Capturing New Growth Opportunities Annual Report 2010

Annual Report 2010

Capturing New Growth

ITOCHU Corporation Annual Report 2010 Opportunities For the Year ended March 31, 2010 Contents

19 Special Features Capturing New Growth Opportunities

In this feature, case studies are used to illustrate 20 Opening Up the Massive Consumer Market the approach of ITOCHU, as a general trading in China company, to growth fields, and how that ap- 24 Supporting Stable Supplies of Natural Resources and Energy proach differs from those of companies in other 28 Targeting Growth Opportunities Driven by industries. Change

2 General Trading Company—The Key 52 As a Good Corporate Citizen Phrase for Understanding ITOCHU 52 Corporate Officers 6 Consolidated Financial Highlights 55 Corporate Governance 59 Compliance 8 Division Companies at a Glance 60 Corporate Social Responsibility (CSR) 10 To All Stakeholders 61 Employee Relations 12 ITOCHU, Now and in the Future, in the 62 Social Contributions Words of President Masahiro Okafuji 63 Environmental Issues 19 Special Features 64 Operational Structure 64 Organizational Structure 32 Division Companies 66 Global Network / Bank List 32 Textile Company 68 Major Subsidiaries and Associated Companies 34 Machinery Company 73 Financial Section 36 ICT, Aerospace & Electronics Company 38 Energy, Metals & Minerals Company 162 Corporate Information / Stock Information 40 Chemicals, Forest Products & General Merchandise Company 42 Food Company 44 Finance, Realty, Insurance & Logistics Services Company 46 Headquarters

Our Mission and Values The ITOCHU Group Corporate Philosophy

To realize the ITOCHU Mission, these are the values that each employee in the ITOCHU Group should respect. These are based on the values inherited from our predecessors, which have supported, and will continue to support, ITOCHU’s development.

Founded on the sampo yoshi management philosophy, this expresses ITOCHU’s responsibility toward society and the Company’s value in society.

Capturing New Growth Opportunities General Trading Company—The Key Phrase for Understanding ITOCHU

Adapting flexibly and constantly to changes in industrial structure has formed ITOCHU into a general trading company with a corporate format without parallel in the world. By taking full advantage of the comprehensive capabilities of that format, which spans a broad spectrum of business areas and global business initiatives, including trade, investment, general management, finance, logistics, and risk management, we will win out in new competitive environments.

Developing local brand businesses in China with Shanshan Group Co., Ltd. General Trading Company—The Key Phrase for Understanding ITOCHU

The Yastreb drilling rig of the Sakhalin- Project in Russia

An offshore platform in the Central Azeri Oil Field in Azerbaijan Ting Hsin Group in China and Taiwan

Mt. Newman JV Iron Ore Mines in Western Australia

See page 20

Seawater desalination PPP project in Australia

Global Reach —Global Networks Beyond National Boarders

With 36 bases in 80 countries, ITOCHU’s field of business is “the world.” As we enter an era of borderless mega-competition, we will capitalize on networks with global reach and our outstanding capabilities in infor- Domestic bases 5 mation gathering and analysis to open up new vistas. Currently, we are aiming to expand earnings from over- Overseas bases 36 seas businesses even further by becoming a truly global Overseas trading subsidiaries 73 enterprise. As of March 31, 2010 General Trading Company—The Key Phrase for Understanding ITOCHU 3 General Trading Company—The Key Phrase for Understanding ITOCHU

An export grain terminal (EGT) on the west coast of the United States

Products of PrimeSource Building Products, Inc. in the United States

An example of solar power generation facilities installed by SolarNet, LLC in the United States

See page 28

Celulose Nipo-Brasileira S.A. in Brazil

NAMISA Iron Ore Mines in Brazil

Newlands Coal Mine in Australia

See page 24

Wide-Ranging of Business Areas —Beyond Business Categories

ITOCHU’s seven Division Companies andTotal Headquarters Assets Textile Company are involved in an extremely broad array of industries. Machinery Company ITOCHU sets no boundaries for its business areas. ICT, Aerospace & Electronics Company ITOCHU’s business areas are wherever there are business Energy, Metals & Minerals Company opportunities. Our current initiatives in new growing business areas include solar power generation and life & Chemicals, Forest Products & General Merchandise Company healthcare-related businesses. In addition, ITOCHU pos- Food Company sesses a business portfolio well-balanced among the Net Income Finance, Realty, Insurance & Logistics Services Company Consumer-Related Sector, the Natural Resource / Energy- Related Sector, and Other Sectors.

Structure to Promote Human Resources Global Human Resources Strategy North — Personnel Are the Source of Competitive America Global Talent Advantage Enhancement Center (New York) Personnel are the greatest management resource of ITOCHU as a Asia Europe general trading company. Each employee supports our competitive Global Talent Global Talent Enhancement Enhancement strength through their strong commitment and appetite for chal- Center Center (Singapore) (Tokyo Headquarters) (London) lenges. Accordingly, ITOCHU is advancing a global human resources Global Talent Enhancement Center strategy in order to reinforce a corporate system for all employees Headquarters to fully realize their ability regardless of nationality, race, gender, (Secretariat) Global Talent or age group. In four cities around the world, Global Talent Japan Enhancement China Office Enhancement Centers (GTECs) lead efforts to hire and foster global Headquarters, Global Talent Human Enhancement General Trading Company—The Key Phrase for Understanding ITOCHU human resources that will shoulder ITOCHU’s future. Resources Center Division (Shanghai) Other Blocs Bloc Human Resources Divisions

Risk Management —Ever More Sophisticated

Throughout our history, we have upgraded risk manage- calculated maximum loss that we could incur in the ment to reflect risks that have become larger and more future, and “Risk Return Index (RRI),” the rate of return diverse as our business model has developed from main- attainable from these risk assets. Currently, ITOCHU’s stay trade to a mixed operational format comprising focus is on further evolving risk management by realizing investment and trade. The concept of “Risk Capital Enterprise Risk Management (ERM), which enables inte- Management (RCM)” entails managing the entire business grated and comprehensive risk control throughout portfolio of ITOCHU, using “Risk Assets,” the statistically ITOCHU.

Foresight and Flexibility —The Key to Creating High Added Value and Taking Initiative

We have always created new business models ahead of brand businesses, ITOCHU’s strategies progressed from the times by being extremely alert to signs of change. acquiring import and marketing rights for famous over- For example, we have evolved the business model of our seas brands to acquiring trademark rights and investing textile operations dynamically and thereby multiplied directly in companies as a way of stabilizing long-term our business lines. Anticipating the shift of the Japanese trade rights. That foresight and flexibility has built textile market to the downstream business area, we ITOCHU’s leading position among general trading com- sought to strengthen our operations in the retail area. In panies.

Developing operations in China

Evolving business models Overall Consumer-Related Sector constantly by pursuing high Brand businesses added value and taking the initiative Vertical integration Importing License Acquiring Investment & M&A trademark rights

Apparel OEM ODM Investment & M&A (original equipment manufacturing) (original design manufacturing) —entering the retail area—

Fabric

Increasing lineups Pursuing high added value Responding to environmental needs

Textile raw materials General Trading Company—The Key Phrase for Understanding ITOCHU 5 General Trading Company—The Key Phrase for Understanding ITOCHU

Value Chain —Coordinating Overall Trade Flows

As a general trading company, ITOCHU is involved in coordinator, we encompass all of the trade flows in initi- trading transactions, or trade flows from raw material ating product development plans with these companies supply through manufacturing and processing to the and in matching seeds and needs. These initiatives fur- sale of finished products to consumers. In these trade ther enhance overall trade flows, add value to entire flows, we take advantage of our worldwide networks to value chains, and strengthen their competitiveness. provide business partners with information as well as ITOCHU then benefits from this added value through all-round integrated solutions that cover logistics, increases in trading revenues as well as dividend income finance, insurance, and IT infrastructure. Also, by invest- and profits from the companies invested in. We build ing in companies we have built relationships with these value-adding combinations of trade and value through trade or in important companies as our part- chains throughout a variety of business areas at home ners, we reinforce value chains. And, acting as a trade and abroad.

An Example from the Food Business Area

North America, Australia, etc. China Providing raw materials / Securing resources Upstream

Providing solutions CGB QTI General Administration of Supply chain information COFCO Land Development Demand chain information of Heilongjiang Province Logistics Finance EGT Burra Insurance IT infrastructure Japan China Processing raw materials / Midstream Midstream Manufacturing intermediary products

ITOCHU ITOCHU Sugar Rice

Acting as a coordinator Prima Longda ITOCHU Yayoi Foods Meat Feed Mills Joint product development Packers Matching of seeds and needs Fuji Oil Japan Foods

Ting Hsin Logistics Downstream Downstream

NIPPON ITOCHU ACCESS SHOKUHIN Zhongxin

Enhancing trade flows & ITOCHU SHOW-WA FRESH BIC Strengthening competitiveness of Retail overall value chain

FamilyMart UNY Izumiya

Consolidated Subsidiaries Equity-method Affiliates Investment / Business Alliance Partners Consolidated Financial Highlights

ITOCHU Corporation and Subsidiaries Years ended March 31

Increase Millions of Millions of Yen (Decrease) U.S. Dollars 2010 2009 2008 2007 2006 2010/2009 2010 For the fiscal year: Revenue ¥3,416,637 ¥3,419,061 ¥2,859,853 ¥2,646,037 ¥2,217,393 (0.1)% $36,722 Gross trading profit 924,366 1,060,521 994,547 907,511 713,546 (12.8) 9,935 Consolidated Financial Highlights Net financial expenses*1 3,562 5,582 (7,709) (7,555) (7,816) (36.2) 39 Net interest expenses*2 (25,338) (29,457) (32,156) (29,218) (26,032) (14.0) (272) Dividends received 28,900 35,039 24,447 21,663 18,216 (17.5) 311 Equity in earnings (losses) of 36,269 41,304 70,238 (20,069) 51,737 (12.2) 390 associated companies Net income 128,153 165,390 217,301 175,856 144,211 (22.5) 1,377 attributable to ITOCHU

At fiscal year-end: Total assets ¥5,476,847 ¥5,192,092 ¥5,274,199 ¥5,288,647 ¥4,809,840 5.5 $58,866 Stockholders’ equity 1,098,419 849,411 973,545 892,553 724,377 29.3 11,806 Net interest-bearing debt*3 1,726,073 1,756,764 1,654,532 1,630,928 1,724,314 (1.7) 18,552

Cash flows: Cash flows from operating activities ¥ 295,376 ¥ 276,854 ¥ 65,552 ¥ 235,917 ¥185,147 6.7 $ 3,175 Cash flows from investing activities (196,318) (326,033) (65,774) (83,394) (79,871) (39.8) (2,110) Cash flows from financing activities (258,987) 258,322 (81,294) (100,920) (85,193) — (2,784) Cash and cash equivalents 475,674 628,820 446,311 532,856 477,707 (24.4) 5,113 at end of year

(Reference) Total trading transactions*4 ¥10,306,799 ¥12,065,109 ¥11,729,082 ¥11,556,787 ¥10,456,727 (14.6)% $110,778 Adjusted profit*5 194,290 339,292 333,673 240,766 251,210 (42.7) 2,089

All figures are for fiscal years, which begin on April 1 of the years preceding and extend through March 31. The Japanese yen amounts for the year ended March 31, 2010 have been translated into U.S. dollar amounts, solely for the convenience of the reader, at the rate of ¥93.04 = U.S.$1, the official rate of The Bank of Tokyo-Mitsubishi UFJ, Ltd., as of March 31, 2010. *1 Net financial expenses = Net interest expenses + Dividends received Calculation formula (Fiscal 2010: ¥ million): 3,562 = (25,338) + 28,900 *2 Net interest expenses = Interest income + Interest expense Calculation formula (Fiscal 2010: ¥ million): (25,338) = 9,911 + (35,249) *3 Net interest-bearing debt = Interest-bearing debt – Cash, cash equivalents and time deposits Calculation formula (Fiscal 2010: ¥ million): 1,726,073 = 2,209,270 – 483,197 *4 Total trading transactions consist of sales with respect to transactions in which the companies act as principal and the total amount of transactions in which the companies act as agent. *5 Adjusted profit = Gross trading profit + Selling, general and administrative expenses + Net financial expenses + Equity in earnings (losses) of associated companies Calculation formula (Fiscal 2010: ¥ million): 194,290 = 924,366 + (769,907) + 3,562 + 36,269

Yen Increase U.S. Dollars (Unless otherwise specified) (Decrease) 2010 2009 2008 2007 2006 2010/2009 2010 Per share: Net income ¥ 81.09 ¥104.64 ¥137.46 ¥111.19 ¥ 91.15 (22.5)% $0.87 attributable to ITOCHU Stockholders’ equity 694.98 537.43 615.89 564.48 457.93 29.3 7.47 Cash dividends 15.0 18.5 18.0 14.0 9.0 (18.9) 0.16

Ratios: Gross trading profit ratio (%) 9.0 8.8 8.5 7.9 6.8 ROA (%) 2.4 3.2 4.1 3.5 3.1 ROE (%) 13.2 18.1 23.3 21.8 23.4 Ratio of stockholders’ equity 20.1 16.4 18.5 16.9 15.1 to total assets (%) Net debt-to-equity ratio 1.6 2.1 1.7 1.8 2.4 (NET DER) (times) Interest coverage (times) 5.3 7.2 6.2 6.6 5.7

Net income attributable to ITOCHU per share and stockholders’ equity per share are calculated by using the shares that exclude the number of treasury stock from that of common stock issued. Consolidated Financial Highlights Consolidated Financial Highlights

Net Income (Loss) Attributable to ITOCHU Revenue / Gross Trading Profit Net Income Attributable to ITOCHU / from Subsidiaries and Adjusted Profit Equity-Method Associated Companies (Billions of Yen) (Billions of Yen) (Billions of Yen) (%) 4,000 400 240 221 219 100 79 3,419 3,417 334 339 78 76 74 166 72 180 182 75 2,860 149 184 160 3,000 2,646 300 129 125 126 251 241 120 50 2,217 217 194 2,000 200 176 165 60 25 144 128 1,061 908 995 924 0 0 1,000 714 100 –20 –37 – 40 –60 –58 –59

0 06 07 08 09 10 0 06 07 08 09 10 –120 06 07 08 09 10 Revenue Net Income Attributable to ITOCHU *Includes overseas trading subsidiaries Gross Trading Profit Adjusted Profit Companies Reporting Profits (left) Companies Reporting Losses (left) Net Income from Subsidiaries and Equity-Method Associated Companies (left) Share of Group Companies Reporting Profits (right)

Share of Group Companies Reporting Profits are calculated by using the numbers of companies within the scope of consolidation based on companies in which the Company or its overseas trading subsidiaries invest directly.

Ratio of Adjusted Profit to Total Assets ROE / ROA Total Assets / Ratio of Stockholders’ Equity to Total Assets (%) (%) (Billions of Yen) (%) 8 30 10,000 25 6.5 20.1 6.3 23.4 23.3 21.8 18.5 5.4 8,000 16.9 16.4 20 6 4.8 18.1 20 15.1 5,477 6,000 5,289 5,274 5,192 15 3.6 13.2 4,810 4 4,000 10 10 2 4.1 3.1 3.5 3.2 2.4 2,000 5

0 06 07 08 09 10 0 06 07 08 09 10 0 06 07 08 09 10 0 ROE Total Assets (left) ROA Ratio of Stockholders’ Equity to Total Assets (right)

Net Interest-Bearing Debt / NET DER Interest Coverage Cash Flows

(Billions of Yen) (Times) (Billions of Yen) (Times) (Billions of Yen) 2,000 4 400 7.2 8 400 1,724 1,757 1,726 6.6 276.9 295.4 1,631 1,655 Net Interest-Bearing6.2 Debt / NET DER 235.9 5.7 327 185.1 1,500 3 300 301 307 5.3 6 200 2.4 (Times) 65.6 2.1 224 1.8 1.7 186 1,000 1.6 2 200 4 0

–79.9 –83.4 –65.8

500 1 100 2 –200 –196.3 50 46 39 45 35 –326.0 0 06 07 08 09 10 0 0 06 07 08 09 10 0 –400 06 07 08 09 10 Net Interest-Bearing Debt (left) Interest Expense (left) Cash Flows from Operating Activities NET DER (right) Gross Trading Profit, SG&A Expenses, Provision for Cash Flows from Investing Activities Doubtful Receivables, Interest Income, and Dividends Received (left) Interest Coverage (right) Division Companies at a Glance

ITOCHU Corporation and Subsidiaries Years ended March 31

Textile Company

Main Products and Services Net Income Attributable to ITOCHU / • Textile materials Total Assets / ROA • Fabrics (Billions of Yen) (Billions of Yen / %) • Apparel products 25 500 Division Companies at a Glance • Fashion goods and accessories 10 • Industrial textiles 20 400 6.3 5.8 8 • Branded products based on total lifestyle-theme 5.4 including apparel, food, and living 15 300 4.3 3.9 6 10 200 4

5 100 2 0 06 07 08 09 10 0 Net Income Attributable to ITOCHU (left) Total Assets (above right) ROA (%) (below right)

Machinery Company

Main Products and Services Net Income (Loss) Attributable to • Gas, oil, and petrochemical plants ITOCHU / Total Assets / ROA • Ships • Automobiles (Billions of Yen) (Billions of Yen / %) • Rolling stock 30 900 6 • Power-generating equipment 3.1 • Construction machinery 20 600 3.5 4 • Devices and businesses related to water resources 10 2.6 300 and the environment 0.6 2 • Devices and businesses related to renewable and 0 0 alternative energy 0 • IPP / IWPP (independent power provider / –10 –300 independent water power provider) and investment, –2.3 –2 project development, operational management, and –20 06 07 08 09 10 –600 maintenance related to other social / industrial –4 infrastructure Net Income (Loss) Attributable to ITOCHU (left) Total Assets (above right) ROA (%) (below right)

ICT, Aerospace & Electronics Company

Main Products and Services Net Income Attributable to ITOCHU / • Systems and related equipment for computers and Total Assets / ROA information processing (Billions of Yen) (Billions of Yen / %) • Internet-related business 20 1,000 • Programming supply and entertainment-related 5 business 16 3.4 800 4 • Broadcasting and communication business 2.7 12 600 • Equipment for broadcasting and communication 3 services 8 2.1 400 • Mobile equipment and services 1.2 2 • Aircraft and in-flight equipment 1.6 4 200 • Air transportation management systems 1 • Space-related equipment 0 06 07 08 09 10 0 • Security equipment • Industrial machinery Net Income Attributable to ITOCHU (left) • Semiconductor equipment Total Assets (above right) • Electronic devices / electronics-related equipment ROA (%) (below right)

Energy, Metals & Minerals Company

Main Products and Services Net Income Attributable to ITOCHU / • Iron ore Total Assets / ROA • Coal (Billions of Yen) (Billions of Yen / %) • Aluminum 150 1,500 12.5 11.9 15 • Steel scrap 11.3 120 10.2 1,200 • Steel products 12 • Crude oil 90 5.8 900 • Petroleum products 9

• LPG 60 600 • LNG 6 • Nuclear fuel 30 300 • Bioethanol 3 • Natural gas 0 06 07 08 09 10 0 • Emission credits Net Income Attributable to ITOCHU (left) • Biomass Total Assets (above right) ROA (%) (below right) Division Companies at a Glance Division Companies at a Glance

Chemicals, Forest Products & General Merchandise Company

Main Products and Services Net Income Attributable to ITOCHU / • Building materials Total Assets / ROA • Logs and lumber (Billions of Yen) (Billions of Yen / %) • Woodchips, pulp, paper 25 1,000 5 • Biomass fuels (woodchips, pellets, etc.) 3.7 20 800 • Natural rubber, tires 4 • Cement, glass, ceramic products 2.8 2.9 15 3.1 600 • Shoes 2.7 3 • Basic chemicals 10 400 • Fine chemicals 2 • Pharmaceutical products 5 200 • Inorganic chemicals 1 • Plastics 0 06 07 08 09 10 0 • Various consumer products Net Income Attributable to ITOCHU (left) • Rechargeable-battery-related materials Total Assets (above right) ROA (%) (below right)

Food Company

Main Products and Services Net Income Attributable to ITOCHU / • Wheat and barley Total Assets / ROA • Vegetable oils (Billions of Yen) (Billions of Yen / %) • Soybeans and corn 30 1,500 5 • Beverage materials (juice, coffee) 24 1,200 • Sugar, sweeteners 4 • Dairy products 18 2.6 2.5 900 • Marine, livestock, and agri products 3 1.9 • Frozen foods 12 2.0 600 • Processed foods and pet foods 1.7 2 • Soft drinks and liquor 6 300 1 0 06 07 08 09 10 0 Net Income Attributable to ITOCHU (left) Total Assets (above right) ROA (%) (below right)

Finance, Realty, Insurance & Logistics Services Company

Main Products and Services Net Income (Loss) Attributable to • Foreign exchange and securities trading, asset ITOCHU / Total Assets / ROA management business (Billions of Yen) (Billions of Yen / %) • Loans • FX margin account trading 40 800 • Credit card / shopping credit 10 • Other financial services 20 2.3 400 • Property development, sales and purchase, and asset 1.6 5 management 0 0 • Brokerage and advisory service –0.3-0.3 –1.1 0 • Equity investment to funds • Private finance initiatives (PFIs) –20 –5.0 –400 –5 • House construction • REIT management • Golf courses –40 06 07 08 09 10 –800 –10 • Insurance agent and insurance broker Net Income (Loss) Attributable to ITOCHU (left) • Domestic and international 3PL Total Assets (above right) • Chartering ROA (%) (below right) 0 To All Stakeholders

ITOCHU is stepping up its pace in taking on challenges and innovative

To All Stakeholders changes and endeavors to further strengthen earning power. Fostering an open and active corporate culture that encourages individuals to maximize their skills, we are strengthening workforce capabilities as we strive to become an enterprise that is highly attractive to all stakeholders. Masahiro Okafuji President & Chief Executive Officer

Masahiro Okafuji President & Chief Executive Officer April 1974 Joined ITOCHU Corporation April 1997 General Manager, Apparel Department 3 April 2002 Chief Operating Officer, Brand Marketing Division June 2002 Executive Officer April 2004 Managing Executive Officer, President, Textile Company June 2004 Managing Director April 2006 Senior Managing Director April 2009 Executive Vice President April 2010 Appointed to current position To All Stakeholders 11 To All Stakeholders

Earn, Cut, and Protect to Reach Targets My name is Masahiro Okafuji, and I was appointed President and Chief Executive Officer in April 2010. Mindful of ITOCHU’s Committed to the global good Mission, I am determined to pursue business management that continuously increases corporate value. Looking at the global economy, in the first half of the fiscal year ended March 31, 2010, the worldwide economic recession that began in the preceding fiscal year continued to affect business conditions. However, the impact of respective countries’ large-scale economic stimulus measures and easing of monetary policies generated a shift toward a phase of gradual recovery in the second half. Slumping market conditions—such as lackluster market prices for raw materials and energy, particularly in the first half—and a downturn in the real economy affected ITOCHU’s business results. Consequently, we recorded year-on-year decreases of 13% in gross trading profit, to ¥924.4 billion, and 23% in net income attributable to ITOCHU, to ¥128.2 billion. We made progress in our medium-term management plan, Frontiere 2010 (from fiscal 2010 to fiscal 2011). In the year under review, the first year of this plan, we made a number of new strategic investments as we consolidated foundations in the growing markets with our sights set on a full- fledged rebound following the global recession. Specifically, we completed our investment in Ting Hsin (Cayman Islands) Holding Corp., and took measures to ensure early returns on Brazil’s Nacional Mine´rios S.A. (NAMISA). In L-I-N-E-s, we have steadily developed future sources of earnings in the Environment & New Energy and Life & Healthcare business areas. Meanwhile, by increasing stockholders’ equity and controlling interest-bearing debt, we have achieved a net debt-to-equity ratio (NET DER) of 1.6 times, surpassing our initial target and reinforcing our financial base. As for fiscal 2011, the final year of Frontiere 2010, we aim to achieve gross trading profit of ¥1,080 billion and net income attributable to ITOCHU of ¥160 billion. To realize these targets, we are making thorough- going efforts in line with three new management principles: earn (boost earnings), cut (reduce expenses), and protect (avoid losses).

Strengthening Workforce Capabilities The simultaneous worldwide recession has drastically changed the business environment. We are in the midst of turbulent change, which cannot be predicted based on past experience. To win out in the global market, clearly we must adapt our methods to suit changing times rather than simply extending past efforts. Accordingly, we will redouble efforts to take on challenges and innovative changes and strengthen our earning power. Further, to enable those efforts, we will strengthen workforce capabilities by regaining the open and active corporate culture that is our tradition. ITOCHU is sure to become even stronger by fully realizing the capabilities of individuals, its inherent strength. I have inherited a tradition that my predecessors have built over more than 150 years. ITOCHU will make a concerted effort to continue this tradition into the future. I would like to ask all our stakeholders for their continued understanding and support.

July 2010 12 ITOCHU, Now and in the Future, in the Words of President Masahiro Okafuji ITOCHU, Now and in the Future, Words of President Masahiro Okafuji

Enhancing Earning Power by Accelerating Innovative Changes and Strengthening Workforce Capabilities ITOCHU, Now and in the Future, in the Words of President Masahiro Okafuji 13 ITOCHU, Now and in the Future, Words of President Masahiro Okafuji

Looking Back on the First Year of Frontiere 2010 Please analyze and evaluate ITOCHU’s performance during fiscal 2010. Looking back on the business conditions in fiscal 2010, in the first half we saw the ongoing effects of the economic recession that lingered on from the preceding fiscal year. As we moved into the second half, however, the global economy began to recover, spurred by economic buoyancy in emerging countries. Prices of raw materials and energy also rebounded to a notable degree in the second half. For the full year, however, lackluster first-half performance weighed down performance, as prices of raw materials and energy were down substantially in a year-on-year average comparison. Sluggish recoveries in the areas of construction machinery and automobiles, ICT, and financial services also contributed to a decline of net income attributable to ITOCHU during the fiscal year. That being said, although we slightly undershot our initially planned figure of ¥130 billion, we came very close to achieving this objective. A look at our quantitative performance by segment demonstrates the tenacity of our earnings structure. A differentiating feature of ITOCHU is that in addition to businesses in the Natural Resource / Energy- Related Sector, it has strong businesses in the Consumer-Related Sector, which includes the apparel, food, and living categories. During the year, although the Energy, Metals & Minerals Company posted a substantial decline in earnings, the Food Company posted record earnings thanks to a robust performance from existing operations and successful new investments. The Textile Company and the Chemicals, Forest Products & General Merchandise Company also maintained earnings at the same level year on year, contributing to the overall performance of ITOCHU. In heavy industries, such as machinery, we still need to address the issue of building a business model that is relatively impervious to economic fluctuations. On a companywide basis, however, I believe that our performance in the face of strong headwinds is acceptable, evincing a robust earnings structure.

Net Income Attributable to ITOCHU

(Billions of Yen) 250 217.3

200 175.9 165.4 160.0 144.2 150 130.0 128.2

100

0 06 07 08 09 10 10 11 (Initial Plan) (Results) (Plan) Frontier–2006 Frontier+ 2008 Frontiere 2010

Years ended March 31

What progress did you make in strengthening ITOCHU’s financial position? NET DER in fiscal 2009, worsened to 2.1 times due to an increase in interest-bearing debt resulting from such strategic investments as that in NAMISA and a decrease in stockholders’ equity caused by yen appreciation and a stock market downturn. For ITOCHU, NET DER is a key indicator of the strength of its financial position. Improving this ratio is important because it will enable us to maintain flexibility in implementing future strategies. To this end, we worked to steadily increase net income attributable to ITOCHU and continued with stringent controls on interest-bearing debt. As a result, we succeeded in improving NET DER to 1.6 times, bettering our target of 2.0 or less. As of March 31, 2010, stockholders’ equity exceeded ¥1 trillion for the first time on a fiscal year-end basis. Therefore, I regard fiscal 2010 as a 14

year in which we successfully strengthened our financial position. Maintaining the strength of our financial position as an important management task, we set out a NET DER target of 1.75 times for fiscal 2011. Consolidated Balance Sheets

(Billions of Yen) 5,800.0 (Times) 5,476.8 6,000 5,288.6 5,274.2 5,192.1 6 4,809.8 5,000 5

4,000 4 2,100.0 3,000 3 2.38 1,726.1 1,630.9 1,654.5 1.70 2.07 1,724.3 1.83 1.57 2,000 1,756.8 1.75 2

ITOCHU, Now and in the Future, Words of President Masahiro Okafuji 1,000 1,098.4 1,200.0 1 724.4 892.6 973.5 849.4 0 06 07 08 09 10 11 0 (Plan) Frontier–2006 Frontier+ 2008 Frontiere 2010

Years ended March 31 Stockholders’ Equity (left) Net Interest-Bearing Debt (left) Others (left) NET DER (right)

Please outline progress on the key measure to expand and improve earnings platforms. We made carefully selected investments in the fiscal year ended March 31, 2010. New investments totaled ¥60 billion in the Natural Resource / Energy-Related Sector, ¥120 billion in the Consumer-Related Sector, and ¥100 billion in Other Sectors, which include automobiles, ICT, chemicals, and financial services. Our total gross investment, therefore, was ¥280 billion, and net investment came to ¥240 billion. Within the Natural Resource / Energy-Related Sector, our natural resource-related investments included capacity expansion through a joint venture with BHP Billiton Group related to the Western Australian iron ore business. In addition to acquiring an equity interest in NAMISA mines in Brazil, we are steadily developing these operations to meet growing demand for iron ore. On the energy front, we decided to move ahead with an investment in the Chirag Oil Project on the Azeri-Chirag-Gunashli (ACG) Oil Field in the Caspian Sea. Investment in this project, which is slated to commence production in 2013, will substantially boost production attributable to ITOCHU. In the Consumer-Related Sector, investment initiatives outperformed expectations. In particular, I believe we secured a stronger foothold in China’s burgeoning consumer market, an increasing focus of attention. In food-related investments, we concluded an investment in Ting Hsin (Cayman Islands) Holding Corp., a leading food business group in China. Completing a value chain centered on this

Investment Plan

(Billions of Yen) Natural Resource / Energy-Related 280.0 60.0 Sector

Consumer-Related Sector 120.0 120.0

Other Sectors 260.0 100.0

100 200 300 400

FY2008–2009 FY2010 FY2011 (plan) Gross ¥250.0 billion Net ¥150.0–¥200.0 billion ITOCHU, Now and in the Future, in the Words of President Masahiro Okafuji 15 ITOCHU, Now and in the Future, Words of President Masahiro Okafuji

company will play a major role in propelling forward our Strategic Integrated System (SIS) strategy in China. In addition, the investment has a strategic significance in terms of bolstering our presence in the Japanese food product market. Related to textiles, we invested in Shanshan Group Co., Ltd., in fiscal 2009 and we fostered cooperative relationships, mainly through the brand business, with a view to expanding sales within China. In collaboration with the Shanshan Group, we also steadily expanded the scope of operations that extend beyond the boundaries of the textile business. Meanwhile in Japan, we also made major companies such as JAVA HOLDINGS Co., Ltd., and LEILIAN CO., LTD., subsidiaries. In Other Sectors, through public tender offers we acquired additional stakes in C.I. Kasei Co., Ltd., and i-LOGISTICS CORP. (now, ITOCHU LOGISTICS CORP.), which we made unlisted subsidiaries. Positioning these companies as core subsidiaries in their respective business areas of plastics processing and logistics, we expect to derive synergies from joint business development in Japan and overseas.

How is ITOCHU developing new businesses in the L-I-N-E-s areas? We must develop new pillars of future earnings while working to grow earnings bases in the Consumer- Related Sector, which is a source of stable earnings, and in the Natural Resource / Energy-Related Sector. To this end, we will accelerate development in the L-I-N-E-s business areas, particularly in the areas of energy storage devices, water resources, solar power generation, and life care. During fiscal 2010, we made particularly good progress on initiatives surrounding the energy storage device business. As demand growth is expected for large lithium-ion batteries for use in electric vehicles (EVs) and hybrid vehicles, we made an aggressive move to collaborate with Toda Kogyo Corp. This company specializes in cathode materials, which are an important contributor to battery performance. We moved forward in our joint venture businesses in the United States and Canada, and made a joint investment in a prominent Chinese manufacturer of cathode materials within the Shanshan Group. In the solar power generation business, we continued to build a solar value chain—a vertically integrated business ranging from upstream materials to downstream power generation and system integration businesses. By bringing competitive companies into the ITOCHU Group, we are building a three-pronged structure: Japan, the United States, and Europe. We are also looking proactively for solid companies in the Healthcare Business for inclusion in our medical value chain. Particularly noteworthy was our investment during fiscal 2010 in Watakyu Seimoa Corporation, which boasts a substantial share of the medical and welfare services market. We expect this company to raise our competitive position in the Healthcare Business. In the area of water resources, we, as a member of a consortium, won a contract for the world’s largest seawater desalination project in Australia. The desalination plant is currently under construction and is slated for completion in 2011. We plan to step up initiatives in this business area, which has the potential to grow globally.

What about progress on the key measure to strengthen foundations of earning power? Owing to the simultaneous worldwide recession, the percentage of affiliates reporting profits fell, pointing to the need to improve the profitability of our affiliates. Targeting future growth, we will accelerate the replacement of assets in the fiscal year ending March 31, 2011. Assets that generate low earnings and profitability are targeted for replacement. We will also take an aggressive approach toward replacing assets, not only from the view point of profitability and efficiency but also based on consideration of strategic significance. 16

ITOCHU and the Chinese Market China’s importance is increasing in the global economy. It has become almost a universally accepted truth that global economic recovery hinges on the Chinese economy. Particularly impressive has been the phenomenal speed with which the presence of China as a consumer market is increasing, supported by the government’s measures to stimulate domestic market demand after the simultaneous worldwide recession. For example, China is already the world’s largest market for automobiles, based on unit sales of new cars. The affluent and

ITOCHU, Now and in the Future, Words of President Masahiro Okafuji mid-income segments of the population are expanding rapidly, and markets are expanding geographically from the coastal cities further inland. These economic developments suggest that markets have ample leeway for further expansion. Companies throughout the world are gathering for the chance to enter the country’s huge consumer markets. In addition to consumer markets, China offers seemingly limitless business potential in its demand for resources and energy, logistics infrastructure,

ITOCHU and Shanshan Group Co., Ltd., conclude a capital and operational tie-up rail and roadway transportation infrastructure, and water and environmental / energy conservation businesses. These areas present business opportunities for ITOCHU, due to the breadth of its operations as a general trading company.

What makes ITOCHU strong in China? History is the answer. The Chinese market is noted for differences in business culture and environment, which make it extremely difficult for foreign companies to operate business successfully alone. Since 1972, when we became the first general trading company to enter the Chinese market, we have cultivated personal relationships, developed networks, and established a team of professionals with business expertise relating to China. As Chinese people tend to respect greatly trust-based relationships, personal connections are an important business tool. Such relationships cannot be built overnight. On the other hand, trust- based relationships that are in place tend to spawn new relationships that lead to even greater business opportunities. At present, being able to enter partnerships with prominent Chinese companies that are well acquaint- ed with local business is our advantage. ITOCHU enjoys that advantage because it began laying the steppingstones for involvement in Chinese business long before China’s market began attracting attention.

Future Management Policy Please share your thoughts on further strengthening basic earning power. For a company to develop sustainably, it needs to set milestones and, upon reaching these milestones, conduct reviews of its achievements. ITOCHU holds equity interests in the upstream Natural Resource / Energy- Related Sector. Strong market prices through 2008 were of unquestionable benefit to our earnings base. Also, we were able to explore business opportunities relatively easily thanks to the favorable management environment. However, altogether different market conditions prevail in the wake of the simultaneous worldwide recession. Opportunities no longer present themselves. Rather, current conditions require proac- tive efforts to develop opportunities. ITOCHU, Now and in the Future, in the Words of President Masahiro Okafuji 17 ITOCHU, Now and in the Future, Words of President Masahiro Okafuji

You have spoken of strengthening workforce capabilities. As my experience to date has put me into constant contact with consumers, I am confident that the basis of business is to look at business from a consumer viewpoint. Salespeople must get out into the market, where they can gain a visceral understanding of the changes that are taking place all around them, see new business opportunities, and take the lead in forging new business models. The same attitudes are required for administrative divisions. Visiting operational frontline sites can help them function from an entirely new perspective. Strengthening workforce capabilities requires creating an environment that encourages individuals to maximize their skills. Looking back at the past, over the years ITOCHU employees operated at their own discretion and created businesses. This may partly be attributable to our origins as an independent trading company. Unfortunately, this characteristic “ITOCHU quality” seems to have faded in recent years. I would like us to return to an open and active corporate culture in which people take on challenges without worrying about failure excessively. To achieve this goal, we began revising the various regulations that hamper sales activities. When the economy is strong, business opportunities tend to become large. Some of these involve relatively high levels of risk, and stringent rules may be necessary to rein in that risk. This is like carefully using the brakes when driving an automobile on an expressway. But the current environment is different. It is often said that “businesses are living things, always changing.” Such change has become more drastic, and spending undue energy worrying about risk prevents companies from taking advantage of opportunities. We need to review our organization and rules from the viewpoint of enabling sales personnel to be nimble and free to take expeditious advantage of opportunities. When driving up a slope, your foot needs to be on the accelerator. Recently, ours has been on the brakes. By no means do I disregard risk control. I believe that employees should not be overly shackled by rules and should have a certain amount of leeway to operate at their own discretion while minimizing risk. Building a structure that encourages this type of autonomy will strengthen workforce capabilities. I plan to spend one year in promoting this objective. Looking at business from a consumer viewpoint will not, on its own, guarantee a company’s survival in current-day markets, with their blindingly quick shifts. For example, I have been involved in the textile business. Boasting No. 1 sales in the brand business among Japanese trading companies, we are without peer. We owe our standing today to frontline operations that have, amid significant changes in market struc- tures, always created new business models based on two principles: taking the initiative and pursuing added value. We must continue to study the peculiarities of individual markets, add value, and seize the business initiative. I will ensure these principles per- meate the entire company. 18

How do you intend to boost earnings during the final year of Frontiere 2010? Our numerical targets for fiscal 2011, the final year of Frontiere 2010, are gross trading profit of ¥1,080 billion and net income attributable to ITOCHU of ¥160 billion. To achieve these goals, I aim to thoroughly implement the three new management principles: “earn,” “cut,” and “protect.” “Earn” means that we will continue to strengthen workforce capabilities, as I mentioned earlier. At the same time, we will promote carefully selected new investment projects, while replacing assets by withdraw- ing from businesses that we have less reason to hold. In this way, we will expand and improve our earnings platforms. Also, we will reform the rules and standards that do not reflect the particular characteristics of

ITOCHU, Now and in the Future, Words of President Masahiro Okafuji individual businesses. ITOCHU comprises seven Division Companies. We will set the performance criteria even higher for highly profitable businesses or businesses in markets with strong growth potential to make them even more robust. At the same time, for businesses in difficult business environments we will establish reasonable targets commensurate with their circumstances, helping them to regain earning power. Thus, our target-setting and business development policies will vary for different types of business. While avoiding the risk of over-concentration in specific businesses, we will prioritize our investments in areas that promise high levels of growth, thereby maximizing earnings. Next, we will “cut,” meaning to reduce expenses. Although the business environment is on a recovery trend, we will not take this upturn for granted in the way we conduct our operations. ITOCHU and its affiliates still have room to cut costs. We will review all manner of expenses, as we work to engineer a turn- around in Group earnings. The final principle is “protect.” This principle refers to maximizing final profits by omitting “leakage.” By upgrading risk management, we will remain vigilant to prevent bad debt losses as well as investment- related losses.

What closing message would you like to send stakeholders? I would like to emphasize to stakeholders that ITOCHU is a company with great potential. Our Natural Resource / Energy-Related Sector is well balanced in terms of products and geographic regions, and we have a strong Consumer-Related Sector. We are also poised to make steady progress in China, and we have the leeway to improve our earning power. I promise that, by thoroughly implementing the three principles of “earn,” “cut,” and “protect,” we will realize our potential and work to meet stakeholders’ expectations. Throughout its history spanning more than 150 years, ITOCHU has developed an open and active corporate culture and a willingness to take on challenges without being overly hampered by risks. We will reinstate this culture, as we work to become an even more attractive company. Going forward, we will do our utmost to meet the expectations of all of our stakeholders. 9

Special Features Capturing New Growth Opportunities

ITOCHU as a general trading company has a distinc- Opening Up the tive presence in global markets. Typically, general Massive Consumer Market in China trading companies are set apart by their approach of “maximizing profits by leveraging a range of capabilities through combinations of trade and investment.” They do not own production facilities. page 20 They do, however, concentrate the distinctive features of a wide range of businesses into a single Supporting Stable entity, and as a result, they have business models Supplies of Natural Resources that are more diverse and more complex than and Energy those of other companies. In new growth fields, general trading companies page are currently caught up in intense competition that 24 transcends industries and national borders. In this feature, case studies are used to illustrate the Targeting Growth Opportunities approach of ITOCHU, as a general trading compa- Driven by Change ny, to growing fields, and how that approach differs from those of companies in other industries.

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Special Features Capturing New Growth Opportunities 1 Opening Up the Massive Consumer Market in China

Nominal GDP

(Billions of dollars) GDP Growth of 8.7% 20,000 In 2009, when developed countries remained mired in 15,000 turmoil, China became the first market to recover, supported by 4 trillion yuan of economic stimulus measures. 10,000 Accompanying urbanization, social infrastructure development is generating a variety of business opportunities, 5,000 such as strong demand for steel. Since the second half of 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 the 1990s, China has been transformed from “the world’s (CY) (Outlook) factory” into “the world’s consumer market,” primarily Source: IMF World Economic Outlook 2009 along its coastal region. With increasing disposable Japan China North America incomes, consumer values are changing to a stronger orientation toward “safety and security.” Under the leader- ship of the government, consumer markets are being Transition from “the World’s Factory” to “the World’s Consumer Market” expanded to inland areas as well. (%) In the near future, China is expected to surpass the 50

United States and become the world’s largest economy. 40 Companies around the world, especially those in devel- 30 oped countries that are confronting the reality of sluggish growth in their own markets, are focusing their 20

attention on the huge consumer market—the 1.3 billion 10 people in China. 0 020100 03 04 05 06 07 08 (CY) Source: Prepared by ITOCHU from materials of the National Bureau of Statistics of China Rate of growth in total foreign trade Rate of growth in nationwide retail sales of consumer goods Opening Up the Massive Consumer Market in China 21 Special Features

ITOCHU’s Strategy as a General Trading Company in China Our Biggest Asset: Relationships of Trust with Leading Partners In March 1972—half a year before the normalization of Sino-Japanese diplomatic relations— ITOCHU became the first general trading company to resume trade between Japan and China by obtaining formal ratification from China’s State Council. Since that time, we have invested management resources continuously and intensively, based on our belief in the future potential of the market. We have built our current competitive foundation in China over a period of 40 years. That foundation includes 17 branches and offices, in the top ranks among general trading companies, personnel with extensive knowledge of China, a broad network of personal contacts, and know-how needed to be successful in the Chinese market. China can be a difficult market for foreign companies. It is not easy to establish a sales network and build brand status independently in China, where business practices and consumer preferences are substantially different from those in other countries. The secret of success in business ventures in China is the establishment of mutual relationships of trust with business partners. ITOCHU already recognized the potential of the Chinese consumer market in the 1980’s through hands-on experience. Rather than short-term profits, we gave priority to building relationships of trust with leading companies that have competitive products or ITOCHU in China: 40 Years of Growth Obtained ratification for the resumption of Sino- sales and distribution networks. It goes without saying that these 1972 Japanese trade (first general trading company). relationships were not built overnight. Our investment in one of Established a representative office in Beijing 1979 (first general trading company) China’s leading major conglomerates—Shanshan Group Co., Ltd., Established a local trading subsidiary in 1992 (28% ownership) in February 2009 is the product of cooperative Shanghai (first general trading company) Obtained approval for an umbrella company ventures extending back over 15 years. In addition, our strategic 1993 (first general trading company) alliance with the Ting Hsin Group and our investment in Ting Hsin Obtained approval for multinational company 2005 “regional headquarters” (Cayman Islands) Holding Corp., which will be discussed in (first general trading company) more detail later in this report, are based on relationships of trust 2009 Invested in Shanshan Group Co., Ltd. established by generations of ITOCHU leaders. In fact, the strong Invested in Ting Hsin (Cayman Islands) 2009 relationships of trust built up with these leading companies are Holding Corp. ITOCHU’s greatest asset and competitive advantage.

Aiming for Mutual Development through the Establishment of Win-Win Relationships We will explain our distinctive approach as a general trading company in the Consumer-Related Sector, where we have strengths compared with other general trading companies. As it is essential in business to build win-win relationships with partners, we believe that our partners should be the main players. On the other hand, ITOCHU helps its partners to increase their competitiveness by providing management know-how and leveraging the strengths of a general trading company, such as organizing alliances. A good example is our relationship with the Shanshan Group, which got its start in the area of textiles but has expanded its business domain to the areas of natural resources and energy, electronic components, food, finance, and real estate. We are expanding the scope of this relationship, which entails cooperative initiatives in brand businesses, in which ITOCHU has notable strengths, as well as in such businesses as real estate development and lithium-ion batteries. These cooperative initiatives reflect the expectations of the Shanshan Group towards ITOCHU’s supporting functions in various fields. ITOCHU can actively contribute to trade flows through the establishment of joint ventures and through direct investment in holding companies. In particular, in the Consumer-Related Sector, we are moving forward with the construction of a value chain that extends from upstream to downstream. There are two main goals. The first is the multifaceted expansion of trade through the activa- The Road to ITOCHU’s Investment in the Shanshan Group tion of trade flows, and the second is growth 1993 Began to commission production of products for Japan in business income and dividend income ac- Around 2000 Searched for tie-ups in brand businesses in the Chinese market companying increases in the enterprise value November Established JIC GARMENTS (NINGBO) LTD., a brand-related joint venture. Began joint initiatives for Marco Azzali brand. of the companies in which we have invested. 2001 Established joint ventures, LE COQ SPORTIF (NINGBO) CO., LTD. 2004 The following pages provide a detailed and RENOMA (NINGBO) APPAREL CO., LTD. Reached agreement on acquisition of shares in Shanshan Group January 2009 explanation, using as an example our opera- Co., Ltd. tions in the food business area, which reached Taking advantage of the business tie-up, actively provided ITOCHU’s management resources and further opened up the From 2009 a major turning point with our investment in Chinese market. Advanced cooperative ventures in a wide range the Ting Hsin Group. of business areas, such as lithium ion batteries. 22

A Key Foundation in a 1.3-Billion-Huge Consumer Market Special Features Strategic Tie-up with the Ting Hsin Group Drives Significant Advances in ITOCHU’s China SIS Strategy Ting Hsin: A Major Food Business Group with Operations in China and Taiwan In November 2008, a signing ceremony was held for ITOCHU’s investment in Ting Hsin (Cayman Islands) Hold- ing Corp., through which ITOCHU acquired shares and underwrote a third-party allocation of new shares from Ting Hsin (Cayman Islands) Holding Corp. It was a moment for commemoration of the success of the relationship of trust built up over many years between the Ting Hsin Group, a major food business group with operations in China and Taiwan, and ITOCHU, which has placed first priority on the Chinese market for many years. At the same time, it was also a moment in which ITOCHU’s China food strategy entered a new phase. Tingyi (Cayman Islands) Holding Corp., which is the Ting Hsin Group’s largest operating company and is listed on the Hong Kong Stock Exchange, has recorded sales growth of 2.75 times over the past five years. In fiscal 2009, it recorded sales of more than $5.0 billion, and at the end of December 2009, its total stock market capitalization was more than HK$100.0 billion (about ¥1.2 trillion). With outstanding brand strength and growth potential, it is one of China’s leading food manufacturing companies. Tingyi, a manufacturer of processed food products such as noodles, beverages, and confectionary, has, on a unit basis, a 41.7% share of the instant noodle market in China, which is the world’s largest consumer market for instant noodles, and it is recording sales growth of more than 10% year on year. In addition, in more than 10 years since it entered the beverage business, Tingyi has built the leading brand in the The Ting Hsin Group: bottled tea and water category. On a unit basis, it has a 50.4% share of the An Overwhelming Market Presence tea beverage market and a 21.4% share of the bottled water market. It is (Tingyi (Cayman Islands) Holding Corp: The Group’s recording sales growth of more than 30% in the beverage market. These largest operating company) figures alone demonstrate the potential of the Chinese market and the Sales growth over About Total market 2.75 strength of Tingyi’s brand in China*. Furthermore, it has introduced the times the past five years ¥1.2 capitalization* trillion latest production lines, and, to a similar extent to Japanese companies, it recognizes quality control as a management risk and has established rigor- 41.7% 50.4% ous hygiene standards. Under the motto “No. 1 in Asia in quality,” it has Share of Share of tea overwhelming brand strength in China. Moreover, the Ting Hsin Group has instant noodle beverage market market independently built China’s largest sales and distribution network, and it is focusing assiduously on human resources development. It is unstinting in the use of post-tax profits, allocating 3% for human resources develop- Share of bottled 21.4% water market ment. More than anything else, the Ting Hsin Group is deeply knowledge- able about the Chinese market. The relationship between this huge food * Listed on Hong Kong Stock Exchange; as of the end of 2009 business group and ITOCHU dates back to the signing of a comprehensive strategic alliance agreement in 2002. * Source: Tingyi 2009 Annual Report

Relationships of Trust Built Up Over Time Since ITOCHU started its strategic alliance with the Ting Hsin Group in 2002, successive generations of ITOCHU leaders have taken the lead in advancing personnel exchanges. In fields ranging from raw material procurement to distribution, ITOCHU has pursued an array of possibilities to support the operational expansion of the Ting Hsin Group. Over that period, ITOCHU has served as an intermediary in a substantial number of joint ventures. These include convenience store operations with FamilyMart Co., Ltd., production of beverages with Asahi Breweries, Ltd., production and sales of beverages with Kagome Co., Ltd., production and sales of premix flour with Nippon Flour Mills Co., Ltd., and China’s first mass production bread operations with Shikishima Baking Co., Ltd. Japanese partner companies have been able to establish a bridgehead in the Chinese market, with its 1.3 billion consumers, and the Ting Hsin Group has been able to expand its operations while simultaneously benefitting from Japan’s world-leading production and hygiene technologies. ITOCHU, meanwhile, has been able to expand its business opportunities in mainland China. Our largest investment in China was made possible by the steady and step-by-step cultivation of relationships of trust in this manner, whereby the partners compensate for each other’s weaknesses and leverage each other’s strengths. Participation in the Ting Hsin Group’s management has further strengthened the mutually supportive relationship between ITOCHU and the Ting Hsin Group. As the Ting Hsin Group records sustained growth and turns its attention to global markets, ITOCHU’s know-how in such areas as business management and internal control will be a major source of strength. Through this relationship, ITOCHU has been able to give shape to its China SIS (Strategic Integrated System) strategy. Opening Up the Massive Consumer Market in China 23 Special Features

Establishing the Foundation of Our China SIS Strategy SIS strategy that is being advanced by ITOCHU in the food business area comprise the establishment of a value chain that is based on customer needs and seamlessly links upstream food resource development, raw material procurement, and processing; midstream distribution; and downstream retail sales, thereby realizing efficient production, distribution, and sales. Our China SIS strategy is the foothold for the global development of these strategies. In 2007, we commenced a tie-up with the General Administration of Land Development of Heilongjiang Prov- ince (Beidahuang Group), a leading supply region in China. In 2008, we started an alliance with COFCO Limited, China’s largest grain importer, and have established a foothold in upstream raw material procurement. In addition, in 2009 we enhanced our presence in intermediate product manufacturing by taking an equity position in Shan- dong Longda Meat Foodstuffs Co., Ltd., a member of Longda Foodstuff Group Co., Ltd., with which we have worked for many years. In conjunction with these efforts, by advancing investment in and strategic alliance with the Ting Hsin Group, which has operations from midstream to downstream, we have completed a major element of the foundation to further our SIS strategy in China. The expansion of ITOCHU’s commerce in a large value chain centered on the Ting Hsin Group opens up trade expansion possibilities for ITOCHU. Moreover, in regard to the sales and distribution network that extends to every corner of China through TingTong (Cayman Islands) HoldIngs Corp., a joint venture with the Ting Hsin Group; and ITOCHU’s subsidiaries, ITOCHU Logistics (China) Co., Ltd. (formerly Beijing Pacific Logistics Co., ltd.), and Beijing ITOCHU-Huatang Comprehensive Processing Co., Ltd., will play an important role in expanding our marketing area.

Overview of China SIS Strategy

Domestic raw material suppliers in China Overseas raw material suppliers EGT CGB Raw materials General Burra Foods Development, Enterprises, and ingredients Administration of Land Pty Ltd. COFCO Development of LLC. Inc. Heilongjiang Province South America Australia Raw materials Food Existing businesses ingredients Product Ting Hsin Group Processed foods Longda Oil business Flour mill business manufacture Fats Instant noodle business Beverage business Processed foods Snack business Chilled beverage business Distribution Food wholesale business (Zhongxin and Beijing Bakery business ITOCHU-Huatang Comprehensive Processing Co., Ltd.) Logistics business Food services business Convenience store business GMS / SM Convenience stores Retail Food services

Reinforcing the Foundation and Expanding around the World ITOCHU has set the stage. Moving forward, we will transition to the phase of reinforcing the foundation and then expanding into more specific areas. As the coordinator, ITOCHU is stepping up the pace at which it arranges tie-ups between the Ting Hsin Group and companies that combine superior technologies and brands with a strong desire to understand and open up the Chinese market. The capital and business alliances with Uny Co., Ltd., and Izumiya Co., Ltd., which are large domestic retail companies, have the objectives not only of pursuing economies of scale in the domestic market but also of bolstering operations in the downstream retail field in China. In addition, ITO- CHU is also taking steps to build a global food resource supply system, such as moving ahead with a new construction project for an export grain terminal (EGT) with the largest loading capacity on the west coast of the United States and investing in an Australian dairy products manufacturer. However, the primary target of those initiatives is China, a huge consumer market with a population of 1.3 billion. From its starting point in China, ITOCHU will strive to expand its SIS strategy to Asia. Our goal is to be one of the leading food companies in Asia. Under the SIS strategy, from a global viewpoint, we will link everything from production bases to consumers, and synergistically expand trade and business earnings. This approach to overseas markets leverages ITOCHU’s strengths as a general trading company that can independently generate trade flows while drawing on its own comprehensive strengths, based on a firm foundation of partnerships.

Special Features Capturing New Growth Opportunities 2 Supporting Stable Supplies of Natural Resources and Energy

Port Hedland iron ore shipping port in Western Australia

Outlook for Seaborne Iron Ore Supply Demand (Million tons) 1,500 The rising price of crude oil, which reached $140 a barrel at one point in 2008, is still fresh in everyone’s memory. 1,000 Under the global economic recession, the price subsequently declined to reflect actual demand, but it is widely considered inevitable that the demand-supply balance 500 for natural resources and energy will tighten over the long term. That trend is taking place against a back- 0 090807 10 11 12 13 14 15 ground of long-term structural factors, such as the grow- (CY) (Outlook) Source: ITOCHU research ing share of emerging countries in the global economy. The rapid growth of emerging countries is giving rise to massive demand for natural resources. In 2009, crude steel production was down across the board in developed countries, but in China it was up by 14% in compar- Outlook for Worldwide Primary Energy Demand ison with 2008, to 568 million tons. Energy demand also (1,000 trillion BTU) 800 continues to increase steadily. The IEA (International

Energy Agency) is forecasting that worldwide primary 600 energy demand in 2030 will increase by about 60% from the level in 2000, with growth driven by China and Asia. 400 Securing stable supplies of natural resources and 200 energy has become an important policy issue for countries around the world, and especially for Japan, which is 0 060590 10 15 20 25 30 almost entirely dependent on imports, this has become a (CY) (Outlook) Source: International Energy Outlook 2009, U.S. Energy Information matter of the greatest urgency. Administration Supporting Stable Supplies of Natural Resources and Energy 5 Special Features

ITOCHU’s Natural Resource and Energy Strategy The Three Operational Functions of ITOCHU ITOCHU has three operational functions in the natural resources and energy businesses. The first is as a trader. In resource-poor Japan, the industrial structure has been developed through the import of raw materials and the export of manufactured goods, and ITOCHU has played an important role in imports and exports. In terms of trade with Japan, ITOCHU is currently in the top ranks among general trading companies in the fields of iron ore and petroleum. We also rank second in the world in uranium trade. When Japan was in the midst of a period of high economic growth, it needed to secure independently developed natural resources. In 1967, through capital participation in the Mount Newman joint venture in Western Australia, ITOCHU complemented its existing business in trade with its first step into the field of mineral resource development. This gave us our start as an investor, our second function. As an investor, we earned profits from the interests acquired through our investment. Currently, we have stakes in multiple iron ore mining joint ventures in Australia, and through continued follow-on investments, these joint ventures have reached an annual production volume of 140 million tons. In coal, meanwhile, we continue to develop new mining concessions and to implement follow-on investment to increase production capacity in the existing joint ventures. In the non-ferrous metals field, we are conducting integrated operations ranging from bauxite mining to alumina refining. Our first step in full-scale energy development was in 1992, following the Gulf War. When the price of oil was declining rapidly, we forecasted that the price would rise over the medium- to long-term, and acquired interests in oil fields in the U.K. North Sea. In 1996, we acquired equity interests in the Azeri-Chirag-Gunashli (ACG) oil field development project, comprising a consortium of oil majors and national enterprises in the Production Attributable to ITOCHU ACG fields, which are located in the Caspian Sea region

Oil / gas approximately 40 thousand barrels a day of Azerbaijan. As a result of steady follow-on investment, by 2009 production had expanded to an average Iron ore approximately 15 million tons a year of 820 thousand barrels a day. In the 2000’s, our long- Coal approximately 8 million tons a year term demand analysis ability, network of personnel connections, and decision-making ability generated substantial results.

Creating Synergies through Natural Resource Development and Trade Before moving on to our third function, we will explain the distinctive features of the business model that incorporates upstream interests and trade. For ITOCHU, the acquisition of upstream interests and trade are the twin key pillars of this business. When acquiring natural resource interests, we aim to also acquire trade rights. In crude oil development, we have acquired trade rights in the ACG project and Sakhalin-1 project. Trade and sales are customer-contact businesses, and through the feedback of information to upstream operations, they make it possible to respond to rapid fluctuations in demand. The distinctive features of the business model of Synergies between Trade and Acquisition of ITOCHU, as a general trading company, are most clear- Upstream Interests ly shown through our third function, as an organizer. This third role is closely linked to the trader and investor roles introduced above. This is explained in detail on the following pages, using as an example our 2008 Earnings investment in Brazil’s NAMISA, which substantially ad- Upstream Trade interests synergies vanced our iron ore business. 26 Special Features

NAMISA Iron Ore Mines in Brazil

The Road to Stable Supply Opened by Partnership Acquisition of Iron Ore Interests in Brazil through Japanese-Korean Consortium A New Point of Entry into South America’s Resource Superpower Currently, China’s imports of iron ore are increasing rapidly. In 2009, imports increased by 41.6% year on year, to 627.8 million tons, and this has tightened the global demand-supply balance for iron ore and coking coal, the raw material for coke. ITOCHU has iron ore interests, principally in Western Australia, and while making continued follow-on investment, we have worked to meet strong short-term demand, keeping an eye on the expansion of demand over the medium- to long-term. On the other hand, we continued to search for additional iron ore interests, with the objectives of pursuing global balance in our mineral resource Outlook for Global Crude Steel Production interests, which had been overly concentrated in Western Australia, and (Million tons) of securing a stable supply of iron ore. A long-held goal was to build a 1,000 strong foothold in Brazil, which is a natural resource superpower on a 750 par with Australia. The tightening of iron ore demand-supply conditions due to the 500 rapid expansion of steel production in China significantly heightened a

250 sense of crisis among steel companies in Japan and around the world. There was a growing conviction that steelmakers should own natural 0 090807 10 11 12 13 14 15 resource interests. In 2008, ITOCHU became an organizer in the forma- (CY) (Outlook) Source: ITOCHU research tion of a Japanese-Korean consortium that participated in international Japan China North America competitive bidding for Nacional Mine´rios S.A. (NAMISA), a Brazilian iron ore production and sales company, which resulted in the acquisition of about 40% of NAMISA stock. The consortium members included leading companies in the steel industry: major Japan’s steel producers—JFE Steel Corporation, Nippon Steel Corporation, Sumitomo Metal Industries, Ltd., Kobe Steel, Ltd., and Nisshin Steel Co., Ltd.—and Korea’s largest steel company, Pohang Iron and Steel Company (POS- CO), which shared the same sense of urgency. ITOCHU invested approximately ¥113.0 billion, its largest-ever investment in an overseas business, and acquired a 16% stake in NAMISA, which is the largest stake among the companies in the consortium. The reliability resulting from linking some of the world’s leading steelmakers, and ITOCHU’s extensive experience in the iron ore business have been highly evaluated by NAMISA’s parent company, Companhia Sideru´rgica Nacional (CSN). That evaluation has been a major factor in the success of this project. The project also benefited from the support of Japanese government-related institutions, which considered the securing of stable sources of production to be an urgent issue.

The Road to Natural Resource Development and Trade Synergies on a Larger Scale The acquisition of natural resource interests through this type of large consortium, which has few precedents, took place in a setting in which each participant was able to reap specific benefits linked to their individual circumstances. In addition to the factors described above, the cooperation of these large steelmakers was also attributable to increased project scales and higher prices for upstream interests. It is not easy for a single company to fund an investment ranging from several hundred billion yen to ¥1 trillion. This is also true for ITOCHU. Next, NAMISA benefited from enhanced possibilities for steadily securing end users through partnerships with multiple major steelmakers. This helped to ensure the success of the project. For ITOCHU, this project became an unparalleled opportunity to demonstrate its capabilities as an organizer, one of the most important strengths of a general trading company, on an unprecedentedly large scale. Furthermore, Supporting Stable Supplies of Natural Resources and Energy 7 Special Features

by implementing a massive investment, we garnered huge trade opportunities. There was an unlimited expansion in business opportunities for ITOCHU, which is active in a wide range of business areas. These opportunities include mining machinery as well as coking coal, vessel chartering business, and trade in steel materials. In addition to the fact that we were able to acquire the interests on a scale next only to those in Western Australia, this project had a major strategic significance for ITOCHU. Iron ore produced in Brazilian mines including NAMISA is known for the world’s highest iron content. Because infrastructure was already in place when the interests were acquired, investment risk was limited, which was another advantage of the NAMISA mines. Through long-term contracts, the project is managed in an integrated process that extends from the mine to the railroad and Win-Win-Win Framework: The NAMISA Project the port of loading. As a result, it was possible to begin production and shipping immediately after the interests • Reduced were acquired. As the global economy showed signs of investment burden Steelmakers • Securing a stable recovery in 2009, shipment volumes increased. This in- supply source • Acquisition of iron ore tegrated process will contribute to shortening the in- • Diversification of interests on a scale next resources only to those in Western vestment payback period. Also, because NAMISA Australia acquired stock in the railroad company, in the future, • Realization of trade and development synergies when production volume increases, our ability to use on a larger scale CSN • Securing end users the railroad infrastructure is guaranteed for an extend- ed period of time.

NAMISA Mines Advantages of infrastructure Itochu’s with integrated operation of ¥113 billion investment mines, railroads, and port Belo Horizonte facilities 2008– Total investment US$2.2 billion 2012 Vitoria 1. Limited investment risk at time of acquisition NAMISA Sales Tonnage* 2009 15 million tons 2. Realization of rapid Mines production to meet Sales Tonnage 2013 38 million tons Casa de Pedra increasing demand plan* Mines 3. Possibility of responding CSN Presidente to long-term shipment * 100% base Vargas Sa˜o Paulo Rio de Janeiro Steel Plant expansion Itaguai Port Santos MRS Railways Vitoria Minas Railways

Building the Road to Stable Supply through an Independent Framework In 2010, a substantial year-on-year increase in sales is forecast. In addition, we plan to advance follow-on investment and to expand sales volume to 38 million tons in 2013. In the future, by turning ultra fine iron ore (pellet feeds) into pellets, which contribute to higher blast furnace productivity, we will increase the competitiveness of the project. Over the medium- to long-term, there is no question that the demand-supply balance for iron ore will tighten. ITOCHU will work to expand production capacity of its iron ore interests while carefully monitoring future demand trends. The acquisition of the project through this consortium provided further confirmation of the high level of effectiveness of ITOCHU’s capability as an organizer. Our policy is not to limit this framework to the iron ore business but rather to develop it in the acquisition of natural resources and energy interests in other areas as well. As an organizer, we will form partnerships with companies that have common goals and strive to achieve our strategic objective of trade and natural resource development synergies. This is an approach to success that draws on the strengths of ITOCHU as a general trading company, which has accumulated information, has developed networks of personal connections, and has established business models in both interests acquisition and trade, through long experience in the Natural Resources / Energy-Related Sector. 8

Special Features Capturing New Growth Opportunities 3 Targeting Growth Opportunities Driven by Change

An example of a solar power generation system installed by Scatec Solar AS in Germany

Japan’s Aging Population (%) Forecast for percentage 65 and older 50 Substantial structural changes are currently underway in a range of fields, and a vast array of new industries are 40 forming at a rapid pace. For example, in Japan, which has 30 a rapidly aging population, the government has clearly 20 positioned medical care, nursing, and health-related industries as drivers of economic growth and has set the 10

goal of new market creation on the order of ¥45 trillion 0 111009 12 13 14 15 20 25 3035 40 45 50 55 by 2020. From a global viewpoint, there are a number of (CY) Source: National Institute of Population and Social Security Research, problems that have the potential to impede the sustain- “Population Projection for Japan,” December 2006 able development of society, and the responses to those problems, such as global warming countermeasures and efforts to secure food and water, are resulting in the emergence of new markets. The worldwide power gener- Projection of Power Generation Capacity for Renewable Energy ation capacity of renewable energy, such as wind power, (GW) biomass energy, and solar power generation, continues to 1,000

grow at more than 8% a year on average and is expected 800 to reach 960 gigawatts by 2030, compared with 135 giga- 600 watts in 2006. In addition, biotechnology and nanotechnology, which have advanced to the application 400

development stage throughout the world, offer a broad 200 range of possibilities. 0 06 15 20 25 30 There is no end to the companies entering these new (CY) growth markets. This is an indication that in these mar- Source: IEA World Energy Outlook 2008 Biomass energy Wind power Geothermal power kets, there are no longer any barriers among industries. Solar power Wave power Targeting Growth Opportunities Driven by Change 9 Special Features

Capturing New Growth Opportunities 3 ITOCHU’s Strategies for Building New Businesses Lateral Business Development in L-I-N-E-s Business Areas ITOCHU has selected the following as priority business areas: Life & Healthcare; Infrastructure, including functional infrastructure and social infrastructure; New Technologies & Materials, such as biotechnology, new materials, and clean technologies; and Environment & New Energy. Taking the initial letter of each business area’s name, and adding an “s” to represent “synergies” among those business areas, we refer to these business areas as L-I-N-E-s. We are now moving forward with the development of these areas as next-generation growing businesses. In almost all of these areas, we are not restricting our maneuverability with short-term profit targets; rather, these are areas that will require a committed approach. In addition, because the business opportunities in these areas are extremely wide-ranging, they present a clear need for sharing information among business organizations and for initiatives that extend across organizational boundaries. Accordingly, under Executive Vice President (LINEs), we have established a dedicated unit for each of these areas to support the initiatives of Division Companies. Espe- cially in the life & healthcare business area, the solar power generation business, and the new technologies & materials business area, these units are leading our development initiatives.

