(Translation)

Annual Securities Report(The 147th Business Term)
From April 1, 2015 to March 31, 2016

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Hitachi, Ltd.

[Cover][Document Filed]Annual Securities Report (“Yukashoken Hokokusho”)[Applicable Law]

Article 24, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 22, 2016

[Fiscal Year]

The 147th Business Term (from April 1, 2015 to March 31, 2016)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English] Hitachi, Ltd.
[Title and Name ofToshiaki Higashihara, President & CEO

Representative][Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Taro Kaiho, Manager, Legal Division[Contact Address]

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Taro Kaiho, Manager, Legal Division[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)

This is an English translation of the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau
via Electronic Disclosure for Investors’ NETwork (“EDINET”) pursuant to the Financial Instruments and Exchange Act ofJapan.
Certain information in “Part I. Information on the Company - II. Business Overview - 4. Risk Factors - Risks Related to
Our American Depositary Shares” is only included in this English translation of the Annual Securities Report for ADSs
holders and not included in the original report.
Certain information in “Part I. Information on the Company - V. Financial Information” in this document incorporates
financial statements prepared in conformity with the International Financial Report Standards (“IFRS”) as issued by theInternational Accounting Standards Board and independent auditor’s report instead of the English translation of the Annual
Securities Report.
The translation of the Internal Control Report, the Independent Auditors’ Report and the Confirmation Letter for theoriginal Annual Securities Report are included at the end of this document.
This English translation of the Annual Securities Report reflected the amendment that was reported in the Amendment
Report of the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau via EDINET on August 26,
2016.
In this document, the terms “we,” “us,” “our” and “Hitachi” refer to Hitachi, Ltd. and consolidated subsidiaries or, as thecontext may require, Hitachi, Ltd. on a non-consolidated basis and the term “the Company” refers to Hitachi, Ltd. on a nonconsolidated basis.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we
have truncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures
presented in columns or otherwise may not equal the total of the individual items. We have rounded all percentages to thenearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be.
References in this document to the “Financial Instruments and Exchange Act” are to the Financial Instruments andExchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments andExchange Act of Japan.
References in this document to the “Companies Act” are to the Companies Act of Japan and other laws and regulations
amending and/or supplementing the Companies Act of Japan.

Contents
Part I Information on the Company ................................................................................................................... 1
I. Overview of the Company ......................................................................................................................... 1
1. Key Financial Data............................................................................................................................ 1
2. History............................................................................................................................................... 4
3. Description of Business .................................................................................................................... 6
4. Information on Affiliates ................................................................................................................... 8
5. Employees ....................................................................................................................................... 16
II. Business Overview ................................................................................................................................. 17
1. Summary of Business Results ......................................................................................................... 17
2. Production, Orders Received and Sales .......................................................................................... 17
3. Challenges Facing Hitachi Group. .................................................................................................. 17
4. Risk Factors .................................................................................................................................... 18
5. Material Agreements, etc. ............................................................................................................... 24
6. Research and Development ............................................................................................................. 25
7. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows ...................... 26
III. Property, Plants and Equipment ............................................................................................................ 34
1. Summary of Capital Investment, etc. .............................................................................................. 34
2. Major Property, Plants and Equipment ........................................................................................... 35
3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc. .......................... 39
IV. Information on the Company ................................................................................................................ 40
1. Information on the Company’s Stock, etc. ...................................................................................... 40(1) Total number of shares, etc. ........................................................................................................ 40(2) Information on the stock acquisition rights, etc.......................................................................... 40(3) Information on moving strike convertible bonds, etc. ................................................................ 40(4) Information on shareholder right plans....................................................................................... 40(5) Changes in the total number of issued shares and the amount of common stock and other ....... 40(6) Shareholders composition........................................................................................................... 40(7) Major shareholders ..................................................................................................................... 41(8) Information on voting rights ....................................................................................................... 42(9) Details of stock option plans ...................................................................................................... 43
2. Information on Acquisition, etc. of Treasury Stock ........................................................................ 44
3. Dividend Policy .............................................................................................................................. 45
4. Changes in Share Prices .................................................................................................................. 45
5. Directors and Senior Management .................................................................................................. 46
6. Corporate Governance, etc. ............................................................................................................. 56
V. Financial Information ............................................................................................................................. 66
VI. Stock-Related Administration for the Company ................................................................................... 67
VII. Reference Information on the Company ............................................................................................. 68
Part II Information on Guarantors, etc. for the Company ................................................................................ 68[Consolidated Financial Statements]................................................................................................................. F-1
Consolidated Financial Statements. .......................................................................................................... F-2
Reports of Independent Registered Public Accounting Firm .................................................................. F-72
[Internal Control Report (Translation)] ............................................................................................................. A-1[Independent Auditors’ Report (Translation)] ................................................................................................. A-3[Confirmation Letter (Translation)] .................................................................................................................. A-6

Part I

Information on the Company

I. Overview of the Company
1. Key Financial Data
(1) Consolidated financial data, etc.

Fiscal year

(Millions of yen, unless otherwise stated)
IFRS
Transition
145th
146th
147th
Date
business term business term business term
April 1, 2013 March 2014 March 2015 March 2016－
9,666,446
9,774,930
10,034,305

