |            |  |   |  |  |  |       |    |   |  |       |    |  
|                          | Production                                                  |  |                           | (3 | )                      |  |           | (10 | )         |  |              | (13 | )          |  |   |  |  |  |       | (64 | ) |  |       | (64 | )
|                          |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |   |   |  |  |       |     |   |  |       |     |  

F-59



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##### Table of Contents



(Continued)

|                           |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |     |  
|-------------------------- | ----------------------------------------------------------- |  | ------------------------- | -- | ---------------------- |  | --------- | --- | --------- |  | ------------ | --- | ---------- |  | -- | -- |  |  | ----- | --- | - |  | ----- | --- | -
|                           |                                                             |  | Crude Oil, Condensate and |    |                        |  |           |     |           |  |              |     |            |  |   
|                           |                                                             |  | Natural Gas Liquids       |    | Natural Gas           
|                           |                                                             |  |                           |    |                       
|                           |                                                             |  | Millions of Barrels       |    | Billions of Cubic Feet
|                           |                                                             |  |                           |    |                       
|                           |                                                             |  | Consolidated              |    | Associated             |  |           |     |           |  | Consolidated |     | Associated |  |    |    | 
|                           |                                                             |  | Companies                 |    | Companies              |  | Worldwide |     | Companies |  | Companies    |     | Worldwide 
|                           |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |           
|Reserves at March 31, 2001 |                                                             |  | 23                        |    |                        |  | 143       |     |           |  | 166          |     |            |  |   |    |  |  | 1,437 |     |   |  | 1,437 |    
|Changes Attributable to:   |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |    
|                           | Revision of Previous Estimates
(includes improved recovery) |  |                           |   |                        |  |           | (34 | )         |  |              | (34 | )          |  |    |   |  |  |       |    |   |  |       |    |  
|                           | Extensions and Discoveries                                  |  |                           |   |                        |  |           |    |           |  |              |    |            |  |    |   |  |  |       |    |   |  |       |    |  
|                           | Purchases                                                   |  |                           |   |                        |  |           |    |           |  |              |    |            |  |    |   |  |  |       |    |   |  |       |    |  
|                           | Sales                                                       |  |                           |   |                        |  |           |    |           |  |              |    |            |  |    |   |  |  |       |    |   |  |       |    |  
|                           | Production                                                  |  |                           | (3 | )                      |  |           | (11 | )         |  |              | (14 | )          |  |    |   |  |  |       | (63 | ) |  |       | (63 | )
|                           |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |    
|Reserves at March 31, 2002 |                                                             |  | 20                        |    |                        |  | 98        |     |           |  | 118          |     |            |  |   |    |  |  | 1,374 |     |   |  | 1,374 |    
|Changes Attributable to:   |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |    
|                           | Revision of Previous Estimates
(includes improved recovery) |  |                           |   |                        |  |           | (7  | )         |  |              | (7  | )          |  |    |   |  |  |       | 56  |   |  |       | 56  |  
|                           | Extensions and Discoveries                                  |  |                           |   |                        |  |           |    |           |  |              |    |            |  |    |   |  |  |       |    |   |  |       |    |  
|                           | Purchases                                                   |  |                           | 25 |                        |  |           |    |           |  |              | 25  |            |  |    | 27 |  |  |       |    |   |  |       | 27  |  
|                           | Sales                                                       |  |                           |   |                        |  |           |    |           |  |              |    |            |  |    |   |  |  |       |    |   |  |       |    |  
|                           | Production                                                  |  |                           | (5 | )                      |  |           | (4  | )         |  |              | (9  | )          |  |    |   |  |  |       | (65 | ) |  |       | (65 | )
|                           |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |    
|Reserves at March 31, 2003 |                                                             |  | 40                        |    |                        |  | 87        |     |           |  | 127          |     |            |  | 27 |    |  |  | 1,365 |     |   |  | 1,392 |    
|                           |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |    
|Proved Developed Reserves: |                                                             |  |                           |    |                        |  |           |     |           |  |              |     |            |  |    |    |  |  |       |     |   |  |       |    
|Reserves at April 1, 2000  |                                                             |  | 26                        |    |                        |  | 42        |     |           |  | 68           |     |            |  |   |    |  |  | 465   |     |   |  | 465   |    
|Reserves at March 31, 2001 |                                                             |  | 23                        |    |                        |  | 68        |     |           |  | 91           |     |            |  |   |    |  |  | 453   |     |   |  | 453   |    
|Reserves at March 31, 2002 |                                                             |  | 20                        |    |                        |  | 35        |     |           |  | 55           |     |            |  |   |    |  |  | 436   |     |   |  | 436   |    
|Reserves at March 31, 2003 |                                                             |  | 37                        |    |                        |  | 35        |     |           |  | 72           |     |            |  |   |    |  |  | 422   |     |   |  | 422   |    