Leveraging Strengths in the Market-Formation Stage with Distinctive Business Characteristics This section explains ITOCHU’s approaches to growing business areas and to the generation of profits, together with its policy for the selection of target business areas. Trade is the fundamental means by which ITOCHU, a general trading company, secures profits. As the scope of a market’s supporting industries broadens, the range of products traded in that market expands, leading to growth in trade opportunities. The following businesses have huge growth potential of trade opportunities: the solar power generation business, which features a broad range of supporting industries in related business areas and ongoing competition in technical development that crosses national borders; the life & healthcare business area, which is undergoing cross-industry expansion; and biotechnology, nanotechnology, and renewable energy, where there is a need to connect the latest technologies and global needs. The key to turning innumerable business opportunities into successes is the ability to match technology seeds with market needs and the ability to coordinate activities among various industries. General trading companies, which have businesses extending over a wide range of business areas and geographic regions, are able to leverage those strengths. One example is the Joint Demon- stration Project on Low-Carbon Transportation System. This project is currently underway as a joint initiative between Tsukuba City and cooperating companies from 15 industries. ITOCHU is working to build value chains while incorporating direct investment. In markets that are in the formation stage and have many new entrants, our objective is to move ahead of other companies, create and control trade flows, and leverage diverse trade opportunities while simultaneously obtaining profits and dividends from companies in which we have invested. In other words, ITOCHU is building a business portfolio based on value chains. In making an investment, as in the medical value chain strategy in the Life & Healthcare business, we look over the entire value chain, from upstream to downstream, forecast market trends, determine the business areas and technologies for which we can influence the entire market, and intensively work on them. The above approach, which draws on the strengths of ITOCHU as a general trading company, is explained in detail on the following pages, using the solar power generation business as an example. Medical Value Chain Development and Services for Hospitals Clinical testing Production and Sales Distribution and Patients

Century Medical, Inc. Imports and sales of medical equipment (100%)

Medical Japan Medical Dynamic Marketing Inc. Equipment Development, production, and sales of medical equipment Healthcare-Tech Corporation (30.0%) SPD and Hospital support for medical materials GOODMAN Co., Ltd. (100%) Development, production, and sales of medical equipment (36.8%)

Medical Collective Intelligence Pharmaceuticals Co., Ltd. ACRONET Corp. Marketing support CRO (100%) 41.5% IML Corporation （） CSO and PET center operation support (100%)

Prevention Wellness Communications Corporation Health management support (100%) * Figures in parentheses indicates ITOCHU’s share 30

Value Chain Created through Comprehensive Capabilities and Special Features Maneuverability Solar Value-chain Strategy Leveraging the Strengths of a General Trading Company The Rapid Rise of the Solar Power Generation Business Around the world, the industrial structure is changing at an accelerating pace. The area of renewable energy is also becoming a giant industry with growing prominence. ITOCHU is laying steppingstones in a range of business areas. And the solar power generation business is a target of focused investment. In the solar power generation market, rapid growth has been recorded since about 2005, with support from government subsidies, the introduction of the feed-in tariff (FIT) system, and growing environmental consciousness mainly in Europe. In addition, market momentum is increasing in the United States, which has clarified its policy of developing renewable energy as a new industry through substantial in- Solar Power’s Share in Renewable Energy Power Generation vestment, as part of the green new deal policy. In the same way, China, (%) 8 Japan, and other countries are shifting their policies toward the development of environmental businesses. In Japan, which has established a tar- 6 get of raising the share of renewable energy to 10% by 2020, subsidies

4 have been revived, and in 2009 a Japanese-style FIT was introduced. In the future, consideration will be given to changing the design of the sys- 2 tem, from the current model under which only surplus power is purchased to a model under which all power generated is purchased. 0 06 15 20 (CY) (Outlook) (Outlook) Due to these types of developments around the world, the solar pow- Source: IEA World Energy Outlook 2008 er generation capacity is expected to grow tenfold from 7 gigawatts in Japan North America Europe Whole world 2006 to 72 gigawatts in 2020.

Leveraging the Strengths of a General Trading Company to Build a Value Chain Among the large number of renewable energies, ITOCHU has focused on the solar power generation business for three reasons. First, solar power generation is distributed power generation. Therefore, as long as insolation is sufficient, it is less susceptible to limitations on installation conditions. This could be a key factor in accelerating the adoption of solar power generation. Second, there is substantial room for cost reductions. Currently, the unit cost of solar power generation is higher than that of conventional power generation, but as technological development and progress in mass production techniques drive down costs, the cost of solar power generation is expected to reach a par with existing power rates in the near future. The final factor is the configuration of the value chain. The length of the value chain is notable, extending from the raw material polysilicon to production of ingots, wafers, cells, and panels; system integration; and power generation operations. Another key feature is the international nature of the value chain. That means that trade and investment opportunities will be plentiful.

Solar Power Generation Value Chain Polysilicon Ingot / Wafer Cell / Panel System Application

Norway System Integrators (SIs) Large-scale Solar New Project Power Generation U.S. Manufacturers of Operations Liquid-crystal-type (Solar Parks) Solar Cells Existing Suppliers Stake: 100% Stake: 85.0% Stake: 4.6% Power Generation Norway / Germany / for Commercial Czech / France Stake: 37.5% Facilities

Thin-film Italy Stake: 43.0% Solar Cell Manufacturers Power Generation for Public Facilities Greece Stake: 40.4%

Power Generation Sales of Solar Cell Manufacturing Equipment / Stake: 84.7% Japan for Homes Trading in Related Materials, Manufacturing Business Targeting Growth Opportunities Driven by Change 31 Special Features

ITOCHU took steps to build a cross-divisional solar value chain, starting with its 2006 investment in NorSun AS, an ingot and wafer manufacturer in Norway. Our objectives are to expand trade opportunities for solar power generation modules and related parts and concurrently to obtain profits and dividends from companies in which we have invested. Subsequently, we invested in six system integration companies in Europe, the United States, and Japan, and we made steady progress in the construction of a value chain. In 2009, to further increase the speed of strategic development, the solar-related businesses that had been advanced by each Division Company were consolidated in Headquarters, and the Solar Business Department was established.

Tie-Ups with Major Players in Key Business Areas The most essential part of ITOCHU’s strategy is to stake out positions in important business areas to expand trade flows. For example, our decision to invest in NorSun AS, which has the technology to manufacture high-quality wafers, was based on the expectation that raw material polysilicon and intermediate-material wafers would become scarce as the adoption of solar power generation picked up momentum. NorSun AS also plays a key role in manufacturing high-efficiency and high-quality solar power cells. Next, we will explain the background of our focused investment of capital in downstream system integrators. In the future, with rapidly increasing competition in the areas of technological innovation and cost reductions, we assume that there will be risks of a dramatic change in the industry structure. On the other hand, marketing capabilities can become a stable strength, and we will be able to flexibly respond to changes in the industry and steadily increase profits. The European system integrators (SIs) in which we invested conduct design and installation of large-scale solar power generation facilities, known as solar parks. In collaboration with superior partners, ITOCHU will enter power generation operations by acquiring solar parks. Another important strategy is to move ahead of our competitors by being the first to enter into partnerships with companies boasting technical and competitive strengths in strategically important business areas and markets. For example, looking at downstream system integrators, we acquired U.S. companies Solar Depot, LLC and Solar- Net, LLC, thereby securing the top share in the U.S. wholesale market for solar power generation systems for industrial and residential use. Also, in April 2009 we acquired Ecosystem Japan Co., Ltd., and as a result we now have one of the top shares of the market for residential-use solar power generation systems. To increase the competitiveness of the companies in which we have invested, we are supporting them from a variety of angles. Ecosystem Japan Co., Ltd. is a good Synergies with a Wide Range of Fields example. In addition to participating in management and supporting them in the area of procurement, Solar power Implementation Provision of generation of sales tie-up for financial services ITOCHU is working to generate synergies in sales chan- system individual residences • Orient nels by leveraging the ITOCHU Group’s access to a range Sales / • ITOCHU ENEX Corporation installation • YANASE of industries. For example, together with ITOCHU ENEX Provision of added value to customers / CO., LTD., we are expanding sales channels using the LP facilities through solar power generation Support for Introduction of gas individual residence sales network, and with Orient introduction to new counterparties / condominiums / projects Corporation, we are working in the area of installment shops • Offices, branches, • ITOCHU Property and others loans. In addition, we are opening up the market for Development, Ltd. industrial-use systems by utilizing the ITOCHU Group’s • FamilyMart corporate customer network. An example of a solar power generation system installed by Ecosystem Japan Co., Ltd.

Continually Anticipating Changes, and Bolstering and Expanding the Value Chain We have built a foothold in key business areas. Moving forward, in priority markets—the U.S., Europe, and Japan—we will bolster the companies in which we have invested and pursue operational scale throughout the value chain. On the other hand, while giving consideration to bolstering procurement of polysilicon, which is the furthest upstream business area, we will continue to uncover new projects and further extend the value chain. The arrival at so-called grid parity, where the cost of solar power generation declines to the level of existing electric power rates, is likely to be a major turning point toward an upsurge in the adoption of solar power generation. Until that point, we will respond to gradual declines in subsidies and FIT, and build a system that is both appropriate to the circumstances and flexible, with the objective of securing substantial profits in the period of full-scale adoption of solar power generation. This approach to the market leverages the strengths of ITOCHU as a general trading company—comprehensive capabilities, maneuverability, and the ability to gather the latest information. 32 Division Companies

Textile Company Division Companies

Strengths of the Textile Company

Foresight and flexibility to make advance investments in promising businesses, creates new business models and replaces assets constantly Established dominant industry position thanks to tireless development of capabilities in brand businesses Businesses development ahead of competitors, targeting rapidly growing markets in China and Asia Unrivaled value chain strength and earning power in Japanese textile market

Hitoshi Okamoto President, Textile Company

Our basic strategy is, first, to build value chains in the apparel products business Main Initiatives in Fiscal 2010 area linking textile raw materials and fabrics through finished products. The second basic strategy is to increase and expand importing, licensing, sales chan- Increased sales for Chinese domestic market by collaborating with partner nels, and product lineups and pursue the long-term stabilization of trade rights companies through a combination of alliances and acquisitions in brand businesses. Also, Expanded women’s innerwear we are exploiting expertise garnered in the textile business to extend our busi- businesses in China ness area to cover a general range of lifestyle-related categories. Focusing on Bolstered overall measures for apparel China and Asia, we are expanding businesses in markets worldwide while seek- OEM businesses with new investee companies ing high-value-added products and services based on a rigorously customer-ori- Undertook initiatives in apparel ented mindset. business area with the Shanshan Group and promoted cross-sectional initiatives in-house Fiscal 2010 Review Accelerating Collaboration with Strategic Partners at Home Invested in Watakyu Seimoa Corporation to enter the healthcare, and Abroad nursing care, and welfare services In fiscal 2010, despite tough market conditions, the Textile Company made business areas large investments in businesses promising immediate, solid earnings and streamlined business management by rigorously reducing expenses. As a result, gross trading profit edged up 0.1% year on year, to ¥102.7 billion. Meanwhile, net income attributable to ITOCHU declined 2.2% year on year, to ¥22.4 billion. And, total assets at the end of fiscal 2010 stood at ¥417.4 billion, up 15.8% from the previous fiscal year-end. In fiscal 2010, the Japanese textile industry saw further market contraction Organizational Structure and significant downturns in markets for textile raw materials, fabrics, and apparel. Similarly, markets in North America and Europe did not emerge from stagnation. By contrast, the Chinese market remained steady thanks to growing Textile Company domestic demand underpinned by economic stimulus measures and, in particu- Textile Material & Fabric Division lar, higher personal income. Aiming to minimize the effect of credit unease and lackluster sales, the Apparel Division Textile Company rigorously managed credit risk and streamlined business man- Brand Marketing Division 1 agement while accelerating initiatives with leading companies that have unshak- Brand Marketing Division 2 able management platforms and excellent access to customers. In the Chinese market, positioned as our most important business hub in Planning & Administration Department Frontiere 2010, we advanced local sales through collaboration with partner Affiliate Administration Department companies. As well as stepping up collaboration in the textile business area with IT Business Development Department Shanshan Group Co., Ltd., which became an equity-method affiliate in February 2009, we advanced cross-sectional initiatives in-house in a range of business areas with the Shanshan Group. Further, we established a firm foothold from which to develop operations aggressively in China’s rapidly growing women’s Textile Company 33 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥122.9 ¥124.6 ¥115.2 ¥102.6 ¥102.7 Equity in earnings (losses) of associated companies (0.5) 1.5 2.0 3.6 8.0 Bolstering Initiatives with Leading Net income attributable to ITOCHU 15.0 17.1 20.5 22.9 22.4 Companies in Japan and Overseas Total assets at March 31 395.4 401.8 364.3 360.4 417.4 ROA (%) 3.9 4.3 5.4 6.3 5.8 Years ended March 31

Net Income from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 ITOCHU Textile Prominent (ASIA) Ltd.* ¥0.0 ¥0.6 ¥0.6 ¥0.6 ¥0.5 ITOCHU TEXTILE (CHINA) CO., LTD. 0.5 0.9 0.9 1.0 0.9 JOI’X CORPORATION 1.2 1.1 0.9 0.4 0.1 Years ended March 31 * Company name changed on February 23, 2010 (Former company name: Prominent Apparel Ltd.) Leilian shop

innerwear market by making a major women’s innerwear group, Dalian Yawen Underwear Co., Ltd., an equity-method affiliate. Dalian Yawen Underwear Co., Ltd., has been ITOCHU’s trading partner since 1998. In Japan, JAVA HOLDINGS CO., LTD., and Leilian Co., Ltd., became consolidated subsidiaries. Together with Sankei Co., Ltd., which became a consolidated subsidiary in fiscal 2009, those new subsidiaries pave the way for Maruko shop developing operations in the Japanese market and overseas markets centered on China with a view to vitalizing the apparel OEM business. The Division Company is advancing capital In brand businesses, we developed operations not only in the textile busi- and operational alliances with first-rate Japanese and non-Japanese companies that ness area but also in the Consumer-Related Sector as a whole. At the same offer solid management platforms or out- time, we stepped up the pace of overseas operational development, a strategy standing points of contact with customers. that LeSportsac, Inc., best exemplifies. Reflecting that strategy, we made a leading Other initiatives included laying steppingstones in the Life & Healthcare garment accessories company, Sankei Co., business area—likely grow as society ages—by concluding a capital and opera- Ltd., a subsidiary in October 2008, and we took a 28% stake in one of China’s major tional tie-up with Watakyu Seimoa Corporation, the largest supplier of hospital corporate groups, Shanshan Group Co., Ltd., linen in Japan. in February 2009. Fiscal 2010 initiatives based on that strategy included taking a 25% stake Fiscal 2011 Strategies in the largest player in the healthcare and Aiming to Increase Earning Power by Strengthening welfare services industry, Watakyu Seimoa Marketing Capabilities Corporation, in August 2009, making the women’s apparel group, JAVA HOLDINGS Business conditions in the textile industry will likely remain tough, particularly in Co., Ltd., a subsidiary in November 2009, Japan. In response, the Textile Company intends to strengthen risk manage- and making Leilian Co., Ltd., a subsidiary in ment and other aspects of business management while adding to marketing January 2010. capabilities and expanding businesses. In another initiative in China, we acquired a Further, the Textile Company will expand initiatives with its affiliates, 28% interest in one of China’s major women’s innerwear companies, Dalian Yawen exchange personnel, and share management expertise in order to raise the Underwear Co., Ltd., in September 2009. The earning power of the Division Company as a whole. aim of that initiative is to establish a strategic Also, we intend to continue strengthening cross-sectional initiatives with the platform in the women’s innerwear market in Shanshan Group in the fast-growing Chinese market. In addition, the Division China, the market which continues to grow Company will step up joint efforts with China’s leading apparel group Youngor more than 30% a year, as well as to launch a Group Co., Ltd., with which we have an existing alliance. And, plans call for foray into the market for corrective undergar- ment by forming a tie-up between Dalian expanding new business areas by entering non-store retailing such as television Yawen Underwear Co., Ltd., and ITOCHU shopping operations. associate company MARUKO Co., Ltd. Through such initiatives in respective regions and areas of the textile industry, the Textile Company will realize synergies throughout the ITOCHU Group and advance strategies in growing markets even more rapidly. 34

Machinery Company Division Companies

Strengths of the Machinery Company

Builds and maintains independent sales networks in regions worldwide for businesses handling plant, ships, automobiles, and construction machinery by increasing the overseas deployment of personnel

Extensive track record in providing total solutions covering the discovery of various types of large-scale plant projects through to arranging of finance and other project formation and facilitation activities; delivery of equipment; investment, development, and operation of businesses in the Infrastructure areas; and provision of a wide variety of after-sales services

Strong relationships with strategic partners in its automobile businesses Toru Matsushima and long track record of trading in North America, Europe, and emerging President, Machinery Company markets

The Machinery Company is involved in a broad range of business areas from Main Initiatives in Fiscal 2010 large-scale plants for gas, petrochemicals, and electric power through to such social infrastructure as roads, railways, and bridges, and other business areas, Participated in Australia’s largest seawater desalination PPP* project including ships, automobiles, and construction machinery. Aiming to benefit and Completed development of the first enrich the global economy, we not only develop businesses in Japan but also biomass power generation project in trade and invest in businesses around the world. Furthermore, we are taking North America steps to create new earnings platforms by developing businesses related to water Concluded agreement on establishing resources and the environment as well as to renewable and alternative energy. first production and distribution company for reverse osmosis membrane elements for seawater desalination in Fiscal 2010 Review Saudi Arabia Exploiting Heavier Demand for Environmental Projects and Purchased additional shares of Century New Energy amid Recession Tokyo Leasing Corporation and stepped up collaboration with it In fiscal 2010, the Machinery Company recorded a 39.8% year-on-year decline in Established an automobile dealer in gross trading profit, to ¥43.3 billion. However, thanks in part to special factors Thailand such as the absence of the previous fiscal year’s impairment loss on automobile- related investment and reserve for tri-nation trade transactions in Mongolia, net income attributable to ITOCHU increased ¥19.1 billion, to ¥3.7 billion, compared * Public-private partnership: a contract format in which the public and the private sectors jointly with the previous fiscal year’s net loss attributable to ITOCHU of ¥15.5 billion. conduct projects Further, total assets at the end of fiscal 2010 amounted to ¥545.0 billion, down 14.8% from the previous fiscal year-end. Having begun from the second half of the previous fiscal year, the worldwide recession continued unabated in fiscal 2010. As a downturn among devel- Organizational Structure oped nations centered on North America and Europe persisted, demand for automobiles and construction machinery decreased sharply. In response to that Machinery Company unprecedented crisis, the Machinery Company took steps steadily in order to further strengthen risk management for inventory and credit exposure. Also, we Plant Project & Marine Division replaced assets and took other measures to restructure operations involved with markets in North America and Europe. At the same time, viewing the changes Automobile & Construction Machinery Division in business conditions as an opportunity, we rebuilt our asset portfolio by accumulating highly profitable assets. With a view to discovering and building new Planning & Administration Department businesses, one of the priority measures of Frontiere 2010, we focused particu- Affiliate Administration Department larly on emerging countries, which recovered from the recession ahead of other

* From the fiscal year ending March 31, 2011, the nations, and environment-related business areas, which are less susceptible to former Automobile Division and the former Isuzu fluctuations in the business climate. & Construction Machinery Division merged to cre- In the Plant Project & Marine Division, we moved forward with initiatives in ate the Automobile & Construction Machinery Division. As a result, the Machinery Company businesses related to renewable and alternative energy and social infrastructure includes two divisions: the new division and the development projects. In North America, a company engaged in the development Plant Project & Marine Division. of biomass power projects, in which we hold a stake through an IPP (independent Machinery Company 35 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥ 68.7 ¥ 89.3 ¥ 99.1 ¥ 71.9 ¥ 43.3 Equity in earnings of associated companies 6.4 5.8 4.8 1.8 10.5 Net income attributable to ITOCHU 12.7 19.9 21.4 (15.5) 3.7 Participating in Australia’s Largest Total assets at March 31 501.8 652.9 709.7 639.9 545.0 Seawater Desalination PPP Project ROA (%) 2.6 3.5 3.1 (2.3) 0.6 Years ended March 31

Net Income (Loss) from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 ITOCHU CONSTRUCTION MACHINERY ¥0.4 ¥ 0.7 ¥ 0.8 ¥ 0.4 ¥ 0.5 CO., LTD. MCL Group Limited 0.4 (0.4) (2.6) (2.5) (0.6) ITOCHU Automobile America Inc. 1.1 1.2 0.6 (1.6) (1.0) Century Tokyo Leasing Corporation* 1.3 1.6 1.5 1.0 6.8 The AquaSure consortium, of which the Years ended March 31 * On April 1, 2009, Century Leasing System, Inc., and Tokyo Leasing Co., Ltd., merged to form Century Tokyo Machinery Company is a member, was select- Leasing Corporation. ed by the Victorian Government of Australia as a preferred bidder for the Victorian Desalination Project, one of the world’s largest seawater desalination projects (daily water power producer) subsidiary, sold one of the largest woodchip-fired biomass supply of approximately 400 thousand tons). power plants in the United States to a major utility firm. The success of the first Upon completion at the end of 2011, that project represents a significant milestone in the promotion of biomass power project—entailing the construction of every- plant development by the Machinery Company. Further, the Machinery Company thing from seawater desalination facilities developed seawater desalination-related projects in Australia and the Middle through to water intake and transmission facilities and power transmission line facilities—will East, regions where pressure on water supplies is rapidly increasing. In July 2009, provide a reliable water supply to Melbourne we participated in Australia’s largest seawater desalination project. Furthermore, and surrounding regions for 27 years. Through in March 2010, we reached an agreement with Toyobo Co., Ltd., and Arabian practical experiences earned from seawater Company for Water & Power Development (APD) to jointly establish a company desalination projects in the Middle East, we for the production and distribution of reverse osmosis membrane elements for will accelerate and expand our activities in the seawater desalination in Saudi Arabia. water sector for such countries as Australia and Asian nations, where pressure on water In the Automobile Division, aiming to take advantage of the rapid increase supplies is rapidly increasing. in demand for motor vehicles in Asia and emerging countries, we established foundations for future development by coordinating closely with strategic partners in Japan and overseas as well as stepping up initiatives to develop automo- Accelerating Power Plant Projects in North America bile retail and financing businesses. For example, we established an automobile dealer for Suzuki vehicles in Thailand. In the Isuzu & Construction Machinery Division, we strengthened initiatives with our close strategic partner Isuzu Motors Limited and sought market strategies and new initiatives in regions worldwide including Japan. In related developments in Japan, Isuzu Motors transferred its domestic sales division to Isuzu Network Co., Ltd., in April 2010. The Machinery Company will continue helping to strengthen Isuzu Network’s domestic sales strategies. In response to the accelerated introduction of renewable energy in the United States, we Fiscal 2011 Strategies established American Renewables, LLC, in Accumulating Strategic Highly Profitable Assets and August 2008 through our IPP subsidiary Tyr Securing Stable Earnings Energy, Inc., in order to advance development In fiscal 2011, the final year of Frontiere 2010, given that certain aspects of busi- of biomass power projects. In fall 2009, we completed the development phase of the first ness conditions remain challenging, the Machinery Company will concentrate its project, the Nacogdoches Power Project, in efforts on revising existing business models while discovering or building new eastern Texas, and sold it to Southern businesses. In the Plant Project & Marine Division, we will strengthen collabora- Company, one of the largest utilities in the tion with strategic partners in order to further advance IPP projects and social United States. Through this, the first and larg- infrastructure-related initiatives. In particular, we plan to focus on renewable est of its project developments, the Machinery energy and businesses involved in water resources. In the Automobile & Company will continue active involvement in power generation plant projects in the United Construction Machinery Division, as well as developing businesses in Asia and States. emerging countries, we will redouble efforts for automobile financing businesses. While continuing to scrutinize asset efficiency, we intend to enhance earning power by investing in promising new businesses. 36

ICT, Aerospace & Electronics Company Division Companies Strengths of the ICT, Aerospace & Electronics Company

IT solutions businesses, centered on ITOCHU Techno-Solutions Corporation, with top-ranked earning power among general trading companies Operates nationwide distribution network for mobile handsets through ITC NETWORkS CORPORATION Large share of market for manufacturing and distributing aircraft interi- or equipment Broad spectrum of business in such business areas as energy storage devices, industrial machinery, and electronic systems in Japan and overseas Hiroo Inoue President, ICT, Aerospace & Electronics Company

The ICT, Aerospace & Electronics Company develops businesses in a wide range Main Initiatives in Fiscal 2010 of business areas relating to IT services, media, the Internet, mobile equipment and services, aircraft, and industrial machinery. In those business areas, our Underwrote third-party allocation of new shares by Ener1, Inc., which is the industry-leading affiliates are further strengthening their core operations. Also, parent company of a U.S. manufactur- with a view to catering to environment-friendly and energy-saving needs, we er of lithium-ion batteries for vehicles are aggressively developing new businesses and technologies in such business Began the Joint Demonstration Project areas as energy storage devices and environmental IT or green technology. on Low-Carbon Transportation System Using Clean Energy Launched business that uses IT to cater Fiscal 2010 Review to companies’ energy-saving needs, Taking a Large Stride Forward in the Energy Storage such as compliance with the Revised Energy Conservation Law Device Business Area In fiscal 2010, the ICT, Aerospace & Electronics Company recorded a 1.7% year-on-year decrease in gross trading profit, to ¥136.4 billion. Partly due to the recognition of impairment losses on investments, net income attributable to ITOCHU was down 25.0% year on year, to ¥6.0 billion. Also, total assets at the end of fiscal 2010 amounted to ¥513.2 billion, an increase of 4.7% from the previous fiscal year-end. In the fiscal year, as most companies curbed IT and capital investment and lowered advertising budgets, we reduced inefficient assets while securing stable earnings platforms and stepping up initiatives in growing business areas. Further, in the commercial aviation business area, which a slump in the aerospace industry affected, we strengthened earnings platforms by expanding ini- Organizational Structure tiatives in upstream business areas. The ICT, Aerospace & Electronics Company steadily advanced efforts in core operations to expand and improve earnings platforms, which is a key measure ICT, Aerospace & Electronics Company of Frontiere 2010, while steadily taking on the challenge of developing new ICT & Media Division business areas related to new technologies and industries. As part of those efforts in core operations to expand and improve earnings Aerospace & Industrial Systems Division platforms, we shifted initiatives toward growing business areas. For example, in Planning & Administration Department the IT services business area we expanded service businesses that are less sus- Affiliate Administration Department ceptible to fluctuation in the business climate, such as data centers and virtual hosting businesses. In the mobile equipment and services business area, which saw lower handset unit sales due to a change in the mobile handset models on sale, we viewed the lengthening of the handset replacement cycle as a business opportunity and concentrated efforts on expanding insurance and warranty services for mobile handsets. In mobile handset sales businesses, we strengthened our sales organization for corporate clients, as a market that is likely to expand ICT, Aerospace & Electronics Company 37 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥116.4 ¥133.5 ¥139.0 ¥138.9 ¥136.4 Equity in earnings (losses) of associated 1.8 (1.5) (1.2) 0.3 2.1 companies Launching the Joint Demonstration Net income attributable to ITOCHU 17.2 11.2 14.6 8.0 6.0 Project on Low-Carbon Transportation Total assets at March 31 524.7 551.2 513.9 490.2 513.2 System Using Clean Energy ROA (%) 3.4 2.1 2.7 1.6 1.2 Years ended March 31

Net Income (Loss) from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 ITOCHU Techno-Solutions Corporation ¥6.6 ¥7.4 ¥ 8.1 ¥ 6.9 ¥ 6.8 ITC NETWORKS CORPORATION 2.1 1.8 1.7 1.6 1.6 Excite Japan Co., Ltd. 0.6 0.2 (1.1) (1.4) 0.0 SPACE SHOWER NETWORKS INC. 0.2 0.2 0.2 0.1 (0.1) Years ended March 31 * The figures for ITOCHU Techno-Solutions Corporation are based on a calculation that includes the figures for CRC Solutions Corp.

Since March 2010, Tsukuba City, Japan, and participating companies have been jointly due to demand for more robust information security and reduction of telecom- conducting Demonstration Tests on Low- munications cost. Those initiatives succeeded, and the solid earning capabilities Carbon Transportation System Using Clean of core IT services and mobile equipment and services businesses underpinned Energy. Focusing on multidisciplinary initiatives, many of which are the first of their kind the Division Company’s earnings. in Japan, the project is tasked with developing In initiatives to develop new business areas, with our sights set on the rapid- battery systems for stationary applications and ly forming electric vehicle (EV) market, in the energy storage device business vehicles as well as systems that enable the area we accelerated the efforts to increase trading in battery products, produc- effective use of electricity from solar power tion machinery, and materials and to develop new service models centered on generation in EVs and stores. ITOCHU Techno-Solutions Corporation and energy storage devices. In December 2009, we underwrote a third-party alloca- many other ITOCHU Group companies are tion of new shares by Ener1, Inc., which is the parent company of EnerDel, Inc., participating in the project, while EnerDel, a manufacturer of lithium-ion batteries for vehicles. Inc., is providing battery systems. Demonstration tests using EnerDel’s battery systems are underway in the Joint Demonstration Project on Low-Carbon Transportation System Using Clean Making a Significant Advance in the Energy. That project is a joint effort between Tsukuba City, Japan, and a group Energy Storage Device Business Area by Underwriting New Shares of Ener1 of collaborating companies, including many ITOCHU Group companies. Moreover, the project is contributing to the creation of a new industry.

Fiscal 2011 Strategies Streamlining Existing Businesses while Strengthening the Development of New Growth Shoots In fiscal 2011, the second year of Frontiere 2010, we will reinforce and expand existing earnings platforms in such business areas as IT services, aerospace, and industrial machinery, with a particular emphasis on business development in China, Asia, and other overseas growing markets. Meanwhile, in the green technology business area and energy storage device businesses we intend to We deepened our relationship with Ener1, focus efforts on the early establishment of new profit-making operations cater- Inc., of the United States, which has strengths ing to environment-friendly and energy-saving needs. in core technologies for clean energy, by While expanding earnings platforms, we will streamline them by disposing underwriting its third-party allocation of new of low-efficiency and loss-making assets. At the same time, we aim to shift the shares in December 2009. In the Ener1 Group, EnerDel, Inc., manufactures lithium-ion bat- allocation of management resources appropriately in order to build a highly teries for vehicles and is the only company in profitable business organization. the United States that has facilities enabling the integrated development and production of lithium-ion batteries for vehicles from electric cells through to battery systems. The underwriting of new shares was a strategically important initiative for ITOCHU, given its positioning of energy storage devices as a priority L-I-N-E-s business area. 38

Energy, Metals & Minerals Company Division Companies Strengths of the Energy, Metals & Minerals Company

Top-ranked earnings platforms and asset efficiency among general trading companies due to highly profitable equity interests Best oil-trading business lines among general trading companies Building well-balanced portfolios in resources development operations in terms of products and regions Second in the world in annual trading of uranium ore

Yoichi kobayashi President, Energy, Metals & Minerals Company

We are working to advance discovery and development of upstream interests as Main Initiatives in Fiscal 2010 well as to build value chains based on the upstream interests, generate synergies between development and trade, and thereby achieve business expansion. Expanded production capacity of existing interests (iron ore and In addition, we are steadily making preparations in the areas of the Environment alumina) in Australia, implemented & New Energy, which is a key business area of L-I-N-E-s, such as biomass and additional development on existing oil and gas projects (Sakhalin-1 and uranium ore. Through long-term and stable supply to multiple countries that Azerbaijan ACG) need resources, we will contribute to the growth of the global economy. Made steady progress in NAMISA project Fiscal 2010 Review Expanded international coal trade Expanding Production Capacity of Existing Interests and Expanded steel product trade by Achieving Profitability in Newly Acquired Interests Rapidly strengthening alliance with Marubeni- In fiscal 2010, the Energy, Metals & Minerals Company recorded gross trading Itochu Steel Inc. profit of ¥141.6 billion, down 36.3% from the previous fiscal year. Net income Established joint venture in Malaysia for solid biomass fuel production attributable to ITOCHU was down 42.8%, to ¥65.7 billion. In the previous fiscal year, we recorded a loss due to the withdrawal from the Entrada Oil / Natural Gas project in the United States, and the resulting rebound effect had a positive influence on earnings in the year under review. However, income was adversely affected by sluggish conditions in natural resources and energy markets in the first half of the fiscal year. Total assets at the end of fiscal 2010 were up 22.9% from the previous fiscal year-end, to ¥1,249.0 billion. In fiscal 2010, we formulated countermeasures to the dramatic fluctuations in the prices of natural resources and energy, such as cost reductions. At the Organizational Structure same time, we moved forward with initiatives under three key measures of Frontiere 2010. In accordance with the first key measure, we expanded production capacity of Energy, Metals & Minerals Company existing interests in natural resources and increased earnings from newly acquired Metal & Minerals Division projects. In Australia, which is the major region of our natural resources development operations, we implemented the expansion (rGP4 and rGP5) of multiple mines Energy Division jointly operated with a major resource company, BHP Billiton Group, and other com- New Energy Department panies. We also approved the pre-sanction funding for the next expansion plan Planning & Administration Department (rGP6). Other investments included initiatives to expand alumina refining operations. In oil and gas development, in the Azerbaijan ACG field and in Sakhalin-1, we Affiliate Administration Section moved forward with additional development targeting expanded production. In fiscal 2010, full-scale operations got underway at NAMISA, in which we took an equity position in the previous fiscal year. Leveraging NAMISA’s infrastructure, we are making steady operational progress. (For more information, please see Special Feature: Supporting Stable Supplies of Natural resources and Energy on pages 24–27.) As for the second key measure, we reinforced trade in individual products. To respond to growing demand in emerging countries, especially in China, we Energy, Metals & Minerals Company 39 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥ 73.9 ¥102.1 ¥127.5 ¥ 222.3 ¥ 141.6 Metals & Minerals 48.2 46.5 50.0 110.7 55.0 Energy 25.6 55.6 77.5 111.6 86.6 Participation in One of the World’s Equity in earnings of associated companies 24.0 27.1 25.5 24.7 9.2 Largest Uranium Ore Projects through Net income attributable to ITOCHU 58.0 80.7 105.7 114.7 65.7 the Acquisition of Kalahari Minerals plc Total assets at March 31 644.4 781.4 916.6 1,016.6 1,249.0 ROA (%) 10.2 11.3 12.5 11.9 5.8 Years ended March 31

Net Income from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 ITOCHU Metals Corporation ¥ 1.0 ¥ 1.2 ¥ 1.4 ¥ 1.4 ¥ 0.8 Itochu Petroleum Japan Ltd. 2.5 5.1 3.6 5.0 0.8 ITOCHU Minerals & Energy of Australia Pty Ltd 25.9 28.9 38.5 71.2 34.1 ITOCHU Oil Exploration (Azerbaijan) Inc. 5.2 21.2 33.4 26.1 6.9 Marubeni-Itochu Steel Inc. 15.9 16.8 16.9 14.8 2.7 Years ended March 31 Through a subsidiary in Australia, we acquired shares of Kalahari Minerals plc. Kalahari is the biggest shareholder of Extract Resources expanded international trade in coal. In steel products trade, we continued to Limited, which owns 100% of the interests in advance our alliance with Marubeni-Itochu Steel Inc., and we concluded contracts the Rossing South uranium deposit in Namibia. for steel rails and other materials for iron ore development projects in Australia. Rossing South is positioned to become a lead- Based on the third key measure, we strengthened our Environment & New ing uranium mine in the world, and is currently under a feasibility study targeting first produc- Energy business, where business opportunities are expanding on a global scale tion in 2013. We will aggressively advance this with support from policy initiatives in major countries. We enhanced our organi- project, which is one of the largest uranium zation and advanced initiatives for new businesses by, for example, establishing projects in the world, with full support from the New Energy Department on April 1, 2009. the Agency for Natural Resources and Energy In biomass fuel, together with FELDA Palm Industries Sdn Bhd, the world’s as well as financial and technical assistance largest palm oil producer, we established a joint venture company in Malaysia from Japan Oil, Gas and Metals National Corporation (JOGMEC). The Division Company to produce solid biomass fuel. We have already established a sales channel for will strive to make a significant contribution to this fuel, and we expect this project to make a steady contribution to earnings the stable supply of uranium to Japan. in the years ahead. In line with the need to reduce emissions of greenhouse gases, there are Building New Crude Oil Production growing business opportunities related to the expansion of nuclear power gen- Platform at ACG Field in Caspian Sea eration in countries around the world. In this setting, the Energy, Metals & Minerals Company has reinforced its initiatives targeting the area of upstream interests for uranium ore. In fiscal 2010, we participated in a feasibility study for a uranium development project in Western Australia and in a development project in Namibia. The development project in Namibia is at a large-scale mine with one of the world’s highest levels of resources, and we expect this project to lead to the stable supply of uranium ore resources to Japan.

Fiscal 2011 Strategies Aiming to Establish a Foundation for Stable and Sustainable Earnings ITOCHU, its consortium partners, and the The fundamental policy of the Energy, Metals & Minerals Company is to estab- State Oil Company of Azerbaijan Republic (SOCAR) have decided to invest in the Chirag lish a foundation for stable and sustainable consolidated net income of more Oil Project, which is expected to further than ¥100.0 million. To that end, the Division Company will work to increase increase crude oil production in the ACG field production attributable to ITOCHU by expanding production capacity of existing in the Caspian Sea in Azerbaijan. interests and generating certain profits from newly acquired interests. In addi- With a total investment of $6.0 billion, this tion, we will strive to discover superior new projects. And through synergies project entails the construction of a new production platform, with production slated to with existing upstream interests, we will strive to expand existing trade and start in 2013. The development is expected to secure new trade. We will also further bolster businesses in Environment & New produce approximately 360 million additional Energy such as uranium ore, biomass, and bioethanol. In the future, the Division barrels of oil and will make a significant contri- Company will contribute to the sustainable growth of the global economy by bution to production attributable to ITOCHU. providing a stable supply to meet demand for natural resources and energy in PHOTO: Courtesy of AIOC (Azerbaijan International Operating Company) emerging countries, which are expected to continue to expand, and by developing businesses that contribute to environmental conservation. 40

Chemicals, Forest Products & General Merchandise Company Division Companies Strengths of the Chemicals, Forest Products & General Merchandise Company

Competitive advantages in building materials-related businesses in North America and Japan Competitive pulp production businesses in Brazil and a global sales network in pulp and paper segment Global procurement capacity and sales network that meet robust demand in chemical area from China and Asia A diverse lineup of competitive products: basic chemicals, plastics, electronic materials, and pharmaceutical raw materials A global sales network for synthetic fiber raw materials and commodity Satoshi kikuchi plastics President, Chemicals, Forest Products & General Merchandise Company

The Chemicals, Forest Products & General Merchandise Company maintains Main Initiatives in Fiscal 2010 close ties, through its operations, with a variety of industries ranging from raw materials to finished products, meeting a broad range of customer needs from a Made C.I. kasei Co., Ltd., a privatized subsidiary global perspective. The Division Company is developing business in new business Established a tire production and sales areas, including Environment & New Energy and Life & Healthcare, which are key company in Russia jointly with The areas of L-I-N-E-s, as it strives to construct a new earnings platform. Yokohama Rubber Company, Limited The Forest Products & General Merchandise Division, which has adopted Capital participation in Hangzhou New “the home and living” as its keywords, is actively engaged in all of the value Huahai Business & Trading Co. Ltd., a leading China‘s general merchandise chains by expanding its operations and trading activities in such segments as wholesaler building products & materials, pulp and paper, and rubber and tires. Established a lithium-ion battery cath- The Chemicals Division also has an extensive product portfolio, ranging from ode material plant in North America various petrochemicals to pharmaceutical products and electronic materials. This jointly with Toda kogyo Corp. division conducts a global trading business involving these items. The division is working to create a well-balanced portfolio through strategic operational investments in China and Asia, as well as in Europe and the United States.

Fiscal 2010 Review Replacing Assets and Accumulating Solid Assets to Expand Trading Profit In fiscal 2010, the Chemicals, Forest Products & General Merchandise Company experienced a 3.7% decline in gross trading profit, to ¥110.1 billion. Net income attributable to ITOCHU, however, increased 1.3% year on year, to Organizational Structure ¥19.3 billion. Total assets at the end of fiscal 2010 were ¥728.0 billion, up 19.1% from the previous fiscal year-end. Chemicals, Forest Products & General In fiscal 2010, various government economic stimulus packages succeeded Merchandise Company in spurring a global economic recovery, which supported a recovery in demand for tires and natural rubber, pulp, chemicals, and such petrochemicals as the Forest Products & General Merchandise raw materials for plastics. The Forest Products & General Merchandise Division Division reinforced its trading capabilities in the pulp and tire segments by strengthening Chemicals Division its overseas sales networks. In Japan, however, the building products & materi- Planning & Administration Department als business suffered a decrease in its earnings year on year due to the effects of Affiliate Administration Department the lowest number of new housing starts since 1964, below 800,000 units. The Chemicals Division, meanwhile, improved its earnings year on year, as it used its global product procurement function to meet robust demand in China. One of the key measures of Frontiere 2010 is to expand and improve earnings platforms. reviewing operations from this perspective, PrimeSource Building Products, Inc., a leading distributor of building products & materials in North America, contributed to overseas earnings. In the North American market, this Chemicals, Forest Products & General Merchandise Company 41 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥111.1 ¥126.2 ¥122.6 ¥114.3 ¥110.1 Forest Products & General Merchandise 72.7 79.4 74.3 66.0 50.3 Chemicals 38.4 46.8 48.3 48.3 59.8 Joint Establishment of Tire Equity in earnings of associated companies 2.8 2.3 2.0 2.9 1.6 Manufacturing and Sales Company Net income attributable to ITOCHU 18.6 24.8 19.7 19.0 19.3 in Russia with Yokohama Rubber Total assets at March 31 634.3 716.8 766.8 611.4 728.0 ROA (%) 3.1 3.7 2.7 2.8 2.9 Years ended March 31

Net Income (Loss) from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 ITOCHU Kenzai Corp. ¥0.8 ¥2.4 ¥0.3 ¥(1.0) ¥0.2 ITOCHU Pulp & Paper Corp. 1.1 0.8 0.6 0.1 0.2 ITOCHU CHEMICAL FRONTIER Corporation 1.3 1.8 1.8 1.1 1.9 ITOCHU PLASTICS INC. 2.6 3.2 3.1 1.6 1.9 Jointly with The Yokohama Rubber Company, PrimeSource Building Products, Inc. 7.7 7.4 6.4 8.3 4.7 Limited, we established YOKOHAMA R.P.Z. Years ended March 31 L.L.C., a tire manufacturing and sales company in Russia, with ITOCHU investing 20%. Located in a special economic zone in Lipetsk, Russia, subsidiary strove to minimize the effects of falling market prices, as new housing this company is slated to commence operations in September 2011, and construction has begun starts in the U.S. fell to approximately 550,000 units—the lowest level on record. of a plant capable of manufacturing 1.4 million Higher earnings from our polyester raw materials business in Ningbo, China, tires per year. Concurrently, we raised our stake contributed to overseas earnings, demonstrating that we have built a quality in YOKOHAMA RUSSIA L.L.C., a joint venture asset capable of generating stable revenues. We also laid the steppingstones for company we established in Moscow with earning expansion in fiscal 2011 and beyond by making strategic and aggressive Yokohama Rubber in April 2005, from 14.9% to 20%. Through these two joint ventures, we investments in business areas promising long-term growth. For example, we plan to enhance our ties with Yokohama established jointly with The Yokohama Rubber Company, Limited, a tire manu- Rubber, as we cooperate to expand manufac- facturing and sales company in Russia. We also made a tender offer for an addi- turing and sales of Yokohama tires in Russia. tional stake in C.I. Kasei Co., Ltd., a core associate in our plastics business, and made this company a privatized subsidiary. Joint Establishment of Lithium-Ion Overseas in chemicals-related businesses, we invested in Hangzhou New Battery Cathode Material Plant in Huahai Business & Trading Co., Ltd., a leading Chinese general merchandise North America with Toda Kogyo wholesaler. This subsidiary and Beijing ITOCHU-Huatang Comprehensive Processing Co., Ltd., another ITOCHU subsidiary, have a complementary relationship in terms of products handled and sales routes. Through this investment, we expect to create a stronger foundation for our earning base in the general merchandise area. In addition, to augment our business in areas related to the Environment & New Energy, a focus of Frontiere 2010, we set up a lithium-ion battery cathode material plant in North America jointly with Toda Kogyo Corp.

In the U.S. state of Michigan, jointly with Toda Fiscal 2011 Strategies Kogyo Corp. we have established a joint ven- Strengthen Existing Profit-Generating Businesses and Build ture to produce and distribute materials for lith- Foundations for New Ones ium-ion battery cathodes. Construction began In fiscal 2011, the second year of Frontiere 2010, we aim to continue boosting in the spring of 2010, and the plant is scheduled to commence operations in 2011. By trading profit, augment and nurture profit-generating businesses, and invest 2015, we intend to expand the plant’s annual strategically in key operational areas, including new business domains. capacity to manufacture enough materials for In the Forest Products & General Merchandise Division, the sales network we 80,000 electric vehicles. At the same time, we have created in the pulp and paper segment has made us the world’s leading converted a Toda Kogyo subsidiary in Ontario, pulp trader. In fiscal 2011, we will further reinforce this network and expand into Canada, into a joint venture that manufactures related areas of business. In the building products & materials segment, we will raw materials for cathode production. By jointly managing these businesses, we will be able to continue to improve the profit-generation capacity of our businesses. In the tire create an integrated manufacturing and sales segment, we will pursue a global strategy that combines trading and operations, operation ranging from raw material procure- as we concentrate on shaping this business into a new pillar of profit generation. ment to the delivery of finished cathodes. In the Chemicals Division, we will reinforce our global trading capabilities Building manufacturing bases in North America while targeting stable profit generation. In addition to our upstream strategy, through these joint businesses will allow us to enter into the United States, Europe and other we plan to continue investing in operations in new business domains, including markets that are expected to grow further. businesses related to pharmaceuticals and secondary batteries. 42

Food Company Division Companies

Strengths of the Food Company

Global expansion of SIS (Strategic Integrated System) strategy Firm operating platforms established in all areas—upstream, mid-stream, and downstream Upstream: Solid overseas food resource supply systems, such as grain-handling operations Midstream: One of Japan’s top-ranked food distribution networks covering all tem- perature ranges Downstream: Points of contact with consumers centered on FamilyMart Co., Ltd., that give accurate feedback on consumer needs to upstream operations Strategic tie-ups with leading companies in China to develop the SIS strategy in China Yoshihisa Aoki Top-ranked among food divisions of general trading companies in President, Food Company Japan, in terms of net income

The Food Company globally advances and develops Strategic Integrated System Main Initiatives in Fiscal 2010 (SIS) strategy that realizes efficient, customer-driven production, distribution, and sales by organically linking food resources development, food resources Made TING HSIN (CAYMAN ISLANDS) HOLDING CORP. an affiliate, which is supply, product processing, midstream distribution, and retail. Our objective is the holding company for the Ting Hsin to become the leading company in the food industry in Japan, China, and Asia Group, a major food business group with operations in China and Taiwan. by upgrading controls for food safety and by leveraging tie-ups with partners in Japan and overseas. Advanced initiatives with the Ting Hsin Group and COFCO Limited in China Fiscal 2010 Review Agreed to participate in the establishment of one of the largest export Advancing SIS Strategy in the Global Market grain terminals (EGTs) on the west coast of the United States. In fiscal 2010, the Food Company recorded gross trading profit of ¥335.5 billion, Invested in an Australian dairy prod- almost the same as that of the previous fiscal year. Net income attributable to ucts manufacturer with the aim of ITOCHU was up 37.8%, to ¥27.8 billion. Total assets at the end of fiscal 2010 expanding sales of milk powder in Asia were ¥1,130.7 billion, up 7.3% from the previous fiscal year-end. Concluded capital and business alli- Accompanying sluggish economic growth in recent years, the domestic ance agreements with each of UNY food industry has come off its peak. Over the medium- to long-term, the Co., Ltd., and Izumiya Co., Ltd., major domestic food industry is expected to face shrinking demand against the back- domestic retail companies ground of an aging population, fewer children, and declining numbers of con- Commenced a tender offer for shares of NIPPON ACCESS, INC. sumers. In fiscal 2010, consumer spending remained conservative, and the demand-supply gap accelerated the move toward industry reorganization. In addition, the industry was marked by intensifying competition that transcended Organizational Structure the traditional industry framework of manufacturers, wholesalers, and retailers. The Food Company has been able to secure revenues and earnings, even in a difficult environment, by responding appropriately to these dramatic fluctua- Food Company tions in its operating environment and advancing the domestic SIS strategy. In Provisions Division downstream operations, we concluded capital and business alliances with UNY Co., Ltd., and Izumiya Co., Ltd., respectively, thereby bolstering our tie-ups to Fresh Food & Food Business Solutions Division boost our ability to respond to changes in the structure of consumption. In mid- Food Products Marketing & Distribution stream operations, to strengthen our business in the intermediary distribution Division area, which is positioned as the pivot of the value chain, we commenced a ten- China Business Development Department der offer for shares of NIPPON ACCESS, INC. (Note: the tender offer was con-

Business Process Operation Department cluded in April 2010.) Markets in China and Asia were affected by the worsening of worldwide Planning & Administration Department economic conditions, but with support from healthy consumer spending, results Affiliate Administration Department were generally solid for the full fiscal year. In China, we made TING HSIN (CAYMAN ISLANDS) HOLDING COrP., an affiliate. In addition, we advanced the global SIS strategy, which is positioned as an important initiative under Frontiere Food Company 43 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥142.6 ¥ 264.6 ¥ 324.7 ¥ 335.6 ¥ 335.5 Equity in earnings of associated companies 9.3 10.2 8.0 10.1 13.0 Net income attributable to ITOCHU 19.4 18.1 18.7 20.2 27.8 Agreement to Build the Largest Grain Total assets at March 31 778.8 1,070.7 1,064.8 1,054.1 1,130.7 Export Facility on the West Coast of ROA (%) 2.6 2.0 1.7 1.9 2.5 the United States Years ended March 31

Net Income from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 NIPPON ACCESS, INC.* ¥0.5 ¥2.4 ¥2.6 ¥3.7 ¥ 4.5 ITOCHU SHOKUHIN Co., Ltd. 1.8 1.4 1.3 0.7 1.7 FamilyMart Co., Ltd. 4.3 4.7 4.9 5.3 4.7 Years ended March 31 * The fiscal 2007 figure for NIPPON ACCESS, INC., is based on a calculation that includes the figure for Nishino Trading Co., Ltd.

Together with Bunge North America, a major 2010. These efforts centered on the advancement of joint activities implemented agribusiness firm, and STX Pan Ocean with local strategic partners that we have aggressively developed in recent (America), a U.S. corporation of South Korea’s years. For example, we built a foundation for new business development in the major marine transportation group, we years ahead, by exchanging a wide range of information and bolstering our agreed to jointly build an export grain terminal (EGT) on the west coast of the United relationships with the Ting Hsin Group and COFCO Limited, which are ITOCHU‘s States. The facilities have the region’s most partners in China. Furthermore, Shandong Longda Meat Foodstuffs Co., Ltd., efficient unloading capabilities, and state-of- became an affiliate, which is a member of Longda Foodstuffs Group Co., Ltd., a the-art equipment will be used to maximize major food manufacturer in China. In the future, we will move ahead with the the grain shipping capacity. In the global SIS integration of livestock operations in China. (For more information, please see strategy, this project is positioned as a means Special Feature: Opening Up the Massive Consumer Market in China on pages of expanding the stable supply system for food resources. 20–23.) In advancing the global SIS strategy, securing and expanding upstream food resource procurement and processing bases is also an extremely important task. Bolstering Partnerships in Domestic Food Distribution We undertook a number of new initiatives during the year. These included agreeing to establish an export grain terminal (EGT) on the west coast of the United States with the region’s most-efficient grain unloading capabilities and the largest grain shipping capacity, entering the milk powder business through an investment in an Australian dairy products company, and concluding an agreement regarding capital participation in an agricultural products purchasing and sales company in northeastern China. Each of these initiatives is principally intended to strengthen ITOCHU’s systems for the supply of food resources to users in Asia, Japan, and China.

Fiscal 2011 Strategies Aiming to be the Leading Food Company in Asia

In Frontiere 2010, with the objective of establishing an earning base that can generate net income on the order of ¥30.0 billion, we will continue to imple- Through capital and business tie-ups, we ment our important policies—advancing the global SIS strategy especially in have strengthened our cooperative relation- China, accelerating the SIS strategy in Japan, and securing and expanding ships with Uny Co., Ltd., and Izumiya Co., resource procurement and processing bases. We will aim to become the leading Ltd., respectively. Through joint initiatives that food company in Asia, Japan, and China. organically combine ITOCHU’s global network and multiple retail support functions with the We will continue to advance initiatives with partners in China, and will store networks and product development establish a food distribution platform in emerging countries. With domestic functions and other management resources partners, we will pursue the benefits of operational alliances through such mea- of each of the companies, we will respond to sures as product development. We will also continue working to secure supply the structural changes in the domestic mar- sources, not only in China but also in North America, Australia, and other ket and advance overseas initiatives, centered on China. regions around the world. 44

Finance, Realty, Insurance & Logistics Services Company Division Companies Strengths of the Finance, Realty, Insurance & Logistics Services Company

Ability to provide integrated solutions of the Division Company’s four functions: finance, insurance, logistics, and construction and real estate A business model that anticipates market environment changes by com- bining finance and insurance Real estate securitization businesses that utilize broad-ranging networks and value chains, and provision of quality manufacturing and services with affiliates centered on the construction and real estate industries A logistics business that differentiates itself through the high-value- added logistics that leverage our general trading company functions kenji Okada President, Finance, Realty, Insurance & Logistics Services Company

The Finance, realty, Insurance & Logistics Services Company deploys its exten- Main Initiatives in Fiscal 2010 sive experience and wealth of expertise, leveraging its know-how and functions in information technology (IT), logistics technology (LT), financial technology Merger between Advance Residence Investment Corporation and Nippon (FT), and other functions developed through its operations as a general trading Residential Investment Corporation company to provide high-value-added solutions. Unified management that Made ITOCHU LOGISTICS CORP. (for- exceeds divisional boundaries provides access to a host of fields and enables the merly, i-LOGISTICS CORP.) a privatized creation of new businesses in global markets, especially in China and Asia, subsidiary which have recently experienced phenomenal rates of growth. Agreed to participate in the outlet mall business in Ningbo, China, through a joint venture with Shanshan Fiscal 2010 Review Group Co., Ltd., and Mitsui Fudosan Co., Ltd. Leveraging Comprehensive Strengths to Tap Post-Financial Crisis Market Potential Commenced realignment of our logistics business in China In fiscal 2010, ended March 31, 2010, the Finance, realty, Insurance & Logistics Services Company posted a gross trading profit of ¥35.6 billion, down 15.2% from the previous fiscal year. The net loss attributable to ITOCHU amounted ¥4.2 billion, a loss of ¥3.0 billion more than in fiscal 2009. Total assets at the end of fiscal 2010 were ¥382.1 billion, up 0.1% from the previous fiscal year-end. Facing the sluggish tempo of economic recovery in developed countries, the Division Company reinforced its management to shore business development, which continued to struggle. Conversely, the Division Company benefited from economic expansion in China and Asia. In the finance and insurance business areas, profit generation through conventional market transactions and the Organizational Structure financing business was sluggish during fiscal 2010. Therefore, we need to further increase asset efficiency in these business areas. Meanwhile, by shifting our Finance, Realty, Insurance & Logistics management resources to China and Asia, we generated solid financial business Services Company results in Asia. A downturn in real estate market prices in Japan hampered operations in the construction and real estate business areas. We responded by Financial and Insurance Services Division redoubling risk management, reducing property inventory, and striving to Construction & realty Division enhance profitability. While real estate operators and funds strove to raise funds and ensure stable management, we succeeded in providing a steady supply of Logistics Services Division carefully selected properties, boosting our industry standing. In logistics, our Orico Business Integrated Department international logistics business experienced a weak rebound in performance, Planning & Administration Department owing to sluggish international trade, but by reinforcing logistics business operations in China and reforming unprofitable businesses, we managed to Affiliate Administration Department strengthen our profit-generation base. In fiscal 2010, the first year of Frontiere 2010, the business environment remained fraught with difficulties. Nevertheless, we believe that by integrating Finance, Realty, Insurance & Logistics Services Company 45 Division Companies

Business Results (Billions of Yen) 2006 2007 2008 2009 2010 Topics Gross trading profit ¥ 46.0 ¥ 43.3 ¥ 41.4 ¥ 42.0 ¥ 35.6 Equity in earnings (losses) of associated companies 8.0 (66.0) 29.6 (2.9) (7.1) Net income (loss) attributable to ITOCHU 9.9 (28.3) 10.8 (1.2) (4.2) The Birth of One of the Largest Total assets at March 31 600.9 524.9 420.5 381.8 382.1 Residential J-REITs ROA (%) 1.6 (5.0) 2.3 (0.3) (1.1) Years ended March 31

Net Income (Loss) from Major Group Companies (Billions of Yen) 2006 2007 2008 2009 2010 ITOCHU Finance Corporation ¥3.2 ¥ 2.3 ¥(7.0) ¥ 0.6 ¥(1.7) ITOCHU Property Development, Ltd. 1.3 0.7 (4.4) 0.3 0.5 ITOCHU LOGISTICS CORP.* 0.6 0.4 0.7 0.1 2.0 Orient Corporation 3.1 (40.6) 19.3 (2.7) (6.2) FX PRIME Corporation 0.3 0.1 0.7 0.9 0.0 eGuarantee, Inc. 0.1 0.1 0.0 0.1 0.1 Years ended March 31 * On January 1, 2010, the name of i-LOGISTICS CORP. was changed to ITOCHU LOGISTICS CORP. In March 2010, Advance Residence Investment Corporation and Nippon Residential Investment Corporation merged, with the our diversity of functions we managed to steadily put in place the stepping- new operation dubbed Advance Residence Investment Corporation. This merger has cre- stones to ensure steady progress in the post-financial crisis world economy. ated one of Japan’s largest residential REITs In the finance and insurance business area, through ITC Investment Partners with residential assets of approximately ¥350 Corporation, which we jointly manage with the Construction & Realty Division, billion. Going forward, the Division Company we developed new financial products and made aggressive inroads into new plans to provide multifaceted support through areas of business, such as linking financial and insurance expertise through the extensive networks of the ITOCHU Group. investment in reinsurance funds. To harness the growth that is expected to con- Accordingly, we look forward to expanding our business opportunities in the residential tinue in China and Asia, we created the China Structured Equity Fund. We also property area through this REIT’s long-term concentrated on providing financial services in the region. and stable growth. In the construction and real estate business area, AD Investment Management Co., Ltd., of which ITOCHU Group is the largest shareholder, The Logistics Business in China implemented a merger between its investment arm, Advance Residence Investment Corporation, and Nippon Residential Investment Corporation. This merger resulted in one of Japan’s largest residential J-REITs. Overseas developments included ongoing efforts to reinforce our alliance with Mapletree Investments Pte. Ltd., developing real estate business in Asia, including China. As a new initiative, through a joint venture with Shanshan Group Co., Ltd., and Mitsui Fudosan Co., Ltd., we are moving into the outlet mall business in Ningbo, China. The facility is scheduled to open for business in spring of 2011. In the logistics business area, we realigned our logistics business in China and began setting up a logistics network in India. These moves are part of our efforts to augment our third-party logistics services in China and Asia, which indicate solid market potential.

To meet burgeoning logistics demand in Fiscal 2011 Strategies China, we are concentrating on restructuring Ongoing Initiatives to Enhance Company Synergies our logistics networks and have begun recon- figuring the Group’s logistics business in the In fiscal 2011, we will redouble our efforts to build company synergies and country. Mainly through ITOCHU Logistics work aggressively to develop business overseas. Specifically, the Financial and (China) Co., Ltd. (formerly, Beijing Pacific Insurance Services Division and the Construction & Realty Division will cooperate Logistics Co., ltd.), and TINGTONG (CAYMAN in asset management businesses, and the Construction & Realty Division and ISLANDS) HOLDINGS CORP., we provide logistics network services throughout China via the Logistics Services Division will step up their joint efforts to form logistics more than 80 logistics centers. Through a tie- funds. Overseas, we will promote business in China and Asia, as we look for up with ITOCHU LOGISTICS CORP., in addition opportunities to apply our new business model. At the same time, we will to services within China, we offer internation- endeavor to raise our operational profitability by concentrating management al logistics services targeting Japan and other resources in key business areas. countries. In the future, we plan to extend this business model to other emerging countries. 46 Headquarters

Division Companies L-I-N-E-s

Toshihito Tamba Executive Vice President (LINEs) L-I-N-E-s is an acronym that encompasses four business areas that will support ITOCHU’s future earnings. Operations were established under this banner in April 2009, with the objective of utilizing cross-sectional synergies to develop and promote new businesses. Frontiere 2010, ITOCHU’s medium-term management plan, specifically focuses on the business areas of Life & Healthcare (L) and Environment & New Energy (E). We are striving to construct value chains to deploy our strengths across both of these areas. In addition, we are emphasizing business creation and development in the areas of Infrastructure (I) and New Technologies & Materials (N). (For more information, please see Special Feature: Targeting Growth Opportunities Driven by Change on pages 28–31.)

III Healthcare Business Department: In the medical and III Solar Business Department: We are striving to establish a health-related business area, which is likely to expand with the value chain across our solar power-related businesses, from aging of Japanese society and falling birthrates, this department raw material production and ingot / wafer manufacturing is developing new initiatives based on a medical value chain through systems integrator businesses that include designing, concept in a broad range of business areas, from upstream selling, and installing solar power generation systems, to solar pharmaceuticals and medical equipment and materials through power generation projects. to downstream hospitals and dispensing pharmacies. During fiscal 2010, we progressed with the construction of During fiscal 2010, we bolstered earnings and implement- a value chain that spanned upstream to downstream areas of ed structural improvements in the upstream medical equip- our solar power-related businesses. In particular, we enhanced ment area, achieving growth in non-consolidated revenue and the operational base of our system integrator businesses in our consolidated operating profit. One specific example of strategic three key markets of Japan, the United States, and Europe. initiatives was the acquisition of domestic sales operations for During fiscal 2011, we aim to upscale earnings based on this the spinal-related products of Showa Ika Kohgyo Co., Ltd., by value chain, while further reinforcing it by implementing new Century Medical, Inc., a wholly-owned domestic subsidiary. In measures for such upstream operations as our raw materials- another example, ITOCHU Corporation, ITOCHU (China) related businesses and such downstream operations as power Holding Co., Ltd., and Goodman Co., Ltd., entered a capital generation businesses. and business alliance with Chinese medical device manufactur- III Innovative Technology Business Development Office: er, Promed Medical Tech (Suzhou) Co., Ltd. During fiscal 2011, This office pioneers new business areas to develop businesses while further strengthening the earnings platform of domestic that will become earnings sources by matching technology operations, we aim to establish and expand business in Asia, seeds in such leading-edge business areas as biotechnology centered on China; the Americas; and other growth markets. and nanotechnology with market demand. The office stakes

Healthcare Business Department: Products handled by Goodman Co., Solar Business Department: Solar power generation plant at the Tokyo Ltd. (left: a PTCA balloon catheter, right: a coronary artery stent) Headquarters of ITOCHU Corporation Headquarters 47 Division Companies

Innovative Technology Business Development Office: Honeycomb pro- Innovative Technology Business Development Office: Honeycomb duced by continuous honeycomb core production technology formed into a complex shape and an application example claims on promising leading-edge technology seeds by unearth- III Corporate Development Office: This office collaborates ing technology seeds based on strategic tie-ups with research with a cross-section of Division Companies to identify, develop, organizations in Japan and overseas and investing in venture and implement new business opportunities in a variety of stra- companies. Also, the office incubates business projects through tegic sectors, including environment and renewable energy, joint development and marketing with these venture compa- infrastructure, and consumer products & services. Domestically, nies. As these projects become commercially viable, it steadily the office enters into alliances with local governments and transfers them to Division Companies. For example, the project companies to develop and promote new business models and for the continuous honeycomb core production technology, commercialize leading-edge technologies. Globally, the office, which EconCore N.V. of Belgium successfully developed, was in conjunction with government and commercial entities, is handed on to Division Companies after the identification of the implementing smart grid demonstration projects—for example technology seed and its incubation by the office, which led to Tsukuba in Japan, New Mexico in the United States, and the conclusion of an exclusive and comprehensive license Gujarat in India—to gain operational expertise required to agreement between ITOCHU and EconCore in the Asia-Pacific undertake commercial-scale projects. region, including Japan, and the Middle East by fiscal 2010. III Planning & Administration Office, New Business This new project is already contributing to the earnings of the Development: Linking the two departments and two offices Division Companies. mentioned above under the authority of the Executive Vice During fiscal 2011, we will continue to promote strategic President (LINEs), this office prepares plans and strategies, and initiatives through investment in new ventures and joint devel- develops business management systems, aiming to advance L- opment and commercialization of existing strategic businesses. I-N-E-s business projects.

Organizational Healthcare Business Department Structure Executive Vice President (LINEs) Solar Business Department As of July 1, 2010 Innovative Technology Business Development Office Corporate Development Office Planning & Administration Office, New Business Development

Corporate Development Office: A rapid charger and EVs for car sharing Corporate Development Office: Opening ceremony of the Joint introduced in a gas station of ITOCHU ENEX Co., Ltd. on Gakuen Higashi Demonstration Project on Low-Carbon Transportation System Using Clean Odori (street). Energy at Tsukuba City, Japan 48

Division Companies Corporate Planning

Koji Takayanagi Chief Corporate Planning Officer The following organizations fall under the control of the Chief Corporate Planning Officer: the Corporate Planning & Administration Division, which carries out company-wide management planning; the Affiliate Administration Division, the IT Planning Division, and the Research & Policy Analysis Division, which fulfils a backup function for business promotion; the Corporate Communications Division, which supports business promotion through internal and external communications activities; the International Operations Division, responsible for policy planning, coordination, and promotion for international operations; and the ITOCHU DNA Project Office, which takes the lead in reforming and optimizing operations and fosters the recognition of operational improvement among employees. The Chief Corporate Planning Officer also collectively leads and directs the operations of all overseas blocs.

