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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer

Interim Business Report Covering the First Half of the 85th Fiscal Year

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of December 8, 2003

Commission File Number 09929

MITSUI & CO., LTD.
(Translation of registrant’s name into English)

2-1, Ohtemachi 1-chome Chiyoda-ku, Tokyo 100-0004 Japan
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F     x         Form 40-F         

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):                       

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):                       

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes                   No     x

     If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                      

 

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To Our Shareholders
Business Report
	Operating Environment
	Management Policies and Business Operations
	Operating Performance
	Trends in Company Performance (Non-Consolidated)
	Trends in Company Performance (Consolidated)
Major Activities
Corporate Data
	Major Offices
	Number of Employees
	Shares
	Information on Directors and Corporate Auditors of the Company
	Managing Officers
Balance Sheets
Statements of Income
Results of Operations (Consolidated Basis)
Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets
	Condensed Consolidated Statements of Income
	Condensed Consolidated Statements of Cash Flows
Operating Segment Information (Unaudited)
Shareholder Information

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 8, 2003

 

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INTERIM BUSINESS REPORT

Enclosed Herewith Is Our Interim Business
Report Covering the First Half of the 85th
Fiscal Year.

MITSUI & CO., LTD.

 

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To Our Shareholders

We are pleased to present this report on the business activities of Mitsui & Co., Ltd. (Mitsui), to our shareholders, covering the period from April 1 through September 30, 2003 (the interim period of the Company’s 85th fiscal year).

     During the interim period under review, net income on a non-consolidated basis amounted to ¥6.4 billion, below the level for the same period of the previous fiscal year. However, on a consolidated basis, net income was ¥25.8 billion, representing an increase year on year. We plan to pay a dividend of ¥4 per common share for the interim period, the same as for the interim period of the previous year.

     As during the first half of the current fiscal year, the entire management and staff intend to continue to unite their efforts to enhance profitability. Accordingly, we look forward to your continuing support and assistance.

December 2003

Shoei Utsuda
President and Chief Executive Officer

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Business Report

(For the interim period April 1, 2003, to September 30, 2003)

RESULTS OF OPERATIONS

OPERATING ENVIRONMENT

The interim period under review began with a high level of uncertainty about future trends because of concerns about the outbreak of war in Iraq and the SARS epidemic. However, by summer, both of these two concerns had largely receded in importance without having a major impact on the world economy. During the latter half of the period, the global economy began to move toward recovery, and, in Japan as well, there was a sense of slight improvement in economic conditions. In addition, stock prices worldwide began to rise, and, boosted by strong demand in China, international commodity prices—including those of crude oil, non-ferrous metals, and grains—exceeded the levels of the previous year.

     The war in Iraq and the SARS epidemic forced Japanese companies to pay more attention to the issue of security at their overseas offices and during business trips outside Japan. Other significant developments related to management included active discussions about corporate governance structures, and some companies adopted a “Committee System” under the revised Commercial Code of Japan. Along with these trends, issues of corporate social responsibility (CSR) and establishing better compliance systems also attracted attention.

     In the Japanese economy, the unemployment rate remained at a high level by historical standards and economic conditions were still challenging. But growth in exports to other countries in Asia, especially China, remained strong, and the markets for digital appliances, including LCD TV sets and digital cameras, continued to expand. Moreover, the recovery in stock prices provided support for the economy and contributed to an improvement in business confidence. Although concerns have been expressed again about the sharp appreciation of the yen since August, there are growing hopes that recovery led by domestic demands will begin in the near future as corporations continue to restructure their core businesses and develop new markets and financial institutions continue to take effective measures against non-performing loan problems.

