3rd Quarter Results

LONDON--(BUSINESS WIRE)--

“Equity in Earnings of Associated Companies - Net (After Income Tax Effect)”

This announcement is for our U.S. $5,000,000,000 Euro Medium Term Note Programme authorised by UKLA on 10th September 2009.

Quarterly Consolidated Financial Statements for the three-month period ended June 30, 2010

English translation of quarterly consolidated financial statements for the three-month period ended June 30, 2010, which were prepared in accordance with U.S. GAAP and filed as part of the Quarterly Securities Report with the Director of the Kanto Local Finance Bureau of the Ministry of Finance of Japan on August 13, 2010.

Financial Highlights

Mitsui & Co., Ltd. and subsidiaries

As of or for the Periods Ended June 30, 2010 and 2009 and as of or for the Year Ended March 31, 2010

Billions of Yen
		Three-month Period ended June 30, 2010		Three-month Period ended June 30, 2009	As of or for the Year ended March 31, 2010
For the Period and the Year:
Revenues	¥	1,098	¥	977	¥		4,096
Gross Profit	¥	223	¥	167	¥		702
Operating Income	¥	90	¥	33	¥		145
Equity in Earnings of Associated Companies―Net	¥	50	¥	31	¥		131
Net Income Attributable to Mitsui & Co., Ltd	¥	103	¥	57	¥		150
Net Cash Provided by Operating Activities	¥	127	¥	209	¥		632
Net Cash Used in Investing Activities	¥	(155)	¥	(23)	¥		(180)
At Period-End and Year-End:
Total Assets	¥	8,205	¥	8,465	¥		8,369
Total Mitsui & Co., Ltd. Shareholders’ Equity	¥	2,128	¥	2,086	¥		2,230
Total Equity	¥	2,334	¥	2,326	¥		2,430
Cash and Cash Equivalents	¥	1,337	¥	1,282	¥		1,401
Long-term Debt, Less Current Maturities	¥	2,933	¥	2,832	¥		2,910
		Yen
Amounts per Share:
Net Income Attributable to Mitsui & Co., Ltd.:
Basic	¥	56.19	¥	31.47		¥		82.12
Diluted	¥	56.19	¥	31.40		¥		82.11
Total Mitsui & Co., Ltd. Shareholders’ Equity	¥	1,165.97	¥	1,145.24		¥		1,222.11

*1. The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America.

*2. Operating income is comprised of our (a) gross profit, (b) selling, general and administrative expenses and (c) provision for doubtful receivables, as presented in the Statements of Consolidated Income.

*3. In accordance with Accounting Standards Codification (“ASC”) 205-20, the figures for the three-month period ended June 30, 2009 relating to discontinued operations have been reclassified.

*4. Tax effects on investments in associated companies which had been formerly included in "Equity in Earnings of Associated Companies - Net (After Income Tax Effect)" were included in "Income Taxes" from the six-month period ended September 30, 2009. At the same time, the line item, "Equity in Earnings of Associated Companies - Net (After Income Tax Effect)" was changed to "Equity in Earnings of Associated Companies - Net." The figures for the three-month period ended June 30, 2009 have been reclassified to conform to the current period presentation.

Consolidated Balance Sheets

Mitsui & Co., Ltd. and subsidiaries

June 30, 2010 and March 31, 2010

	Millions of Yen
	June 30, 2010		March 31, 2010
ASSETS
Current Assets:
Cash and cash equivalents (Notes 1 and 3)	¥	1,337,166	¥	1,401,399
Time deposits		6,574		14,563
Marketable securities (Notes 1, 3 and 14)		4,464		4,361
Trade receivables (Note 4):
Notes and loans, less unearned interest		291,581		293,034
Accounts		1,332,282		1,382,259
Associated companies		172,876		162,166
Allowance for doubtful receivables (Note 1)		(15,586)		(18,423)
Inventories (Notes 1, 4 and 11)		492,513		504,847
Advance payments to suppliers		105,261		96,482
Deferred tax assets―current (Note 1)		58,092		39,809
Derivative assets (Notes 1, 12 and 14)		125,349		114,463
Other current assets		276,168		266,130
Total current assets		4,186,740		4,261,090
Investments and Non-current Receivables (Notes 1 and 4):
Investments in and advances to associated companies (Notes 3, 8 and 14)		1,370,265		1,403,056
Other investments (Notes 3 and 14)		866,919		965,947
Non-current receivables, less unearned interest (Notes 12 and 14)		442,288		453,299
Allowance for doubtful receivables		(46,544)		(48,472)
Property leased to others―at cost, less accumulated depreciation		211,826		224,000
Total investments and non-current receivables		2,844,754		2,997,830
Property and Equipment―at Cost (Notes 1, 2, 4 and 14):
Land, land improvements and timberlands		157,613		158,528
Buildings, including leasehold improvements		356,394		381,029
Equipment and fixtures		1,004,688		979,957
Mineral rights (Note 15)		141,161		132,510
Vessels		30,606		29,709
Projects in progress (Note 15)		163,331		170,218
Total		1,853,793		1,851,951
Accumulated depreciation		(856,418)		(873,391)
Net property and equipment		997,375		978,560
Intangible Assets, less Accumulated Amortization (Notes 1, 2 and 14)		129,715		84,741
Deferred Tax Assets―Non-current (Note 1)		14,933		13,376
Other Assets		31,251		33,387
Total	¥	8,204,768	¥	8,368,984

See notes to consolidated financial statements.