III Corporate Planning & Administration Division: This divi- for the ITOCHU Group and overcome management issues, this sion formulates company-wide management plans, such as division supports the operations of the Group in terms of IT medium-term management plan Frontiere 2010, and promotes systems, preparing IT strategies for the ITOCHU Group and important company-wide management measures by coordinat- developing IT infrastructure. ing with Division Companies. The division also plays a central III Research & Policy Analysis Division: Amid dramatic and role in the practical advancement of strategies for the entire global fluctuations in the business environment, it is becoming ITOCHU Group by allocating management resources, following increasingly important to analyze the environment and prepare the progress of plans, and evaluating business results. forecasts swiftly and accurately. The ITOCHU Group’s think III Affiliate Administration Division: For the entire ITOCHU tank, the Research & Policy Analysis Division, analyzes a range Group to realize its comprehensive capabilities, increasing the of information and prepares various forecasts. earnings of Group companies is critical. Moreover, the Group III International Operations Division: Aiming to increase the must respond to the emergence of more-exacting require- ITOCHU Group’s overseas earnings, this division plans and ments for internal control and other administrative viewpoints. implements measures for international operations and aggres- The Affiliate Administration Division supports Group compa- sively supports Division Companies in their promotion of proj- nies’ implementation of strategies, while participating in man- ects subject to business conditions in each country. In agement of Group companies, with a view to heightening the addition, the division reinforces the functions and the man- entire Group’s comprehensive capabilities. agement systems of overseas offices. III Corporate Communications Division: This division ensures III ITOCHU DNA Project Office: This office promotes the accountability and promotes understanding of the ITOCHU ITOCHU DNA Project—Designing New Age—which com- Group’s management and businesses through a variety of menced in fiscal 2007 in order to foster the recognition of communications activities to a wide range of stakeholders operational improvement among all employees and to inside and outside ITOCHU. increase overall operational efficiency. Under this project, the III IT Planning Division: ITOCHU has to design and operate office is currently supporting each Division Company to incor- effective systems in response to the increasing sophistication porate processes optimally suited to its operation. and complexity of its operations. In order to facilitate strategies

Organizational Corporate Planning & Administration Division Structure Chief Corporate Planning Officer Affiliate Administration Division As of July 1, 2010 Corporate Communications Division IT Planning Division Research & Policy Analysis Division International Operations Division ITOCHU DNA Project Office Overseas Office Headquarters 49 Division Companies

Comments from Overseas Regional Headquarters

North America Central & South America Europe Yoshihisa Suzuki Yutaka Washizu Takeshi Kumekawa President & C.E.O., ITOCHU International Inc. C.E.O. for Latin America Chief Executive for European Operation

Amid economic reces- Central and South Although the European sion in the wake of the America has been steadi- economy is on a path of Lehman shock, the last ly gaining importance as gradual improvement, fiscal year was challeng- a supplier of various nat- financial issues and other ing, particularly for con- ural resources. We are problems still beset EU struction machinery and aggressively focusing, countries and it has yet building material-related from a global perspec- to enter a full-blown businesses. However, tive, on the development recovery phase. During with the onset of eco- of natural resources such fiscal 2011, despite the nomic recovery, the cur- as minerals, forestry, absence of a dramatic rent fiscal year can bio-ethanol, and agricul- economic upturn, we are become a time of inno- tural products. Moreover, promoting business vation and the start of a b u o y e d b y ro b u s t development in such new era. We are striving to achieve sustainable demand in the region, we are aiming to create new areas as the highly promising field of the environment, growth for the 32 companies operating under the earning sources through businesses in such areas as including renewable energy and infrastructure; and ITOCHU International banner and to pursue new social infrastructure, automobiles, industrial plants, brand and consumer goods in which ITOCHU deploys businesses and investments, led by new energy busi- medical equipment, and telecommunications. its strengths. ness such as wind and solar power generation, environment-related technologies, and construction of grain elevators to serve Asian markets.

Africa Middle East Oceania Tomoyuki Akamatsu Masanori Toyoshima Tatsuo Fujino Chief Executive for Africa CEO for the Middle East C.E.O. for Oceania

Africa is being reassessed The Middle East is T h e e c o n o m i e s o f in light of escalating witnessing increased Oceania were relatively resource prices and the expenditures, led by oil- fast to recover from the advance of mining tech- producing nations, with global economic reces- nologies, and is once growth in investment sion compared with again attracting world- in infrastructure and those of other leading wide attention as an petrochemicals. Rising developed regions, with important global supply populations and living resurgence of resource point. In this bloc, we standards are also prices leading to pro- are currently focusing on boosting businesses in nounced recovery from business areas of emerg- the Consumer-Related the latter half of fiscal ing importance, includ- Sector. Ongoing busi- 2010. While continuing ing development of such ness areas of focus in to emphasize such exist- resources as Namibian uranium, in addition to such this bloc include energy, chemicals, plant projects, ing business areas as coal, iron ore, and other miner- existing trade products as automobiles, construction and automobiles. We are also implementing a policy al resources, we are targeting business expansion by machinery, coffee, cocoa, sesame, and woodchips. of developing the Consumer-Related Sector and L-I- further developing businesses in food, forest resourc- N-E-s-related businesses, including renewable energy. es, and timber products, as well as infrastructure projects, such as water and railway.

China Asia CIS Junichi Sasaki Toru Nomura Takahiko Motani President & C.E.O., ITOCHU China Bloc Chief Executive for Asia C.O.O. for CIS

Regardless of financial In Asia, which is exhibit- CIS countries have crisis and export down- ing a strong rebound achieved continuous turn, China achieved the from the global eco- annual GDP growth of GDP growth rate of nomic recession, we are at least several percent- 11.9% in the first quar- targeting earning expan- age points over the last ter of this year thanks to sion from increased decade except 2009 a huge domestic market trade as a result of FTA under the economic cri- comprising a population contracts, led by ASEAN sis. This has been aided of 1.3 billion. The China members and extending by many countries rich bloc will continue to to China and India. In in oil, uranium, and shift its strategy to cooperation with influen- other resources, includ- domestic demand-driven tial regional enterprises, ing Russia, Kazakhstan, business and strive to we are also developing and Azerbaijan. In addi- develop the business in four areas: environmental investment in various business areas and emphasiz- tion to resource-related businesses, in this bloc we protection, energy conservation, resources, and busi- ing infrastructure projects in various countries in a will focus on automobiles, tires, and other consumer- nesses in the Consumer-Related Sector. drive to develop new income sources for the future. related products linked with economic growth, in addition to plant projects, machinery, and raw material businesses, which are indispensible for industrial regeneration. 50

Division Companies Administration

Yoshio Akamatsu Chief Officer for Human Resources, General Affairs, Legal Four divisions are positioned under the control of the Chief Officer for Human Resources, General Affairs, Legal: the Human Resources Division, the General Affairs Division, the Legal Division, and the Trade & Logistics Administration Division. These divisions play a leading role in ITOCHU’s drive to evolve management systems and are working to realize the full-fledged implementation of global human resources strategy, both of which are key measures of Frontiere 2010.

III Human Resources Division: One of the key measures cited III General Affairs Division: The division provides various sup- in Frontiere 2010 is ITOCHU’s aim to advance full-fledged port services, such as facilities administration, documentation implementation of global human resources strategy. The divi- management, and control of security and disaster prevention sion has a central role in achieving this aim and is striving to measures, in order to facilitate smooth and efficient execution reinforce ITOCHU’s personnel capabilities from a global per- of business in pursuit of overall company management targets. spective. It is also pivotal in controlling and promoting human It also promotes CSR and environmental conservation activities resources strategies for each bloc under Global Talent for the ITOCHU Group. In addition, the division is responsible Enhancement Centers (GTECs). In addition, the division works for shareholder relations matters and harmony with local com- to improve the morale and motivation of employees through munities as part of an array of measures to construct favorable the management of human resources systems and policy, and relationships with the diverse stakeholders involved in ITOCHU’s also strives to enhance employee training. Furthermore, the operations. division respects the careers of individuals and aims to create a III Trade & Logistics Administration Division: The division company with employee-friendly work environments and well- supports operational activities through integrated monitoring balanced work styles that enable diverse employees to realize and control of import, export, and logistics, which are particu- their full potential, regardless of age, nationality, or gender. larly important for general trading companies, such as security III Legal Division: Based on its monitoring and analysis of and trade control and customs control; planning and imple- important trends in laws and statutory regulations, this division mentation of trade and logistics policies; and a registration sys- provides recommendations to the management team on tem for logistics contractors. appropriate responses to these trends. Also, the division helps ITOCHU avoid business risk arising from the increasing complexity and globalization of operations by providing advanced legal expertise in relation to transaction screening and business support. In addition, regarding compliance as of paramount importance, the division takes a range of measures to strengthen compliance, including in-house education and awareness campaigns.

Organizational Chief Officer for Human Resources, Human Resources Division Structure General Affairs, Legal General Affairs Division As of July 1, 2010 Legal Division Trade & Logistics Administration Division Headquarters 51 Division Companies

Tadayuki Seki Chief Officer for Finance, Accounting, Risk Management; Chief Financial Officer Four divisions are positioned under the control of the Chief Officer for Finance, Accounting, Risk Management: the Finance Division, the General Accounting Control Division, the Business Accounting & Control Division, and the Risk Management Division, and also advances initiatives to strengthen financial position and to upgrade risk management, which are key measures of Frontiere 2010. In addition to these roles, the Chief Financial Officer (CFO) directly controls the CFO Office, the Investor Relations Department, and the Group Accounting Support & IFRS Office.

III Finance Division: This division realizes flexible and stable Management (ERM), which comprehensively controls risk from funding in response to changes in financial conditions and aims a Group-wide perspective. to strengthen financial foundations. Further, the division is also III CFO Office: In addition to assisting the CFO, this office car- building a global cash management system by developing ries out integrated management of the operation and mainte- Group finance in Japan and overseas. nance of internal control pertaining to the ITOCHU Group’s III General Accounting Control Division: R esponding to consolidated financial reports. changes resulting from increasingly sophisticated and complex III Investor Relations Department: This department provides accounting systems, this division conducts financial accounting investors, analysts, and other stakeholders in Japan and over- operations, such as preparing consolidated and non-consoli- seas with timely and appropriate information. This department dated financial statements and financial reports. In addition, also fosters accurate understanding of the ITOCHU Group’s the division prepares the ITOCHU Group’s accounting policies. management status and strategies through such activities as The division also establishes tax strategies from a global per- planning and facilitating various types of presentations that spective and supports the Group’s growth strategies from the senior management conducts both in Japan and overseas, standpoints of accounting and tax. responding to individual investors and analysts, and preparing III Business Accounting & Control Division: This division annual reports. undertakes comprehensive control operations that reflect the III Group Accounting Support & IFRS Office: This office was operational situations of Division Companies and supports their established in April 2010, with the objective of ensuring appro- operational activities with respect to accounting and tax. priate preparation throughout the Group for the adoption of III Risk Management Division: This division plays a central role International Financial Reporting Standards (IFRSs). The office’s in the management of credit risk and country risk, and controls responsibilities include providing support for consideration of and implements company-wide risk management, led by “Risk Group Accounting Policies and specific tasks of each Group Capital Management (RCM)” based on risk assets. Further, company on the adoption of IFRSs. The office also supports aiming to upgrade the risk management of the ITOCHU Group Group companies’ operations for consolidated financial reports as a whole, the division not only strengthens the management based on currently adopted U.S. GAAP. of individual risks but also develops Enterprise Risk

Organizational Chief Officer for Finance, Accounting, Finance Division Structure Risk Management General Accounting Control Division As of July 1, 2010 Business Accounting & Control Division Chief Financial Officer Risk Management Division CFO Office Investor Relations Department Group Accounting Support & IFRS Office 52 Corporate Officers

As of July 1, 2010

Directors

President & Chief Executive Chairman As a Good Corporate Citizen Officer Masahiro Okafuji Eizo Kobayashi 1974 Joined ITOCHU Corporation 1972 Joined ITOCHU Corporation 2009 Executive Vice President 2004 President & Chief Executive 2010 President & Chief Executive Officer Officer 2010 Chairman

Vice Chairman Director Director Director Kouhei Watanabe Toshihito Tamba Yoichi Kobayashi Yoshio Akamatsu Executive Advisory Officer for Executive Vice President (LINEs) President, Energy, Metals & Minerals Chief Officer for Human Resources, Corporate Administration 1972 Joined ITOCHU Corporation Company General Affairs, Legal; 1971 Joined ITOCHU Corporation 2008 Executive Vice President 1973 Joined ITOCHU Corporation Chief Compliance Officer 2006 Executive Vice President 2010 Executive Vice President 2008 Senior Managing Director 1974 Joined ITOCHU Corporation 2010 Vice Chairman 2010 Senior Managing Executive 2005 Managing Executive Officer Officer 2010 Senior Managing Executive Officer

Director Director Director Director Yoshihisa Aoki Tadayuki Seki Hiroo Inoue Kenji Okada President, Food Company Chief Officer for Finance, President, ICT, Aerospace & President, Finance, Realty, Insurance 1974 Joined ITOCHU Corporation Accounting, Risk Management; Electronics Company & Logistics Services Company 2009 Managing Director Chief Financial Officer 1975 Joined ITOCHU Corporation 1974 Joined ITOCHU Corporation 2010 Senior Managing Executive 1973 Joined ITOCHU Corporation 2008 Managing Director 2008 Managing Director Officer 2009 Managing Director 2010 Managing Executive Officer 2010 Managing Executive Officer 2010 Senior Managing Executive Officer

Director Director Director Director Koji Takayanagi Satoshi Kikuchi Toru Matsushima Hitoshi Okamoto Chief Corporate Planning Officer; President, Chemicals, Forest President, Machinery Company President, Textile Company Chief Information Officer Products & General Merchandise 1979 Joined ITOCHU Corporation 1980 Joined ITOCHU Corporation 1975 Joined ITOCHU Corporation Company 2009 Managing Executive Officer 2008 Executive Officer 2008 Managing Director 1976 Joined ITOCHU Corporation 2010 Managing Executive Officer 2010 Managing Executive Officer 2010 Managing Executive Officer 2008 Managing Director 2010 Managing Executive Officer Corporate Officers 53 As a Good Corporate Citizen

Executive Officers

President & Chief Executive Officer Managing Executive Officers Kimio Kitamura General Manager, General Accounting Control Masahiro Okafuji Hiroo Inoue Division President, ICT, Aerospace & Electronics Company 1975 Joined ITOCHU Corporation 2010 Managing Executive Officer Executive Vice President Yoshihisa Suzuki Shuichi Koseki President & C.E.O., ITOCHU International Inc. Toshihito Tamba 1979 Joined ITOCHU Corporation Executive Vice President, ITOCHU China Bloc; Executive Vice President (LINEs) 2006 Managing Executive Officer Managing Director, ITOCHU Shanghai Ltd.; Group Director, China Business Development Kazutoshi Maeda Group; Senior Managing Executive Officers General Manager, ITOCHU Shanghai Ltd. Wuhan Deputy Chief Officer for Human Resources, Branch General Affairs, Legal 1979 Joined ITOCHU Corporation Yoichi Kobayashi 1974 Joined ITOCHU Corporation 2010 Managing Executive Officer President, Energy, Metals & Minerals Company 2007 Managing Executive Officer Ichiro Nakamura Tatsuo Fujino Yoshio Akamatsu Executive Vice President, Energy, Metals & Chief Officer for Human Resources, C.E.O. for Oceania; Minerals Company; General Affairs, Legal; Chief Compliance Officer Managing Director & C.E.O., ITOCHU Australia Ltd. Chief Operating Officer, Metals & Minerals Division 2006 Joined ITOCHU Corporation 1979 Joined ITOCHU Corporation Nobuo Kuwayama 2007 Managing Executive Officer 2010 Managing Executive Officer Chief Officer for Kansai District Operation Kenji Okada Tomofumi Yoshida 1971 Joined ITOCHU Corporation 2010 Senior Managing Executive Officer President, Finance, Realty, Insurance & Logistics Chief Operating Officer, Forest Products & General Services Company Merchandise Division Yoshihisa Aoki 1979 Joined ITOCHU Corporation Koji Takayanagi 2010 Managing Executive Officer President, Food Company Chief Corporate Planning Officer; Junichi Sasaki Tadayuki Seki Chief Information Officer President & C.E.O., ITOCHU China Bloc; Chief Officer for Finance, Accounting, Risk Toru Nomura Chairman, ITOCHU (China) Holding Co., Ltd.; Management; Chief Financial Officer Chief Executive for Asia; Chairman, ITOCHU Shanghai Ltd.; President & C.E.O., ITOCHU Singapore Pte Ltd.; Chairman, ITOCHU HONG KONG Ltd.; General Manager, ITOCHU Corporation Singapore Chairman, BIC Branch 1979 Joined ITOCHU Corporation 1976 Joined ITOCHU Corporation 2010 Managing Executive Officer 2008 Managing Executive Officer 2009 Managing Director Hitoshi Okamoto 2010 Managing Executive Officer President, Textile Company Satoshi Kikuchi Executive Officers President, Chemicals, Forest Products & General Merchandise Company Kazuhiko Matsumi Takeshi Kumekawa General Manager, Legal Division Chief Executive for European Operation; 1975 Joined ITOCHU Corporation C.E.O., ITOCHU Europe PLC 2008 Executive Officer 1974 Joined ITOCHU Corporation 2009 Managing Executive Officer Hiroo Sato Chief Operating Officer, Provisions Division Yoshiharu Matsumoto 1979 Joined ITOCHU Corporation General Manager for Nagoya Area 2008 Executive Officer 1975 Joined ITOCHU Corporation 2009 Managing Executive Officer Masataka Yukiya Chief Operating Officer, Financial and Insurance Shintaro Ishimaru Services Division Executive Vice President, Finance, Realty, 1979 Joined ITOCHU Corporation Insurance & Logistics Services Company 2008 Executive Officer 2006 Joined ITOCHU Corporation 2009 Managing Executive Officer Masahiro Imai Chief Operating Officer, Plant Project & Marine Toru Matsushima Division President, Machinery Company 1980 Joined ITOCHU Corporation 2008 Executive Officer Yuji Fukuda Nobuyuki Kasagawa Executive Vice President, Chemicals, Forest Products & General Merchandise Company; Chief Operating Officer, Aerospace & Industrial Chief Operating Officer, Chemicals Division Systems Division 1979 Joined ITOCHU Corporation 1981 Joined ITOCHU Corporation 2009 Managing Executive Officer 2008 Executive Officer 54

Nobuyuki Kizukuri Toshio Obayashi Isamu Nakayama Chief Operating Officer, Construction & Realty General Manager, Human Resources Division Vice President, Food Company Division 1981 Joined ITOCHU Corporation 1981 Joined ITOCHU Corporation 1976 Joined ITOCHU Corporation 2009 Executive Officer 2010 Executive Officer 2009 Executive Officer As a Good Corporate Citizen Eiichi Yonekura Masanori Toyoshima Takahiro Susaki General Manager, Corporate Planning & Adminis- CEO for the Middle East; Chief Operating Officer, ICT & Media Division tration Division Chairman of ITOCHU Middle East F.Z.E. 1979 Joined ITOCHU Corporation 1981 Joined ITOCHU Corporation 1981 Joined ITOCHU Corporation 2009 Executive Officer 2009 Executive Officer 2010 Executive Officer Masanobu Takagi Shuichi Hoshi Kazutaka Yoshida Chief Operating Officer, Energy Division Chief Operating Officer, Food Products Marketing Chief Operating Officer, Automobile & 1979 Joined ITOCHU Corporation & Distribution Division Construction Machinery Division 2009 Executive Officer 1979 Joined ITOCHU Corporation 1981 Joined ITOCHU Corporation 2010 Executive Officer 2010 Executive Officer Yukihiro Miyake Hiroaki Tamamaki General Manager, Affiliate Administration Division 1980 Joined ITOCHU Corporation Chief Operating Officer, Textile Material & Fabric 2009 Executive Officer Division 1980 Joined ITOCHU Corporation Yutaka Washizu 2010 Executive Officer C.E.O. for Latin America; Fumihiko Kobayashi President of ITOCHU Brasil S.A. 1980 Joined ITOCHU Corporation General Manager, General Affairs Division 2009 Executive Officer 1980 Joined ITOCHU Corporation 2010 Executive Officer

Auditors

Corporate Auditors

Masahito Tominaga 1971 Joined ITOCHU Corporation 2005 Executive Officer 2007 Standing Corporate Auditor Shozo Yoneya 1974 Joined ITOCHU Corporation 2005 Executive Officer 2008 Standing Corporate Auditor

Outside Corporate Auditors

Haruo Sakaguchi 1989–1990 Vice Chairman, Japan Federation of Bar Association; Chairman, Osaka Bar Association 2001–2006 Chairman, Osaka Public Bid Monitoring Committee 2003 Corporate Auditor, ITOCHU Corporation Ryozo Hayashi 2004– Senior Adviser, NTT DATA Institute of Management Consulting, Inc. a_Masahito Tominaga 2005– c d e Professor, Graduate School of Public Policy, b Shozo Yoneya University of Tokyo 2009 Corporate Auditor, ITOCHU Corporation c Haruo Sakaguchi d Ryozo Hayashi Keiji Torii a b e Keiji Torii 2004–2005 Deputy President & CIO, Mizuho Financial Group, Inc. 2005–2009 Deputy President, Mizuho Information & Research Institute, Inc. 2009 Corporate Auditor, ITOCHU Corporation Corporate Governance 55 As a Good Corporate Citizen

ITOCHU operates its business in accordance with the ITOCHU Group Corporate Philosophy and Code of Conduct. Our fundamental policy is to work toward the long-term preservation and enhancement of our corporate value by building fair and favorable relationships with our stakeholders. To execute our business activities in an appropriate and efficient manner in accordance with our fundamental policy, we are increasing the transparen- cy of our decision-making process and constructing a corporate governance system that incorporates appropriate monitoring and supervisory functions.

Features of ITOCHU’s Corporate Governance System

ITOCHU is “a company with corporate auditors,” in which functions of the Board of Directors from its implementation corporate auditors including outside corporate auditors, of business management. supervise business management independently and objec- One feature of ITOCHU’s corporate governance system tively. Although ITOCHU does not appoint outside directors, is the HMC (Headquarters Management Committee), a sup- it ensures that corporate auditors adequately perform porting body of the CEO, where company-wide manage- supervisory functions by continuously strengthening its cor- ment policy and important issues are discussed and porate governance system in order to heighten the effec- decided. tiveness of auditing. Also, aiming to further raise the quality In addition, management issues in individual areas of of corporate governance by incorporating objective and responsibility are discussed and screened by various internal unrestrained third-party opinions, ITOCHU has established committees in order to support the decision making of the the Advisory Board. CEO and the Board of Directors. Moreover, ITOCHU is Comprising 14 directors as of July 1, 2010, the Board of developing and implementing a system for incorporating Directors makes decisions on important management mat- third-party opinions in which outside experts become mem- ters and supervises each director’s business management. bers of some internal committees. ITOCHU has adopted an Executive Officer System in The table below details steps ITOCHU has taken to order to separate the decision-making and supervisory strengthen corporate governance.

Steps Taken to Strengthen Corporate Governance

1997 Introduced the Division Company System To accelerate decision making / increase efficiency of business management

To strengthen decision-making and supervisory functions of the Board of 1999 Introduced Executive Officer System Directors To improve quality of business management by incorporating objective / 2000 Established the Advisory Board specialized third-party opinions Shortened the terms of office of directors and executive officers 2007 To clarify management responsibility during terms of office to one year

Systems to Ensure Effectiveness of Supervisory Functions

ITOCHU appoints five corporate auditors, of whom three audits. Aiming to facilitate exchanges of information and are outside corporate auditors. Standing corporate auditors close collaboration, members of this division meet regularly strengthen audit functions by regularly attending meetings with corporate auditors to discuss such matters as internal of the Board of Directors and other in-house meetings and audit planning. In addition, the Corporate Auditors’ Office, working in cooperation with ITOCHU’s independent exter- reporting directly to the Board of Corporate Auditors, sup- nal auditors and other audit bodies inside and outside ports corporate auditors. ITOCHU. ITOCHU’s Audit Division is responsible for internal

Relationship of Outside Corporate Auditors with ITOCHU Name Concurrent Position Reason for Appointment Although ITOCHU had concluded a legal adviser agreement with Mr. Sakaguchi before he was appointed as a corporate auditor of ITOCHU, there are currently no material interests between ITOCHU and him. He provides auditing Haruo Sakaguchi Lawyer from an independent perspective by utilizing the understanding of ITOCHU’s business that he gained during the term of the above legal adviser agreement and his many years of experience and knowledge in the judicial world. Professor, Graduate There are no material interests between ITOCHU and Mr. Hayashi before or after his appointment as a corporate School of Public Ryozo Hayashi auditor. He provides auditing from an independent perspective by utilizing his wealth of experience at the Ministry Policy, The University of Economy, Trade and Industry, and his long-term perspective and broad vision as a university professor. of Tokyo Before being appointed a corporate auditor of ITOCHU, Mr. Torii had served as an executive of a major financial institution that has dealings with ITOCHU, but he had retired from his position at the financial institution before Keiji Torii being appointed as a corporate auditor of ITOCHU, and there are no material interests between ITOCHU and him. He provides auditing from an independent perspective by utilizing his many years of experience and insight as an executive of a major financial institution. 56

ITOCHU’s Current Corporate Governance System Election and dismissal Election and General Meeting of Stockholders dismissal

As a Good Corporate Citizen Election and dismissal Board of Corporate Auditors Board of Directors Monitoring and auditing 5 Corporate Auditors 14 Directors 3 Outside Corporate Monitoring and auditing Auditors Appointment and supervision

President and C.E.O. Corporate Auditors’ Office HMC

C.F.O. Independent External Internal Control Committee Auditors

Financial audit C.C.O. Compliance Committee

ALM Committee

Disclosure Committee

Audit Division

Division Companies

Notes: 1 Each Division Company has a Division Company President. 2 Internal control systems and mechanisms have been implemented at every level of ITOCHU. Only the main internal control organization and committees are described herein. Further, the Internal Control Committee receives reports from internal departments related to internal control, the Compliance Committee, the ALM Committee, and the Disclosure Committee on the development and operation of respective internal controls for which they are responsible; evaluates and confirms the overall development status of internal control; and reports items for improvement to the HMC and Board of Directors.

Principal Internal Committees Name Objectives

Internal Control Committee • Deliberates progress in development of overall internal control

Disclosure Committee • Deliberates disclosure-related issues and internal control of financial statements

ALM Committee • Deliberates risk management and related systems and balance sheet management

Corporate Officer Compensation • Deliberates compensation of corporate officers and their compensation after retirement Consultative Committee

Compliance Committee • Deliberates compliance-related issues

• Deliberates issues related to corporate social responsibility, environment, and social contribution CSR Committee initiatives Corporate Governance 57 As a Good Corporate Citizen

Internal Control

On April 19, 2006, ITOCHU’s Board of Directors established risk, country risk, and investment risk. At the same time, the Basic Policy regarding the Internal Control System and ITOCHU has developed the risk management systems and made a commitment to continuously improve internal con- methods to manage company-wide and specific risks. trol systems. Those include a range of management regulations, invest- (For ITOCHU‘s Basic Policy regarding the Internal Control ment criteria, risk exposure limits, and transaction limits, as System, please see: http://www.itochu.co.jp/en/about/gov- well as reporting and monitoring systems. Moreover, ernance/policy/) ITOCHU regularly reviews the effectiveness of its risk man- The following highlights some noteworthy initiatives agement systems. As part of such efforts, the ALM under the Basic Policy regarding the Internal Control Committee protects the ITOCHU Group’s assets through System. deliberations on balance sheet management as well as analysis and management of risk. Initiatives to Further Heighten the Reliability of Financial Statements Advancement of Operational Improvement Project In order to further heighten the reliability of its consolidated in Light of Internal Control Requirements financial statements, ITOCHU has designated the Disclosure Aiming to increase overall operational efficiency, ITOCHU is Committee as a steering committee and is building internal reforming and optimizing operations through the ITOCHU control systems in adherence with the internal control DNA Project—Designing New Age—, which is strengthen- reporting system. ing workforce capabilities. Further, ITOCHU has established the Internal Control Under the project, we began by “visualizing” all opera- Audit Section, tasked with evaluating whether ITOCHU is tional processes. Then, we considered a range of solutions designing and operating internal control systems appropri- to the tasks that this initial phase brought to light and ately. That section provides its evaluation results to related established company-wide standard operations reflecting divisions, which use them as guidelines to design and oper- internal control requirements. Currently, in order to improve ate internal control systems even more appropriately. In this operational efficiency and strengthen risk management, way, as a response to the internal control reporting system, each Division Company is steadily incorporating processes ITOCHU has built a PDCA cycle that is strengthening inter- optimally suited to its operations. nal control. Looking ahead, we will design and develop systems to support those operational processes while considering the Strengthening Risk Management development of organizations to control and support those ITOCHU has established internal committees and responsi- operational processes. ble departments in order to address the various risks associated with its business operations, such as market risk, credit

PDCA Cycle of Internal Control

Act Independent Give instruction External to remediate Auditors deficiencies

Internal control reports President Report on support provision Internal control audits Disclosure Committee Report on Instruction to provide Instruction to implement assessment support assessment implementation Instruction for Backup declaration Plan CFO Office, improvement Check Internal Control Develop Company Internal Assess Audit Section guidelines Control Team, etc. Implement assessment internal control

Each Division PDCA at headquarters Provide support PDCA at companies Implement assessment PDCA at group companies

Do Design, operation, improvement 58 As a Good Corporate Citizen

Accountability to Stakeholders

Viewing explanations of corporate and business manage- cities in Japan. In addition, ITOCHU publishes annual reports ment information to such stakeholders as shareholders and and other reports in English and Japanese as a means of other investors as an important corporate governance task, communicating ITOCHU’s policies and progress in relation we strive for timely and appropriate disclosure. to business management to shareholders and investors For each release of quarterly financial results, we pro- unable to attend presentations and a range of other stake- vide explanations from senior management through finan- holders. Furthermore, from the standpoint of fairness, cial results presentations and videos on our web site. ITOCHU’s web site provides disclosure documents in both Further, senior executives visit overseas investors to explain English and Japanese. business management information directly to them. In fiscal In order to facilitate appropriate and highly transparent 2010, senior executives held direct dialogues with investors disclosure, senior executives receive any feedback from in major cities in Europe, the United States, and Asia. Also, shareholders and investors attending presentations. for individual investors ITOCHU holds presentations in major

Comments from Corporate Auditor

My major activities at the Ministry of Economy, Trade and Industry as well as at the University of Tokyo were focused on corporate governance and corporate social responsibility. Based on my experiences, I intend to contribute to the enhancement of management performance by introducing an outside perspective and by focusing on enhancing the corporate governance system. The current business environment surrounding major global companies, such as ITOCHU, is unprecedentedly difficult. The opportunities and risks that such companies face change swiftly and drastically. In such a business environment, management is required to show both strong lead- ership to pursue the business opportunities and an effective corporate Ryozo Hayashi governance system that limits risks. In particular, ITOCHU, as one of the Corporate Auditor largest trading companies engaged in diversified businesses around the world, has not only to perform a wide range of operations skillfully but also to maintain a balance between the realization of short-term business performance and the maintenance of sustainable long-term value creation. As a corporate auditor, I will monitor management performance and advise management with a view to developing a strong and well-balanced management system, which is an imperative to coping with these challenges. In developing such a system, I will keep reminding myself of the interests of ITOCHU shareholders as well as the interests of a wide range of other stakeholders. Compliance 59 As a Good Corporate Citizen

Compliance is of paramount value as a foundation of the ITOCHU Group. Aiming to reinforce our “Integrity,” which is stated as one of the ITOCHU Values, we are stepping up our compliance with laws, and statutory and other regulations to further expand and upgrade our compliance system.

The ITOCHU Group’s Compliance System

The ITOCHU Group deploys compliance officers not only in been assimilated by them and to foster free discussions at ITOCHU Corporation but in each Group company in Japan all workplaces with a view to raising the consciousness of and overseas. These key figures are responsible for building both executives and employees. Based on the results of this frameworks to enhance compliance, responding to individ- compliance awareness survey, trends in former incidences ual cases, and implementing other initiatives based on of compliance violations, and the findings of monitor & directives and support from Division Companies, with con- review surveys, we are formulating and executing individual sideration for the respective characteristics, conditions, and compliance reinforcement measures tailored to each local laws in the regions and markets in which they conduct Division Company. Moreover, during the fiscal year we business. In addition, the status of ITOCHU Corporation implemented meticulous education and training programs and each Group company is checked to enhance and geared to employees in different tiers with the objective of upgrade compliance advancement systems through biannu- preventing misconduct and irregularities. In the future, we al company-wide monitor & review surveys and other mea- will escalate promotion of these policies and measures, and sures. During fiscal 2010, ITOCHU conducted a compliance focus on compliance reinforcement with an emphasis on awareness survey of all Group corporate officers and overseas operations and Group companies. employees to ascertain the degree to which compliance has

Compliance Structure

Checks and advice Compliance Committee Outside experts [ Executive office ] Legal Division (lawyers, etc.)

[ Administrative Divisions at Headquarters ] Compliance Liaison Administrative divisions at Headquarters compliance officers Committee (Domestic Group Companies only) [ Companies ] Company compliance officers

[ Overseas blocs, Domestic offices ] [ Group companies ] Compliance officers Group company compliance officers

Initiatives for Comprehensive Import, Export, and Logistics Control

ITOCHU is continuously bolstering its import, export, and boosting control and upgrading education and training logistics control to ensure the safe, reliable, and efficient through effective utilization of information technology tools execution of trade and logistics—the cornerstone of a gen- for correct import and export procedures, including cus- eral trading company’s operations. Specifically, in addition toms declarations. to abidance with laws and statutory regulations pertaining Moreover, integrated management of logistics contrac- to the Foreign Exchange and Foreign Trade Act, we have tors throughout all Division Companies ensures monitoring formulated and are enforcing internal regulations for com- of logistics contracts and optimal, appropriate, and stream- prehensive security and trade control that facilitate man- lined logistics operations company-wide. agement of global security risks. Furthermore, we are 60 Corporate Social Responsibility (CSR)

As a company conducting diverse operations across a broad array of sectors and in many different regions, ITOCHU maintains clear cognizance of the significant impact its business activities have on the global environment and the global society. We will continue to contribute to the building of a sustainable society through our business activities and remain Committed to the Global Good going forward. As a Good Corporate Citizen

Basic CSR Philosophy

ITOCHU fully recognizes that a corporate enterprise is a expectations of society, and to remain deemed necessary by part of society and that failing to coexist with society as a society. good corporate citizen and live up to the expectations of Giving importance to meeting its corporate social society through business activities undermines ITOCHU‘s responsibilities through business activities systematically, sustainability. This approach is integrally linked to the ITOCHU incorporates CSR initiatives into management sampo yoshi management philosophy of being a good for plans, and each division advances such initiatives through the seller, the buyer, and society, as advocated by the mer- PDCA management cycles. In addition, to reflect stakehold- chants in Ohmi, on which ITOCHU’s founder, Chubei Itoh, er opinions in business management, we will continue the based his business operations. dialogue between experts and management and create ITOCHU also recognizes that its mission as a truly global other opportunities for dialogue with a broad range of enterprise is to accommodate diverse values, to meet the stakeholders.

CSR Approaches through Dialogue with Our Stakeholders

In each and every one of our wide range of corporate activities, we always take care to avoid arbitrary logic and judgments. For this reason, in our approaches to CSR as well, we engage in dialogue with our stakeholders based on the premise that judgments in society are by definition correct.

Major Stakeholders of the ITOCHU Group

Global Environment

International Society Shareholders Employees and Investors

Local Suppliers The ITOCHU Group Communities

Clients Consumers

Besides those noted above, our major stakeholders include many other parties, such as NGOs and NPOs, financial institutions, government ministries and agencies, mass media, and the coming generations.

CSR Reports

Please refer to ITOCHU’s CSR reports for specific information about CSR initiatives and case studies, including ITOCHU’s engagement with employees, society, and the environment. Employee Relations 61 As a Good Corporate Citizen

ITOCHU’s current medium-term management plan, Frontiere 2010, cites its global human resources strategy as one of the Group’s key initiatives. We have long emphasized maintaining a diversified workforce and are now stepping up reinforcement of human resources from a global perspective and aggressively promoting support for each member of our varied workforce to realize their full potential.

Full-Blown Development of Our Global Human Childcare and Nursing Support Initiatives Resources Strategy In order to realize an environment in which its employees We are promoting our human resources strategy from a can concentrate on their work with peace of mind, and to worldwide perspective to fully optimize the value of the retain and support a diversified workforce, ITOCHU is human resources that form our global Groupwide base. In expanding its childcare and nursing support systems. During addition, we respect the diverse values and individuality of fiscal 2010, in response to the evolving social problem in our employees, regardless of nationality, age, gender, and the Tokyo metropolitan area of lengthening waiting lists for other factors, and are building an environment that will nursery school places, we opened the I-Kids day-care center raise morale and motivation, while enabling employees to for the children of employees, located near our Tokyo realize their full potential and encouraging them to rise to Headquarters. Further, ITOCHU’s Maternity Support Leave new challenges. and Family Support Leave—systems that were introduced to ensure adequate support for employees juggling the dual responsibilities of work and childcare—have both been utilized by steadily increasing numbers of employees.

Aggressively implementing training programs geared toward developing global operations

Steps to Promote Human Resource Diversification I-Kids day-care center for the ITOCHU formulated the Promotion Plan on Human children of employees Resource Diversification 2013 (Japan) to spearhead the diversification of its employees in Japan from April 2009 through March 2014. We are currently implementing this plan as a specific measure focused on establishing and supporting a diversified workforce. As part of this drive, we inaugurated the Gaienmae Forum from fiscal 2010 to serve Employee Meeting as a showcase of role models for employees juggling the The Employee Meeting is freely open to all employees and dual responsibilities of work and childcare and as a refer- serves as a forum for direct dialogue between the President ence for their future career formation. & CEO and employees. The President & CEO uses these meetings as valuable opportunities to explain management policies and the determination of the President & CEO to realize management goals directly to employees, while employees can address their opinions and questions straight to the President & CEO.

The Gaienmae Forum offers an opportunity for people to obtain tips and build up a network of personal connections that will assist with their future career formation.

Employee Meeting 62 Social Contributions

ITOCHU recognizes the role it has to fulfill as a good corporate citizen from a global perspective, while working in harmony with regional and international communities and contributing to the realization of a more affluent society. Currently, led by our Social Contribution Programs to Commemorate the 150th Anniversary of ITOCHU’s Foundation, we are focusing our social contribution activities on five areas: global humanitarian issues, envi-

As a Good Corporate Citizen ronmental conservation, community contribution, development of the future generation, and support for volunteer activities by our employees.

Examples of Activities in Fiscal 2010

Activities to Restore the Tropical Rainforests and ITOCHU Foundation Activities Conserve Borneo’s Ecosystem The ITOCHU Foundation was founded in 1974 to promote (Social Contribution Programs to Commemorate the the sound development of young people. Its primary activi- 150th Anniversary of ITOCHU’s Foundation) ties include supporting children’s libraries and organizing ITOCHU and its Group companies are donating ¥250 mil- camps. Our work to help volunteers establish libraries for lion to the World Wide Fund for Nature Japan (WWF children involved the provision of 95 grants during fiscal Japan) over five years, commencing in fiscal 2010 to sup- 2010, in Japan and overseas. These grants were channeled port the WWF’s endeavors in Borneo to implement the to encourage reading among children, including those “Heart of Borneo” project for restoration and conservation suffering from long-term illnesses. of the tropical rainforests. In November 2009, we organized the First Borneo Tree-Planting Tour, with 16 participants, including members from an overseas office and a Group company.

Promoting the sound development of the young people who will lead the future generation. Participants develop a greater degree of personal maturity, vitality, and independence by taking part in outdoor activities.

First Borneo Tree-Planting Tour NGO KnK Support Activities ITOCHU Scholarship Fund Kokkyo naki Kodomotachi (KnK, Children without Borders) (Social Contribution Programs to Commemorate the is an NGO dedicated to activities to support street children 150th Anniversary of ITOCHU’s Foundation) in developing nations, victims of major natural disasters, This new scholarship fund was established to help overseas and other kids in need. In December 2009, KnK reopened a students studying in Japan to concentrate on their studies, self-support facility, called House for Youth in the suburbs to contribute to the growth of Japan and their home coun- of Manila, the Philippines, aided by ITOCHU sponsorship. In tries, and to bolster ties between them in the future. The the future, approximately 1,000 children a year should ben- project targets some 50 third- and fourth-year overseas stu- efit from assistance offered by this facility. dents studying in Japanese universities, providing ¥1.5 million to each scholar annually (total of ¥3.0 million provided per scholar for two years). Scholars attend orientation ses- sions about ITOCHU’s business activities and volunteer programs organized by ITOCHU.

Providing a wide-range of educational opportunities, centered on House for Youth, to young people living in slums Social gathering for ITOCHU scholars Environmental Issues 63 As a Good Corporate Citizen

ITOCHU conducts its business activities with perpetual consideration for global environmental conservation. We established the Global Environment Department in 1990 as a specialist body dealing with environmental issues and formulated and promulgated “the ITOCHU Environmental Policy“ through internal and external channels in 1997.

Environmental Policy

The following two revisions were made to the ITOCHU (2) “Conserve ecosystems,” cited in the Activity Guidelines Environmental Policy in May 2010. of the current ITOCHU Environmental Policy, has been (1) This policy has been renamed the “ITOCHU Group expanded to “conserve ecosystems and biodiversity” to Environmental Policy” to clarify that ITOCHU tackles envi- facilitate a more explicit statement of our consideration for ronmental issues as the ITOCHU Group. biodiversity.

The ITOCHU Group Environmental Policy 1. Basic Philosophy achieve the goals of the ITOCHU Group Corporate Philosophy, Global warming and other environmental issues are affecting the Committed to the Global Good. future of mankind. As a global enterprise, ITOCHU Group is position- 2. Activity Guidelines ing these issues as one of the most important management policies. In keeping with the basic philosophy presented above, the ITOCHU ITOCHU Group contributes to the realization of a sustainable society Group pursues a continual improvement of its environmental man- by promoting “Actively addressing the better global environment” agement system and defines the following guidelines concerning based on the ITOCHU Group Corporate Code of Conduct, in order to activities of environmental conservation.

(1) Prevention of environmental pollution (3) Promotion of environmental conservation to society in general, support local communities for In all business activities, duly consider the need to activities environmental education and assist in basic research conserve ecosystems and biodiversity, as well as local Besides promoting activities for conservation of pertaining to conservation of the global environment. and global environments, and strive to prevent the energy and resources as well as reduction and recy- (5) Promotion of educational activities occurrence of any environmental pollution. cling of waste as needed to establish the recycling- Educate both our own employees and those of (2) Observance of laws and regulations oriented society, endeavor to develop and supply Group companies in order to raise their awareness Observe all domestic and foreign laws and regula- products and services that help to conserve the envi- of environmental conservation and improve the tions related to environmental conservation, along ronment. quality and effectiveness of associated activities. with other requirements to which we have sub- (4) Harmonious coexistence with society scribed. As a good corporate citizen, aspiring for the prosperity May 2010 of succeeding generations and positive contribution Masahiro Okafuji President & Chief Executive Officer

Evaluation of the Environmental Impact of Products and New Investments

We believe that assessing each product’s effect on the glob- these products. Specifically, we approach the handling of al environment is critical because of the volume and range marine and forest resources by consulting directly with of products in which ITOCHU trades globally. Accordingly, overseas suppliers and encouraging them to ensure compli- we carry out original environmental impact evaluations ance with international regulations and conventions and based on Life Cycle Assessment* analysis. If the results of consideration for ecosystems. In a separate initiative, we these evaluations reveal environmental impacts exceeding have introduced a system that checks and assesses in predetermined benchmarks, we formulate regulations or advance the potential effects of our investments in new prepare procedural manuals to manage transactions of business projects on the natural and regional environments.

Procurement of raw Production Distribution Sales Use Disposal materials

* Life Cycle Assessment (LCA): A method that evaluates the environmental impact of products at all stages of their life cycles, from procurement of materials, production, distribution, sales, and use through disposal and recycling or reuse

Environmental Risk Management by Group Companies

As an integral part of the ITOCHU Group’s environmental Group companies, waste management, energy use, envi- management drive, representatives of ITOCHU’s Global ronmental education, and other relevant facets. Environment Department have visited approximately 20 Furthermore, we conduct practical reviews of factories, Group companies each year since fiscal 2002 to check on warehouses, and other facilities, pointing out issues or indi- their environmental management status. We hold hearings cating preventative approach, and if necessary providing with Group companies on the situation regarding compli- guidance with the aim of reinforcing measures to prevent ance with environmental laws and regulations applicable to environmental risks. 64 Operational Structure heighten theoverallvalue oftheITOCHUGroup. Management Committee(GMC)wasestablished to In additiontotheaboveorganization, Group As ofJuly1,2010 Organizational Structure General MeetingofStockholders President andC.E.O. Board ofDirectors CorporateAuditors Board ofCorporateAuditors, Corporate Auditors’Office Headquarters ManagementCommittee Chief InformationOfficer Chief ComplianceOfficer Chief FinancialOfficer Chief Officer forKansaiDistrictOperation PresidentExecutive Vice (LINEs) RiskManagement Chief Officer forFinance,Accounting, Chief CorporatePlanningOfficer GeneralAffairs, Legal Chief Officer forHumanResources, Secretariat Audit Division Solar BusinessDepartment Healthcare BusinessDepartment Risk ManagementDivision Business Accounting&Control Division General AccountingControl Division Finance Division OperationsDivision International Research &PolicyAnalysisDivision IT PlanningDivision Corporate CommunicationsDivision Affiliate AdministrationDivision &AdministrationDivision Corporate Planning Trade &LogisticsAdministrationDivision Legal Division General Affairs Division Human Resources Division Group AccountingSupport&IFRSOffice Investor RelationsDepartment CFO Office NewBusinessDevelopment Planning &AdministrationOffice, Corporate DevelopmentOffice DevelopmentOffice Innovative Technology Business ITOCHU DNAProject Office LogisticsServicesCompany Finance, Realty, Insurance& Food Company GeneralMerchandise Company Chemicals, Forest Products & MineralsCompany Energy, Metals& Electronics Company ICT, Aerospace & Machinery Company Textile Company Overseas Office Domestic Office Affiliate AdministrationSection Planning &AdministrationDepartment New EnergyDepartment Energy Division Metals &MineralsDivision Affiliate AdministrationDepartment Planning &AdministrationDepartment Chemicals Division Forest Products&GeneralMerchandiseDivision Affiliate AdministrationDepartment Planning &AdministrationDepartment Aerospace &IndustrialSystemsDivision ICT &MediaDivision Affiliate AdministrationDepartment Planning &AdministrationDepartment Automobile &ConstructionMachineryDivision Plant Project&MarineDivision IT BusinessDevelopmentDepartment Affiliate AdministrationDepartment Planning &AdministrationDepartment Brand MarketingDivision2 Brand MarketingDivision1 Apparel Division Textile Material&FabricDivision Affiliate Administration Department Planning &AdministrationDepartment Orico BusinessIntegratedDepartment Logistics ServicesDivision Construction &RealtyDivision Financial &InsuranceServicesDivision Affiliate AdministrationDepartment Planning &AdministrationDepartment Business ProcessOperationDepartment China BusinessDevelopmentDepartment Food ProductsMarketing&DistributionDivision Fresh Food&BusinessSolutionsDivision Provisions Division Chemical BusinessProcess OperationDepartment Retail &PlasticsMaterialsDepartment Plastics Department Inorganic ChemicalsDepartment Organic ChemicalsDepartmentNo.2 Organic ChemicalsDepartmentNo.1 General Merchandise Department Paper Products &MaterialsDepartment Wood Products &MaterialsDepartment Natural GasBusinessDepartment Exploration &Production Department EnergyTradingInternational Department2 EnergyTradingInternational Department1 Coal Department Non-Ferrous &MetalMaterialsDepartment Iron Ore &SteelmakingResources Department Steel BusinessAdministrationDepartment Industrial Machinery&Electronic SystemsDepartment Aircraft &InteriorDepartment Aerospace &DefenseDepartment Mobile NetworkBusinessDepartment BusinessDepartment Media &Internet Information Technology BusinessDepartment Construction MachineryDepartment Isuzu BusinessDepartment Automobile BusinessPromotion Department Automobile DepartmentNo.2 Automobile DepartmentNo.1 Plant &Project DepartmentNo.2 Plant &Project DepartmentNo.1 Marine Department Logistics Projects Department Logistics SolutionDepartment Osaka Construction&RealtyDepartment Construction &RealtyDepartmentNo.2 Construction &RealtyDepartmentNo.1 Insurance &RiskSolutionsDepartment Financial ServicesBusinessDepartment Financial InvestmentsDepartment Financial MarketsDepartment FamilyMart Department Food Products Marketing&DistributionDepartment Food Service&DistributionDepartment Agri Products Department Meat Products Department Marine Products Department Coffee &BeverageMarketingDepartment &DairyProducts Department Sugar, ConfectionaryMaterials Grain &FeedDepartment Oilseeds, Oils&FatsDepartment Industrial Textile &LifestyleDepartment Brand MarketingDepartment3 Brand MarketingDepartment2 Brand MarketingDepartment1 Apparel Department2 Apparel Department1 Fabric &Apparel Department Textile Material&FabricDepartment 65 Operational Structure 23 49 25 28 27 20 15 65 25 14 14 16 12 38 29 13 170 243 392 296 385 278 408 259 210 9,404 7,256 3,873 6,037 2,031 4,259 8,050 4,262 11,608 62,379 11,889 Domestic Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Overseas Consolidated Domestic Domestic Non-consolidated Overseas Overseas Non-consolidated Non-consolidated Non-consolidated Non-consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Non-consolidated Consolidated Non-consolidated Domestic Consolidated Domestic Consolidated Non-consolidated Overseas Non-consolidated Overseas Number of Subsidiaries and Associates and Subsidiaries of Number Total Number of Employees Associates and Subsidiaries of Number Number of Employees Associates and Subsidiaries of Number Number of Employees Associates and Subsidiaries of Number Number of Employees Associates and Subsidiaries of Number Others Number of Employees Number of Employees Associates and Subsidiaries of Number Number of Employees Associates and Subsidiaries of Number Number of Employees Associates and Subsidiaries of Number Number of Employees Associates and Subsidiaries of Number Organizational Structure Organizational Textile Material & Fabric Department Textile Department Fabric & Apparel Department 1 Apparel Department 2 Apparel 1 Brand Marketing Department 2 Brand Marketing Department 3 Brand Marketing Department & Lifestyle Department Industrial Textile Financial Markets Department Financial Investments Department Financial Services Business Department Insurance & Risk Solutions Department Construction & Realty Department No. 1 Construction & Realty Department No. 2 Osaka Construction & Realty Department Logistics Solution Department Department Logistics Projects Oilseeds, Oils & Fats Department Grain & Feed Department Confectionary Materials Sugar, Department & Dairy Products & Beverage Marketing Department Coffee Department Marine Products Department Meat Products Department Agri Products Food Service & Distribution Department Department Marketing & Distribution Food Products FamilyMart Department Marine Department Department No. 1 Plant & Project Department No. 2 Plant & Project 1 Automobile Department No. 2 Automobile Department No. Department Automobile Business Promotion Isuzu Business Department Construction Machinery Department Business Department Information Technology Media & Internet Department Business Mobile Network Business Department & Defense Department Aerospace & Interior Department Aircraft Systems Department Industrial Machinery & Electronic Steel Business Administration Department Department Resources & Steelmaking Ore Iron & Metal Materials Department Non-Ferrous Coal Department Department 1 International Trading Energy Department 2 International Trading Energy Department Exploration & Production Natural Gas Business Department Materials Department & Products Wood & Materials Department Paper Products Department General Merchandise Organic Chemicals Department No. 1 Organic Chemicals Department No. 2 Inorganic Chemicals Department Plastics Department Retail & Plastics Materials Department Operation Department Chemical Business Process Financial & Insurance Services Division Construction & Realty Division Logistics Services Division Orico Business Integrated Department Planning & Administration Department Administration Department Affiliate Provisions Division Fresh Food & Food Business Solutions Division Food Products Marketing & Distribution Division China Business Development Department Business Process Operation Department Planning & Administration Department Administration Department Affiliate Textile Material & Fabric Division Textile Apparel Division Division 1 Brand Marketing Division 2 Brand Marketing Department Planning & Administration Administration Department Affiliate IT Business Development Department Plant Project & Marine Division Machinery Division Automobile & Construction Department Planning & Administration Administration Department Affiliate ICT & Media Division Aerospace & Industrial Systems Division Planning & Administration Department Administration Department Affiliate Forest Products & General Merchandise Division Chemicals Division Planning & Administration Department Administration Department Affiliate Metals & Minerals Division Energy Division New Energy Department Planning & Administration Department Administration Section Affiliate Others of the number of non-consolidated employees includes a total of 1,269 employees; employees temporary relo- Others of the number of non-consolidated employees includes a total of 1,269 employees; employees temporary cated to other companies (domestic 635, overseas 296), employees and trainees assigned to overseas posts (338). The criteria to count group companies is changed so that the number of companies directly invested by ITOCHU or its is changed so that the number of companies directly companies The criteria to count group above. shown overseas trading subsidiaries are * * The numbers of employees, subsidiaries, and associates are as of March 31, 2010. as of March * The numbers of employees, subsidiaries, and associates are * The number of consolidated employees is based on actual working employees excluding temporary staff. * Domestic Office Overseas Office Textile Company Textile Machinery Company & Aerospace ICT, Company Electronics Metals & Energy, Minerals Company & Products Chemicals, Forest Company General Merchandise Food Company Insurance & Finance, Realty, Logistics Services Company Innovative Technology Business Innovative Technology Development Office Corporate Development Office Planning & Administration Office, New Business Development ITOCHU DNA Project Office ITOCHU DNA Project CFO Office Investor Relations Department Support & IFRS Office Accounting Group Human Resources Division Human Resources Division General Affairs Legal Division & Logistics Administration Division Trade Healthcare Business Department Healthcare Solar Business Department Corporate Planning & Administration Division Administration Division Affiliate Corporate Communications Division IT Planning Division & Policy Analysis Division Research International Operations Division Finance Division Division General Accounting Control Division Business Accounting & Control Risk Management Division Audit Division Secretariat Chief Officer for Human Resources, Chief Officer Legal General Affairs, Executive Vice President (LINEs) Executive Vice President for Kansai District Operation Chief Officer Chief Corporate Planning Officer for Finance, Accounting, Chief Officer Risk Management Chief Financial Officer Chief Compliance Officer Chief Information Officer Headquarters Management Committee Headquarters Management Corporate Auditors’ Office Board of Corporate Auditors, of Board Corporate Auditors Board of Directors Board and C.E.O. President General Meeting of Stockholders General Meeting 66 Operational Structure

Latin America North America North America/Latin [ GlobalNetwork] Latin America North America/ • • Facsimile • Facsimile As ofJuly1,2010 Global Network/BankList T São PauloCEP01311-902,BRAZIL 19 andar, Mariana, Vila Av. Paulista37 ITOCHU BRASILS.A. T N.Y. 10017,U.S.A. Plaza, 335MadisonAvenue, NewYork 22nd and23rd Floors,BankofAmerica Inc. ITOCHU International elephone elephone Lima, Havana Aires, Bogota,Santiago,Caracas,Quito São Paulo,RiodeJaneiro, Panama,Buenos Portland, Vancouver Los Angeles,Washington, Houston, New York, Chicago,SanFrancisco, : : : : 1-212-818-8543 1-212-818-8000 55-11-3170-8549 55-11-3170-8501

, MexicoCity

Middle East Africa Europe Europe /AfricaMiddleEastCIS CIS • Facsimile • Facsimile • Facsimile • Facsimile • • • • • T 61422, JebelAliFree Zone, Dubai,U.A.E. LOB 12-Office No.119&121,P.O.Box ITOCHU MIDDLEEASTFZE T SOUTH AFRICA Roos Street, Fourways,2055,Johannesburg, 2nd FloorBlockNo.9,FourwaysGolfPark, ITOCHU Corporation, Johannesburg Branch T 76 ShoeLane,LondonEC4A3PJ,U.K. PressThe International Center, ITOCHU Europe PLC T RUSSIAN FEDERATION Savvinskaya Nab.,15,Moscow, 119435, Savvinskaya Office Building, 9thFloor, ITOCHU Corporation,MoscowOffice elephone elephone elephone elephone Lagos, Douala Milano, Madrid,Athens,Budapest,Tunis London, Düsseldorf,Hamburg,Paris, Islamabad, AbuDhabi Kuwait, Muscat,Doha,Tripoli, Karachi, Cairo, Amman,Ankara,Riyadh, Damman, Dubai, Tehran Johannesburg Istanbul Tananarive Abidjan, Accra,Nairobi, AddisAbaba, Warszawa Alger, Casablanca,Praha,Bucharest, Tashkent, Baku Moscow, Almaty, Kiev, Ashgabat, : : : : : : : : 971-4-335-5321 971-4-302-0000 27-11-465-0635/0604 27-11-465-0030 44-20-7583-1847 44-20-7827-0822 7-495-961-1447/1448 7-495-961-1456 Middle East/CIS Europe /Africa

Oceania Oceania /ChinaAsiaJapan Asia China • T (ZIP code:100025) • Facsimile THE PEOPLE’SREPUBLICOFCHINA T Street, Sydney, N.S.W. 2000,AUSTRALIA Level 29,Grosvenor Place,225George • • • • Facsimile • Facsimile ITOCHU AustraliaLtd. T SINGAPORE 048619 9 Raffles Place,#41-01RepublicPlaza, ITOCHU Singapore PteLtd. R China Central Place, No. 79, Jian Guo Room 501,5/f.No.2Office Building, ITOCHU (China)HoldingCo.,Ltd. elephone elephone elephone oad, Chaoyang District,Beijing, Shenzhen, Nanjing,Sichuan,Wuhan Qingdao, HongKong,Guangzhou, Beijing, Shanghai,Dalian,Tianjin, Ulaanbaatar Phnom Penh,Colombo,Dhaka, Jakarta, Hanoi,HoChiMinhCity, Yangon, Kuala Lumpur Auckland Sydney, Perth,Brisbane, Melbourne, Taipei, Kaohsiung,Seoul New Delhi,Mumbai,Kolkata,Chennai, Surabaya, Bandung,Bangkok, Singapore, KualaLumpur, Jakarta, Shenyang, ChangChun Port Moresby : : : : : : 86-10-6599-7111 86-10-6599-7000 65-6230-0560 65-6230-0400 61-2-9241-3955 61-2-9239-1500 , Manila

Oceania /ChinaAsiaJapan • • • andtheirBranches/Offices • Others OverseasLiaisonOffices OverseasBranches OverseasTrading Subsidiaries Overseas RegionalHeadquarters 67 Operational Structure

, Limited

national Cooperation

d Chartered Bank d Chartered Global Network / Bank List / Bank Network Global and Banking Corporation and Banking Company South Africa Limited Japan Bank for Inter Banking Corporation Limited Banking Group Limited Banking Group Unicredit Mizuho Trust & Banking Co., Ltd. Mizuho Trust Mitsubishi UFJ Trust SAMBA Financial Group Union National Bank Australia and New Zealand Bangkok Bank Public Company Limited Bank of China Bank of Communications CIMB Thai Public Company Limited The Hongkong and Shanghai Mizuho Corporate Bank, Ltd. Sumitomo Mitsui Banking Corporation UFJ, Ltd. The Bank of Tokyo-Mitsubishi Shinsei Bank, Ltd. Aozora Bank, Ltd. Resona Bank, Limited Ltd. Co., Banking and Trust Sumitomo The The Chuo Mitsui Trust Bank of America, N.A. of Commerce Canadian Imperial Bank Citibank, N.A. Comerica Bank JPMorgan Chase Bank Capital Finance Fargo Wells Banamex, S.A. de C.V. Grupo Financiero Helms Bank S.A. PLC Bank Barclays BNP Paribas Agricole Credit Deutsche Bank ING Bank N.V. Intesa Sanpaolo S.p.A. Investec Bank Limited Rabobank Nederland The Royal Bank of Scotland plc Societe Generale Bank of The Standard Standar

Japan Finance Corporation, China Bank of Industrial and Commercial Kasikornbank Public Company Limited Malayan Banking Berhad RHB Bank Berhad Banking Corporation Westpac Development Bank of Japan The Norinchukin Bank Shinkin Central Bank

Oceania Asia Japan [ Bank List ] [ Bank List the with transactions financial has ITOCHU banks. following North America Central & South America Africa & Europe Middle East

Overseas Regional Headquarters Overseas Regional Overseas Trading Subsidiaries Subsidiaries Overseas Trading Overseas Branches Overseas Liaison Offices Others • and their Branches / Offices • • • Oceania / China / Asia / Japan Oceania / China / 81-3-3497-2121 81-3-3497-4141 81-6-6241-2121 81-6-6241-3220 : : : : Headquarters Tokyo 5-1, Kita-Aoyama 2-chome, 107-8077, JAPAN Minato-ku, Tokyo, Telephone Facsimile Osaka 4-chome, 1-3, Kyutaro-machi Chuo-ku, Osaka, 541-8577, JAPAN Telephone Facsimile Nagoya, Kyushu, Chugoku, Hokkaido, Toyama, Niigata, Shizuoka, Tohoku, Kanazawa, Fukui, Shikoku, Naha, Oita Japan Europe / Africa / Middle East / CIS North America / Latin America 68 Operational Structure Machinery Company * OnFebruary23,2010,thenameofProminent Apparel Ltd.waschangedtoITOCHUTextile Prominent (ASIA)Ltd. Textile Company

oetcMARUKOCO.,LTD. Domestic Major SubsidiariesandAssociatedCompanies Subsidiaries Associates Subsidiaries As ofMarch 31,2010 vresThai shikiboco.,ltd.(Thailand) Overseas ITOCHUTextile Prominent (ASIA)Ltd. Overseas vresI-PowerInvestmentInc.(U.S.A.) Overseas oetcITOCHUPlantechInc. Domestic ROY-NE CO.,LTD. Domestic Tyr Energy Inc.(U.S.A.) NAES Corporation(U.S.A.) MCL Group Limited(U.K.) MATTAEHLIGGmbH(uti)100 hlsl n ne-hr rd fmtrvhce n oocce 12 Retail, distribution,andtradingofmotorvehicles 100.0 Auto InvestmentInc.(U.S.A.) Wholesaleandinter-third trade of motorvehiclesandmotorcycles ITOCHU AutomobileAmericaInc.(U.S.A.) 100.0 IM AUTOTRADEHOLDINGG.m.b.H(Austria) PROMAX Automotive,Inc.(U.S.A.) EILSMDL ATFC UAE)100 Trade finance formotorvehicles 100.0 Automobilefinancecompany 70.0 MULTIQUIP INC.(U.S.A.) VEHICLES MIDDLEEASTFZCO(U.A.E.) PT. SUZUKI FinanceIndonesia(Indonesia) ITOCHU CONSTRUCTIONMACHINERY ITOCHU AutomobileCorporation IMECS Co.,Ltd. ITOCHU MODEPAL CO.,LTD. UNICO CORPORATION JOI’X CORPORATION LEILIAN CO.,LTD. JAVA HOLDINGSCO.,LTD. alSihGopHlig iie UK)4. HoldingcompanyofPaulSmithGroup 40.4 Manufacture ofwomen’s underwear Shanshan Group Co.,Ltd. (China) 28.0 Paul SmithGroup Holdings Limited(U.K.) Dalian Yawen UnderwearCo.,Ltd.(China) Watakyu SeimoaCorporation T.KAWABE &CO.,LTD. BMI HOLDINGSCO.,LTD. AYAHA CORPORATION Comprehensive consultinginthefashionindustry 100.0 RAIKA CO.,LTD ITOCHU FASHION SYSTEMCo.,Ltd. SCABAL JAPAN Co.,Ltd. NMXSIO O,LD Venm 00 Manufacture ofuniforms 12 80.0 Production control andwholesaleoftextilematerials,fabrics,apparel 100.0 ITOCHU TEXTILE(CHINA)CO.,LTD. (China) Qualitycontrol oftextileandapparel UNIMAX SAIGONCO.,LTD. (Vietnam) 100.0 PROMINENT (VIETNAM)CO.,LTD. (Vietnam) Manufacture andwholesaleofhomefurnishings 97.9 CO.,LTD.CI TEXTILESERVICE CI ShoppingServiceCo.,Ltd. ITOCHU HOMEFASHION CORPORATION DEAN &DELUCAJAPAN Co.,Ltd. DESCENTE, LTD. SANKEI CO.,LTD. MAGASeek Corporation CO., L (Hong KongS.A.R.,China)* TD. Name

Shar 0. Manufacture andwholesaleofapparel 100.0 0. Manufacture andwholesaleofuniforms 100.0 0. Saleofmen’s apparel 100.0 0. Holdingcompanyofbrandbusiness 100.0 100.0 Wholesale of materials, yarns, textile,andapparel Wholesaleofmaterials,yarns, 100.0 Manufacture andwholesaleofapparel 100.0 0. aeo vrdyiesamda TCUGopepoesadfmle 3 Outsourcing ofadministrativedutiesfordeliveryandaccounting 100.0 SaleofeverydayitemsaimedatITOCHUGroup employeesandfamilies 100.0 0. Investment companyinthepowerindustry 100.0 Salesandrental ofconstructionmachinery 100.0 0. Powergeneration businessinNorthAmerica 100.0 0. Power plantoperationandmaintenanceservicesprovider forindependent 100.0 0. Warehousing andfinancingofmotorvehicles 100.0 0. Retail of motorvehicles 100.0 0. Third-party logisticsservices 100.0 0. Distribution andmanufacturingoflightconstructionequipment 100.0 0. Export/importandinter-third tradeofcarparts 100.0 Ownershipandoperationofships,chartering,shipmachinery, secondhand 100.0 Exportandimportofsmall-to-medium-scaleplantequipment 100.0 Voting 11Retailofwomen’s apparel 61.1 Holdingcompanyofretail ofladies’&kids’apparel brand 65.0 80 HoldingcompanyofShanshanGroup, operatingatextilebusiness, 28.0 Manufacture oftire cords, etc. 33.5 Total outsourcing servicemainlylinen supplyformedical 25.0 Manufacture andsalesofhandkerchiefs, scarves,andotheraccessory 25.3 ImportandsaleofSCABALbrandproducts 80.0 00 Manufacture ofcottonyarn 30.0 04 Operationofcafeteriachainandothernewbusiness 20.4 Manufacture andwholesaleofsportswear, etc. 25.7 Manufacture andwholesaleoflady’s underwear, etc. 26.5 99Manufacture andwholesaleofwovenknittedproducts 99.9 44Retailwebsiteoffashionapparel byPCandmobile 64.4 Wholesaleofgarmentmaterials 90.5 es (%)

electronic components,etc. & welfare institutions goods power producers andutilities and generators ships, andadministrationmanagementofoverseasshippingcompanies domestic environmental and energysolutionbusinesses

Operations Y

Month ear-End Fiscal 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 3 3 2 6 7 3 6 3 3 3 3 3 2 3 2 3 8 3 3 3 3 3 3 3 2

69 Operational Structure

3 3 3 3 3 9 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 12 12 12 12 12 12 12 12 12 Fiscal ear-End Month

Y Operations Major Subsidiaries and Associated Companies Associated and Subsidiaries Major

of gas pipelines and Internationalbusiness of deep sea oil & gas production facilities of deep sea oil & gas production services development; information processing commissioned software including web site integrated digital marketing technologies and services developments, online advertising, BPO services equipment and related devices, and assembly business steel scrap, development of recycle of alumina and oil exploration manufacture

es (%) 50.0 of steel products Import / export and wholesale 25.0 products Wholesale of LPG and petroleum 35.0 of gas and condensate Exploration and production 47.7 in Brazil ore of iron Investment in projects 30.0 operation for the construction, ownership, and Investment in the project 22.0 of automobiles Sales and repair 25.0 vehicle life cycle business Commercial 20.0 Diversified leasing business, various types of financing, 49.0 energy generation facilities Development company of renewable 20.0 Sales and service of construction machinery 53.6 and gas products Wholesale of petroleum 30.0 and operation for the construction, ownership, Investment in the project 59.2 Internet service information 51.0 Music channel on cable / satellite television 60.7 of mobile phones business Distribution and retail 51.3 Content publishing, mobile site operation, and application development 3 33.3 Mobile insurance agency 33.3 interior of aircraft and manufacture Maintenance of aircraft 26.4 communication devices, electronic and sales of optical Manufacture 20.3 & facilities service for mechatronics Maintenance & engineering 37.5 products International trade of petroleum 50.0 products International trade of crude oil and petroleum Voting 100.0 in Namibia project Investment in uranium 100.0 providing Full service interactive agency or digital marketing company, 100.0 part, aircraft of aircraft, Import / export and wholesale 100.0 of industrial machinery Import / export and wholesale 100.0 aircraft Lease of commercial 100.0 and / light metals, products, of non-ferrous Import / export and wholesale 100.0 resources of oil, gas, and other hydrocarbon Exploration and production 100.0 products company of crude oil and petroleum Investment to the trading 100.0 3 of bioethanol in Brazil Investment in projects 100.0 3 coal, and bauxite mining, ore, of iron projects Investment and sales in 100.0 products International trade of crude oil and petroleum 100.0 of crude oil and gas Exploration and production Shar

est Indies) Name Hong Kong S.A.R., China) S.A.R., Kong Hong Limited (Australia) (Republic of South Africa) Corporation (Australia) (Cayman Islands, British W ( NISSHO Petroleum Gas Corporation NISSHO Petroleum Japan Ohanet Oil & Gas Co., Ltd. Corporation Ore Brazil Japan Iron Nippon Uranium Resources (Australia) Pty Nippon Uranium Resources Malha Gas Investment Co., Ltd. Malha Gas Investment Co., & CO., LTD. YANASE Isuzu Network Co., Ltd. Leasing Corporation* Century Tokyo Komatsu Southern Africa (Pty) Ltd. (Indonesia)PT Hexindo Adiperkasa Tbk 22.5 Sales and service of construction machinery ITOCHU ELECTRONICS CORP. Excite Japan Co., Ltd. SHOWER NETWORKS INC. SPACE ITC NETWORKS CORPORATION NANO Media Inc. Inc. ITOCHU Aviation, ITOCHU Sanki Corporation* JAMCO Corporation SUNCALL CORPORATION ENGINEERING CORP. MYSTAR ITOCHU Metals Corporation ITOCHU Oil Exploration Co., Ltd. Japan Ltd. ITOCHU Petroleum JB BioEnergy Inc. (U.K.) IPC EUROPE LTD. ITOCHU Oil Exploration (Azerbaijan) Inc. IPC (USA), Inc. (U.S.A.)