Year end
Revenues
Income from continuing－
678,498
518,994
517,040
operations, before income taxes
Net income attributable to－413,877
217,482
172,155
Hitachi, Ltd. stockholders
Comprehensive income
attributable to Hitachi, Ltd.
－665,372
337,578(127,557)
stockholders
Total Hitachi, Ltd.
2,058,708
2,668,657
2,942,281
2,735,078
stockholders’ equity
3,157,567
3,868,831
4,296,342
4,125,570
Total equity
Total assets
9,777,007
11,098,191
12,433,727
12,551,005
Total Hitachi, Ltd.
stockholders’ equity per share
426.18552.62609.35566.48(yen)
Earnings per share attributable
to Hitachi, Ltd. stockholders,
－
85.69
45.04
35.65
basic (yen)Earnings per share attributable
to Hitachi, Ltd. stockholders,
－
85.66
45.00
35.62
diluted (yen)Total Hitachi, Ltd.
21.1
24.0
23.7
21.8
stockholders’ equity ratio (%)
Return on equity (%)
－
17.5
7.8
6.1
Price earnings ratio (times)
－
8.9
18.3
14.8
Net cash provided by operating－
306,777
451,825
812,226
activities
Net cash used in investing－(550,179)(612,545)(730,799)
activities
Net cash provided by (used in)－
228,840
233,206(26,467)
financing activities
Cash and cash equivalents at
523,357
560,657
701,703699,315
end of year
Number of employees
329,703
323,919
336,670
335,244[Average number of part-time[48,432][48,592][45,111]
employees, etc.](Notes) 1. Our consolidated financial statements have been prepared in conformity with IFRS since the146th business term.
2. Revenues do not include the consumption tax, etc.

-1-

Fiscal year

(Millions of yen, unless otherwise stated)
U.S. GAAP
143rd
144th
145th
146th
business term business term business term business term
March 2012 March 2013 March 2014 March 2015
9,665,883
9,041,071
9,563,791
9,761,970

Year end
Revenues
Income from continuing
557,730
344,537
573,691
535,612
operations, before income taxes
Net income attributable to347,179
175,326
264,975
241,301
Hitachi, Ltd. stockholders
Comprehensive income
392,581420,680
769,178
525,081
Total Hitachi, Ltd.
1,771,782
2,082,560
2,651,241
2,930,309
stockholders’ equity
2,773,995
3,179,287
3,852,464
4,274,313
Total equity
Total assets
9,418,526
9,809,230
11,016,899
12,395,379
Total Hitachi, Ltd.
stockholders’ equity per share382.26431.13549.02606.87(yen)
Net income attributable to
Hitachi, Ltd. stockholders per
76.81
37.28
54.86
49.97
share, basic (yen)Net income attributable to
Hitachi, Ltd. stockholders per
71.86
36.29
54.85
49.93
share, diluted (yen)Total Hitachi, Ltd.
18.8
21.2
24.1
23.6
stockholders’ equity ratio (%)
Return on equity (%)
21.6
9.1
11.2
8.6
Price earnings ratio (times)
6.9
14.6
13.9
16.5
Net cash provided by operating
447,155
583,508
439,406
447,348
activities
Net cash used in investing(195,584)(553,457)(491,363)(610,255)
activities
Net cash provided by (used in)(167,838)(180,445)
32,968250,335
financing activities
Cash and cash equivalents at
619,577
527,632
558,217709,531
end of year
Number of employees
323,540
326,240
320,725
333,150[Average number of part-time[46,182][48,535][48,391][48,548]
employees, etc.](Notes) 1. Our consolidated financial statements had been prepared in conformity with accounting
principles generally accepted in the United States until the 145th business term. The figures forthe 146th business term in the above table are unaudited financial information pursuant to the
Financial Instruments and Exchange Act.
2. Revenues do not include the consumption tax, etc.
3. Effective from the 146th business term, in accordance with the provisions of the AccountingStandards Codification 205-20 “Presentation of Financial Statements - Discontinued Operations”
of the U.S. Financial Accounting Standards Board, a part of the thermal power generation
systems business is classified as a discontinued operation, which was not transferred to
MITSUBISHI HITACHI POWER SYSTEMS, LTD. for the business integration in the thermal
power generation systems with Mitsubishi Heavy Industries, Co., Ltd. The results of the
discontinued operation are reported separately from continuing operations. In line with thisclassification, “Revenues” and “Income from continuing operations, before income taxes” for the145th business term are reclassified.

-2-

(2) Financial data etc. of the Company
Fiscal year
Year end(Millions of yen, unless otherwise stated)
143rd
144th
145th
146th
147th
business term business term business term business term business term
March 2012 March 2013 March 2014 March 2015 March 2016
1,870,475
1,911,529
2,070,147
1,842,126
1,859,605
48,92376,05017,887(300)(20,944)
254,549
57,681
57,85685,26264,934
427,775
458,790458,790458,790458,790