	Millions of Yen
	June 30, 2010		March 31, 2010
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities:
Short-term debt (Note 4)	¥	243,038	¥	241,380
Current maturities of long-term debt (Notes 4 and 12)		254,340		320,480
Trade payables:
Notes and acceptances		34,746		36,831
Accounts		1,266,702		1,307,980
Associated companies		68,522		63,760
Accrued expenses:
Income taxes (Note 1)		44,739		37,604
Interest		21,701		19,177
Other		77,367		71,582
Advances from customers		119,976		110,712
Derivative liabilities (Notes 1, 12 and 14)		95,108		83,972
Other current liabilities (Notes 1 and 10)		94,856		87,289
Total current liabilities		2,321,095		2,380,767
Long-term Debt, less Current Maturities (Notes 4 and 12)		2,932,863		2,909,794
Accrued Pension Costs and Liability for Severance
Indemnities (Note 1)		32,731		33,927
Deferred Tax Liabilities―Non-current (Note 1)		263,785		305,096
Other Long-Term Liabilities (Notes 1, 10, 12 and 14)		319,843		309,594
Contingent Liabilities (Notes 4 and 10)
Equity (Note 6):
Mitsui & Co., Ltd. Shareholders’ equity:
Common stock―no par value		341,482		341,482
Authorized, 2,500,000,000 shares;
Issued, 1,829,153,527 shares in 2010. 6 and 1,829,153,527 shares in 2010. 3
Capital surplus		428,813		428,848
Retained earnings:
Appropriated for legal reserve		60,538		53,844
Unappropriated		1,693,861		1,618,101
Accumulated other comprehensive income (loss) (Note 1):
Unrealized holding gains and losses on available-for-sale securities (Note 3)		67,096		123,891
Foreign currency translation adjustments (Note 12)		(393,060)		(272,665)
Defined benefit pension plans		(47,563)		(49,132)
Net unrealized gains and losses on derivatives (Note 12)		(17,118)		(7,920)
Total accumulated other comprehensive loss		(390,645)		(205,826)
Treasury stock, at cost: 4,420,598 shares in 2010. 6 and 4,331,644 shares in 2010. 3		(6,457)		(6,321)
Total Mitsui & Co., Ltd. shareholders' equity		2,127,592		2,230,128
Noncontrolling interests		206,859		199,678
Total equity		2,334,451		2,429,806
Total	¥	8,204,768	¥	8,368,984

Statements of Consolidated Income

Mitsui & Co., Ltd. and subsidiaries

For the Three-Month Periods Ended June 30, 2010 and 2009

		Millions of Yen
	Three-Month Period Ended June 30, 2010			Three-Month Period Ended June 30, 2009
Revenues (Notes 1, 8, 12 and 14):
Sales of products	¥		969,328	¥	853,626
Sales of services			90,736		90,350
Other sales			37,533		33,467
Total revenues			1,097,597		977,443
Total Trading Transactions (Notes 1 and 8)
Three-month period ended June 30, 2010 …¥ 2,429,690million
Three-month period ended June 30, 2009 …¥ 2,230,683million
Cost of Revenues (Notes 1, 8, 12 and 14)
Cost of products sold			826,188		763,970
Cost of services sold			32,757		30,419
Cost of other sales			15,213		16,297
Total cost of revenues			874,158		810,686
Gross Profit			223,439		166,757
Other Expenses (Income):
Selling, general and administrative (Notes 1 and 5)			132,109		132,458
Provision for doubtful receivables (Note 1)			1,180		815
Interest income (Notes 1 and 12)			(9,440)		(8,435)
Interest expense (Notes 1 and 12)			10,200		14,882
Dividend income			(14,509)		(10,239)
Gain on sales of securities―net (Notes 1, 3 and 6)			(4,174)		(2,220)
Loss on write-down of securities (Notes 1, 3 and 14)			4,577		2,788
Gain on disposal or sales of property and equipment―net			(303)		(261)
Impairment loss of long-lived assets (Notes 1, 14 and 15)			2,090		－
Other income―net (Notes 12 and 15)			(3,710)		(687)
Total other expenses			118,020		129,101
Income from Continuing Operations before Income Taxes
and Equity in Earnings			105,419		37,656
Income Taxes (Notes 1 and 9):			44,348		4,064
Income from Continuing Operations before Equity in Earnings			61,071		33,592
Equity in Earnings of Associated Companies―Net (Notes 1, 8 and 14)			49,911		30,822
Income from Continuing Operations
before Attribution of Noncontrolling Interests			110,982		64,414
Loss from Discontinued Operations―Net
(After Income Tax Effect) (Note 1)			－		(568)
Net Income before Attribution of Noncontrolling Interests			110,982		63,846
Net Income Attributable to Noncontrolling Interests			(8,447)		(6,524)
Net Income Attributable to Mitsui & Co., Ltd	¥		102,535	¥	57,322

	Yen
Net Income Attributable to Mitsui & Co., Ltd. per Share (Notes 1 and 7):	Three-Month Period Ended June 30, 2010		Three-Month Period Ended June 30, 2009
Basic:
Continuing operations	¥	56.19	¥	31.74
Discontinued operations		－		(0.27)
Total	¥	56.19	¥	31.47
Diluted:
Continuing operations	¥	56.19	¥	31.67
Discontinued operations		－		(0.27)
Total	¥	56.19	¥	31.40
See notes to consolidated financial statements.

