MEL.L Regulatory News (MEL)

30 Oct 2006 08:42

Mitsubishi Electric Corporation30 October 2006 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 Travis.Woodward@eb.MitsubishiElectric.co.jp http://global.mitsubishielectric.com/news/ MITSUBISHI ELECTRIC ANNOUNCES CONSOLIDATED AND NON-CONSOLIDATED FINANCIAL HALF-YEAR RESULTS FOR THE PERIOD OF APRIL 1,2006- SEPTEMBER 30, 2006 Tokyo, October 30, 2006 - Mitsubishi Electric Corporation (President and CEO:Setsuhiro Shimomura) announced today its half-year financial results for theperiod of April 1,2006- September 30,2006 (fiscal 2007). Consolidated Financial Results Net sales: 1,791.9 billion yen (9% increase from the same period last year) Operating income: 93.6 billion yen (103% increase from the same period last year) Income before income taxes: 82.4 billion yen (63% increase from the same period last year) Net income: 56.4 billion yen (94% increase from the same period last year) Non-consolidated Financial Results Net sales: 1,082.0 billion yen (11% increase from the same period last year) Ordinary profit: 63.5 billion yen (248% increase from the same period last year) Net income: 30.8 billion yen (148% increase from the same period last year) Management conditions during the first half of fiscal 2007 saw general steadydevelopment of the global economy despite high petroleum and materials prices.The Japanese economy as well saw general steady development based on domesticdemand in continued strength of demand for capital expenditures, etc. Under these circumstances, consolidated net sales for this interim period grew9% to 1,791.9 billion yen compared to the same period of the previous fiscalyear, with increased sales in all segments. Consolidated operating Incomeincreased 103% to 93.6 billion yen compared to the same period of the previousfiscal year due to a return to profitability in the Energy and Electric Systemsand Information and Communications Systems segments in addition to increasedprofit in the Industrial Automation Systems and Electronic Devices segments. CONSOLIDATED FINANCIAL RESULTS BY BUSINESS SEGMENT Energy and Electric Systems Total sales: 391.3 billion yen (12% increase from the same period last year) Operating Income: 6.7 billion yen (16.1 billion yen improvement compared to the same period last year, return to profitability) The social infrastructure system business saw increases in both orders and salescompared to the same period of the previous fiscal year due to increases inelectric transmission and distribution related business as well as domesticpower generation business in addition to expansion both domestically and abroadin electric equipment for rolling stock. The building systems business experienced increases in both orders and salescompared to the same period of the previous fiscal year due to increases inlarge domestic projects in new elevators and escalators installations andrefitting as well as increases in initiatives in the Middle East and SoutheastAsia. As a result, total sales for this segment increased 12% from the same period ofthe previous fiscal year. Operating income returned to profitability with animprovement of 16.1 billion yen from the same period of the previous fiscal yeardue to increased sales. Industrial Automation Systems Total sales: 466.2 billion yen (13% increase from the same period last year) Operating income: 65.1 billion yen (20.8 billion yen increase from the same period last year) The factory automation systems business saw increases in both orders and salescompared to the same period of the previous fiscal year due to capitalexpenditures in such areas as flat panel display, semiconductor, and surfacemounting systems mainly in Japan, Korea, China, and Taiwan. The automotive equipment business saw an increase in both orders and salescompared to the same period of the previous fiscal year due to increases inalternators and starters, etc. for domestic and overseas automotivemanufacturers. As a result, total sales for this segment increased by 13% compared to the sameperiod of the previous fiscal year. Operating income increased 20.8 billion yencompared to the same period of the previous fiscal year due to increases