Revenues
Ordinary income (loss)
Net income
Common stock
Number of issued shares
4,637,785
4,833,463
4,833,463
4,833,463
4,833,463(thousands of shares)
Total net assets
1,212,199
1,298,882
1,373,336
1,399,885
1,378,441
Total assets
3,331,589
3,423,417
3,570,087
3,749,326
3,868,633
Net assets per share (yen)261.52268.89284.39289.92285.50
Dividends per share (yen)
8
10
10.5
12
12
[Of the above, interim
[3]
[5]
[5]
[6]
[6]
dividends per share (yen) ]Net income per share, basic
56.31
12.27
11.98
17.66
13.45
(yen)
Net income per share, diluted
52.70
11.94
－
－
－
(yen)
Stockholders’ equity ratio (%)
36.4
37.9
38.5
37.3
35.6
Return on equity (%)
23.6
4.6
4.3
6.1
4.7
Price earnings ratio (times)
9.4
44.3
63.6
46.6
39.2
Dividend payout ratio (%)
14.2
81.5
87.6
68.0
89.2
Number of employees
32,90833,66533,50031,37537,353(Notes) 1. Revenues do not include the consumption tax, etc.
2. “Net income per share, diluted” is not stated for the 145th, 146th and 147th business terms since
there are no dilutive shares.
3. Average number of part-time employees, etc. is not stated since it was less than 10% of thenumber of employees.

-3-2. History
Month/Year
1910
February, 1920
February, 1921
May, 1935
May, 1937
April, 1939
September, 1940
April, 1942
September, 1943
March, 1944
December, 1944
April, 1947
May, 1949
February, 1950
May, 1955
October, 1956
November, 1956
June, 1957
February, 1959
October, 1959
June, 1960
August, 1960
February, 1961
August, 1961
August, 1962
February, 1963
April, 1963
February, 1966
February, 1968
February, 1969
April, 1969
August, 1969
December, 1969
May, 1970
September, 1970
April, 1971
June, 1971
February, 1973
June, 1974
November, 1974
June, 1982
April, 1985
February, 1989
February, 1991
August, 1991

HistoryFounded as a repair shop at Hitachi copper mine of Kuhara Mining Company
Incorporated as Hitachi, Ltd. with the Hitachi and Kameido Works
Acquired the Kasado shipyard from Nippon Kisen Co., Ltd. and established Kasado Works
Equity participation in Kyousei Reiki Kogyo K.K. (later changed its name to Hitachi Plant
Engineering & Construction Co., Ltd.)
Merged Kokusan Industries, Ltd. and established 7 factories, including Totsuka Works
Established Taga Works, spun off Hitachi Research Laboratory from Hitachi Works
Established Mito Works
Established Central Research Laboratory
Merged Riken Vacuum Industry and established Mobara Works
Spun off Shimizu Works from Kameari Works
Spun off Tochigi Works from Taga Works
Established Hinode Shokai Co., Ltd. (currently Hitachi High-Technologies Corporation)
Established Higashi-Nippon Senikikai KK (later changed its name to Hitachi Medical
Corporation)
Established Nitto Transport KK. (currently Hitachi Transport System, Ltd.)
Established Hitachi Sales Corporation
Spun off Hitachi Metals Industries, Ltd. (currently Hitachi Metals, Ltd.) and Hitachi Cable,
Ltd.
Established Hitachi Kiden Kogyo, Ltd.
Spun off Kokubu Works from Hitachi Works
Established Yokohama Works
Established Hitachi New York, Ltd. (currently Hitachi America, Ltd.)
Equity participation in Nippon Business Consultant Co., Ltd. (later changed its name to
Hitachi Information Systems, Ltd.)
Established Hitachi Geppan Corp. (later changed its name to Hitachi Credit Corporation)
Spun off Naka Works from Taga Works;
Equity participation in Maxell Electric Industrial Co., Ltd. (currently Hitachi Maxell, Ltd.)
Established Katsuta Works
Established Kanagawa Works
Spun off Narashino Works from Kameido Works
Spun off Hitachi Chemical Company, Ltd.
Established Mechanical Engineering Research Laboratory
Spun off Sawa Works from Taga Works, spun off Tokai Works from Yokohama Works, andspun off Odawara Works from Kanagawa Works
Established Software Works
Established Ome Works
Established Omika Works
Spun off Hitachi Construction Machinery Co., Ltd.
Established Takasaki Works
Established Hitachi Software Engineering Co., Ltd.
Acquired Asahi Works from Hitachi Denshi, Ltd.
Established Production Engineering Research Laboratory
Established Systems Development Laboratory
Established Tsuchiura Works
Relocated Kameido Works and renamed to Nakajo Works
Established Hitachi Europe Ltd.
Established Advanced Research Laboratory
Established Hitachi Asia Pte. Ltd. (currently Hitachi Asia Ltd.)
Integrated Sawa Works into Automotive Products Division
Integrated Katsuta Works into Materials Process Technology Division; integrated Totsuka
Works into Information & Telecommunication Division; integrated Naka Works into
Instruments Division-4-Month/Year
February, 1992
August, 1992
February, 1993
August, 1993
August, 1994
October, 1994
February, 1995