Statements of Changes in Consolidated Equity

Mitsui & Co., Ltd. and subsidiaries

For the Three-Month Periods Ended June 30, 2010 and 2009

		Millions of Yen
		Three-Month Period Ended June 30, 2010		Three-Month Period Ended June 30, 2009
Common Stock:
Balance at beginning of period
Shares issued: 2010.06―1,829,153,527 shares; 2009.06―1,824,928,240 shares	¥	341,482	¥	339,627
Common stock issued upon conversion of bonds
Shares issued: 2010.06― 0 shares; 2009.06―102,657 shares		-		45
Balance at end of period
Shares issued: 2010.06―1,829,153,527 shares; 2009.06―1,825,030,897 shares	¥	341,482	¥	339,672
Capital Surplus:
Balance at beginning of period	¥	428,848	¥	434,188
Conversion of bonds		－		45
Equity transactions with noncontrolling interest shareholders		(35)		29
Balance at end of period	¥	428,813	¥	434,262
Retained Earnings:
Appropriated for Legal Reserve:
Balance at beginning of period	¥	53,844	¥	48,806
Transfer from unappropriated retained earnings		6,694		1,269
Balance at end of period	¥	60,538	¥	50,075
Unappropriated:
Balance at beginning of period	¥	1,618,101	¥	1,486,201
Net income attributable to Mitsui & Co., Ltd		102,535		57,322
Cash dividends paid to Mitsi & Co., Ltd. shareholders		(20,081)		－
Transfer to retained earnings appropriated for legal reserve		(6,694)		(1,269)
Losses on sales of treasury stock		-		(1)
Balance at end of period	¥	1,693,861	¥	1,542,253
Accumulated Other Comprehensive Income (Loss) (After Income Tax Effect):
Balance at beginning of period	¥	(205,826)	¥	(421,497)
Unrealized holding (losses) gains on available-for-sale securities (Notes 1 and 3)		(56,795)		53,198
Foreign currency translation adjustments (Notes 1 and 12)		(120,395)		84,783
Defined benefit pension plans		1,569		1,596
Net unrealized (losses) gains on derivatives (Notes 1 and 12)		(9,198)		7,097
Balance at end of period	¥	(390,645)	¥	(274,823)
Treasury Stock, at Cost:
Balance at beginning of period	¥	(6,321)	¥	(5,662)
Purchases of treasury stock		(149)		(12)
Sales of treasury stock		13		4
Balance at end of period	¥	(6,457)	¥	(5,670)
Total Mitsui &Co., Ltd. shareholders’ equity	¥	2,127,592	¥	2,085,769

Statements of Changes in Consolidated Equity - (Continued)

Mitsui & Co., Ltd. and subsidiaries

For the Three-Month Periods Ended June 30, 2010 and 2009

		Millions of Yen
		Three-Month Period Ended June 30, 2010		Three-Month Period Ended June 30, 2009
Noncontrolling Interests (Note 6):
Balance at beginning of period	¥	199,678	¥	229,783
Dividends paid to noncontrolling interest shareholders		(4,026)		(6,608)
Net income attributable to noncontrolling interests		8,447		6,524
Unrealized holding (losses) gains on available-for-sale securities (after income tax effect) (Notes 1 and 3)		(6,358)		4,756
Foreign currency translation adjustments (after income tax effect) (Notes 1 and 12)		(5,818)		1,204
Defined benefit pension plans (after income tax effect)		1		(6)
Net unrealized losses on derivatives (after income tax effect) (Notes 1 and 12)		(179)		(36)
Equity transactions with noncontrolling interest shareholders and other		15,114		4,284
Balance at end of period	¥	206,859	¥	239,901
Total Equity:
Balance at beginning of period	¥	2,429,806	¥	2,111,446
Conversion of bonds		－		90
Losses on sales of treasury stock		－		(1)
Net income before attribution of noncontrolling interests		110,982		63,846
Cash dividends paid to Mitsui & Co., Ltd. shareholders		(20,081)		－
Dividends paid to noncontrolling interest shareholders		(4,026)		(6,608)
Unrealized holding (losses) gains on available-for-sale securities (after income tax effect) (Notes 1 and 3)		(63,153)		57,954
Foreign currency translation adjustments (after income tax effect) (Notes 1 and 12)		(126,213)		85,987
Defined benefit pension plans (after income tax effect)		1,570		1,590
Net unrealized (losses) gains on derivatives (after income tax effect) (Notes 1 and 12)		(9,377)		7,061
Sales and purchases of treasury stock		(136)		(8)
Equity transactions with noncontrolling interest shareholders and other		15,079		4,313
Balance at end of period	¥	2,334,451	¥	2,325,670
Comprehensive Income (Loss):
Net income before attribution of noncontrolling interests	¥	110,982	¥	63,846
Other comprehensive income (loss) (after income tax effect):
Unrealized holding (losses) gains on available-for-sale securities (Notes 1 and 3)		(63,153)		57,954
Foreign currency translation adjustments (Notes 1 and 12)		(126,213)		85,987
Defined benefit pension plans		1,570		1,590
Net unrealized (losses) gains on derivatives (Notes 1 and 12)		(9,377)		7,061
Comprehensive (loss) income before attribution of noncontrolling interests		(86,191)		216,438
Comprehensive loss (income) attributable to noncontrolling interests		3,907		(12,442)
Comprehensive (loss) income attributable to Mitsui & Co., Ltd	¥	(82,284)	¥	203,996

See notes to consolidated financial statements.

Statements of Consolidated Cash Flows

Mitsui & Co., Ltd. and subsidiaries

For the Three-Month Periods ended June 30, 2010 and 2009

	Millions of Yen
	Three-Month Period ended June 30, 2010		Three-Month Period ended June 30, 2009
Operating Activities: (Note 1)
Net income before attribution of noncontrolling interests	¥	110,982	¥	63,846
Adjustments to reconcile net income before attribution of noncontrolling interests to net cash provided by operating activities:
Loss from discontinued operations―net (after income tax effect)		-		568
Depreciation and amortization		32,759		34,714
Pension and severance costs, less payments		2,356		2,976
Provision for doubtful receivables		1,180		815
Gain on sales of securities―net		(4,174)		(2,220)
Loss on write-down of securities		4,577		2,788
Gain on disposal or sales of property and equipment―net		(303)		(261)
Impairment loss of long-lived assets		2,090		-
Deferred income taxes		2,276		(16,886)
Equity in earnings of associated companies, less dividends received		(16,107)		15,361
Changes in operating assets and liabilities:
Decrease in trade receivables		15,403		79,318
(Increase) decrease in inventories		(26,423)		17,984
Decrease in trade payables		(7,252)		(39,044)
(Increase) decrease in advance payments to suppliers		(572)		7,456
Decrease in advances from customers		(477)		(12,491)
Other―net		10,566		54,464
Net cash provided by operating activities of discontinued operations		-		102
Net cash provided by operating activities		126,881		209,490
Investing Activities:
Net decrease in time deposits		14,271		372
Investments in and advances to associated companies		(16,009)		(12,566)
Sales of investments in and collection of advances to associated companies		4,599		9,347
Acquisitions of other investments		(22,752)		(11,336)
Proceeds from sales and maturities of other investments		18,428		30,473
Increase in long-term loan receivables		(23,710)		(14,311)
Collection of long-term loan receivables		21,884		17,017
Additions to property leased to others and property and equipment		(65,268)		(46,204)
Proceeds from sales of property leased to others and property and equipment		1,227		4,625
Acquisitions of subsidiaries, net of cash acquired		(106,797)		-
Proceeds from sales of subsidiaries, net of cash held by subsidiaries......		18,693		-
Net cash used in investing activities		(155,434)		(22,583)
Financing Activities :
Net increase (decrease) in short-term debt		22,676		(98,420)
Proceeds from long-term debt		79,859		132,961
Repayments of long-term debt		(102,876)		(96,160)
Transactions with noncontrolling interest shareholders		10,601		(4,408)
Purchases of treasury stock―net		(136)		(8)
Payments of cash dividends		(20,081)		-
Net cash used in financing activities		(9,957)		(66,035)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(25,723)		12,928
Net (decrease) increase in Cash and Cash Equivalents		(64,233)		133,800
Cash and Cash Equivalents at Beginning of Period		1,401,399		1,147,809
Cash and Cash Equivalents at End of Period	¥	1,337,166	¥	1,281,609
See notes to consolidated financial statements.