Domestic Marubeni-Itochu Steel Inc. Overseas Limited Energy Chemoil Overseas American Renewables, LLC (U.S.A.) Domestic ITOCHU ENEX CO., LTD. Domestic Corporation ITOCHU Techno-Solutions 52.6 and network systems; Sales, maintenance and support of computers Domestic Investment Barracuda & Caratinga OverseasDomestic (Netherlands) ITOCHU AirLease B.V. Asurion Japan K.K. Overseas ITOCHU Minerals & Energy of Australia Pty Ltd

Associates Subsidiaries Associates Subsidiaries Associates 2010 Newly consolidated subsidiaries in the fiscal year ended March Subsidiary changed from associates in the fiscal year ended March 2010 the fiscal year ended March associates in Subsidiary changed from : : On April 1, 2010, the name of ITOCHU Sanki Corporation was changed to ITOCHU MACHINE-TECHNOS CORPORATION, through merger with ITOCHU MECHATRONICS merger with ITOCHU MECHATRONICS through was changed to ITOCHU MACHINE-TECHNOS CORPORATION, On April 1, 2010, the name of ITOCHU Sanki Corporation CORPORATION.

Energy, Metals & Minerals Company Metals & Minerals Energy, * ICT, Aerospace & Electronics Company Electronics & Aerospace ICT, * On April 1, 2009, Century Leasing System, Inc., and Tokyo Leasing Co., Ltd., merged to form Century Tokyo Leasing Corporation. Leasing Co., Ltd., merged to form Century Tokyo * On April 1, 2009, Century Leasing System, Inc., and Tokyo 70 Operational Structure * OnApril1,2010,the nameofITOCHUForestry Corp.waschangedtoITCGreen &Water Corp. Chemicals, Forest Products &GeneralMerchandise Company

Associates Subsidiaries vresALBANYPLANTATION FORESTCOMPANY Overseas JapanBrazilPaperandPulpResources Domestic oetcITOCHUKenzaiCorp. Domestic vresCIPA LumberCo.Ltd.(Canada) Overseas imRs odPout o,Ld Taln)2. Manufacture ofparticleboard 27.5 Siam Riso Wood Products Co., Ltd. (Thailand) UIE TALN)C. T.(hiad 90 Manufacture ofPMMA sheet 49.0 NCT HollandB.V. (Netherlands) SUMIPEX (THAILAND)CO.,LTD. (Thailand) BRUNEI METHANOLCOMPANY SDN. Ningbo PTA Investment,Co.,Ltd INC. TOHO EARTHTECH, TAKIRON Co.,Ltd. DAIKEN CORPORATION TCUCEIA RNIRCroain100 Wholesaleoffinechemicalsandrelated rawmaterials 100.0 ITOCHU PLASTICSINC. ITOCHU CHEMICALFRONTIERCorporation IFA Co.,LTD. ITR Corp. Co.,Ltd. ITOCHU Windows ITOCHU CeratechCorp. ITOCHU Pulp&PaperCorp. ITOCHU Forestry Corp.* Daishin PlywoodCo.,Ltd. Tetra Chemicals (Singapore) Pte. Ltd. Manufacture ofplasticproducts 22.6 Shanghai JinpuPlasticPackagingMaterial Shanghai BaolingPlasticsCo.,Ltd.(China) TODA ADVANCED MATERIALS INC. TODA AMERICAINC.(U.S.A.) SUMIKA POLYMER COMPOUNDS NARENDRA PLASTICPVT. LTD. (India) YOKOHAMA RUSSIA L.L.C. (Russia) Hangzhou NewHuahaiBusiness SHOWA ALUMINUMPOWDERK.K. Manufacture andprocessing ofmetalpretreatment chemicals 80.0 Chemical LogitecCo.,Ltd. VCJ Corporation The JapanCee-BeeChemicalCo.,Ltd. C.I. KaseiCo.,Ltd. aii odehCroain(... 0. Manufacture ofLVL &I-Joist Wholesaleofbuildingmaterials 100.0 100.0 PT. AnekaBumiPratama(Indonesia) PrimeSource BuildingProducts, Inc.(U.S.A.) Pacific Woodtech Corporation(U.S.A.) Stapleton’s (Tyre Services)Ltd.(U.K.) TCUPatc t. t.(igpr)100 Wholesaleofplastic resins 100.0 Plastribution Limited(U.K.) ITOCHU PlasticsPte.,Ltd.(Singapore) TCUCeiasAeiaIc USA)100 Wholesaleofchemicalproducts andsyntheticresins 100.0 Saleofcruderubber 80.0 REMEJE PHARMACEUTICALS(CHINA) ITOCHU ChemicalsAmericaInc.(U.S.A.) RUBBERNET (ASIA)PTELTD. (Singapore) THAITECH RUBBERCORPORATION LTD. PTY.SOUTH EASTFIBREEXPORTS LTD. DAIKEN NEWZEALANDLIMITED BHD. (Brunei) OF AUSTRALIAPTY Development Co.,Ltd. (Singapor Co., Ltd.(China) (Canada) (EUROPE) L & T CO., L (Thailand) (Australia) (New Zealand) rading Co.,Ltd.(China) TD. (China) e) TD. (U.K.) . LIMITED(Australia) Name

Shar 0. Developmentandwholesaleofplasticsrelated products 100.0 Wholesaleofshoesandbags 100.0 Wholesaleandretail oftires 100.0 Manufacture andsaleofceramicrawmaterialsproducts 100.0 Wholesale of paper, paper boards, and various materials 100.0 Designingandinstallationofwatertreatment system,landscape 100.0 Manufacture ofplywood 100.0 0. Managementofchemicalstoragewarehouses andtransportationof 100.0 0. Manufacture ofveneer 100.0 0. Processing ofnaturalrubber 100.0 0. Wholesaleandretail oftires 100.0 0. Wholesaleofsyntheticresins 100.0 Voting 30 Processing ofnaturalrubber 33.0 00 Trading anddistributionoftheplasticsmaterialsbasedonEurope and 40.0 Sale andmanufacture ofMTBE (Methyl t-ButylEther) 40.0 50 Manufacture ofmethanolinBrunei 25.0 00 Import,export,andwholesaleofpharmaceuticals(Rx,OTC),supplements, 70.0 50Wholesaleofcosmeticsanddailygoods,salecosmetics,skincare 85.0 50 Investmentinmanufacture ofPTA inChina 35.0 Explorationandproduction ofnaturalgasandiodine 34.2 Manufacture offlatandcorrugatedplasticsheets 27.5 Manufacture ofbuildingmaterialsandconstructionparts 25.1 InvestmentinCENIBRA,oneofthelargesteucalyptuspulpmanufacturers 25.9 60 Manufacture andsaleofinsulatingglass 66.0 Wholesaleofwoodproducts andbuildingmaterials 87.3 00 Manufacture ofpolypropylene films 30.0 Saleand manufacture ofcompound ofplasticrawmaterials 25.0 00 aeadmnfcueo ahd aeil o ihu o atre 3 Saleandmanufacture ofprecursor materialsforuseinLithiumIon 50.0 Saleandmanufacture ofcathodematerialsforLithiumIonBatteries 50.0 Manufacture ofplasticsbags 29.9 Wholesaleoftires 20.0 Manufacture ofaluminumpaste 85.1 WholesaleofDVD/videoandplasticproducts forretailers 80.0 Manufacture ofPVCpipeandfilmrelated materials 97.6 75 Manufacture ofwoodchip 37.5 Manufacture ofMDF 49.0 Plantationofeucalyptustrees forpapermaking 28.4 es (%)

Middle East and otherhealthcare goods inChina products, toiletryproducts, andotherdailygoods in Brazil and gardening, andgreenery business Batteries cathodes chemicals andothercargos

Operations Y

Month ear-End Fiscal 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

71 Operational Structure

3 3 3 3 3 3 3 3 9 3 3 7 3 3 3 6 2 3 3 2 5 3 3 3 3 3 3 3 3 3 3 3 3 3 2 2 12 12 12 12 12 12 12 12 12 12 12 12 Fiscal ear-End Month

Y Operations Major Subsidiaries and Associated Companies Associated and Subsidiaries Major

for convenience store chain, retailers, and food service business and food chain, retailers, for convenience store a franchise system Corporation business in Asia business in North America business in Europe and retail chain stores in China and Taiwan chain stores and retail

es (%) 85.9 and wholesale of compound feeds Manufacture 89.6 Wholesale of rice 93.2 foods prepared of frozen Manufacture 98.0 business Planning supply-chain management in food service 51.7 Wholesale and distribution of foods 69.8 Wholesale and distribution of foods 25.7 oil and soybean protein of cooking Integrated manufacturer 35.0 of soft drinks Production 25.0 business Harbor transport and warehousing 34.8 and sales of raw sugar Production 39.7 foods ham, sausage, and processed and marketing of meat, Production 21.0 chain Operation of Beef Bowl and other restaurant 33.5 3 Distributor of fruits and vegetables 20.0 Wholesale of foods 31.5 chain, using the name FamilyMart, and Operation of a convenience store 50.0 Handling of grain and operation of barges 40.0 Holding company of Chinese beer manufacturers 26.0 foods and wholesale of processed Manufacture 99.1 business Loan and other finance-related 55.0 exchange brokerage Online foreign homes) and 99.8condominiums, (apartments, housing of sale and Development 3 62.8 services and risk consulting Insurance broking 70.7 and warehousing Transportation 98.5 Asset management business 99.0 logistics services Comprehensive 20.0 food services, foods manufacturers, Holding company of processed 39.4 Wholesale of foods and sundries Voting 100.0 of sugar and by-products and processing Manufacture 100.0 Import and wholesale of food materials 100.0 and wholesale of feed and feed additive Manufacture 100.0 and wholesale of fish, meat, and agri-products Processing 100.0 chilled, and dry foods and sundries Logistics services of frozen, 100.0 Structuring and distribution of investment products 100.0 consultant Real estate agent and property 100.0 estate property of real Operation and management 100.0 of homes Planning and construction 100.0 agency Travel 100.0 Logistics business in China 100.0 of insurance and reinsurance Consulting and broking 100.0 financial investment and development of new financial Proprietary Shar 4 1

3 est Indies) 2 Name aiwan) (Cayman Islands, British W LIMITED (Hong Kong S.A.R., China) (Hong Kong S.A.R., China) (T (Hong Kong S.A.R., China) (Hong Kong S.A.R., China) ITOCHU LOGISTICS CORP.* TING HSIN (CAYMAN ISLANDS) HOLDING CORP. CORP. HOLDING ISLANDS) (CAYMAN HSIN TING ITOCHU Sugar Co., Ltd. I-FOODS Co., Ltd. ITOCHU Rice Corporation Japan Nutrition Co., Ltd. Foods Co., Ltd. Yayoi ITOCHU FRESH Corporation Universal Food Co., Ltd. ITOCHU SHOKUHIN Co., Ltd. NIPPON ACCESS, INC. Family Corporation Inc. Japan Foods Co., Ltd. SHIBUSHI SILO CO., LTD. Kumejima Sugar Co., Ltd. Prima Meat Packers, Ltd. Holdings Co., Ltd. Yoshinoya Inc. Access, KI Fresh Co., Ltd. SHOW-WA FamilyMart Co., Ltd. CGB ENTERPRISES, INC. (U.S.A.) ASAHI BREWERIES ITOCHU (HOLDINGS) ANEKA TUNA INDONESIA (Indonesia)P.T. WINNER FOOD PRODUCTS LTD. 47.0 of canned and pouched tuna Production CO., LTD. DISTRIBUTION CENTER TAIWAN ITOCHU Capital Securities, Ltd. FX PRIME Corporation Development, Ltd. ITOCHU Property ITOCHU HOUSING Co., Ltd. ITOCHU Urban Community Ltd. ITOHPIA HOME Co., Ltd. ITOCHU Orico Insurance Services Co., Ltd.I&T Risk Solutions Co., Ltd. Service Co., Ltd. 65.0 Naigai Travel agency Insurance ITC Investment Partners Corporation* Guangzhou Global Logistics Corp. (China) 77.7 and trucking Warehousing COSMOS SERVICES CO., LTD. COSMOS SERVICES CO., LTD. COSMOS SERVICES (AMERICA) INC. (U.S.A.) 100.0 (Thailand)SIAM COSMOS SERVICES CO., LTD. of insurance Consulting and broking 80.0 EURASIA LOGISTICS LTD.(Hungary)* of insurance Consulting and broking AD Investment Management Co., Ltd. 68.9 Asset management company of Advance Residence Investment ITOCHU Finance (Asia) Ltd. ITOCHU Financial Services, Inc. (U.S.A.) 100.0 and development of new financial financial investment Proprietary Beijing Pacific Logistics Co., ltd. (China)*

Domestic ITOCHU Finance Corporation OverseasDomestic (U.S.A.) LTD. OILSEEDS INTERNATIONAL Fuji Oil Co., Ltd. 100.0 oil manufacture Safflower Overseas OIL SDN. BHD. (Malaysia) EDIBLE PALMAJU 30.0 Refining of palm oil Domestic Ltd. ITOCHU Feed Mills Co., Overseas PLC (U.K.) ITOCHU Finance (Europe) 100.0 financial investment and development of new financial Proprietary

Subsidiaries Associates Subsidiaries 2010 the fiscal year ended March associates in Subsidiary changed from 2010 Newly consolidated subsidiaries in the fiscal year ended March : :

*1 On April 1, 2009, the name of TAKMA Capital Corporation was changed to ITC Investment Partners Corporation. *1 On April 1, 2009, the name of TAKMA was changed to ITOCHU LOGISTICS CORP. *2 On January 1, 2010, the name of i-LOGISTICS CORP. *3 On April 1, 2009, the name of EURASIA SPED Kft. was changed to EURASIA LOGISTICS LTD. (CHINA) CO., LTD. *4 On June 1, 2010, the name of Beijing Pacific Logistics Co., ltd. was changed to ITOCHU LOGISTICS Finance, Realty, Insurance & Logistics Services Company Insurance & Finance, Realty, Food Company 72 Operational Structure Headquarters, OverseasTrading Subsidiariesandtheir Headquarters

: :

Newlyconsolidatedsubsidiariesinthefiscal yearendedMarch 2010 Subsidiarychangedfrom associatesinthefiscalyearendedMarch 2010 Associates Subsidiaries Associates vresITOCHUTREASURY CENTREASIAPTE.LTD. Overseas CenturyMedical,Inc. Domestic CENTRALENGINEERING&CONSTRUCTION Domestic vresP.T. MALIGIPERMATA INDUSTRIALESTATE Overseas vresGeniinAbet ht-oa ...(tl)4. Photovoltaicsystemintegrator 43.0 Greenvision AmbientePhoto-SolarS.R.L.(Italy) Overseas GOODMANCo.,Ltd. Domestic

TINGTONG (CAYMAN ISLANDS) Healthcare administrationservice 100.0 Ecosystem JapanCo.,Ltd. IML Corporation Wellness Communications Corporation ACRONET Corp. Healthcare-Tech Corporation Leasingandoperationofrental residences 25.0 MINAMI AOYAMA ApartmentCo.,Ltd. ITOCHU International Inc.(U.S.A.) ITOCHU International eeetLaigCroain(... 0. Distributionandleaseoftelevisionstohotelshospitals 100.0 Master-Halco, Inc.(U.S.A.) Telerent LeasingCorporation(U.S.A.) TCUTIA OPRTO Tia)100 Wholesaleandinvestment 100.0 ITOCHU TAIWAN CORPORATION (Taiwan) Enprotech Corp.(U.S.A.) ITOCHU Europe PLC(U.K.) TCUSnaoePe t.(igpr)100 Wholesaleandinvestment 100.0 ITOCHU Korea LTD. (Korea) ITOCHU Singapore Pte,Ltd.(Singapore) TCULtnAeia ..(aaa 0. Wholesaleandinvestment 100.0 ITOCHU BRASILS.A.(Brazil) ITOCHU LatinAmerica,S.A.(Panama) ITOCHU HongKongLtd. ITOCHU (Thailand)Ltd. TCU(hn)HligC. t.(hn)100 Wholesaleandinvestment 100.0 Beijing ITOCHU-HuatangComprehensive ITOCHU (China)HoldingCo.,Ltd. ITOCHU AustraliaLtd.(Australia) ITOCHU MIDDLEEASTFZE(U.A.E.) VIETNAM HI-TECHTRANSPORTATION eGuarantee, Inc. Superex Corporation Orient Corporation Headquartersofreal estatefranchisesystem POCKETCARD Co.,Ltd. 49.7 Famima Credit Corporation CENTURY 21REALESTATE OFJAPAN LTD. Scatec SolarAS(Norway) SolarNet, LLC(U.S.A.) aa eia yai aktn n.3. Ipr,dvlpet auatrn,adsl fmdcleupet5 Marketingsupportformedicalandpharmaceuticalcompanies 41.5 Import,development,manufacturing,andsaleofmedicalequipment Enolia SolarSystemsS.A.(Greece) 30.0 Medical CollectiveIntelligenceCo.,Ltd. Japan MedicalDynamicMarketingInc. ITOCHU TREASURY CENTREEUROPEPLC Solar Depot,LLC(U.S.A.) (Cayman Islands,BritishW HOLDINGS CORP (Singapor Co., Ltd. (Hong KongS.A.R.,China) Pr CO., L (Indonesia) (U.K.) ocessing Co.,Ltd.(China) TD. (Vietnam) e) .

Name est Indies)

Shar 0. CSObusiness,PETcenterbusiness 100.0 CRObusiness 3 100.0 Distributionserviceandwholesaleofmedicaldevicesproducts 100.0 Importandsaleofmedicalequipment 100.0 0. Wholesaleandinvestment 100.0 0. Manufacture anddistributionoffencematerials 100.0 0. Maintenanceandrepair ofindustrialmachineryinautomotive,steel,and 100.0 0. Wholesale andinvestment 100.0 0. Wholesale andinvestment 100.0 0. Wholesale andinvestment 100.0 Wholesale andinvestment 100.0 Wholesale andinvestment 100.0 0. Wholesale andinvestment 100.0 Wholesale andinvestment 100.0 0. Financialservices 100.0 Financialservices 100.0 0. Photovoltaicsystemintegrator 100.0 Voting 00 PortoperationandinlandtransportationinVietnam 20.0 47 ae n ntlaino htvlacssesadeosniiepout 3 Salesandinstallationofphotovoltaicsystemseco-sensitiveproducts 84.7 Engineeringandventilationconstruction 50.0 00Reprocessing, sorting,packaging,and shippingofproducts inthe apparel, 90.0 00 Development,sale,andmanagementofindustrialparks 50.0 AccountReceivablesprotection servicesforgeneralcorporationsand 31.7 Logisticscenter 41.9 Consumercredit, credit card business 32.0 Credit card business 23.4 Credit card business 32.5 75Photovoltaicsystemintegrator 37.5 Photovoltaicsystemintegrator 85.0 04 Photovoltaicsystemintegrator 40.4 6 Import,development,manufacturing,andsaleofmedicalequipment 36.8 00 ManagementoflogisticsinChina 50.0 es (%)

food, andlivingcategories bottling industries financial institutions

Operations Y

Month ear-End Fiscal 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 2 2 3 3

Financial Section

74 Six-Year Summary

75 Management’s Discussion and Analysis of Financial Condition and Results of Operations

100 Consolidated Balance Sheets

102 Consolidated Statements of Income

103 Consolidated Statements of Equity

104 Consolidated Statements of Cash Flows

105 Notes to Consolidated Financial Statements

155 Independent Auditors’ Report

156 Supplementary Explanation

157 Management Internal Control Report (Translation)

158 Independent Auditors’ Report (filed under the Financial Instruments and Exchange Act of Japan)

160 Supplemental Oil and Gas Information (Unaudited)

162 Corporate Information / Stock Information 74

Financial Section

Cash flows(Fortheyear):

Common stockinformation

5. 4. B/S (Atyear-end):

2. 1. Note: P/L (Fortheyear): 3.

Exchange ratesintoU.S.currency

Number ofemployees

Ratios:

Y ears endedMarch 31 (Fortheyear): (Federal ReserveBankofNewY (At year Years endedMarch 31 ITOCHU CorporationandSubsidiaries Six-Year Summary Long-term debt,excludingcurrent Market capitalization Net interest-bearing debt. Ratio ofstockholders’equity Interest coverage(times). Total trading Interest-bearing debt. ROE (%). Range: Stockholders’ equity. Net debt-to-equityratio(times). Trading volume Per share (Yen andU.S.Dollars): Long-term interest-bearing debt. Net incomeattributable ROA (%). Number of shares of common stock Average fortheyear.

At year-end. Stock price(Y

Cash and cash equivalents Cash flows from financing activities Cash flows from investing activities Cash flows from operating activities Revenue.

Gr Gr Short-term inter Adjusted profit(Note3). otal assets. at end of year issued (at year-end, 1,000 shares) interest-bearing debt). to totalassets(%). (Yen andU.S.Dollarsinbillions). to ITOCHU. transactions maturities (includinglong-term profit ratio(%)(Note4). (yearly, millionshares). High. Closing price. Low. Net incomeattributable Low. Stockholders’ equity(Note1). Opening price. High. Cash dividends. oss trading oss tradingprofit. to ITOCHU(Note1). at rate the of ¥93.04=U.S.$1 rate official (the dated March 31,2010announced by of The Bank Tokyo-Mitsubishi UFJ, Ltd.). The Japanese yen amounts for year the March ended 31,2010have translated been into U.S. dollar amounts, solely for convenience the of reader, the “Gross trading profit ratio” is percentage the of “Gross trading profit” to “Total trading transactions.” “Total trading transactions” is presented inaccordance with Japanese accounting practiceand is not meant to present issued and outstanding for period. the “Net income attributable share” per to ITOCHU and “Stockholders’ equity share” per are by calculated using weighted the average number of shares o Adjusted profit =Gross trading profit general and +Selling, administrative +Net expenses +Equity expenses financial inearnings with U.S. GAAP...... f associated companies ...... -end, consolidated)...... en andU.S.Dollars): .

(Note2)......

......

est-bearing debt......

......

ork): ......

......

¥10,306,799 ¥5,476,847 ¥3,416,637 1,726,073 2,209,270 1,098,419 1,919,306 2,107,589 1,584,890 ¥ 295,376 (196,318) (258,987) 128,153 289,964 924,366 475,674 194,290 2010 100.71 694.98 ¥81.09 62,379 ¥93.40 86.12 92.49 1,298 2,616 ¥487 13.2 20.1 15.0 819 486 821 5.3 1.6 2.4 9.0

¥12,065,109 ¥5,192,092 ¥3,419,061 1,756,764 2,389,322 1,760,530 1,934,421 1,060,521 1,584,890 ¥ 276,854 (326,033) 849,411 ¥104.64 165,390 339,292 628,792 628,820 258,322 ¥ 2009 110.48 537.43 100.85 55,431 ¥

87.80 1,337 2,913 99.15

18.1 16.4 18.5 994 478 380 758

7.2 2.1 3.2 8.8

¥11,729,082 ¥2,859,853 ¥5,274,199 1,654,532 2,104,402 1,720,939 1,895,088 1,584,890 ¥ 973,545 ¥137.46 217,301 333,673 383,463 994,547 446,311 ¥ 2008 (65,774) (81,294) 124.09 615.89 113.61 48,657 ¥1,174 65,552 Millions ofY 96.88 1,560 1,591 2,928 99.85 23.3 18.5 18.0 984 804 6.2 1.7 4.1 8.5

¥11,556,787 ¥2,646,037 ¥5,288,647 1,630,928 2,165,629 1,647,589 1,795,333 1,584,890 ¥ 235,917 (100,920) en 892,553 ¥111.19 175,856 240,766 518,040 907,511 ¥117.56 532,856 2007 (83,394) 110.07 121.81 564.48 116.55 45,690 ¥1,014 1,168 1,851 1,223 1,969 21.8 16.9 14.0 837 6.6 1.8 3.5 7.9 ¥10,456,727 ¥2,217,393 ¥4,809,840 1,724,314 2,226,468 1,670,937 1,762,103 1,584,890 ¥185,147 724,377 144,211 251,210 555,531 713,546 ¥117.48 477,707 ¥ 2006 (79,871) (85,193) 104.41 120.93 457.93 113.67 42,967 ¥ 1,011 1,602 91.15 1,056 1,580 23.4 15.1 541 484 5.7 2.4 3.1 9.0 6.8

¥1,990,627 ¥4,483,505 ¥9,562,614 orsales revenue inaccordance 1,891,086 2,346,704 1,669,834 1,750,815 1,584,890 ¥ 126,624 (127,600) (125,342) 508,893 188,196 676,870 630,150 ¥107.22 452,934 ¥ 2005 102.26 114.30 321.59 107.28 77,063 40,890 48.70 1,533 ¥466 16.6 11.4 540 403 856 573 5.7 3.7 1.7 7.0 6.6

$110,778 U.S. Dollars Millions of $36,722 $58,866 $ 3,175 (Note 5) 18,552 23,746 11,806 20,629 22,652 (2,110) (2,784) 2010 13.95 1,377 2,089 3,117 9,935 5,113 $0.87 $5.23 8.80 5.22 7.47 8.82 0.16

Financial Section 75 ------& Products Forest In field in the the ACG 31, 2010 fiscal ended March year uranium of supply a stable provide help ITOCHU Further, in Japan. companies power to to traders company venture a joint ITOCHU established Also, e. Family addition, 2010. In in April completed bid offer vol production of share ITOCHU’s increasing to icantly and Ltd. UNY Co., with tie-ups business and capital luded area the retail and area distribution in the midstream ures s US$6 totaled Sea. in the project Caspian ITOCHU will invest will that a new construct platform to which plans billion sig will contribute initiative in 2013. This on-stream come nif globally. operations develop to in order a tire established ITOCHU jointly General Merchandise, Rubber Yokohama with in Russia company manufacturing intensify to ITOCHU intends forward, Going Ltd. Company, the expand and Company Rubber Yokohama alliance with its in Russia. tires Yokohama-brand sales of and production Sector / Energy-Related Resources Natural in Western business ore in the iron resources, natural In annual increase to work Ltd., Billiton, BHP with Australia in the tons 200 million approximately to capacity production initial to according progressing is project RGP-5 and RGP-4 ITOCHU decided to energy, in 2011. In completion for plans in Oil Project” in the “Chirag invest an it made and Taiwan, in China and distributor product ITOCHU con Japan, In company. associated equity-method c made company, associated equity-method an Ltd., Co., Mart its all of acquiring a subsidiary by Ltd., Co., Japan am/pm merged. subsequently companies two The shares. ITOCHU mea will up step those initiatives, on Capitalizing Japan. to resources Other Sectors won to ITOCHU belongs that a consortium Machinery, In scale seawater largest the world’s of rights project for the bid Victoria, of which the government project, conversion partnership a public-private through advancing is Australia sectors the private and in which the public format (a contract the for in yen Figures into been translated fiscal have year”), “the or 2010” (“Fiscal based the reader on of the convenience for solely dollars U.S. Bank The by = US$1, announced ¥93.04 of rate the exchange 31, 2010. March on Ltd., UFJ, Tokyo-Mitsubishi of company resource-related in British a 15% stake acquired on agreement an concluded and plc., Minerals Kalahari management. business in the company’s involved becoming Extract of shareholder the largest is plc. Minerals Kalahari Extract Resources shares. its 40% of holding Ltd., Resources interest equity the entire owns that company Australian an is the Africa, boasts one that field in Namibia, in a uranium reserves. field scheduled The to is uranium largest world’s in 2013. ITOCHU will take production uranium start up urani largest the world’s of one as position its of advantage Palm FELDA palm producer, oil largest the world’s with a plant began building and Malaysia, of Sdn. Bhd. Industries fruit empty fuel from solid biomass of the production for in operations start up to plant that call for Plans bunches. for fuel a year of 120,000 tons produce eventually 2010 and sale um additional ITOCHU acquired Further, Ltd. Co., Izumiya a ten through INC., ACCESS, NIPPON of shares common der um ------ambi

e 2010, spe- Stage, upon e HOLDINGS

JAVA

embarking and China, India, by consolidated

in April the ¥8,000 level from rose worldwide newly

economies ITOCHU

a global enterprise that is highly attractive to all stake- all to attractive is highly that enterprise a global drove Textile,

in each area, industry-leadingalliances with companies follows. as were ic achievements the fiscal Frontier first of year the fiscalIn year, as up picked economy period, that the U.S. From y. of purchases rewards that (a system point” “eco uction of the intro from goods, which resulted durable of umption al demand grew domestic fiscal financial policiesious that and recov which a modest led to financial markets, y stabilized the of end ¥95 at between to and ¥90 weakened the yen y, l t the effect. took At measures stimulus economic large-scale toward began trending countries European many time, same the However, measures. economic the of back on recovery regions. other with compared moderate was recovery pace of as such nations emerging Meanwhile, er Brazil the World on Value Corporate 2010—Enhancing Fiscal 2010 and Fiscal which covers the Future—, Shaping in the global economy, changes significant of 2011, in light to continue basic policy review to foundations, is ITOCHU’s to steadily forward move and challenges, take on and reform become . holders cif specializing subsidiaries in apparel which owns LTD., CO., which Ltd., Leilian Co., and children, and women young for for mainly apparel sales base in upscale women’s a strong has capi and business ITOCHU promoted Also, women. mature Sector Consumer-Related In their economies. of expansion steady supported thereby and the price worldwide, economies of the recovery with step In rose. commodities other crude and oil of spring from modest recovery continued economy Japan’s higher con and in exports Asia to upturn an to 2009 thanks Overview fully did not worldwide economies 2010, although Fiscal In began in that downturn the serious economic from recover developed on a financial crisis centered to 2008 due autumn measures economic large-scale countries’ such countries, gradual 2009 summer monetary policies from of easing and esults of Operations Results and Condition of Financial Analysis and Discussion Management’s business the & Healthcare innerwear Life and including in TING investment an ITOCHU Food, completed In areas. a which is CORP., HOLDING ISLANDS) (CAYMAN HSIN food a major Group, Hsin the Ting of company holding l fiscal year. Frontier Plan Management Medium-Term its Under Initially, 2010. March of the end at the level ¥11,000 2009 to below dipping dollar, the U.S. against strengthened the yen the U.S. over concern to 2009 due in November the ¥90 mark between the difference of fiscal a narrowing and deficit as however, December, From rates. interest U.S. and Japanese the difference and subsided economy the U.S. of criticism widened according rates interest U.S. and between Japanese on tax breaks and certain appliances) energy-efficient home recovery, Reflecting eco cars. economic of of signs purchases Average Stock the Nikkei d based is on herein provided the financial information All of in this annual included financial statements the consolidated been have financial statements These consolidated report. generally principles accounting with in conformity prepared GAAP). America (U.S. of States in the United accepted t s 76

Financial Section of because inMachinery decrease low transactions inauto andsales business initiatives. Meanwhile, ITOCHU EnerDel, Inc., inorder to strengthen an allianceinproduct Inc., controls which lithium-ion battery manufacturer w p or ¥2.4billion, to ¥3,416.6billion (US$36,722million) com commissions on trading transactions) down edged by 0.1%, totalRevenue (the of revenue sales and trading margins and Bu * n jointly conduct projects). In development the of busi new year.fiscal and fewer deliveries of built newly ships than previous the transactions of automobiles and construction machinery, ENEX CO., LTD., and due inMachinery adecrease to low despite positivefrom the effect acquisition the of ITOCHU annual average prices resources inmineral Energy, Metals & Minerals of because significant declines in previous year. fiscal This was mainly due to in adecrease related investments that an offset increase individends from year,fiscal mainly due to individends adecrease from LNG- ¥28.9 billion (US$311million) compared with previous the Mongolia doubtful receivables from Machinery-related customers in previousthe year, fiscal due to absence the of aprovision for ¥9.7 billion, to ¥7.0billion (US$76million), compared with acquisitionsthe companies of several year, lastassets inthe fiscal inaddition to increase the after pension cost increase resulting from inpension adecrease to low the performance of pension assetmanagement and a compared with previous the year. fiscal This was mainly due by 0.2%,or ¥1.8billion, to ¥769.9billion (US$8,275million), lio o subsidiaries. due to cost reductions and deconsolidation of existing group ENEX CO., LTD., eventhough such decreased expenses annual average prices resources inmineral and oil &gas. previousthe year, fiscal despite significant the decline in due U.S.the and previous inthe Food year; adecrease fiscal fromeffect deconsolidation the by in of sale asubsidiary the housingthe market slowdown inJapan and U. the S.,and the ForestChemicals, Products Merchandise &General due to si interest rates inU.S. dollars. m in Energy, Metals &Minerals, due of to acqui the effect the and fats. Such inrevenue decreases were by offset an increase to ¥25.3billion (US$272million), compared with previ the provisions for doubtful receivables. year,us fiscal mainly due to an upturn resulting from lower for Environment &New Energy, primarily bioethanol and solar power generation, “S” while stands for lateral synergies among business areas. Infrastructure, IT, LT, “N” infrastructure; FTinfrastructure, and for social New Technology &Materials, mainly biotechnology and and nanotechnology; “E” L-I-N-E-s is an acronym referring to four business areas. “L” stands for Life &Healthcare, and centered health-related on services business; medical “I” for ared with previous the year. fiscal This was mainly due to a inpriorityesses areas, or “L-I-N-E-s,*” under ITOCHU tion of ENEXCO., ITOCHU LTD. third inthe quarter of rote allocation athird-party of shares new for U.S. Ener1 in adecrease obiles and construction machinery; Selling, general and general administrativeSelling, expenses Provision for doubtful receivables Gross trading profit received Dividends Net interest improved expenses by 14.0%,or ¥4.1billion, n, to ¥924.4billion (US$9,935million), compared with the s

to ss R ine

price recognized

declines es ult

i n s F in

food bydecreased 17.5%, or bydecreased 12.8%,or ¥136.2bil- the o r Fi

materials previous sca l 2010—C

such fiscal including ITOCHU bydecreased 57.9%,or

as year, and oil &gas,

feed ¥6.1 billion, to om

despite grains, upedged p a

ri oils other - - so - - - - n b etween Fi etween nies, As aresult, companies inMachinery, and ICT, Aerospace &Electronics. and Food, inaddition to an increase inexisting associated c despite an increase insome associated companies pur newly equity inearnings from The them. overall occurred decrease , received Dividends subsidiary TODA KOGYO’s positive-electrode material manufacturing materialselectrode for lithium-ion batteries and making Unitedin the States for manufacture the and of sale positive- a joint venture company with TODA KOGYO CORP. advanced initiatives for storage batteries by establishing earnings ofcompanies associated As aresult, previousin the year. fiscal from Entrada the Oil/Natural Gas Field Development Project translation and absence the of aloss arising from withdrawal previous fiscal m previousthe year, fiscal inaddition to inimpair adecrease Gas Field Development Project U.S. inthe Gulf of Mexico in a loss arising from withdrawal from Entrada the Oil/Natural billion, to ¥8.5billion (US$92million), due to absence the of restructuring of some group companies. in loss onof disposal group companies as aresult of the ingaindecrease on of sales investments, and an increase with recovery gradual the of stock markets, despite aslight year,fiscal due to asignificant indevaluation decrease loss ¥4.5 billion (US$48million), compared with previous the (US$39 million). with previous the year. fiscal ¥53.3 billion, to ¥155.0billion (US$1,666 million) compared lio lio LOGISTICS CORP., and Co., Leilian acquisitionsthe of C.I.Kasei Co., Ltd., ITOCHU lio e insteeldecrease products, resources, mineral and pulp-relat compared with previous the year. fiscal This was 12.2%, or ¥5.0billion, to ¥36.3billion (US$390million), year.fiscal ¥51.6 billion (US$555million) compared with previous the in restaurant chain and finance-related associated compa iaries. income or (expense) total of oil and gas-related investments. As aresult, Net financial inTextile;hased Energy, Machinery; Metals &Minerals; d companies, as well as impairment on losses investments ent loss, and again on of sales subsid properties inseveral Loss on property andLoss equipment–net improved by ¥36.9 on investments–netLoss improved by ¥18.6billion, to Income taxes Other–net improved by ¥7.5billion, to a gain of ¥3.0bil Equity inearnings ofcompanies associated G n (US$32million), due to again on foreign currency n, to ¥139.7billion (US$1,501million) compared with the n (US$151million), was which at recognized of time the ain on purchase bargain inacquisition was ¥14.0 bil as aresult of revaluation the of fair their values and less in Canadaajoint venture company. sca income before income taxes and equity in Net income year. l 2010 a bydecreased 29.1%,or ¥21.2billion, to worsened by ¥2.0billion, to ¥3.6billion n bydecreased 21.0%, or ¥37.1bil- d Fi Net interest expenses sca bydecreased 25.6%,or Ltd.* l 2009 worsened by due to a and

------Financial Section 77 - - - an 32 (76) (48) (92) 390 107 311 151 (555) (124) (379) 1,666 1,111 1,501 9,935 2010 1,377 (8,275) (26,787) Millions of U.S. Dollars $ 36,722 $ 7.5 (5.0) (0.1) (2.4) 21.2 (37.2) (133.7)

(Decrease) ¥ Japanese with in accordance — 14.0 (4.5) 41.3 16.3 (6.3) 35.0 (6.1) (11.4) (72.8) (16.7) 9.7 (45.7) 10.5 (23.1)(45.4) 18.6 36.9 208.3 (53.3) 165.4 135.5 (32.1) 176.8 (37.1) (768.1) (1.8) 1,060.5 (136.2) (2,358.5) Billions of Yen ¥ 3,419.1 ¥ ¥ 3.0 9.9 (7.0) (4.5) (8.5) 36.3 28.9 14.0 (51.6) (11.5) (35.2) 155.0 103.4 139.7 924.4 2010 2009 Increase 128.2 (769.9) (2,492.3) ¥ ¥ 3,416.6 . Revenue machinery; construction iles and in Chemicals, Forest in automo transactions low to fiscal in addition ious year in Japan slowdown market housing and in chemicals, ge information) (Supplemental ” transactions trading “Total 2010 decreased Fiscal 14.6% or practice for accounting million) (US$110,778 billion ¥10,306.8 to ¥1,758.3 billion falls price on & Minerals, Metals in Energy, to due mainly despite & gas oil and mineral in resources average annual the in Machinery, LTD.; ITOCHU ENEX CO., of acquisition the in pre ships newly built of deliveries multiple of absence v mentioned as reasons the same in Foods and the U.S.; and in aver annual falls price on & General Merchandise, Products a b ...... Net Net ...... (after ¥6.2 billion is ...... Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s ...... 22.5 decreased (US$124 million), by billion ¥11.5 of Net income attributable to the noncontrolling the noncontrolling to attributable income Net less ITOCHU to attributable income effect Net The on in purchase bargain on tax Gain effect), of the which total income is interests. held previously of remeasurement on loss and acquisition . equity in earnings of associated companies Income before income taxes and income Equity in earnings of associated companies. . interest Less: Net income attributable to the noncontrolling Net income attributable to ITOCHU. Other–net. Income taxes. Consolidated Statements of Income Revenue. Cost of sales. interest million) (US$1,377 ¥128.2 billion to ¥37.2 billion, %, or fiscal year. the previous with compared * , ITOCHU to attributable income Net Consequently, Income before equity in earnings of associated companies. Income before equity in earnings of associated Net income. Gross trading profit. . Selling, general and administrative expenses . for doubtful receivables Provision income. Interest expense. Interest . Dividends received Gain (loss) on investments–net . and equipment–net. Gain (loss) on property in acquisition. Gain on bargain purchase Years ended March 31 ended March Years 78

Financial Section Years endedMarch 31

Note: , Metals&Minerals. , Aerospace &Electronics. , Metals&Minerals. , Aerospace &Electronics. , Metals&Minerals. , Aerospace &Electronics. , Metals&Minerals. , Aerospace &Electronics. Trading transactions(Note): Operating SegmentInformation Total assetsatMarch31: Net income(loss)attributabletoITOCHU: Gross tradingprofit: ICT Machinery. ICT Machinery. Other, Adjustments& Eliminations...... Finance, Realty Food. Chemicals, For Energy ICT Machinery. Other, Adjustments&Eliminations...... Finance, Realty Food. Chemicals, For Energy Other, Adjustments&Eliminations...... Finance, Realty Food. Chemicals, For Energy ICT Machinery. Other, Adjustments&Eliminations...... Finance, Realty Food. Chemicals, For Energy T T T T extile. extile. extile. extile. Total. Total. Total. Total. U “Trading transactions” is presented inaccordance with Japanese accounting practiceand is not meant to present or sales revenue inaccordance with .S. GAAP...... est Products &GeneralMerchandise. est Products &GeneralMerchandise. est Products &GeneralMerchandise. est Products &GeneralMerchandise. , Insurance&LogisticsServices. , Insurance&LogisticsServices. , Insurance&LogisticsServices. , Insurance&LogisticsServices...... ¥ ¥ ¥ ¥ ¥ ¥10,306.8 ¥ ¥ 1,130.7 1,249.0 3,032.4 1,795.5 3,272.6 5,476.8 516.8 417.4 102.7 924.4 128.2 2010 751.9 382.1 728.0 335.5 110.1 166.9 513.2 545.0 141.6 136.4 607.8 162.8 511.4 (12.4) 22.4 65.7 35.6 27.8 19.3 43.3 19.2 (4.2) 3.7 6.0 ¥ ¥ ¥ ¥ ¥ ¥12,065.1 ¥ ¥ Billions ofYen ,7. 1,407.8 1,370.2 ,5. 1,064.8 916.6 1,054.1 1,016.6 3,036.8 2,289.5 3,188.4 3,170.3 2,024.0 3,916.8 1,060.5 5,192.1 ¥ 589.6 ¥ 360.4 ¥ 102.6 165.4 2009 8. 420.5 766.8 381.8 611.4 105.7 114.7 324.7 122.6 335.6 114.3 182.1 167.3 9. 513.9 709.7 490.2 639.9 127.5 139.0 222.3 138.9 722.6 633.8 175.1 637.7 1.)21.4 (15.5) ¥ 22.9 20 41.4 42.0 02 18.7 19.7 20.2 19.0 99.1 71.9 33.0 12 10.8 (1.2) (2.8) . 14.6 8.0 ¥ ¥11,729.1 ¥ 5,274.2 ¥217.3 690.7 994.5 364.3 115.2 2008 229.3 517.6 20.5 25.1 6.0 U.S. Dollars $ $ $ $ $ $110,778 $ $ Millions of 2010 12,153 13,425 32,592 19,299 35,174 58,866 5,555 8,082 4,486 1,104 4,107 7,825 3,606 1,183 1,794 5,517 5,857 1,522 1,466 6,533 9,935 1,377 1,749 5,496 (134) 241 706 383 299 207 465 206 (46) 40 64

Financial Section 79 - - - - 65X35 10 Other, Other, Adjustments & Eliminations Finance, Realty, Insurance Finance, Realty, & Logistics Services for in prepayment performances low to Net fiscal year. Food Chemicals, Forest Products Products Chemicals, Forest & General Merchandise 07 08 09 0606 & Minerals Energy, Metals Energy, & Electronics ICT, Aerospace ICT, 06 Textile 0 assets decreased by Total fiscal year. d in the previous Machinery 2009 2010 , Aerospace & Electronics , Aerospace 400 300 200 100 the and companies associated of in earnings in equity ent ship less as well as machinery, construction and obiles securities recog marketable and investments on loss ent (Billions of Yen) * For Fiscal Years nize impair and receivables doubtful for allowance of absence the previous than transactions trading to ¥19.1 billion, ITOCHU to improved attributable income improve a significant to due (US$40 million), ¥3.7 billion m million), (US$5,857 ¥545.0 billion to ¥95.0 billion, 14.8%, or which mainly fiscal year-end, the previous with compared inventories and decreases in trade receivables from resulted machinery. construction and automobiles to related trading Gross ships. newly built of deliveries fewer as well ¥43.3 billion to ¥28.6 billion, 39.8%, or decreased by profit auto for a decrease in transactions to due (US$465 million), m Gross Trading Profit by Operating Segment Profit Trading Gross ICT to ¥25.9 billion, 4.1%, or decreased by transactions Trading due (US$6,533 million), ¥607.8 billion businesses. ICT-related and aerospace-related by overall to ¥2.4 billion, 1.7%, or decreased by profit trading Gross reflecting (US$1,466 million), unfavorable ¥136.4 billion income Net businesses. ICT-related by overall performances ¥2.0 billion, ITOCHU or 25.0%, to decreased by attributable trading gross lower to due (US$64 million), billion ¥6.0 to an despite investments, on loss impairment and profit Total companies. associated of in earnings in equity increase ¥513.2 billion to ¥23.1 billion, 4.7%, or by assets increased fiscal year- the previous with compared (US$5,517 million), machinery in industrial increase related an to due end, a decrease for assets, which compensated projects. aircraft the large delivery of m - - - - 65X35 10 Other, Other, Adjustments & Eliminations n Finance, Realty, Insurance Finance, Realty, & Logistics Services o ti Food ma Chemicals, Forest Products Products Chemicals, Forest & General Merchandise r 07 08 09 fo Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s n 0606 & Minerals Energy, Metals Energy, ent I m because fiscal year-end, the previous with & Electronics ICT, Aerospace ICT, 06 ting Seg Textile a a decrease despite LTD., CO., HOLDINGS JAVA and 0 Machinery 2009 2010 n), compared system. that of the categories with in accordance g is 2,000 1,000 4,000 did not Ltd. in Leilian Co. control of the acquisition anying 3,,000 extile ITOCHU to attributable income Net apparel. ics, and (Billions of Yen) * For Fiscal Years r (US$241 ¥22.4 billion to ¥0.5 billion, 2.2%, or decreased by new equity-method to due increase becausemillion), an accom purchase bargain on gain and companies associated Total Trading Transactions by Operating Segment Transactions Trading Total Machinery ¥618.3 billion, 45.1%, or decreased by transactions Trading a decrease in to due (US$8,082 million), billion ¥751.9 to machinery as construction transactions, and automobiles in fab textile materials, for in the markets a slowdown to due to ¥72.8 billion, or 12.3%, decreased by transactions Trading slowdown a market to due million), (US$5,555 ¥516.8 billion increase an despite apparel, and fabrics, in textile materials, JAVA and LTD., SANKEI CO., of the acquisitions from by increased profit trading Gross LTD. CO., HOLDINGS million), (US$1,104 ¥102.7 billion to ¥0.1 billion, 0.1%, or SANKEI CO., of the acquisitions from increase an to due LTD. The follows. as are segment operating by results Business the follow and system, Company uses a Division Company T Oper exclude Companies Division of transactions trading Further, transactions. inter-segment textile materials, for markets slumping for fully compensate disposal of on a gain of the absence and apparel and fabrics, assets increased securities. Total marketable and investments (US$4,486 mil ¥417.4 billion to ¥56.9 billion, 15.8%, or by lio JAVA of the inclusion and new investments multiple consolidated as Ltd., Leilian Co., and LTD., CO. HOLDINGS a decrease in trade receivables counteracted subsidiaries, transactions. trading lower accompanying p 80

Financial Section U.S. subsidiary. Net income attributable to ITOCHU Unitedin the States and Japan of of and sale a the effect the unable cancel to fully out aslowdown of increasethe due to acquisition the of C.I.Kasei Co., Ltd. was or ¥4.2billion, to ¥110.1billion (US$1,183million), because e lio 22.9%, or ¥232.5billion, to ¥1,249.0billion (US$13,425mil due to ingross decreases trading profit and equity inearn 42.8%, or ¥49.0billion, to ¥65.7billion (US$706million), year.fiscal Net income attributable averagein the prices of resources metal and over energy the as aconsolidated didnot subsidiary completely afall offset increase due to inclusion the of ENEXCO. ITOCHU LTD., against yen the compared with previous the year-end. fiscal appreciation of Australian the dollar and Brazilian the additional acquisition of property and equipment, and oilhigher prices compared with previous the year-end, fiscal increases receivables intrade and inventories accompanying lio year. Gross trading profit by decreased 36.3%,or ¥80.7bil average prices of resources metal and over energy fiscal the Net Income(Loss)AttributabletoITOCHUbyOperatingSegment of Japan, counteracted which an increase due to acquisition the as aslowdown inhousing markets United inthe States and averagein the price of chemicals year, over fiscal the as well to ¥1,795.5billion (US$19,299million), attributable to afall Trading transactions by decreased 11.3%,or ¥228.5billion, Chemicals, Forest ProductsGeneral Merchandise & s due to inclusion the of ENEXCO. ITOCHU LTD., as acon to ¥3,272.6billion an (US$35,174million), because increase Trading transactions by decreased 16.4%,or ¥644.2billion, Energy, Metals&Minerals from Entrada the oil and natural development gas field proj in (Billions ofYen) * ForFiscalYears olidated didnot subsidiary completely inthe afall offset previous inthe year.ct fiscal Total assetsincreased by gs of associated companies, despite absence the of loss the n, to ¥141.6billion an (US$1,522million), because n), compared with previous the year-end, fiscal due to C.I. 100 150 –50 2010 2009 Machinery 50 0 Kasei Textile 06 ICT, Aerospace Co., &Electronics Ltd. Gross Energy, Metals & Minerals 0606 trading 70 09 08 07 & GeneralMerchandise Chemicals, Forest Products by decreased to ITOCHU profit Food housing the markets decreased & LogisticsServices Finance, Realty, Insurance & Eliminations Adjustments Other, 10 65X35 by 3.7%, real - - - - - by 19.1%,or ¥116.6billion, to ¥728.0billion (US$7,825mil in earnings of associated companies. Total assetsincreased ingrossdecrease trading profit and adeterioration of equity equipment (impairment loss, loss onoffsetting a disposal), Kasei Co., Ltd., and absence the of loss on property and million), due to net gain on acquisition of control of C.I. increased by 1.3%,or ¥0.2billion, to ¥19.3billion (US$207 lio p ¥76.6 billion, to ¥1,130.7billion (US$12,153 million), com of associated companies. Total assetsincreased by 7.3%,or distributionfood and improved subsidiary equity inearnings productfood distribution. property and equipment inrelation to investments new and a acquisition of C.I.Kasei Co., Ltd., increased trading receiv Total AssetsbyOperatingSegment lio increased byto ITOCHU 37.8%,or ¥7.6billion, to ¥27.8bil from distribution afood subsidiary. Net income attributable grains, oils, and fats didnot completely lower offset earnings improvementsbecause inprofitability inrelation to feed down ¥0.1billion, to ¥335.5billion (US$3,606million), year. of first half in the fiscal the Gross trading profit edged materialsfood such as grains, feed oils, and fats, particularly ¥3,032.4 billion (US$32,592million), due to prices falling for Trading transactions by decreased 4.9%,or ¥156.0billion, to Food (US$383 profit by decreased 15.2%,or ¥6.4billion, to ¥35.6billion revenues from afinance consolidated didnot compensate subsidiary fully for lower due to acquisition the of LOGISTICS ITOCHU CORP. as a to ¥166.9 billion an (US$1,794million), because increase Trading transactions by decreased 0.2%,or ¥0.3billion, Finance, Realty, Insurance&LogisticsServices *AsofMarch 31 (Billions ofYen) bles resulting from market recovery inchemicals. ared with previous the year-end, fiscal due to an increase in 1,200 1,600 n n), compared with previous the year-end, fiscal due to 400 800 2010 2009 Machinery (US$299million), as aresult of reductions inSG&A ina 0 Textile 06

million), ICT, Aerospace &Electronics

due

Energy, Metals to associated company. Gross trading

lower & Minerals 0606

revenues 70 09 08 07 & GeneralMerchandise Chemicals, Forest Products Food

from & LogisticsServices Finance, Realty, Insurance

finance-related & Eliminations Adjustments Other, 10 65X35 the - - - - Financial Section 81 ------a unfavorable food materials l 2011 equivalents. cash sca r Fi k fo oo rading Profit fiscal year; a decrease in the previous and ary in the U.S. d Outl and cash lower to n), due newly as companies other and LTD., OCHU ENEX CO., of deliveries fewer and machinery, construction and obiles uncertain and risks potential other and Information g Risk ¥9.7 ITOCHU to deteriorated attributable loss esses. Net n & Metals a decrease in Energy, to due mainly fiscalus year, America and in North transactions l trading busi L-I-N-E-s from increase an which counteracted ion, foreign to decrease due in a ¥24.3 billion resulted aries s o sidi i those 2010. Excluding Fiscal during fluctuations exchange the actual decrease in the gross factors, negative and positive ¥170.2 billion. was subsidiaries existing of profit trading average in annual decline the significant to due Minerals, the positive despite & gas, oil and in mineral resources prices LTD., ITOCHU ENEX CO., of theeffect acquisition from auto of transactions low to a decrease in Machinery due and fats. and oils feed grains, as such falls price in to due Food, from in revenues apprecia yen as well as demand slumping to due conditions America in North transactions trading material equipment slumping with associated conditions unfavorable and which counteracted appreciation, yen as well as demand profit trading Gross businesses. L-I-N-E-s from increase an billion ¥19.2 to ¥13.8 billion, or 42.0%, decreased by materi equipment for falling prices to due (US$206 million), a in Selling, General and Administrative Expenses by expenses edged down administrative Selling, and general (US$8,275 million), ¥769.9 billion to ¥1.8 billion, 0.2%, or the to due mainly fiscal year, the previous with compared and asset management pension of performance low ross T Gross to ¥136.2 billion, 12.8%, or decreased by profit trading Gross the previ with compared (US$9,935 million), ¥924.4 billion the a sub sale of by the the effect deconsolidation and from n fiscal year. in the previous than ships newly built of acquisition the above-mentioned Furthermore, IT The ¥67.5 billion. contributed subsidiaries consolidated in a resulted subsidiaries consolidated of deconsolidations subsid overseas of the translation decrease; and, ¥9.2 billion the because (US$134 million), of ¥12.4 billion to billion, in retirement increase an profit, trading in gross decline financial asset of deterioration accompanying benefit costs a and fiscal year, the previous of performance management companies associated of in earnings equity of deterioration assets Total local tax the burden. effect a lower cancelled of decreased by fiscal year-end the previous with compared (US$5,496 mil ¥511.4 billion to ¥126.3 billion, 19.8%, or lio factors. m t could that factors 2010. Thus, Fiscal of the end at available statements such from differ materially to actual results cause in the follow stated the factors limitation, without include, n o ti - - a - - l 2010 a l 2010 - sca (US$4,107 assets

s of Oper s in Fi n year-end, billion Total

ult o es ti a ¥382.1 to business.

s of R i of

in LTD. ITOCHU ENEX CO., Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s ys l billion, a s of Oper transfer

¥0.3

ult on

d An or

es n n a 0.1%,

o s of R i by i

ss ys u l a sc machinery; construction and obiles a decrease in revenues subsidiaries. g sales of basis a net on revenue present subsidiaries its and ompany transactions.” trading on commissions and ins for revenue” “Sales as operations of statements olidated (US$5,708 million). ¥531.0 billion were basis a net on ions” Revenue Standards Accounting of the stipulations with accordance In standard 605 (the pre-codification Codification Topic Revenue “Reporting 99-19, Force Task Issues Emerging the Company Agent”), an as Net versus a Principal as Gross with transactions certain revenue present subsidiaries its and in the basis con a gross on revenues of cost corresponding s An Other, Adjustments & Eliminations Adjustments Other, to ¥12.4 billion, 7.1%, or decreased by transactions Trading for falling prices to due (US$1,749 million), ¥162.8 billion Di increased in real- of inventory on loss impairment an and companies ITOCHU to deteriorated attributable loss sale. Net for estate because (US$46 million), the net ¥4.2 billion to ¥3.0 billion, ITOCHU LOGISTICS of control of acquisition on gain in earnings a decrease fully in equity absorb did not CORP. and companies finance-related for companies associated of the revaluation from resulting loss in impairment increase an the fiscal the previous of the absence as well as values fair of gain overseas year’s to ¥2.4 billion, 0.1%, or by edged down revenue Total because (US$36,722 million), unfavorable ¥3,416.6 billion an included factors Favorable factors. offset favorable factors to due & Minerals Metals Energy, from in revenues increase of acquisition the effect an of m the significant despite year, the previous of quarter the third oil and in mineral resources prices average in annual decline a decrease in included factors unfavorable Meanwhile, & gas. in auto transactions low to due Machinery, from revenues & General Merchandise, Products Chemicals, Forest from the U.S., and in Japan slowdown market the housing to due g in manufacturing, traded a primary as transactions obligor sales general with service for and and processing, rendering Otherwise, orders. the customer before risk inventory mar “trading as operations of statements in the consolidated C t revenue” 31, 2010, “Sales ended March the fiscal In year, (US$31,014 million), ¥2,885.6 billion was basis a gross on transac trading on commissions and margins “Trading and and the financial position of analysis and A discussion follows. as 2010 is Fiscal for operations of results are later 2011 and Fiscal for the outlook of Descriptions based management’s on are that statements forward-looking currently information beliefs, considering and assumptions fiscal the previous with compared million), a as CORP. ITOCHU LOGISTICS of because the acquisition in condominium increase subsidiaryan and consolidated tax offset assets accompany a decrease in deferred inventory 82

Financial Section individendsa decrease ¥6.1 billion, to ¥28.9billion (US$311million), mainly due to Furthermore, Dividends received by decreased 17.5%,or for U.S. the dollar. interest rate from 2.93%to 0.69%, due to lower interest rates was ¥32.7billion. of expenses inthe existing decrease actual the subsidiaries year.fiscal Excluding positive those and negative factors, duedecrease to foreign exchange fluctuations during the t consolidated subsidiaries was ¥10.0billion, and transla the lio U.S. dollar. Interest by decreased 22.9%,or expense ¥10.5bil 39.0%, or ¥6.3billion, as result of lower interest rates for the billion (US$272million). Interest income by decreased interest income, improved by 14.0%,or ¥4.1billion, to ¥25.3 year. ofdecrease Net income financial was ¥3.6billion (US$39million), a Expense andDividendsReceived) Net FinancialIncome(ofnterest Income, nterest Mongolia doubtful receivables from Machinery-related customers in previousthe year, fiscal due to absence the of aprovision for ¥9.7 billion, to ¥7.0billion (US$76million), compared with Provision for doubtful receivables by decreased 57.9%,or Provision forDoubtfulReceivables lio companies consolidated as newly subsidiaries was ¥57.8bil acquisitionthe of ENXEXCO., ITOCHU LTD., and other costbenefit was ¥4.5billion, due increase the inexpenses to Furthermore, above-mentioned the inretirement rise group subsidiaries. due to cost reductions and deconsolidation of existing ENEX CO., LTD., eventhough such decreased expenses acquisitionsthe companies of several including ITOCHU year, lastassets inthe fiscal inaddition to increase the after pension cost increase resulting from inpension adecrease provisions for doubtful receivables. * Forfiscalyears Administrative Expenses Gross Trading Profit; Selling,Generaland (Billions ofYen) ion of overseas subsidiaries 1,200 Net interest consisting expenses, of interest and expense 300 600 900 n, due to adecline of 2.24percentage points average inthe due inexpenses decrease ton, the deconsolidation the of Selling, GeneralandAdministrativeExpenses Gross Trading Profit 0 05 recognized ¥2.0billion compared with previous the fiscal 06 in from LNG-related investments that the 70 09 08 07 previous resulted ina¥17.8billion fiscal year, despite 10 65X35 other - - - investments. anoffset increase individends from oil and gas-related lio on business restructuring was up by Net FinancialExpenses a Furthermore, gain onof disposal investments and market restructuring of some group companies. in loss onof disposal group companies as aresult of the ingaindecrease on of sales investments, and an increase recovery gradual the of stock markets, despite aslight year, due to asignificant indevaluation decrease loss with billion (US$48million), compared with previous the fiscal onLoss investments-net improved by ¥18.6billion, to ¥4.5 Other Profit (Loss) Provision forDoubtfulReceivables a impairment loss, and again on of sales properties insever previousin the year, fiscal inaddition to in adecrease Gas Field Development Project U.S. inthe Gulf of Mexico a loss arising from withdrawal from Entrada the Oil/Natural billion, to ¥8.5billion (US$92million), due to absence the of on Loss property and equipment–net improved by ¥36.9 t * Forfiscalyears Net FinancialExpenses=Interest Expenses+DividendsReceived Net Interest Expenses=Interest Income+Interest Expense * Forfiscalyears (Billions ofYen) (Billions ofYen) ies declinedby ¥26.2billion, to ¥19.8billion. by decreased ¥2.1billion,ble securities to ¥24.6billion. Loss l subsidiaries. –20 onofn. Loss disposal investments and marketable securi –40 –30 –10 Provision forDoubtfulReceivables Net FinancialExpenses Net Interest Expenses 10 15 20 10 0 5 0 05 05 06 06 70 09 08 07 70 09 08 07 ¥5.5billion, to ¥9.3bil 10 10 65X35 65X35 - - - - Financial Section 83 - - - 65X35 10 07 08 09 subsidiaries. of the acquisitions & Minerals; Metals Machinery; Energy, 06 05 less and values their fair of the revaluation of result a as 0 500 400 300 200 100 investments losses on impairment as well as d companies, hased in Textile; * For fiscal years (Billions of Yen) Adjusted Profit compa associated finance-related and chain in restaurant e arningsEquity in E Companies of Associated by declined companies associated of in earnings Equity million), (US$390 ¥36.3 billion to ¥5.0 billion, 12.2%, or a to due was This fiscal year. the previous with compared pulp-relat and mineral resources, products, decrease in steel Adjusted Profit selling, general profit, trading gross of (net profit Adjusted expenses, dividends expenses, interest net administrative and companies) associated of in earnings equity and received, ¥194.3 billion to ¥145.0 billion, 42.7%, or decreased by profit trading a decrease in Gross to due (US$ 2,089 million), from increase despite occurred decline overall them. The from in earnings equity newly pur companies associated in some increase an despite c associated in existing increase an to in addition Food, and & Electronics. Aerospace ICT, and in Machinery, companies equity-method major of results the business Furthermore, of in Performance included are companies associated Companies, Associated Equity-Method and Subsidiaries Major or Reporting Profits Companies Group Major under Reporting Losses. Companies Group nies, - 65X35 a ¥53.3 10 Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s 07 08 09 06 withdrawal from arising a loss of the absence axes 05 0 80 60 40 20 currency foreign on a gain to due n (US$32 million), –20 –40 * For fiscal years (Billions of Yen) Income T ¥51.6 to billion, ¥21.2 or 29.1%, decreased taxes by Income to due mainly which was (US$555 million), billion in equity and taxes income before income in decline billion companies. associated of earnings lio improved equipment and property on gain Furthermore, arising loss a of absence The ¥2.5 billion. to ¥2.5 billion, by Field Gas Oil/Natural the Entrada from withdrawal from fiscal accounted year in the previous Project Development decreased loss ¥5.2 impairment other and, ¥29.2 billion; for ¥11.0 billion. to billion, ¥14.0 billion was in acquisition purchase bargain on Gain the the time of recognized which at was (US$151 million), ITOCHU LOGISTICS Ltd., Co., C.I. Kasei of acquisitions Ltd. Leilian Co., and CORP., ¥3.0 bil of a gain to ¥7.5 billion, by improved Other–net and translation Project Development Field Gas Oil/Natural the Entrada from fiscal year. in the previous was currency translation foreign on gain Furthermore, foreign on loss with compared improvement an ¥0.3 billion, fiscal the previous for ¥3.4 billion of currency translation the from withdrawal from arising a loss of absence The year. in the Project Development Field Gas Oil/Natural Entrada other and, ¥7.1 billion; for fiscal accounted year previous ¥2.7 billion. to billion, ¥2.9 deteriorated (loss) gain Equity in Earnings of Associated Companies 84