MANAGEMENT POLICIES AND BUSINESS OPERATIONS

Mitsui’s Medium-Term Strategic & Financial Plan, issued in May 2001, sets the objective of becoming “the world’s strongest Comprehensive Business Engineering Enterprise.” To attain this goal, Mitsui is implementing policies to allocate its resources strategically, increase profitability, and create new value. Specific initiatives include the following:

1. Enhancing Systems to Earn the Trust and Confidence of Society

Mitsui is working to maximize shareholder value by fulfilling its responsibilities as a corporate citizen and meeting high standards of excellence for its work that will make it an indispensable business partner in Japan and the rest of the world. To attain these objectives, Mitsui is conducting its activities with the utmost commitment to achieving harmony between corporate profitability and social responsibility. Through continuing disclosure regarding its activities, Mitsui endeavors to respond to the trust of its shareholders, customers, and society. Each and every staff member shares this objective and is committed to contributing to Mitsui’s business position and performance as it moves into the 21st century.

2. Creating New Management Frameworks

While maintaining the delegation of authority to the operating level, which was achieved under the group president system introduced in the previous fiscal year, Mitsui has made the organizational changes described below, to support agile and strategic decision making, enhance transparency, and strengthen its business development and implementation capabilities.

     Specific measures adopted include the elimination of the group president system, resulting in a flatter organization that permits direct interfacing between the CEO and unit chief operating officers (unit COOs), and the expansion of the authority delegated to unit COOs to a level comparable with that of the former group presidents. Similarly, within the corporate administrative organization, Mitsui has eliminated certain bundlings of staff groups while also aiming for a more professional, smaller corporate organization.

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3. Allocating Resources Strategically

Some of Mitsui’s key initiatives to allocate its resources strategically have included the following:

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In the areas of natural resources and energy, Mitsui has invested in Valepar S. A., the controlling shareholder of Brazil’s Companhia Vale do Rio Doce, which is one of the world’s largest owners of iron ore resources and operates in various other mineral resources, and made the decision to proceed with the second phase of development of the Sakhalin LNG project.

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Establishment of the Financial Markets Business Unit, which combines the financial expertise formerly dispersed throughout the Company into a single unit

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Strengthening of food product distribution/logistics activities through an injection of capital into Sanyu Koami Co., Ltd.

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In the field of emerging technologies, Mitsui has succeeded in bringing a biomass ethanol plant into operation in Brazil and established Nanotech Park in Tsukuba.

OPERATING PERFORMANCE

As a result of conditions in the operating environment and Mitsui’s own initiatives, the Company reported sales on a non-consolidated basis of ¥4,908.8 billion for the interim period under review, representing an increase year on year of ¥475.5 billion. This increase was supported by the expansion in transactions of the Machinery, Electronics & Information; Energy; Chemical; and other segments across the board.

     Gross profit expanded ¥2.9 billion year on year, to ¥106.7 billion, due primarily to growth in the Chemical; Energy; and Machinery, Electronics & Information segments.

     Although selling, general and administrative (SG&A) expenses rose, principally because of an increase in employee severance costs, the increase in SG&A expenses was offset by an increase in dividends received and other factors. As a result, ordinary profit for the interim period under review rose ¥8.0 billion, to ¥37.5 billion.

     During the interim period, Mitsui continued its review of loans and investments in affiliated companies. While continuing to report gains from the sale of investment securities, Mitsui also worked to maintain the soundness of its assets by recognizing evaluation losses on certain investment securities and making provisions for doubtful receivables. In addition, Mitsui recognized losses on the devaluation of tangible assets, related to certain real estate assets, including Company housing and dormitories earmarked for future sale. As a consequence, net extraordinary gains and losses amounted to a loss of ¥27.5 billion.

     As a result of the above factors, after the subtraction of current income taxes as well as adjustments for deferred income taxes, interim net income amounted to ¥6.4 billion, ¥2.1 billion lower than for the interim period of the previous fiscal year.

     For further information on consolidated financial performance, please see the table “Trends in Company Performance (Consolidated)” on the following page and “Condensed Consolidated Financial Statements” in the final section of this report.