insales, etc. Information and Communication Systems Total sales: 304.9 billion yen (14% increase from the same period last year) Operating income: 5.2 billion yen (9.5 billion yen improvement from the same period last year, return to profitability) The telecommunications equipment business saw an increase in both orders andsales compared to the same period of the previous fiscal year due to increasesin third generation mobile handsets for the domestic market. The information systems and services business saw an increase in sales from thesame period of the previous fiscal year due to expansion of our systemintegration business. The electronic systems business saw an increase in both orders and salescompared to the same period of the previous fiscal year due to expansion of oursatellite related ventures. As a result, total sales for this segment increased 14% compared to the sameperiod of the previous fiscal year. Operating income returned to profitabilitywith an increase of 9.5 billion yen compared to the same period of the previousfiscal year due to increased sales, etc. Electronic Devices Total sales: 91.6 billion yen (11% increase from the same period last year) Operating income: 7.2 billion yen (0.7 billion yen increase from the same period last year) The semiconductors business saw a decrease in orders compared to the same periodof the previous fiscal year due to a drop in price of red laser diodes. However,sales increased compared to the same period of the previous fiscal year due toincreases in industrial use power modules and power amplifiers for mobilehandsets, etc. The liquid crystal business saw a decrease in orders compared to the same periodof the previous fiscal year due to a decrease in small-sized products forconsumer use, including mobile handsets, etc. However, sales increased comparedto the same period of the previous fiscal year due to increases in medium sizedproducts mainly for industrial machinery. As a result, total sales for the segment increased 11% compared to the sameperiod of the previous fiscal year. Operating income increased by 0.7 billionyen compared to the same period of the previous fiscal year due to increasedsales, etc. Home Appliances Total sales: 464.9 billion yen (1% increase from the same period last year) Operating income: 15.4 billion yen (1.1 billion yen decrease from the same period last year) The Home Appliances segment saw an increase in sales of 1% compared to the sameperiod of the previous fiscal year due to increases in products for all electricpowered homes like electric water heaters as well as solar power generationsystems and air conditioners for the overseas market, despite reductions in airconditioners for the domestic market, refrigerators, and DVD, etc. Operating income decreased 1.1 billion yen compared to the same period of theprevious fiscal year due to a decline in prices, etc. Others Total sales: 300.8 billion yen (9% increase from the same period last year) Operating income: 6.4 billion yen (0.8 billion yen increase from the same period last year) Sales increased 9% compared to the same period of the previous fiscal yearmainly in our materials procurement and engineering etc. affiliate companies.Operating income increased 0.8 billion yen compared to the same period of theprevious fiscal year due to increased sales, etc. Dividend Mitsubishi Electric will pay a dividend of 4 yen per share out of retainedearnings for the interim of fiscal 2007. cf. Fiscal 2006 dividend was 8 yen pershare (interim dividend of 3 yen per share and a term end dividend of 5 yen pershare) FINANCIAL CONDITION (CONSOLIDATED BASIS) Assets, Liabilities, and Shareholders' Equity The company's total assets declined from the end of the previous fiscal year by4.3 billion yen to 3,309.4 billion yen. While cash and cash equivalentsincreased by 42.5 billion yen, and inventory for the upcoming half-year periodincreased mainly in the Energy and Electric Systems segment to 52.1 billion yen,accounts receivables decreased by 102.7 billion yen due to extensive effort toaccelerate collection of our credits. The balance of outstanding debts fell by 14.0 billion yen from the end of theprevious fiscal year to 679.1 billion