MEL.L Regulatory News (MEL)

27 Apr 2007 07:53

Mitsubishi Electric Corporation27 April 2007 MITSUBISHI ELECTRIC CORPORATION PUBLIC RELATIONS DEPARTMENT 7-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo, 100-8310 Japan FOR IMMEDIATE RELEASE No. 2409 Investor Relations Inquiries: Media Contact:Yasumitsu Kugenuma Travis WoodwardCorporate Finance Division Public Relations DivisionMitsubishi Electric Corporation Mitsubishi Electric CorporationTel: +81-3-3218-2391 Tel: +81-3-3218-3380Cad.Irg@rk.MitsubishiElectric.co.jp prd.gnews@nk.MitsubishiElectric.co.jp http://global.mitsubishielectric.com/news/ MITSUBISHI ELECTRIC ANNOUNCES CONSOLIDATED AND NON-CONSOLIDATED FINANCIALRESULTS FOR FISCAL 2007 Tokyo, April 27, 2007 - Mitsubishi Electric Corporation (President and CEO:Setsuhiro Shimomura) announced today its consolidated and non-consolidatedfinancial results for fiscal 2007 (April 1, 2006 - March 31, 2007). Consolidated Financial Results Net sales: 3,855.7 billion yen (7% increase from the previous fiscal year)Operating income: 233.0 billion yen (48% increase from the previous fiscal year)Income before income taxes: 184.7 billion yen (21% increase from the previous fiscal year)Net income: 123.0 billion yen (29% increase from the previous fiscal year) Non-consolidated Financial Results Net sales: 2,363.6 billion yen (7% increase from the previous fiscal year)Ordinary profit: 131.4 billion yen (75% increase from the previous fiscal year)Net income: 41.6 billion yen (14% decrease from the previous fiscal year) The business environment in FY 2007 saw a general underlying strength in theglobal economy such as continuing recovery in Europe, despite a partial sense ofstagnation in the latter half of the fiscal year. The Japanese economy also sawa general underlying strength with recovery mainly in the corporate sector dueto continued buoyancy in both foreign demand and capital investment, etc.,despite a shift to less dynamic consumer spending. Meanwhile, the Mitsubishi Electric Group is involved in structural reforms thatrespond to changing operating circumstances to increase and strengthenprofitability in each business segment under its 'make strong businessesstronger' strategy. We also continue to strengthen production and sales systemsboth in domestic and overseas markets by establishing and reinforcing operatingfacilities as well as strengthening our competitive edge through businessalliances, etc. In addition, we are involved in company-wide improvementactivities like reducing inventory and increasing productivity in addition tocontinuing our cost reducing A-Sigma program and Just In Time activities. We arealso strengthening our competitive edge through HR investments and optimizingour HR structure. We have set reserves of 42.1 billion yen for contingent liabilities arising fromvarious competition law related expenses as Other expenses (consolidated) andExtraordinary loss (non-consolidated). CONSOLIDATED FINANCIAL RESULTS BY BUSINESS SEGMENT Energy and Electric SystemsTotal sales: 951.0 billion yen (9% increase from the previous fiscal year)Operating income: 49.3 billion yen (24.0 billion yen increase from the previous fiscal year) The social infrastructure systems business saw increases in both orders andsales from the previous fiscal year due to expansions both domestic and abroadin our power generation and transmission/distribution related business as wellas in electric equipment for rolling stock.Building system business experienced an increase in both orders and sales fromthe previous fiscal year due to things like an increase in domestic large-scaleinstallation and refitting orders for elevators and escalators as well asincreased orders in the Middle East, Southeast Asia, and the United States. As aresult, total sales for this segment increased 9% from the previous fiscal year,and operating income increased 24.0 billion yen from the previous fiscal yeardue to increased sales, etc. Industrial Automation Systems Total sales: 956.9 billion yen (11% increase from the previous fiscal year) Operating income: 126.2 billion yen (30.2 billion yen increase from the previous fiscal year) Factory automation systems business saw an increase in both orders and salesfrom the previous fiscal year due to increases in capital investments