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Trends in Company Performance (Non-Consolidated)

Notes: 1.		Net income per share was computed based on the average number of shares outstanding for the period. Beginning with the 84th semiannual year, the average number of shares for the period was calculated based on the number of shares issued minus treasury stock.
2.		Figures less than ¥1 million and figures less than ¥1/100 (in the case of net income per share) are truncated.

Trends in Company Performance (Consolidated)

(Unaudited)

Notes: 1.		These financial data have been prepared on the basis of accounting principles generally accepted in the United States of America (“U.S. GAAP”).
		Total trading transactions and operating income for the interim period under review have been presented according to Japanese accounting practices for the convenience of Japanese investors. Total trading transactions represents the gross transaction volume or the nominal aggregate value of the sales contracts in which the Company and its subsidiaries act as principal and transactions in which the Company and its subsidiaries serve as agent.
		Condensed consolidated financial statements can be found at the end of this report.
2.		In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the figures for the last three corresponding periods relating to discontinued operations have been reclassified.
3.		In consideration of a consensus relating to the presentation of gains and losses on derivative instruments held for trading purposes by the Emerging Issues Task Force under U.S. GAAP, all gains and losses on forward contracts held by certain foreign subsidiaries for trading purposes for crude oil and oil products, which are also derivatives, are shown net in total trading transactions effective April 1, 2003. In relation to this change, the figures for the last three corresponding periods have been restated.

Operating Income and Net Income (Consolidated)

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Major Activities

To realize its objective of becoming “the world’s strongest Comprehensive Business Engineering Enterprise,” Mitsui will continue to implement the following business policies:

1. Strengthen Core Businesses

Mitsui is continuing to implement a policy of selectivity and concentration in the allocation of its corporate resources. As part of this policy, Mitsui is endeavoring to substantially strengthen its core businesses, which are its core sources of earnings. These comprise, in particular, resource development, including energy and metals, as well as chemicals, machinery and project engineering, steel, and foods.

2. Developing New Businesses

Mitsui is allocating its corporate resources to create next-generation sources of earnings with the aim of sustaining growth into the future. These activities include strengthening Mitsui’s capabilities for applying strategic business development methods, including the formation of alliances and M&A with partner companies in Japan and overseas, newly entering into a comprehensive range of outsourcing service businesses, carving out new business niches through applying cutting-edge biotechnology and nanotechnology, and making investments in venture businesses and ongoing concerns.

3. Increasing Consolidated Enterprise Value

Mitsui is strengthening its consolidated capabilities through optimal Group management by working closely with its associated companies.

     Specifically, beginning in spring 2003, Mitsui has been making a thorough review of the concentrated initiatives to evaluate associated companies now in progress and, while taking steps to strengthen its corporate grip, proceeding with a selective examination of its associated companies to focus on assets and businesses that will yield higher profitability.

4. Executing a Global Strategy

With the entry of China into the WTO, the presence of the Greater China Sphere—comprising mainland China, Hong Kong, and Taiwan—has been strengthened. Moreover, other countries in Asia, broadly defined, including AFTA (the ASEAN Free Trade Area), are aiming to further expand their markets by promoting free trade with Japan and the Greater China Sphere. Mitsui is aiming for global expansion in earnings through the concentrated allocation of human resources under the greater China representative system it instituted in April 2003, through the formation of alliances to create a broad range of business opportunities with the partner in these areas, and draw fully on its extensive network, which is the strongest in the region.

5. Implementing Management Reforms

Mitsui is moving forward on a Companywide basis with its Business Re-Engineering Project, which aims to review its business processes and achieve a balance between efficiency and internal controls. Through the implementation of this project, Mitsui aims to create new value by standardizing best practices throughout the Company, realizing greater productivity through the introduction of a common information infrastructure that will contribute to faster decision making and the sharing of synergies (knowledge).

     As part of this project, to strengthen business development capabilities and improve efficiency, Mitsui is planning a transition from the current management system in Japan—where its subsidiaries and branches operate as independent profit centers—to a profit center system organized by product along the lines of the operating units.