1. 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 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 Mitsui & Co., Ltd. and subsidiaries’ (collectively, 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, accounting for certain investments including non-monetary exchange of investments and effects of changes in foreign currency exchange rates on foreign-currency-denominated available-for-sale debt securities, accounting for warrants, accounting for pension costs and severance indemnities, recognition of installment sales on the accrual basis of accounting, accounting for consolidation accounting for business combinations, accounting for goodwill and other intangible assets, accounting for asset retirement obligations, accounting for consolidation of variable interest entities, accounting for leasing, accounting for stock issuance costs, and accounting for uncertainty in income taxes.

Total trading transactions, as presented in the accompanying Statements of Consolidated Income, are voluntary disclosures, and represent the gross transaction volume or the aggregate nominal value of the sales contracts in which the companies act as a principal and transactions in which the Company and certain subsidiaries serve as an agent. During the year ended March 31, 2010, the companies changed the reporting of total trading transactions for transactions where the Company and certain subsidiaries serve as an agent, and not as a contracting party, from gross amounts, which included transaction volume exchanged between the contracting parties and commissions earned as an agent; to net amounts, which include only commissions. In relation to this change, amounts for the three-month period ended June 30, 2009 have been reclassified.

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 generally 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.

II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The consolidated financial statements include the accounts of the Company, its majority-owned domestic and foreign subsidiaries, the variable interest entities (“VIEs”) where the Company or one of its subsidiaries is a primary beneficiary, and its proportionate share of the assets, liabilities, revenues and expenses of certain of its oil and gas producing, and mining unincorporated 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 VIEs are defined by ASC 810, “Consolidation.”

The difference between the cost of investments in VIEs which are not a business and the equity in the fair value of the net assets at the dates of acquisition is accounted for as an extraordinary gain or loss while the excess of the cost of investments in other subsidiaries that meet the definition of a business over the equity in the fair value of the net assets at the dates of acquisition is accounted for as goodwill.

Changes in the companies’ ownership interests while retaining their controlling financial interests in their subsidiaries are accounted for as equity transactions. When the companies cease to have their controlling financial interests, any retained investments are remeasured at their fair value at the date the companies cease to have their controlling financial interests, and the difference between the fair value and the carrying amount of the retained noncontrolling investments is recognized as a gain or loss in net income attributable to Mitsui & Co., Ltd.

Certain subsidiaries with a first-quarter-end on or after March 31, but prior to the parent Company’s first-quarter-end of June 30, are included on the basis of the subsidiaries’ respective first-quarter-ends.

Foreign currency translation

The assets and liabilities of foreign subsidiaries and associated companies are translated into Japanese yen at the respective period-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 (loss).

Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at period-end exchange rates with the resulting gains and losses recognized in earnings.

Cash equivalents

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

Allowance for doubtful receivables

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 recorded for all receivables not defined as specific loan 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 a specific-identification basis, or market.

Derivative instruments and hedging activities

In accordance with ASC 815, “Derivatives and Hedging,” 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 their resulting hedge designation. On the Consolidated Balance Sheets, the companies offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement.

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 sales of products or cost of products sold 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 sales of products or cost of products sold when the hedged transactions affect earnings. Changes in the fair value of the ineffective portion are recognized in sales of products or cost of products sold immediately.

Changes in the fair value of derivative commodity instruments, for which hedge requirements are not met, are currently recognized in sales of products or cost of products sold 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 other sales.

Changes in the fair value of all open positions of precious metals traded in terminal (future) markets are recognized in other sales 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 income and 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 income and expense when the hedged transactions affect earnings. Changes in the fair value of the ineffective portion are recognized in interest income and 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, are currently recognized in interest income and 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 other sales.

The companies use derivative instruments and non-derivative financial instruments in order to reduce the foreign currency exposure in the net investment in a foreign operation. The foreign currency transaction gains or losses on these instruments, designated as and effective as hedging instruments, are deferred and recorded as foreign currency translation adjustments within other comprehensive income to the extent they are effective as hedge. These amounts are only recognized in income upon the complete or partial sale of the related investment or the complete liquidation of the investment.

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

The companies classify debt and marketable equity securities, at acquisition, into one of three categories: held-to-maturity, available-for-sale or trading.

Securities are classified as trading securities and carried at fair value only if the companies possess those securities for the purpose of purchase and sale. Unrealized holding gains and losses are included in earnings.

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 related unrealized holding gains and losses reported in accumulated other comprehensive income (loss) in 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 period in which such determination is made. Various factors, such as the extent by which the cost exceeds the market value, the duration of the market decline, the financial condition and near-term prospects of the issuer, and the intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value, are reviewed to judge whether the decline is other than temporary.

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

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, the investment is reduced to its fair value and an impairment loss is recognized. Various factors, such as the financial condition and near-term prospects of the issuer, are reviewed to judge whether it is other than temporary.