April, 1995
April, 1999
October, 2000
October, 2001

April, 2002

October, 2002

January, 2003
April, 2003

June, 2003
October, 2004
April, 2006

December, 2006
July, 2007
March, 2009

History
Integrated Yokohama Works and Tokai Works into AV Products Division
Changed operation unit of home appliances, computers and electronic devices
businesses from factory to business division
Integrated Semiconductor Technology Development Center, Musashi Works andTakasaki Works into Semiconductor Division
Integrated Shimizu Works into Air Conditioning Division, integrated Nakajo Works andNarashino Works into Industrial Equipment Division
Integrated Consumer Products Group and Image & Information Media Division andrenamed to Consumer Products & Information Media Systems Group
Established Hitachi (China), Ltd.
Reorganized business groups as Power & Industrial Systems Group, Consumer Products& Information Media Systems Group, Information Systems Group and Electronics
Components Group; integrated a part of R&D division and sales division into thebusiness groups
Merged Hitachi Sales Corporation
Reorganized business groups into de facto companies to independently operate eachbusiness group
Merged Hitachi Credit Corporation with Hitachi Leasing Corp. and changed its name to
Hitachi Capital Corporation
Split Instruments Group and Semiconductor Manufacturing Equipment Group via
company split and reorganized as Hitachi High-Technologies Corporation;
Split Industrial Machinery Systems Division via company split and reorganized as
Hitachi Industries Co., Ltd.
Split Home Appliance Group via company split and reorganized as Hitachi Home &Life Solutions, Inc.;
Split Industrial Equipment Group via company split and reorganized as Hitachi
Industrial Equipment Systems Co., Ltd.
Split Display Group via company split and established Hitachi Displays, Ltd.;
Split Telecommunication Equipment Division via company split and reorganized as
Hitachi Communication Technologies, Ltd.;
Turned Unisia Jecs Corporation (later changed its name to Hitachi Unisia Automotive,Ltd.) into a wholly owned subsidiary via share exchange
Acquired HDDs business from IBM Corp., and commenced operations as Hitachi
Global Storage Technologies Netherlands B.V.
Split semiconductor business, centering on system LSIs, via company split andestablished Renesas Technology Corp. (merged with NEC Electronics Corporation andchanged its name to Renesas Electronics Corporation in April 2010, and ceased to be anaffiliate of the Company due to a decrease in the Company’s ownership percentage ofvoting rights in September 2013)
Adopted committee system as the Company’s corporate governance structure
Merged TOKICO, Ltd. and Hitachi Unisia Automotive, Ltd.;
Split Mechatronics System Division, centering on ATMs, via company split andestablished Hitachi-Omron Terminal Solutions, Corp.
Split Social & industrial infrastructure business via company split and integrated with
Hitachi Plant Engineering & Construction Co., Ltd., Hitachi Kiden Kogyo, Ltd. andHitachi Industries Co., Ltd. and reorganized as Hitachi Plant Technologies, Ltd.;
Merged Hitachi Home & Life Solutions, Inc. with Hitachi Air Conditioning Systems
Co., Ltd. and changed its name to Hitachi Appliances, Inc.
Turned Clarion Co., Ltd. into a consolidated subsidiary via tender offer
Split nuclear power systems business via company split and reorganized as Hitachi-GE
Nuclear Energy, Ltd.
Turned Hitachi Koki Co., Ltd. into a consolidated subsidiary via tender offer;
Turned Hitachi Kokusai Electric Inc. into a consolidated subsidiary via tender offer-5-

Month/Year
July, 2009

October, 2009
February, 2010
April, 2010
October, 2010
October, 2011
March, 2012

April, 2013
July, 2013
February, 2014
March, 2014
April, 2015

October, 2015
April, 2016
May, 2016

History
Merged Hitachi Communication Technologies, Ltd.;
Split Automotive Systems Group via company split and established Hitachi Automotive
Systems, Ltd.;
Split Consumer Business Group via company split and established Hitachi Consumer
Electronics Co., Ltd.
Reorganized business groups into in-house companies with independent accounting topromote quick business operation
Turned Hitachi Information Systems, Ltd., Hitachi Software Engineering Co., Ltd. andHitachi Systems & Services, Ltd. into wholly owned subsidiaries
Turned Hitachi Plant Technologies, Ltd. and Hitachi Maxell, Ltd. into wholly owned
subsidiaries via share exchanges (turned Hitachi Maxell, Ltd. into an equity-method
associate of the Company via selling its shares in March 2014)
Merged Hitachi Software Engineering Co., Ltd. with Hitachi Systems & Services, Ltd.
and changed its name to Hitachi Solutions, Ltd.
Merged Hitachi Electronics Services Co., Ltd. with Hitachi Information Systems, Ltd.
and changed its name to Hitachi Systems, Ltd.
Transferred HDDs business to Western Digital Corporation via share sale of Viviti
Technologies Ltd., a holding company for Hitachi Global Storage Technologies Inc., etc.
Transferred small and medium-sized displays business via share sale of Hitachi
Displays, Ltd.
Merged Hitachi Plant Technologies, Ltd.
Merged Hitachi Metals, Ltd. with Hitachi Cable, Ltd.
Split thermal power generating systems business via company split and transferred to
MITSUBISHI HITACHI POWER SYSTEMS, LTD.
Turned Hitachi Medical Corporation into a wholly owned subsidiary via share exchange(changed its name to Hitachi Healthcare Manufacturing, Ltd. following thereorganization of Hitachi’s healthcare business in April 2016)
Reorganized Central Research Laboratory, Hitachi Research Laboratory, Yokohama
Research Laboratory, Design Division and overseas R&D facilities into Global Center
for Social Innovation, Center for Technology Innovation and Center for Exploratory
Research to establish global R&D structure from the customers’ perspective
Hitachi Appliances, Inc. transferred its air-conditioning systems business to a joint
venture established with Johnson Controls Inc.
Reorganized in-house companies into business units as a market-specific businessstructure
Turned Hitachi Transport System, Ltd. into an equity-method associate of the Company
via sale of a part of its shares