Financial Section Years endedMarch 31 lio m e number of companies included inconsolidation) deteriorat Group companies reporting profits as apercentage of the share of Group companies reporting profits number (the of development project previous inthe year. fiscal Further, the from withdrawal from Entrada the oil and natural gas field (US)Limited dueEnergy to absence the of aloss arising s lower earnings from United States, Australia, and off China subsidiaries ¥12.5billion, decreased to ¥7.9billion, because price of oil year. over fiscal the Profits from overseas trading Exploration (Azerbaijan) Inc., due average inthe to afall of resources metal year, over fiscal the and Oil ITOCHU ofEnergy Australia Ltd, Pty due average inthe to afall price absorb inrevenues decreases from Minerals & ITOCHU ies, The aggregate income from Group companies (subsidiar in sidi associatedmethod companies (aggregate profit /loss of sub year, In fiscal the net income from subsidiaries and equity- (Note) Share. No. ofgroup companies. No. ofcompanies Share ofGroupReporting Profits Companies Overseas trading Group companies Profits/Losses ofGroupReporting Profits/ Companies Losses P d business results of 413companies, comprising 257consoli Consolidated business results year for includes fiscal the the from Group companies reporting improved losses ¥18.8bil Exploration (Azerbaijan) Inc. Meanwhile, aggregate the loss ofMinerals &Energy Australia Ltd Pty and Oil ITOCHU ¥166.2 billion, due to inearnings decreases dra (US) Limited due to absence the of aloss arising from with ¥118.4 billion, an because improvement Energy inCIECO overseas trading subsidiaries) declined¥21.3billion, to Years endedMarch 31 earningset higher from Singapore. d 1.7percentage points, to 71.9%. r subsidiaries. trading subsidiaries. excluding overseas ated subsidiaries (105domestic and 152overseas) and 156 er eporting profits. g subsidiaries) reporting profits ¥52.6billion, decreased to ent project previous inthe year didnot fiscal Total. n, to ¥40.0billion, as aresult of improvement inCIECO equity-method associated companies, and overseas trad fromwal Entrada the oil and natural develop gas field aries and equity-method associated companies excluding fo ...... sidi Investment companies are which considered of as part parent (151entities) and companies indirectly invested by or ITOCHU its overseas trading sub- ...... r aries (307entities) are not included above-mentioned inthe number of companies. ma ...... n c ...... Su e of ...... bs i d i a rftbeUpoial oa rftbeUpoial oa rftbeUpoial Total Unprofitable Profitable Total Unprofitable Profitable Total Unprofitable Profitable oetcOesa oa oetcOesa oa oetcOesa Total Overseas Domestic Total Overseas Domestic Total Overseas Domestic ¥166.2 166¥3.)¥118.4 ¥(38.2) ¥156.6 s a rie 74.1% 170 2 7 297 171 126 9.7 n from ITOCHU d Equit ¥(40.0) 2010 2010 70.4% 243 (1.8) completely y ¥126.3 -Meth 71.9% - 413 - 7.9 ------A od ¥218.9 181¥5.)¥139.7 ¥(58.3) ¥198.1 Equity-Method AssociatedCompanies Net IncomeAttributabletoITOCHUfrom Subsidiariesand * Forfiscalyears (Billions ofYen) of scope the consolidation are as follows. (Note) overseas). The earnings or of companies losses those within equity-method associated companies (65domestic and 91 73.9% 20.8 176 3 7 309 179 130 –120 120 180 240 –60 Share ofGroup CompaniesReportingProfits (Right) Companies (Left) Net IncomeAttributabletoITOCHUfrom SubsidiariesandEquity-MethodAssociated Companies ReportingLosses(Left) Companies ReportingProfits (Left) 60 ssoc 0 Billions ofYen 05 i ¥(58.8) a 2009 2009 73.4% 244 te (0.5) d C 06 om ¥160.1 73.6% 20.3 420 p a 70 09 08 07 s nie ¥(52.6) (15 2. ¥(21.3) ¥20.2 ¥(41.5) 0.2pts. (11.1) (6) 4 8 (12) (8) (4) (3.0)pts. Changes Changes ¥18.8 (1) (1.3) 10 65X35 (1.7)pts. ¥(33.8) (12.5) (7) 100 25 50 75 0 (%) Financial Section 85 Reasons for Changes Almost the same level due to reduced customer IT investments IT customer reduced to due level same the Almost Due to gain on quarter. this fourth Started consolidation from in acquisition bargain purchase impairment of absence the reduction, cost to due increase previ- the in Significant asset tax deferred the of reversal and assets and fixed of loss acquisition in purchase bargain on gain net and year, fiscal ous quarter first this in interests pre-existing for revaluation in acquisition and to net gain on bargain purchase due Increase in this first quarter interests for pre-existing revaluation of price and demand in this fiscal year, to recovery due Increase quarter price falls after the third significant despite last fiscal year’s and of automobile, electronics, to demand recovery due Increase materials in addition to the absence of semiconductor-related fiscal year impairment loss on investments in the previous from in dividends received to significant increase due Increase Sakhalin Oil and Gas Development Co., Ltd. increasingly from resulting due to worsened profitability Decrease intense competition associated with demand shrink in mobile phones Sales decrease Decrease due to price falls in mineral resources on annual average due to price falls in mineral resources Decrease due to oil price falls on annual average Decrease due to housing market slowdown in North America Decrease transactions in plastics and nonferrous due to reduced Decrease and semiconductor sec- metal transactions mainly for electronics in the fourth quarter the year despite increase tors throughout and finance businesses despite the textile from profit Decreased price plunges in chemi- from absence of loss transactions resulting fiscal year cals in the previous due to good performance in chemical trading for Asia Increase Baku-Tbilisi-Ceyhan Pipeline from in dividends received Increase Company ITOCHU Mineral & Energy of from decrease Significant profit comparison Australia Pty Ltd. as a year-to-year in the fourth quarter due to sale of biomass power project Increase in addition to good performance in IPP associated company whose equity pick-up started since this first quarter a accompanying losses and profits of result net a as increased Profits combination business a from profits and restructuring business and sales decrease effect cards due to lack of Taspo Decrease consumer spending weak from resulting after Steady growth Equity pick-up started since this first quarter. this first quarter as both in Japan and overseas Reduced demand for steel products comparison a year-to-year from profit some and quarter, first this since started pick-up Equity recog- were securities of sale on gain and business production food nized — — 0.1 8.3 3.0 1.0 6.9 1.1 1.6 0.3 2.0 1.6 2.8 2.3 1.0 0.9 0.1 5.3 0.0

(1.1) 1 71.2 14.8 26.1 2009 ¥ ITOCHU* 8.7 1.5 6.8 6.8 2.0 2.0 4.7 1.9 1.8 1.6 1.6 2.9 1.9 2.3 2.1 1.7 1.6 1.2 4.7 4.0 2.7 6.9 Billions of Yen Attributable to to Attributable 34.1 2010 Net Income (Loss) (Loss) Income Net

¥ 20.6 97.6 99.0 53.7 60.7 52.6% 61.1 99.8 31.5 47.7 50.0 51.4 Shares 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 4 6 5 Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s 3 4 2 ITOCHU ENEX CO., LTD. ITC NETWORKS CORPORATION Overseas Subsidiaries ITOCHU Minerals & Energyof Australia Pty Ltd * ITOCHU CHEMICAL FRONTIER Corporation ITOCHU PLASTICS INC. ITOCHU Oil Exploration Co., Ltd. Leilian Co., Ltd. C.I. KASEI Co., Ltd.* ITOCHU LOGISTICS CORP.* Years ended March 31 ended March Years Domestic Subsidiaries Corporation ITOCHU Techno-Solutions Overseas Equity-method Associated Companies ISLANDS) HOLDING CORP.TING HSIN (CAYMAN 20.0 Domestic Equity-method Associated Companies Leasing Corporation * Century Tokyo FamilyMart Co., Ltd. Corporation Ore Brazil Japan Iron Marubeni-Itochu Steel Inc. ITOCHU Oil Exploration (BTC) Inc. ITOCHU Australia Ltd.* I-Power Investment Inc. Products, Inc. * Building Products, PrimeSource ITOCHU (China) Holding Co., Ltd. ITOCHU Hong Kong Ltd. Pte, Ltd. ITOCHU Singapore ITOCHU Oil Exploration (Azerbaijan) Inc. Profits Reporting Companies Major Group follows: as fiscal were year the the fiscal previous and losses for year or profits reporting companies Group Major 86

Financial Section p *6 *5 TheabovefiguresInc.includes80.0%ofthatPrimeSource ofITOCHUInternational BuildingProducts Inc. *4 Theabovefigures ofITOCHUAustraliaLtd.includes3.7%thatMinerals&Energy ofAustraliaPtyLtd. *3 o of sectors, U.S. the crisis incertain financial the effects econ continue growing vigorously. Also, despite residual the emerging nations inAsia, such as and China India, likely will 31, 2011,among economies worldwide economies the of Regarding business conditions inFiscal 2011,ending March Outl *7 Theabovefigures ofOrient CorporationandYoshinoya HoldingsCo.,Ltd.includetherelated taxeffect. *2 *1 Major Group CompaniesReportingLoss m stepped-up corporate continuing activities—reflecting of economic stimulus ofbecause aslow recovery inemployment. Moreover, sup meanwhile, economic to time take recovery is expected in Japan MedicalDynamicMarketing,INC. Resources DevelopmentCo.,Ltd. Japan BrazilPaperandPulp Yoshinoya Holdings Orient Corporation* Domestic Equity-methodAssociatedCompanies ITOCHU AirLease B.V. MCL Group Limited ITOCHU AutomobileAmericaInc. Inc.* ITOCHU International CIECO Energy(US)Limited Overseas Subsidiaries GANBARE JAPAN KIGYOFUND Daishin PlywoodCo.,Ltd. ITOCHU ELECTRONICSCORP. ITOCHU FinanceCorporation Domestic Subsidiaries Years endedMarch 31 my is likely amodestrecovery as apickup to see inemploy ort through stimulus measures is unlikely due to deteriorat positions. Ing fiscal Japan’s economy, although benefits the ent supports growth inconsumer spending. In Europe, 1, 2010.Theabovefigure ofthiscompanyincludestheprofit resulting from thegainonbargainpurchase inacquisition. i-LOGISTICS CORP. hasbeenacquired sincethisfirstquarter. i-LOGISTICSCORP. changeditsnametoITOCHULOGISTICSCORP. effective January bargain purchase inacquisition. C.I. KASEICo.,Ltd.hasbeenacquired sincethisfirstquarter. Theabovefigure ofthiscompanyincludestheprofit resulting from thegainon Corporation. Theabovefigure ofthiscompanyincludestheprofit related toamerger. As ofApril1,2009,CenturyLeasingSystem,Inc.,andTokyo LeasingCo.,Ltd.,were mergedtobenewlynamedCenturyTokyo Leasing ny announces. Net income(loss)attributabletoITOCHUare thefigures afteradjustingtoU.S.GAAP, whichmaybedifferent from thefigures thateachcompa- oo k fo r Fi Co., Ltd.* 7 sca measures steadily weaken, will 5 l 2011 7 100.0 100.0 100.0 100.0 100.0 Shares 99.1% 21.0 32.6 30.0 25.9 30.6 99.4 92.1 ¥(1.7) - Net Income (Loss) 2010 (4.3) (6.2) (1.7) (0.5) (0.7) (0.4) (0.6) (1.0) (2.2) (0.3) (0.4) (0.4) Attributable to Billions ofYen - - - ITOCHU* ¥ Group ITOCHU the to an post increase in expects Corporate Value on World the Stage, Shaping Future—, the year yearFiscal of final 2011,the Frontier Against backdrop the of business those conditions, in recur and adversely economies affect worldwide. must to possibility the alert that be instability financial could m is evident from problems confusion the fiscal the of govern given residual the instability system, financial inthe which likelywill sustain atrend toward recovery. gradual Further, growthexports and an improvement inbusiness results— 2009 resources and energy. (22.4)

1 (1.5) (2.7) (2.5) (1.6) (0.2) (0.1) (0.1)

8.6 0.6 0.5 4.9 0.0 ents inEurope have caused markets, infinancial ITOCHU on despite continuousdeficit Improved duetowithdrawal from unprofitable retail business recession intheU.S.andreversal ofdeferred taxassets due tocontinuousdecreased automobilesalesresulting from loss ongoodwillintheprevious fiscalyeardespitedeficitrecorded Improved duetocostreduction andtheabsenceofimpairment business arising from pricefallsandpoordemandinequipmentmaterial struction machinerybusinessinadditiontosignificantdecrease Decrease duetolowperformanceinhousingmaterialandcon- Increased impairmentlossoninvestments housing market Effect from reduced production resulting from weakdomestic Occurrence ofanunprofitable project insystemdevelopment in theprevious fiscalyear profit, gainonnegativegoodwill associatedwithnewinvestment Impairment lossofinventoryinadditiontotheabsence real Pulp pricefallsonannualaverageandexchangelossfrom Brazilian main andsubsidiaries’business Impairment lossoninvestmentsinadditiontopoorperformance resulting from loanreduction Impairment lossoninvestmentsinadditiontodecreased profit swap cancellation Deficit duetoreduced profit from leaseandlossfrom interest Project intheprevious fiscalyear of thelossfrom EntradaOil/NaturalGasFieldDevelopment and gaspricesdespitesignificantimprovement duetotheabsence Deficit duetoimpairmentlossonoilandgasassetsfrom lowoil gain onsaleofstocksintheprevious fiscalyear decrease resulting from reduced loanbalance,andtheabsenceof Worsened ofcard-related equityinearnings associated company, year due to higher Reasons forChanges resources e prices 2010—Enhancing centered earnings on metal - Financial Section 87 ------basic

its of strategy’s

expand and improve improve and expand to established Department, resources a global enterprise that is that enterprise a global

efforts human

its IT

position OF with to

in business measure a key as overseas ’S PR R A balance its managing and equity stockholders’ keeping

E in

continuing L Y divi cash interim an comprising ¥18.0 per share, of ds ¥9.0 of dividend cash a year-end and ¥9.0 per share d of SCA I Positioning strategy. resources global its human of entation and compliance for control internal while bolstering ance will further promote the ITOCHU Group addition, In ls. in careful new making investments while actively own ul to projects. y composed l n further. even financial reports full-fledged will advance imple ITOCHU Group Fourth, financial position ITOCHU Second, its will strengthen be may the Group Although management. risk upgrade and will it continue financial conditions, tough of the worst over replenishing lev sound at financial key ratios maintain to in order sheet will develop the Group growth, will sustain that management 2011, Fiscal In earnings. they contribute ensure and projects assets through replace steadily to will continue the Group meaning as longer no is it that businesses from withdrawal f den the center at strategy resources the global human ITOCHU will individual focus on strategy, resources human take concrete and employees) staff (non-Japanese national measures basis. a worldwide on Group the entire optimizing of aim ITOCHU its will advance initiatives, the above Through while expectations meet stockholders’ and results business become to steadily forward moving stakeholders. all to attractive highly full-year divi cash pay to 2011, ITOCHU Fiscal plans For den sales initiatives. in 2009, will advance steadily lead to efforts Further, the in measures to priority area—giving Energy business devices, and energy storage generation, power solar of areas Solar Business resources—the water platforms earnings per share. global capital shift toward to in order Finance Group use of efficiency capital while improving thereby management, requirements. funding the meeting Group’s steadily Those systems. ITOCHU management will Third, evolve social corporate advance to continuing willefforts involve gover corporate strengthening and initiatives responsibility m e - - - - URRENT F take - to basic expected N OF THE C 2010— is e O 2010 Medium- expand and improve improve and expand e UTI B recovery TRI r the Future S I Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s D D cy fo N economic li policy stepping its with of accordance In CY A LI O ent Po m meanwhile, will weaken, steadily measures stimulus economic D P ge EN a D n Europe, a ITOCHU in financial markets, caused have in Europe ents IVI spending. in consumer growth supports p in employment the although economy, Japan’s fiscal In rating positions. performance. business its of tion & Environment and & Healthcare the Life on efforts rating Moreover, in employment. recovery slow a time because of deteri to due unlikely is measures stimulus through support could financial instability be that alert the possibility to must worldwide. affect economies adversely and recur benefits of m activities—reflecting continuing corporate stepped-up results— in business improvement an and exports growth Further, gradual recovery. toward a trend sustain will likely which in the financial system, instability the residual given govern of the fiscal the confusion problems from evident is o In Shaping Stage, the World on Value Corporate Enhancing the will continue the ITOCHU Group the Future—, on-site 2010 while in Fiscal reinforcing policy followed it heighten and vitalize workplaces to in order capabilities power. earning assets in light and investments will replace the Group First, to exacting selection order in of criteria D t a Further Advancement of Frontier its 31, 2011, the final of year March 2011, ending Fiscal In Frontier Plan Management Medium-Term which will become areas, business in L-I-N-E-s initiatives up concen will continue the Group mainstays, earnings future the ITOCHU Group conditions the business Lookingover the worldwide economies among forward, will face going China and as such in Asia, nations emerging of economies despite Also, vigorously. growing continue will likely India, effects the financial crisis in certain sectors, of the residual see to a pick as a modest recovery likely is economy the U.S. u M Term Management Plan Term & New the Environment In areas. Energy business New . platforms earnings as power competitive its reinforces and ITOCHU maintains earnings retaining by equity stockholders’ increases as well basic policy The ITOCHU of strategies. growth promote to stable and a consistent is payments dividend regarding based consider on stockholders to returns of distribution 88

Financial Section s Medium Term Note Programme (Euro MTN). Kingdom have registered atotal of US$5.0billion inaEuro States, companies and treasury inSingapore and United the Corporation, International ITOCHU Inc. heighten and capital lower efficiency capital costs. ITOCHU Company funding through undertakes commercial paper to bond-issuance registration system inJapan. Also, the from Augustperiod 2009to July 2011inaccordance with the a As to direct financing, Company the registered issu anew institutionsfinancial enable which it to raise funds required. r Regarding fundingCompany the methods, such uses indi Companythe works to improve consolidated capital efficien financing mainly by means of long-term funding. Further, its funding structure with enhancing stability the of its endeavoring while methods optimum tothe find balancein Also, Company the to diversify seeks its funding sources and March 31 Long-term debt(Note): t bond issuance. As to indirect financing, Company the main ofDetails interest-bearing debt as of March 31,2009,and as of March 31,2010,are as follows. (Note) Net interest-bearing debt. Cash andcashequivalentstimedeposits. Total interest-bearing debt. Long-term total. Short-term total. cial paper. Current maturitiesoflong-termdebt: Short-term debt: t response to changes conditions infinancial and advan take The Company aims to ensure flexibility infunding in Basic FundingPolicy L Finance scheme inAsia and Europe for the Company. Moreover, Company the established Group domestic subsidiaries on Group Finance from parent the c ains favorable and wide-ranging relationships with various age of opportunities to lower its overall financing costs. financingect as loans bank and such direct financing as subsidiaries.eas nce of bonds up to ¥300.0billion, covering two-year the y and funding structure by concentrating funding for iqui Long-term loansmainlyfr Debentures. Current maturitiesofdebentures. Curr Commer Short-term loansmainlyfrom banks. ur “Long-termBecause debt” Consolidated inthe Sheets Balance includes elements of non-interest-bearing debt, “Long-term this debt” presents fig- the ent maturitiesoflong-termloansmainlyfrom banks. d es excluding such elements. it y a ...... n ...... d C ...... a pit ...... om banks,lesscurrent maturities. a l R eso ...... ur c ...... es Unitedin the funding of over ...... ------thorough risk management. profitability, improve position, financial and implement ratings, evenhigher secure Company the strengthen will debt as of year end the are of fiscal the as follows. Aiming to Ratings of Company’s the long-term debt and short-term interest-bearing debt increased from 74%at previous the fis funding, ratio the of long-term interest-bearing debt to total to ensure astable funding structure by long-term seeking with previous the year-end. fiscal Further, thanks to efforts improved 0.5points from to 2.1times compared 1.6times (US$18,552 million). Net DER (debt-to-equity ratio) bydeposits, decreased ¥30.7billion, to ¥1,726.1billion debt, after deducting cash and cash equivalents and time ¥2,209.3 billion (US$23,746million). Net interest-bearing ¥180.1 billion compared with previous the year, fiscal to Interest-bearing debt as of March by 31,2010,decreased Interest-Bearing Debt c year-endal to 87%. Standard &Poor’s (S&P) Moody’s InvestorsService Rating &Investment Japan Credit Rating Information (R&I) Agency (JCR) rdtRtn gnyLn-emDb Short-termDebt Long-termDebt Credit RatingAgency ¥ ¥1,726.1 2,209.3 1,919.3 1,736.2

229.2 2010 483.2 183.1 290.0 57.5 3.3 Billions ofYen — a1/Sal P-2 Baa1 /Stable +/Sal J-1 A+ /Stable –/Sal A-2 A– /Stable tbea-1 A /Stable ¥ ¥1,756.8 2,389.3 1,760.5 1,610.4

453.2 2009 632.6 150.2 628.8 81.9 84.9 8.7 U.S. Dollars Millions of $ $18,552 23,746 20,629 18,660

2010 5,194 1,969 3,117 2,464 618 35 — - Financial Section 89 - - - billion, ¥10.7 Realty, by clined in a major investment ¥28.1 bil- declined by de

¥72.9 to billion, ¥19.0 decreased by ¥257.1 bil- to ¥22.1 billion, by rose ¥450.3 to ¥24.3 billion, by increased ¥229.2 to ¥308.9 billion, decreased by billion ¥1,426.7 to ¥144.0 billion, (US$81 billion ¥7.5 to ¥3.8 billion, by rose ¥103.6 billion to ¥8.9 billion, by up were ¥201.9 billion to ¥33.2 billion, by increased ¥476.1 billion to billion, ¥33.4 declined by ¥666.4 billion to ¥105.6 billion, by rose by increased a recovery securities from on stemming gains d holding a decrease to due (US$1,165 million), ¥108.3 billion n, to loans. the collection of to due n (US$2,763 million), Inventories debt Short-term Trade receivables (less allowance for doubtful receiv- doubtful (lessreceivables allowance for Trade suppliers to Advances assets Other current doubt- (lessallowance receivables for non-current Other Other investments Due from associated Duecompanies from Property and equipment, at cost (less cost accumulated at equipment, and Property Goodwill assets (less intangible accumulated other and , tax assets, non-current Deferred Investments in and advances to associated companies to advances in and Investments Time deposits Time decreased. g transactions (US$10,089 million), ¥938.7 billion to ¥184.6 billion, ose by billion ¥131.2 to ¥27.3 billion, ax assets declined by

(US$1,410 million). improvement an to a decrease due and markets, in stock deferred net Furthermore, adjustments. liability in pension t and loans of repayment to due (US$2,464 million), billion debt interest-bearing of the amount increase to efforts “10. to (Please funding. refer long-term by for accounted Consolidated to in Notes Debt” Long-term and Short-term Statements.) Financial million). ables) lio (US$5,117 million). (US$783 million). billion lio in unrealized increase an to due (US$4,840 million), billion securities reflected on in stock a recovery that gains holding markets. ful receivables) in an from stemming increase an to due increases and Taiwan in China and distributor food product & Minerals. Metals Energy, and in Textile biles. energy to related increase an to due (US$15,334 million), automo to which offset chemicals, a decrease related and (US$1,114 million). receivables non-current and investments total a result, As (US$16,043 ¥1,492.7 billion to ¥217.8 billion, by increased million). depreciation) new from resulting increase an to due (US$7,162 million), Chemicals, Forest in Textile; subsidiaries consolidated Finance, and & General Merchandise; Products & Logistics Services, related increase Insurance an as well as the of appreciation to due development resource overseas to dollar. Australian amortization) new from resulting increase an to due (US$2,170 million), investments. ize measures of implementation the continued accompanying through differences temporary in deductible a reduction for securities, and a decrease in unreal disposal receivables of to ¥44.7 billion, assets declined by current total a result, As (US$31,099 million). ¥2,893.5 billion r

because (US$1,035 million), Machinery trad ¥96.3 billion to - - (Times) 8 6 4 2 0 65X35 10 million).

a result, As (US$14,095

billion

Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s 07 08 09 ¥1,311.4

06 2009,

31,

05 March 0

Net Interest-Bearing Debt (Left) Net Interest-Bearing Stockholders’ Equity (Left) Net DER (Right) 500 to Cash cash ¥153.1 billion, and equivalents decreased by in Food. and in both Textile ents 2,000 1,500 1,000 of the appreciation from resulting equipment and roperty currency in Foreign improvement an ITOCHU, to ble the fiscal and year the previous between of the end are ion (Billions of Yen) * For fiscal years p dollar; newinvest and Australian and real both the Brazilian the fiscal review.) of under end year to ¥284.8 billion, 5.5%, or by assets increased Total the new to due mainly (US$ 58,866 million), ¥5,476.8 billion Chemicals, in increase an subsidiaries; some of consolidation in Energy, and & General Merchandise Products Forest and receivables in Trade increases to due & Minerals, Metals a recovery and prices higher with oil associated Inventories of the end with compared recovery in the market chemical Net and fiscal in investments year;the increase previous an Financial Position sec- in the following otherwise comparisons stated, (Unless t Net Interest-Bearing Debt, Stockholders' Equity and Debt, Stockholders' Net Interest-Bearing Ratio) Net DER (Debt-to-Equity total to which corresponds equity, ITOCHU stockholders’ to transfer to 160 (Please refer SFAS applying before equity Accounting in New 810, “Consolidation” Topic ASC to ¥249.0 billion, 29.3%, or by increased Pronouncements.), a decrease in to due (US$11,806 million), ¥1,098.4 billion attribut income Net of accumulation an payments, dividend a in Unrealized improvements and adjustments, translation adjustments liability securities Pension on and gains holding market. the stock of recovery from resulting 3.7 by assets* rose total to equity stockholders’ Ratio of 20.1%. 31, 2009, to March with compared points and equity ITOCHU stockholders’ of total or equity, Total the of equity the total which means interest, Noncontrolling compared ¥274.0 billion 26.4% or by increased Group, entire with of items decreases in respective and increases main The the those with of compared balance sheet the consolidated follows. as are fiscal year-end previous (US$5,113 million). ¥475.7 billion m 90

Financial Section Contingent liabilities Current maturitiesoflong-terminterest-bearing debt. er t to ¥1,992.6billion (US$21,416million). As aresult, current liabilities by decreased ¥155.6billion, events. * Short-term interest-bearing debt. Necessary Liquidity and commitment line agreements (yen short-term: ¥100.0 sum of cash, cash equivalents, deposits time (¥483.2billion), t Company must maintain adequate to repay reserves liabili months of because market turmoil. In such the acase, whereby funding new may unavailable be for about three within three months. on scenario is the based This policy term interest-bearing debt and contingent liabilities due amount required of reserves for liquidity covering short- is to maintainThe policy basic and an secure adequate Reserves forLiquidity March 31 automobiles. andenergy chemicals counteracted related adecrease to lio deposits from associated companies. Advances from custom ¥25.4 billion of (US$273million), because areduction in of ships. current Other liabilities rose by ¥22.3billion, ¥215.0 billion (US$2,311million), due to increases inderiva lio ive liabilities and deposits. ies during inorder such aperiod to cope with unpredictable equity-method associatedcompaniesandcustomers). (Guarantees [substantialrisk]formonetaryindebtednessof ci The figure is total the of current maturities of long-term debt (¥60.7billion) Consolidated inthe Sheets Balance and long-term commitment line with finan- bys decreased ¥16.7billion, to ¥80.0billion (US$860mil Total. liquidityPrimary Trade payables Due to companies Due associated ann (US$13,087million), because increase related to n), due to adecline resulting inMachinery from delivery institutionsal (¥147.8billion)...... were up by ¥175.9billion, to ¥1,217.6bil- resources at end the of Fiscal 2010,the ...... increased by ¥8.8billion, to ...... to

- - - - q v liquidity (other assetsthat reserves con Secondary can be to ¥182.7billion (US$1,964million) as of March 31,2010. t liquidity amount (short-term interest-bearing debt and con end. The Company that believes amount this constitutes ade million), down ¥152.0billion from previous the yearfiscal short-term: US$500million) was ¥929.7billion (US$9,993 billion, yen long-term: ¥300.0 billion, multiple currency mi million). As aresult of availability the of long-term this com with institutions financial totaling ¥300.0billion (US$3,224 The Company has long-term commitment line agreements ¥1,477.6 billion (US$15,882million). total the amountreserves, of at liquidity stood reserves s contracts with amaturity of one year or less, not on con the liquidity amount on repayment wasthe based figure for loan Fiscal 2010.However, above the calculation of necessary the of one year or on less loan based contracts at end the of (US$2,241 million) innon-current liabilities with amaturity consolidated balancesheet, was which part maturities of long-term debt as non-current liabilities on the ¥147.8billionclassified (US$1,589million) of current term debt from institutions. financial The Company thus along-termundertake rollover of current maturities of long- lio ingent liabilities due within three months), amounted which olidated balancesheet figures. to casherted in uate for reserves liquidity since it isnecessary the 5.1times n (US$5,889million). When liquidity to added primary tment line, Company the has intention the and ability to ¥229.2 2010 208.5* 64.0

(208.5/12 monthsx3months) of at stood time) a short ¥547.9bil period (229.2/6 monthsx3months) (64.0/12 monthsx3months) Necessary Liquidity Billions ofYen ¥114.6 ¥182.7 16.0 52.1 of ¥208.5billion U.S. Dollars Millions of $1,232 $1,964 2010 172 560

------Financial Section 91 - - - 73 6,759 million). million). 2010 (2,110) (2,784) (1,646) $ 3,175 $ 5,113 1,560 2,677 5,899 1,652 4,799 Millions of

$9,993 U.S. Dollars $5,194 $ $15,882 Millions of Millions of U.S. Dollars U.S. Dollars (US$2,784 (US$2,110 2010 2010 (26.6) 258.3 182.5 446.3 2009 (326.0) ¥ 276.9 ¥ 628.8 billion billion 249.1 153.7 446.5 145.1 $ 547.9 ¥929.7 ¥483.2 ¥ ¥ ¥1,477.6 Billions of Yen Billions of Yen Billions of Yen 6.8 ¥259.0 ¥196.3 Liquidity Reserves Liquidity Reserves Liquidity Reserves Liquidity Reserves 628.8 2010 of of (196.3) (259.0) (153.1) ¥ 475.7 ¥ 295.4 2010 result Fiscal activities for financing cash-outflow cash-outflow net net a a in in d d the 2009 as financial crisis in Fiscal high following ively cash and cash of a reducing to attributable mainly was This compara kept had whichthe Company levels, equivalents sector, in the consumer-related investment to due was This in the natural expenditures capital to related increase an for investment additional and sector, development resource ITOCHU LOGISTICS and Ltd., Co., C.I. Kasei making subsidiaries. consolidated our CORP. Cash flows from chemicals, food, and textile, resources, natural overseas to inventories. in automobile-related a reduction as well as 2010 result Fiscal activities for investing Cash flows from e t e stabilized. financial markets ...... - - ...... - ...... Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s ...... debt. interest-bearing of was This fiscal year-end. the previous with n), compared . liquidity reserves secondary Total . reserves liquidity Total . primary liquidity reserves Total sale and includes assets. This osal existing / collection of (US$3,175 million). ¥295.4 billion of cash-inflow d in a net March 31 March 31 March Any profits. of accumulation as well assets as of recovery are when new investments shortfall in financial resources activities financing flows from cash by covered is made bonds. of the issuance and loans through 31, 2010, decreased March of as equivalents cash Cash and (US$5,113 mil ¥475.7 billion to ¥153.1 billion, 24.4%, or Cash flows from operating activities. Cash flows from investing activities. Cash flows from financing activities. Cash flows from of exchange rate changes on cash and cash equivalents. Effect Cash and cash equivalents at beginning of year. Cash and cash equivalents at end of year. follows. as 2009 were 31, 2010 and the fiscal ended March flows for A summary cash years of p Capital Resources for policy new expenditures finance to fundamental is The the dis flows and cash operating activities from investment . portion of over draft for ITOCHU parent 3. Available . 5. Notes receivable in cash and cash equivalents. (decrease) Net increase Reserves Secondary Liquidity 1. Cash, cash equivalents and time deposits. 1. Cash, cash equivalents . 2. Commitment line agreements iquidity Reserves Primary L March 31 March related revenue operating favorable to attributable was This 4. Available-for-sale securities (Fair value on a consolidated basis). securities (Fair value on a consolidated 4. Available-for-sale equivalents cash and cash of efficient control to due mainly repayment and 2010 result Fiscal activities for operating Cash flows from e lio 92

Financial Section for indebtedness including loans bank to subsidiaries, equi The Company and its subsidiaries issue various guarantees long-term debt The following table shows breakdown the by maturity of repayment of short-term debt Commercial Loan, Paper) (Bank and Company’s consolidated statements, financial off-balance guaranteedthe borrowings of subsidiaries are included inthe March 31 March 31 Total: Guarantees forcustomers: t Operating leases. Short-term loanspayable. Operating leases. Short-term loanspayable. b substantialthe on amount actual the based risk taken, of lia The amount of substantial risk represents total the amount of Company under guarantee the contracts is presented above. The maximum potential amount of future payments of the Guarantees forequity-methodassociatedcompanies: O Long-term debt. Long-term debt. March 31 recoveredcan be from under back-to-back thirdthe parties established under guarantee the contracts. The amount that respective termwithin pre-determined the guaranteed limit associatedy- method companies and customers. Because ility by incurred guaranteed the as of parties end the of the ff Maximum potentialamountoffutur Maximum potentialamountoffutur Amount ofsubstantialrisk. Amount ofsubstantialrisk. Amount ofsubstantialrisk. Maximum potentialamountoffuture payments. - ba l a n c ...... e- ...... Debentures, Loan, (Bank Capital as well as payments Leases) under operating leases: s heet Arr heet ...... a nge e payments. e payments. m ent s a ...... n d Aggreg ¥ $ ,6. 07691588909.7 568.8 629.1 60.7 2,168.3 335636726139,777 6,113 6,762 653 23,305 - 292¥2. ¥ ¥229.2 229.2 oa Ls hn1ya - er - er More than5years 3-5years 1-3years Lessthan1year Total oa Ls hn1ya - er - er More than5years 3-5years 1-3years Lessthan1year Total - ,6 244$ $2,464 2,464 1,588 147.7 a te C te as follows: d do associatedmethod companies and customers. The break sheet guarantees are solely total the guarantees to equity- show inNote 23“Variable Interest Entities” to consoli the The disclosures related to variable interest entities are to consolidated the statements. financial shown in substantial risk. The disclosures related to guarantees are concerned have excluded been indetermining amount the of guarantees submitted by Company the or its subsidiaries ated statements. financial ofwn guarantees as of March 31,2010and 2009were o ntr 29.3 315 Note 25“Commitments and Contingent Liability” ac tu Millions ofU.S.Dollars a Billions ofYen l O

41.6 2010 2010 447 b $ — ¥ — ¥ ¥153.0 ¥ 2010 lig 87.1 36.5 50.6 83.6 69.4 Billions ofYen a ti o n 30.5 327 s $ — ¥ — ¥ ¥137.5 ¥ 2009 87.9 51.6 36.3 62.9 74.6 46.4 U.S. Dollars 499 Millions of — — $1,644 $ $ 2010 746 936 392 544 898 - - Financial Section 93 ------of performances policy an on management change rate interest to losses due and gains in both risk rais rate exposed is interest to OCHU Group method Earnings at be specific, the management using To or futures as such derivatives utilizing by risk odity price operating and investing, financing, for money using g and commodi of array a diverse handling company s a trading be to limited, considered is hedging by provided ess risk. price commodity of nce trading. Therefore, in import/export involvement ant avoid a complete guarantee cannot ITOCHU Group ures, sets and and etc. sales contracts, and racts, inventories, risk exposed price is commodity to ies, ITOCHU Group as assets such insensitive the interest activities. Among securities fixed assets, the part or acquired investment be to the interest considered is loans interest floating using ITOCHU risk. rate exposed interest to amount mismatch the control to risk rate the interest quantify to working is of fluctuation properly. risk. rate exchange foreign ITOCHU hedge does not Rate Risk Interest IT risk rate exchange minimize foreign to ITOCHU works as derivatives such utilize that transactions hedge through ITOCHU cannot However, contracts. exchange forward exchange foreign such of avoidance a complete guarantee these techniques. utilizing hedging by risk rate in investments ITOCHU’s that a risk is there Further, stockholders’ of fluctuation cause could businesses overseas on fluctuation exchange the effect foreign to of due equity foreign This adjustments. currency translation foreign the on impact no has risk rate exchange generally periods Because long are themselves. businesses the effective and investments of the cost needed recover to n these mea hedging. Despite of means as contracts forward s in Limit) (EaR),Risk ITOCHU set (Loss has Cut a certain limit executed has expense and interest the acceptable highest as rate interest of in the form primarily transactions hedging risk. rate minimize interest to swaps a complete guarantee ITOCHU still cannot However, these adopted even having risk, rate interest of avoidance methods. management Commodity Price Risk A Foreign Exchange Rate Risk Exchange Foreign risk rate exchange exposed is foreign to ITOCHU Group signifi its to due currencies in foreign transactions to related t c each individual for limit cut loss and a balance limit manages periodic conducting reviews. with product minimize com to works ITOCHU Group addition, In m con purchase assessing basis, Company Division individual t has Group The fluctuations. market as factors such to due risk a fundamental established a

------ITOCHU events, future strong a relatively has about Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s ranging business wide variety of isks Due to Macroeconomic Factors Macroeconomic to Due Risks n o descriptions ti to Result ma r fo respect n hedging for instruments derivative g a variety of k I affect the Group. icantly s With eds. in products sale of and purchase as such transactions ercial uti by and limits controlling and policy setting as such ent in the trends economic on dependent all largely are ent pro globalization economic as segments retail-related and i trade mineral in resources, machinery, construction ils and effects its significant on have may and uncertainties ble sale in and manufacturing to materials raw of supply rom estimates and assumptions determined its has appropriately 31, March of as available currently based information on ce trade import/export between overseas market, the domestic metal resources energy, of development as well as affiliates main overview Group’s an of give To mineral resources. and automo trade in machinery plants, as such business, of areas financial performance. and business future policy management risk its enhanced has ITOCHU Group manage and methodology monitor to management risk and all these avoid completely to impossible is it these but risks, risks. in North including worldwide, in regions Furthermore, as which ITOCHU regards Asia, America, China, and trade. and business conducts the Group areas, priority worldwide overall only not trends, economic Consequently, sig could also specific trends, but regional trends economic nif minimize risks to attempts Group The risks. price stock and in foreign changes as such fluctuations market to related manage risk establishing by rates interest and rates exchange m (2) Market Risk foreign as such risks exposed is market to ITOCHU Group risks price commodity risks, rate interest risks, rate exchange 2010. a Corporate (1) a involves ITOCHU Group types com of diverse conducts It areas. businesses its each of market as such risks exposed is various to ITOCHU Group a of the nature to due risks, investment and risks credit risks, unpredict These include risks businesses. its of wide range f m R lizin in develop investments and products, chemical energy and m economy while the domestic world such segments retail-related and the consumer influence on in the world trends economic food. However, textilesas and these consum even on influential more and been more have er purposes. b 94

Financial Section si cen risk, inadditioncountry appropriate to taking countermea restrictions on transfers the of funds. In response to the byimposed foreign governments, instability, political or to risk resulting country is exposed from regulations country. andeach country setting credit appropriate policies to each manage contracts. to continue its business and m countries. include These handling foreign and goods invest GroupITOCHU has trading relationships with many foreign (4) CountryRisk and results of operations of Group. ITOCHU such could occurrences seriously position financial the affect ofoccurrence credit risks cannot completely be avoided, and onbooked basis. With this measures, these all aredelinquencies. reserves and determined The necessary of reviews status the with periodic of debt collections and receivablestrade are monitored basis along on aperiodic dates are for set credit limits. limits These and status the of limit upon completion the of review. expiration Specific credit department, an sets appropriate then which credit by abusiness division undergoes careful screening by the quantitative and qualitative proposal Each submitted bases. of business the departments, manages credit risk on both ac GroupITOCHU conducts avast array of commercial trans- (3) Credit Risks h vulnerable to price fluctuation. There is arisk that stock IT Stock PriceRisk position and results of operations of Group. ITOCHU If were this to occur, it could seriously financial the affect to deteriorate. noted above, and it is possible for value the of businesses the to same the commoditybusinesses exposed price is also risk and other manufacturing businesses. Production inthese businesses such as energy, the and metals minerals sector Group ITOCHU participates also inresource development t seriously position financial the affect and results of opera recognizing holding may loss on securities arise, and it could for-sale marketable necessity the decreased, of securities m statements along with price the fluctuations of invest these t uncollectible trading receivables, loans, or credits for guaran insolvency of ITOCHU’s from partners, assuming arespon s s y held by Group the due to deteriorating the credit status or ions of Group. ITOCHU ures for eachtransaction, with aim the of avoiding acon therefore ITOCHU eas. bearscredit risk from the olders’ equity may change inour consolidated financial contracts the bility as an to involved fulfill is unable party ents inforeign Group trading ITOCHU partners. therefore ents, and assuming that tions with its domestically trading both partners, and over In ITOCHU, credit the department, is which independent GroupOCHU holds available-for-sale are which securities tration of exposure, Group ITOCHU is endeavoring to risk by setting total limit guidelines and limits for fairthe value of available- these its obligationsfulfill under the however, the ------notdoes foresee at present any necessity for addi booking assets held, such as real estate, aircraft, and ships. ITOCHU b risk, that produce will profit commensurate with attendant the serious decisions regarding initiation the of investments new portfolio of investments strategically, Group ITOCHU faces operations of Group. ITOCHU could seriously position financial the affect and results of market deteriorate due demand to decreased or deterioration in impairment should losses economic the value of assets fixed However, Group ITOCHU might required be to recognize n debt and collection sustainability of Group’s ITOCHU busi

t n Investing inavarietyof businesses is one of major the busi- (5) InvestmentRisk ITOCHU (6) RisksDuetoImpairmentLossonFixedAssets instability, Group ITOCHU cannot entirely deny possi the faceeventsactivities caused by political, economic, or social for indebtedness. monetary When debts those and business are implemented through loans, investment and guarantees risk emerging,country and business inwhich those activities and regions where there is arelatively probability high of en that infusion the of additional funds is required. investment wholethe or partial is as recognized loss, and of Group ITOCHU are possible including necessities the that position and results of operations of Group. ITOCHU sidera to dropprices is level expected for below aspecified acon lowered due tocorporate poor results of investees, or stock investments of etc., likelihood investment the recovery is of business from partners’ the policy or low liquidity of f r from abusiness or restructure business the under atime ITOCHU’s Group ITOCHU partners, is unable to withdraw deteriorating corporate results and standing financial of for businesses the Group the inwhich have invested or the businesses due to deteriorating management environment to achieve Group’s the thereactivities, may such arise that cases Group the is unable However, Group’s inITOCHU engagement ininvesting profits consistent with attendant risks. rame or that method Group the desires due to difference the ional impairment losses. ences could have aserious,adverseon financial the effect ility that events those may have asignificant impact on the ess of activities Group. ITOCHU In managing Group’s the ess insuch activities countries and GroupITOCHU however, does, have debts incountries ces on future the corporate results and standing financial or of time.ble period the conditions for eachof assets.Such the an occurrence Group withdrawal is exposed forecasted results from invested the from In such seriousadverse cases, influ to investments impairment regions. Such occur that loss do risks not produce on - - fixed - - - - - Financial Section 95 - - - - -

impact adverse to adhere to required is Group a possibility is there all however, these measures, also competitiveness could find its ITOCHUtion. Group or domestic that shall be assurance there no However, and products provide to in a position are that g capacity, ther legal proceedings. affect the materially may that legal proceeding other or ion, major giving ITOCHU Group, for iveness major of possibilities are there and overseas, ically and em. With country each in which of the laws and laws ual property t ITOCHU overseas. business conducts ITOCHU Group is regulations and the observance laws that of aware is Group the and the Company the part of on a serious obligation every the observance of into effort committed has Group sys the compliance reinforcing by regulations and these laws ITOCHU of the operations of results or financial position Group. ever-greater services needs. Moreover, meet customer that countries in newly developing companies from competition ongoing to in addition emerging gradually China is like North and in European companies from competition global economic to due countries industrialized American iza of operations of results and the financial position on ITOCHU Group. political/economical by regulations and in laws change influence on exert a serious, adverse could This changes. of operations of results and the financial position ITOCHU Group. deregulation, as such events future to due unsustainable into entering as such environment in the business changes advent The innovation. technological and industries, other in competi loss a corresponding cause could risks such of t t each industry, for the laws as such regulations and laws and Instruments Financial Act, Companies including pertaining all to as well laws as tax laws, and Act, Exchange intellec laws, antitrust laws, exchange foreign as trade such (12) Risks Associated with Compliance Risks Related to Laws and Regulations and laws diverse of a number to subject is ITOCHU Group the vast to due overseas and both domestically regulations provides. services and products the Group of array be specific, ITOCHU To fund- and experience, technology, superior with companies in awsuits (11) Risks Associated with Significant L arbitra- lawsuit, pending currently significant, no is There t not may ITOCHU Group activities of business overseas or arbitrations lawsuits, such of any to subject become o by personal misconduct including where, the situation of or compliance with associated risks employees, and directors socialsuffering be removed. disgrace cannot unexpected, additional that deny ITOCHU cannot Also, legislative, by regulations and in laws change or enactment both domes a possibility bodies regulatory are and judicial, t ------compa ratio assets are Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s axes to contributions additional that exert a seri could This costs. funding other of the existence deny cannot ITOCHU Group Obligations and increase could tions tax deferred of amount realizable of ations or increase may taxes deferred for allowance However, al. results and the financial position on influence adverse us, benefit obli projected and cost pension that possible is et, it there should or rating, credit the Company’s of lowering ant in increase an ience based should or are which the actuarial calculations on ions k o financial position The be necessary. assets might pension be could ITOCHU Group of operations of results and occurrences. such affected by seriously ga financial in major in the financial systems be upheaval an raise to experience inability could an the Group markets, whennecessary investors or financial institutions from funds expe consequently could and conditions desirable under or ITOCHU Group. of operations of nies. m (10) Risks Due to Competition different in many involvement ITOCHUDue to Group’s array a vast handles the Group the fact that and industries competition to open is services, and products the Group of foreign, and both domestic companies, different many from trading general other from competition including t T (9) Risks Due to Deferred in ITOCHU’s factor important an taxDeferred assets are judgment accounting Therefore, balance sheets. consolidated impact tax a substantial assets has deferred of evaluation on financial statements. consolidated ITOCHU’s on tax deferred for allowance an of the necessity Considering of amount the realizable reports assets, ITOCHU Group taxable future consideration tax taking assets, deferred into strategies. tax planning feasible and income believes these esti ITOCHU Group of management The rojected Benefit isks Due to Pension Cost and Projected (8) R ITOCHU of benefit benefit obligations expensesThe and a utilize calculated that based actuarial calculations on are benefit for rate the discount as such assumptions variety of assets. pension on return of the expected and rate obligations the assump necessary become it change to should However, c isks Due to Fund Raising (7) Risks Due to to Management) Liability uses ALM (Asset ITOCHU Group ensure to and businesses its the necessary for funding ensure international and domestic from debt through liquidity commercial of the issuance as well as financial institutions, credit ITOCHU’s should However, debentures. and papers a signifi to due deteriorate market in the capital worthiness n mar in the stock deterioration assets be affectedpension by income taxable in estimated changes decrease on depending in the tax system period, the tax changes planning during in tax planning changes and in tax rates, changes including affect the financial seriously could case it that In strategies. ITOCHU Group. of operations of results and position r 96

Financial Section m Group’s business not world the will activities affect environ Group efforts, ITOCHU these cannot guarantee that the handling of and goods, provision the Despite of services. m minimize environmental risk, including risk of the infringe building an environmental management system inorder to issues designated by ITOCHU’s environmental and is policy policy. The Group is actively working on environmental as one of most the important elements of its management GroupITOCHU has designated environmental global issues Risks RelatedtotheEnvironment that opposition the and results of operations of Group. ITOCHU could suffer seriousadverseon position financial the effects GroupITOCHU could suffer loss the of public and trust impede business the growth. Should such events occur, the m ent, real estate development and other investments, the ent of laws and regulations, innatural resource develop ent, and cannot ITOCHU completely avoid possibility the of environmental protection groups will - - - ra maintain operation asecure of and to improve of operations. efficiency the In order to information systems to facilitate sharing the of information information level. Group ITOCHU security has established p Despite measures, Group these ITOCHU cannot com developed crisiscontrol measures. GroupITOCHU has established guidelines and security has s introducing viruses, influenza new asafety confirmation sys large-scale disasters, developing for of occurrence aBCP the results of operations of Group. ITOCHU could significantly position financial the affect viruses and e t such may influenza as new the adversely opera the affect Natural disasters such as earthquake or infectious diseases (14) NaturalDisastersandOtherRisks d In Group, ITOCHU of acode conduct concerning han- the (13) Risks AssociatedwithInformationSystemsand ra damage to information system equipment arising from natu computer or operational viruses, failure of system the due to outside, leakage the of sensitive company information due to t completely avoided. Therefore, damagefrom natu inflicted Group.ITOCHU on position financial the effect and results of operations seriousness of damage, the could result inaseriousadverse deterioration of operational efficiency, and depending on the such viruses infectious influenza as new diseases inavastactivities range of regions, damage from disasters or company. However, Group since ITOCHU operates business measures have implemented been individually ineachGroup t c em, creating adisaster manual, reinforcing earthquake resis ions of Group. ITOCHU has implemented ITOCHU mea ance, and conducting Also, emergency drills. various ures such as developing Business Continuity for Plan (BCP) ations circuitry. If such events occur, could this cause a es and priority high is on placed maintaining ahigh letely avoid possibility the of unauthorized access from the ling of information is enforced on directors all and employ l disasters or accidents or from trouble with telecommuni l disaster or such infectiousinfluenza as new diseases Information Security its information systems, cannot be - of ------Financial Section 97 ------debt Company

The

income deferred receivables.

doubtful

for risk credit evaluates and manages

axes provision

required

tax assets income deferred of the evaluation on g judgment receiv doubtful for the provision and balance sheets, ated collateral decreases in estimated and financial conditions rs’ consolidated the in Company’s factor important an is bles its and tax assets, the Company income deferred for nces record discuss and to delinquency collection and debt of ion receivables doubtful for in provision increase an and ion, t and amount the recoverable estimate subsidiaries its and receivables, doubtful for provision the required records collection, of the status considering comprehensively after and debtors, of financial conditions record, insolvency past the Company of management The collateral. of the value doubtful for provisions of these estimations believes that the of deterioration However, rational. are receivables the in d Income T Deferred in the factor important an tax assets are income Deferred account Therefore, balance sheets. consolidated Company’s rovision for Doubtful Receivables for Doubtful Provision in addition accounts, and notes including receivables Trade consoli in the Company’s amount a large represent loans, to a consolidated the Company’s on impact a substantial has allow valuation recording consider To financial statements. a t conditions in business changes unpredictable to due value estima the latest from amounts the recoverable reduce may consolidated the Company’s on impact a material have may financial statements. on judgment accounting Therefore, income. of statements on impact a substantial has receivables of the evaluation the In financial statements. consolidated the Company’s of independent which is department, the credit Company, departments, business perspectives, regularly qualitative and both quantitative from of condition the current and limit the credit monitoring condi reviewing the current regularly and trade receivables, of amount the realizable report subsidiaries income taxable future consideration tax assets, taking into the realizable evaluate To strategies. tax planning feasible and records historical as such information considers it amount, the future. to related information available any and these believes that the Company of management The income deferred of amount the realizable of estimations for allowances valuation However, rational. tax assets are decrease or increase tax may assets income deferred the tax during income in taxable changes on depending strategies, in tax planning period changes planning and the Company’s on impact a material have which may financial statements. consolidated o ------and - - - - how judgments estimates, ies c to li impairment the case is as for Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s relate and and between carrying amount

future estimated as such in estimates policies unting Po investees

cco the financial conditions asset value, net of terms l A accounting ca equity-method after conducted is decline other-than-temporary an of ent the evaluation on judgment accounting therefore, and, ents of amounts affect the reported that assumptions and ents

wing the con preparing In GAAP. U.S. with in conformity ared may uncertainties, by accompanied often which are ver, the Company of management The the investment. from ted the recognized for losses are impairment amount, ying the of the management financial statements, olidated assumptions, and judgments These estimates, tances. financial state consolidated in the Company’s factors ant affect materially believes may management that assumptions financial statements. consolidated a lo r s this value. of devaluation securities, judg non-marketable of the impairment For rational. are evaluations these investment believes that differences However, conditions in business changes unforeseen to flows due cash a material have and investments of the value impair may financial statements. consolidated the Company’s on impact impor- are investments from profit balance and Investment t Evaluation of Investments p Criti the of the magnitude of consideration a comprehensive decrease in their future for the outlook and companies, the invested of investments marketable of the impairment For performance. in judge subsidiaries its and assets, the Company long-lived of not temporary than decrease other is a price not whether or the decrease in market of the magnitude measuring by only the possibility considering comprehensively also by but value flows gener cash future collection based the estimated of on an have may These differences actual results. differ from financial statements consolidated effect the Company’s on fol The every segment. of the performance operating and s of statements in the consolidated reported is value fair tax securities, trading are of net while for differences income gains holding “unrealized as equity in stockholders’ reported securities. the When available-for-sale for securities,” on decrease the price that judge subsidiaries its and Company considering securities temporary, than other is marketable of car against value in the fair decline of duration severity and judg estimates, of a number make to required is Company m m the Company’s on impact a substantial has investments of its and Company The financial statements. consolidated securities based their on marketable evaluate subsidiaries difference The values. fair each of as liabilities assets and contingent assets, liabilities, expenses in each and revenues and date, balance sheet periodically verifies and period.reporting Management assumptions and judgments estimates, its a review of makes be to considered is that information based the available on circum experiences and historical from judging reasonable, m e pre are financial statements consolidated Company’s The 98

Financial Section on business the plan. The management of Company the is estimated according to discounted future cash Fair value, is which indispensable for impairment the test, reporting unit amount. below its carrying that would more likely than not reduce fair the value of a at any an when time event or occurs circumstances change t Combinations,” and ASC Topic 810,“Consolidation,” respec SFAS to ASC 160haveTopic codified been 805,“Business accordance above, with ASC the described SFAS 141(R)and company. group is a single economic entity separate from parent the and its subsidiaries, with recognition that consolidated the organically combined consisting body of parent the company the statementsfinancial position financial the should and reflect standards adopted adifferent view, namely that consolidated results of operations of parent the company. However, these should present substantial the position financial and the generally accepted that consolidated statements financial m Interests inConsolidated Financial Statements—an amend “ The Company and its subsidiaries adopted SFAS 141(R), in Consolidated FinancialStatements Business CombinationsandNoncontrolling Interests m issued. Accounting Principles, an amendment of SFAS 162”was andCodification™ Hierarchy the of Accepted Generally In June 2009,SFAS168, FASB “The Accounting Standards FASB AccountingStandards Codification™(ASC) N ni and non-amortizableGoodwill intangible assetswith indefi- Goodwill andOtherIntangibleAssets era amountIf of apart carrying the unrecov- is to determined be Impairment ofLong-ivedAssets Accepted Accounting Principles.” SFAS into 168itself was codified ASC Topic 105“Generally standard year. from of first half the fiscal this In addition, GAAP. The Company and its subsidiaries have adopted this ASC,the is which now single authoritative the source of US consolidated statements. financial mayassets, which have amaterial impact on Company’s the business conditions may reduce evaluation the of long-lived cash flowsand fair value due to unpredictable changes in rational manner. However, fluctuations inestimated future determinationthe of fair the value have made in been Company that believes estimated the future cash flowsand aresale, amount. below carrying the The management of the asset and future cash flows(undiscounted) resulting from its sum the when of outcome the of of use the long-lived the impairment of such long-lived on fair assetsbased value finite, Company the and its subsidiaries recognize the forused business and intangible lives are useful assetswhose ively. Prior to issuance the of standards, these it had been Business Combinations,” and SFAS 160,“Noncontrolling ew A ew liveste are useful tested for impairment at least annually or ent of ARBNo. 51,” year duringunder review. fiscal the In ents previously issued under into USGAAPwere codified According to standard, the authoritative all pronounce ble due to changes situation inthe for long-lived assets results of operations of consolidated the group, or the cco unting P unting r o n o un c e m ent s flowsbased a -

- - a es di m The Company and its subsidiaries applied treat new the are remeasured at fair their value held by acquirer the prior to business the combination date t Company’s consolidated statements. financial intangible may assets,which have amaterial impact on the statements.financial may have amaterial impact on Company’s the consolidated future retirement costs benefit and pension liabilities, which assumptions and conditions actual the may influence the in arational manner. However, any difference the between that determination the of assumptions these done has been thatbelieves estimated the future cash flowsand deter the u liabilities of acquiree, the and recognition attrib of goodwill as of business the combination date, as well as assetsand the treatment to measuring noncontrolling interest at fair value after April 1,2009.This application changes accounting the acquisition” on Consolidated the Statements of Income. excess amount is as recognized “Gain on bargain purchase in value of any noncontrolling interest acquiree, inthe the previously held equity interest in transferred, acquisition-date the fair value of acquirer’s the aggregateexceeds the of fair the value of consideration the of identifiable the assetsacquired and liabilities the assumed transactions where net the of acquisition-date the fair value 31, 2010is under bargain purchase transaction, that is, for in t calculations,actuarial obligations on of same the based types assumptions in used employees’ retirement and severance and benefits pension The Company and its subsidiaries calculatecost the of its Cost ofRetirement andSeveranceBenefits I 1. a. Changesinaccountingtreatment available information including market trends such as inter Company and its subsidiaries comprehensively judge all assets. To determine eachof assumptions, these the rates ac In business addition, that incase combination every trans gain or loss in“Gain (loss) on investments–net.” and fair value due to unpredictable changes inbusiness con manner. However, fluctuations inestimated future cash flows r min ion date, with difference the fair between value and car the ions as discount rates, retirement rates, death rates, increase n accordance with above-mentioned the view, account the ying amount of previously held interests as recognized a ble to stockholders of Company. the Furthermore, interests table to noncontrolling interest inaddition to that attribut tions may reduce evaluation the and of other goodwill t rate changes. The management of Company the believes g treatment of abusiness combination has changed. ent for business combination transactions on beginning or tion at and year after ofending beginning the fiscal March nation (ASCTopic 805“BusinessCombinations”) Changes inaccountingtreatment ofabusinesscombi- ation of fair the values have made inarational been of salary and long-term include which such important estima expected acquireethe and fair the as of business the combina rates of return on plan ------Financial Section 99 ------represent to changed is Equity in the presenta the line first standard, is interest noncontrolling to attributable amount of the stockholders to attributable amounts t respective them disaggregating without presented is interest ntrolling this fiscal the beginning of after ended and year at tions the new standard, of adoption before income” “Net of ent interests” “Minority of the reverse g activities. Accordingly, income ve cash of statements the consolidated the change, before ven Balance in the Consolidated Equity as manner n the same in presented is amount the remaining and interest,” rolling be to activities is “Net operating flows from cash of ion to attributed equity stockholders’ of the component “Retained surplus,” “Capital stock,” ITOCHU “Common as (loss)” income comprehensive other “Accumulated earnings,” in subsidiaries equity and cost” at stock, “Treasury and “Noncontrolling as interest noncontrolling to attributed interest.” in the income net as manner in the same addition, In “Comprehensive Income, of Statements Consolidated be to is Equity of Statements the in Consolidated income” in the Therefore, itself. group the consolidated for presented “Comprehensive Equity, of Statements revised Consolidated each decrease for or increase the entire shows (loss)” income then the comprehen and component income comprehensive si of flow position the cash indicate to considered flows were treat the previous under However, group. the consolidated m comprehensive other “Accumulated earnings,” “Retained as indicated cost” at stock, “Treasury and (loss)” income pres Equity” Stockholders’ ITOCHU’s “Total of components en itself, group the consolidated for be to is represented Sheets changed is Equity of Statements in the Consolidated Equity Equity ITOCHU to and being attributed Equity represent to the Therefore, interest. Noncontrolling to being attributed of Statements Consolidated t noncon to attributable income in “Comprehensive deducted ITOCHU.” to attributable (loss) income “Comprehensive 4. Consolidated Statements of Cash Flows E t After income.” net reconcile to in “Adjustments included was the new of adoption financing classified flows from in cash 31, 2010, are March Cash flows under included previously were activities, and activities. investing from in the of adoption ITOCHU” after to attributable income (“Net operat flows from cash under presented was new standard) Accordingly, defined as the in new pronouncement. income,” “net (or interests necessary minority reverse to longer no is it trans Such interest”). noncontrolling to attributable income ac components. individual into of Equity 3. Consolidated Statements I co interest” whileITOCHU in “Noncontrolling Corporation, non to attributable amounts equity subsidiaries’ of the total ------previous surplus,”

the “Capital sheets

stock,” been has income of

balance inter “Noncontrolling renamed Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of and Condition of Financial Analysis and Discussion Management’s “Common

is,

consolidated opic 810) That the

in standard.

the fiscal from year implemented deconsolidation new Therefore,

balance sheets consolidated preparing e basic policy for net mean to adjusted is income” “Net of e definition Changes in accounting treatment of deconsolidation Changes in accounting treatment 810 “Consolidation”) (ASC Topic Changes in accounting treatment of changes in a par- of changes in a accounting treatment Changes in while retaining in a subsidiary ownership interest ent’s 810 subsidiary (ACS Topic in the control “Consolidation”) the of thecarrying and ce between value amount the fair compa parent that by held that as well as interest ntrolling statements the consolidated of at equity as for accounted the subsidiary of are g control been has revised. The deconsolidation for g treatment defini The equity. of a component as presented is and t” in changes thefiscal with review, under year ommencing y. the account view, the above-mentioned with n accordance of adoption after unchanged is Equity” “Stockholders’ of ion co t the to is Balance Sheets in the Consolidated Equity changed. has equity is, that itself, group the consolidated for be presented non to be to distributed or from, contributed in subsidiaries financial consolidated of the presentation to regard With indicated the changes require the new standards statements, financial statements. comparative including below, 1. Consolidated Statements of Income Th the for Therefore, itself. group the consolidated for income m evision of the presentation of consolidated financial b. Revision of the presentation statements (ASC T in I in a subsidiary while retain interest ownership a parent’s 2. C in the new to according income” “Net first revised in presenting noncontrolling to attributable income “Net deducting view, indicating and interests”) “Minority (the previous interest” to attributable income “Net as amount the remaining income”). “Net ITOCHU” (the previous 2. Consolidated Balance Sheets Th es The loss. or a gain recognizing without transactions, revised their accordingly subsidiaries its and Company based on changes, ownership such for treatment accounting ownership reclassify simply transactions such the view that noncontrolling and stockholders the Company’s among in the consolidated equity which hold both of stockholders, group. 3. for the new standard applied subsidiaries its and Company each disposal losses on of or gains recognizing review, under also remeasuring but previously, been had as done interest, of the date of as values their fair at interests the remaining the differ losses on or gains recognizing deconsolidation, en interests. remaining n been has interest” “Minority 100

Financial Section

Prepaid pensioncost(Note13).

Goodwill andotherintangibleassets(Note9): Property andequipment,atcost(Notes7,8,1217): Investments andnon-currentreceivables:

Other assets(Note20). Deferred taxassets,non-current (Note15).

Refer to Notes to consolidated statements. financial Current assets: Assets As ofMarch 31,2010and2009 ITOCHU CorporationandSubsidiaries Consolidated BalanceSheets Other intangibleassets,lessaccumulatedamortization.

Short-term investments(Notes4and8). Goodwill. Less accumulateddepr Fur Machinery andequipment. Land. Other non-curr Investments inandadvancestoassociatedcompanies(Notes5,813). Deferr Pr Advances tosuppliers. Inventories (Note8). Due fr T Construction inpr Mineral rights. Allowance fordoubtfulr Other curr Buildings. T T Other investments(Notes4and8). Cash andcashequivalents(Notes48). rade receivables (Note8): otal. ime deposits(Note8). epaid expenses. Allowance fordoubtfulreceivables (Note6). Accounts (Note12). Notes. niture andfixtures.

Total goodwillandotherintangibleassets. Net property andequipment . Total property andequipment,atcost. Total investmentsandnetnon-current receivables. Total current assets. Net tradereceivables...... ed taxassets(Note15). om associatedcompanies...... ent assets(Note20)...... ent receivables (Notes8and12)...... ogress...... eciation...... eceivables (Note6)......

¥5,476,847 ¥ 2,893,481 1,287,821 1,175,491 1,426,682 1,492,669

475,674 101,849 201,906 100,057 666,351 420,640 938,689 257,127 476,066 153,694 509,140 164,522 163,515 412,468 106,521 108,316 450,341 2010 (14,833) (59,876) 28,361 72,870 96,279 30,838 82,871 45,759 64,152 7,603 7,140 7,523 Millions ofY

¥ ¥5,192,092 2,938,194 1,135,031 1,282,695 1,274,839

628,820 en 168,681 560,774 235,046 509,503 106,934 161,533 958,449 397,675 328,940 336,630 426,054 155,427 145,881 136,389 112,136 754,062 2009 (13,869) (60,704) 81,121 87,560 29,817 91,871 16,846 60,245 69,907 40,556 3,738 9,214 1,079

U.S. Dollars $ $58,866 Millions of (Note 2) 31,099 13,842 15,334 12,634 16,043 10,089

2010 1,095 1,075 2,170 7,162 2,763 5,117 1,035 1,652 5,472 4,521 4,433 4,840 1,758 1,768 1,165 1,145 5,113 (160) (644) 305 783 331 690 891 491 81 77 82

Financial Section 101

9 (29) (33) 653 237 466 860 173 273 417 436 (968) (930) 2,174 2,464 2,289 1,347 1,342 2,311 1,478 9,505 2010 (1,495)

14,095 44,771 22,652 11,806 11,740 13,087 21,416 (Note 2) Millions of $ $58,866 U.S. Dollars

983 (2,711) (6,482) 90,631 17,502 54,697 96,769 13,183 16,618 45,472 13,686 2009 202,241 187,944 137,171 849,411 134,591 907,149 125,062 192,681 783,699 en 538,161 (185,363) (106,013) (284,172)

1,037,355 4,154,737 1,934,421 1,041,740 2,148,117 ¥5,192,092 ¥

Consolidated Balance Sheets Balance Consolidated 868 Millions of Y (2,687) (3,015) 60,728 22,033 43,314 80,030 16,117 25,431 38,763 40,544 (90,088) (86,479) 2010 202,241 137,506 212,934 125,278 124,877 215,026 884,280 229,236 (139,038)

4,165,494 1,311,353 1,098,419 1,092,321 1,217,599 1,992,558 2,107,589 ¥5,476,847 ¥

......

...... ehensive income (loss) (Notes 15 and 19): ......

...... nings (Note 18): om customers. ent liabilities (Notes 11, 12 and 20). . olling interest ed tax liabilities (Note 15)...... 4,379,005 shares 2010 4,379,005 shares 2009. 4,374,899 shares Total ITOCHU stockholders’ equity. Total Total trade payables. Total liabilities. current Total loss. accumulated other comprehensive Total Authorized: 3,000,000,000 shares; issued: 1,584,889,504 shares 2010 and 2009 and 2010 shares 1,584,889,504 issued: shares; 3,000,000,000 Authorized: Total liabilities. Total Total equity. Total Foreign currency translation adjustments. currency Foreign Legal reserve . Legal reserve Pension liability adjustments (Note 13). holding gains on securities (Note 4). Unrealized Accounts . earningsOther retained . holding losses on derivative instruments (Note 20). Unrealized . Notes and acceptances reasury stock, at cost (Note 18): reasury rade payables (Note 8): Capital surplus (Note 18). . Total

Short-term debt (Notes 8 and 10). Short-term debt (Notes T . of long-term debt (Notes 8 and 10) maturities Current Common stock (Note 18):

Deferr Noncontr . Due to associated companies Accrued expenses. Income taxes payable (Note 15). Advances fr Retained ear Accumulated other compr Other curr T

Liabilities and Equity Liabilities Current liabilities:

Commitments and contingent liabilities (Note 25) Commitments and contingent liabilities Equity: . Deferred tax liabilities, non-current (Note 15) Accrued retirement and severance benefits (Note 13). Accrued retirement and severance benefits

(Notes 8, 10, 11, 12 and 20). Long-term debt, excluding current maturities

102

Financial Section Gross tradingprofit(Note17).

Diluted netincomeattributabletoITOCHU Net income. Provision fordoubtfulreceivables (Note6)...... (losses)of Equity inearnings Income taxes(Note15): Selling, generalandadministrativeexpenses Interest income. Gain onbargainpurchase inacquisition(Note3). Refer to Notes to consolidated statements. financial Net incomeattributabletoITOCHUpercommonshare(Note16). Net incomeattributabletoITOCHU(Note17). Less: Netincomeattributabletothenoncontrolling interest. Income beforeequityinearnings(losses) Income beforeincometaxesandequityinearnings(losses) Other–net (Notes9,14,20and24). Gain (loss)onproperty andequipment–net(Notes7,924). Gain (loss)oninvestments–net(Notes3,4and22). Dividends received. Interest expense(Note20). Revenue (Notes12,17and20):

per commonshare associated companies(Notes5and17). (Notes 3,9,12and13). of associatedcompanies. of associatedcompanies Years endedMarch 31,2010,2009and2008 ITOCHU CorporationandSubsidiaries Consolidated StatementsofIncome Cost ofsales. Curr T Deferred (Notes3and22). Sales r rading marginsandcommissionsontradingtransactions. Total revenue. Total incometaxes. ent. evenue...... (Note16)...... (Note15)......

