During the period under review, the Japanese economy became steadily worse month by month due to a simultaneous worldwide economic depression and greatly reduced demand for IT-related products, which led to lower production, decreased investment activities and weak consumer spending. Furthermore, prices of products and services fell in the midst of worldwide deflation.
In this severe management environment, energy and electric systems and home appliance sales held firm. However, due to a sudden and extreme downturn in IT-related demand, electronic devices businesses (such as semiconductors) and information communication systems businesses (such as mobile phones) met worsened profitability conditions. Mitsubishi Electric also bore restructuring costs for operations outside Japan.

Cash Flow
For free cash flow in the period under review, spending amounted to 57.7 billion yen due to the following. Cash flow (income) obtained through mainly operating activities amounted to 71.9 billion yen (a 168.3 billion yen reduction compared to the same period last year). Thus the balance of debt increased by 46.7 billion yen from the previous fiscal year.

Consolidated Results by Business Segment
In the Energy and Electric Systems segment, compared to the same period in the previous year, sales increased by 5% to 363.7 billion yen and operating income increased 357% to 12.5 billion yen.
  Due to a slackening of demand in Japan, orders for power equipment decreased compared to the previous year’s first half but thanks to business growth outside Japan, sales increased. Given the trend towards reduced capital spending by Japanese manufacturers, industrial machinery orders were higher but sales were lower compared to the first half period last year. Due to transportation equipment growth outside Japan, orders were at the same level as last year while sales were higher both in Japan and abroad. In the public works sector, both sales and orders were higher than in the same period last year.
  In building systems, where there was a tendency towards slackening demand and lower prices for elevators and escalators both in Japan and abroad, orders and sales were lower than in the same period last year.
As a result, sales revenue in the business segment increased by 5% compared to the same period last year.
Even with lower prices, operating income for the segment increased thanks to improvements in cost cutting measures.

The Industrial Automation Systems segment experienced a 6% decrease in sales to 302.0 billion yen and operating income fell by 20% to 20.3 billion yen compared to the same period last year.
  Compared to the first half period of the previous fiscal year, both orders and sales for industrial equipment products declined. This can be attributed to sudden reductions in IT-related capital investment, which resulted in slackening demand for factory automation (FA) related products such as programmable controllers and servo motors. Similarly, affected by the slowing down of the US economy, there was a reduced demand for FA products in markets outside Japan (mainly the US and Asia). Furthermore, due to lower Japanese demand for production facility, building and construction-related projects, orders and sales for both electric motors and power supply controllers were lower compared to the same period last fiscal year. In industrial mechatronics products, while the level of demand remained the same as last year’s period for automobile manufacturing equipment, demand for machine tools (mainly IT-related) greatly decreased both in Japan and abroad, leading to lower orders and sales compared to the same period last year.
  Due to decreased automobile production both inside and outside Japan, orders and sales for automotive equipment were lower than last year.
  As a result, compared to the same period last year, sales fell by 6%.
  Operating income for the business segment decreased due to reduced sales and lower prices.

In the Information and Communication Systems segment, sales fell 10% to 390.0 billion yen compared to the same period last year and an operating loss of 27.6 billion yen was recorded.
  Amidst the world economic retreat, demand for mobile phones has become stagnant notably in North America and Europe and, as a result, both orders and sales for the communication systems business has decreased compared to the same period in the previous fiscal year.
  For the information systems and services business, network services (mainly Internet-related) expanded but systems sales geared to small and middle-sized business decreased, bringing sales lower compared to the same period last year.
  Due to an absence of concentrated large-scale projects compared to the same period last year, orders for Space Activities orders decreased but sales increased. For defense-related equipment, orders and sales were higher compared to the same period in the previous fiscal year.
  As a result, sales revenues decreased by a total of 10% in the segment compared to the same period last year.
  Due to worsening profitability conditions at mobile handset operations outside Japan and other factors, the business segment as a whole went into the red.