related toflat panel display and surface mounting systems in the first half of the fiscalyear, and robust power distribution business and capital investments related tosemiconductors in the latter half of the fiscal year. The automotive equipmentbusiness saw an increase in both orders and sales from the previous fiscal yeardue to increases in alternators and starters etc. for both domestic and overseasautomotive manufacturers. As a result, total sales for this segment increased by11% compared to the previous fiscal year. Operating income rose by 30.2 billionyen from the previous fiscal year due to increase in sales, etc. Information and Communication SystemsTotal sales; 688.0 billion yen (7% increase from the previous fiscal year) Operating income: 20.8 billion yen (0.1 billion yen increase from the previous fiscal year) The telecommunications equipment business saw an increase in both orders andsales due to buoyant shifts in mobile handsets as well as communicationsinfrastructure. The information system service business saw an increase in sales from theprevious fiscal year due to expansion in the system integration business. The electronic systems business sales increased from the previous fiscal yeardue to our satellite related business etc., however orders remained the same asthe previous fiscal year. As a result, total sales for this segment showed anincrease of 7% from the previous fiscal year. Operating income was in linewith the previous fiscal year. Electronic DevicesTotal sales: 185.9 billion yen (9% increase from the previous fiscal year)Operating income: 12.1 billion yen (1.3 billion yen decrease from the previous fiscal year) The semiconductor business saw an increase in both orders and sales from theprevious fiscal year due to increases in power modules for consumer use mainlyfor air conditioners and industrial use as well as power amplifiers for mobilehandsets.The liquid crystal business saw a decrease in both orders and sales from theprevious fiscal year. Despite increases in medium sized products for industrialuse, there were decreases in small sized products for consumer use in mobilehandsets, etc.As a result, total sales for this segment increased by 9% from the previousfiscal year, and operating income decreased by 1.3 billion yen from the previousfiscal year due to falling liquid crystal prices, etc. Home AppliancesTotal sales: 921.9 billion yen (3% increase from the previous fiscal year)Operating income: 36.6 billion yen (21.6 billion yen increase from the previous fiscal year) The home appliance business saw a 3% increase in sales from the previous fiscalyear due to increases in air conditioners and solar power generation systems forthe foreign market in addition to residential home equipment such as electricwater heaters, induction heating cooking systems, etc. for the domestic market.Operating income increased by 21.6 billion yen from the previous fiscal year dueto increased sales, etc. Others Total sales: 630.5 billion yen (4% increase from the previous fiscal year) Operating income: 15.1 billion yen (1.8 billion yen increase from the previous fiscal year) Sales increased 4% from the previous fiscal year mainly in our materialprocurement, logistics, and engineering, etc. affiliated companies. Operatingincome increased by 1.8 billion yen from the previous fiscal year due toincreased sales, etc. Fundamental dividend distribution policy Our fundamental policy is to comprehensively measure improvement in shareholderprofits from the viewpoints of appropriate profit distribution commensurate withearning performance of its respective fiscal year as well as strengthening ourfinancial standing through our internal reserves, with the ultimate goal ofimproving corporate value. FY 2007 and FY 2008 dividend With our financial standing and business performance continuing to improve, wewill pay a year-end retained earnings dividend of 6 yen per share for fiscal2007. Adding the interim dividend of 4 yen per share, the total annual dividendis 10 yen per share. Payment of year-end dividends will start on June 4, 2007.The retained earnings dividend for fiscal 2008 is still undecided. cf. Fiscal 2006 dividend was 8 yen per share (interim dividend of 3 yen per share and a year-end dividend of 5 yen per share) FINANCIAL CONDITION (CONSOLIDATED BASIS) Assets, Liabilities, and Shareholders' Equity The company's total assets for the fiscal year increased from the end of theprevious fiscal year by 138.4 billion yen to 3,452.2 billion yen. This increaseis mainly attributable to increases in cash and cash equivalents by 38.1 billionyen, increases in trade receivables by 47.0 billion yen along with a 28.2billion yen increase in inventories in response to increased orders and sales. The balance of outstanding debts and corporate bonds fell by 52.0 billion yenfrom the balance as of the end of the previous fiscal year to 641.0 billion yen,resulting in a reduction of its ratio against total assets down to 18.6% (animprovement of 2.3 points compared to the end of the previous fiscal year).While retirement and severance benefits decreased by 59.6 billion yen, othercurrent liabilities increased by 59.0 billion yen due to increases in accruedincome tax and other fixed liabilities also increased by 41.0 billion yen due toappropriation of competition law related expenditure allowances, etc. Shareholders' equity increased by 117.0 billion yen compared to the previousfiscal year to 1,059.2 billion yen. This was due to inclusion of total netincome of 123.0 billion yen for this fiscal year despite a 19.3 billion yendecrease from dividend payments. The ratio of shareholders' equity to totalassets was 30.7%, a 2.3 points improvement compared to the previous fiscal year. Cash Flow Cash flows from operating activities for this financial year decreased by 30.2billion yen compared to the previous fiscal year to 274.6 billion yen (positive)due to increases in trade receivables and increases in inventory, etc., despiteincreases in net income. Investment cash flow decreased by 0.6 billion yen to 155.5 billion yen (used)due to reduced securities acquisition despite increases in capital investmentcompared to previous fiscal year. As a result, free cash flow was 119.0billion yen (positive). Financial cash flow was 88.7 billion yen (used) due to continued debt repaymentand bond redemption in order to improve financial standing. Cash Flow related index FY '03 FY '04 FY '05 FY '06 FY '07 Cash Flow to interest 5.7 times 4.3 times 4.4 times 2.4 times 2.4 timesbeanng debt ratio(1) Interest coverage ratio(2) 10.0 times 17.0 times 17.6 times 31.5 times 28.1 times (1)balance of outstanding debts and corporate bonds* divided by cash flow from operating activities*balance of outstanding debts and corporate bonds is the average of the year-start and year-end balance of outstanding debts and corporate bonds. (2)cash flow from operating activities divided by interest paid CURRENT FORECAST FOR FISCAL 2008 The world economy is expected to remain steady similar to the previous fiscalyear, while there will be persistent sense of general stagnation, particularlyin the US economy. As far as the Japanese economy is concerned, also a setbackis foreseeable in terms of its current recovery around the middle of fiscal2008. Further, some specific economic indicators such as possible increases inpetroleum and material prices, risks from a fluctuating exchange rate, etc, donot allow us to be optimistic about our management environments in the nearfuture. In the meantime, the Mitsubishi Electric Group will continue to increase andstrengthen profitability in each business field. In addition, we are committedto implementing various company-wide managerial measures toward improvingbusiness performance and financial standing. The growth strategies will besteadfastly adhered to in the interest of maintaining sustainable growth. Current forecast for fiscal 2008: consolidated Net sales 3,940.0 billion yen (2% increase from fiscal 2007)Operating income 200.0 billion yen (14% decrease from fiscal 2007)Income before income taxes 185.0 billion yen (no change from fiscal 2007)Net income 125.0 billion yen (2% increase from fiscal 2007) Current forecast for fiscal 2008: non-consolidated Net sales 2,430.0 billion yen (3% increase from fiscal 2007)Operating income 110.0 billion yen (14% decrease from fiscal 2007)Ordinary profit 105.0 billion yen (20% decrease from fiscal 2007)Net income 75.0 billion yen (80% increase from fiscal 2007) MANAGEMENT POLICY Fundamental Management Policy Based on its corporate statement "Changes for the