yen, with a reduction of its ratio tototal assets down to 20.5% (a reduction by 0.4 point compared to the end of theprevious fiscal year). Trade payables also decreased by 61.5 billion yen.Reserves for retirement and severance benefits increased by 21.5 billion yen dueto an increase in insufficiency of pension funds, etc. brought on by a declinein stock price. And other current liabilities increased 27.1 billion yen due toincreased sales deposits. Shareholders' equity increased by 18.0 billion yen compared to the previousfiscal year to 960.2 billion, with an increase in ratio of shareholders' equityto total assets of 0.6 points compared to the previous fiscal year to 29.0percent. This was the net result of the posting of net income of 56.4 billion onthe one hand, and the dividend payment of 10.7 billion, an increase inallowances for minimum pension liability adjustments and a decrease inunrealized gains on securities on the other hand. Cash Flow Cash flows from operating activities increased by 5.2 billion yen compared tothe same period of the previous fiscal year to 148.7 billion yen (inflow) due toincreased net income and a collection of receivables. Cash flows from investingactivities decreased by 8.1 billion yen compared to same period of the previousfiscal year to 76.0 billion yen (outflow) due to a payment that took place inthe same period of the previous fiscal year for a repurchasing of electrictransmission and distribution related businesses and associated assets as aresult of joint venture dissolution despite an increased spending from capitalexpenditures, etc. Consequently, free cash flow reached revenues of 72.6 billionyen. Cash flows from financing activities were 31.1 billion yen (outflow) due tocontinued debt repayment and bond redemption in order to improve financialstanding. FORECAST FOR FISCAL 2007 (ending March 31. 2007) The domestic and overseas economy is expected to slow down slightly with a slowdown in the U.S. economy. Management environments will not necessarily beoptimistic either with continued concerns of increased petroleum and materialprices. Under these circumstances, the Mitsubishi Electric Group will continue toincrease and strengthen profitability in each business segment. In addition, weare committed to implementing various company wide measures toward improvingbusiness performance and financial standing. The growth strategies will besteadfastly adhered to in the interest of maintaining sustainable growth. The current earnings forecast for Fiscal 2007 are written below. There are nochanges from the revised earnings forecast on September 19, 2006. Current forecast for fiscal 2007: consolidated Net sales: 3,700.0 billion yen (3% increase from the same period last year) Operating income: 180.0 billion yen (14% increase from the same period last year) Income before income taxes: 165.0 billion yen (8% increase from the same period last year) Net income: 120.0 billion yen (25% increase from the same period last year) Current forecast for fiscal 2007: non-consolidated Net sales: 2,320.0 billion yen (5% increase from the same period last year) Ordinary profit: 100.0 billion yen (33% increase from the same period last year) Net income: 65.0 billion yen (34% increase from the same period last year) 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. Fundamental Profit Distribution Policy With the ultimate objective of enhancing corporate value, Mitsubishi Electric'sfundamental policy is to comprehensively improve shareholder profitability bothin terms of profit distribution in response to earnings from the correspondingfiscal year and reinforcement of our financial standing by adding to ourinternal reserves. Policy on Reducing Minimum Stock Purchase Requirement Mitsubishi Electric recognizes that increasing corporate value to expand a baseof long-term and stable investors as one of the most important managerialissues. Mitsubishi Electric has been considering the effects and expensesrelated to reducing the minimum stock purchase requirement and will continue tocarefully study this issue. Corporate Agenda Based on its three point balanced management of "Growth," "Profitability &Efficiency" and "Soundness", the