The Electronic Devices segment recorded sales of 261.7 billion yen, a 25% decrease compared to the same period last year and there was an operating loss of 14.8 billion yen.
  For semiconductor operations, a decline in US IT-related investments has led to dramatically decreased demand for PC peripherals, telecommunication networks, servers and other products, which has forced production adjustments in testing and assembly bases located in Asia. In addition, with major production adjustments in the mobile phone industry (a major catalyst for semiconductor demand) in Japan and Europe, demand has fallen worldwide causing a reduction in both orders and sales of semiconductors compared to the previous period.
  In the liquid crystal business, even amidst a slowdown in the PC market, the quantity of 15.0-inch monitors held firm, reflecting a trend towards greater adoption of LCD monitors. However, with increased production coming from Taiwanese and Korean liquid crystal makers, prices have dramatically decreased and therefore orders and sales were less than the first half period of the previous fiscal year.
  As a result, compared to the previous period last fiscal year, sales revenues fell by 25% for the business segment.
  The segment fell into the red due to the greatly reduced profitability of semiconductor operations.

In the Home Appliances segment, compared to the same period last year, sales increased 4% to 372.9 billion yen and operating income was 25.8 billion yen, an 89% increase.
  Thanks to growth in television sales and home air conditioners (due to hot weather in Japan), home electronics and audio-visual sales were higher than in the same period of the previous fiscal year. Residential equipment sales decreased compared to the first half period of the previous fiscal year mainly because of sluggish demand in Japan for facility-related equipment (mostly ventilation fans). The cooling and heating equipment business met lower sales than last year due to inactive Japanese market demand. The visual information business met lower sales compared to the same period last fiscal year due to a lack of growth in professional printers and other products. Outside Japan, package air-conditioners in Europe, professional printers in the Europe and the USA, air conditioning systems (mainly in China) and large projection TVs in the US enjoyed growth, bringing sales higher than those of the previous fiscal year’s first half.
  As a result, sales revenues for the business segment as a whole increased by 4%.
  Operating income for the segment also increased due to higher sales and other factors.

In the Others segment, compared to the same period last year, sales decreased 3% to 283.7 billion yen and operating income increased 19% to 5.0 billion yen.
  Sales for engineering and real estate businesses at affiliates increased compared to the first half period of the previous fiscal year but revenue at finance company affiliates decreased.
  As a result, sales revenue decreased 3% for the segment as a whole.
  Operating income increased for the business segment.

Profit Sharing
  As stated above, the company incurred a loss in the period under review on a non-consolidated basis and regrettably will not be able to make a half-year dividend payment. To fulfill the long-term expectations of shareholders, Mitsubishi Electric will make every effort to strengthen its financial status and improve profitability.

Annual Consolidated Forecast for Fiscal 2002 (The year ended Mar. 31^st, 2002)
The direction of business trends have become more difficult to ascertain as conditions continue to worsen in the world economy due to the fallout from the terrorist attacks in the US and other factors. As a result, there is an increased possibility for a delayed recovery in IT-related demand and it is estimated the managerial environment for Mitsubishi Electric will become even more severe.
Carrying out its strategy of “Balanced Management,” Mitsubishi Electric is focusing efforts on quickly improving semiconductor and mobile handset operations by making concentrated structural reforms to secure profits this fiscal year. Forecasts for the fiscal year ended March 31^st, 2002 are as follows.

Management Policy
  On its 80th anniversary, Mitsubishi Electric Corporation and its subsidiaries have adopted a new corporate statement: “Changes for the Better.” This new corporate statement expresses the company’s commitment to creating a “better tomorrow” by enhancing the quality of life in all areas.
  In this rapidly changing business environment, Mitsubishi Electric will establish a strong foundation by carrying out management action plans based on the three pillars of “Growth,” “Profitability & Efficiency” and “Soundness.”
  Based on the above strategy, Mitsubishi Electric will further improve its corporate value to satisfy the expectations of all stakeholders, including customers and shareholders.

Policy for Profit Sharing
We aim to improve our corporate value and provide adequate dividends according to actual profits each year. At the same time, we aim to strengthen our financial structure based on sufficient retained earnings.