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Corporate Data
(As of September 30, 2003)

MAJOR OFFICES

Note:

The Company has local overseas subsidiaries in various parts of the world (Mitsui & Co. (U.S.A.), Inc.; Mitsui & Co. Europe PLC; Mitsui & Co. (Middle East) E.C.; and Mitsui & Co., (Australia) Ltd.).

NUMBER OF EMPLOYEES

Note: The above figure for the number of employees includes 1,148 people seconded to other companies. In addition to this staff, Mitsui employs 991 foreign nationals at its overseas offices and 2,279 foreign nationals at its overseas subsidiaries.

SHARES

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Information on Directors and Corporate Auditors of the Company
(As of November 2003)

Notes: 1.		Akishige Okada is the external Director, as provided for in Item 7-2, Clause 2, Article 188 of the Commercial Code of Japan. Ko Matsukata, Minoru Suzuki and Yasutaka Okamura are the external Corporate Auditors, as provided for in Clause 1, Article 18, of the “Law Concerning Special Measures under the Commercial Code with Respect to Audit, etc. of Corporations.” Makoto Ejima and Hiroshi Matsuura are the Corporate Auditors as provided for in Clause 2, Article 18, of the aforementioned law.
2.		Representative directors are indicated with an asterisk.

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Managing Officers

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     Note: *Concurrently serving as a director.

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Balance Sheets
(March 31 and September 30, 2003)

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Notes: 1.		Figures are rounded down to the nearest million yen.
2.		For the interim period under review, the amounts of the items listed below were as follows:
		1)		Accumulated depreciation of tangible assets: ¥105,423 million
		2)		Assets pledged as security: ¥75,127 million
		3)		Guarantees and contingent liabilities:
				(1)		Guarantees: ¥1,039,818 million (including ¥153,112 million of commitments and other letters similar to guarantees)
				(2)		Notes receivable discounted: ¥53,697 million

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Statements of Income
(Six-month periods ended September 30, 2003 and 2002)

     

     Notes: 1. Figures are rounded down to the nearest million yen.
                 2. Net income per share for the interim period under review: ¥4.04

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Results of Operations (Consolidated Basis)

Total Trading Transactions

The Company’s consolidated total trading transactions rose ¥490.9 billion, or 9.0% year on year, to ¥5,949.9 billion, for the interim period under review. This increase was due to higher levels of transactions in the Machinery, Electronics & Information segment, where industrial plant exports and shipping reported strong performances; the Energy segment, where the volume of LNG handled expanded; the Chemical segment, where markets for petrochemicals were firm; and other areas.

Profits

Revenue—gross trading profit increased ¥18.9 billion year on year, to ¥293.6 billion, supported principally by higher transactions in the Chemical and Machinery, Electronics & Information segments. Operating income rose ¥2.6 billion year on year, to ¥50.2 billion, as the Company reported lower provisions for doubtful receivables to provide for country risk and aircraft-related assets but also recorded higher SG&A expenses, owing to higher employee severance costs and other expenses related to newly consolidated subsidiaries.

     Among other income and expense items, miscellaneous expenses rose due to payments for the settlement of antitrust lawsuits in the United States and other costs. However, net financial income and expenses showed improvement, net gains on the sale of securities increased, and net valuation losses on securities declined. As a result of these factors, other loss—net showed an improvement of ¥1.8 billion, to ¥11.5 billion.

     Equity in earnings of associated companies—net (after income tax effect) expanded ¥4.3 billion, to ¥16.1 billion. Although contributions to equity in earnings of overseas food product related companies declined, equity in earnings of associated companies in the energy and metal resources fields remained strong. In addition, write-downs of goodwill accompanying the decline in stock prices that were reported as a temporary factor in the same interim period of the previous year related to investments in associated domestic companies were absent from the results for the interim period under review, thus also contributing to improvement in profitability.