3. Description of Business
The Hitachi Group, which is comprised of the Company and 1,305 affiliates (1,056 consolidated
subsidiaries and 249 equity-method associates and joint ventures. Consolidated trust accounts are notincluded in the number of consolidated subsidiaries.), engages in a broad range of business activities, fromproduct development and manufacturing to sales and services, in 9 segments of Information &Telecommunication Systems, Social Infrastructure & Industrial Systems, Electronic Systems & Equipment,
Construction Machinery, High Functional Materials & Components, Automotive Systems, Smart Life &Ecofriendly Systems, Others (Logistics and Other services) and Financial Services. Effective from April 1,
2015, the Power Systems segment was abolished and the businesses and affiliated companies previously
constituting this segment have been integrated into the Social Infrastructure & Industrial Systems segment.
Major business outline for each segment and the positioning of principal affiliated companies aredescribed as follows. The Company mainly engages in manufacturing and sales of products and providing
services in the segments of Information & Telecommunication Systems, Social Infrastructure & Industrial
Systems and Electronic Systems & Equipment.

-6-

(As of March 31, 2016)
Main products and services
Information & Telecommunication
Systems
Systems Integration, Consulting, Cloud
Services, Servers, Storage, Software,
Telecommunications & Network, ATMs

Social Infrastructure & Industrial Systems
Industrial Machinery and Plants,
Elevators, Escalators, Railway Systems,
Thermal, Nuclear and Renewable
Energy Power Generation Systems,
Transmission & Distribution Systems

Electronic Systems & Equipment
Semiconductor Processing Equipment,
Test and Measurement Equipment,
Advanced Industrial Products, Medical
Electronics Equipment, Power Tools
Construction Machinery
Hydraulic Excavators, Wheel Loaders,Mining Machinery
High Functional Materials & Components
Semiconductor and Display RelatedMaterials, Circuit Boards and Materials,
Automotive Parts (Molded Plastics,etc.), Energy Storage Devices, Specialty
Steels, Magnetic Materials andComponents, High Grade Casting
Components and Materials, Wires andCablesAutomotive Systems
Engine Management Systems, ElectricPowertrain Systems, Drive Control
Systems, Car Information Systems
Smart Life & Ecofriendly Systems
Air-Conditioning Equipment, Room Air
Conditioners, Refrigerators, Washing
Machines

Positioning of principal affiliated companies
Manufacturing
Sales and services[Consolidated subsidiaries][Consolidated subsidiaries]
Hitachi Solutions, Ltd.
Hitachi Information & Telecommunication
Hitachi Systems, Ltd.
Engineering, Ltd.
Hitachi Consulting Corporation
Hitachi-Omron Terminal Solutions, Corp.
Hitachi Data Systems Corporation
Hitachi Computer Products (America), Inc.
Hitachi Information & Telecommunication
Hitachi Computer Products (Europe) S.A.S.
Systems Global Holding Corporation
Hitachi Financial Equipment System (ShenZhen) Co., Ltd.
[Consolidated subsidiaries][Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi-GE Nuclear Energy, Ltd.
Hitachi Industry & Control Solutions, Ltd.
Hitachi Industrial Equipment Systems Co.,
Hitachi Plant Construction, Ltd.
Ltd.
Hitachi Plant Services Co., Ltd.
Hitachi Elevator (China) Co., Ltd.
Hitachi Power Solutions Co., Ltd.
[Equity-method associates]
Hitachi Rail Europe Ltd.
MITSUBISHI HITACHI POWER
Horizon Nuclear Power Limited
SYSTEMS, LTD.
[Equity-method associates]
Mitsubishi-Hitachi Metals Machinery, Inc.
[Consolidated subsidiaries]
Hitachi High-Technologies Corporation
Hitachi Koki Co., Ltd.
Hitachi Kokusai Electric Inc.
Hitachi Medical Corporation[Consolidated subsidiaries]
Hitachi Construction Machinery Co., Ltd.
[Consolidated subsidiaries]
Hitachi Chemical Company, Ltd.
Hitachi Metals, Ltd.

[Consolidated subsidiaries]
Clarion Co., Ltd.
Hitachi Automotive Systems, Ltd.
Hitachi Automotive Systems Americas, Inc.
[Consolidated subsidiaries]
Hitachi Appliances, Inc.
Hitachi Consumer Products (Thailand), Ltd.

[Consolidated subsidiaries]
Hitachi Consumer Marketing, Inc.
[Equity-method associates]
Johnson Controls-Hitachi Air Conditioning
Holding (UK) Ltd[Consolidated subsidiaries][Consolidated subsidiaries]
Others (Logistics and Other services)
Hitachi Life, Ltd.
Hitachi-LG Data Storage, Inc.
Logistics, Optical Disk Drives, Property
Hitachi Transport System, Ltd.
Management
Hitachi Urban Investment, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.
Financial Services[Consolidated subsidiaries]
Leasing, Loan Guarantees
Hitachi Capital Corporation(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the HitachiGroup’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the Hitachi Group’s products.
2. Hitachi Medical Corporation changed its name to Hitachi Healthcare Manufacturing, Ltd. as of April 1, 2016.
3. Hitachi Transport System, Ltd. turned into an equity-method associate of the Company via sale of a part of its shares as of May
19, 2016.