“Balanced Management” for Achieving Targets
  Under current market conditions, which have been affected by the slowdown of IT product sales, further deflation and acts of terrorism in the US, we are concerned about the current stagnation of the world economy. Under these circumstances, we will promote “Balanced Management” through management action plans based on the three pillars of “Growth,” ”Profitability & Efficiency,” and “Soundness” to establish a strong management structure thereby overcoming changing business conditions.
  Specifically, for “Growth,” we will promote IT-related businesses, expanding our global market share and encouraging strategic alliances for stronger development capabilities and continued growth.
  For “Profitability & Efficiency”, we will carry out drastic procurement cost reduction through our “Sigma 21” activities and improve our productivity through reforming information systems. By promoting the policy of “Selection and Concentration,” we will establish a stronger financial structure and reduce fixed costs to ensure a firm foundation for profitability. Furthermore, we will make efforts to improve our mobile phone and semiconductor businesses.
  For “Soundness,” we will strengthen our financial structure through reduction of interest bearing debt, improve our product quality through “Diamond Quality” activities, hold “Global Advisory Committee” meetings (which includes members outside the company), reinforce corporate governance by adopting a stock option system (newly introduced in June 2001) and continuously promote environmental protection activities.
  Through the above management actions, Mitsubishi Electric and its subsidiaries and affiliates aim to attain the following targets.

About Mitsubishi Electric Corporation
With 80 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, Mitsubishi Electric Corporation (FTSE: 6503q.l) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and construction. The company has operations in 34 countries and recorded consolidated group sales of over US$33BN in the year ended March 31, 2001. Additional information on Mitsubishi Electric is available at global.mitsubishielectric.com.

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Cautionary Statement
The expectation of operating results herein and any associated statement to be made with respect to Company's current plans, estimates, strategies and beliefs and any other statements that are not historical facts are forward-looking statements. Words such as “expects”, “anticipates”, “plans”, “believes”, “scheduled”, “estimated”, “targeted” along with any variations of these words and similar expressions are intended to identify forward-looking statements which include but are not limited to projections of revenues, earnings, performance and production. While the statements herein are based on certain assumptions and premises that trusts and considers to be reasonable under the circumstances to the date of announcement, you are requested to kindly take note that actual operating results are subject to change due to any of the factors as contemplated hereunder and/or any additional factor unforeseeable as of the date of this announcement.
Such factors materially affecting the expectations expressed herein shall include but are not limited to the following: (1) Any change in operating circumstances in any of the markets, in which the Company conducts its business operation inter alia Japan, the USA and Europe: such change shall include but not limited to changes in economic situation, political regime, legal system and legislation, relevant laws and regulations, administrative policies and practices by any competent authorities, taxation in any of such markets. (2) Foreign exchange fluctuations, in particular, the rate of Japanese yen against US Dollar. (3) Relative disproportion between demand and supply of any products that may affect price and volume, which could be highly intrusive in such fields like information, telecommunication, electronic devices and home appliances, without limitation thereto. (4) Shortage of any devices, components and/or parts necessary for manufacturing operation and difficulties in material procurement arising out of such shortage, which could even lead to substantial disconformity with the operating results as expected herein. Also this factor could be highly intrusive in such fields as information, telecommunication, electronic devices and home appliances, without limitation thereto. (5) Any change in technical and technological trends that may be relevant to businesses of the Company, including but not limited to IT-based or IT-related fields. (6) Any patent and its licensing that may be granted from time to time and may affect businesses of the Company. (7) Any development of products incorporating new technological innovation and the time of their introduction in the marketplace. (8) Any business alliances of any nature whatsoever, including but not limited to joint ventures, business transfers, mergers, acquisitions, capital contributions, technical licensing or co-development. (9) Any change in fund raising or procurement, inter alia in the Japanese financial market. (10) Any fluctuation in stock quotations at any relevant markets including securities exchanges and over-the counter stock markets, inter alia in Japan.