Better", the MitsubishiElectric Group hopes to build a better tomorrow by contributing to the creationof new societies, industries and lifestyles. Keeping this corporate approach in mind, Mitsubishi Electric will establish asolid business foundation and implement sustainable growth through a three pointbalanced management of "Growth," "Profitability & Efficiency" and "Soundness". Mitsubishi Electric will also work to further enhance its corporate value bybecoming a conglomerate of highly competitive electric-electronic businesseswith a synergistic unity, capable of responding to the expectations ofcustomers, shareholders, and all of our stakeholders. Management Targets The Mitsubishi Electric Group has established three management targets that itcontinuously aims to achieve: an operating income ratio of 5% or more, ROE of10% or more, and a interest-bearing debt ratio of 20% or less. Businessperformance for fiscal 2007 achieved all of our management targets. Because ofefforts we have taken thus far in structural improvement of our businesses,improving productivity, and improving our financial standing, we had anoperating profit ratio of 6.0%, ROE of 12.3%, and an interest- bearing debtratio of 18.6%. The Group revised its targeted ratio of interest-bearing debtsto 15% or less, while also continuing efforts to accomplish our other managementtargets. Management Target Ratio of operating income to net sales 5% or more ROE 10% or more Ratio of interest-bearing debt to total assets 20% or less => 15% or less Corporate Agenda Based on its three point balanced management of "Growth," "Profitability &Efficiency" and "Soundness", the Mitsubishi Electric Group will continuouslyimprove by strengthening quality, cost competitiveness, and intellectualproperty as well as productivity, R&D, and sales capabilities. We will alsostrengthen our two-tiered growth strategy VI1 strategy, 'making strongbusinesses stronger', and AD2 strategy, 'reinforcing solutions businessescentered on strong businesses'. While also restructuring business segments inresponse to changing business environments, we strive to create a managementbase that will continue to strengthen and improve our business performance. Specifically, with an objective of strengthening our integrated "Craftsmanship",we will strengthen our development and productivity in software and hardware,and continue to streamline our productivity with measures like Just In Timeproduction. From the very first stages of design and development, we willpromote cost reduction activities that respond to material price hikes and exertquality consciousness. We will utilize human resources to enhancecompetitiveness, and engage in activities such as streamlining our humanresources structure from a mid- and long-term perspective. We will improve ourfinancial standing by further pursuing such measures as inventory reduction.Also, we will further promote 'Global Integration' to build an optimal businessstructure both in global terms and for the entire corporate Group. In businessdevelopment in overseas markets, we will pay intensive attention on managingassociated risks. Finally, we will enhance our operational structure to managevarious businesses, through integration and coordination among various aspects,including research, development, procurement, production, sales and servicesetc. In addition, we will be committed to enhance Corporate Social Responsibility(CSR) efforts based on the Corporate Mission and Seven Guiding Principles . Wewill also improve corporate value while responding to external environmentalchanges such as legislative reforms to the Commercial Code. Steadily executing the above strategy, the Mitsubishi Electric Group will work to further enhance its corporate value. 1VI, the first two letters of 'Victory' 2AD, the first two letters of 'Advance'3Corporate Mission: The Mitsubishi Electric Group will continually improve its technologies and services through creativity, and at the same time contribute to society. 