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

Investments in associated companies

Investments in associated companies (20% to 50%-owned corporate investees, corporate joint ventures, and less than 20%-owned corporate investees over which the companies have the ability to exercise significant influence) and noncontrolling investments in general partnerships, limited partnerships and limited liability companies are accounted for under the equity method, after appropriate adjustments for inter Company 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.

Leasing

The companies are engaged in lease financing consisting of direct financing leases and leveraged leases, and in operating leases of properties. 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 as other sales 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.

Property and equipment

Property and equipment are stated at cost.

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. Mineral rights are amortized over their respective estimated useful lives using the straight-line method or the unit-of-production method.

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

Significant renewals and additions are capitalized at cost. Maintenance and repairs, and minor renewals and betterments are charged to expense as incurred.

Impairment of long-lived assets

Long-lived assets to be held and used or to be disposed of other than by sale are reviewed, by using undiscounted future cash flows, 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 undiscounted 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 its fair value. 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

In accordance with ASC 805, “Business Combinations,” the acquisition method of accounting which requires the measurement of the fair value of all of the assets and liabilities of an acquired Company, including noncontrolling interests, is used for all business combinations from April 1, 2009. The companies separately recognize and report acquired intangible assets as goodwill or other intangible assets. Any excess of fair value of acquired net assets over cost arising from a business combination is recognized as a gain from a bargain purchase.

Goodwill and other intangible assets

Goodwill is not amortized but tested for impairment annually or more frequently if impairment indicators arise. Identifiable intangible assets with a finite useful life are amortized over their respective estimated useful lives and reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment.” Any identifiable intangible asset determined to have an indefinite useful life is not amortized, but instead tested for impairment in accordance with ASC 350, “Intangibles-Goodwill and Other, ” until its useful life is determined to be no longer indefinite.

Equity method goodwill is reviewed for impairment as part of an other-than-temporary decline in the value of investments in associated companies below the carrying amount in accordance with ASC 323, “Investments-Equity Method and Joint Ventures.”

Oil and gas producing activities

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.

In accordance with ASC 360, proved properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the proved properties are determined to be impaired, an impairment loss is recognized based on the fair value. Unproved properties are assessed annually for impairment in accordance with ASC 932-360-35-11, “Extractive Activities-Oil and Gas―Unproved Properties, ” with any impairment charged to expense. The companies make a comprehensive evaluation and record impairment of unproved property based on undiscounted future net cash flow approach, as well as taking into consideration various factors, such as remaining mining rights periods, examples of sales and purchases in neighboring areas, drilling results and seismic interpretations.

Mining operations

Mining exploration costs are expensed as incurred until the mining project has been established as commercially viable by a final feasibility study. Once established as commercially viable, costs are capitalized as development costs and are amortized using either the unit-of-production method or straight-line method based on the proven and probable reserves.

In open pit mining operations, it is necessary to remove overburden and other waste materials to access mineral deposits. The costs of removing waste materials are referred to as “stripping costs.” During the development of a mine, before production commences, such costs are generally capitalized as part of the development costs. Removal of waste materials continues during the production stage of the mine. Such post-production stripping costs are variable production costs to be considered as a component of mineral inventory costs and are recognized as a component of costs of products sold in the same period as the related revenues from the sales of the minerals. Depending on the configuration of the mineral deposits, the post-production stripping costs could lead to a lower of cost or market inventory adjustment.

Asset retirement obligations

The companies 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 companies capitalize 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.

Pension and severance indemnities plans

The Company and certain subsidiaries have defined benefit pension plans and severance indemnities plans covering substantially all employees other than directors. The costs of defined benefit pension plans and severance indemnities plans are accrued based on amounts determined using actuarial methods. The Company and certain subsidiaries recognize the overfunded or underfunded status of a defined benefit plan as an asset or a liability in the Consolidated Balance Sheets. In addition, the Company and certain subsidiaries have defined contribution pension plans. The costs of defined contribution pension plans are charged to expenses when incurred.

Guarantees

In accordance with ASC 460, “Guarantees,” the companies recognize, at the inception of a guarantee issued on or after January 1, 2003, a liability for the fair value of the obligation undertaken for the guarantee.

Revenue recognition

The companies recognize revenues when they are realized or realizable and earned. Revenues are 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:

Sales of products

Sales of products include the sales of various products as a principal in the transactions, the manufacture and sale of a wide variety of products such as metals, chemicals, foods and general consumer merchandise, the development of natural resources such as coal, iron ore, oil and gas, and the development and sale of real estate. The companies recognize those revenues at the time the delivery conditions agreed with customers are met. These conditions are usually considered to have been met when the goods are received by the customer, the title to the warehouse receipts is transferred, or the implementation testing is duly completed.

For long-term construction contracts such as railroad projects, depending on the nature of the contract, revenues are accounted for by the percentage-of-completion method if estimates of costs to complete and extent of progress toward completion of long-term contracts are reasonably dependable, otherwise the companies use the completed contract method.

The Company and certain subsidiaries enter into buy/sell arrangements, mainly relating to transactions of crude oil and petroleum products. Under buy/sell arrangements, which are entered into primarily to optimize supply or demand requirements, the Company and certain subsidiaries agree to buy (sell) a specific quality and quantity of commodities to be delivered at a specific location and/or time while agreeing to sell (buy) the same quality and quantity of the commodities to be delivered at a different location and/or time to the same counterparty. The buy/sell arrangements are reported on a net basis in the Statements of Consolidated Income.

Sales of services

Sales of services include the revenues from trading margins and commissions related to various trading transactions in which the companies act as a principal or an agent. Specifically, the companies charge a commission for the performance of various services such as logistic and warehouse services, information and communication services, and technical support. For some back-to-back sales and purchase transactions of products, the companies act as a principal and record the net amount of sales and purchase prices as revenues. The companies also facilitate conclusion of the contracts between manufacturers and customers and deliveries for the products between suppliers and customers. Revenues from service related businesses are recorded as revenues when the contracted services are rendered to third-party customers pursuant to the agreements.