-7-

4. Information on Affiliates(1) Consolidated subsidiaries

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2016)
Relationship(%)

Hitachi Information & Nishi-ku,
Telecommunication
Yokohama,
Engineering, Ltd.
Kanagawa

Information &1,350 Telecommunication
Systems

Hitachi-Omron
Terminal Solutions,Corp.

Shinagawaku, Tokyo

Information &8,500 Telecommunication
Systems

Hitachi Solutions, Ltd.

Shinagawaku, Tokyo

Information &20,000 Telecommunication
Systems

Hitachi Systems, Ltd.

Shinagawaku, Tokyo

Information &19,162 Telecommunication
Systems

Hitachi Computer
Products (America),
Inc.

Oklahoma,
U.S.A.

Information &Telecommunication
14,000 Systems(Thousands of
US dollars)-8-

The Company
outsources design,development,
manufacturing,evaluation andvalidation of servers
and telecommunication
100.0
networks equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases ATMs andother informationequipment. The
55.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources
development of
information systems
and software, etc. The
100.0
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources calculation,
development ofsoftware, installationand maintenance of
telecommunication
100.0 equipment andcomputers. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company supplies
parts for computer
peripherals. The[100.0] Company’s Directors,
100.0 Executive Officers or
employees concurrently
hold position of
directors or officers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal business voting rights(As of March 31, 2016)
Relationship(%)

Hitachi Computer
Products (Europe)
S.A.S.

Ardon,
France(Thousands ofEuro)**Hitachi
Consulting
Corporation

Texas,U.S.A.

(Thousands of
US dollars)**Hitachi Data
Systems
Corporation

California,
U.S.A.

(Thousands of
US dollars)

Hitachi Financial
Equipment System Shenzhen,(Shen Zhen) Co.,
China
Ltd.

**Hitachi
Information &Telecommunication California,
Systems Global
U.S.A.
Holding
Corporation

Hitachi Building
Systems Co., Ltd.

Chiyodaku, Tokyo

Hitachi-GE Nuclear Hitachi,
Energy, Ltd.
IbarakiInformation &Telecommunication
15,245 Systems

Information &Telecommunication
797,208 Systems

Information &Telecommunication
931,651 Systems

Information &Telecommunication
3,480 Systems(Thousands of
US dollars)Information &Telecommunication
1,313,980 Systems(Thousands of
US dollars)Social5,105 Infrastructure &Industrial Systems

Social5,000 Infrastructure &Industrial Systems-9-

The Company supplies
parts for computer
peripherals. The
Company’s Directors,
100.0 Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Company
outsources consulting
services. The
Company’s Directors,[100.0]Executive Officers or
100.0
employees
concurrently holdposition of directors orofficers.
Sales company for theCompany’s storage,
etc. The Company’s[100.0] Directors, Executive
100.0 Officers or employees
concurrently holdposition of directors orofficers.
Manufacturing andsales company in China[100.0]for the Hitachi Group’s
100.0
information products
such as ATMs.
Holding company for
Hitachi Consulting
Corporation and
Hitachi Data Systems
Corporation, etc. The
100.0 Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
Design, manufacturing,sales, installation andmaintenance of theelevators and escalators
the Company
developed. The
100.0
Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Company delivers
nuclear power
generation equipment,
etc. The Company’s
80.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2016)
Relationship(%)

Hitachi Industrial
Chiyoda-ku,
Equipment
Tokyo
Systems Co., Ltd.

Social
10,000 Infrastructure &Industrial Systems

Hitachi Industry& Control
Solutions, Ltd.

Social3,000 Infrastructure &Industrial Systems

Hitachi,
Ibaraki

Hitachi Plant
Toshima-ku,
Construction, Ltd. Tokyo

Social3,000 Infrastructure &Industrial Systems

Hitachi Plant
Toshima-ku,
Services Co., Ltd. Tokyo

Social3,000 Infrastructure &Industrial Systems

Hitachi Power
Solutions Co.,Ltd.

Hitachi,
IbarakiSocial4,000 Infrastructure &Industrial Systems

Hitachi Elevator(China) Co., Ltd.

Guangzhou,
China

SocialInfrastructure &64,880 Industrial Systems(Thousands of
US dollars)-10-

The Company
purchases industrial
equipment. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources
development of
information control
systems, etc. The
100.0
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Construction of theCompany’s power andindustrial plants, etc.
The Company’s
100.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Construction of theCompany’s industrial
plants, etc. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
purchases power plantparts, and outsources
maintenance of power
generation equipment[9.6] and control equipment,
100.0 etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Sales, installation andmaintenance, etc. of the
Hitachi Group’s
elevators and escalators[70.0] in China. The
70.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2016)
Relationship(%)

Hitachi RailEurope Ltd.

London,U.K.

**Horizon Nuclear Gloucester,Power Limited
U.K.

*Hitachi HighTechnologies
Corporation

SocialInfrastructure &83,910 Industrial Systems[100.0]100.0SocialInfrastructure &876,000 Industrial Systems[100.0]
100.0(Thousands ofSterling pounds)(Thousands ofSterling pounds)

Minato-ku,
Tokyo

7,938

Electronic Systems& Equipment

51.8*Hitachi Koki Co., Minato-ku,
Ltd.
Tokyo

17,813

Electronic Systems& Equipment[10.9]
51.2*Hitachi Kokusai
Electric Inc.