¥ 2,885,598 ¥ (2,492,271)

3,416,637 (769,907) 924,366 531,039 139,684 128,153 154,986 103,415 2010 2010 (11,531) (35,249) ¥80.91 36,269 14,015 ¥81.09 51,571 55,126 28,900 (7,045) (3,555) (8,548) (4,456) 9,911 2,999

¥ ¥ Millions ofY (2,358,540) 3,419,061 1,060,521 2,821,553 1 (768,115) 165,390 597,508 ¥103.94 135,501 208,258 ¥104.64 2009 2009 (16,742) (11,415) (22,816) (45,407) (23,066) (45,710) 76,805 Yen 41,304 72,757 95,573 35,039 16,253 (4,515)

— en

¥ ¥ (1,865,306) 2,859,853 2,233,523 (723,403) 217,301 626,330 159,423 280,531 994,547 229,661 121,108 ¥127.71 ¥137.46 2008 2008 (12,360) (49,985) 70,238 29,186 91,922 16,384 24,447 17,829 (5,977) 6,675 14 — $ $ 31,014 U.S. Dollars U.S. Dollars Millions of (26,787) (Note 2) (Note 2) 36,722 (8,275) 1,377 2010 2010 5,708 $0.87 $0.87 1,111 1,666 9,935 1,501 (124) (379) 390 593 151 311 107 555 (76) (92) (38) (48) 32

Financial Section 103

4 0 0 1 (1) (1) — 32 26 26 38 (32) (29) (29) (77) (16) (32) (18) 212 299 124 236 142 173 (263) (150) 1,377 1,560 1,501 2,937 2,174 2,174 1,474 8,423 9,505 2,020 2,289 1,037 1,586 3,087 1,478 2010

(Note 2) $ $ (3,055) $ $ $ $ $ $ $ $ $ $ $ $ $ $11,806 $14,095 $ $ (1,495) $ Millions of Millions of U.S. Dollars — — 16 353 125 (679) (125) (389) 3,075 2,758 2,833 (3,075) (1,910) (2,589) 7,423 (6,352) (4,793) (1,694) (1,989) (2,160) 12,360 (27,688) 81,863 (26,448) 10,373 (10,200) (25,633) (32,272) (50,577) 217,301 119,190 2008 (108,311) 108,990 466,094 652,757 143,055 145,618 229,661 202,241 202,241 136,842 (110,471) 137,211 973,545

¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥1,119,163 ¥ ¥ ¥ ¥ ¥ ¥

en (2) — — — (40) 168

(122) (168) 2,642 3,786

(2,642) (4,781) (2,589) (2,711) (1,131) (5,330) (6,634) (7,067) (4,005) 11,415 45,434 (31,636) (26,448) (92,334) 10,373 13,183 (33,759) (61,990) (85,700) 165,390 202,241 137,211 2009 (257,724) (162,751) 652,757 783,699 (284,172) 145,618 187,944 176,805 202,241 137,171 849,411 (262,505)

¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥1,037,355 ¥ ¥ ¥ ¥ Millions of Y 9 — 24 73 (73) 335 (122) 3,007 2,391 2,411 3,502 (3,007) (2,711) (2,687) (1,648) (2,977) (7,177) (1,448) 96,446 13,183 16,117 11,531 21,907 19,700 27,868 (24,516) (13,922) 128,153 145,125 147,516 287,200 2010 273,278 783,699 884,280 187,944 212,934 139,684 202,241 202,241 137,171 (284,172) (139,038) ¥137,506

¥ ¥ ¥ ¥ ¥ ¥ ¥1,098,419 ¥ ¥ ¥ ¥1,311,353 ¥ ¥ ¥ ¥ ¥ ¥

......

...... olling interest : ...... olling interest ...... interest om noncontrolling ehensive income (loss) attributable to the ehensive income (loss)...... chase) of subsidiary shares to (from) noncontrolling interest noncontrolling to (from) chase) of subsidiary shares ehensive income (loss) attributable to ITOCHU. ehensive income (loss). . interest ehensive income attributable to the noncontrolling eserve: . stock of subsidiaries and associated companies . stock of subsidiaries and associated companies Redistribution arising from sale by parent company of common sale by parent Redistribution arising from . to legal reserve Transfer Redistribution arising from sale by parent company of common sale by parent Redistribution arising from Cash dividends. Deficit arising from retirement of treasury stock. of treasury retirement Deficit arising from Foreign currency translation adjustments. currency Foreign issued: 1,584,889,504 shares 2010, 2009 and 2008. 2010, shares issued: 1,584,889,504 earnings other retained . from Transfer Balance at beginning of year. Net income attributable to ITOCHU. Pension liability adjustments (Note 13). holding gains (losses) on securities (Note 4). Unrealized holding gains (losses) on derivative instruments (Note 20). Unrealized income (loss) (net of tax). other comprehensive Total Balance at beginning of year. issued: 1,584,889,504 shares 2010, 2009 and 2008. 2010, shares issued: 1,584,889,504 Total ITOCHU stockholders’ equity. Total Total equity. Total noncontrolling interest (Notes 15 and 19). interest noncontrolling Balance at end of year. Balance at end of year. Balance at end of year. Balance at end of year. Sale (purchase) of subsidiary shares to (from) noncontrolling interest noncontrolling to (from) of subsidiary shares Sale (purchase) Sale (purchase) of subsidiary shares to (from) noncontrolling interest noncontrolling to (from) of subsidiary shares Sale (purchase) Balance at end of year. Net change in treasury stock. Net change in treasury income (loss) (net of tax); Other comprehensive Other compr Balance at beginning of year. Balance at end of year stock. of treasury retirement Excess (deficit) arising from earnings:Other retained . interest Net income attributable to the noncontrolling Compr Contribution fr Sale (pur Acquisitions of subsidiaries (Note 3). Balance at end of year. Cash dividends to noncontr Distribution to noncontr Compr Compr Balance at beginning of year. Net income. Legal r Other compr Deconsolidation of subsidiaries.

Balance at beginning of year Balance at beginning of

Balance at beginning of year. Balance at beginning of Balance at beginning of year. (Notes 4, 13, 15, 19 and 20)

: stock (Note 18) Treasury

Noncontrolling interest: Comprehensive income (loss) (Notes 15 and 19): : Retained earnings (Note 18)

financial statements. consolidated to Notes to Refer : Common stock (Note 18) Consolidated Statements of Equity of Statements Consolidated and Subsidiaries Corporation ITOCHU and 2008 31, 2010, 2009 ended March Years

: Capital surplus (Note 18) (loss) Accumulated other comprehensive income 104

Financial Section

Supplemental disclosuresofcashflowinformation:

Cash flowsfrominvestingactivities:

Cash flowsfromfinancingactivities:

Refer to Notes to consolidated statements. financial Cash andcashequivalentsatendofyear. Cash andcashequivalentsatbeginningofyear. Net increase(decrease)incashandequivalents. Cash flowsfromoperatingactivities: Effect ofexchangeratechangesoncashandequivalents.

Years endedMarch 31,2010,2009and2008 ITOCHU CorporationandSubsidiaries Consolidated StatementsofCashFlows Collections ofothernon-current loanreceivables Origination ofothernon-current loanreceivables . Proceeds from salesofsubsidiaries’commonstock. Acquisitions ofsubsidiaries,netcashacquired. Proceeds from salesofotherinvestments. Acquisitions ofotherinvestments. Net increase intreasury stock. Proceeds from maturitiesofheld-to-maturitiessecurities. Cash dividendstononcontrolling interest. Proceeds from maturitiesofavailable-for-sale securities. Cash dividends. Acquisitions ofsubsidiaries(Note3): Proceeds from salesofavailable-for-sale securities. Payments forequitytransactionswithnoncontrolling interest.

Acquisitions ofavailable-for-sale securities. Proceeds from equitytransactionswithnoncontrolling interest. Decrease ininvestmentsandadvancestoassociatedcompanies. Net increase (decrease) inshort-termdebt. Information regarding non-cashinvesting andfinancingactivities: Increase ininvestmentsandadvancestoassociatedcompanies. Net increase intimedeposits. Repayments oflong-termdebt. Proceeds from salesofproperty, equipmentandotherassets Adjustments tor Cash paidduringtheyearfor:

Payments forpur Pr

Net income. to netcashprovided byoperatingactivities: oceeds from long-termdebt. Acquisitions ofsubsidiaries,netcash acquired. Cash acquired. Non-cash acquisitioncosts. Acquisition costsofsubsidiaries. Fair valueofliabilitiesassumed. Fair valueofassetsacquired. Gain onbargainpurchase inacquisition(Note3). (Gain) lossonproperty andequipment–net. Non-monetary exchangeofshares (Note4): Change inassetsandliabilities: (Gain) lossoninvestments–net(Note3). Contribution ofsecuritiestopensiontrust. Deferred incometaxes. Provision fordoubtfulreceivables . Equity in (earnings) lossesofassociatedcompanies, Equity in(earnings) Income taxes. Depreciation andamortization. Interest. less dividendsreceived. Other–net. Due toassociatedcompanies. Trade payables. Inventories. Costs ofshares surrendered . Due from associatedcompanies. Fair marketvalueofshares received. Trade receivables. Net cashprovided byoperatingactivities. Net cashprovided by(usedin)financingactivities. Net cashusedininvestingactivities...... econcile netincome chases ofproperty, equipmentandotherassets......

......

¥ 139,684 ¥ 475,674 ¥ (258,987) (121,964) (196,318) (325,677) (116,226) (360,254) (153,146)

295,376 110,638 148,607 182,581 628,820 461,718 (31,372) (35,462) (24,516) (14,015) (18,128) (16,794) (95,123) 36,931 2010 18,918 11,068 49,026 10,482 71,943 49,255 14,966 27,554 70,173 35,563 76,377 13,078 (3,999) (7,177) (3,956) (2,506) (3,555) (1,311) 1,572 3,999 9,756 1,472 8,548 4,456 9,109 7,045 6,783 (111) 108 986 30 62

Millions ofY ¥ ¥ ¥ 176,805 ¥ 628,820 (306,860) (326,033) (191,239) (345,590) (131,189) 276,854 258,322 269,985 345,678 334,168 256,101 101,250 446,311 384,515 182,509 (50,349) (29,634) (56,516) (31,636) (12,751) (22,816) (22,298) (26,634) 2009 39,085 25,964 42,330 75,693 15,108 45,407 16,874 23,066 16,742 47,547 13,538 34,799 64,988 (5,722) (2,636) (7,067) (7,188) 4,564 5,722 7,110 2,118

(119) (752) 194 208 206

— — — — en

¥ 229,661 ¥ 446,311 ¥ ¥ (162,395) (324,581) (118,800) 532,856 324,994 (48,817) (81,294) (54,844) (26,994) (19,628) (27,688) (13,473) (23,286) (65,774) (16,384) (48,071) (53,267) (55,444) (86,545) 2008 65,552 35,492 32,818 19,779 38,495 29,186 94,312 48,979 78,582 52,666 71,569 (6,352) (2,666) (6,675) (2,266) (5,029) 9,684 1,082 2,114 5,977 (678) 808 598 — — — — — — — — — — — U.S. Dollars Millions of $ 1,501 $ $ 5,113 $ (Note 2) (2,784) (1,311) (2,110) (3,500) (1,249) (3,872) (1,646) (1,022) 2010 $ 397 $ 3,175 1,189 1,597 1,962 6,759 4,962 (337) (381) (263) (195) (180) (151) 203 119 527 113 773 105 529 161 296 754 140 382 821 (43) (77) (43) (27) (38) (14) 17 43 16 92 10 48 98 76 73 (1) 0 1 1

Financial Section 105 - - - - -

includ shares any of consideration financial ser IT, machinery, chemicals, All rates. exchange year-end respective and ability based upon investments” “Other and ents” time deposits. g short-term market. method, or the specifically by identification in engage the companies addition, In estate. real ices and Sector, Resource/Energy-Related in the Natural handise; including shares, voting of hip a recognized as is entity whether an of determination The owner subsidiary based is the Company’s on consolidated m these Sector, the Consumer-Related In companies. division mer general and products forest textiles, food and cover v available-for-sale or trading held-to-maturity, as intent Life as such areas, new business diverse of the development Energy. New and the Environment and & Healthcare 3) Cash Equivalents as define equivalents cash subsidiaries its and Company The less), or months three of (original maturities short-term to convertible readily which are investments highly liquid in value, changes of risk insignificant have and cash in 4) Inventories determined princi- cost, of the lower at stated are Inventories p Securities5) Marketable Other Investments and and 320 “Investments-Debt Topic ASC with accordance In for 115, “Accounting SFAS (formerly Securities” Equity and Securities” Equity and in Debt Certain Investments 124-1 “The FAS 115-1 and FAS (“FSP”) Position Staff FASB Its and Impairment Other-Than-Temporary of meaning 115-2 and FAS FSP and Certain to Investments,” Application Other-Than- of Presentation and 124-2 “Recognition FAS subsidiaries its and the Company Impairments,”) Temporary invest in “Short-term included classify certain investments 2) Foreign Currency Translation 2) Foreign been translated have currency financial statements Foreign Currency 830 “Foreign Topic ASC with in accordance Accounting Financial of Statement (formerly Matters” Translation”). Currency 52, “Foreign (“SFAS”) Standard foreign of liabilities the assets and this statement, to Pursuant into translated are companies associated and subsidiaries the at yen Japanese rates average at translated are expense accounts and income currency translation foreign resulting The exchange. of other in “Accumulated included tax, are of net adjustments, currency receivables Foreign (loss).” income comprehensive year-end at yen Japanese into translated are payables and and gains exchange foreign the resulting and rates exchange in the in “Other–net” included recognized and losses are income. of statements consolidated c the Company trusts. Although the pension to contributed to the rights shares, the contributed vote to the rights retains equity the trustee. The by executed are shares such dispose of included is trust, if any, the pension to shares in contributed financial in the consolidated interests in noncontrolling statements. energy; and in Other metal resources and they include Sectors, they involve s ------as expected entity’s the accrual on the of majority a absorb will and Basis of Financial Statements and Summary of Significant Accounting Policies Statements and Summary of Significant Basis of Financial rate. other any or the above at 2. 1. of Operations nature America (“U.S. of States in the United accepted lly coordination. and planning project as well as products, y of in their coun prevailing principles accounting with ance into be could converted amounts yen the Japanese that ation in a wide operate subsidiaries its and ies, the Company gains deferred investments, of exchange ies, non-monetary been made have certain adjustments incorporation, ries of expected residual the entity’s of a majority losses, receive both. or returns, the basis on included are the subsidiaries of accounts The fiscal their respective of periods on primarily which end 31. March to prior the months three within 31 or March t t era d maintain subsidiaries its and BecauseGAAP”). the Company in accor their financial statements prepare and their records seven spanning via global and networks industries of range attributed the interest of measurement accounting, of basis in business interest noncontrolling and the Company to intangible goodwill other of and amortization combinations, activities. hedging and instruments derivative assets and of issuance of the cost costs, pension property, sales of on sales installment of recognition new shares, subsidiaries its and the Company entities, interest variable concluded is it where entities interest variable consolidate the primary is subsidiaries its of one or the Company that beneficiary (2) Summary of Significant Accounting Policies Consolidation of 1) Basis the accounts include financial statements consolidated The owned majority indirectly or directly its and the Company of subsidiaries. foreign and domestic Codification™ Standard Accounting with accordance In Financial (formerly 810 “Consolidation,” Topic (“ASC”) Interpretation Board (“FASB”) Standards Accounting an Entities, Interest Variable of 46, “Consolidation (“FIN”) No. Bulletin (“ARB”) Research Accounting of interpretation 51” (revised 46 (R)”), which defines December 2003) (“FIN specified has whosethose equity characteristics entities Statements (1) Basis of Financial are financial statements consolidated accompanying The the currency the country yen, in which of in Japanese stated The operates. principally and incorporated is the Company amounts dollar U.S. into amounts yen Japanese of translation the for solely included is 31, 2010 ended March the year for been has at made and Japan outside readers of convenience 31, March of as (the official rate ¥93.04 = U.S.$1 of the rate UFJ, Tokyo-Mitsubishi Bank The of by 2010 announced be a represen as construed not should translation The Ltd.). subsidiaries its and “Company”) (The ITOCHU Corporation vari a huge logistics involving and finance trading, conduct et t otes to Consolidated Financial Statements Financial to Consolidated Notes and Subsidiaries Corporation ITOCHU and functions of range a diverse cultivated They also have and development in resource expertise investments through capabili these leveraging comprehensive By projects. other include adjustments major The GAAP. U.S. to conform to securi certain investment of the valuation to those relating t dollars U.S. have financial statements consolidated accompanying The gen principles accounting with in accordance been prepared 106

Financial Section m loan on cash the basis. interest income on recorded the investment inan impaired The Company and its subsidiaries primarily recognize, fair value of loan the is less than recorded the amount. p an investment inan associated company is other than tem An impairment loss is where recognized adecline invalue of amountcarrying of investment the by dividends received. significant intercompany unrealized profits and to reduce the Company and its subsidiaries make adjustments to eliminate after date the of acquisition. Under equity-method, the the undistributed earnings or of losses associated the companies amount of investment the to recognize our share of the outstanding voting stocks) at cost and adjust carrying the the m loanthe is collateral dependent, and recognize an impair market price or fair the value of underlying the collateral if the presentthe future value of expected cash flowsdiscounted at subsidiaries measure impairment for on loans certain based Equipment” (formerly SFAS 144,“Accounting for the In accordance with ASC Topic 360 “Property, Plant and Assets 8) Long-lived m Loan—Income Recognition and Disclosures—an amend and SFAS 118,“Accounting by Creditors for Impairment of a Loan—an amendment of FASB Statements No. 5and 15,” SFAS 114,“Accounting by Creditors for Impairment of a In accordance with ASC Topic 310“Receivables” (formerly 7) m The Company and its subsidiaries initially record invest- 6) Investments inAssociated Companies t Held-to-maturitysecurities. are securities reported at amor- h “Accumulated other comprehensive income (loss)” instock holdingunrealized gains and included losses in available-for-sale are securities reported at fair value with holdingunrealized gains and included losses inearnings and Non-marketable included in“Other securities invest of impaired). has that time been asecurity fairwhich value is below cost) and duration the period (the is by determined considering extent (the severity the to basis. Whether decline the invalue is other than temporary is written securities downthose to fair value cost as anew value is judged other to be than temporary, cost the basis of other to be thanbelieved has declinedbelow cost securities andsale ifsuch decline is fair the whether value of held-to-maturity and available-for- investments their review for impairment to determine cost The method. Company and its subsidiaries periodically investments is sold using determined moving-average the ability amountwould carrying the justify of investment. the inability of investee the to sustain an earning capacity which are cost,ized trading securities reported at fair value with olders’ equity on anet-of-taxbasis. The cost of certain orary, includes which but is not limited to absence the ent by creating and adjusting avaluation allowance ifthe ents inassociated companies (generally, inwhich those ent of FASB Statement No. Company 114”),the and its ents” are reported at cost or fair the value ifit is lower. for Doubtful Receivables and Allowance Impaired Loans Company and its subsidiaries own 20%to 50%of the loan’s interest effective original rate, loan’s the observable

recover

the

carrying temporary. If decline the infair

amount

the

investment or the - of - -

- an - es Statements of Income. on bargain purchase inacquisition” on Consolidated the where net the of acquisition-date the amounts of identifi the a bargain purchase inacquisition, that is, for transactions the assumed. In addition, for business combinations resulting in amounts of identifiable the assetsacquired and liabilities the interest acquiree inthe over net the of acquisition-date the si of any noncontrolling interest acquiree inthe and acqui the aggregatethe of consideration the transferred, fair the value as of acquisition the goodwill date, measured as excess the of Consolidatedin the Statements of Income”) and recognize or loss, ifany, inearnings as “Gain (loss) on Investment-net at acquisition-date fair value (recognizing resulting the gain re-measure its previously held equity interest acquiree inthe acquireein the at its fair value at acquisition the date, then, apply other GAAPand measure noncontrolling the interest acquired and liabilities to subsequently assumed as necessary subsidiaries or classify designate identifiable the assets (f to others)leased is computed principally by unit-of- the Depreciation of property and equipment (including property 9) Depreciation reporting unit level at least on an annual basis and between butamortize goodwill performan impairment test at the Intangible Assets,”) Company the and its subsidiaries donot and Others” (formerly SFAS 142,“Goodwill and Other In accordance with ASC Topic 350 “Intangibles-Goodwill and OtherIntangible Assets 11) Goodwill n Company and its subsidiaries account for business all combi In accordance 10) Business Combinations in to be group) exceeds its fair value. Along-lived asset(assetgroup) amountby carrying the which of along-lived asset(asset impairment loss is as recognized by determined amount the amountless than carrying the of asset(assetgroup), the an sumthe of undiscounted the future expected cash flowsis amount of asset(assetgroup) the may not recoverable. be If circumstances indicate that some portionof carrying the futureexpected cash flows,whenever events or changes in of other disposed thanbe by using sale, undiscounted for a Company and its subsidiaries performan impairment test Impairment orof Disposal Long-Lived Assets”), the date aggregate of consideration the transferred, acquisition- the acquireein the and fair the value of any noncontrolling inter 20 years for Furniture and fixtures). Buildings, 2to 33years for and Machinery equipment, 2to lives of related the property and equipment (6to 65years for rights,mineral using rates upon estimated based the useful and equipment other than land, construction inprogress and orline method declining-balance the for method property a production for method rights, mineral and by straight the ble assetsacquired and liabilities the assumed exceeds the ations using acquisition the The method. Company and its tion-date fair value of acquirer’s the previously held equity ormerly SFAS 141,“Business Combinations”), the acquiree,t inthe excess the amount is as recognized “Gain g amount or fair value less cost to sell. fair value of acquirer’s the previously held equity interest long-lived asset(assetgroup) held to and be or used to of by disposed is reported at sale lower the of its carry with ASC Topic 805“Business Combinations”

- - - - - Financial Section 107 - - - - basis.

(formerly straight-line

on subsidiaries its and

term

lease

the accrete subsidiaries its and Company

over

Notes to Consolidated Financial Statements Financial to Consolidated Notes recognized

Require Disclosure and Accounting 45, “Guarantor’s in the period is a liability as in which it obligation ent the expense recognized over is interest ase obligations, with tax in accordance of net (loss),” income rehensive subsidiaries its and 143”), the Company No. SFAS of ation a constant the lease term at over unearned income izing m Accounting 158 “Employers’ SFAS 715 (formerly Topic ASC Other Postretirement and Defined Benefitfor Pension 87, 88, No. Statements FASB of amendment Plans—an 132 (R)”). 106, and be can made value fair of estimate incurred if a reasonable the related of in the cost amount the same capitalize and the asset. Subsequently, each period, depreciate value and present its to the liability asset. the related the useful of life over cost the capitalized t Severance and Benefits 18) Retirement defined benefit have certain subsidiaries and Company The their all employees. of substantially covering plans pension accrued are thedefined plans of benefit pension costs The actuarial methods, in determined using based amounts on “Compensation-Retirement 715 Topic ASC with accordance for Accounting 87 “Employers’ SFAS (formerly Benefits” the Company addition, In Pensions”). a defined benefit of pension the fundedrecognize status fair assets at between plan the difference as plan—measured a asset or an benefit obligation—as the projected and value actuarial net The balance sheet. consolidated in its liability to required service prior balance are balance and loss credit com other “Accumulated of be a component recognized as p 19) Guarantees 460 “Guarantees” Topic ASC with accordance In FIN of Guarantees Indirect Including Guarantees, for ments subsidiaries its and the Company Others”), of Indebtedness the for a liability a guarantee, of the inception at recognize, those guarantees undertaken for the obligation of value fair modified December or newly issued after 31, 2002. 16) Asset Retirement Obligations Retirement 16) Asset and Retirement “Asset 410 Topic ASC with accordance In “Accounting 143 SFAS (formerly Obligations” Environmental FIN 47 “Accounting and Obligations,” Retirement Asset for interpre Obligations—an Retirement Asset Conditional for 17) Leases lease subsidiaries fixed assets under its and Company The leases a lessor. as operating leases and financing direct amor leases recognized by is financing direct from Income t asset retire long-lived a tangible of value the fair recognize Operating investment. the net on return of periodic rate the a straight- lease term on recognized over is lease income basis. line lease subsidiaries fixed assets under its and Company The capital leases a lessee. For as operating leases and capital le the lease on periodic obligation. rate a constant lease term at the lease the leased of recognized over is assets Depreciation operating expense Rental basis. on a straight-line term on leases ------accounted are any of value costs of in the costs included development incurred. as and exploration gas Change in a Parent’s Ownership Interest Ownership Interest Change in a Parent’s in a Subsidiary and income in net loss or a gain recognizes the parent ary, (former- 810 “Consolidation” Topic ASC with accordance the unit-of-pro using amortized and capitalized are ent reserves. accordance In probable and d based the proven on commercial produce the to efforts uction method. Should be should that costs production ble no Therefore, transactions. equity as for accounted ary are in Interests “Noncontrolling SFAS160 y standard a sub deconsolidates in the parent case where y SFAS160), costs The accounting. the successful method efforts of by for exploratory equipping drilling and properties, acquiring of equip and plants related and wells development and wells, i or income net recognized in consolidated is loss or gain income. comprehensive m 15) Mining Operation 15) Mining expensed the incurred until as are costs exploration Mining viable commercially as been has established project mining as established is a project Once study. a final feasibility by development as capitalized are costs viable, commercially meth the unit-of-production using amortized are and costs 14) Oil and Gas Exploration and Development 14) Oil and Gas and Exploration Oil o 13) Deconsolidation of a Subsidiary13) Deconsolidation of (former- 810 “Consolidation” Topic ASC with accordance In l 12) In l that change circumstances occurs or event if an tests annual the fair that not than likely more is it that indicate would An carrying its below amount. is unit a reporting of value over useful amortized is a definite with asset life intangible in impairment reviewed for is useful and life estimated its and 350 “Intangibles-Goodwill Topic ASC with accordance the Impairment for 144 “Accounting SFAS (formerly others” asset intangible An Assets”). Disposal Long-Lived or of amortized useful not is indefinite life an have determined to the in same impairment periodically instead is for tested but goodwill. as manner ARB to amendment Statements—an Financial Consolidated while the interest ownership in a parent’s 51”), changes No. subsid in its financial interest controlling its retains parent sidi d carrying and amount investment noncontrolling retained subsidiary in the former investment noncontrolling any of the of the carrying less amount date the deconsolidation at liabilities. assets and subsidiary’s former the of the aggregate as measured the parent, to attributable fair received, consideration any of value fair expensed. reserves are the costs be determined unsuccessful, geophysical geological as and such costs exploration The expensed are costs research the period the stripping during that produced the inventory incurred. are costs (formerly Activities-Mining” 930 “Extractive Topic ASC with 04-6, No. Issue (“EITF”) Force Task Issues Emerging During Production Costs Incurred Stripping for “Accounting incurred during costs the stripping Industry”), in the Mining vari as for accounted are the mine of phases the production a 108

Financial Section nize a a terms of underlying the on leases astraight-line basis for air Statements of Income. commissions on trading transactions” Consolidated inthe Revenues from other are activities upon recognized custom of aircraft, real estate, and industrial other machinery assets. software development and maintenance and leasing services other of activities Company the and its subsidiaries include customers have renderedcontracted been services to third-party the support.technical The revenues are the when recognized information,and services, logistics communications and areactivities originated invarious such fields, as financial Transactions derive which revenues from service-related percentage-of-completion method. s subsidiaries present certain Principal versus Net as an Agent”), Company the and its (formerly EITF99-19,“Reporting Revenue Gross as a p recognize Revenues such from as sup supporting services, revenue transactions, Company the and its subsidiaries development and of sale real estate. In addition to these of products, development the of natural resources and the Company and its subsidiaries recognize revenues from sales agent trading intheir transactions for earning revenues. The The Company and its subsidiaries as either act principal or 20) Revenue Recognition fac from product including sales, retailmanu wholesale, sales, The Company and its subsidiaries recognize revenues to have are met goods when been received by customer, the customers are met.conditions These are usually considered real estate, at conditions delivery the time the agreed with m accounted for by completed the contract unlessesti method contract,the revenues from long-term construction are from customer the is received. on Depending nature the of t iza der have goods the have delivered ren been been or services the met: (1)persuasive of evidence an arrangement exists, (2) realizable and all when earned nize The activities. Companyservices and its subsidiaries recog a risk before customer orders. The revenues that are recog rendering andand for service with general inventory sales obligor as aprimary traded inmanufacturing, processing Consolidatedin the Statements of Income, for transactions I Reporting RevenueGross versusNet m completion of long-term contracts are reasonably depend cra er he warehouse receipts are transferred or acceptance the n accordance with ASC Topic 605“Revenue Recognition” ponding cost of revenues on agross basis as “Sales revenue” ble, Company the case inwhich and its subsidiaries the use ble and (4)collectability is reasonably assured. for softwarel period maintenance and over the services orting customers’ trading leasing activities, and software acceptance for software development, over contractu the ent of natural resources and development the and of sale ates of costs to complete and extent the of progress toward ble and earned. In other words, revenues are or realized tured product processed product sales, develop the sales, real estate,ft, and industrial other machinery assets. toed customers, price or is fixed sales (3)the determin revenues at revenues when time the are or realized real d on anet basis are presented as “Trading margins and pursuant to arrangements. the Transactions from revenue transactions with corre of following the criteria are ------b “Accounting for Income Taxes”). assetsand Deferred tax lia with ASC Topic 740“Income Taxes” (formerly SFAS 109, Operating Segment Information. In addition, Trading Transactions are referred to within an exit or plan disposal is committed. liability the when is rather incurred period in the than when cost associated with exit at oractivities disposal its fair value and its subsidiaries recognize and measure aliability for the Associated with Exit orActivities”), Disposal Company the Obligations” (formerly SFAS In accordance with ASC Topic 420“Exit orCost Disposal Activities or Exit Disposal Associated with 23) Costs incurred.when Research and development costs are changed to expense 22) Research and Development Costs Advertising costs are changed incurred. when to expense 21) Advertising Costs t Japanese accounting practiceand is not meant as asubsti Total trading transactions is presented inaccordance with Company and its subsidiaries as principal act or agent. transaction volume contracts of sales the the inwhich similar Japanese trading companies and represents gross “Total trading transactions” is ameasure commonly by used Trading Transactions i The Company and its subsidiaries utilize an assetand liabil- 24) Income Taxes s assetsor Deferred tax liabilitiescarry-forwards. are mea Company’s statements, financial and net operating loss t Consolidatedthe Statements of Income. are benefits tax unrecognized included inIncome taxes in upon settlement. Interest and accrued penalties has agreater than 50percent of likelihood realized being threshold are measured at largest the amount of that benefit positions that more-likely-than-not the meet recognition upon examination by authorities. tax the from Benefits tax merits,technical that sustained positions be tax the will of positions tax it when is more likely than not,on the based and its subsidiaries statement recognize financial the effects interpretation of FASB Statement No. Company 109”),the FIN 48,“Accounting for Uncertainty inIncome Taxes—an According to ASC Topic 740“Income Taxes” (formerly than not that a portion of adeferred assetfor tax it which is more likely enactment date. Avaluation allowance is provided for the inearningsthatrecognized for includes period the the change rates intax on deferred assetsand tax liabilities is recoveredare to be expected orof The settled. a effect income years inthe temporary differences those inwhich q approachty to accounting for income taxes inaccordance ute for or sales revenues inaccordance with U.S. GAAP. ax basis of assetsor liabilities and reported amounts inthe ured using rates to tax enacted apply expected to taxable ilities are for recognized estimated the future conse tax uences attributable to temporary differences the between not realized. will be benefit tax 146, “Accounting for Costs related to - - - - Financial Section 109 - or - -

- issued.

hedges was

value 162”

fair SFAS as

the consolidated on of

hedges amendment

Statement FASB of amendment an currency

the hedge’s at made is assessment formal foreign Generally Accepted of the Hierarchy and TM Notes to Consolidated Financial Statements Financial to Consolidated Notes of Principles,

currency fair qualify foreign and as designated of 142-2, “Application SFAS FSP (formerly Gas” l and for instruments derivative of value in fair changes The assets, of amounts affect the reported assumptions and ates flow hedges. cash reported currently is the hedge of portion ineffective The in earnings. fair foreign-currency of a hedge currency hedge”: “Foreign derivatives of value fair in changes The flow. cash or value are that liabilities, recognized or assets of hedges flow cash or value transactions forecasted or unrecognized firm commitments other “Accumulated or earnings in either recorded are considered are if the hedges (loss)” income comprehensive “Accumulated or in earnings highly Recognition effective. the on dependent is (loss)” income comprehensive other treatment value fair at financial liabilities financial assets and any ure differ could actual results and liabilities, assets and ingent 815, which Topic ASC by prescribed as requirements ion meet the documenta subsidiaries its and Company The m • con of the disclosure expenses, and and revenues liabilities, t 142, Goodwill Other Intangible and No. Statement FASB all mineral Entities”), Producing Gas- Oil- and to Assets, entities producing gas- and oil- and mining by held rights assets tangible as been presented have balance sheets. those estimates. from Accounting (3) New Accounting Pronouncements Codification™ Standards (ASC) Accounting 1) FASB Standards Accounting 168 “The FASB 2009, SFAS June In Codification 28) Fair Value Option Value 28) Fair SFAS159 (formerly Instruments” 825 “Financial Topic ASC Financial and Assets Financial for Option Value “The Fair an including Liabilities report to option an with companies provides No.115”), value. fair at selected financial liabilities financial assets and elected mea to not have subsidiaries its and Company The s 29) Classification Mineral Rights of Activities- 932 “Extractive Topic ASC with accordance In Oi Estimates of 30) Use and estimates make subsidiaries its and Company The esti Such these financial statements. prepare to assumptions in earnings. recorded purposestrading are the and objective management risk its of a statement include transactions. hedge undertaking various for strategy a addition, In every periodically an and on at quarter thereafter inception used hedging in whether the to derivatives as basis, ongoing in the fair highly changes effective in offsetting activities are items. hedged flows of cash or values hedges, ineffective for discontinued is accounting Hedge instruments derivative of value in fair changes The if any. recognized in earnings are hedges discontinued to related currently. t fair at be to measured required previously not which were value.

- - - to - - - - - flow cash of con loss and income variability the of of value in fair changes The hedge Certain and Hedging Instruments a hedge”: flow the items. hedged as designated liabilities d assets or Net Income (Loss) Attributable (Loss) Income Attributable Net Share Per ITOCHU to ed highly effective. and contracts swap rate interest contracts, n exchange liability pension adjustments, n currency translation considered are if the hedges (loss)” income rehensive “Cash in for also changes but loss or income net only not of sts p nize earnings until continued is treatment highly This effective. or be flows to received in cash the variability affected by are the recog or transactions the forecasted to in relation paid a recognized of value the fair of a hedge hedge”: value “Fair unrecognized firm an commitment. of or liability, asset or liabilities, recognized assets or of value in fair changes The derivative related and unrecognized firmor commitments qualify value fair and as designated are that instruments consid are if the hedges in earnings recorded are hedges er a or transaction, a forecasted to related paid or be received liability. recognized asset or qualify and as designated are that instruments derivative com other in “Accumulated recorded are flow hedges cash (revenues, components its and loss and income rehensive the period. treasury Diluted for stock) (excluding tanding and designate subsidiaries its and Company The value. follows: as instruments derivative for account • fair at Balance Sheets in the Consolidated contracts, futures them, holding for the purpose intent of or regardless value, in changes for accounting The liabilities. assets or either as the derivative use of the intended depends on value fair All effectiveness. derivative hedge resulting and instruments their fair at the sheet balance recognized on are instruments 27) Derivative Instruments and Hedging Activities Hedging and Instruments 27) Derivative and 815 “Derivatives Topic ASC with accordance In Derivative for 133, “Accounting SFAS (formerly Hedging” 138, “Accounting SFAS Activities,” Hedging and Instruments Certainfor Derivative and 133,” No. Statement FASB of amendment Activities—an Derivative 133 on No. Statement of “Amendment 149, SFAS its and the Company Activities”), Hedging and Instruments for as such instruments, all recognize derivative subsidiaries eig 26) Comprehensive Income (Loss) Income 26) Comprehensive Income” 220 “Comprehensive Topic ASC with accordance In Income”), Comprehensive 130, “Reporting SFAS (formerly com present and report subsidiaries its and the Company is ITOCHU to per share attributable (loss) Basic income net ITOCHU to attributable income net dividing by computed out shares common of number the weighted-average by s p 25) computed is ITOCHU to per share attributable income net that shares common potential effectgiving all to dilutive the period. during outstanding were eig losses on and gains unrealized holding net adjustments, “Other and investments” “Short-term in certain investments losses on and gains unrealized holding net and investments” addition, In basis. a net-of-tax on instruments, derivative the noncontrolling to attributable income “Comprehensive to attributable (loss) income “Comprehensive and interest” the Consolidated on represented distinctively ITOCHU” are Equity. of Statement si losses) in a full purpose and general setexpenses, of gains Comprehensive financial statements. • 110

Financial Section into ASC Topic 810“Consolidation.” Consolidated Financial Statements. SFAS160 was codified t Consolidated Statements of Income year. inthis The presen in Statements of Income inprevious year to is classified “Net (¥11,415 million) was which represented on Consolidated Sheets year.Balance inthis “Minority Likewise interests” to “Noncontrolling interest” inEquity on Consolidated Consolidated Sheets previous Balance inthe year is classified lin approachthe of including fair the value of any noncontrol to business combinations. Further, SFAS 141(R) “Business Combinations.” year.fiscal SFAS into 141(R)was codified ASC Topic 805 Company and its subsidiaries adopted SFAS 141(R)inthis e “Minority interests” (¥187,944million) was which represent year. fiscal this As aresult of adoption of SFAS 160, The Company and its subsidiaries adopted SFAS 160in will increase interests or consolidated statements. financial Further, purchases to Accordingly, Company the changed its presentation of the regarding noncontrolling interests as acomponent of equity. m after balancesheet the dateoccur but before state financial events are (which as events defined or transactions that SFAS165 requires Company the to recognize subsequent “Subsequent Events (ASC 855)” were issued, respectively. 2010, Accounting Standards Update (“ASU”) No. 2010-09, In May 2009,SFAS 165“Subsequent Events” and in January 4) Subsequent Events maintaining t SFAS 160changes minority interests, previous the designa No. 51,” was issued. Consolidated Financial Statements—an amendment of ARB In 2007,SFAS December 160“Noncontrolling Interests in 3) o from previous the “purchase method” to “acquisition meth was issued. SFAS 141(R)represents achange inapproach In 2007,SFAS December 141(R)“Business Combinations” 2) Business Combinations m According to standard, the authoritative all pronounce- Accepted Accounting Principles.” SFAS into 168itself was codified ASC Topic 105“Generally standard year. from of first half the fiscal this In addition, GAAP. The company and its subsidiaries have adopted this ASC, is which now single authoritative the source of US Financial Statements. ASU No. 2010-09requires evaluated date the disclose through subsequent which events have been that statements financial the are available issued to and be to (“SEC”) filer, to evaluate subsequent events through date the and iswhich not Exchange Securities the Commission issued.to be ion, to noncontrolling interests and adopts an approach of ation guidance of SFAS 160was retroactively applied to the Liabilitiesd between and Stockholders’ Equity on the d” on acquisition focuses the which of control with regard come attributable to noncontrolling the Interest” on the ents previously issued for into USGAAPwere codified the ents are issued) and Consolidated inthe them disclose g interest acquiree inthe inrecognizing The goodwill. in Consolidated Financial Statementsin Consolidated Noncontrolling Interests

longer and

control

recognize the date

are ofdisposal aportionof interests while

the capital any financial

gain

transactions,

loss statements

such

and

the transactions. were an entity, introduces

Company available ------and Servicing.” SFAS into 166itself was codified ASC Topic 860“Transfer into ASC Topic 860“Transfer and Servicing.” Company and its subsidiaries. SFAS 166itself was codified affect Company and its subsidiaries. position financial the and results of operations of the Adoption of ASU No. 2010-03didnot significantly affect 2010-03 from January 2010. The company and its subsidiaries have adopted ASU No. a itself wascodifiedintoASCTopic810“Consolidation.” of operations theCompanyanditssubsidiaries.FAS167 will notsignificantlyaffectthefinancialpositionorresults currently underexamination.However,itisbelievedthat financial statementoftheCompanyanditssubsidiariesis March 31,2011).TheeffectofadoptingSFAS167onthe after November after thebeginningofanentity’sfirstfiscalyearthatbegins SFAS167iseffectiveforfinancialassettransfersoccurring controlling financialinterestinavariableentity. whether theenterprise’svariableinterestorinterestsgiveita enterprise tocontinuouslyperformananalysisdetermine Interpretation No.46(R)”wasissued.SFAS167requiresan In June2009,SFAS167“AmendmentstoFASB 6) Variable Interest Entities n Companythe and its subsidiaries is currently under exami of adoptingeffect SFAS 166on statements financial the of year2009 (that ending is, fiscal March the 31,2011).The first after annual beginning November reporting period 16, assets accounted for SFAS as asale. 166 isfor effective the and liabilities as incurred aresult of atransfer of financial assets obtained (including atransferor’s interest) beneficial a transferor recognize and initially measure at fair value all entity fromspecial-purpose Statement 140and requires that was issued. SFAS 166removes the Financial Assets–an amendment of FASB Statement No. 140” In June 2009,SFAS 166“Accounting for Transfers of 5) Accounting for Transfers of Financial Assets year amounts to conform to current the year’s presentation. reclassificationCertain and changes have made to prior been (4) Reclassification c estimationreserve requirements and by expanding dis the main provisions improve section by them updating the 31,2008.The changesDecember from current GAAPinthe and Oil the Requirements” Gas Reporting issued being on requirements that SECrule, inthe is, “Modernization final of Activities–OilExtractive and Gas (Topic and estimation gas reserve and disclosure requirements of ASU No.2010-03 is for objective the on oil the aligning Estimation and Disclosures” was issued. In January 2010,ASU No. 2010-03“Oil and Gas Reserve Estimation and Reserve Disclosures and Gas 7) Oil SFAS165 The company and its subsidiaries have adopted guid this losure requirements. nce from year. first quarter the of fiscal this In addition, ation. However, it that is believed not it will significantly position financial the or results of operations of the

was

codified 15, 2009(thatis,thefiscalyearending

into

ASC

Topic concept of aqualifying

855,

932) with the “Subsequent

Events.” - - - Financial Section 111 - equity raised 87

2010 business. Company Company

Millions of held U.S. Dollars the the interest,

and and logistics

its equity

previously 4,9922,814 53 30 1,1678,576 13 92 2010 8,061 $ 31,669 340 of 2009, 2009,

(19,567) (210) (40,901) (440) its ¥ 39,071 $ 420 ¥ ¥ 15,867 $ 170 ¥ 20,015 $ 215 held 9, 7,

Millions of Yen to April April C.I. KASEI with in combination added on on previously functionality

its

and rights,

to closed closed

is whose rights) primary business voting of offer offer These added

Notes to Consolidated Financial Statements Financial to Consolidated Notes tender tender rights,

competitiveness

the year for profit a lump-sum as nized this difference The acquisition. of the date at The logistic services. domestic and acquisition The international the improve to intended was ITOCHU LOGISTICS of heighten and resources efficiency management of Company’s the Acquisition of ITOCHU LOGISTICS CORP. Acquisition of ITOCHU LOGISTICS CORP. for offer a tender issued 24, 2009, theOn February Company LOGISTICS”), (“ITOCHU CORP. ITOCHU LOGISTICS on CORP. i-LOGISTICS from changed was name (Corporate company associated equity-method 1, 2010), an January 47.8% (holding on in “gain the amount recorded 31, 2010 and ended March this profit, to regard With in acquisition.” purchase bargain in ($18 million) ¥1,700 million also recorded the Company taxes–deferred.” “income og and business scope of its expanding by business processing to also intends Company The functions. its strengthening business overseas its expand further and improve power earning overseas its bolster to synthetic of in the processing resources efficiency sharing by resins. voting 93.2% of to KASEI C.I. of ownership the Company’s became a subsidiary the Company. of C.I. KASEI and rights, in ITOCHU rights voting 47.1% of additional an acquired LOGISTICS. in C.I. KASEI. rights voting 57.3% of additional an acquired These ITOCHU of ownership raised the Company’s interest, ITOCHU and rights, voting 94.9% of to LOGISTICS a subsidiary the became Company. to LOGISTICS of - - - - - ...... Business Combinations Business ...... ent liabilities. ent assets. ent liabilities...... With investments–net.” on (loss) in “gain ($17 million) operty and equipment, at cost. 3. noncontrolling and interest equity held the previously of administrative and general in “selling, n ($3 million) n Pr Curr Other intangible assets. Other assets. Curr Net assets. Non-curr recognized. was consideration contingent 2) No ote sale of and the manufacture involves ary business whose rights) pri voting 35.9% of (holding company ated a of the falling category within as combination business his assumed liabilities and the assets acquired as well as interest, rolling ues t closing C.I. KASEI’s the of basis calculated on were interest acquisition. of the date on price share held previously its of value the fair remeasuring Upon ¥1,552 mil of a loss recorded the Company interest, equity

¥279 mil- of cost the acquisition recorded Company The lio in cash. paid was 1) All consideration (Note (N Fair value of consideration paid (Note 1) (Note 2). Fair value of consideration paid (Note 1) (Note held equity interest...... Fair value of previously . interest Fair value of noncontrolling . Total and liabilities assumed Fair value of assets acquired 31, ended March the year for combinations business Major follows: as 2010 are KASEI Co., Ltd. Acquisition of C.I. for offer a tender issued 2009, the 20, On February Company asso equity-method an KASEI”), (“C.I. Ltd. Co., C.I. KASEI ci

val fair The combination. this business to related expenses”

m t 805 Topic ASC defined as transaction, by purchase bargain rec has the Company 141 (R)). Accordingly, SFAS (formerly taxes– “income recorded the this Company loss, to regard ($7 million). ¥636 million of deferred” assets acquired of value the fair the above, of a result As of value the fair exceeded of the total assumed liabilities and equity held previously of value the fair paid, consideration by interest noncontrolling of value the fair and interest, assets of value fair The ($45 million). ¥4,148 million diligence, due of the result is assumed liabilities and acquired at the Company to available based the best information on recognizes Company The diligence. the due the time of specialty films agricultural materials, materials, decorative industrial and civil engineering and materials, packaging and to intended was C.I. KASEI of acquisition The materials. resins in the synthetic competitiveness the Company’s raise lio noncon and interest equity held previously paid, consideration of values fair the estimated summarizes table following The 112

Financial Section acquired and liabilities assumed was result the of due dili ¥4,981 million ($54million). The fair value of assets interest, and fair the value of noncontrolling interest by consideration paid, fair the value of previously held equity and liabilities assumed total the for exceeded fair the value of As aresult of above, the fair the value of assetsacquired ¥784 loss,this Company the recorded mi equity interest, Company the recorded aloss of ¥1,912($21 Upon remeasuring fair the value of its previously held acquisition. LOGISTICS’ITOCHU closing share price on date the of noncontrolling interest were on calculated basis of the The fair values of previously the held equity interest and expenses” related to business this combination. lio The Company recorded acquisition the cost of ¥151mil- (N (Note consideration 1)All was paid incash. Fair valueofassetsacquired andliabilitiesassumed Total. Fair valueofnoncontrolling interest. Fair valueofpreviously heldequityinterest...... Fair valueofconsiderationpaid(Note1)2). t The following table summarizes estimated the fair values of consideration paid, previously held equity interest and noncon-

category of abargain purchase by transaction, as defined recognizes this Company at of time the due the diligence. The Company g rolling interest as well as assetsacquired the and liabilities assumed at date the of acquisition. onence, information best the based available to the ote 2)No contingent consideration was recognized. Pr Curr Curr Other assets. Other intangibleassets. Net assets. Non-curr n ($2million) in“selling, general and administrative llion) in“gain (loss) on investments–net.” With regard to operty andequipment,atcost.

...... million ent assets. ent liabilities. ent liabilities......

($8 ...... business combination as within falling the ......

million)......

“income ......

taxes–deferred” ......

of - basis. attractive on products astable and and ongoing services to cooperate, expanding business the to provide evenmore Going forward, Company the and JAVA HOLDINGS plan HOLDINGS of Company. the asubsidiary became lio t increased to 65.0%as result the of JAVA HOLDINGS’ reduc Company’s13, 2009,the percentage of voting rights and of sale women’s business primary whose involves manufacture design, the accounted for as an equity-method associated company in JAVA HOLDINGS CO., LTD. (“JAVA HOLDINGS”), The Company has previously held 35.0%of voting rights Acquisition ofJAVA HOLDINGSCO.,LTD. regard to profit, this Company the recorded also ¥2,042mil amount in“gain on bargain purchase inacquisition.” With profit for year the March ended 31,2010and recorded the Company has difference this recognized as alump-sum ASC Topic 805(formerly SFAS 141(R)).Accordingly, the ion number inthe of its shares outstanding, and JAVA n ($22million) in“income taxes–deferred.” and children’s clothing. OnNovember Millions ofYen 1,6 $110 ¥10,264 1,1 $116 ¥10,810 ¥ 1,9 $170 ¥15,791 209129 12,019 657 (71) (53) (6,587) (4,975) 2010 4,936 ,5 $ 5,055 3,802 1,268 819 U.S. Dollars Millions of 2010 53 54 41 14 9 - - Financial Section 113 - - 36 60 99 2010 Millions of U.S. Dollars 3,364 5,626 9,207 2010 (9,210) (99) 12,513 134 15,692 169 12,094 130 (14,898) (160) ¥ 24,607 $ 264 ¥ 15,400¥ 24,607 $ 165 $ 264 ¥ 11,520 $ 124 Millions of Yen client substantial Leilian’s leverage to Notes to Consolidated Financial Statements Financial to Consolidated Notes its enhance to plans the ITOCHU Group forward, Going the same At value. corporate Leilian’s enhancing thereby ls, China. on ering OEM apparel own its expertise invigorate to management and regions in Japanese involvement its increase business, cen markets, overseas into business its extend and markets ITOCHUtime, plans Acquisition of Leilian Co., Ltd. in shares acquired the 26, 2010, Company On January the is whose primary business (“Leilian”), Ltd. Leilian Co., this acquisition, to regard With apparel. women’s sale of 61.1% of of ownership in the Company’s which resulted Leilian rights, became a subsidiary the of voting Leilian’s Company. efficiency distribution and capabilities procurement product materi high-value-added garment a global offer to on basis a the this profit, to regard 31, 2010. With ended March in ($9 million) million ¥810 also recorded Company taxes–deferred.” “income t ...... - - - - - year ...... ent liabilities. ent liabilities. ent assets...... operty and equipment, at cost. operty and equipment, and profit a lump-sum recognized as was amount n). This Net assets. Goodwill. Non-curr . Other intangible assets Other assets. Curr Curr Pr the assets and interest, noncontrolling the acquisition”), following interest equity held previously of value (“fair g rights the noncontrolling of value the fair and g the acquisition taking basis, a comprehensive determined on were terest flow cash the discounted using conducted valuation te a corpo party a third and by diligence due ucted through the and the acquisition following interest equity held usly ra a financial method by multiple price the share method and the previ of between value the fair difference The advisor. o the date on interest equity held carrying previously of value ($21 mil ¥1,975 million was control of the acquisition of acquisition. of the date at assumed liabilities and acquired

. Total

in consideration of goodwill The a result recognized as was apparel be OEM with achieved might that the synergies of tax been purposes has for and deductible not is It products. segment. operating the Textile to assigned ¥51 million of cost the acquisition recorded Company The expenses” administrative and general in “selling, ($1 million) combination. this business to related follow interest equity held the previously of value fair The . interest Fair value of noncontrolling liabilities assumed and Fair value of assets acquired recognized. was consideration contingent No (Note) Fair value of previously held equity interest following the acquisition. interest held equity Fair value of previously in vot- the increase following interest equity held the previously of values fair the estimated summarizes table following The in . Total in con asset conditions, financial and of the status account into d the for investments–net” on (loss) in “gain recorded lio 114

Financial Section Net income. acquired and The following table summarizes estimated the fair values of consideration paid, noncontrolling interest, and assets the ci andflow method share the price multiple by method afinan corporate valuation conducted using discounted the cash t intotaking account status the of and financial assetcondi Net incomeattributabletoITOCHU. Total revenue. Net incomeattributabletoITOCHU. Net income. Total revenue. m The following tables indicate operating performance for year the March ended 31,2010,as included consolidated inthe state ( t The consideration paid and fair the value of noncon the related to business this combination. ($1 million) in“selling, general and administrative expenses” The Company recorded acquisition the cost of ¥99million (N (Note consideration 1)All was paid incash. Fair valueofassetsacquired andliabilitiesassumed Total. Fair valueofnoncontrolling interest. Fair valueofconsiderationpaid(Note1)2). from respective their dates of acquisition.

ions conducted through due diligence by and athird party a rolling interest were on determined acomprehensive basis, Results of operations from respective the dates of acquisition) advisor.al ents of income, of C.I.KASEI Co., Ltd., LOGISTICS ITOCHU CORP., JAVA HOLDINGS CO., LTD., and Co., Leilian Ltd., ote 2)No contingent consideration was recognized. Pr Curr Net assets. Non-curr Curr Other assets. Other intangibleassets. operty andequipment,atcost...... ent assets. ent liabilities. ent liabilities...... liabilities assumed at date the of acquisition...... C.I. KASEI C.I. KASEI 7,3 4,1 ¥21,012 ¥41,813 ¥72,630 Co., Ltd. Co., Ltd. $781 411 364 4 4 - - - LOGISTICS CORP. LOGISTICS CORP. ITOCHU ITOCHU lio regard to profit, this Company the recorded also ¥2,004mil amount in“gain on bargain purchase inacquisition.” With i Company has difference this recognized as alump-sum prof ASC Topic 805(formerly SFAS 141(R)).Accordingly, the category of abargain purchase by transaction, as defined recognizes business this combination as within falling the lin value of consideration paid acquired and liabilities assumed total the of exceeded fair the As above the table indicates, fair the value of assets t for year the March ended 31,2010and recorded the $449 n ($22million) in“income taxes–deferred.” g interest by ¥4,886million ($52million). The Company 160 154 2 2 Millions ofU.S.Dollars JAVA HOLDINGS JAVA HOLDINGS Millions ofYen O,LD ela o,Ld Total LeilianCo.,Ltd. CO., LTD. O,LD ela o,Ld Total LeilianCo.,Ltd. CO., LTD. $226 901 585 10 6 and fair the value of noncontrol Millions ofYen —¥135,455 — — — — — — 2,2 $241 ¥22,421 1,5 $206 ¥19,157 ¥ 2,4 $258 ¥24,043 556 (60) (96) (5,576) (8,924) 2010 ,5 101 9,356 ,0 $105 9,801 8,096 1,134 6,892 U.S. Dollars Millions of $1,456 1,472 1,103 2010 16 12 87 12 74 - - - - Financial Section 115 - - - - 1,511 1,383 2010 2009 61,809 28,679 (38,017) 82,987 petroleum $37,439 Millions of (182,640) U.S. Dollars ¥ ¥ 164,611 ¥ 265,627 ¥(144,623) Millions of Yen the investments–

2009 (loss) 163,900 175,747

centralized ¥3,651,168 “gain

has in

Millions of Yen 2010 128,683 140,585 financial The acquisition. of the date included ¥3,483,366

reorganization of asset profiles financial and including million

Notes to Consolidated Financial Statements Financial to Consolidated Notes business ¥5,154

by platforms earnings long-term and medium the Group’s aggressively. even more ent allotment an received the Company a result, As al advisors. period years. ion five of it as in ITOCHU ENEX, where businesses related product this By companies. Group dispersed across previously was strength and establish to aims the Company reorganization, m determined based was on shares allotted of number The factors various Business Trade Products ITOCHU the ENEX, Petroleum due through researched which were the IPCJ Business and professionals independent by conducted processes diligence techniques valuation various using analyses multifaceted and flow method cash method, discounted the multiple as (such finan by method) price conducted share average market and This en those the efficiency businesses of strength increasing and invest and while transactions trading undertakingoverseas of stock common of shares 25,148,809 of issuance and ¥14,385 million. of value ITOCHU a fair with ENEX, ended the year for income of statement consolidated The of operations of the results 31, 2009 includes March ITOCHU from ENEX between (i) the decrease the in difference also include results and Business Trade Products the Petroleum assets of the net which ITOCHU to ENEX succeeded and the IPCJ Business in a which resulted shares, the allotted of value (ii) the fair gain ¥2,113 million. of taxes–deferred the income and net,” was ¥10,528 million the acquisition, with connection In The amortization. to assets subject intangible to assigned of primarily consist amortization to assets subject intangible amortiza an with ¥7,895 million of relationships customer t ci ...... 10,528 - - - and import ...... acquisition. of the date at assumed liabilities and assets acquired of values fair the estimated summarizes table following the a result, as and acquisition, a reverse constituted tion Fair value of liabilities assumed. . Fair value of assets acquired supplying tankers, operating and chartering as esses (such ITOCHU the reorganization, of a result subsidiary As ated ITOCHU trans ENEX. The from stock common of f shares Net assets. 141 (R)). SFAS 805 (formerly Topic ASC with in accordance ¥40,657 million of interest noncontrolling assets include Net (Note) Investments and other non-current assets. Investments and other non-current Current assets. Current and equipment, at cost. Property Goodwill and other intangible assets, less accumulated amortization. ITOCHU ENEX acquired On October 1, 2008, the Company acquisition a reverse by ENEX”) (“ITOCHU LTD. CO., logistics and trading petroleum of a reorganization through Japan ITOCHU Petroleum the Company, among businesses ITOCHU ENEX. ITOCHU and mainly ENEX is Ltd. high- and products petroleum in the wholesale of engaged equity- an as for accounted previously was and gas pressure the voting 39.1% of (holding company method associated a consoli now is the transaction to subsequent and shares), d Net income attributable to ITOCHU. Net income attributable 31, ended March the year for combinations business Major follows: as 2009 are ENEX CO., LTD. Acquisition of ITOCHU . revenue Total information) forma (Pro C.I. involving combinations if the business as operations, of results forma pro the unaudited presents table following The 1, occurred April had on Ltd., Leilian Co., and LTD., CO., HOLDINGS JAVA CORP., ITOCHU LOGISTICS Ltd., Co., KASEI 2008, respectively. 2009 and Net income. Current liabilities. Current liabilities. Non-current ITOCHU of shares the voting of 52.2% owned Company October 1, 2008. ENEX on n and oil gas (kerosene, export, products petroleum sale of the by conducted been which had previously others) Products Petroleum (“the Division Energy Trade Company’s logistics busi products the petroleum and Business”) Trade Japan-based ENEX succeeded the domestic, ac trading tanks and storage petroleum operating fuels, marine the by beenwhich ), had oil conducted lubricating (“the Ltd Japan ITOCHU Petroleum subsidiary, Company’s IPCJ Business”). the Petroleum of the transfer for consideration As the the IPCJ Business, and Business Trade Products shares the voting 13.1% of additional an acquired Company issuance and allotment an receiving ITOCHU ENEX, by of o The 116

Financial Section t The purchase on price various was based determined fac overseas markets centered on China. businesses related to domestic both production areas and invigorate OEM apparel businesses and dramatically grow The following table summarizes estimated the fair values of assetsacquired and liabilities assumed at date the of acquisition. Current liabilities. Current liabilities. researched through due diligence processes conducted by Net assets. Non-current liabilities. Investments andothernon-current assets. Goodwill andotherintangibleassets,lessaccumulatedamortization. Property andequipment,atcost. Current assets. mize million. By acquiring its interest, Company the aims to maxi power IPP inthe business. The purchase price was ¥22,807 to exhibitexpected steady growth demand inthe for electric Company’sthe assetportfolio inNorth is which America, voting shares of Chesapeake. Chesapeake, LLC, of Company the which owns 100%of the (“Chesapeake”), and established subsidiary, anew Tyr Station, New Church, State of Virginia, United the States entirethe interests of Commonwealth Chesapeake Power Tyrits subsidiary Energy, Inc. (Fiscal year end: December), Company OnFebruary 13,2008,the acquired, through replacements of assets. asset portfolio through investments, new acquisitions and Asia,America, and Near the Middle east, and establishes its The Company engages inIPP businesses, mainly inNorth Station Acquisition ofCommonwealthChesapeakePower (Note) Net assetsinclude noncontrolling interest of ¥604million inaccordance with ASC Topic 805(formerly SFAS 141(R)). Net assets. Non-current liabilities. Investments andothernon-current assets. Goodwill andotherintangibleassets,lessaccumulatedamortization. Property andequipment,atcost. Current assets. c mainly engaged of insales garment accessories. The pur voting shares of SANKEICo., Ltd. (“SANKEI”), is which Company 2,2008,the On October acquired 90.5%of the Acquisition ofSANKEICo.,Ltd. of Group. the expertise The following table summarizes estimated the fair values of assetsacquired and liabilities assumed at date the of acquisition. ors, including SANKEI’s and financial assetprofile pricehase was ¥10,556million. The Company aims to Fair valueofliabilitiesassumed. Fair valueofassetsacquired. Fair valueofliabilitiesassumed. Fair valueofassetsacquired. value the of invested the assetsthrough utilizing the ...... This acquisition is one of part ...... - - - ...... 1,489 ...... 9,112 ...... of acquisition. The consolidated statements financial for by advisor. afinancial (using mainly discounted the conducted cash flowmethod) independent professionals and athorough valuation analysis t from date the of acquisition. In connection with acquisi the March 31,2009include results the of operations of SANKEI ues The following table summarizes estimated the fair val assigned to operating Machinery the segment. is notgoodwill deductible and for has purposes been tax acquisition,the ¥1,489million was The assigned to goodwill. Chesapeake from date the of acquisition. In connection with March 31,2009include results the of operations of The consolidated by advisor. afinancial (mainly using discounted the conducted cash flowmethod) independent professionals and athorough valuation analysis researched through due diligence processes conducted by factors, including Chesapeake’s and financial assetprofile, as The purchase on price various was based determined Textilethe operating segment. is not deductible and for assigned to has purposes been tax ion, ¥8,915million was The assigned togoodwill goodwill. of assetsacquired and liabilities assumed at date the statements financial for year the ended yearthe ended Millions ofYen Millions ofYen ¥ 11,160 ¥(41,647) ¥ 54,098 ¥ 26,150 ¥ ¥22,807 ¥25,953 ¥ (42,938)

23,133 11,352

(1,291) (3,146) (3,137) 2009 2009 7,484

970 361 - (9) - Financial Section 117 0 45 75 $2,678 21,836 ¥190,544 ¥249,145 4 235 — — — 79 2,678 $79 397 Gross Gross Gross Gross Gross Losses Value Fair Losses Fair Value Losses Fair Value ¥7,421 Holding Holding Holding ¥12,931 Unrealized Unrealized Unrealized Unrealized Unrealized 2010 2009 2010 1 — 301 9,201 — — — 54 Millions of Yen Millions of Yen $699 Millions of U.S. Dollars Gross Gross Gross Gross Gross Gains Gains Gains Holding Holding Holding ¥31,349 ¥65,009 Unrealized Unrealized Unrealized Unrealized Unrealized 0 75 45 238 Notes to Consolidated Financial Statements Financial to Consolidated Notes 9,502 2,058 699 Cost Cost Cost $2,058 22,179 $1,820 $698 $75 $2,443 191,512 65,009 7,421 249,100 ¥172,126 ¥191,557 ¥162,549 ¥31,349 ¥12,630 ¥181,268 ¥169,333 ¥64,955 ¥7,024 ¥227,264 ...... nvestments Debt and Marketable Equity Securities Debt and Marketable Investments Securities and Marketable ...... 172,051 31,349 12,931 190,469 ...... 4. Debt securities. Debt securities. Debt securities. Equity securities. Debt securities. Equity securities. Debt securities. Equity securities. Debt securities. Held-to-maturity: Subtotal. Held-to-maturity: Subtotal. . Total Available-for-sale: . Total Available-for-sale: . Total Available-for-sale: Debt and Marketable Equity Securities Equity Marketable and Debt “trading as value fair securities determinable equity readily with marketable and classify debt subsidiaries its and Company The gross gains, unrealized holding gross cost, The securities.” “held-to-maturity and securities” “available-for-sale and, securities” security March type of securities as major by held-to-maturity and available-for-sale of value fair losses and unrealized holding follows. as 2009 were 31, 2010 and

Subtotal. Held-to-maturity: 118

Financial Section continuous loss unrealized position as of March 31,2010were as follows: with gross holding unrealized Securities and losses length the of that time such have individual ina securities been in listed above,to securities the Company the and its subsidiar individual and severity duration of impairment the of these Total. Available-for-sale: Total. Available-for-sale: m ranged from 0.3%to 29.9%and duration the of impair the market prices. of The severity decline infair value below cost industries, were due principally to general the decline inthe consist which securities, primarily of customers of various its available-for-sale portfolio. on The losses unrealized these of 94issuers securities the with an holding unrealized loss in At March Company 31,2010,the and its subsidiaries held lio balance sheets were ¥13,598($146million) and ¥5,991mil included incash and cash equivalents consolidated inthe amounts The carrying of available-for-sale debt securities marketable declines inwhich infair value securities below respectively. The impairment of losses available-for-sale the yearsthe March ended 31,2010and 2009that relates to trad respectively. The portionof net trading gains and for losses million) and ¥9,121million as of March 31,2010and 2009, ies es of held at still Marchg securities 31,2010and 2009were loss ent was less than 9months. As aresult of evaluation of the Debt securities. Equity securities. Debt securities. Equity securities. n as of March 31,2010and 2009,respectively. In addition at carried heldfair trading value securities of ¥6,701($72 ¥175million ($2million) and ¥3,029million, ...... 5,8 704¥ —¥826¥7,024 ¥58,286 ¥— ¥— ¥7,024 ¥58,286 ¥61,688 Fair Value Fair Value esta wlemnh Twelve monthsorlonger Less thantwelvemonths esta wlemnh Twelve monthsorlonger Less thantwelvemonths 3,402 66$5$ $— $— $75 $626 $663 37 - - - - - Unrealized Unrealized Holding Holding ¥7,421 ossFairValue Losses ossFairValue Losses Gross Gross 397 $79 s of its investment inconnection busi with certain securities its subsidiaries gains recognized and on losses exchange the Exchange of Cost-Method Investments”), Company the and “Investments–Other” (formerly EITF91-5“Nonmonetary respectively. In accordance with ASC Topic 325 lio and prospects the securities of issuer, the Company the and than-temporarily impaired at March 31,2010. subsidiaries didnot consider investments these other- to be for aforecasted recovery of fair value, Company the and its investmentsthese for areasonable of sufficient time period Companythe and its subsidiaries’ intent and ability to hold would recover on nearthat inthe term.Based evaluation and i lio are included in“Gain (loss) on investments–net” con in the Marchended 31,2010,2009and 2008,respectively, which n years March ended 31,2010,2009and 2008were ¥7,051mil amortizedthe cost basis are other than temporary for the ts subsidiaries concluded fair the value of securities these olidated statements of income. ess combinations resulting of inlosses ¥46million ($0mil 4 n ($76million), ¥41,661million and ¥16,078million, n), ¥2million and gains of Millions ofU.S.Dollars $— ¥— — — Millions ofYen 2010 2010 Unrealized Unrealized Holding Holding ossFairValue Losses ossFairValue Losses Gross Gross $— ¥— — — ¥1,516million for years the ¥61,688 3,402 $663 66$75 $626 37 Total Total Unrealized Unrealized Holding Holding ¥7,421 Losses Losses Gross Gross $79 397 4 - - - - Financial Section 119 - - 0 0 0 — — 247 47 12 26 9,842 2010 $235 $

$ $10,089 Millions of U.S. Dollars ¥134,874 million 0 00 $ — 25 2009 Millions of U.S. Dollars Millions of U.S. $238 $ 12,614 the Company by held ¥741,448 ¥754,062 shares

—— — 30 Millions of Yen 15 $ 45 2,389 voting 2010

22,958 ¥21,836 ¥ ¥915,731 ¥938,689 are

— — 45 30 Millions of Yen 15 ¥

Notes to Consolidated Financial Statements Financial to Consolidated Notes 1,063 1,063 12 4,744 4,362 51 2,350 Cost Fair Value Cost Fair Value

¥ ¥22,179 ¥ ¥14,022 ¥14,022 $150 $150 parenthetically

method cost investments of carrying The ents. amounts value effect the fair adverse on a significant have may that m and ($1,115 million) ¥103,741 million were 2009, respectively. 31, 2010 and March of as carrying aggregate an with investments Additionally, ¥133,356 and ($1,090 million) ¥101,431 million of amount reflect to the in order value fair at estimated not were million the investments of in the value decline other-than-temporary 2009, respectively. 31, 2010 and March of as Japan (31.5%), Brazil Ltd. Co., Mart (50.0%), Family Inc. (CAYMAN HSIN TING (47.7%) and Corporation Ore Iron percentages (20.0%). The CORP. HOLDING ISLANDS) shown 31, 2010. March at subsidiaries its and those at values fair the corresponding of estimation The cost-method of value the fair as practicable, not was dates not are subsidiaries its and the Company by held investments date. balance sheet each at determinable readily in circumstanc changes or the identified events case of In es the fair estimate would the Company the investment, of reflect to losses, recognize if any, and investments of value the invest of in the value decline the other-than-temporary - - ...... ough ten years. ough ten years. ough five years...... 2009, respectively. 2010 and ...... 5. investments in and Advances to Associated Companies otal. 31, March of n as respectively. ¥13 million, and ¥362 million n ($4 million), Due after five years thr Due within one year. Due after one year through five years. five Due after one year through Due after five years thr Due after ten years. Due after ten years. Due within one year. Due after one year thr T Held-to-maturity: lio Investments in associated companies. in investments for account subsidiaries its and Company The 20% to owned companies (generally companies associated equity-method Significant the equity-method. 50%) by Leasing Corporation Century Tokyo include investees Steel (32.0%), Marubeni-Itochu Corporation (20.0%), Orient and in non-traded investments include Other investments deposits long-term and suppliers and customers unaffiliated ¥241,594 mil and ¥215,233 ($2,313 million) to amounting Investments Other Than Debt Debt Than Other Investments Securities Equity Marketable and . Total available- sales losses of on and realized gains gross The 31, 2010, 2009 ended March the years securities for for-sale ($132 million), ¥12,302 million of gains 2008 were and ¥391 mil losses of and ¥13,661 million and ¥6,513 million lio . Total Available-for-sale: 31, 2010 were March of as held-to-maturity and securities debt classified available-for-sale as of maturities contractual The follows: as follows: as 2009 were 31, 2010 and March of as companies associated to advances in and Investments Advances to associated companies.. securities were available-for-sale sales of from proceeds The and ¥15,108 million ($161 million), ¥14,966 million 31, 2010, 2009 ended March the years for ¥19,779 million 2008, respectively. and 120

Financial Section ci Stockholders’ equity. Long-term debtandothers. Current liabilities. ¥229,833 million ($2,470million) and ¥199,229million at assets of such equity-method associated companies were Company and its subsidiaries’ equity underlying inthe net investments inequity-method associated companies and the amounts The differences carrying the between of the March 31,2010and 2009,respectively. ¥255,177 million ($2,743million) and ¥214,192million at Corresponding aggregate quoted market values were ¥290,088 million at March 31,2010and 2009,respectively. amountscarrying of ¥289,295million ($3,109 Purchases. Total tradingtransactions . March 31,2010,2009and 2008were summarized as follows: Total trading transactions and purchases by Company the and its subsidiaries with associated companies for years the ended Net incomeattributabletoshareholders ofassociatedcompanies. Net income. Gross tradingprofit. Total tradingtransactions. Noncontrolling interest. Non-current assets,principallyproperty andequipment. p ended Dividends received from associated companies for years the Current assets. as follows: Summarized information financial of inrespect associated companies for years the March ended 31,2010,2009and 2008was The million), ¥19,006million and ¥14,794million, respectively. and be and Investments common inthe stock of equity-method asso operations anies ated companies include marketable with equity securities Total liabilitiesandstockholders’equity. Total assets.

diluted

accordingly its

March

Company which subsidiaries’ ......

of ......