Other sales

Other sales principally include the revenues from leasing activities of real estate, rolling stock, ocean transport vessels, equipment and others, the revenues from derivative commodity instruments and derivative financial instruments held for trading purposes, and the revenues from external consumer financing. See accounting policies for leasing and derivative instruments and hedging activities for the revenue recognition policies regarding leasing and derivative transactions, 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.

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 carryforwards 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.

In accordance with ASC 740, “Income Taxes,” the companies recognize and measure uncertainty in income taxes. Interests and penalties incurred in relation to income taxes are reported in current income taxes in the Statements of Consolidated Income.

Net income per share

Basic net income per share attributable to Mitsui & Co., Ltd. is computed by dividing net income attributable to Mitsui & Co., Ltd. by the weighted-average number of common shares outstanding for the period. Diluted net income per share attributable to Mitsui & Co., Ltd. reflects the potential dilution as a result of issuance of shares upon conversion of the companies’ convertible bonds.

III. RECLASSIFICATION

Tax effects on investments in associated companies which were formerly included in “Equity in Earnings of Associated companies―Net (After Income Tax Effect)” are included in “Income Taxes” from the three-month period ended September 30, 2009 and the six-month period ended September 30, 2009. At the same time, the line item, “Equity in Earnings of Associated companies―Net (After Income Tax Effect)” has been changed to “Equity in Earnings of Associated companies―Net.” Amounts for the three-month period ended June 30, 2009 have been reclassified to conform to the current period’s presentation.

Other certain reclassifications and format changes have also been made to amounts for the three-month period ended June 30, 2009 to conform to the current period presentation.

IV. DISCONTINUED OPERATIONS

The companies have the policy of presenting 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 income or loss from discontinued operations—net (after income tax effect). The figures related to the discontinued operations for the year ended March 31, 2010 were reclassified in the Statement of Consolidated Income and the Statement of Consolidated Cash Flows for the three-month period ended June 30, 2009 to conform to the current period presentation.

The figures of discontinued operations for the three-month period ended June 30, 2010 were not reclassified due to their immateriality to the companies’ financial position and results of operations.

Income from continuing operations attributable to Mitsui & Co., Ltd. and loss from discontinued operations―net (after income tax effect) attributable to Mitsui & Co., Ltd. for the three-month period ended June 30, 2009 were ¥ 57,813million and ¥ 491million, respectively.

V. NEW ACCOUNTING STANDARDS

Transfers of financial assets

Effective April 1, 2010, the companies adopted the new provisions in ASC 860, “Transfers and Servicing,” which the FASB issued as ASU 2009-16, “Accounting for Transfers of Financial Assets,” which was formerly SFAS No. 166.

ASU 2009-16 amends the provisions in ASC 860, eliminates the concept of a qualifying special-purpose entity and changes the derecognition requirements of financial assets. The new provisions also enhance disclosure requirements for transfers of financial assets and a transferor’s continuing involvement with transferred financial assets.

The effect of the adoption of these provisions on the companies’ financial position and results of operations was immaterial.

Variable interest entities

Effective April 1, 2010, the companies adopted the new provisions in ASC 810, “Consolidation,” which the FASB issued as ASU 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which was formerly SFAS No. 167, and ASU 2010-10, “Amendments for Certain Investment Funds.”

ASU 2009-17 amends the provisions in ASC 810 to require an entity to determine the need for consolidating a VIE based on qualitative analysis, including whether the entity has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and to assess such needs on an ongoing basis. ASU 2010-10 indefinitely defers the application of provisions amended by ASU 2009-17 for interests in certain investment funds and similar entities.

The effect of the adoption of these provisions on the companies’ financial position and results of operations was immaterial.

2. BUSINESS COMBINATIONS

For the three-month period ended June 30, 2010

The following is the primary business combination, which was completed during the three-month period ended June 30, 2010.

On December 24, 2009, MT Falcon Holdings Company S.A.P.I. de C.V., a 70% owned subsidiary of the Company, entered into a definitive agreement with Gas Natural SDG, S.A. to acquire 100% of its outstanding shares of a portfolio of companies holding five gas-fired combined cycle power stations in Mexico, as well as relevant companies including a pipeline company. This acquisition for ¥111,519 million (U.S. $1,221 million) was closed on June 2, 2010(“acquisition date”). The Company intends to enhance its portfolio of power generating assets through this acquisition.

The Company recorded the provisional amounts for assets acquired and liabilities assumed because the purchase price allocation of the business combination is incomplete as of the issuance date of the consolidated financial statements. The provisional amounts mainly consist of property and equipment and intangible assets of ¥65,230 million and ¥46,704 million, respectively, as of the acquisition date.

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.

For the three-month period ended June 30, 2009

The business combinations which were completed during the three-month period ended June 30, 2009 were immaterial.

3.　MARKETABLE SECURITIES AND OTHER INVESTMENTS

Debt and marketable equity securities

At June 30 and March 31, 2010, the cost, fair value and gross unrealized holding gains and losses on available-for-sale securities and the amortized cost, fair value and gross unrealized holding gains and losses on held-to-maturity debt securities were as follows:

	Millions of Yen
						Unrealized holding gains (losses)
	Cost		Fair value			Gains		Losses		Net
June 30, 2010:
Available-for-sale:
Marketable equity securities (Japan)	¥	223,061	¥	349,926	¥		134,380	¥	(7,515)	¥	126,865
Marketable equity securities (Non-Japan)		36,960		57,159			24,048		(3,849)		20,199
Preferred stock that must be redeemed		77,401		67,449			212		(10,164)		(9,952)
Government bonds		8,024		8,031			7		-		7
Other securities		1,897		1,897			0		-		0
March 31, 2010:
Available-for-sale:
Marketable equity securities (Japan)	¥	212,367	¥	416,844	¥		204,612	¥	(135)	¥	204,477
Marketable equity securities (Non-Japan)		27,212		58,337			32,611		(1,486)		31,125
Preferred stock that must be redeemed		78,940		74,595			271		(4,616)		(4,345)
Government bonds		8,024		8,036			12		-		12
Other securities		1,891		1,891			0		-		0

	Millions of Yen
					Unrealized holding gains (losses)
	Amortized cost		Fair value		Gains		Losses		Net
June 30, 2010:
Held-to-maturity debt securities	¥	1,056	¥	1,056	¥	0		—	¥	0
March 31, 2010:
Held-to-maturity debt securities	¥	117	¥	117	¥	0		—	¥	0

At June 30 and March 31, 2010, the companies did not hold available-for-sale securities, with original maturities of three months or less, included in cash and cash equivalents in the Consolidated Balance Sheets.