TABLE 5. STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES

The standardized measure of discounted future cash flows,
related to preceding proved oil and gas reserves, is calculated in accordance
with SFAS No. 69. Estimated future cash inflows from production are computed by
applying year-end prices to year-end quantities of estimated net proved
reserves. Future development and production costs are those estimated future
expenditures necessary to develop and produce year-end estimated proved
reserves based on year-end cost indices, assuming continuation of year-end
economic conditions. Estimated future income taxes are calculated by applying
appropriate year-end statutory tax rates. Discounted future net cash flows are
calculated using discount factor of 10 percent. The information provided does
not represent managements estimate of the companies expected future cash
flows or value of proved oil and gas reserves. Estimates of proved reserve
quantities shall change over time as new information becomes available.
Moreover, probable and possible reserves, which may become proved in the
future, are excluded from the calculations. The arbitrary valuation prescribed
under SFAS No. 69 requires assumptions as to the timing of future development
and production costs. The calculations are made as of each fiscal year-end and
should not be relied upon as an indication of the companies future cash flows
or value of their oil and gas reserves.

F-60



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##### Table of Contents



1) Standardized Measure of Discounted Future Net Cash Flows

|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|-------------------------------------------------------- |  | --------------- | ------- | ---------- |  | --------- | --------- | - |  | - | --------- | -
|                                                         |  | Millions of Yen
|                                                         |  |                
|                                                         |  | Consolidated    |         | Associated |  |           |           |  
|                                                         |  | Companies       |         | Companies  |  | Worldwide
|                                                         |  |                 |         |            |  |          
|At March 31, 2003:                                       |  |                 |         |            |  |           |           |   |  |   |           |  
|Future Cash Inflows
from
Production                      |  | ¥               | 175,465 |            |  | ¥         | 1,103,231 |   |  | ¥ | 1,278,696 |  
|Future Production
Cost                                   |  |                 | (42,988 | )          |  |           | (425,423  | ) |  |   | (468,411  | )
|Future Development
Cost                                  |  |                 | (16,452 | )          |  |           | (57,161   | ) |  |   | (73,613   | )
|Future Income
Taxes                                      |  |                 | (57,914 | )          |  |           | (179,727  | ) |  |   | (237,641  | )
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|Undiscounted Future
Net Cash
Flows                       |  |                 | 58,111  |            |  |           | 440,920   |   |  |   | 499,031   |  
|10% Annual Discount
for Timing of
Estimated Cash
Flows   |  |                 | (24,094 | )          |  |           | (258,454  | ) |  |   | (282,548  | )
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|Standardized
Measure of
Discounted Future
Net Cash Flows |  | ¥               | 34,017  |            |  | ¥         | 182,466   |   |  | ¥ | 216,483   |  
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|At March 31, 2002:                                       |  |                 |         |            |  |           |           |   |  |   |           |  
|Future Cash Inflows
from
Production                      |  | ¥               | 43,561  |            |  | ¥         | 1,002,120 |   |  | ¥ | 1,045,681 |  
|Future Production
Cost                                   |  |                 | (15,318 | )          |  |           | (416,090  | ) |  |   | (431,408  | )
|Future Development
Cost                                  |  |                 | (2,029  | )          |  |           | (60,240   | ) |  |   | (62,269   | )
|Future Income
Taxes                                      |  |                 | (10,819 | )          |  |           | (158,576  | ) |  |   | (169,395  | )
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|Undiscounted Future
Net Cash
Flows                       |  |                 | 15,395  |            |  |           | 367,214   |   |  |   | 382,609   |  
|10% Annual Discount
for Timing of
Estimated Cash
Flows   |  |                 | (6,444  | )          |  |           | (241,649  | ) |  |   | (248,093  | )
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|Standardized
Measure of
Discounted Future
Net Cash Flows |  | ¥               | 8,951   |            |  | ¥         | 125,565   |   |  | ¥ | 134,516   |  
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|At March 31, 2001:                                       |  |                 |         |            |  |           |           |   |  |   |           |  
|Future Cash Inflows
from
Production                      |  | ¥               | 58,775  |            |  | ¥         | 1,062,713 |   |  | ¥ | 1,121,488 |  
|Future Production
Cost                                   |  |                 | (24,181 | )          |  |           | (383,906  | ) |  |   | (408,087  | )
|Future Development
Cost                                  |  |                 | (2,059  | )          |  |           | (76,199   | ) |  |   | (78,258   | )
|Future Income
Taxes                                      |  |                 | (11,810 | )          |  |           | (178,827  | ) |  |   | (190,637  | )
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|Undiscounted Future
Net Cash
Flows                       |  |                 | 20,725  |            |  |           | 423,781   |   |  |   | 444,506   |  
|10% Annual Discount
for Timing of
Estimated Cash
Flows   |  |                 | (8,298  | )          |  |           | (274,176  | ) |  |   | (282,474  | )
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  
|Standardized
Measure of
Discounted Future
Net Cash Flows |  | ¥               | 12,427  |            |  | ¥         | 149,605   |   |  | ¥ | 162,032   |  
|                                                         |  |                 |         |            |  |           |           |   |  |   |           |  