...... possible 31, the issue ......

......

this

2010, Company and

...... convertible

...... shares

may

its conversions

...... 2009

...... subsidiaries

have

...... of

and and

reported

a preference

its 2008 material

subsidiaries.

invest those

were

profits ......

effect

stocks.

¥19,475

preference in

and associated

million) and The

losses

the million

......

Company stocks, results

might

com

($210

- of - ...... si m Marchended 31,2010.The Company impair recognized Yoshinoya Holdings Co., Ltd., respectively, during year the equity-method investments inOrient Corporation and million ($128million) and ¥4,020million ($43million) on The Company impairment recognized of losses ¥11,928 primarily attributed to land and intangible assets. and The equity-method goodwill. of investments the inequity-method associated companies included in“Equity in earnings of (losses) associated compa decline. The above-mentioned impairment were losses resultthe of judgment the of an other-than-temporary amount and estimated fair value as an impairment loss, as Company difference the recognized between market prices of equity-method the investments, the analysis prepared by appraisers third party and quoted the March 31,2009.Considering discounted the cash flow Holdings Co., Ltd., respectively, during year the ended investmentsmethod inOrient Corporation and Yoshinoya March 31,2010and 2009,respectively. The differences con n ies” st of fair certain value adjustments (net of taxes) at time the ent of losses ¥10,752million and ¥2,628million on equity-

¥6,786,973 the ¥159,038 ¥719,937 1,330,031 193,366 193,817

2010 2010 accompanying Millions ofYen Millions ofYen ¥9,068,590 ¥9,068,590 ¥4,058,924 74821¥7,724,465 ¥7,478,281 ¥4,726,820 2662¥198,681 ¥806,445 ¥296,652 ¥652,515 4,341,770 2,881,365 2,039,835 ,5,4 1,242,750 1,356,840 5,6 412,725 413,554 156,367 156,651 2010 2009 2009

88,466 consolidated Millions ofYen fair value adjustments are ¥7,243,106 ¥7,243,106 ¥3,209,734 ¥4,395,827 2,847,279 2,523,645 1,422,922

statements 2009 2008 2008 86,805 carrying the

of U.S. Dollars U.S. Dollars U.S. Dollars Millions of Millions of Millions of $97,470 $97,470 $43,626 $72,947 $50,804

income. 30,969 46,666 21,924 $1,709 $7,738 14,295 2010 2010 2010 2,078 2,083 951 - - - Financial Section 121 - 2 6 7 13 76 (87) — — — 80 $ 0 $95 $781 $804 $644 $802 $750 2010 2010 2010 2010 Millions of Millions of Millions of Millions of U.S. Dollars U.S. Dollars U.S. Dollars U.S. Dollars follows:

— 62 56 as 56

127 2008 2008 2008 2009 (3,040) ¥5,932 ¥75,458 ¥69,755 ¥68,948 ¥59,704 were

7 Millions of Yen segment 936 684

105 ¥ 3,741 1,3371,2452,706 110 886 4,635 2009 2009 2009 2010 36,222 16,742 5,977 (14,858) (15,797) ¥71,861 ¥74,573 ¥59,876 ¥43,242 ¥ ¥68,948 ¥81,808 ¥69,800 Millions of Yen Millions of Yen Millions of Yen operating

by — — —

38 557 625 172 Notes to Consolidated Financial Statements Financial to Consolidated Notes impair The 31, 2008. ended March the year 1,153 7,443 7,045 2010 2010 2010 (8,062) ¥8,835 ¥ 2008 ¥72,629 ¥74,709 ¥74,573

and

earnings of the deterioration to due generally were ents 2009 to due generally were impairments The segment. operating a expected and flows. For earnings cash of the deterioration the Entrada losses on the impairment regarding discussion, of Mexico of Gulf in the U.S. Project Gas Natural Oil and Loss Relating 24 “Regarding Note to refer ¥29,207 million, Gulf in the U.S. Project Gas Natural Oil and the Entrada to Mexico.” of in the courses golf primarily assets were impaired The & Logistics Services Insurance operating Realty, Finance, for segment courses. the golf of determined based assets were long-lived of values fair The appraisals. independent flows or cash discounted on m

...... 2010,

31,

March

...... ended

...... years

in the equipment and the

...... for

...... recognized

losses

...... adjustments. translation and subsidiaries consolidated of in the number changes the effects to of due primarily consisted “Other” ...... 7. impairment of Long-lived Assets 6. Receivables Allowance for Doubtful Loans and impaired . Total follows: as 2009 were 31, 2010 and March of as loans those to impaired related receivables doubtful for nce follows: Energy, Metals & Minerals. Energy, . & General Merchandise Products Chemicals, Forest Food. Insurance & Logistics Services. Finance, Realty, Other, Adjustments & Eliminations. Other, . Textile golf and segment operating & Minerals Metals Energy, & Logistics Services Insurance Realty, in the Finance, courses Impairment Machinery. & Electronics...... Aerospace ICT, recognized impairment subsidiaries its and Company The ($95 million), ¥8,835 million assets of long-lived losses on ended the years for ¥5,932 million and ¥43,242 million which were 2008, respectively, 31, 2010, 2009 and March equipment–net” and property on (loss) in “Gain included income. of statements in the consolidated in the rights Mineral primarily assets were impaired The the year for segment operating & Minerals Metals Energy, due generally were impairments 31, 2010. The ended March expected and flows. earnings cash of the deterioration to 31, 2009 were ended March the year assets for impaired The Machinery rights, Mineral primarily Average amounts of impaired loans. amounts of impaired Average 2008 were 31, 2010, 2009 and ended March the years for loans the impaired recognized on income interest of amounts The significant. not . for doubtful receivables Provision . Charge-offs loans. Impaired loans. to those impaired related Allowance for doubtful receivables or collateral secured either by is receivables, doubtful for the allowance of net loans, in the impaired investment recorded The believed be to collectible. follows: as 2008 were 31, 2010, 2009 and ended March the years during loans impaired of amounts average The Other. Balance at end of year. Note: the allow- 114) and SFAS (formerly 310 “Receivables” Topic ASC the scope within of loans impaired of carrying The amounts a Balance at beginning of year. Balance at beginning of

as 2008 was 31, 2010, 2009 and ended March the years for receivables doubtful for in the allowance the changes of analysis An 122

Financial Section duringlosses year the March31, ended 2009mainly consist and software of ¥276million ($3million). The impairment lio 2010 mainly consisted of customer relationships of ¥391mil The impairment during losses million, respectively. were ¥1,515million ($16million), ¥1,750million and ¥1,977 Trademarks. Trade payablesandothers. Long-term debt. Short-term debt. Collateral was pledged following the to secure obligations at March 31,2010and 2009: Property andequipment,atcost,lessaccumulateddepreciation. t Impairment of losses intangible assetssubject to amortiza ended trademarks and software that were acquired during year the million). The weighted average amortization for period million ($200million) and software of ¥17,544million ($189 million), and consisted primarily of trademarks of ¥18,626 yearthe March ended 31, 2010 totaled ¥42,406million ($456 Intangible assetssubject to amortization acquired during Other. Software. Intangible assetssubject to amortization at March 31,2010and 2009comprised following: the cei In addition, acceptances payable were by re- secured trust Investments andnon-current receivables. Inventories. Trade receivables. Marketable securities. Cash andcashequivalentstimedeposits. The following assetswere pledged as collateral at March 31,2010and 2009: Both amount of such pledged assetsis not determinable. additional collateral or guarantors) with furnished be will upon request the of lender, the collateral or guarantors (or pursuant to agreements customarily which provide that, o ion during years the March ended 31,2010,2009and 2008 off. large the Because volume of import transactions, the Total. Total. T n ($4million), trademarks of ¥308million ($3million) pts on merchandise and proceeds the from there sales the otal. goodwillandOtherIntangibleAssets 9. pledgedAssets 8......

...... March

short-term ......

31, ......

2010

and ......

were long-term ......

years

yearthe March31, ended loans

and ......

are

5 ......

generally years, Gross Carrying 1608¥(67,717) ¥166,018 ¥

Amount respectively. 286¥(12,575) 52,846 349(16,400) (38,742) 43,419 69,753

made 2010 ...... - - - - Accumulated Amortization m lio 2008 mainly consisted of customer contracts of ¥1,034mil impairment of losses intangible assetssubject to amortiza warehousing, retail and financing of motor vehicles. The million, respectively. ¥16,782 million ($180million), ¥13,258million and ¥11,446 during years the March ended 31,2010,2009and 2008were The aggregate amortization for expenses intangible assets e lio become due at stated maturity or earlier. arising out of contingent obligations) to that bank the has s t m lender respect indebtedness to such lender. Several loans as collateral or otherwise, for present and future Millions ofYen ion were included in“Gain (loss) on property and equip et cash deposited with it against any debt (including debt d of trademarks of ¥794million and software of ¥575mil ent–net” in ents provide also that lending the has bank right the to off n. The impairment during losses year the March31, ended n, held by MCL Group Limited (U.K.), operates which

may

Gross Carrying to 1474¥(57,068) ¥134,744 ¥

Amount the 030(11,296) (33,052) 40,390 56,758 756¥(12,720) 37,596

treat

consolidatedthe statements of income. loans

any 2009

under

collateral, Accumulated Amortization ¥32,916 ¥11,238 ¥93,872 ¥ 17,508 34,412 11,719 26,752 20,042 2010 2010 4,170

certain 947 Millions ofYen Millions ofYen —

whether

circumstances Gross Carrying ¥47,559 ¥96,437 ¥17,199 ¥ of loan bank the agree Amount 175$(728) $1,785 28,495 27,881 21,592 40,298 $ Millions ofU.S.Dollars 2009 2009 2,479 5,384

furnished 535 58$(135) 568 6 (177) (416) 467 750 133 2010

Millions ofU.S. and Accumulated Amortization for specific U.S. Dollars Millions of $ $1,009 Dollars that 2010 2010 $354 $121 126 288 215 370 188 10 — 45

- the - - - - - Financial Section 123 - - 8 - -

742 941

Total Total

(5,748) Total Total $1,075 77,710 87,560

¥100,057

(11)

$ 50 Other Other (1,244) (1,031) ¥ 4,686 0 2 (42) $ 19 Realty, Realty, Services Finance, Realty, Realty, Insurance Services Finance, ¥1,785 & Logistics Insurance & Logistics 5 —

490

Food mil ¥455 of trademarks of consisted $225 Food ¥20,924 1 85 $ 91 Notes to Consolidated Financial Statements Financial to Consolidated Notes Forest Forest Forest Forest (3,048) General General ¥ 8,501 Products & Products Products & Products Chemicals, Chemicals, Merchandise Merchandise Millions of Yen 0 Millions of U.S. Dollars 13 respectively. ¥38 million, and ¥853 million n ($4 million), in included were all years losses for impairment n. The ¥510 million lease land of unlimited an of consisted ainly (254) income. of statements ated $ 12 the during amortization to subject not which are ul lives Energy, Energy, not useful which are indefinite assets with lives Intangible ended the year during acquired amortization to subject and ($6 million), ¥520 million 31, 2010, totaled March m lio ¥359 mil 2008 were 2010, 2009 and endedMarch31, years ended March31, the year losses during impairment The ($3 ¥309 million of trademarks of consisted 2010 mainly ended the year losses during impairment The million). mainly 2009 March31, lio in the consoli equipment–net” and property on (loss) “Gain d ($5 million). use indefinite assets with intangible losses of Impairment f Minerals Metals & Energy, Energy, ¥1,132 Minerals Metals & — — — $394 ICT, ICT, ICT, ICT, 8 15 15 ¥36,609 Electronics Electronics $ $38 Aerospace & Aerospace Aerospace & Aerospace 2010 Millions of U.S. Dollars 35 69 154 119 (6)

$176

(550) $ 35 (1,211) Machinery ¥ 3,208 Machinery 906 1,460 2009 ¥1,079 ¥3,445 — (1,233) — — — — — (696) (1,929) — ¥ 5,053 ¥35,978 ¥1,020 ¥ 8,507 ¥20,434 ¥1,825 ¥ 4,893 ¥ — (13) — — — — — (8) (21) 51 96 $ 54 $394 $ 12 $ 90 $220 $ 19 $ 56 $ 19

134 — — — — — — 13 147 $249 1,733 8,966 ¥ 4,991 ¥36,609 ¥1,119 ¥ 8,416 ¥20,434 ¥1,783 ¥ 5,242 ¥ Textile Textile Textile Textile 12,513 — — — — — — 1,171 13,684

¥23,212 3,300 Millions of Yen 649 1,424 1,430 2010 ¥ ¥3,548 ...... $ ...... ¥ ...... ¥ ...... —...... (340) — — — — — — (340) ...... 8,915 1,489...... 631 353 2,957 — — 1,593 15,938 ...... Total follows: as is years five the next le assets for . Acquired Impairment losses. . Acquired Impairment losses. combinations. business from resulting adjustments value certain disposals fair and adjustments, translation of consists primarily changes” “Other Note: Balance at March 31, 2009. Balance at March Other changes (Note). 31, 2010. Balance at March indefinite assets with intangible of carrying The amount amortization to subject not therefore useful which are lives 2009: 2010 and 31, March at the following comprised Other changes (Note). 31, 2010. Balance at March combinations. business from resulting adjustments value certain disposals fair and adjustments, translation of consists primarily changes” “Other Note: Other changes (Note). Balance at March 31, 2008. Balance at March . Trademarks Other. Years ending March 31 ending March Years 2011...... 2012...... ¥16,334 Millions of Yen2013...... of U.S. Dollars Millions 14,323 2014...... 11,106 2015...... 6,432 intangi- expense for amortization aggregate estimated The b . Acquired Impairment losses. Unlimited land lease. Balance at March 31, 2009. Balance at March 2009 31, 2010 and ended March the years during segment goodwill operating of by the in carrying amounts changes The follows: as were 124

Financial Section Balance atMarch 31, Balance atMarch 31, Balance atMarch 31, Balance atMarch 31, impairment were losses included in“Other–net” con inthe during years the March ended 31,2010,2009and 2008.The million and ¥3,231million, respectively, were recognized Gross amount. Accumulated impairment losses Gross amount. Accumulated impairment losses Gross amount. Accumulated impairment losses Gross amount. m As aresult of testing for impairment of impair- goodwill, Accumulated impairment losses follows: Gross amount and of accumulated goodwill impairment by losses operating segment at March 31,2010,2009and 2008were as byrecognized construction equipment-related business in 31, 2010,an impairment loss segment Machinery inthe was s olidated statements of income. For year the March ended ent amounting losses to ¥1,929million ($21million), ¥340 ...... —¥640¥598¥,2 1,5 2,3 185¥734¥83,521 ¥7,354 ...... ¥1,825 ¥20,434 ¥10,450 ¥1,020 ¥35,978 ¥6,460 ¥— ¥91,768 ¥7,703 ...... ¥1,783 ¥20,434 ¥8,416 ¥1,119 ¥36,609 ¥6,738 ¥8,966 ...... ￥ 322¥,8 3,0 112¥,0 2,2 175¥783¥106,194 ¥7,843 ¥1,785 ¥20,924 ¥8,501 ¥1,132 ¥36,609 ¥6,188 ¥￥23,212 Textile Textile Textile Textile 4 7$34$1 1$25$1 4$ 1,141 $ 84 $ 19 $ 225 $ 91 $ 12 $ 394 $ 67 $ 249

— — — — Machinery Machinery Machinery Machinery (2,980) (1,407) (1,747)

(32) Aerospace& Aerospace& Aerospace& Aerospace& Electronics Electronics Electronics Electronics ICT, ICT, ICT, ICT, - — — — — Metals & Metals & Metals & Metals & Minerals Minerals Minerals Minerals Energy, Energy, Energy, Energy, retail of tires. Distributions Inc. (U.S.A.) operated which and wholesale Merchandise segment was by recognized Am-Pac Tire impairment Forest loss inChemicals, Products &General above-mentionedthe MCL Group Limited (U.K.), impairment loss segment inMachinery was by recognized trading subsidiary. For year the March ended 31,2008,an InternationalITOCHU Inc. (U.S.A.) was which overseas — — — — Millions ofU.S.Dollars Millions ofYen Millions ofYen Millions ofYen Merchandise Merchandise Merchandise Merchandise Chemicals, Chemicals, Chemicals, Chemicals, Products & Products & Products & Products & General General General General (1,943) Forest Forest Forest Forest 2010 2009 2010 2008 — — — Food Food Food Food

— — — — Insurance & Insurance & Insurance & Insurance & Logistics Logistics Logistics Logistics Finance, Finance, Finance, Finance, Services Services Services Services Realty, Realty, Realty, Realty, — — — — (3,157) (2,461) (2,461) Other Other Other Other

(34) and an Total Total Total Total (6,137) (5,811) (4,208)

(66) Financial Section 125 1 — — — — — — 69 161 107 215 146 107 107 161 107 107 107 107 107 215 269 187 — (653) 2,023 2010 23,159 23,305 19,002 2010 $22,652 $ Millions of $2,464 U.S. Dollars Millions of U.S. Dollars — — — — 244 496 237 8,060 10,000 10,000 10,000 10,000 10,000 15,000 10,000 10,000 10,000 10,000 10,000 20,000 10,000 10,635 26,904 (90,631) 2009 173,891 2,014,417 2,025,052 1,659,585 2.1% 0.8% ¥1,934,421 ¥ — — — — — — 84 2009 Millions of Yen 6,049 15,000 10,000 20,000 10,000 10,000 15,000 10,000 10,000 10,000 10,000 10,000 20,000 25,000 13,579 17,424 (60,728) 2010 188,283 2,154,738 2,168,317 1,767,898 ¥2,107,589 ¥ 84,937 ¥453,224 Notes to Consolidated Financial Statements Financial to Consolidated Notes — 1.9% 2010 ...... —

¥229,236 Millions of Yen Rate Interest Millions of Yen Rate Interest ...... en Bonds due 2010...... ong-term Debt and Long-term Short-term ...... es: es: ed ...... date. the maturity 25, 2009 until November then 25, 2009 2.55% from November 1.30% until of the rate at bears interest callable, one-time bond, The 25, 2009. November on the redeemed full amount Company The long- for date the balance sheet of as value the fair record to adjustment of amount The adjustment: value 133) fair SFAS (formerly 815 Topic ASC derivatives. with hedged which is term debt Medium-Term Notes. etc., maturing through 2013. Notes. etc., maturing through Medium-Term . Total interest mainly 0.6%-4.4%. interest Long-term debt, less current maturities. Long-term debt, less current Japan Bank for International due 2009-2012, Cooperation, Issued in 2009, 1.91% Yen Bonds due 2019. Issued in 2009, 1.91% Yen Bonds due 2019. Issued in 2009, 1.65% Yen Bonds due 2020. Issued in 2010, 1.65% Yen Issued in and after 1999, . Total Issued in 1999, 3.19% Yen Bonds due 2009. Bonds Issued in 1999, 3.19% Yen due 2010. Bonds Issued in 2003, 0.87% Yen Bonds due 2014 (note 1). Issued in 2004, 1.30% / 2.55% Yen due 2012. Bonds Issued in 2005, 1.46% Yen Unsecured bonds and notes: Unsecured due 2009. Bonds Issued in 1997, 2.45% Yen Due 2009-2024, interest mainly 0.1%-14.7%.. Due 2009-2024, interest due 2009. Bonds Issued in 2004, 1.04% Yen due 2016. Bonds Issued in 2006, 2.17% Yen due 2016. Bonds Issued in 2006, 2.09% Yen due 2017. Bonds Issued in 2007, 2.11% Yen due 2017. Bonds Issued in 2007, 2.02% Yen due 2017. Bonds Issued in 2007, 1.99% Yen Bonds due 2017. Issued in 2007, 1.90% Yen Bonds due 2018. Issued in 2008, 2.28% Yen Bonds due 2014. Issued in 2009, 1.49% Yen Secured bonds and notes: Secured Other, due 2009-2027, interest mainly 1.0%-16.5%. mainly due 2009-2027, interest Other, 10. Less current maturities. Less current Others. (note 2). 133) fair value adjustment 815 (formerly SFAS ASC Topic Secured:

Debentur Debentur

Issued in 2008, 1.92% Yen Bonds due 2010. Bonds Issued in 2008, 1.92% Yen Issued in 2008, 2.06% Y

Unsecur follows: as was 2009 31, 2010 and March at debt” “Short-term banks from Short-term loans, mainly paper Commercial

Note: 1. 2.

below: summarized 2009 is 31, 2010 and March at debt” “Long-term Banks and financial institutions: 2009. 31, 2010 and March balances at outstanding on rates average weighted represent rates interest The Note:

126

Financial Section m 410 “Asset Retirement and Environmental Obligations” (for consolidated balancesheets. and “Long-term debt, excluding current maturities” on the liabilitiesThese are included in“Other current liabilities” mining, iron-ore mining and facilities. oil drilling crude are principally related to costs the of dismantlement of coal m March 31,2010are as follows: The aggregate annual maturities of long-term debt after collateral and other rights of such lenders. (2) lo of colla Reference means of managing interest their rate exposure. interest rate swap agreements for long-term certain debt as a The Company and subsidiaries certain have entered into not expect The Company has never received such arequest and does following: Japan m The Company and its subsidiaries account for assetretire- 2,997 3,116 3,436 278,821 3,326 2016 andthereafter. 289,952 2015...... 319,691 2014...... 309,431 2013...... 2012...... ¥ 2011...... Years endingMarch 31 Certain ng-term and short-term loan bank agreements relating to ent of facilities and mine reclamation, on ASC based Topic erly ent obligations, consisting of costs the related to dismantle Total. (1) 11.

s submittedearnings be to JBIC for before review pre JBIC may request that any proposed distribution of reduce such loans through increased earnings. loans JBIC when that believes Company the is able to t ing income or proceeds the from of sale any the deben The Company applies or all aportionof its operat Bank SFAS ures or common stock to reduction the of outstanding ...... entation to stockholders. the t anderal customary provisions certain of

agreements

that any such request made. be will

for Asset Retirement Obligations

143 is

made

International

and ......

to FIN

with

Note

47).

the

Cooperation (“JBIC”) require the 8

The

“Pledged

Japan

asset Millions ofYen ¥2,168,317

Finance

retirement 909,694 Assets” $ 60,728

Corporation

for

obligations a

U.S. Dollars descri Millions of $23,305 9,777 653 p

and tion - - - - m more than five years. The short-term commitment agree of long-term debt reclassified into non-current liabilities for Company has consistently refinanced current the maturities ($1,589 million) is included in“2016and thereafter.” The 31, 2010and 2009,respectively. The ¥147,798million from current liabilities to non-current liabilities as of March ¥199,889 million of current the maturities of long-term debt classificationthe of ¥147,798million ($1,589million) and has Marchended 31,2010and 2009were as follows: The changes inassetretirement obligations for years the o maturities of long-term debt. Because agreements solely insupport of refinancing current the Company intends long-term to the use commitment line for short-term debt at March 31,2010and 2009.The 2010 and 2009.The $500million U.S. dollar facility was held and ¥300,000million for long-term debt, as of March 31, million, consisting of ¥100,000million for short-term debt facility available under such agreements totaled ¥400,000 stable funding. The aggregate amounts of Japanese the Yen agreements for banks with certain working capital and needs institutionsfinancial and has entered into commitment line The Company has borrowing arrangements with many Note: Balance atendofyear. Other. Balance at Revisions to Accretion expense. Liabilities settled. Liabilities incurred. beginning ofyear. cost estimate. nstrate ents were unused as of March 31,2010and 2009.

expressed “Other” mainly includes foreign translation currency adjustments...... the Company’s ......

an ......

...... intention ...... ability

¥22,925 ¥16,593 to (1,581)

2010 2,302 4,316 do 924 371 Millions ofYen to

so, refinance

the agreementsthe dem

¥16,593 ¥21,568 Company (7,174) (2,964) 2009 1,913 1,196 2,054 and the

has U.S. Dollars Millions of Company

$246 $178 changed 2010 (17) 25 46 10 4 - - Financial Section 127 1 (5) — (37) $216 $258 2010 $298 9 Millions of 12 56 40 26 18 U.S. Dollars 21 71 60 49 35 22 $161 $ $258 $ 1 137 35 141 (247) $76 2009 (1,832) ¥12,391 ¥10,449 depreciation Net Accumulated Millions of U.S. Dollars — 2 Millions of Yen 877 (436) Cost 1,078 5,226 2010 $374 (3,501) 1,976 6,590

¥24,016 ¥20,079 ¥15,019 ¥24,016 Millions of Yen Millions of U.S. Dollars Millions of Yen Millions of U.S. Dollars 83 Notes to Consolidated Financial Statements Financial to Consolidated Notes ¥27,711 56 ¥7,058 depreciation Net Accumulated Millions of Yen 139 Cost accu- leases. and cost The operating assets under certain other and estate real

¥34,769 ...... aircraft,

...... lease

...... 16,352 3,261 13,091 176 subsidiaries

its

...... and

...... ¥18,278 ¥3,741 ¥14,537 $196 $40 $156 Company ......

12. leases . Total . Total . Total follows: as 31, 2010 were March of as classes lease by for held the property of depreciation ulated 13 “Accounting SFAS (formerly 840 “Leases” leasesTopic ASC under classified financing direct as assets, which are other ain follows: as 31, 2010 is March of er as Less unearned income...... Estimated unguaranteed residual value. residual Estimated unguaranteed . to be received minimum lease payments Total . receivables Less allowance for doubtful leases. financing Net investment in direct Lessor machinery cer- construction and medical institutions, for equipment and lease subsidiaries furniture its and Company The t follows: as 2009 were 31, 2010 and March leases of as financing in direct investment the net of components The

2012...... 2013...... 2014...... 2015...... 5,602 4,510 3,298 2,040 m . 2016 and thereafter The succeeding the five each of leases for financing direct from be to received lease payments minimum future of schedule The follows: as 31, 2010 is March of as thereafter and years 31 ending March Years 2011...... ¥ Leases”). for 2012...... 2013...... 2014...... 2015...... 3,689 . 2016 and thereafter 2,453 1,696 thereaf- and years succeeding the five each of leases for operating noncancelable on rentals future minimum of schedule The t 31 ending March Years 2011...... ¥ Real estate. Machinery and equipment.. Others. 128

Financial Section 2009 ...... 14,266 16,185 18,737 22,827 2015...... 2014...... 2013...... 2012...... 10,157 10,115 11,957 16,122 2015...... 2014...... 2013...... 2012...... lio The total of minimum sublease rentals received to be future inthe under noncancelable subleases is ¥8,101million ($87mil- 2016 andthereafter. ¥ 2011...... Years endingMarch 31 ($136 The total of minimum sublease rentals received to be future inthe under noncancelable subleases is ¥12,655million 2016 andthereafter. ¥ 2011...... Years endingMarch 31 as follows: The schedule of future minimum payments lease for eachof five the succeeding years and thereafter as of March 31,2010is Capital leaseobligations. Less amountrepresenting interest. Total minimumleasepayments . The components of capital the obligations lease as of March 31,2010and 2009were as follows: Others. Machinery andequipment. Buildings. Others. Buildings. cost and accumulated depreciation of assetsby such leased classes as of March 31,2010and 2009were as follows: The Company and its and buildings, subsidiaries lease equipment machinery and other certain assetsunder capital The leases. Lessee Machinery andequipment. lio and ¥26,473million, respectively. Sublease rental income for years the March ended 31,2010and 2009were ¥4,399 ($47mil The of March 31,2010is as follows: future minimum payments lease under noncancelable operating for leases eachof five the succeeding years and thereafter as 2010 Total. Total. Total. Total. n) and ¥3,084million, respectively. n). Total rental under operating expenses for leases years the March ended 31,2010and 2009were ¥47,255($508million) million).

...... Company ...... 2,5 1,9 ¥13,258 ¥12,095 ¥25,353 ...... ¥ ......

and ......

its ......

subsidiaries ...... 2,9 ,4 16,657 9,742 26,399 ...... 3,8 ,0 260309 244 96 340 22,680 9,008 31,688 ......

lease

aircraft, ¥103,495 ¥68,075

real 16,323 20,809 098¥052¥046$ ¥30,466 ¥20,532 50,998 Cost Cost estate and other certain assetsunder operating The schedule of leases. Millions ofYen Millions ofYen Accumulated Accumulated ercain Net depreciation ercainNet depreciation ¥26,089 ¥37,058 4,252 7,518 ¥41,986 ¥66,437 12,071 13,291 iloso e MillionsofU.S.Dollars Millions ofYen MillionsofU.S.Dollars Millions ofYen ¥147,728 ¥105,239 ¥ ¥105,239

(23,540) $1,112 46,412 38,513 29,301 18,375 81,699 2010

Cost 58$2 $327 $221 548 224 Millions ofYen Millions ofU.S.Dollars Accumulated ercainNet depreciation ¥45,963 ¥50,787 $398 (4,824) 2009 81 $1,588 $1,131 $ $ 315 197 153 174 202 245 109 109 129 173 499 414 U.S. Dollars Millions of $ $1,131 $714

2010 143 (253) 878 - Financial Section 129 - 7 1 7 (3) (1) 83 88 57 72 60 82 (10) (63) 153 229 144 (170) (255) (170) (466) $ 3,313 2,591 2,929 $(384) 2010 2010 2010 $ (384) $3,167 $1,829 $1,574 amortized Millions of Millions of Millions of U.S. Dollars U.S. Dollars U.S. Dollars

follows:

will

626 626 (159) 8,896 8,181 2,023 6,080 2,678 1,990 were that 2009 2009 2009

1,079 (3,896) (3,034) (5,112) (4,922) (4,271) (54,697) (29,131) (12,885) (48,707) (12,885) 294,694 241,076 305,508 ¥ ¥(53,618) ¥295,033 ¥204,126 ¥174,995 ¥ (53,618) plans plans

the

Millions of Yen Millions of Yen Millions of Yen 137 620 620 of

(119) (924) (280) 7,699 8,208 5,326 6,691 5,624 pension 2010 2010 2010 7,603

(5,933) 14,214 21,338 13,416 (15,852) (15,852) 308,207 272,496 241,076 (43,314) (23,715) ¥ ¥(35,711) ¥170,169 ¥ (35,711) ¥ 294,694 ¥ 146,454 status

benefit

funded

Notes to Consolidated Financial Statements Financial to Consolidated Notes defined

the

and

for

plans. ion participate companies associated Certain and subsidiaries Fund). Pension (ITOCHU Union plan in a multiemployer t both unfunded have certain subsidiaries and the Company lump-sum which provide plans, severance and retirement defined contribu and their employees benefits to payment assets

credit

plan

and of: 2009 consisted 31, 2010 and March at pre-tax, (loss), income sive the

(“CPF”) value ......

31, 2011 are March ending the year periodic net for cost pension into (loss) fair

...... Fund ...... and

...... income

...... Pension ...... obligations ......

...... comprehensive Corporate

...... benefit

the ...... he other t

...... om plan asset. om plan assets...... in

(e.g., ...... eturn (loss) on plan assets. plans ...... changes est cost.

accumulated eign currency translation adjustments. eign currency

ranslation adjustments. 13. Benefits and Severance retirement Settlement and curtailment. Other. benefit obligations at end of year. Projected Service cost. Inter Projected benefit obligations at beginning of year. Projected Benefits paid by employer. For Acquisition. Settlement and curtailment. Acquisition. Plan participants’ contributions. Fair value of plan assets at beginning of year. Actual r Employer contributions. Plan participants’ contributions. Net actuarial gain (loss). Benefits paid fr Benefits paid fr T respectively. (gain), ($54 million) ¥5,000 million and (loss) ($107 million) ¥10,000 million approximately from The Fair value of plan assets at end of year. . Funded status at end of year.

Change in projected benefit obligations: Change in projected definedbenefit have certain subsidiaries and Company The pension

Net actuarial loss. . Prior service credit service prior actuarial and net loss of amounts estimated The Prepaid pension cost. Prepaid and severance benefits. Accrued retirement n comprehe other recognized in accumulated Amounts of: 2009 consisted 31, 2010 and March at balance sheets recognized in the consolidated Amounts

Change in plan assets:

all of substantially covering Plan) Pension the Tax-Qualified are Benefits plans these under pension their employees. plan service and of factors, based certain years other and on securities, debt marketable of primarily comprised assets are bearing securities. addition, In interest securities other and 130

Financial Section Weighted-average assumptionsusedtodeterminenetperiodicpensioncostfortheyear: Amortization ofunrecognized netactuarialloss. Amortization ofunrecognized priorservicecost. Expected returnonplanassets. Interest cost. and ¥5,442million for years the March ended 31,2010 and 2009,respectively. The amount of contribution to multi the employer plan Union (ITOCHU Pension Fund) was ¥5,564million ($60million) The amountofcostrecognized fordefinedcontributionpensionplans. Net periodicpensioncostfordefinedbenefitplans. Total Settlement curtailmentloss(gain). Service cost. si pension costs Thefor net periodic retirement and severance for benefits years the March ended 31,2010,2009and 2008con- a employees to receive expected related The benefits. net actu overmethod average the of period remaining service cost is amortized by The prior straight-line the service Weighted-average assumptionsusedtodeterminebenefitobligationsattheendofyear: Assumptions Accumulated benefitobligation. periods. service The accumulated obligations benefit for all gain andrial loss is amortized over average the remaining sted of following: the Expected long-termrateofr Discount rate. Total expensesforpension plans. Net periodicpensioncost. Rate ofcompensationincrease. Rate ofcompensationincr Discount rate.

expenses ......

projected

to ...... ease.

pension benefit eturn onplanassets. eturn ......

obligations

plans

for ......

the

plans benefit defined as of March 31,2010and 2009were as follows: and ......

years

net

periodic ended ...... -

March

pension ...... ¥198 million at March 31,2010and 2009,respectively. included inplan assetswas ¥242million ($3million) and The fair value of of equity associated securities companies

31,

costs

2010,

¥ ¥17,136 ¥19,682 ¥17,136 as

16,242 2009 (5,549) (6,880) 2010 2010

5,624 7,699 2,546 of

March —

and

2008

Millions ofYen Millions ofYen 31, ¥307,242 ¥ 1,8 ¥5,672 ¥13,823 ¥11,582 ¥11,582 1385,855 11,318

2010 540 (5,700) (5,490) 792 (8,724) (7,992) (1,230) 2010 2009 2009

,8 6,182 6,080 ,9 ¥8,965 8,896 2,241 consisted Millions ofYen

and

2009

1.1–7.6% of ¥293,699 ¥ 5,672

¥7,032 the 2009 2008 2008 2010

1,360 were 2.8% 2.2% 3.4% 2.1% (906)

following:

follows: 1.0–6.0% 1.1–7.6% U.S. Dollars U.S. Dollars U.S. Dollars Millions of Millions of Millions of $3,302 2009 2010 2010 2010 2.8% 2.3% 2.2% $211 $184 $ $184 (60) 175 (74) 27 83 60 — Financial Section 131 - - 57 5,283 2,929 768 trust by 92,020

272,496 Millions of U.S. Dollars —— $989 —— 201 — 799 — 252 302 329 — — — — —— 18,658 — 74,305 — 23,439 — 28,158 30,633 71,457 Millions of Yen 2 category.

57 99 Millions of Yen by

1,904 5,283 Millions of U.S. Dollars 50,411 ¥ — ¥

177,170 follows,

— — — 329 — 30,633 6560 136 739 153 300 Notes to Consolidated Financial Statements Financial to Consolidated Notes $447 $542 1,025 5,983 12,675 5,598 68,707 ...... were 95,326 14,19027,946 9,249 212 Level 1 2 Level Level 3 Total Level 1 Level 2 Level 3 Total

¥41,609 ¥ expect certain subsidiaries and contribute to e Company 31, 2011. March ending in the year n plans for and frequent is which trading securities debt for ies and

which reflect expected benefit payments, following The service, expected befuture to are paid: 2016–2020. defined to ($37 million) ¥3,400 million benefit pen about sio 31 ending March Years 2011...... 2012...... 2013...... ¥16,7982014...... 16,6122015...... 15,707 $181 15,502 15,399 179 169 167 166 t securi those owned of classified Level as 1 consist Assets Assets markets. in active available are prices which quoted managed jointly of consist classified Level as 2 primarily that account) (general plans pension corporate trusts and securities. securities debt These in owned assets and invest provided valuation using value fair at measured are companies. insurance life banks and Certain and Cash Company the Flow Subsidiaries: of Th subsidiaries

its

- - and

Company’s

Company

The

a provides that securities and the

by ......

securities. held

assets equity

...... plan

verseas o

2010,

and

31,

...... March

domestic

...... in

the objectives achieve to order In control. risk of level ble Others. Domestic. Others. Domestic. Overseas. Domestic. Overseas. Cash and cash equivalents. Life insurance company general accounts. Overseas. Domestic. Overseas. . Cash and cash equivalents general accounts. Life insurance company securities Debt companies. in listed shares of primarily st pension corporate cash, also include assets may of allocation The appropriate. as investments, alternative and plans a and asset liquidity basic policy emphasize to is Company’s the addition, In investments. its of diversification thorough trust mainly pension employee an establishes Company securities plan equity a part as of domestic of comprised securities con marketable of holdings Company’s assets. The the most establishes the Company policy, the investment of as results return the past considering portfolio appropriate manages assets and invested on returns the estimated as well the portfolio. assets is plan of portfolio its for standard Company’s The debt overseas and in domestic 60% invest to 40% era Total assets, plan policy for investment portfolio its setting In focuses securing basis, on a long-term on the Company, the for provide to sufficient are that returns investment a tol of in the context employees for benefit payments future . Total Equity securities:

Equity securities: As Debt securities: Other assets: Value “Fair financial statements, the consolidated 21 to Note to please refer value, fair used measure to information For Measurements.”

Debt securities: Other assets: The bonds. government highly-rated comprise principally stipulate Regulations Enforcement Law Business Insurance plans pension assets in corporate of the investment that in a manner be conducted account) (general guarantee. a principal and rate specific interest assumed expected its determines long- the Company addition, In policy, investment the above considering return of term rate on returns historical and returns future of the expectations assets. plan si 132

Financial Section Deferred taxliabilities:

Net deferred taxassets. Deferred taxassets: Significant components of deferred assetsand tax liabilities at March 31,2010and 2009were as follows: Other comprehensive (income)loss. Income taxes. Amounts provided for income taxes for years the March ended 31,2010,2009and 2008were as allocated follows: Effective incometaxrate. Other. Tax effect oninvestmentsinequity-methodassociatedcompanies. Valuation allowance. Tax effect ondividendsreceived. Difference oftaxratesforforeign subsidiaries. Expenses notdeductiblefortaxpurposes. Normal incometaxrate. 2009 and 2008is as follows: Areconciliation normal the income between rate tax and income effective the rate tax for years the March ended 31,2010, result inanormal income rate tax of appro number on of income, taxes based aggregate inthe which The Company and its domestic subsidiaries are subject to a March 31,2010,2009and 2008,respectively, were included in“Other–net” consolidated inthe statements of income. Net foreign exchange gains of ¥144million of ($2million), losses ¥3,290million, and of losses ¥631million for years the ended Accrued r Total deferred taxassets. Marketable securitiesandinvestments. Accrued r Pr Net operatinglosscarryforwar Allowance fordoubtfulreceivables. Total deferred taxliabilities. Other. Undistributed ear Marketable securitiesandinvestments. Deferred taxassets–net. Less valuationallowance. Other. Inventories, property andequipment. Total incometax(benefit) expense. incomeT 15. 14. operty, equipmentand otherintangibleassets...... etirement andseverancebenefits etirement andseverancebenefits Foreign ExchangeGainsand Losses ...... nings...... axes ...... ds...... ximately 41%...... Company adopted aconsolidated taxation system. commencing Effective year the March ended 31,2003,the countries whereoperate. they Foreign subsidiaries are subject to income taxes of the ¥51,571 ¥80,500 28,929 2010 Millions ofYen ¥ 131,174 ¥ (159,721) ¥ 12,910 277¥121,108 ¥ 72,757 373,248 290,895 (32,666) (26,402) (51,813) (37,866) (10,974) (82,353) (59,847) 64,979 85,742 63,792 20,858 64,013 73,864 (4.2) 33.3% 41.0% 2010 2010 2009 (8.5) (4.3) 2.3 3.6 3.4 Millions ofYen ¥ 158,460 ¥ 101,484 ¥ (123,319) 351,031 281,779 (18,637) (33,202) (11,637) (69,252) (57,505) (44,282) (15,561) 27,383 95,265 60,672 48,995 63,603 17,232 34.9% 10 41.0% 41.0% 2009 2008 2009 86 (4.3) (8.6) 24 6.0 (2.4) 09 (0.5) (0.9) 0.6 . 1.3 2.3 . 0.9 2.9 U.S. Dollars U.S. Dollars Millions of Millions of $ 1,410 $ 43.2% (1,716)

2010 2010 2008 (1.2) 4,011 3,126 $865 $554 (351) (283) (118) (885) (557) (407) 688 698 311 921 686 794 224 Financial Section 133 0 1 1 7 194 (6) — — 11 $554 ended $ 673 993 $

2010 2010 $ $1,666 14 17 13 year Millions of Millions of 158 131 128 825 533 U.S. Dollars U.S. Dollars (38) $(38) $ $1,819 2010 the for (3) 17 (27) 837 (362) 232 Millions of U.S. Dollars $592 $360 $(—) $360 2008 2009 (1,083) ¥ 1,747 ¥ 1,126 134,777 ¥280,531 1,252 49,622 37,323 83,785 — — carryforwards 33 55 45

Millions of Yen ¥169,249 ¥121,108 638 (621) 2009 2010 ¥1,126 ¥ 68,236 ¥145,754 140,022 credit ¥208,258 ¥ Millions of Yen 2008 (3,086) ...... 1,305 tax ¥29,186 ...... 76,730 ...... 14,736 ...... 1,553 11,898 ...... 12,153 ...... ¥ Notes to Consolidated Financial Statements Financial to Consolidated Notes 2010 foreign 62,576 92,410 40,409 ¥91,922 ¥154,986 ¥ ...... reduce to available carryforwards loss are operating Net . Total 48,403 which do ($60million), ¥5,577million 31, 2010 were March 31, 2013. March until expire not loss operating such utilized, not If taxes. income future follows: as carryforwards expire Within. 2 years Within. 3 years Within. 5 years After 5 to 10 years. After 10 to 15 years. Years ending March 31 ending March Years Within. 1 year Millions of Yen Millions of U.S. Dollars Within. 4 years After 15 years. Unused

¥72,757 ...... - - 2009 (6,160) - ¥(22,816) Millions of Yen ...... 54,563 ¥95,573 ¥41,010 ¥(16,656) ¥24,354 ¥51,513 ¥32,272 ¥ ...... 18,025 foreign of earnings ...... ¥51,571 ...... (16) ¥33,546 2010 (3,539)

¥(3,555) ...... 21,564 Current Deferred Total Current Deferred Total Current Deferred Total Current Deferred Total ¥33,562 ¥ ¥55,126 ...... present under difference temporary beed to a taxable ...... the of Most 2009, respectively. 31, 2010 and March n at . Total its domestic subsidiaries. subsidiaries. been has provided tax liability deferred which no for aries

31, 2010, ended March the years for companies” associated (losses) of in earnings equity and taxes income before “Income the following: 2008 comprised 2009 and 31, 2010 and ended March the years unrecognized tax benefits for gross total ending the beginning and of A reconciliation follows: as were 2009, respectively, ¥244,215 mil and ($2,678 million) million ¥249,145 totaled lio Balance at ending of year. Balance at beginning of year. translation. currency on foreign Effects . Total The Company and Foreign The Company and its domestic subsidiaries. subsidiaries. Foreign the following: 2008 comprised 31, 2010, 2009 and ended March the years for taxes” “Income i ended the years for allowance in the valuation changes Net ¥13,101 of increase an 2008 were 31, 2010, 2009 and March a and ¥8,114million of increase an ($141 million), million respectively. million, ¥4,833 of increase subsid foreign of earnings undistributed of amount The Additions based on tax positions related to the current year. to the current Additions based on tax positions related Additions for tax positions of prior years. Reductions for tax positions of prior years. of a lapse of the applicable statute of limitations. Reductions as a result Settlements. sider con not are subsidiaries domestic of earnings undistributed the determine to practicable not is It tax laws. Japanese undistributed for tax liability deferred subsidiaries. 134

Financial Section t m Income taxesconsolidated inthe statements of income. related accrued penalties in benefits to tax unrecognized The Company and its subsidiaries recognize interest and nextthe twelve months. changes are within benefits to tax unrecognized the expected subsidiaries are aware as of March 31,2010,no significant on eachof Based items the of Company the which and its rate tax effective infuture periods. audit settlements and any related litigation could the affect resource allocations, and evaluations by management. the s Diluted netincomeattributabletoITOCHUpercommonshare. Basic netincomeattributabletoITOCHUpercommonshare. Denominator: nies diversethese palette and network, global 7division compa trading, finance, and logistics coordinating projects. By using partner, as well asrange awide of business such activities as resources development operations and as astrategic also palette of through functions investments and expertise in CorporationITOCHU and its subsidiaries, have adiverse Numerator: t The reconciliation of numerators the and denominators of net basic the income attributable share per to ITOCHU computa- t that,benefits would ifrecognized favorably effec the affect and ¥802million, respectively, represent amount the of 2010 and ¥1,126million in2009,¥597million ($6million) ending Ofthe balancesof ¥638million ($7million) in prepared and presented according to system. this This sys company system and information on operating segments is The Newthe business sector. sectors, asOther well as life Although Company the and its subsidiaries its believe esti er Natural resource /energy-related sector, chemicals, machin Consumer-related sector, resources, metal oil and gas as business and intextile, food general merchandise as the em is regularly for used decisions inoperations, including ions for years the March ended 31,2010,2009and 2008 was as follows: ive rate. tax onable, uncertainty regarding determination final the of tax ates and assumptions of are benefits tax unrecognized rea y, information technology, finance and real-estate as the Weighted-average numberofcommonshares outstanding. Diluted netincomeattributabletoITOCHU. Ef Net incomeattributabletoITOCHU. 17. netIncomeAttributabletoITOCHUPerShare 16. fect ofdilutivesecurities: have promoting been and developing many kinds of Convertible preferred stock.

Company Segment Information

and

its

subsidiaries care,as and energy new ecology ......

...... have

introduced ......

division ...... 8.9¥0.4¥137.46 ¥104.64 ¥81.09 ...... - ...... 8.1¥0.4¥127.71 ¥103.94 ¥80.91 ......

- - - - - material. taxes for year the March ended 31,2010and 2009are not and 2009,and interest and included penalties inincome interest Both as of and accrued March penalties 31,2010 ies The operating segments of Company the and its subsidiar regulation. authoritytax for years on certain respective their based tax subject tobe income examinations tax by eachjurisdiction’s and later. Moreover, Company the and its subsidiaries might income examinations tax for years the March ended 31,2004 Japanese authorities tax retain still right the to execute However according to income the regulation tax inJapan, Marchended 31,2008have substantially been completed. income examinations tax by authorities tax through the Company and its subsidiaries understand that regular in Japan and various foreign jurisdictions. tax In Japan, the i The segment Machinery is engaged indiverse business activ- Machinery a businesses, development of technology, high and retail oper worldwide In scale. materials. This segment performs production and on sales a products for garments, home furnishings and industrial business from rough material, thread and to textile final the The Textile segment is engaged stages inall of textile the Textile and othermachinery items. This segmentconducts also other to infrastructures automobiles, ships, construction rangingties from projects inplants, bridges, railways and tions and Internet of TV shopping. The Company and its income subsidiaries returns file tax are as follows: ¥128,153 ¥127,869 2010 2010 1,580,448,671 (284) 2010 addition, segment the promotes brand Millions ofYen ¥164,284 ¥217,301 ¥165,390 (1,106) 2009 2009 Yen Number ofShares ,8,7,7 1,580,878,959 1,580,579,472 2009 ¥201,890 (15,411) 2008 2008 U.S. Dollars U.S. Dollars Millions of 2008 $1,374 $1,377 2010 2010 $0.87 $0.87 year (3)

- - Financial Section 135 - - — - 36,269 76,377 924,366 128,153 5,476,847 Consolidated ¥10,306,799 ¥ ¥ ¥ ¥ ¥ 6,674 19,151 (1,018) Other, Other, (47,476) ¥115,293 ¥ ¥511,364 ¥ ¥ ¥ (12,449) Eliminations Adjustments & Adjustments the years for total) of more or 2,537 (4,247) 35,642 15,950 (7,114) Realty, Realty, Services Finance, Logistics ¥182,871 ¥ ¥382,135 ¥ ¥ ¥ Insurance & 1,782 13,015 27,808 11,555 Food 335,487 ¥3,034,181 ¥ ¥ ¥ ¥1,130,719 ¥ Notes to Consolidated Financial Statements Financial to Consolidated Notes 1,629 7,652 2010 21,055 19,270 Forest Forest 110,073 727,944 General Products & Products Chemicals, determined in accor (loss), income net as such l factors Millions of Yen Merchandise ¥1,816,599 ¥ ¥ ¥ ¥ ¥ GAAP. U.S. with ance in third-party engaged is this segment addition, In urance. and financial sales products structuring in of and s engaged era d developed internally utilizes management addition, In the purpose internal methods of for control management decisions. operating to reference with priced are transactions Intersegment parties. unaffiliated with transactions to applicable prices single any with been transactions trading no have There (10% external customer major 2008. 31, 2010, 2009 and ended March s Food efficiency-oriented operations pursues segment Food The food of in all areas retail to distribution and production from both domestically finished products to materials raw from abroad. and & Logistics Services Insurance Finance, Realty, & Logistics Services Insurance segment Realty, Finance, The i rein services and insurance consulting of and broker agency, fine in basic chemicals, chemicals, and ceramic, and cement chemicals. inorganic and plastics intermodal trucking, international logistics, warehousing, estate. real of operation and the development and transport based sev on performance segment evaluates Management 437 9,186 65,661 31,213 141,591 - - Energy, Energy, - Minerals Metals & - ¥3,273,060 ¥ ¥ ¥ ¥1,249,048 ¥ - and 6,353 2,063 6,017 7,288 ICT, ICT, Electronics ¥614,192 ¥136,432 ¥ ¥ ¥513,249 ¥ Aerospace & Aerospace 1,332 3,692 5,311 10,489 43,257 ¥753,228 ¥ ¥ ¥544,958 ¥ ¥ 567 8,019 4,147 22,401 Textile Machinery ¥516,808 ¥751,896 ¥607,839 ¥3,272,623 ¥1,795,544 ¥3,032,399 ¥166,921 ¥ 162,769 ¥10,306,799 ¥517,375 ¥102,733 ¥ ¥ ¥417,380 ¥

...... ch 31. perating segments perating o transactions. and associated companies. in green trading including business ts, environmental Unaffiliated customers Unaffiliated between Transfers trading Total

alternative and renewable to activities related as well as ent con various activities involving in business engaged is ent iron coal, pig ore, in iron trading and emissions, gas ouse abroad. ally and at Mar (losses) of associated companies. to ITOCHU. amortization. tire, rubber, paper, pulp, lumber, as such products umer etc.),industrial (broadcast-related, ribution/service business c 2008 was 31, 2010, 2009 and ended March the years for segments operating in different operations concerning Information follows: as Trading transactions: Trading Chemicals, Forest Products & General Merchandise Chemicals, Forest Products & General seg- & General Merchandise Products Chemicals,The Forest m Energy, Metals & Minerals Energy, in metal engaged is segment & Minerals Metals Energy, The prod steel of processing development, mineral resource and ICT, Aerospace & Electronics Aerospace ICT, in engaged is segment & Electronics Aerospace ICT, The provider systems/ IT-related activities involving business in venture service investment Internet business, business, video dis distribution, sales/content phone mobile business, uc equip- environment-related and resources in water business m t Total assets Total . trading profit Gross Equity in earnings Net income attributable Depreciation and Depreciation energy. equipment electronic equipment, environmental machinery, equipment. related and aircraft and transactions h s metal light and non-ferrous materials, raw ferrous and is Also the segment overseas. and in Japan products steel in trading and development in energyresource engaged both fuels domesti nuclear and gas products, oil crude oil, 136

Financial Section Depreciation and Total assets Net incomeattributable Equity inearnings Gross tradingprofit.

Trading transactions: Depreciation and Total assets Net incomeattributable Equity inearnings Gross tradingprofit.

Trading transactions: amortization. at Mar to ITOCHU. associated companies. (losses) of amortization. at Mar to ITOCHU. associated companies. (losses) of Total trading Transfers between Unaffiliated customers Total trading Transfers between Unaffiliated customers transactions. o companies. and associated transactions. o companies. and associated perating segments perating segments ch 31. ch 31......

¥ ¥364,349 ¥ ¥ ¥115,236 ¥691,299 6060¥,0,6 7265¥,7,8 22951¥,3,3 1208¥2,0 ¥11,729,082 ¥229,307 ¥182,068 ¥3,036,830 ¥2,289,521 ¥3,170,281 ¥722,625 ¥1,407,760 ¥690,690 ¥ ¥360,431 ¥ ¥ ¥102,626 ¥590,214 5956¥,7,0 6376¥,1,7 20405¥,8,6 1724¥7,3 ¥12,065,109 ¥175,132 ¥167,254 ¥3,188,363 ¥2,024,015 ¥3,916,776 ¥633,766 ¥1,370,207 ¥589,596 etl Machinery Textile etl Machinery Textile 20,500 22,898 3,419 2,039 3,341 3,602 609 618 ¥ ¥ ¥ ¥ ¥ ¥1,408,437 ¥ ¥ ¥ ¥ ¥ ¥1,371,748 709,708 639,939 21,350 99,120 (15,457) 71,854 5,444 4,752 6,341 1,759 1,541 677 Aerospace & Aerospace & ¥ ¥513,870 ¥ ¥ ¥138,952 ¥726,900 ¥ ¥490,159 ¥ ¥ ¥138,859 ¥637,559 Electronics Electronics 14,583 (1,233) ICT, ICT, 6,394 4,275 7,340 8,026 3,793 307 ¥ ¥ ¥ ¥ ¥ ¥3,170,603 ¥ ¥1,016,596 ¥ ¥ ¥ ¥3,917,333 Metals & Metals & Minerals Minerals Energy, Energy, 916,571 105,716 127,464 114,695 222,263 34,272 25,463 25,405 24,710 322 557 ¥ ¥ ¥ ¥ ¥ ¥2,308,458 ¥ ¥ ¥ ¥ ¥ ¥2,043,942 Merchandise Merchandise Millions ofYen Millions ofYen Chemicals, Chemicals, Products & Products & General General 766,790 122,640 611,375 114,277 Forest Forest 19,677 19,025 18,937 19,927 2008 2009 4,307 2,017 4,514 2,949 ¥ ¥1,064,825 ¥ ¥ ¥ ¥3,037,109 ¥ ¥1,054,127 ¥ ¥ ¥ ¥3,188,823 324,665 335,606 Food Food 18,657 10,297 20,185 10,073 9,577 7,951 279 460 Insurance & Insurance & ¥ ¥420,501 ¥ ¥ ¥ ¥182,179 ¥ ¥381,800 ¥ ¥ ¥ ¥167,263 Logistics Logistics Finance, Finance, Services Services Realty, Realty, 10,828 29,595 41,381 (1,212) (2,880) 42,042 1,894 1,119 111 9 Adjustments & Adjustments & Eliminations Eliminations ¥ ¥517,585 ¥ ¥ ¥ ¥204,097 ¥ ¥637,665 ¥ ¥ ¥ ¥148,227 Other, Other, (25,210) (26,905) 25,089 (2,770) 32,994 6,262 5,990 6,631 (346) 784 ¥ ¥ ¥ ¥ ¥ ¥11,729,082 ¥ ¥ ¥ ¥ ¥ ¥12,065,109 Consolidated Consolidated 5,274,199 5,192,092 1,060,521

217,301

994,547 165,390 64,988 41,304 71,569 70,238 — — Financial Section 137 — 390 821 9,935 1,377 58,866 $7,162 $110,778 $ $ $ $ $ $36,722 ¥666,351 ¥560,774 Consolidated ¥3,416,637 ¥3,419,061 ¥2,859,853 follows:

as 72

206 134 (510) $1,239 $ $ $5,496 $ $ (11) Other, Other, was

$602 Eliminations Other Consolidated Adjustments & Adjustments $3,847 Other Consolidated Other Consolidated Other Consolidated ¥56,046 ¥57,687 2008

¥357,986 ¥501,130 ¥505,412 27 (76) (46) 171 383 and

$1,965 $ $4,107 $ $ $ Realty, Realty, Services Finance, Logistics Insurance & 2009

$505 20 2010 2010 2009 2009 2008 2010 2010 $1,387 140 299 124 ¥46,974 ¥52,683 2010, 3,606

¥129,088 ¥200,592 ¥124,542 Food Millions of Yen Millions of Yen Millions of Yen Millions of Yen Millions of Yen $32,612 $ $ $ $12,153 $ 31,

Millions of U.S. Dollars Millions of U.S. Dollars Notes to Consolidated Financial Statements Financial to Consolidated Notes 17 82 226 March 207

1,183 7,825 2010 $3,939 $1,571 $19,525 $ $ $ $ $ Forest Forest General Products & Products Chemicals, ¥366,440 ¥146,173 ¥558,512 ¥102,631 ¥615,610 Merchandise ended

5 Millions of U.S. Dollars Millions of U.S. 99 706 335 years

1,522 $35,179 $ $ $ $13,425 $ the Energy, Energy,

Minerals Japan Australia United States Other Consolidated Metals & Japan United States Australia Japan Australia United States Other Consolidated Japan Australia United States Other Consolidated $4,484 Japan United States Australia Japan United States Australia Japan United States Australia $27,549 for

¥417,158 ¥347,773 ¥2,563,123 ¥2,158,827 ¥1,614,289 78 68 22 64 ICT, ICT, $5,517 $ $6,601 $1,466 $ $ Electronics countries

Aerospace & Aerospace 14 57 40 465 113 $5,857 $ $8,096 $ $ $ different

6 45 86 241 $5,555 $8,082 $6,533$5,561 $35,174 $19,299 $32,592 $1,794 $1,749 $110,778 $4,486 $ $1,104 $ $ Textile Machinery operations

...... concerning ......

...... practice. accounting Japanese with in accordance presented are transactions trading Total net companies, associated (losses) of in earnings equity profit, trading gross transactions, trading includes & Eliminations” Adjustments “Other, etc. adjustments, and eliminations areas, foreign and in domestic the specified segments allocated to assets not total operating (loss), income ch 31. perating segments perating o and associated companies. transactions. Transfers between Transfers Unaffiliated customers Unaffiliated Total trading Total to ITOCHU. at Mar amortization. (losses) of associated companies. revenue. such the assets producing of based the location on countries to attributed is “Revenue” Note:

Trading transactions: Trading Long-lived assets. Revenue. Note: 1. Geographic Information Information Net income attributable assets Total and Depreciation 2. . trading profit Gross Equity in earnings Revenue. Long-lived assets. Revenue. Revenue. Long-lived assets.

138

Financial Section m s The amount available as dividends or purchase the of trea purchasethe stocks of under Companies the treasury Act. determinationthe of available the balanceas dividends or statutory standalone statements, financial have on no effect ofBoard Directors, (2)having of Board the Corporate companies that criteria such certain meet as (1)having the dividend at any year during inaddition time fiscal the to year-end the Under Companies the Act, companies can pay dividends change by such as purchase stocks of thereafter. treasury as of March 31,2010,provided however figure this might must appropriated be as of dividends, an amount to equal 10%of paid the dividends The Companies Act inJapan provides that upon payment Law.in the to common the stock account, specified unlessotherwise shares, at least 50%of amount the credited be will raised The Companies Act states that upon issuance of new prior to revision”). Company Law. Hereafter referred to as “Commercial Code concerning CommercialAudits;the Code Limited Liability Law forII of Provisions Commercial the Code; Special for various laws covering regulation the of companies (Chapter On May Companies 1,2006,the Act inJapan superseded in accountingfinancial standards of Japan. The adjustments standalone statements financial inaccordance with the on amount the based recorded Company’s inthe statutory available for purchase the stocks. of This amount treasury is amount that distributed can be as dividends and amount the The Companies Act provides that there is alimit to the 25% of common the stock. amount of additional paid-in capital equals and reserve legal upon payment the of such dividends until total the aggregate retained earnings) depending on equity the account charged n stocks under Companies the ury Act was ¥251,827million ent of capital surplus) (acomponent or reserve as legal of cluded accompanying inthe consolidated state financial ents to conform with U.S. GAAP, but not recorded inthe 18. upon resolution at shareholders’ the For meeting. Common Stock,CapitalSurplusandRetainedEarnings additional paid-in capital (acompo - - - surplus as permitted prior by Commercialto the Code revi Company’sthe of books account by atransfer from capital Company’s accumulated deficits of ¥109,799million from sio den ofBoard Directors may dividends decide (except for divi of directors the term of is prescribed as service one year, the Auditors, (3)appointing independent auditors, and (4)the U accumulated deficits. ¥16,117 million, had Company the not eliminated the have ¥790,598million, including of been reserve alegal consolidated Unitedpractices inthe States of The America. balanceof idated statements, financial following private company’s on its ofentry books account preparing when consol the account, Company the deficit the reclassification reflected was not significantly different from Company’s the of books sio Company, held At June the 29,2000shareholders’ meeting of the stock account. of aportionor of all retained earnings to common the resolution of shareholders’ the such meeting, as transfer the common stock, capital surplus and retained earnings by The Companies Act reclassification permits among by Companies the Act. must within limits the be previously as determined described incorporation. The amount stockpurchased of so treasury stock, or to purchase it as articlesof prescribed intheir resolvedso by of Board the Directors, of to dispose treasury The Companies Act provides also for companies, provided the resolution of of Board the Directors (cash dividends only) if system may declare dividends once year duringby fiscal the of incorporation. Companies of under Board the Directors’ .S. GAAPconsolidated statements financial on that date shareholdersn, the approved aproposal to eliminate the Company’s the n. Because accumulated deficits inthe

company ds in kind)

has retained earnings at March 31,2010would if priorunder Commercialto the Code revi

prescribed the company

in has

i ts prescribed

articles

so incorporation. in its articles -

- - Financial Section 139 32 159 3,502 1,011 1,178 1,022 2,485 (3,573) (6,141) 94,257 27,868 96,446 19,700 Amount 147,516 Net-of-Tax Net-of-Tax follows:

5 985 as

— — 32 32 95,268 32 ¥ (25) (626) (108) 2,134 4,220 2010 (1,724) (1,744) were

(15,241) (28,929) (11,976) (Expense) Tax Benefit Tax Millions of Yen 57 267 980 adjustments

1,648 4,209 5,246 1,011 1,178 5,189 (1,719) 3,470 (5,707) 43,109 94,225 ¥ 96,414 31,676 47,168 (16,749) 30,419 41,461 (14,615) 26,846 31,409 (11,868) 19,541 95,236 41,770 (16,088) 25,682 Amount (10,361) 176,445 Before-Tax Before-Tax ¥

Notes to Consolidated Financial Statements Financial to Consolidated Notes ...... reclassification

...... and

(loss) ......