     As a result of these factors, and after deducting a loss from discontinued operations amounting to ¥1.0 billion and the loss resulting from the cumulative effect of applying SFAS No. 143, “Accounting for Asset Retirement Obligations” of ¥2.3 billion, net income for the interim period under review rose ¥1.0 billion year on year, to ¥25.8 billion.

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Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets
(March 31 and September 30, 2003)

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Note:

The Company and its subsidiaries changed their policy concerning which items are treated as cash equivalents on April 1, 2003. In relation to this change, the figures as of March 31, 2003 have been restated.

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Condensed Consolidated Statements of Income (Unaudited)
(Six-month periods ended September 30, 2003 and 2002)

Notes: 1.		Total trading transactions and operating income have been presented according to Japanese accounting practices for the convenience of Japanese investors.
		Total trading transactions represents the gross transaction volume or the nominal aggregate value of the sales contracts in which the Company and its subsidiaries act as principal and transactions in which the Company and its subsidiaries serve as agent.
2.		In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the figures for the six-month period ended September 30, 2002 relating to discontinued operations have been reclassified.
3.		In consideration of a consensus relating to the presentation of gains and losses on derivative instruments held for trading purposes by the Emerging Issues Task Force under U.S. GAAP, all gains and losses on forward contracts held by certain foreign subsidiaries for trading purposes for crude oil and oil products, which are also derivatives, are shown net in total trading transactions effective April 1, 2003. In relation to this change, the figures for the six-month period ended September 30, 2002 have been restated.
4.		On April 1, 2003, the Company and its subsidiaries adopted SFAS No. 143, “Accounting for Asset Retirement Obligations.” The Company and its subsidiaries recognized the cumulative effect of initially applying SFAS No. 143 as a separate line item in the Statements of Consolidated Income under “Cumulative Effect of Change in Accounting Principle (After Income Tax Effect),” which represents the difference between the amounts recognized in the Consolidated Balance Sheets prior to the application of SFAS No. 143 and the net amount that is recognized in the Consolidated Balance Sheets pursuant to the provisions of SFAS No. 143 for the asset retirement obligations and related costs as of April 1, 2003.

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Condensed Consolidated Statements of Cash Flows (Unaudited)
(Six-month periods ended September 30, 2003 and 2002)

Notes: 1.		In accordance with SFAS No. 144, the figures for the six-month period ended September 30, 2002 relating to discontinued operations have been reclassified.
2.		The Company and its subsidiaries changed their policy concerning which items are treated as cash equivalents on April 1, 2003. In relation to this change, the figures for the six-month period ended September 30, 2002 have been restated.

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Operating Segment Information (Unaudited)

The Company allocates its resources and evaluated performance by operating group, defined based on the nature of products and services transacted by the Head Office and other considerations, with domestic and overseas branches and offices and overseas trading subsidiaries as management units. These management units are then classified into five product segments (classification units) and four geographical segments (classification units).

Six-month period ended September 30, 2003

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Six-month period ended September 30, 2002

Notes: 1.		In accordance with SFAS No. 144, the figures for the six-month period ended September 30, 2002 relating to discontinued operations have been reclassified. The reclassifications to “Loss from Discontinued Operations—Net (After Income Tax Effect)” are included in “Corporate and Eliminations.”
2.		“Corporate and Eliminations” includes items pertaining to the Headquarters and companies affiliated with the Headquarters and items not allocated to the segments. Net loss of “Corporate and Eliminations” for the six-month period ended September 30, 2003 includes ¥6,049 million in pension-related costs and ¥7,761 million in impairment losses of long-lived assets (all amounts are after income tax effects).
3.		Total assets of “Corporate and Eliminations” at September 30, 2003 and 2002 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.
4.		Transfers between operating segments are made at cost plus a markup.
5.		All gains and losses on forward contracts held by certain foreign subsidiaries for trading purposes for crude oil and oil products, which are also derivatives, are shown net in total trading transactions effective April 1, 2003. In relation to this change, the figures for six-month period ended September 30, 2002 have been restated.

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Shareholder Information

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