4 These principles are: Trust: Establish relationships with all stakeholders based on strong mutual trust and respect, Quality: Provide the best products and services with unsurpassed quality, Technology: Pioneer new markets by promoting research and development, Citizenship; As a global player, contribute to the development of communities and society as a whole, Ethics: Honor high ethical standards in all endeavors, Environment: Respect nature, and strive to protect and improve the global environment, Growth: Assure fair earnings to build a foundation for future growth. CONSOLIDATED AND NON-CONSOLIDATED FINANCIAL RESULTS 1. CONSOLIDATED FINANCIAL RESULTS (in billions of yen except where noted) FY'07(A) FY '06 (B) A/B (Apr. 1,2006- Apr. 1,2005- (%) Mar. 31, 2007) Mar. 31, 2006) Net sales 3,855.7 3,604.1 107Operating income 233.0 157.7 148Income before income taxes 184.7 152.3 121Net income 123.0 95.6 129Basic net income per share 57.34yen 44.64yen 128 Note: 1) Consolidated financial charts made according to U.S. GAAP. 2) Company has 148 consolidated subsidiaries. 2. NON-CONSOLIDATED FINANCIAL RESULTS (in billions of yen except where noted) FY'07(A) FY '06 (B) A/B (Apr. 1, 2006- Apr. 1, 2005- (%) Mar. 31, 2007) Mar. 31, 2006) Net sales 2,363.6 2,217.0 107Ordinary profit 131.4 75.1 175Net income 41.6 48.5 86Dividend per share Annual dividend 10 yen 8 yen 125 Interim dividend 4 yen 3 yen Year-end dividend 6 yen 5 yenNet income per share 19.42 yen 22.66 yen 86 CONSOLIDATED PROFIT AND LOSS STATEMENT (in millions of yen) FY '07 (A) FY '06(B) Comparison to (Apr. l, 2006 - (Apr. l, 2005 - previous year Mar. 31, 2007) Mar. 31, 2006) (A - B) %of %of A/B total total (%)Net sales 3,855,745 100.0 3,604,185 100.0 251,560 107Cost of sales 2,831,309 73.5 2,694,985 74.8 136,324 105Selling, general and administrative expenses 791,434 20.5 751,482 20.8 39,952 105 Operating income 233,002 6.0 157,718 4.4 75,284 148Other income 40,745 1.1 45,980 1.3 (5,235) 89 Interest and 12,281 0.3 9,492 0.3 2,789 129 Dividends Other 28,464 0.8 36,488 1.0 (8,024) 78Other expenses 88,971 2.3 51,372 1.5 37,599 173 Interest 9,375 0.2 9,648 0.3 (273) 97 Other 79,596 2.1 41,724 1.2 37,872 191Income before income taxes 184,776 4.8 152,326 4.2 32,450 121 Income taxes 80,203 2.1 69,701 1.9 10,502 115Equity in earnings of affiliated companies 18,507 0.5 13,067 0.4 5,440 142 Net income 123,080 3.2 95,692 2.7 27,388 129 CONSOLIDATED BALANCE SHEET (in millions of yen) FY '07 (A) FY'06 (B) (ending March (ending March A - B 31, 2007) 31, 2006) (Assets)Current assets 2,050,500 1,886,779 163,721 Cash and cash equivalents 342,640 304,514 38,126 Short-term investments 16,258 7,991 8,267 Trade receivables 891,271 843,600 47,671 Inventories 520,238 491,950 28,288 Prepaid expenses and other current assets 280,093 238,724 41,369Long-term receivables 3,711 4,378 (667)Investments 571,458 584,871 (13,413)Net property, plant and equipment 605,285 589,998 15,287Other assets 221,277 247,716 (26,439)Total assets 3,452,231 3,313,742 138,489 (Liabilities and shareholders' equity)Current liabilities 1,529,838 1,440,133 89,705Bank loans and current portion of long-term debt 253,141 247,595 5,546Trade payables 739,585 714,455 25,130Other current liabilities 537,112 478,083 59,029Long-term debt 387,941 445,583 (57,642)Retirement and severance benefits 360,713 420,348 (59,635)Other fixed liabilities 54,169 13,081 41,088Minority interests 60,361 52,395 7,966Shareholders' equity 1,059,209 942,202 117,007 Common stock 175,820 175,820 - Capital surplus 210,910 210,938 (28) Retained earnings 632,003 528,240 103,763 Accumulated other comprehensive income (loss) 40,932 27,718 13,214 Treasury stock at cost (456) (514) 58Total liabilities and shareholders' equity 3,452,231 3,313,742 138,489Balance of Debt 641,082 693,178 (52,096)Accumulated other comprehensive income (loss): Foreign currency translation adjustments 32,088 9,426 22,662 Minimum pension liability adjustments - (58,695) 58,695 Pension liability adjustments (59,723) - (59,723) Unrealized gains on securities 68,578 76,970 (8,392) Unrealized gams (losses) on derivative instruments (11) 17 (28) CONSOLIDATED CASH FLOW STATEMENT (in millions of yen) FY'07(A) FY'06(B) A-B (Apr. 1,2006- (Apr, 1, 2005- Mar. 31, 2007) Mar. 31, 2006) I Cash flows from operating activities 1 Net income 123,080 95,692 27,388 2 Adjustments to reconcile net income to net cash provided by operating activities (1) Depreciation of tangible fixed assets and other 141,514 135,821 5,693 (2) Decrease in deferred income taxes 9,553 22,796 (13,243) (3) Decrease (increase) in