At June 30 and March 31, 2010, the fair value and gross unrealized holding losses on available-for-sale securities, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss positions, were as follows:

		Millions of Yen
		Less than 12 months				12 months or more
		Fair value		Unrealized holding losses		Fair value		Unrealized holding losses
June 30, 2010:
Available-for-sale:
	Marketable equity securities	¥	95,639	¥	(11,364)		—		—
	Debt securities, consisting of preferred stock that must be redeemed		—		—	¥	66,353	¥	(10,164)
	Total	¥	95,639	¥	(11,364)	¥	66,353	¥	(10,164)
March 31, 2010:
Available-for-sale:
	Marketable equity securities	¥	27,896	¥	(1,621)		—		—
	Debt securities, consisting of preferred stock that must be redeemed		—		—	¥	73,440	¥	(4,616)
	Total	¥	27,896	¥	(1,621)	¥	73,440	¥	(4,616)

The companies’ investments in available-for-sale securities in an unrealized holding loss position consisted primarily of marketable equity securities and preferred stock that must be redeemed. The unrealized losses on marketable equity securities were due principally to a temporary decline in the stock market. The companies evaluated the near-term prospects of the issuer of the equity securities in relation to the severity and duration of impairment. Based on that evaluation and the companies’ ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the companies did not consider these investments to be other-than-temporarily impaired at June 30, 2010.

The unrealized losses on preferred stock that must be redeemed were due to a devaluation of foreign currencies against the yen in the foreign exchange market. For current portion of the preferred stock, losses on write-down recognized to reflect the devaluation of foreign currencies considered to be other-than-temporary. For non-current portion, the companies evaluated the prospects of the foreign exchange market for the period of maturity of the stock. Based on that evaluation, the companies did not consider this portion to be other-than-temporarily impaired at June 30, 2010.

For the three-month periods ended June 30, 2010 and 2009, losses of ¥3,612 million and ¥104 million, respectively, were recognized on write-downs of available-for-sale securities to reflect the decline in market value considered to be other-than-temporary.

The portion of net trading gains and losses for the three-month periods that relates to trading securities still held at June 30, 2010 and 2009 were as follows:

	Millions of Yen
	June 30, 2010		June 30, 2009
Net trading losses	¥	(6)	¥	(2)

The proceeds from sales of available-for-sale securities and the gross realized gains and losses on those sales for the three-month periods ended June 30, 2010 and 2009 are shown below:

	Millions of Yen
	June 30, 2010		June 30, 2009
Proceeds from sales	¥	1,342	¥	2,135
Gross realized gains	¥	621	¥	712
Gross realized losses		(41)		(2)
Net trading gains	¥	580	¥	710

Debt securities classified as available-for-sale and held-to-maturity at June 30, 2010 mature as follows:

		Millions of Yen
		Available-for-sale				Held-to-maturity
		Amortized cost		Aggregate fair value		Amortized cost		Aggregate fair value
Contractual maturities:
Within 1 year		¥	8,660	¥	9,033	¥	47	¥	47
After 1 year through 5 years			70,149		60,862		107		107
After 5 years through 10 years			8,513		7,482		—		—
After 10 years			—		—		902		902
	Total	¥	87,322	¥	77,377	¥	1,056	¥	1,056

The actual maturities may differ from the contractual maturities shown above because certain issuers may have the right to redeem debt securities before their maturity.

Investments other than debt and marketable equity securities

Investments other than investments in debt and marketable equity securities consisted primarily of non-marketable equity securities and non-current time deposits and amounted to ¥451,149 million and ¥482,930 million at June 30 and March 31, 2010, respectively. The estimation of the corresponding fair values at those dates was not practicable, as the fair value for all the individual non-marketable securities held by the companies was not readily determinable at each balance sheet date.

Investments in non-marketable equity securities are carried at cost; however, if the fair value of an investment has declined and such decline is judged to be other-than-temporary, the investment is written down to its estimated fair value.

Losses on write-downs of these investment securities recognized to reflect the declines in fair value considered to be other-than-temporary were ¥965 million and ¥2,684 million, for the three-month periods ended June 30, 2010 and 2009, respectively.

The aggregate carrying amount of the companies’ non-marketable equity securities accounted for under the cost method totaled ¥403,342 million and ¥434,194 million at June 30 and March 31, 2010, respectively.

4. PLEDGED ASSETS AND FINANCIAL ASSETS ACCEPTED AS COLLATERAL

Pledged assets

At June 30, 2010 and March 31, 2010, 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
	June 30, 2010	March 31, 2010
Trade receivables (current and non-current)	¥ 86,438	¥ 92,004
Inventories	7,860	2,927
Investments	193,853	217,672
Property leased to others (net book value)	34,641	44,457
Property and equipment (net book value)	23,818	23,761
Other	2,722	9,079
Total	¥ 349,332	¥ 389,900

The distribution of such collateral among short-term debt, long-term debt, and financial guarantees and other was as follows:

		Millions of Yen
		June 30, 2010	March 31, 2010
Short-term debt		¥ 14,766	¥ 15,311
Long-term debt		128,941	145,693
Financial guarantees and other		205,625	228,896
	Total	¥ 349,332	¥ 389,900

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.

　In addition to the above, the Company has bank borrowings under certain provisions of loan agreements which require the Company, upon the request of the bank, immediately to provide collateral, which is not specified in the loan agreements.