Mitsubishi Electric Group will intensivelypursue a two-tier strategy consisting of the "VI Strategy(1)", which aims atstrengthening individual businesses with objective of "making strong businesseven stronger" and "AD Strategy(1)", which aims at promotion of solutionbusinesses by integrating strong businesses as the nucleus element. We will alsocontinuously improve by strengthening quality, cost competitiveness, andintellectual property as well as productivity, R&D capability, and salesprowess. While also restructuring business segments in response to changingbusiness environments, we strive to create a management base that will continueto strengthen and improve our business performance. Specifically, with an objective of strengthening our integrated "Craftsmanship",we will improve our research and development for software and hardware, exertquality consciousness from the very first stages of design and development,continue to streamline our productivity with such measures like Just In Timeproduction, promote cost reduction activities such as extending scope of ourcost reduction effort to cover very initial stages of design and development ineffective response to raising raw material prices. Further, we are keenly awareof that our human resources are essential in enhancing competitiveness, and wewill endeavor to reallocate our human resources in an appropriate and optimizedorganizational structure so that we can properly cope with the so called 'Year2007'(2) problem. We will improve our financial standing by strengthening ourproductivity by further pursuing such measures as inventory reduction etc. 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 strengthen our operational structure tomanage various businesses, through integration and coordination among variousaspects, including research, development, procurement, production, sales andservices etc. In addition, we will be committed to enhance Corporate Social Responsibility(CSR) efforts based on the Corporate Mission(3) and Seven Guiding Principles(4).Especially, in terms of legal and ethical compliances, we will enrich ourinternal educational efforts and intensively implement internal controlmeasures, as a priority task over the entire consolidated group of MitsubishiElectric Corporation. We will also improve corporate value while responding toexternal environmental changes such as legislative reforms to the CommercialCode. (1)VI, the first two letters of 'Victory'; AD, the first two letters of 'Advance' (2)The year in which the oldest of the baby boomers who were born in 1947 will be reaching the age of 60, the mandatory retirement age in most of the Japanese companies. This is causing various concerns such as sudden reduction in the labor force, inability to pass on professional skills, and rapid drop in office space demands. (3)Corporate 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 HALF-YEAR RESULTS (In billions of yen except where noted) FY '07 1st half FY '06 1st half A/B FY06 (A) (B) (%) Net sales 1,791.9 1,647.8 109 3,604.1 Operating income 93.6 46.0 203 157.7 Income before income taxes 82.4 50.7 163 152.3 Net income 56.4 29.1 194 95.6 Basic net income per share 26.32 yen 13.59 yen 194 44.64 yen Note: 1) Consolidated financial charts made according to U.S. GAAP FY'07 1st half:Apr.1,2006-Sept.30,2006 2) Company has 148 consolidated subsidiaries. FY'06 1st half:Apr.1,2005-Mar. 31,2005 FY'06:Apr.1,2005 - Mar.31,2006 2. NON-CONSOLIDATED HALF-YEAR RESULTS (In billions of yen except where noted) FY'07 1st half FY'06 1st half A/B FY 06 (A) (B) (%) Net sales 1,082.0 979.1 111 2,217.0 Ordinary profit 63.5 18.2 348 75.1 Net income 30.8 12.4 248 48.5 Annual dividend 8 yen 4 yen 3 yenDividend per share 133 (Term-end biannual dividend (Interim dividend) (Interim dividend) 5 yen) Net income per share 14.37yen 5.80yen 248 22.66 yen FY'07 1st half: Apr.1,2006 - Sept.30,2006 FY'06 1st half: Apr.1,2005 - Sept.30,2005 FY'06: Apr.1,2005 - Mar.31,2006 CONSOLIDATED PROFIT AND LOSS STATEMENT (In millions of yen) FY'07 FY'06 FY'06 1st half 1st half (A) % of (B) % of A-B A/B % of total total (%) total Net sales 1,791,982 100.0 1,647,830 100.0 144,152 109 3,604,185 100.0 Cost of sales 