Chiyoda-ku,
Tokyo

10,058

Electronic Systems& Equipment

[0.0]
51.8

Hitachi Medical
Corporation

Chiyoda-ku,
Tokyo

13,884

Electronic Systems& Equipment

100.0

**
*HitachiConstruction
Machinery Co.,Ltd.

Bunkyo-ku,
Tokyo81,576

Construction
Machinery

[0.6]
51.5

-11-

Manufacturing, sales,
engineering andmaintenance of theCompany’s rail systems
products. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
Nuclear power
production company in
the U.K. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company sells andpurchases informationequipment and powerrelated parts through thiscompany. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company purchases
electronic equipment andparts, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Company supplies
parts for medical
equipment. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(As of March 31, 2016)
Relationship(%)*Hitachi Chemical Chiyoda-ku,
Company, Ltd.
TokyoHigh Functional
15,454 Materials &Components

[0.1]
51.4

**
*Hitachi Metals,
Ltd.

Minato-ku,
TokyoHigh Functional
26,283 Materials &Components

[0.5]
53.5

*Clarion Co., Ltd.

Chuo-ku,
Saitama,
Saitama

20,346

Automotive
Systems

64.0

HitachiAutomotive
Systems, Ltd.

Hitachinaka,Ibaraki

15,000Automotive
Systems

100.0

HitachiAutomotive
Systems
Americas, Inc.

Kentucky,
U.S.A.

Automotive
Systems[100.0]
100.0

HitachiAppliances, Inc.

Minato-ku,
Tokyo

Smart Life &20,000 Ecofriendly
Systems

100.0

Hitachi Consumer Minato-ku,
Marketing, Inc.
Tokyo

Smart Life &3,000 Ecofriendly
Systems

100.0

Smart Life &Ecofriendly
2,472,000 Systems[80.1]
80.1

Hitachi Consumer
Prachinburi,
Products
Thailand(Thailand), Ltd.

Hitachi-LG Data
Storage, Inc.

Minato-ku,
Tokyo(Thousands of
US dollars)

86,278(Thousands ofThai Baht)

5,460

Others (Logistics
and Other services)

-12-

51.0

The Company purchases
electronic materials andparts, energy storage
devices and systems,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company purchases
wires and cables andspecialty steels, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company supplies
parts for car navigation
systems, etc.
The Company purchases
parts for railway
vehicles, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Manufacturing and sales
company in North
America for the HitachiGroup’s automotive
systems products.
The Company purchases
electronic parts, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Sales company for the
Hitachi Group’s home
appliances in Japan.
Manufacturing and sales
company for the HitachiGroup’s refrigerators
and washing machines,
etc. in Thailand.
Development,
manufacturing and sales
company for the HitachiGroup’s optical disk
drives. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2016)
Relationship(%)

Hitachi,
Ibaraki

1,000

Others (Logistics
and Other services)*Hitachi Transport Koto-ku,
System, Ltd.
Tokyo

16,802Others (Logistics
and Other services)

Hitachi Urban
Investment, Ltd.

2,000

Others (Logistics
and Other services)

Hitachi Life, Ltd.

Chiyoda-ku,
Tokyo**Hitachi America, New York,Ltd.
U.S.A.

Hitachi Asia Ltd.

Singapore(Thousands of
US dollars)

2,288,946

Others (Logistics
and Other services)(Thousands of
Others (Logistics
Singapore dollars)

186,231

and Other services)-13-

The Company
outsources managementof welfare facilities,
etc. The Company’s[21.8]
Directors, Executive
100.0
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsources
transportation andstorage of products.
[5.7] The Company’s
59.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsourcesmanagement of welfare
facilities, etc. The
100.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Hitachi Group’s
regional supervising
company in Americas,
and sells the HitachiGroup’s plant,
industrial machinery,
100.0 digital media-related
products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Hitachi Group’s
regional supervising
company for Asia, andsells the HitachiGroup’s industrial
machinery,information-related
100.0 products and airconditioning
equipment, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

(As of March 31, 2016)
Company nameLocation

Commonstock

Ownership
percentageofPrincipal businessvoting rights

Relationship(%)

Hitachi (China),Ltd.

Beijing,
China

Hitachi Europe
Ltd.

Maidenhead,
U.K.

Hitachi India Pvt. New Delhi,
Ltd.
India

*Hitachi Capital
Corporation

Others- 1,013 companies

Minato-ku,
Tokyo

－

(Thousands of
US dollars)

Others (Logistics
and Other services)(Thousands ofSterling pounds)

Others (Logistics
and Other services)

226,380

257,389(Thousands ofIndian rupee)

344,000

Others (Logistics
and Other services)

9,983 Financial Services

－

－

-14-

The Hitachi Group’s
regional supervising
company for China,
and sells the HitachiGroup’s plant,
industrial machineryand digital media-,
train-, healthcare- and
100.0
information-related
products, etc. The
Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Hitachi Group’s
regional supervising
company for Europe,and sells the HitachiGroup’s plants,
industrial machineryand digital media- and100.0 information-related
products, etc. The
Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Hitachi Group’s
regional supervising
company for India, andsells the HitachiGroup’s plants,
industrial machinery[100.0] and digital media100.0 related products, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Leases manufacturing
equipment, industrial
equipment, officeequipment, etc. to theCompany, and engages
in leasing and credit[2.1] sales of the Company’s
60.6 business equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
－－