Financial assets accepted as collateral

At June 30, 2010 and March 31, 2010, 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
	June 30, 2010	March 31, 2010
Bank deposits	¥ 958	¥ 899
Trade receivables—accounts	842	608
Stocks and bonds	4,432	4,906

There were no financial assets repledged or accepted as collateral under security repurchase agreements at June 30, 2010 or March 31, 2010.

5. PENSION COSTS AND SEVERANCE INDEMNITIES

Net periodic pension costs of the companies’ defined benefit pension plans for the three-month periods ended June 30, 2010 and 2009 included the following components:

	Millions of Yen
	Three-month period ended
	June 30, 2010	June 30, 2009
Service cost―benefits earned during the period	¥ 2,155	¥ 2,434
Interest cost on projected benefit obligation	1,593	1,582
Expected return on plan assets	(2,006)	(1,965)
Amortization of prior service cost	51	(16)
Amortization of net actuarial loss	1,867	3,178
Curtailment gain	(4)	－
Net periodic pension costs	¥ 3,656	¥ 5,213

6. EQUITY

Equity transactions with noncontrolling interest shareholders

During the three-month periods ended June 30, 2010 and 2009, changes in noncontrolling interests due to equity transactions with noncontrolling interest shareholders were as follows:

	Millions of Yen
	Three-month period ended
	June 30, 2010	June 30, 2009
Increase in noncontrolling interests due to transfers of Mitsui & Co., Ltd's ownership interests in its subsidiaries to noncontrolling interests	¥2,198	¥1,594
(Decrease) increase in noncontrolling interests due to transfers of ownership interests in Mitsui & Co., Ltd's subsidiaries from noncontrolling interests	(9)	366

Increase of a noncontrolling interest due to the consolidation of a subsidiary

During the three-month period ended June 30, 2010, ¥12,602 million of a noncontrolling interest was recorded in equity transactions with noncontrolling interest shareholders and other in the Statements of Changes in Consolidated Equity, as a result of the consolidation of MT Falcon Holdings Company S.A.P.I. de C.V. (“MT Falcon”), with the Company’s 70% ownership interest. See Note 2, “BUSINESS COMBINATIONS,” for further information regarding MT Falcon’s acquisition of gas-fired power business.

Gains recorded due to the deconsolidation of subsidiaries

During the three-month period ended June 30, 2010, the companies deconsolidated certain subsidiaries and recognized pre-tax gains of ¥2,346 million, which were included in gains on sales of securities―net in the Statements of Consolidated Income. Of the total gains of ¥2,346 million, ¥1,554 million was recorded as a result of the remeasurement of the retained investments in the former subsidiaries to their fair values.

7. NET INCOME ATTRIBUTABLE TO MITSUI & CO., LTD. PER SHARE

The following is a reconciliation of basic net income attributable to Mitsui & Co., Ltd. per share to diluted net income attributable to Mitsui & Co., Ltd. per share for the three-month periods ended June 30, 2010 and 2009:

	Three-Month Period Ended June 30, 2010			Three-Month period ended June 30, 2009
	Net income (numerator)	Shares (denominator)	Per share amount	Net income (numerator)	Shares (denominator)	Per share amount
	Millions of Yen	In Thousands	Yen	Millions of Yen	In Thousands	Yen
Basic Net Income Attributable to Mitsui & Co., Ltd. per Share:
Income from continuing operations	¥102,535	1,824,779	¥56.19	¥57,813	1,821,192	¥31.74
Loss from discontinued operations -net (after income tax effect)	－	－	－	(491)	1,821,192	(0.27)
Net income	102,535	1,824,779	56.19	57,322	1,821,192	31.47
Effect of Dilutive Securities:
Japanese yen convertible bonds	―	―		6	4,286
Adjustment of effect of dilutive securities of associated companies	(1)	―		(1)	―
Diluted Net Income Attributable to Mitsui & Co., Ltd. per Share:
Income from continuing operations	102,534	1,824,779	56.19	57,818	1,825,478	31.67.
Loss from discontinued operations -net (after income tax effect)	－	－	－	(491)	1,825,478	(0.27)
Net income after effect of dilutive securities	¥102,534	1,824,779	¥56.19	¥57,327	1,825,478	¥31.40

8. SEGMENT INFORMATION

	Millions of Yen
Three-month period ended June 30, 2010 :	Iron & Steel Products	Mineral & Metal Resources	Machinery & Infrastructure Projects	Chemical	Energy	Foods & Retail	Consumer Service & IT	Logistics & Financial Markets
Revenues	¥29,831	¥114,598	¥60,124	¥206,944	¥246,151	¥141,488	¥34,080	¥17,986
Gross profit	¥10,162	¥47,854	¥23,518	¥16,919	¥51,150	¥18,695	¥12,108	¥10,414
Operating income (loss)	¥2,416	¥43,436	¥2,647	¥5,264	¥36,825	¥3,017	(¥2,408)	¥3,221
Equity in earnings (losses) of associated companies - net	¥739	¥23,420	¥8,738	¥759	¥9,481	(¥189)	¥2,008	¥2,659
Net income attributable to Mitsui & Co., Ltd	¥2,335	¥39,695	¥6,567	¥3,156	¥32,564	¥1,665	¥4,228	¥1,175
Total assets at June 30, 2010	¥455,819	¥883,742	¥1,397,524	¥585,497	¥1,361,678	¥607,398	¥512,630	¥377,324
Investments in and advances to associated companies at June 30, 2010	¥23,295	¥438,575	¥330,301	¥31,517	¥140,608	¥83,705	¥99,075	¥63,115
Depreciation and amortization	¥665	¥2,777	¥2,424	¥1,682	¥17,490	¥1,637	¥1,295	¥831
Additions to property leased to others and property and equipment	¥238	¥10,095	¥10,024	¥3,249	¥29,072	¥3,238	¥557	¥3,055

	Millions of Yen
Three-month period ended June 30, 2010 :	Americas	Europe, the Middle East and Africa	Asia Pacific	Total	All Other	Adjustments and Eliminations	Consolidated Total
Revenues	¥182,424	¥32,951	¥30,544