1,311,842 73.2 1,235,601 75.0 76,241 106 2,694,985 74.8 Selling, generaland administrative expenses 386,534 21.6 366,229 22.2 20,305 106 751,482 20.8 Operating income 93,606 5.2 46,000 2.8 47,606 203 157,718 4.4 Other income 16,561 0.9 27,548 1.7 (10,987) 60 45,980 1.3 Interest and Dividends 6,325 0.4 4,821 0.3 1,504 131 9,492 0.3 Other 10,236 0.5 22,727 1.4 (12,491) 45 36,488 1.0 Other expenses 27,693 1.5 22,823 1.4 4,870 121 51,372 1.5 Interest 5,076 0.3 4,789 0.3 287 106 9,648 0.3 Other 22,617 1.2 18,034 1.1 4,583 125 41,724 1.2 Income before income taxes 82,474 4.6 50,725 3.1 31,749 163 152,326 4.2 Income taxes 33,650 1.8 27,609 1.7 6,041 122 69,701 1.9 Equity in earnings of affiliated companies 7,668 0.4 5,990 0.4 1,678 128 13,067 0.4 Net income 56,492 3.2 29,106 1.8 27,386 194 95,692 2.7 FY'07 1st half: Apr.1,2006 - Sept.30,2006 FY'06 1st half: Apr.1,2005 - Sept.30,2005 FY'06: Apr.1,2005 - Mar.31,2006 CONSOLIDATED BALANCE SHEETS (In millions of yen) FY'07 FY'06 1st half (A) (B) A-B (ending Sept. (ending March 30,2006) 31,2006) (Assets) Current assets 1,882,872 1,886,779 (3,907) Cash and cash equivalents 347,055 304,514 42,541 Short-term investments 9,138 7,991 1,147 Trade receivables 741,541 843,600 (102,059) Inventories 544,115 491,950 52,165 Prepaid expenses and other current assets 241,023 238,724 2,299 Long-term trade receivables 3,671 4,378 (707) Investments 565,229 584,871 (19,642) Net property, plant and equipment 601,742 589,998 11,744 Other assets 255,914 247,716 8,198 Total assets 3,309,428 3,313,742 (4,314) (Liabilities and shareholders' equity) Current liabilities 1,376,798 1,440,133 (63,335) Bank loans and current portion of long-term debt 218,697 247,595 (28,898) Trade payables 652,866 714,455 (61,589) Other current liabilities 505,235 478,083 27,152 Long-term debt 460,419 445,583 14,836 Retirement and severance benefits 441,868 420,348 21,520 Other fixed liabilities 12,630 13,081 (451) Minority interests 57,493 52,395 5,098 Shareholders' equity 960,220 942,202 18,018 Common stock 175,820 175,820 - Capital surplus 210,927 210,938 (11) Retained earnings 574,001 528,240 45,761 Accumulated other comprehensive income (loss) (74) 27,718 (27,792) Treasury stock at cost (454) (514) 60 Total liabilities and shareholders' equity 3,309,428 3,313,742 (4,314) Balance of Debts 679,116 693,178 (14,062) Accumulated other comprehensive income (loss): Foreign currency translation adjustments 12,230 9,426 2,804 Minimum pension liability adjustments (79,141) (58,695) (20,446) Unrealized gains on securities 66,869 76,970 (10,101) Unrealized gains (losses) on derivative (32) 17 (49) instruments CONSOLIDATED CASH FLOW STATEMENT (In millions of yen) FY'07 FY'06 1st half 1st half A-B FY'06 (A) (B) I Cash flows from operating activities 1 Net income 56,492 29,106 27,386 95,692 2 Adjustments to reconcile net income to net cash provided by operating activities (1) Depreciation of tangible fixed assets and other 67,913 50,835 17,078 135 821 (2) Decrease in deferred income taxes 4,502 13,999 (9,497) 22,796 (3) Decrease(increase) in trade receivables 105,976 117,750 (11,774) (19,359) (4) Decrease(increase) in inventories (48,916) (30,598) (18,318) (9,379) (5) Decrease(increase) in prepaid expenses and other assets 11,708 5,115 6,593 (3,308) (6) Increase(decrease) in trade payables (62,820) (66,930) 4,110 60,170 (7) Increase in other liabilities 15,210 19,605 (4,395) 35,346 (8) Other, net (1,327) 4,569 (5,896) (12,938) Net cash provided by operating activities 148,738 143,451 5,287 304,841 II Cash flows from investing activities 1 Capital expenditure (70,235) (60,023) (10,212) (134,413) 2 Proceeds from sale of property, plant and equipment 3,025 1,979 1,046 5,374 3 Purchase of short-term investments and investment securities (15,186) (17,937) 2,751 (33,590) 4 Proceeds from sale of short-term investments and investment securities 15,402 17,884 (2,482) 32,937 5 Other, net (9,082) (26,103) 17,021 (26,517) Net cash used in investing activities (76,076) (84,200) 8,124 (156,209) I+II Free cash flow 72,662 59,251 13,411 148,632 III Cash flows from financing activities 1 Proceeds from long-term debt 17,100 12,270 4,830 62,675 2 Repayment of long-term