trade receivables (35,474) (19,359) (16,115) (4) Decrease(increase) in inventories (15,954) (9,379) (6,575) (5) Decrease(increase) in prepaid expenses and other assets 964 (3,308) 4,272 (6) Increase in trade payables 19,252 60,170 (40,918) (7) Increase in other liabilities 44,382 35,346 9,036 (8) Other, net (12,687) (12,938) 251 Net cash provided by operating activities 274,630 304,841 (30,211) II Cash flows from investing activities 1 Capital expenditure (140,557) (134,413) (6,144) 2 Proceeds from sale of property, plant and equipment 4,782 5,374 (592) 3 Purchase of short-term investments and investment securities (24,115) (33,590) 9,475 4 Proceeds from sale of short-term investments and investment securities 28,163 32,937 (4,774) 5 Other net (23,872) (26,517) 2,645 Net cash used in investing activities (155,599) (156,209) 610 I+II Free cash flow 119,031 148,632 (29,601) III Cash flows from financing activities 1 Proceeds from long-term debt 32,200 62,675 (30,475) 2 Repayment of long-term debt (154,250) (100,024) (54,226) 3 Increase(decrease) in bank loans, net 50,496 (43,794) 94,290 4 Dividends paid (19,317) (15,000) (4,317) 5 Purchase of treasury stock (132) (4,583) 4,451 6 Reissuance of treasury stock 162 125 37 7 Other, net 2,107 - 2,107 Net cash provided by(used in) financing activities (88,734) (100,601) 11,867 IV Effect of exchange rate changes on cash and cash equivalents 7,829 9,920 (2,091) V Net increase in cash and cash equivalents 38,126 57,951 (19,825) VI Cash and cash equivalents at beginning of period 304,514 246,563 57,951 VII Cash and cash equivalents at end of period 342,640 304,514 38,126 CONSOLIDATED SEGMENT INFORMATION 1. SALES AND OPERATING INCOME BY BUSINESS SEGMENT (in millions of yen) FY'07 FY'06 A/B (Apr.1,2006-Mar.31,2007) (Apr.1,2005-Mar.31,2006) (%) Business Segment Sales (A) Operating Sales (B) Operating % of total income % of total income Energy and Electric Systems 951,065 21.9 49,310 868,789 21.5 25,296 109 Industrial Automation Systems 956,930 22.1 126,227 860,111 21.3 95,967 111 Information and Communication Systems 688,004 15.9 20,803 644,111 15.9 20,677 107 Electronic Devices 185,911 4.3 12,141 170,394 4.2 13,531 109 Home Appliances 921,948 21.3 36,644 896,437 22.2 14,958 103 Others 630,510 14.5 15,169 603,585 14.9 13,342 104 Subtotal 4,334,368 100.0 260,294 4,043,427 100.0 183,771 107 Eliminations and other (478,623) - (27,292) (439,242) - (26,053) - Consolidated Total 3,855,745 - 233,002 3,604,185 - 157,718 107 * Note: Inter-segment sales are included in the above chart. 2. SALES AND OPERATING INCOME BY LOCATION (in millions of yen) FY'07 FY'06 A/B (Apr.1,2006-Mar.31,2007) (Apr.1,2005-Mar.31,2006) (%) Sales (A) Operating Sales (B) Operating income income(loss) Japan 3,346,100 191,274 3,131,472 123,578 107 North America 277,555 6,345 251,717 (4,100) 110 Asia(excluding Japan) 482,363 31,057 430,976 29,205 112 Europe 299,401 11,041 228,993 8,148 131 Others 30,819 1,007 27,567 945 112 Subtotal 4,436,238 240,724 4,070,725 157,776 109 Eliminations (580,493) (7,722) (466,540) (58) - Consolidated Total 3,855,745 233,002 3,604,185 157,718 107 * Note: Inter-segment sales are included in the above chart. 3. OVERSEAS SALES FY'07 FY'06 A/B (Apr.1,2006-Mar.31,2007) (Apr.1,2005-Mar.31,2006) (%) Location Sales (A) % of total Sales (B) % of total net sales net sales North America 297,360 7.7 281,502 7.8 106 Asia (excluding Japan) 470,886 12.2 426,579 11.9 110 Europe 340,121 8.8 270,761 7.5 126 Others 91,951 2.4 69,727 1.9 132 Total overseas sales 1,200,318 31.1 1,048,569 29.1 114 Cautionary Statement The expectation of operating results herein and any associated statement to bemade orally with respect to the Company's current plans, estimates, strategiesand beliefs and any other statements that are not historical facts areforward-looking statements. Words such as "expects", "anticipates", "plans","believes", "scheduled", "estimated", "targeted" along with any variations ofthese words and similar expressions are intended to identify forward-lookingstatements which include but are not limited to projections of revenues,earnings, performance and production. While the statements herein are based oncertain assumptions and premises that the Company trusts and considers to bereasonable under the circumstances