......

...... income ......

...... olling interest during the year. olling interest comprehensive -sale securities.

...... eign entities...... other

...... component

each

olling interest during the year. olling interest olling interest during the year. olling interest olling interest during the year. olling interest Other Comprehensive Income (Loss) Other Comprehensive allocated

effects

to the noncontr on derivative instruments during the year. and losses on securities attributable to the noncontr to the noncontr upon sale or liquidation of investments in for upon sale or liquidation to the noncontr to ITOCHU during the year. to ITOCHU during the year. . to ITOCHU during the year 19. Net change in unrealized holding gains and losses on derivative instruments attributable holding gains and losses on derivative Net change in unrealized holding gains and losses Net change in unrealized Net change in unrealized holding gains and losses on securities during the year. holding gains and losses on securities Net change in unrealized in net income. realized Reclassification adjustments for gains and losses Reclassification adjustments for gains and losses realized in net income.. realized Reclassification adjustments for gains and losses holding gains Net change in unrealized Reclassification adjustments for gains and losses realized in net income. realized Reclassification adjustments for gains and losses Net change in pension liability adjustments attributable the year. Net change in pension liability adjustments during Reclassification adjustments for gains and losses realized for gains and losses realized Reclassification adjustments adjustments attributable translation currency Net change in foreign adjustments during the year. translation currency Net change in foreign Amount arising during the year on investments in foreign entities. the year on investments in foreign Amount arising during Net change in unrealized holding gains and losses on securities attributable holding gains and losses on securities Net change in unrealized Net change in pension liability adjustments attributable to ITOCHU during the year. Net change in pension liability adjustments attributable Amount arising during the year on derivative instruments for cash flow hedges. Amount arising during the year on derivative instruments Net change in foreign currency translation adjustments attributable translation currency Net change in foreign adjustments. Amount arising during the year on pension liability Amount arising during the year on available-for instruments attributable holding gains and losses on derivative Net change in unrealized

income (loss). Other comprehensive

Tax translation adjustments: currency Foreign

Unrealized holding gains and losses on derivative instruments: Unrealized Pension liability adjustments: holding gains and losses on securities: Unrealized 140

Financial Section Other comprehensive income(loss). Foreign currency translationadjustments: Unrealized holdinggainsandlossesonsecurities: Pension liabilityadjustments: Unrealized holdinggainsandlossesonderivativeinstruments: Net changeinunrealized holdinggainsandlosses Net changeinunrealized holdinggainsandlossesonderivativeinstrumentsattributable Reclassification adjustmentsforgainsandlossesrealized innetincome. Net changeinunrealized holdinggainsandlossesonsecuritiesduringtheyear. Net changeinunrealized holdinggains Reclassification adjustmentsforgainsandlossesrealized innetincome.. Net changeinpensionliabilityadjustmentsduringtheyear. Net changeinpensionliabilityadjustmentsattributable Reclassification adjustmentsforgainsandlossesrealized innetincome. Net changeinforeign currency translationadjustmentsduringtheyear. Net changeinforeign currency translationadjustmentsattributable Reclassification adjustmentsforgainsandlossesrealized Amount arisingduringtheyearoninvestmentsinforeign entities. Net changeinunrealized holdinggainsandlossesonsecuritiesattributable Amount arisingduringtheyearonavailable-for Net changeinpensionliabilityadjustmentsattributabletoITOCHUduringtheyear. Amount arisingduringtheyearonpensionliabilityadjustments. Net changeinforeign currency translationadjustmentsattributable Net changeinunrealized holdinggainsandlossesonderivativeinstrumentsattributable Amount arisingduringtheyearonderivativeinstrumentsforcashflowhedges. on derivativeinstrumentsduringtheyear. to thenoncontr and lossesonsecuritiesattributabletothenoncontr to thenoncontr to thenoncontr upon saleorliquidationofinvestmentsinfor to ITOCHUduringtheyear. to ITOCHUduringtheyear. to ITOCHUduringtheyear. olling interest duringtheyear. olling interest duringtheyear. olling interest duringtheyear...... 9,5)3,5 (60,703) 35,054 (95,757) ...... (160,415) 431 (160,846) ...... 519 ,2 (3,972) 1,227 (5,199) ...... eign entities...... -sale securities. olling interest duringtheyear......

......

1042 ¥ ¥ (160,412) 1925 863(80,612) 48,623 (129,235) (163,182) (322,352) Before-Tax Amount 5,7)2,3 (32,634) (29,210) 21,636 19,246 (54,270) (48,456) (56,177) (97,715) 33,478 475 ,8 (3,351) 1,384 (4,735) (1,907) (5,814) (2,336) (5,278) (1,958) (434) (464) (79) Millions ofYen Tax Benefit (Expense) (13,569)

22,418 59,847 35,725 2009 2,390 1,273 (157) 782 431 671 3 ¥(159,981) 431 46 — — (162,751) (262,505) Net-of-Tax Amount (33,759) (61,990) 19,909 (1,125) (3,424) (2,336) (4,005) (1,287) (434) (621) (33) Financial Section 141 80 (21) 644 218 (228) (132) 1,126 (2,230) (1,989) Amount (26,495) (50,577) (25,633) (32,272) Net-of-Tax Net-of-Tax (110,471) 9 (1) — 58 13 14 ¥ (83) 158 1,413 1,580 2008 (1,442)

32,860 57,505 23,052 (Expense) Tax Benefit Tax Millions of Yen (30) 163 644 219 (190) (386) 2,568 (3,643) (3,569) (3,542) 1,605 (1,937) Amount (83,437) (25,646) (55,324) (82,362) 32,889 (49,473) (54,938) 22,894 (32,044) (54,908) 22,885 (32,023) Before-Tax Before-Tax (167,976) ¥ (26,509) ¥

Notes to Consolidated Financial Statements Financial to Consolidated Notes ......

......

...... olling interest during the year. olling interest -sale securities...... eign entities...... (3,732) 1,663 (2,069) ...... (79,794) 31,447 (48,347) ...... (25,865) 14 (25,851) olling interest during the year. olling interest olling interest during the year. olling interest olling interest during the year. olling interest on derivative instruments during the year. to the noncontr and losses on securities attributable to the noncontr to the noncontr to the noncontr upon sale or liquidation of investments in for upon sale or liquidation to ITOCHU during the year. to ITOCHU during the year. . to ITOCHU during the year Net change in unrealized holding gains and losses Net change in unrealized Reclassification adjustments for gains and losses realized in net income. realized Reclassification adjustments for gains and losses instruments attributable holding gains and losses on derivative Net change in unrealized Reclassification adjustments for gains and losses realized in net income.. realized Reclassification adjustments for gains and losses holding gains Net change in unrealized during the year. holding gains and losses on securities Net change in unrealized Reclassification adjustments for gains and losses realized in net income. realized Reclassification adjustments for gains and losses Net change in pension liability adjustments attributable the year. Net change in pension liability adjustments during Net change in foreign currency translation adjustments attributable translation currency Net change in foreign adjustments during the year. translation currency Net change in foreign Amount arising during the year on investments in foreign entities. the year on investments in foreign Amount arising during for gains and losses realized Reclassification adjustments Net change in pension liability adjustments attributable to ITOCHU during the year. Net change in pension liability adjustments attributable for cash flow hedges. Amount arising during the year on derivative instruments instruments attributable holding gains and losses on derivative Net change in unrealized Net change in foreign currency translation adjustments attributable translation currency Net change in foreign the year on pension liability adjustments. Amount arising during Amount arising during the year on available-for attributable holding gains and losses on securities Net change in unrealized

income (loss). Other comprehensive

Foreign currency translation adjustments: currency Foreign holding gains and losses on derivative instruments: Unrealized Pension liability adjustments: holding gains and losses on securities: Unrealized 142

Financial Section Unrealized holdinggainsandlossesonderivativeinstruments: Unrealized holdinggainsandlossesonsecurities: Pension liabilityadjustments: Other comprehensive income(loss). Foreign currency translationadjustments: Net changeinunrealized holdinggainsandlossesonderivativeinstrumentsattributable Amount arisingduringtheyearonderivativeinstrumentsforcashflowhedges. Net changeinunrealized holdinggainsandlossesonsecuritiesattributable Amount arisingduringtheyearonavailable-for Net changeinpensionliabilityadjustmentsattributabletoITOCHUduringtheyear. Amount arisingduringtheyearonpensionliabilityadjustments. Net changeinforeign currency translationadjustmentsattributable Net changeinunrealized holdinggainsandlosses Net changeinunrealized holdinggainsandlossesonderivativeinstrumentsattributable Reclassification adjustmentsforgainsandlossesrealized innetincome. Net changeinunrealized holdinggainsandlossesonsecuritiesduringtheyear. Net changeinunrealized holdinggains Reclassification adjustmentsforgainsandlossesrealized innetincome.. Net changeinpensionliabilityadjustmentsduringtheyear. Net changeinpensionliabilityadjustmentsattributable Reclassification adjustmentsforgainsandlossesrealized innetincome. Net changeinforeign currency translationadjustmentsduringtheyear. Net changeinforeign currency translationadjustmentsattributable Reclassification adjustmentsforgainsandlossesrealized Amount arisingduringtheyearoninvestmentsinforeign entities. to ITOCHUduringtheyear. to ITOCHUduringtheyear. to ITOCHUduringtheyear. on derivativeinstrumentsduringtheyear. to thenoncontr and lossesonsecuritiesattributabletothenoncontr to thenoncontr to thenoncontr upon saleorliquidationofinvestmentsinfor olling interest duringtheyear. olling interest duringtheyear. olling interest duringtheyear...... eign entities...... -sale securities. olling interest duringtheyear......

......

Before-Tax Amount 103$ $1,013 1,024 1,037 1,897 (112) 4 17 289 (157) 446 210 276 (127) (173) 337 449 340 464 0 10 327 (180) 507 (61) 11 6(9 37 (19) 56 13 11 56 45 18 3 0 Millions ofU.S.Dollars Tax Benefit (Expense)

2010 (128) (311) (164) (19) (19) 23 46 — — (1) (0) (7) 0$1,013 0 0 1,024 0 0 Net-of-Tax Amount 1,037 1,586 212 300 (38) (66) 11 13 11 37 26 11 2 0 Financial Section 143

------and rate cash Interest were hedges designated hedge. were that value fair a as derivatives designated a fixed inter on receivables/payables loan of currency are of Notes to Consolidated Financial Statements Financial to Consolidated Notes basis amounts rate t designat not were that currency derivatives of pal amounts designated were that currencyof derivatives al amounts al ¥240,644 were qualify instruments hedging did not as d or 2009, the 31, 2010 and March of As flow hedge. a cash d as commodity and hedge, value a fair as designated ies are derivatives commodity of amounts ively; principal the total p respectively. ¥220,448 million, and ($2,586 million) million were qualified flow hedges cash and as designated were that respectively; ¥1,819 million, and ($7 million) ¥678 million derivatives commodity of amounts principal the total and qualify hedging did not as or designated not were that and ($6,891 million) ¥641,162 million were instruments respectively. ¥114,640 million, e in cash fluctuations to related risk hedge that derivatives designat are rates in interest fluctuations future to flows due e flow of cash of minimize the fluctuation to held derivatives are changes price commodity to due transactions forecasted 31, 2010 and March of As hedge. flow a cash as designated derivatives commodity of amounts principal 2009, the total qualified value fair and as designated were that respec ¥32,073 million, and ($414 million) ¥38,538 million t ci were that derivatives rate interest of amounts notional total ¥592,990 were hedges qualified value fair as and designated respectively; ¥537,555 million, and ($6,373 million) million that derivatives rate interest of amounts notional the total were qualified flow hedges cash and as designated were ¥1,185,926 million, and ($10,798 million) ¥1,004,660 million rate interest of amounts notional respectively; the total and qualify did not as or designated not were that derivatives ($200 million) ¥18,595 million were instruments hedging respectively. ¥252,300 million, and ($786 ¥73,101 million were qualified hedges flow cash and as prin respectively; the million, total ¥9,472 and and million) Commodity Derivatives commodity the of hedging for held derivatives Commodity invento and in unrecognized risk firmprice commitments Currency Derivatives risk rate exchange foreign hedge to held derivatives Currency as designated are unrecognized firm commitments regarding minimize to held currency derivatives and hedge, value a fair caused transactions forecasted flow of cash of the fluctuation a as designated are changes rate exchange foreign by Derivatives Rate Interest fluctuations to related risk hedge that derivatives rate Interest value in the fair r princi 2009, the total 2010 and 31, March of As flow hedge. p es ($397 ¥36,904 million were hedges qualified value fair as respectively; million, ¥49,299 princi the total and million) - - - quali and designated other in accumulated are that instruments nstruments and Hedging Activities Instruments Derivative deriva commodity and derivatives, rate interest derivative of and agreements, currencyswap contracts, n exchange 20. in receivables/payables loan of value in the fair luctuations purposes. trading for ives be flow hedges ied recognized cash as f 815 Topic ASC Also, (“AOCI”). (loss) income comprehensive or earnings be into reclassified these amounts that requires affect earnings periodlosses in the same the items hedged as losses. or its and 815, the Company Topic ASC with accordance In hedging them as by owned derivatives designate subsidiaries manner: the following with in accordance instruments t Commodity Risk Price to related risk reduce subsidiaries its and Company The using by commodities marketable of in prices fluctuations agreements, swap commodity contracts, forward futures, collectively (hereafter agreements option commodity and derivatives”). “commodity as to referred currency hold subsidiaries its and the Company Moreover, derivatives, Interest Rate Risk Rate Interest to related risk reduce subsidiaries its and Company The f receive/pay to agree subsidiaries its and which the Company fluctuations to related risk and basis, a fixed rate on interest in interest fluctuations future to due flows cash in future rate interest and agreements swap rate interest using by rates as to referred collectively (hereafter agreements option derivatives”). rate “interest exposed a variety to are subsidiaries its and Company The activities. business their ongoing to in relation risks of certain utilize derivative subsidiaries its and Company The risks. the following manage to principally instruments Risk Rate Exchange Foreign liabilities assets and have subsidiaries its and Company The to order In risks. rate exchange exposed foreign to are that dollar between U.S. exchange for the mainly risks, reduce use for subsidiaries its and the Company yen, Japanese and eig

to referred collectively (hereafter contracts currency option derivatives”). “currency as SFAS (formerly Hedging” and 815 “Derivatives Topic ASC be assets or recognized as all derivatives that 133) requires Topic ASC Further, in balance sheets. value fair at liabilities derivative of value in the fair changes that 815 requires qualify value fair and as designated are that instruments with losses together be or hedges recognized in earnings items. hedged the corresponding of value in the fair changes in the fair changes that 815 requires Topic ASC addition, In value 144

Financial Section (formerly FSP FAS 133-1and 45-4 “Disclosures about Credit Commodity derivatives. Commodity derivatives. Interest ratederivatives. Currency derivatives. Commodity derivatives. Interest ratederivatives. Currency derivatives. (a) DerivativesinASCTopic 815FairValue HedgingRelationships sidi March 31,2009were as follows. The Company and its sub year March ended 31,2010and three the months ended Gains and related losses to derivative instruments for the (2) liability derivatives were included current inOther liabilities and Long-term debt, excluding current maturities. As for balancesheet the location for items, those assetderivatives were included current inOther assetsand assets,and Other Other. Interest ratederivatives. Currency derivatives. (b) Commodity derivatives. Currency derivatives. (a) The fair values of derivative instruments as of March 31,2010and 2009,were as follows. (1) Fairvaluesofderivativeinstruments Interest ratederivatives. Total. Total. Total. Total. aries adopted ASC Topic 815“Derivatives and Hedging” derivative instruments Gains andlossesrelatedto Derivatives DesignatedasHedgingInstrumentsunderASCTopic 815 Derivatives NotDesignatedasHedgingInstrumentsunderASCTopic 815 ...... Other-net ...... Other-net ...... Trading marginsandcommissions ...... Trading marginsandcommissions ...... Interest expense ...... Interest expense ......

on tradingtransactions on tradingtransactions Location ofGainor(Loss) Location ofGainor(Loss) Derivatives Derivatives ¥ ¥ ¥22,672 ¥16,921 Income onDerivative Income onDerivative 84218,685 18,422 3583,833 13,578 Asset Asset ,8 ¥ 3,980 ¥2,377 1,207 2,136 Recognized in Recognized in 6 421 266 Millions ofYen Millions ofYen 4 2010 2010 - Derivatives Derivatives ¥22,254 Liability Liability ¥6,959 3,142 749 2009 only. Statement No. 133”)for three the months March ended 31, Instruments and Hedging Activities, an amendment of FASB Hedging” (formerly SFAS 161“Disclosures about Derivative instruments required by ASC m Derivatives Guarantees”) and Certain and infor the disclose 6 ation regarding gains and related losses to derivative Derivatives Derivatives ¥ ¥ ¥13,501 ¥12,295

0717,773 10,751 Asset Asset ,7 7,697 9,074 ,4 ¥1,631 4,346 1,177 Amount ofGainor(Loss) Amount ofGainor(Loss) 37¥ 367 Millions ofYen Millions ofYen Income onDerivative Income onDerivative 1151 81 0 Millions ofYen Millions ofYen Recognized in Recognized in ¥ 3,041 ¥ 3,070 2009 2009 ¥5,201 ¥ (1,751)

1,722 6,866 (817) (848) 2010 2009 Derivatives Derivatives ¥10,742 Liability Liability ¥9,480

1,072 1,897 1 Topic 815“Derivatives and

Derivatives Derivatives Amount ofGainor(Loss) Millions ofU.S.Dollars Millions ofU.S.Dollars Asset Asset Millions ofU.S.Dollars $244 $182 $ $ Income onDerivative 9 200 198

146 23 3$ 43 3$26 13 Recognized in 0 3 $ (9) $56 2010 2010 2010 74 (9) Derivatives Derivatives Liability Liability $239 $75 34 41 0 8 5 - Financial Section 145 - 2 5 45

$ $52 from AOCI from into income (Loss) Reclassified (Effective Portion) (Effective Amount of Gain or 2010 related transactions Millions of U.S. Dollars (6) (3) $ 5 $(4) (Effective Portion) (Effective (Loss) Recognized Amount of Gain or In OCI on Derivative (21) 194 606 461 Notes to Consolidated Financial Statements Financial to Consolidated Notes 4,162

¥ ¥4,817 ¥4,466 ¥3,881 from AOCI from from AOCI AOCI from into income into income (Loss) Reclassified (Loss) Reclassified (Effective Portion) (Effective (Effective Portion) (Effective Amount of Gain or Amount of Gain or the for material occur not not was would d transactions ended the months three 31, 2010 and ended March year 31, 2009. March financial existing on interest variable of the payment to 25 months. approximately was instruments, AOCI from reclassified loss or gain net of amount The forecast that probable was losses because it or earnings into forecasted flows for cash in future variability to exposure those forecasted excluding transactions, e qualified longer no that firm of commitments amount The ended the year for material not was hedges value fair as 31, 2009. ended March the months three 31, 2010 and March 2010 2009 from AOCI from from AOCI AOCI from into income into income Millions of Yen Millions of Yen (Loss) Reclassified (Loss) Reclassified (Effective Portion) (Effective (Effective Portion) (Effective and commissions on trading transactions and commissions on trading transactions Location of Gain or Location of Gain or Trading margins Trading Interest expense Interest

Other-net 656 Other-net (258) (530) ¥ 446 ¥(342) ¥1,188 (Effective Portion) (Effective (Effective Portion) (Effective (Loss) Recognized (Loss) Recognized Amount of Gain or Amount of Gain or In OCI on Derivative In OCI on Derivative ...... 195 expense Interest ...... 337 margins Trading ...... ¥ ...... otal. otal. T T . Commodity derivatives

Interest rate derivatives. Interest Interest rate derivatives. Interest Commodity derivatives. or gain the net and ineffectiveness hedge of amount The was effectiveness hedge of the assessment from excluded loss the three 31, 2010 and ended March the year for material not 31, 2009. ended March months in ($24 million) million ¥2,227 of (pre-tax) gain A net expected 31, 2010 is be into to reclassified March at AOCI months. 12 the next within earnings time of length 31, 2010, the maximum March of As their hedged subsidiaries its and which the Company over Currency derivatives. Currency Currency derivatives. Currency (b) Derivatives in ASC Topic 815 Cash Flow Hedging Relationships Topic (b) Derivatives in ASC or gain the net and ineffectiveness hedge of amount The was effectiveness hedge of the assessment from excluded loss the three and 31, 2010 ended March the year for material not 2009. 31, ended March months 146

Financial Section s Standard establishes also ahierarchy for inputs inmea used marketbetween participants at measurement the date. The or paid to transfer aliability inan orderly transaction fair value as price the that would received be an to sell asset Disclosures” with ASC Topic 820“Fair Value Measurements and The Company and its subsidiaries inaccordance defines, (1) Other. Commodity derivatives. Interest ratederivatives. Currency derivatives. Other. Commodity derivatives. Interest ratederivatives. Currency derivatives. (c) t concentration counterparties on or specific groups of coun into contracts only with major counterparties and avoiding and its subsidiariesto minimizecredit seek risk by entering event of non-performance by counterparties. The Company instruments and as such areto credit exposed inthe losses The Company and its subsidiaries have various derivative prescribe monitoring of creditworthiness and exposure on a t into The of policies Company the erparties. and its subsidiaries y of inputs. uring fair value Total.. Total.. 21. Derivatives NotDesignatedasHedgingInstrumentsunderASCTopic 815

Fair Value Measurements one ...... Other-net ...... Other-net ...... of following the on three levels its based observabili Fair V

(formerly

and alue Measurements ......

requires

SFAS ...... Trading marginsandcommissions ...... Trading margins andcommissions ...... Other-net ...... Other-net ......

157

that Recognized inIncomeonDerivative Location ofGainor(Loss) Recognized inIncomeonDerivative Location ofGainor(Loss)

“Fair Trading marginsandcommissions Trading marginsandcommissions Other-net Other-net

each on tradingtransactions on tradingtransactions on tradingtransactions on tradingtransactions

Value

fair

value

Measurements”),

categorized - - - subsidiaries are involved as seller. the disclosure of credit derivatives Company the inwhich and its t 3:UnobservableLevel inputs for identical assetsor liabilities. 2: Level 1: Level required by any downgrade of credit their ratings. In addi require immediate settlement nor provision of collateral and its subsidiaries donot have derivative agreements that counterparty-by-counterparty ion, there are no material items mentioned to be regarding directly or indirectly. that are for observable assetor the liability, either Inputs other than quoted prices included 1 inLevel identical assets Quoted prices (unadjusted) inactive markets for Amount ofGainor(Loss) Amount ofGainor(Loss) Income onDerivative Income onDerivative Millions ofYen Millions ofYen Recognized in Recognized in ¥ 4,529 ¥ 3,140 ¥ ¥8,259 (1,227) 8,311 2,640 2010 2009 (111) (290) 193 (12) or liabilities. 57 87 basis. Further, Company the Amount ofGainor(Loss) Millions ofU.S.Dollars Income onDerivative Recognized in 2010 $ 49 $ 34 (13) 28 (1) 1 - Financial Section 147 72 89 426 146 314 5,991

13,598 25,796 20,222 $ 39,593 29,213 ¥ ¥ — ¥ — — — — — 227,264 — 2,443 72 26 — ¥ — $ —

¥ ¥ 2010 2009 2010 — 6,701 6,701 — 9,121 9,121 — — 1,969 181,268 49 62 Millions of Yen Millions of Yen 346 $260 $146 $ — $ 5,991 ¥ Millions of U.S. Dollars 22,265 32,186 ¥18,446 ¥24,181 ¥13,598 ¥ 1 — — — — 80 67 5,723 2,448 8,238 — — ¥ 54 160 1,755 1,295 3,210 Notes to Consolidated Financial Statements Financial to Consolidated Notes 3,531 1,776 7,407 5,032 2,394 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 2 Level Level 3 Total $ $ 222,757 4,507 179,299 ¥ ¥ ¥ ...... ¥ ...... Derivative assets. Derivative assets. Derivative assets. Debt securities. Equity securities. Equity securities. Equity securities. Debt securities. Debt securities. Assets and Liabilities Measured at Fair Value on a Recurring Basis on a Recurring at Fair Value Liabilities Measured Assets and vailable-for-sale securities vailable-for-sale securities vailable-for-sale securities vailable-for-sale Trading securities. Trading A Derivative liabilities. Derivative liabilities. Cash equivalents. Derivative liabilities. Cash equivalents. securities. Trading A Cash equivalents. Trading securities. Trading A

Debt Balance Sheets. the Consolidated on Investments” classified in “Other mainly are securities above Available-for-sale The Balance the Consolidated on investments” classified in “Short-term are less or year one of maturity securities a remaining with Sheets.

Assets:

Assets: Assets: (a) of primarily a recurring consist basis on value fair at measured are that liabilities and assets subsidiaries’ its and Company The liabilities. derivative assets and securities, derivative securities,trading available-for-sale a recurring on value fair at measured were that liabilities assets and for level by information provides table following The respectively. 2009, and 31, 2010 March at basis

Liabilities: Liabilities: Liabilities:

148

Financial Section m m

Purchases, issuancesandsettlements. Purchases, issuancesandsettlements. Purchases, issuancesandsettlements. Total gainsorlosses(realized /unrealized). Total gainsorlosses(realized /unrealized). Total gainsorlosses(realized /unrealized).

with transactionswhich sufficient are frequency occur avail market that are listed on exchanges are measured using quoted exchanges and alternative investments. Marketable securities t The Company and its subsidiaries following the use valua- The amountoftotalgainsorlosses(inGain(loss)oninvestments–net)fortheperiodincluded Ending balance. Effect ofexchangeratechanges. Beginning balance. The amountoftotalgainsorlosses(inGain(loss)oninvestments–net)fortheperiodincluded Ending balance. Effect ofexchangeratechanges. Beginning balance. The amountoftotalgainsorlosses(inGain(loss)oninvestments–net)fortheperiodincluded Ending balance. Effect ofexchangeratechanges. Beginning balance. The following table provides changes the 3items inLevel years for March ended fiscal the 31,2010and 2009,respectively. and The available-for-sale trading securities pri securities market prices and 2. as them Level classify and its subsidiaries measure fair their value using quoted the maturitiesoriginal of three months or less. The Company basis consistrecurring primarily of commercial papers with The cash equivalents that are measured at fair value on a a s ion techniques for assetsand the liabilities that are mea ured at fair value on basis. arecurring to assetsstillheldatMarch 31,2010. attributabletothechangeinunrealizedin earnings gainsorlossesrelating to assetsstillheldatMarch 31,2010. attributabletothechangeinunrealizedin earnings gainsorlossesrelating to assetsstillheldatMarch 31,2009. attributabletothechangeinunrealizedin earnings gainsorlossesrelating ble, are they included other 1.Onthe inLevel hand, instru ents that are measured at quoted prices inmarkets in arily consist of marketable that are securities listed on Included inothercompr Included inear Included inothercompr Included inear Included inear Included inothercompr prices. When quoted prices inactive markets in ...... nings. nings. nings...... ehensive income(loss). ehensive income(loss). ehensive income(loss)...... (14,750) ...... (3,847) ...... - - - - markets as of the flows, as well as referring to index data available inactive r Derivative assetsand derivative liabilities consist of cur e measured at fair value inputs using unobservable of invest available-for-sale by holding are securities which purposes), alternative investments or as trading (classified securities 3items 2.Level Level consist of other investments such as therewhich are relatively few transactions are included in inputs uponbased observable only and 2. as Level classified fair value pricing models, such as Black-Scholes the model, derivative instruments are measured using commonly-used quoted market prices and 1.The as other Level classified derivatives that are inactive markets traded are valued at derivatives,ency interest rate derivatives, and commodity es’ fundamentals specific including estimated future cash year end. fiscal ¥ 29,754 ¥ (3,029) ¥ ¥ 9,121 Securities Securities Securities (1,905) (3,847) (2,036) Trading Trading Trading 9,121 6,701 (175) (465) $ $ 98 (20) (50) (50) Millions ofU.S.Dollars 72 — — — (1) (1) (2) (5) Millions ofYen 2010 2010 2009 Available-for-sale Available-for-sale Available-for-sale ¥ ¥ Securities Securities Securities ¥2,125 ¥3,264

1,203 3,264 2,448

(784) $— $35 — (32) (32) (64) (64) — 26 — — — — — — (9) (0) (0) - - Financial Section 149 - - - 95 41 4,377 13,380 (pre-tax) (pre-tax) (pre-tax) Impairment loss Impairment loss Impairment loss 25 $121 1,518 ¥ 2010 2009 2010 48,460 Millions of Yen Millions of Yen Millions of U.S. Dollars 25 $ 341318125 341 318 125 171 the measurement of as estimates $ 1,518 ¥ 48,460 31,685 31,685 15,948 29,55611,658 29,556 11,658 8,835 3,803 Level 3 Total Level 3 Total Level 3 Total ¥ 2,310 ¥ 2,310 ¥ 11,255 nal advisors. Notes to Consolidated Financial Statements Financial to Consolidated Notes The subsidiaries. its and the Company to ble ervable inputs. of price market the quoted as such factors other of the using Measurement if available. the investee, was the investee of flow projection cash future avail which were based unobservable inputs upon a the using primarily measured are values fair Their using of operation continuing from income of sum flows (before cash future asset and the long-lived unob sale, which are its from resulting discounts) s the measured of also verified and rationality date profes independent review by through amounts utilized these subsidiaries inputs its and Company based the upon were inputs such that confirming best Company’s sio using primarily measured were values fair Their plan the business flow on cash future discounted unobservable inputs. which are Note3: Note4: - - - - ...... ¥ ...... at companies in associated investments their fair at investments non-marketable of ent of ent by held liabilities and in assets be to considered values fair Their beed to other-than-temporary. asset net the investees, of income future of ion recognized impair- subsidiaries and Company The m t various considering of a result as measured were the to available which were unobservable inputs expecta including subsidiaries, its and Company the carrying below were values their fair as values consid was values in fair the decline and amounts the below were values their fair as values their fair was values in fair the decline and carrying amounts fair Their be to other-than-temporary. considered cash future using primarily measured were values consideration with the investees, of flow projection er es unrealized loss material and the investees, of value the investees. recognized impair subsidiaries and Company The m Financial Assets Measured at Fair Value on a Nonrecurring Basis on a Nonrecurring at Fair Value Assets Measured Financial 1: Note Assets: Non-marketable investments (Note 1). Investments in associated companies (Note 2). Investments in associated companies (Note 2). Long-lived Assets (Note 3). . Goodwill and Other Intangible Assets (Note 4) Assets: (Note 1). Non-marketable investments (b) ended the years during value fair at measured were financial assets that for level by information provides table following The respectively. basis, a nonrecurring 2009 on 31, 2010 and March Investments in associated companies (Note 2). Investments in associated 3). Long-lived Assets (Note Goodwill and Other Intangible Assets (Note 4). Goodwill and Other Intangible Assets: Non-marketable investments (Note 1). 2: Note 150

Financial Section lio from subsidiary 81.5%tothe 69.3%. no significant concentrations of credit risk with any individ in onthird parties September 18,2008,coincident with its list 1,250,000 shares of common stock inapublic offering to engaged inonline foreign exchange brokerage, issued FX PRIME Corporation, aconsolidated subsidiary, is which es The fair values of non-current Other receivables and advanc- Receivables and Advances to Associated Companies: Valuation Techniques for Fair Values of Other Non-current Financial assets: t The Company and its subsidiaries are engaged intransac of non-performance by counterparties. instruments, areto which credit event exposed inthe losses The Company and its subsidiaries have various financial (2) FairValue ofFinancialInstruments ¥1,100 and total the amount of issuance the was ¥1,375mil similar credit ratings. and maturities offered being to borrowers or customers with rates of loans or receivables with similar terms, conditions of disclosure the purpose requirements of ASC Topic 825 amounts, The carrying and estimated fair values for the en u Financial liabilities: ions with numerous counterparties to ensure that there are counterpartyal or group of counterparties. to associated companies are estimated on pres the based g on JASDAQ the market. The offering share price per was Long-term debt Other non-current receivables issuanceofStockbySubsidiariesorAssociatedCompanies 22. t value of future cash flowsdiscounted using current the n. This issuance Company’s the decreased ownership of (including curr for doubtfulreceivables). companies (lessallowance and advancestoassociated ent maturities).

...... ,6,1 ¥2,168,527 ¥ 2,168,317 1657¥127,383 ¥ 126,597 Carrying Amount 2010 - - - - - Estimated Far Value b short maturity. are usually the than marketable and current securities liabilities financial amounts The carrying of current assetsother financial stock. The issuance of shares these was regarded as a of Company’s the share value per carrying of subsidiary the The offering share price per of issuance the was inexcess 31, 2010. There is no material item for year the March ended “Income taxes–Deferred.” liability of ¥228million on gain the is which included in investments–net.” The Company adeferred recognized tax Marchended is 31,2009,which included in “Gain (loss) on Company again recognized of ¥555million for year the ofpart Company’s the interest and the subsidiary inthe r value of future cash flowsdiscounted using current the bor The fair values of Long-term debt are on present the based Valuation Techniques for Fair Values of Long-term Debt: and Hedging Activities” respectively): and Investments”Securities and “20.Derivative Instruments asset/liability derivatives, refer please to “4.Marketable investments and investments, Other and for fair value of 2010 associated companies and long-term debt as of March 31, techniques for other non-current receivables, advances to about Fair Value of Financial Instruments”) and valuation “Financial Instruments” (formerly SFAS 107“Disclosures Millions ofYen owing rates of similar to debt instruments having compara le maturities. and 2009were as follows (for fair value of Short-term 20502¥2,016,519 ¥2,025,052 1737¥109,035 ¥ 107,337 Carrying Amount same as fair their values of because the 2009 Estimated Far Value 2,0 $23,307 $23,305 Carrying Amount ,6 $1,369 $ 1,361 Millions ofU.S.Dollars 2010 Estimated Far Value of sale a - - Financial Section 151 ------4 12 16 37 7

12 62 25 27 69 $191 $ $ $244 2010 2010 $ $ $101 $101 Millions of Millions of U.S. Dollars U.S. Dollars beneficiary.

313 In obligation. no have 1,165 7,628 7,330 1,276 1,191 4,507 3,756 2009 2009 10,757 ¥ ¥13,364 ¥ ¥13,113 ¥13,113 ¥13,677 ¥25,061 ¥ primary

the

was balance sheets the consolidated

Millions of Yen Millions of Yen the maximum of calculation 352 612 1,494 5,805 2,508 6,424 3,460 2,371 1,142

2010 2010 ¥9,407 ¥9,407 ¥1,094 ¥ ¥ ¥22,661 ¥ ¥17,707 subsidiaries

absorb to they if are entity interest a variable its

Notes to Consolidated Financial Statements Financial to Consolidated Notes and

ary undertaking real beneficiary entities principally were recognized in ts which are entities. interest ble guarantees. to due was amounts d balance sheet in which the entities with the assets associated of d amounts vari such with relationships the contractual including ors entities interest variable existing with ual relationships do so to in likely is or support, undertake any currently aries beneficiary of the losses expected a variable half of than arise from to more half of than more party no if absorbs Even entity. interest receive subsidiaries its and expected losses, if the Company the the expected returns, half of than residual more be deemed to the primary are subsidiaries its and Company entities. beneficiary interest those variable of no are there believe that subsidiaries its and Company The subsid its and the Company where entities interest variable m a information Quantitative businesses. development estate follows: as is those entities regarding aggregat The businesses. development estate real and vessels consolidat the recorded and loss to exposure the maximum e i the not whether or of in assessments change in no resulted Company entities, interest variable 31, 2010, among March of As the pri are subsidiaries its and those in which the Company follows: as are investments, includes loss to exposure maximum The The guarantees. and loans, the involvement of based is assessments loss to on exposure fac various considering subsidiaries its and the Company of t they contractually although the future, contrac of a reconsideration 31, 2010 March of as addition, t es inter variable significant have subsidiaries its and Company e ------million) subsid ...... ($5,218 ...... million ...... ¥485,518 ...... were ...... interests ntities E ariable Interest ...... variable 23. v Total assets. Total Total current assets. current Total . assets Total and equity. liabilities Total con parties, third which are to loans providing and ent, (ii) Those those entities; by held liabilities in the assets or its and Company (i) The met: are conditions wing and specialucted Company through The purpose entities. in these special purpose enti investments equity and ntees, ant risk at investment the equity of the holders them or with ted under entities interest classified variable as ies, which are between difference major 31, 2009. The March of as ively or investments loans, of in the form exposure have aries es a t the associ risk cover to capital sufficient have do not entities a March of as respectively ($487 million), ¥45,319 million and respec ¥41,995 million, and ¥464,492 million 31, 2010 and involvement. the beginning of them at of control lack consider subsidiaries its and the Company addition, In interest each variable with relationships the contractual deemed be to the primary deicide if they are and entity, lo FIN 46 (R)). 810 (formerly Topic ASC FIN 46 (R)), 810 (formerly Topic ASC with accordance In whether determine those subsidiaries its and the Company the fol in which both of entities, interest variable are entities Inventories. . receivables Other non-current the to loss to exposure the maximum assets and total The their involvement of a result as subsidiaries its and Company its and in which the Company entities interest in variable signifi the primary beneficiary not have are subsidiaries but Long-term debt, excluding current maturities. Long-term debt, excluding current associated companies. Due from assets. Other current c of holders beneficial or interest the creditors addition, In of credit the general to recourse have do not those entities subsidiaries. its and the Company interest variable have subsidiaries its and Company The not are subsidiaries its and which the Company for entities the primary the ocean beneficiary plying for established Other. . equity Total debt. secure to long-term mainly collateral, as pledged were inventories most Further, cost. at equipment, and property includes mainly “Other” Note: Cash and cash equivalents. in certain involved are subsidiaries its and Company The develop property vessels, ocean as plying such businesses, m

Investments in and advances to associated companies. . liabilities current Total rights have subsidiaries its and the Company and guarantees chang arise from that risks take benefits or to obligations or guar loans, through interests variable retain subsidiaries its d t i 152

Financial Section respectively, for loans and investments inequity capital. mi financing commitments aggregating ¥76,750million ($825 The Company and its had subsidiaries long-term also at various dates through 2026. at March 31,2010and 2009,respectively. The deliveries are ¥1,734,273 million ($18,640million), and ¥1,421,451million contracts. The outstanding purchase contracts contracts these cases, are matched with counterparty sales chemical materials, either at or fixed variable prices. In most t The Company and its subsidiaries enter into purchase con divestiture of equity the interest to third lease inthe parties. an economically viable development plan nor areasonable Company the because and its were partner unable to define (US) Limited, awholly-owned of Company, the subsidiary (Entrada) LLC, awholly-owned of Energy CIECO subsidiary of Mexico, Company the which participated through CIECO Total: Total: Guarantees forcustomers: Guarantees forcustomers: Guarantees forequity-methodassociatedcompanies: Guarantees forequity-methodassociatedcompanies: dra In March Company 2009the to definitively decided with-

forracts items, certain principally energy, and machinery Maximum potentialamountoffutur Maximum potentialamountoffutur Maximum potentialamountoffutur Amount ofsubstantialrisk. Maximum potentialamountoffutur Amount ofsubstantialrisk. Amount ofsubstantialrisk. Maximum potentialamountoffuture payments. Amount ofsubstantialrisk. Maximum potentialamountoffuture payments. Amount ofsubstantialrisk. Amount ofsubstantialrisk. 25. r 24. llion) and ¥109,317million at March 31,2010and 2009, w from Entrada the oil and natural gas project Gulf inthe Commitments andContingentLiabilities egarding L oss ...... R elating to the e payments. e payments. e payments. e payments. amounted to ...... ¥ ...... E ntrada Oil and -

and 2009are summarized below: m payments. The maximum potential amount of future pay Company and its subsidiaries in indebtedness by to third enhance parties credit their stand customers. The guarantees are principally for monetary for indebtedness of equity-method associated companies and The Company and its subsidiaries issue various guarantees net” consolidated inthe statements of income. expenditures and unrecoverable costs included in“Other– and a¥7,067million impairment loss due to additional included in“Gain (loss) on property and equipment–net” and equipment (US)Limited, by Energy is which CIECO related to amount the held under rights, mineral machinery, The loss consisted of a¥29,207million impairment loss 31, 2009. amountin the of ¥36,274million for the As aresult, Company the aloss recognized for project the gs. If aguaranteed its obligation, fails to party fulfill the ents and amount the of substantial risk at March 31,2010, N atural Monetary Indebtedness Monetary Indebtedness G as Guarantees for Guarantees for ¥ 1682¥067¥137,459 ¥30,607 ¥106,852 ¥152,984 ¥27,268 ¥125,716 P 24,341 37,931 33,719 26,040 50,622 70,525 56,230 55,191 58,060 63,971 roject in the would required be to execute Millions ofYen Millions ofYen 2009 2010 urnesTotal guarantees urnesTotal guarantees U 1,8 ¥ ¥12,280 ¥ ¥13,038 .S. 19336,324 11,983 50,636 12,705 17,846 10,445 83774,557 18,327 69,421 14,230 98987,889 29,829 87,121 23,150 Other Other year March ended G ulf of Mexico

51,565 36,485 62,902 83,563 - - Financial Section 153 ------2036. 392 936 898

30, June on the to equivalent 153 746 136112 544 248 $293 $1,644 $140 $ Other expire guarantees Total 2010 Millions of U.S. Dollars Millions of U.S. customers the business check to order 593 280 688 408 758 and 2009, respectively. $1,351 $ Guarantees for Guarantees for Monetary Indebtedness Notes to Consolidated Financial Statements Financial to Consolidated Notes companies the than other customers for provided lines credit For expect an does the Company nor guarantees, on ance guarantees. on ance in a year once least at lly perfor of lead demands to which might contingencies ant perfor of lead demands to which might contingencies ant amounts recoverable The payments. future of ial amount performed individu reviews are regular Moreover, date. ion as companies associated equity-method ees undertaken for expira an and limit credit appropriate sets an the Company a t signifi expect does not any 31, 2010, the Company March of at ¥40,553 million and ($365 million) ¥33,964 million were 31, 2010 and March guaran For efficiency and the investment. of circumstances subsidiaries its and the Company by issued Guarantees equity-method of indebtedness term for the longest with associated t control credit the Company’s companies, group Company’s the business of independent which are departments, with together limit credit appropriate sets an departments, basis item by item an on date expiration an the Accordingly, each customer. of creditworthiness limits credit of the condition monitors regularly Company time to reviews from and receivables, the collection of and guarantees For receivables. overdue of time the situation group the Company’s than other customers undertaken for been signifi no have 31, 2010, there March of as companies c t the deterioration to due amounts guarantee of increase associated equity-method at conditions management of companies. parties third from be recovered might that amounts The poten the maximum determining from been excluded have m m c ------...... e payments. e payments. associated equity-method for ...... the employees If guarantees. above of management handling departments the business t of the controls the Company those guarantees, Including Amount of substantial risk. Amount of substantial risk. Amount of substantial Maximum potential amount of future payments. of future Maximum potential amount Amount of substantial risk. Amount of substantial of futur Maximum potential amount Maximum potential amount of futur Maximum potential amount indepen which are departments control the affiliate by ent group its a part of considered customers other and anies at ¥807 million and ($8 million) ¥787 million was ntees certain those of and employees its of loans housing ntees were the contracts under payments future of ial amounts in the included ees are t den 31, March at ¥8,779 million and ($87 million) ¥8,069 million the to relating provisions No 2009, respectively. 2010 and financial in the consolidated been recorded have guarantees statements. line, credit guarantee any for Further, companies. the said t risk having them as recognizes the Company companies, to related risks other with along be to controlled exposure the time monitors time to from and in affiliates, investment the for Accordingly, their operations. of circumstances associated equity-method for undertaking guarantees of assess an after undertaken is only guarantee any companies, to be required would the Company a payment, on default poten maximum The the contracts. under payments make and in advance creditability of assessment an by companies, follows. as circumstances customer of periodical monitoring provided lines credit For p com associated equity-method for provided exposure credit 2009 31, 2010 and March at risk substantial of amount The the incurred by liability of the actual amount represents guaranteed parties the pre-determined within guaranteed The contracts. the guarantee under established limits parties third have from be recovered might that amounts risk. substantial of the amount in determining been excluded guar recognized for the liability of carrying The amount Guarantees for equity-method associated companies: Guarantees for equity-method a guar Company The 2009, respectively. 31, 2010 and March a Guarantees for customers: Total: These guaran the benefit program. a part as of subsidiaries m 154

Financial Section The major equity-method associated companies and customers and substantial the risk of related the guarantees for mone amount of ¥10,000million ($107million) on May 25, 2010, lio Japan inan aggregate amount of ¥20,000million ($215mil The Company issued 0.653%Yen both due Bonds 2015in issued. Subsequent events were as follows. 2010, on statements financial the which were available to be The Company evaluated subsequent events through June 25, million at March 31,2010and 2009,respectively. business were ¥69,115million ($743million) and ¥65,978 exchange discounted withordinary inthe banks course of and 2009,respectively. The amounts of bills of export receivable on arecourse basis with at banks March 31,2010 settlement of accounts payable and discounted notes trade for notes trade the receivable endorsed to suppliers inthe amountsin the of ¥438million ($5million) and ¥172million The Company and its subsidiaries were contingently liable Japan BrazilPaperandPulpResources Consolidated Grain&BargeCo.. Ningbo MitsubishiChemicalCo.,Ltd.. JAPAN ALUMINAASSOCIATES LNGSHIPPINGCO.,LTD.NEFERTITI . Sakhalin OilandGasDevelopmentCo.,Ltd.. Famima Credit Corporation. t ISUZU FinanceofAmerica,Inc.. BEIJING BEERASAHICO.,LTD. . MOON RISESHIPPINGCO.,S.A.. indebtednessary at March 31,2010and 2009were as follows: Development Co.,Ltd.. (AUSTRALIA) PTYL 26. n) and 1.53%Yen due Bonds 2020inJapan inan aggregate Subsequent Events TD ...... Millions of 1,6 $143 ¥13,263 Yen ,2 24 30 2,227 54 66 2,789 5,046 75 6,163 107 6,960 9,982 ,8 14 16 1,284 1,501 9 11 991 2010 - U.S. Dollars Millions of June Company 25, 2010,the was authorized to pay a At ordinary the general meeting of shareholders held on Directors held on May 15,2009. in accordance with an approved resolution of of Board the The date effective of dividend the payment is June 28,2010. ($128 million) to shareholders of record on March 31,2010. dividend of share, ¥7.5($0.08)per or atotal ¥11,865million ce subject to any such lawsuits, arbitrations or other pro legal business ofGroup activities ITOCHU the may not become However, there is no assurance that domestic or overseas Group.ITOCHU position financial the t There are currently no significant pending lawsuits, arbi ration, or other proceedings legal that may materially affect edings future. inthe ONRS HPIGC...... 1,622 MOON RISESHIPPINGCO.,S.A...... Consolidated Grain&BargeCo.. Famima Credit Corporation. Japan BrazilPaperandPulpResources AI BeverageHoldingCo.Ltd.. Ningbo MitsubishiChemicalCo.,Ltd.. Sakhalin OilandGasDevelopmentCo.,Ltd.. Asahi Breweries Itochu(Holdings)Limited. BEIJING BEERASAHICO.,LTD. . Zhejiang ZhongpengChemicalCompanyLimited Development Co.,Ltd.. or results of operations of the ...... 3,688 ...... 3,163 ...... 4,869 ...... 1,355 ...... 2,945 ...... 6,162 ...... 982 ...... ¥14,305 ...... 1,525 ... Millions of cash 2009 Yen - - - Financial Section 155 ndependent Auditors’ Report Auditors’ Independent 156

Financial Section auditors ofthefinancialstatementsthesecompaniesreportonmanagement disclose theassessmenttoinvestorsin“ManagementInternalControlReport.” TheActalsorequiresthattheindependent we concludedthatitsinternalcontrolsystemoverfinancialreportingas ofMarch31,20 to The FinancialInstrumentsandExchangeActinJapan(“theAct”)requires themanagementofJapanesepubliccompanies Internal ControlsOverFinancialReportinginJapan published bytheBusinessAccountingCouncil. under theAct. its ManagementInternalControlReport. Act isattachedonthefollowingpages “The after April 1,2008 Independent Auditors’Report(“indirectreporting”).UndertheAct Supplementary Explanation annuallyevaluatewhetherinternalcontrolsoverfinancialreporting As aresultofconductinganevaluationinternalcontrolsoverfinancial reportinginthefiscalyearendedMarch31,20 An Englishtranslationof Our IndependentAuditors,DeloitteToucheTohmatsu,performedanaudit oftheManagementInternalControlReport We StandardsandPracticeforManagementAssessment AuditofInternalControlOverFinancialReporting” havethusevaluateditsinternal . theManagementInternalControlReportand theIndependentAuditors’Reportfiledunder . controlsoverfinancialreportingasof onthese reportsarerequiredforfiscalyearsbeginning or (“ICFR”)areeffectiveasofeachfiscalyear-endandto March31,20 ’s assessmentoftheeffectivenessICFRinan 10 10 was effectiveandreportedsuchin in accordancewith ITOCHU Corporation

10,

Financial Section 157 ------entities business pro- determined tak entities”, see Note) selected business process- business units, of the four key financial figures. which is the end of this fiscal 10, entities, we reasonably determined 8 locations and/or the consolidated financial statements and, thus, we did not include them conducted under the (“ICFR under FIEA”) and one Exchange Act and and equity in earnings of associated companies” as of March 31, 20 affect the the perspective of the materiality that may significant on a consolidated basis procedures and operation of these key controls. These ranslation) entities as “significant locations and/or business units”. We 42 selected the at is no such detailed guid standards established by the AICPA, there ICFR under the attestation NOTE TO READERS: ( TRANSLATION ) not have any material impact on or may not be completely prevented possibility that material misstatements business objectives of the Company. we controls”) and based on the results of this assessment, of assessment, high-risk transactions, taking into account their business or operation dealing with scope in the company-level entities other than the 158 entities, however we included major special purpose entities into the scope of assessment. Regarding “158 associated companies (the consolidated subsidiaries and equity-method 8 that may have a material impact on the controls identified key analyzed these selected business processes, for designing are responsible Officer Officer and Tadayuki Seki, Chief Financial President & Chief Executive We included 10. subsidiaries, if any. In addition, we did not include entities are directly owned by the Company. The assessment of these entities includes their own consolidated control we concluded that the Company’s internal of the assessment described above, as of the end of this fiscal year, 31, 20 by the Business Accounting Council. that may and investments as significant accounts relating to revenue, gross trading profit, accounts receivable, inventories, accepted in Japan. The Company and 158 in the scope of assessment of company-level controls. and the major special purpose entities, we concluded that they do special purpose entities in the 15 receivable, inventories, and investments gross trading profit, accounts and/or business units, business processes relating to revenue, at the selected significant locations associated companies, carrying amount of investments (for equity-method “Revenue”, “Gross trading profit”, “Total assets” control over business processes, we of assessment of internal for the scope guidance which provides an approximate measure Accordingly, based on the quantitative estimates and and/or (ii) significant accounts involving processes relating to (i) greater likelihood of material misstatements of its basic elements. Therefore, there is a through the effective function and combina objectives to the extent reasonable The internal control is designed to achieve its have a material effect on our entire financial report internal controls which may In conducting this assessment, we evaluated financial reporting for the Company, as well as its of internal control over We determined the required scope of assessment units to be we selected locations and business Regarding the scope of assessment of internal control over business processes, reporting was performed assessment of internal control over financial Instruments and of ICFR under the Financial between management assessment There are differences such as quantitative guidance on business assessment of ICFR management ICFR under FIEA, there is detailed guidance on the scope of In management assessment of financial reporting based upon four key financial fig and qualitative impacts on into account the materiality of quantitative on a consolidation basis (“ a result for internal control set forth in “The accordance with the basic framework internal control over financial reporting in to be tested. We Matters relating to the scope of assessment, the basis date of assessment and the assessment procedures] Matters relating to the scope of assessment, ment, have a material impact on the as significant accounts that may selection. In management assessment of location selection and/or account of and Exchange Act filed under the Financial Instruments (“ICFR”) over financial reporting report on internal control English translation of management’s Following is an information. is presented merely as supplemental Japan. This report (“AICPA”). by the American Institute of Certified Public Accountants attestation standards established ance. the scope of assess included in units. We locations and business of significant thirds of revenue and gross trading profit for the selection used a measure of more than two As the year ended exceeded two thirds of totals for verified that combined revenue and gross trading profit of in-scope entities March the required scope of assessment of internal controls over business processes. and the 15 Based on the assessment of company-level controls conducted for the Company were in the scope of our assessment and represented approximately 95% for internal control over financial reporting gen with assessment standards year. The assessment was performed in accordance erally over financial reporting was effectively maintained. We have nothing to be reported as remarks. We have nothing to be reported as points to be noted. Okafuji, Masahiro tion (Note) The 158 of Internal Control Over Financial Reporting” pub Assessment and Audit Standards and Practice Standards for Management lished cesses “Income before income taxes in associated companies), and summation of transactions for the year ended March 31, before elimination of inter-company “Equity in earnings of associated companies” 2010. and have designed and operat (the “Company”) our company internal control over financial reporting of and operating effective ed ing ing and assessed the design reliability of the Company’s financial reporting, Company. of the internal controls of the have allowed us to evaluate the effectiveness associated companies, from consolidated subsidiaries and equity-method reliability of the financial reporting is that may affect the reliability of their financial reporting. The materiality impact on the financial reporting. We selected the Company and the management’s judgment and/or (iii) a ures: we also inter-company transactions). In addition, tested based upon revenue and gross trading profit (before elimination of materiality, busi as business processes having greater added locations and business units by considering qualitative aspects such ness detected by internal control over financial reporting. The es have a material impact on the business objectives of the Company. 3. [Matters relating to the results of the assessment] 4. [Remarks] 5. [Points to be noted] 1. [Matters relating to the basic framework for internal control over financial reporting] to the basic framework for internal 1. [Matters relating T ( Report InternalManagement Control 2. [ 158

Financial Section [Audit ofFinancialStatements] To of Board the Directors of Corporation: ITOCHU Independent Auditors’Report(filedundertheFinancialnstrumentsandExchangeActofJapan) a plan and audit performthe to obtain reasonable assurance about consolidated the whether financial statements are of free materi financial statements on our based audit. Financial Statements—an amendment of ARBNo. 51”). Standards Topic Codification 810,“Consolidation” (formerly FASB Statement No. 160,“Noncontrolling Interest inConsolidated m co Corporation and subsidiaries “Company”) (the and related the consolidated statements of income, equity and cash flows, and financial statements included Financial inthe namely, Section, consolidated the balancesheet as of March 31,2010of ITOCHU Consolidated Financial Statements”). conformity with accounting principles generally accepted United inthe States of (Refer America to “Basis of Presenting position of Company the as of March 31,2010,and results the of operations their and cash their flows for year the in ended then reasonable basis for our opinion. management, as well as evaluating overall the consolidated financial statement presentation. We that believe our audit provides a e Pur l m selection and processes objectives an FIEA, under d financial statements. An audit l misstatement. An audit includes examining, on atest supporting basis, evidence amounts the and disclosures consolidat inthe y ents are responsibility the of Company’s the management. responsibility Our is to express an opinion on consolidated these

nsolidated supplementary schedules for year from fiscal the April 1,2009to March consolidated 31,2010.These financial state ate as

audit Following There In

suant to first the paragraph of 193-2of Article Financial the Instruments and Exchange Act, we have audited consolidated the We conducted our audit inaccordance with auditing standards generally accepted inJapan. standards Those require that we inNoteAs discussed In our opinion, consolidated the financial statements referred to above present fairly, material financial inall the respects, one

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the - - - - - Financial Section 159 - - - accepted generally reporting financial over control internal for standards auditing reporting. financial over with language.) in the Japanese issued the original report of accordance in audit our opinion. Independent Auditors’ Report (filed under the Financial Instruments and Exchange Act of Japan) Act of Exchange and Instruments the Financial under Report (filed Auditors’ Independent conducted We the that which represents above, to referred reporting financial over control internal on report management’s opinion, our In required is which disclosure for in the Company interest financial any have partners do not the Our engagement firm and a test on examining, includes audit An misstatement. material free of is reporting financial over control internal on report ent’s on report management’s on opinion an express to is Our responsibility reporting. financial over control internal on report g its our for basis ble the overall evaluating as well as management, by made control internal of assessment of results and thebasis, scope, procedures a reason provides audit our believe that We reporting. financial over control internal on report the management’s of presentation a m completely will not misstatements material that a possibility is There audit. based our reporting on financial over control internal control internal detected by or be prevented maintained, effectively 31, 2010 is March of as subsidiaries and ITOCHU Corporation of reporting financial over control internal assessment with in conformity reporting financial over control internal of respects, the in all assessment material fairly, presents in Japan. accepted generally reporting financial over control internal for standards Act. the Certified of Accountants Public the provisions under in management’s audited have we Act, Exchange and Instruments the Financial Article 193-2 of of paragraph the second to Pursuant 31, 2010. The March of as subsidiaries and ITOCHU Corporation of reporting financial over control internal on report prepar and reporting financial over control internal effective operating and designing for responsible is management Company’s only, convenience for a translation, represents above (The whether manage about assurance reasonable obtain to perform the audit and plan we that require Those standards in Japan. nternal Control over Financial over FinancialReporting] Internal[Audit of Control 160

Financial Section The Company’s share ofassociatedcompanies’netcapitalizedcosts. Accumulated depreciation, depletion,amortization Proved oilandgasproperties. The Company’s share ofassociatedcompanies’result of Results ofoperationsfrom producing activities Expenses: Total revenues. Revenues: Table 3:Results ofOperationsforProducingActivities The Company’s share ofassociatedcompanies’costs of Total costsincurred. Development costs. Exploration costs. Acquisition ofunproved properties...... Acquisition ofproved properties...... Table 2:CostsIncurredinOilandGasPropertyAcquisition,ExplorationDevelopmentActivities Net capitalizedcosts. Unproved oilandgasproperties. Table 1:CapitalizedCostsRelatingtoOilandGasProducingActivities and onshore areas of U.K. the Africa, North America, Sea, through subsidiaries and associated companies inoffshore development and production are activities conducted The Company and its subsidiaries’ oil and gas exploration, Total expenses. and valuationallowance. operations fr (excluding corporateoverheadandinter pr Supplemental OilandGasInformation(Unaudited) Income taxexpenses. Depr Exploration expenses. Pr Sales toaf Sales tounaffiliated companies. Subtotal. operty acquisition,explorationanddevelopment. oduction costs. eciation, depletion,amortizationandvaluationallowances...... filiated companies. om producing activities...... est costs)...... s presented below is prepared inaccordance with FASB disclo information on subsidiaries the and associated companies and the ure requirements as of March 31,2010,2009and 2008.

¥ (98,202) ¥ ¥185,128 ¥ area of and Caspian Pacific Sea Supplementary Rim. ¥ 168,259

¥10,886 ¥36,065 ¥ ¥10,026 ¥34,691 ¥ ¥ ¥

21,725 16,869 26,499 86,926 2010 2010 2010

1,374 2,066 9,566 8,157 1,869 (12) 14 12 — — 2 Millions ofYen Millions ofYen Millions ofYen ¥171,073 ¥ ¥ ¥ ¥ 21,082 ¥ ¥ ¥ ¥ ¥ ¥(10,907) 152,189 ¥17,615 ¥51,958 ¥

(78,448) 84,913 13,185 74,006

2009 2009 2009 52,415 18,884 19,285 32,658 52,924 92,625 1,685 . . . (30)

30 28 — 5

¥ ¥ ¥127,583 ¥223,642 ¥ ¥ ¥26,076 ¥29,002 ¥21,543 ¥77,931 194,357 ¥65,851 ¥18,680 ¥94,853

(96,059) 2008 2008 2008 30,541 29,285 23,106 73,310 19,061 22,689

1,376 2,253 959 (955)

4 U.S. Dollars U.S. Dollars U.S. Dollars Millions of Millions of Millions of $ $ $ $ $ $ 1,989 (1,055)

2010 2010 2010

1,808

$ $ $103 $373 $117 $388 934 $108 $ $ 181

234 285

(0) 15 20 88 22 — — 0 0 0 - Financial Section 161 5 — 85 44 40 796 924 (3) — — — (267) (172) (268) (956) (594) (374) 31 34 24 550 $ 287 $ 550 2008 2010 2010 (1,403) $ 3,877 $ becomes Millions of Millions of Millions of Millions of

U.S. Dollars U.S. Dollars (3) (8) — — 3,607 20 17 31 (7,750) information 2009 22,584 16,375 21,352 2008 2008

(75,125) (19,260) (39,648) (97,195) 118,773 292,123 (117,591) (193,027) (194,185) Natural Gas ¥133,624 ¥174,532 ¥ 776,530 ¥ 174,532 new

(Billions of Cubic Feet) as

—

time (467)

1 . . (3) — — 18 15 20 95,293 13,352 29,215 43,883 2009 2009 2010 (58,310) (18,887) (20,910) 26,706 (18,214) (17,177) 26,706 (68,566)

(187,112) (127,055) over

¥ ¥ 257,718 ¥ 174,532 ¥ Millions of Yen Millions of Yen change —

475 2 (1) — 4,086 3,675 7,936 70 27 80 (11) 2008 may 2010 2010 74,061 85,957

51,144 (24,826) (16,007) (24,962) (55,278) (34,813) (88,957) ¥ 51,144 ¥ 26,706 (130,521) ¥ 360,713 ¥

Supplemental Oil and Gas Information (Unaudited) Information Oil and Gas Supplemental els) in relation only registered are revenues hand, On the other does here provided the information Consequently, available. its and the Company of estimate management’s represent not the of value flows or cash expected future subsidiaries’ reserves. proved 4 in Table reserves stated proved estimated the currently to reserve proved of Estimates (Reserve Information). Quantity quantities Sharing the Production the asset under for operation and Agreement.

8 (7) — — 20 71 70 2009 ...... Crude Oil - - (Millions of Barr ...... 8 (6) — 27 63 71 (10) 2010 ......

...... ed...... oil The factor. discount a 10% annual and rates ...... Standardized Measure of Discounted Future Net Cash Flows and Changes therein Relating to Standardized Measure of Discounted Proved Oil and Gas Reserves net of production costs. net of production 2009. 31, 2008 and ended March the years for factor unt

Development costs incurr Extensions, discoveries and improved recovery, less related costs. less related recovery, Extensions, discoveries and improved Net changes in prices, development and production costs. Net changes in prices, development and production . of reserves Purchases quantity estimates. Revisions of previous of discount (10%). Accretion Net changes in income taxes. exchange rates. of foreign Difference End of year. Sales and transfer of oil and gas produced, . Production Beginning of year. Revision of previous estimates. Revision of previous . Extensions and discoveries . Purchases based is first- flows cash net on future discounted of ure

Discounted future net cash flows at March 31. net cash flows at March Discounted future Proved developed reserves–end of year. developed reserves–end Proved costs. production Future net cash flows at April 1. Discounted future (2) Details of Changes for the Year co cash inflows. Future (1) Standardized Measure of Discounted Future Net Cash Flows (1) Standardized Measure of Discounted of measure a standardized GAAP, U.S. with accordance In the proved to flows relating cash net future discounted the end at costs and based is the prices on reserve quantities dis a 10% annual and enacted tax rates currently the year, of development costs. Future income tax expenses. Future net cash flows. Undiscounted future cash flows. 10% annual discount for estimated timing of net cash flows. of discounted future measure Standardized Table 5: Table reserves: developed and undeveloped Proved Table 4: Reserve Quantity Information 4: Reserve Table 31, ended March the years for reserves changes oil and describes table proved the following GAAP, U.S. with accordance In 2008. and 2010, 2009

currently costs, year-end prices, average month day-of-the enacted tax net future discounted of measure activities' standardized development of costs the full committed flows includes cash mea 31, 2010, the standardized ended March the year For s 162 Corporate Information / Stock Information

As of March 31, 2010

Company Name: Transfer Agent of Common Stock: ITOCHU Corporation The Chuo Mitsui Trust & Banking Co., Ltd.

Founded: Stock Listings: 1858 Tokyo, Osaka, Nagoya, Fukuoka, Sapporo

Corporate Information / Stock Information Incorporated: General Meeting of Stockholders: 1949 June 25, 2010

Common Stock: Number of Common Stock Issued: ¥202,241 million 1,584,889,504

Tokyo Head Office: Number of Stockholders: 5-1, Kita-Aoyama 2-chome, 105,119 Minato-ku, Tokyo 107-8077, Japan Telephone: 81 (3) 3497-2121 Breakdown of Stockholders: Facsimile: 81 (3) 3497-4141 % (Number of Stockholders)

Domestic Financial Instruments Firm Corporations 3.01% (1,490) 1.89% (62) Osaka Head Office: Individuals Treasury Stock 0.18% (1) 1-3, Kyutaromachi 4-chome, and Other 14.78% (102,707)

Chuo-ku, Osaka 541-8577, Japan Financial 45.54% (144) Telephone: 81 (6) 6241-2121 Type of Institutions Stockholders Foreign Investors 34.60% (715)

Homepage: http://www.itochu.co.jp/en/ (Investor Information) Less than 10,000 or more 5.66% (4,900) 1,000 0.27% (28,482) http://www.itochu.co.jp/en/ir/ 100,000 or more 7.78% (389)

1,000 Offices: or more 8.91% (71,165) 5,000,000 60.51% (60) Domestic: 15 Number of or more Shares 1,000,000 Overseas: 136 or more 16.87% (123)

Number of Employees: Consolidated*: 62,379 Major Stockholders:

Non-consolidated: 4,259 Number of Stock *The number of consolidated employees is based on stocks held holding actual working employees excluding temporary staff. Stock holders (1,000 shares) ratio (%) Japan Trustee Services Bank, Ltd. (trust account) 107,172 6.76 The Master Trust Bank of Japan, Ltd. (trust account) 88,943 5.61 Japan Trustee Services Bank, Ltd. (trust account 9) 43,826 2.77 Mitsui Sumitomo Insurance Co., Ltd. 41,150 2.60 Nippon Life Insurance Company 41,057 2.59 NIPPONKOA Insurance Co., Ltd. 37,748 2.38 Tokio Marine & Nichido Fire Insurance Co., Ltd. 37,144 2.34 Asahi Mutual Life Insurance Company 27,530 1.74 Mizuho Corporate Bank, Ltd. 20,703 1.31 Sumitomo Mitsui Banking Corporation 20,667 1.30

Forward-Looking Statements This Annual Report contains forward-looking statements regarding ITOCHU Corporation’s corporate plans, strategies, forecasts and other statements that are not historical facts. They are based on current expectations, estimates, forecasts and projections about the industries in which ITOCHU Corporation operates. As the expectations, estimates, forecasts and projections are subject to a number of risks, uncertainties and assumptions, including without limitation, changes in economic conditions; fluctuations in currency exchange rates; changes in the competitive environment; the outcome of pending and future litigation; and the continued availability of financing, financial instruments and financial resources, they may cause actual results to differ materially from those presented in such forward-looking statements. ITOCHU Corporation, therefore, wishes to caution that readers should not place undue reliance on forward-looking statements and, further, that ITOCHU Corporation undertakes no obligation to update any forward-looking statements as a result of new information, future events or other developments. Adding Value and Taking the Initiative ITOCHU Corporation Annual Report 2010 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo 107-8077, Japan Telephone : 81 (3) 3497- 2121 Facsimile : 81 (3) 3497- 4141 Homepage : http://www.itochu.co.jp/en/ ITOCHU Corporation

Printed in Japan