debt (40,005) (36,710) (3,295) (100,024) 3 Increase (decrease) in bank loans, net 331 (18,531) 18,862 (43,794) 4 Dividends paid (10,731) (8,584) (2,147) (15,000) 5 Purchase of treasury stock (50) (4,486) 4,436 (4,583) 6 Reissuance of treasury stock 99 57 42 125 7 Other, net 2,107 - 2,107 - Net cash provided by (used in) financing activities (31,149) (55,984) 24,835 (100,601) IV Effect of exchange rate changes on cash and cash equivalents 1,028 2,505 (1,477) 9,920 V Net increase in cash and cash equivalents 42,541 5,772 36,769 57,951 VI Cash and cash equivalents at beginning of period 304,514 246,563 57,951 246,563 VIICash and cash equivalents at the end of period 347,055 252,335 94,720 304,514 FY'07 1st half: Apr.1,2006 - Sept.30,2006 FY'06 1st half: Apr.1,2005 - Sept.30,2005 FY'06: Apr.1,2005 - Mar.31,2006 CONSOLIDATED SEGMENT INFORMATION 1. Sales and Operating Income by Business Segment (In millions of yen) FY '07 1st half FY '06 1st half (A)(B) FY '06 Business Segment % of Operating % of Operating (%) % of Operating Sales (A) total income Sales total income Sales total income (B) (loss) Energy and Electric 391,305 19.4 6,713 347,985 18.8 (9,437) 112 868,789 21.5 25,296Systems IndustrialAutomation 466,294 23.1 65,159 412,998 22.3 44,342 113 860,111 21.3 95,967Systems Information andCommunication 304,937 15.1 5,292 268,638 14.5 (4,277) 114 644,111 15.9 20,677 Systems Electronic Devices 91,637 4.5 7,206 82,919 4.5 6,466 111 170,394 4.2 13,531 Home Appliances 464,979 23.0 15,437 461,941 25.0 16,610 101 896,437 22.2 14,958 Others 300,817 14.9 6,478 275,358 14.9 5,587 109 603,585 14.9 13,342 Subtotal 2,019,969 100.0 106,285 1,849,839 100.0 59,291 109 4,043,427 100.0 183,771 Eliminations andothers (227,987) - (12,679) (202,009) - (13,291) - (439,242) - (26,053) Consolidated Total 1,791,982 - 93,606 1,647,830 - 46,000 109 3,604,185 - 157,718 *Note: Inter-segment sales are included in the above chart FY '07 1st half: Apr. 1,2006 - Sept. 30,2006 FY '06 1st half: Apr. 1,2005 - Sept. 30,2005 FY '06 Apr. 1,2005 Mar.31,2006 2. Sales and Operating Income by Location (In millions of yen) FY '07 1st half FY'06 1st half FY'06 Sales (A) Operating income Sales (B) Operating A/B Sales Operating income income % (loss) (loss) Japan 1,539,185 74,369 1,404,237 21,147 110 3,131,472 123,578 North 134,243 1,970 119,638 (1,010) 112 251,717 (4,100)America Asia(excluding 231,887 14,610 215,795 15,906 107 430,976 29,205Japan) Europe 143,933 5,715 117,673 5,990 122 228,993 8,148 Others 13,641 476 12,248 285 111 27,567 945 Subtotal 2,062,889 97,140 1,869,591 42,318 110 4,070,725 157,776 Eliminations (270,907) (3,534) (221,761) 3,682 - (466,540) (58) Consolidated 1,791,982 93,606 1,647,830 46,000 109 3,604,185 157,718Total * Note: Inter-segment sales are included in the above chart FY'07 1st half: Apr.1, 2006 - Sept. 30, 2006 FY'06 1st half: Apr.1, 2005 - Sept. 30, 2005 FY'06:Apr.1, 2005 - Mar, 31,2006 3. Overseas Sales (In millions of yen) FY'07 1st half FY'06 1st half FY'06 Sales (A) % of total net Sales (B) % of total net A/B %of total net sales sales % Sales sales North America 145,046 8.1 136,583 8.3 106 281,502 7.8 Asia 230,809 12.9 204,027 12.4 113 426,579 11.9(excluding Japan) Europe 165,315 9.2 135,983 8.2 122 270,761 7.5 Others 42,665 2.4 37,935 2.3 112 69,727 1.9 Total 583,835 32.6 514,528 31.2 113 1,048,569 29.1overseas sales FY'07 1st half: Apr.1, 2006 - Sept. 30, 2006 FY'06 1st half: Apr.1, 2005 - Sept. 30, 2005 FY'06:Apr.1, 2005 - Mar, 31,2006 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) 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. (8) 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. (9) Business restructuring The Mitsubishi Electric Group may record losses due to restructuring measures. (10) 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. (11) 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 3,604 billion yen(US$ 30.8billion*) in the fiscal year ended March 31, 2006. For more informationvisit http://global.mitsubishielectric.com * At an exchange rate of 117 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31,2006. This information is provided by RNS The company news service from the London Stock Exchange