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##### Table of Contents



2) Details of Changes for the Year

|                                                                 |  |                        |         |                      |  |           |        |      |  |      |        |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         |  
|---------------------------------------------------------------- |  | ---------------------- | ------- | -------------------- |  | --------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                 |  | Millions of Yen       
|                                                                 |  |                       
|                                                                 |  | Consolidated Companies |         | Associated Companies |  | Worldwide
|                                                                 |  |                        |         |                      |  |          
|                                                                 |  | 2003                   |         | 2002                 |  | 2001      |        | 2003 |  | 2002 |        | 2001 |  | 2003 |         | 2002 |  | 2001
|                                                                 |  |                        |         |                      |  |           |        |      |  |      |        |      |  |      |         |      |  |     
|Present Value
at April 1                                         |  | ¥                      | 8,951   |                      |  | ¥         | 12,427 |      |  | ¥    | 14,208 |      |  | ¥    | 125,565 |      |  | ¥    | 149,605 |   |  | ¥ | 71,280  |   |  | ¥ | 134,516 |   |  | ¥ | 162,032 |   |  | ¥ | 85,488  |  
|                                                                 |  |                        |         |                      |  |           |        |      |  |      |        |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         |  
|Sales/Transfers of Oil
and Gas Produced,
Net of
Production Costs |  |                        | (12,256 | )                    |  |           | (5,519 | )    |  |      | (5,327 | )    |  |      | (36,727 | )    |  |      | (34,696 | ) |  |   | (32,173 | ) |  |   | (48,983 | ) |  |   | (40,215 | ) |  |   | (37,500 | )
|Development Costs
Incurred                                       |  |                        | 5,807   |                      |  |           |       |      |  |      | 923    |      |  |      | 22,593  |      |  |      | 24,116  |   |  |   | 6,296   |   |  |   | 28,400  |   |  |   | 24,116  |   |  |   | 7,219   |  
|Purchases of
Reserves in Place                                   |  |                        | 24,635  |                      |  |           |       |      |  |      |       |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   | 24,635  |   |  |   |        |   |  |   |        |  
|Extensions
and Discoveries                                       |  |                        |        |                      |  |           |       |      |  |      |       |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  
|Net Changes
in Prices,
Development and
Production Cost           |  |                        | 7,156   |                      |  |           | (2,762 | )    |  |      | (2,099 | )    |  |      | (4,650  | )    |  |      | (5,090  | ) |  |   | 65,223  |   |  |   | 2,506   |   |  |   | (7,852  | ) |  |   | 63,124  |  
|Revisions of Previous
Quantity Estimates                         |  |                        |        |                      |  |           |       |      |  |      |       |      |  |      | 64,001  |      |  |      | (46,076 | ) |  |   | 41,281  |   |  |   | 64,001  |   |  |   | (46,076 | ) |  |   | 41,281  |  
|Accretion of Discount                                            |  |                        | 895     |                      |  |           | 1,243  |      |  |      | 1,421  |      |  |      | 12,557  |      |  |      | 14,961  |   |  |   | 7,128   |   |  |   | 13,452  |   |  |   | 16,204  |   |  |   | 8,549   |  
|Net Changes
in Income Taxes                                      |  |                        | (1,127  | )                    |  |           | 700    |      |  |      | (1,042 | )    |  |      | (6,076  | )    |  |      | 17,882  |   |  |   | (17,167 | ) |  |   | (7,203  | ) |  |   | 18,582  |   |  |   | (18,209 | )
|Others*                                                          |  |                        | (44     | )                    |  |           | 2,862  |      |  |      | 4,343  |      |  |      | 5,203   |      |  |      | 4,863   |   |  |   | 7,737   |   |  |   | 5,159   |   |  |   | 7,725   |   |  |   | 12,080  |  
|                                                                 |  |                        |         |                      |  |           |        |      |  |      |        |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         |  
|Net Changes
for the Year                                         |  |                        | 25,066  |                      |  |           | (3,476 | )    |  |      | (1,781 | )    |  |      | 56,901  |      |  |      | (24,040 | ) |  |   | 78,325  |   |  |   | 81,967  |   |  |   | (27,516 | ) |  |   | 76,544  |  
|                                                                 |  |                        |         |                      |  |           |        |      |  |      |        |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         |  
|Present Value
at March 31                                        |  | ¥                      | 34,017  |                      |  | ¥         | 8,951  |      |  | ¥    | 12,427 |      |  | ¥    | 182,466 |      |  | ¥    | 125,565 |   |  | ¥ | 149,605 |   |  | ¥ | 216,483 |   |  | ¥ | 134,516 |   |  | ¥ | 162,032 |  
|                                                                 |  |                        |         |                      |  |           |        |      |  |      |        |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         |  