to the date of announcement, you arerequested to kindly take note that actual operating results are subject tochange due to any of the factors as contemplated hereunder and/or any additionalfactor unforeseeable as of the date of this announcement. Such factorsmaterially affecting the expectations expressed herein shall include but are notlimited to the following: (1) Important trends The Mitsubishi Electric Group's operations may be affected by trends in theglobal economy, social conditions, laws, tax codes, and regulations. (2) Foreign currency exchange rates Fluctuations in foreign currency markets may affect Mitsubishi Electric's salesof exported products and purchases of imported materials that are denominated inU.S. dollars or euros, as well as its Asian production bases' sales of exportedproducts and purchases of imported materials that are denominated in foreigncurrencies. (3) Stock markets A fall in stock market prices may cause Mitsubishi Electric to recorddevaluation losses on marketable securities, or cause an increase in retirementbenefit obligations in accordance with a decline in the fair value of pensionassets. (4) Supply/demand balance for products and procurement conditions for materials and components A decline in prices and shipments due to changes in the supply/demand balancemay adversely affect mainly Mitsubishi Electric's Information and CommunicationSystems, Electronic Devices, and Home Appliances segments. In addition, anincrease in material prices due to a worsening of material and componentprocurement conditions may adversely affect all of Mitsubishi Electric'soperations. (5) Fund procurement An increase in interest rates, the yen interest rate in particular, wouldincrease Mitsubishi Electric's interest expenses. (6) Significant patent matters Important patent filings, licensing, copyrights and patent-related disputes mayadversely affect related businesses. (7) Environmental matters We may appropriate funds for losses or increase allowances to respond toregulation trends or outbreaks of issues related to the environment. This mayimpact manufacturing and all corporate activities of the Mitsubishi ElectricGroup. (8) Quality of products and services We may appropriate funds for losses from defective services or products, and thelowered reputation of the quality of all our products and services may affectthe entire Mitsubishi Electric group. (9) Litigation and other legal proceedings The Mitsubishi Electric Group's operations may be affected by lawsuits or otherlegal proceedings against Mitsubishi Electric, its subsidiaries and/orequity-method affiliated companies. (10) Disruptive changes Disruptive changes in technology, development of products using new technology,timing of production, and market introduction may adversely affect performancemainly in Mitsubishi Electric's Information and Communication Systems,Electronic Devices, and Home Appliances segments. (11) Business restructuring The Mitsubishi Electric Group may record losses due to restructuring measures. (12) Natural disasters The Mitsubishi Electric Group's operations, particularly manufacturingactivities, may be affected by the occurrence of earthquakes, typhoons, tsunami,fires and other large-scale disasters. (13) Other significant factors The Mitsubishi Electric Group's operations may be affected by the outbreak ofsocial or political upheaval due to terrorism, war or other factors. About Mitsubishi Electric With over 80 years of experience in providing reliable, high-quality products toboth corporate clients and general consumers all over the world, MitsubishiElectric Corporation (TSE:6503) is a recognized world leader in the manufacture,marketing and sales of electrical and electronic equipment used in informationprocessing and communications, space development and satellite communications,consumer electronics, industrial technology, energy, transportation and buildingequipment. The company recorded consolidated group sales of 3,855.7 billion yen(US$ 32.7billion*) in the fiscal year ended March 31, 2007. For more informationvisit http://global.mitsubishielectric.com * At an exchange rate of 118 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2007 This information is provided by RNS The company news service from the London Stock Exchange