Annual Report Japan Airlines Corporation at a Glance Consolidated Financial Highlights Consolidated Operating Highlights Message from the Management Interview with the Group CEO Dream Skyward II: Stepping-stone to become "the world' s No.1 airline group" Review of Operations Corporate Social Responsibility (CSR) Activities Management's Review and Analysis of Financial Position Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholder' Equity (Note8) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors Consolidated Subsidiaries JAL and Its Subsidiaries and Affiliates Directory JAL Group Route Network Board of Directors Investor Information

Consolidated Statements of Cash Flows

Japan Airlines Corporation and Consolidated Subsidiaries

			Millions of yen	Thousands of U.S. dollars (Note 2)
Years ended March 31,	2004	2003	2002 Pro forma (Unaudited)	2004
Operating activities:
(Loss) income before income taxes and minority interests	¥ (82,148)	¥ 4,081	¥ (31,205)	$ (782,361)
Adjustments to reconcile (loss) income before income taxes and minority interests to net cash provided by operating activities:
Depreciation and amortization	119,388	118,187	113,517	1,137,028
(Gain) loss on sales of, and loss on revaluation of, short-term investments in securities and investments in securities, net	(569)	(2,551)	7,402	(5,419)
Loss (gain) on sales and disposal of property and equipment, net	17,846	17,603	(10,968)	169,961
Net provision for accrued pension and severance costs	19,459	17,223	847	185,323
Interest and dividend income	(2,928)	(2,932)	(3,814)	(27,885)
Interest expense	28,503	34,657	38,829	271,457
Exchange loss (gain)	547	141	(483)	5,209
Equity in (earnings) losses of affiliates	(1,221)	(340)	155	(11,628)
(Increase) decrease in notes and accounts receivable	(7,215)	31,761	(6,645)	(68,714)
Decrease (increase) in flight equipment spare parts	2,387	(2,812)	27	22,733
Increase (decrease) in accounts payable	2,608	7,778	(7,126)	24,838
Other	14,366	(29,111)	(11,767)	136,819
Subtotal	111,023	193,686	88,769	1,057,361
Interest and dividends received	3,386	3,427	4,026	32,247
Interest paid	(29,003)	(34,709)	(38,254)	(276,219)
Income taxes paid	(9,060)	(6,991)	(14,646)	(86,285)
Net cash provided by operating activities	76,345	155,413	39,896	727,095
Investing activities:
Purchases of time deposits	(1,092)	(101)	(1,372)	(10,400)
Proceeds from maturity of time deposits	996	1,877	3,498	9,485
Purchase of property and equipment	(151,585)	(195,575)	(118,882)	(1,443,666)
Proceeds from sales of property and equipment	57,285	62,043	43,665	545,571
Purchases of investments in securities	(974)	(11,540)	(2,218)	(9,276)
Proceeds from sales and maturity of investments in securities	3,615	12,400	18,520	34,428
Proceeds from sales of consolidated subsidiaries resulting in change in scope of consolidation	103	683	1,511	980
Long-term loans receivable made	(2,853)	(4,937)	(42,279)	(27,171)
Collection of long-term loans receivable	8,875	42,887	22,892	84,523
Other	247	7,074	7,491	2,352
Net cash used in investing activities	(85,382)	(85,187)	(67,172)	(813,161)
Financing activities:
(Decrease) increase in short-term borrowings, net	(9,976)	(36,196)	1,802	(95,009)
Proceeds from long-term loans	200,882	214,804	266,607	1,913,161
Repayment of long-term loans	(134,638)	(199,550)	(145,433)	(1,282,266)
Proceeds from issuance of bonds	29,815	−	−	283,952
Redemption of bonds	(67,495)	(83,864)	(60,000)	(642,809)
Dividends paid to stockholders	(7,813)	(50)	(7,089)	(74,409)
Dividends paid to minority interests	(334)	(266)	(379)	(3,180)
Other	(2,825)	(2,979)	(474)	(26,904)
Net cash provided by (used in) financing activities	7,615	(108,103)	55,032	72,523
Effect of exchange rate changes on cash and cash equivalents	(1,568)	(670)	1,713	(14,933)
Net (decrease) increase in cash and cash equivalents	(2,991)	(38,548)	29,469	(28,485)
Cash and cash equivalents at beginning of year	146,318	185,399	151,150	1,393,504
Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation	−	176	1,030	−
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation	−	(708)	−	−
Cash and cash equivalents at end of year (Note 3)	¥143,327	¥146,318	¥181,651	$ 1,365,019

In order to enhance comparability, supplemental unaudited pro forma financial statements for the year ended 2002 are presented above.
The accompanying notes are an integral part of these consolidated statements.

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