* Main portion of Others is foreign currency translation adjustments.

F-62



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##### Table of Contents



SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

|                         |  |  |  |     |                                                                           
|------------------------ |  |  |  | --- | --------------------------------------------------------------------------
|                         |  |  |  |     | MITSUI & CO., LTD.                                                        
|                         |  |  |  |    
|                         |  |  |  |     | (Registrant)                                                              
|                         |  |  |  |     |                                                                           
|                         |  |  |  |     |                                                                           
|Date: September 29, 2003 |  |  |  | By: | /s/ Tasuku Kondo                                                          
|                         |  |  |  |    
|                         |  |  |  |     | Tasuku Kondo
Senior Executive Managing Officer and
Chief Financial Officer





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##### Table of Contents



INDEX OF EXHIBITS

|        |      |          |  |  |                                                                                                                                                         
|------- | ---- | -------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |         
|Number  |      | Document
|        |      |         
|        | 1.1  |          |  |  | The Articles of Incorporation of Mitsui & Co., Ltd., as
of June 27, 2003 (English-language translation).                                                
|        |      |          |  |  |                                                                                                                                                         
|        | 1.2  |          |  |  | The Share Handling Regulation of Mitsui & Co., Ltd., as amended on June 27, 2003 (English-language translation).                                        
|        |      |          |  |  |                                                                                                                                                         
|        | 1.3  |          |  |  | The Rules of the Board of Directors of Mitsui & Co., Ltd., as
amended on June 27, 2003 (English-language translation).                                  
|        |      |          |  |  |                                                                                                                                                         
|        | 1.4  |          |  |  | The Rules of the Board of Corporate Auditors of Mitsui & Co., Ltd.,
as amended on April 1, 2002 (English-language translation).                         
|        |      |          |  |  |                                                                                                                                                         
|        | 2.1  | *        |  |  | Deposit Agreement, dated October 1, 1982 among Mitsui & Co., Ltd.,
Citibank, N.A., and holders of ADRs and European Depositary Receipts.                
|        |      |          |  |  |                                                                                                                                                         
|        | 4.1  | *        |  |  | Corporate Separation
Contract, dated December 7, 2001, among Mitsui
& Co., Ltd. and Sumisho Building Materials Co., Ltd. (English-language
translation).
|        |      |          |  |  |                                                                                                                                                         
|        | 8.1  |          |  |  | List of Subsidiaries of Mitsui & Co., Ltd.                                                                                                              
|        |      |          |  |  |                                                                                                                                                         
|        | 12.1 |          |  |  | Certification of the principal executive officer of Mitsui & Co., Ltd. required by Rule 13a-14(a).                                                      
|        |      |          |  |  |                                                                                                                                                         
|        | 12.2 |          |  |  | Certification of the principal financial officer of Mitsui & Co., Ltd. required by Rule 13a-14(a).                                                      
|        |      |          |  |  |                                                                                                                                                         
|        | 13.1 |          |  |  | Certification required by Rule 13a-14(b) and Section 1350 of
Chapter 63 of Title 18 of the United States Code.                                          



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|* |  | Incorporated by reference to the corresponding exhibit to our
annual report on Form 20-F (File No. 0-9929) filed on September 27,
2002.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------

We have not included as exhibits certain instruments with respect to our
long-term debt, the amount of debt authorized under each of which does not
exceed 10% of our total assets, and we agree to furnish a copy of any such
instrument to the Securities and Exchange Commission upon request.