(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen,unless otherwise specified.
2. Companies with two asterisks (**) in the “Company name” column are specified subsidiaries.
3. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
4. The name of segment in which the companies classified is shown in the “Principal business”
column.
5. The amounts in brackets in upper row of the “Ownership percentage of voting rights” column
represent the percentage of voting rights owned indirectly by subsidiaries, of the total ownership
percentage.
6. Companies with negative net worth are shown below, along with the amount of liabilities inexcess of assets.
Hitachi Power Europe GmbH¥45,676 million
Hitachi Vehicle Energy, Ltd.
¥41,045 million
7. Hitachi Medical Corporation changed its name to Hitachi Healthcare Manufacturing, Ltd. as ofApril 1, 2016.
8. Hitachi Transport System, Ltd. turned into an equity-method associate of the Company via saleof a part of its shares as of May 19, 2016.
(2) Equity-method associates and joint ventures

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal business voting rights(As of March 31, 2016)
Relationship(%)

MitsubishiHitachi Metals
Machinery, Inc.

Minato-ku,
TokyoSocial9,100 Infrastructure &Industrial Systems

MITSUBISHI
Nishi-ku,
HITACHI
Yokohama,
POWER
Kanagawa
SYSTEMS, LTD.

Social100,000 Infrastructure &Industrial Systems

Johnson ControlsHitachi Air
Hampshire,
Conditioning
U.K.
Holding (UK) Ltd

Others- 246 companies－

Smart Life &Ecofriendly
935,107 Systems(Thousands of
US dollars)－－

The Company’s
Directors, Executive
Officers or employees
34.3
concurrently holdposition of directors orofficers.
The Company supplies
equipments for thermal
power generation
system. The Company’s
35.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Holding company for
air-conditioning
systems business[40.0] companies from which
40.0 the Hitachi Grouppurchases airconditioning systems
devises.
－－(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen,unless otherwise specified.
2. The name of segment in which the companies classified is shown in the “Principal business”
column.
3. Companies with negative net worth are shown below, along with the amount of liabilities inexcess of assets.
Agility Trains East (Holdings) Limited¥82,902 million
Agility Trains West (Holdings) Limited¥76,969 million
GE-Hitachi Nuclear Energy Holdings, LLC ¥15,550 million-15-

5. Employees(1) Consolidated basis(As of March 31, 2016)
Name of segment
Number of employees
Information & Telecommunication
76,451
Systems[17,113]
Social Infrastructure & Industrial
73,651
Systems[10,930]
25,800Electronic Systems & Equipment[3,352]
20,908Construction Machinery[－]
High Functional Materials &47,283Components[－]
33,214
Automotive Systems[－]
11,997
Smart Life & Ecofriendly Systems[－]
Others (Logistics and Other
38,826
services)[3,396]
4,552
Financial Services
[－]
2,562
Corporate (Head Office and others)[2,562]335,244
Total[37,353](Notes) 1. In addition to those listed above, the average number of part-time employees for the fiscal year was
45,111.
2. The number in brackets in the lower row of the “Number of Employees” column is the number of
employees of the Company included in each of the numbers in the upper row.
(2) The Company(As of March 31, 2016)
Number of employees
Average age
Average length of service Average annual salary
37,35341.2
18.4 years¥8,686,283(Notes) 1. The number of employees of the Company increased by 5,978 persons during the year ended March
31, 2016. This increase was due mainly to the absorption-type company split in which the Company
succeeded the system solutions business in the social infrastructure, financial, and government &public sectors in Hitachi Solutions, Ltd. and temporally transfer of employees of Hitachi Medical
Corporation and Hitachi Aloka Medical, Ltd. to the Company for integrated management of thehealthcare business.
2. Average annual salary includes bonuses and extra wages.
(3) Relationship with labor union
The Company’s labor union, Hitachi Workers Union, is a member of the Japanese Electrical Electronic& Information Union.
The relationship between management and labor unions in the Hitachi Group is stable and smooth.

-16-II. Business Overview
1. Summary of Business Results
See “7. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows.”
2. Production, Orders Received and Sales
The Hitachi Group does not present production and orders received in amount or volume terms for eachsegment since it produces and sells a wide variety of products, there are variety of specifications in samekinds of products and certain products are mass-produced.
Regarding sales, see “7. Analyses of Consolidated Financial Condition, Operating Results and Cash
Flows.”
3. Challenges Facing Hitachi Group(1) Business and Financial Condition
While the forecast of the world economy still remains uncertain, the Hitachi Group will promote thefollowing measures in order to realize growth as a partner that resolves issues facing customers in an era
where all “things” are connected to the Internet.
-

In order to respond to issues facing customers with optimal solutions, we will establish a structure forproviding customized services tailored to customers’ characteristics while utilizing the Hitachi Group’s
advanced IT, control technologies and excellent products as a common platform of the entire Group.

-

We will ensure to seize business opportunities in growth sectors by providing optimal services andproducts under localized leadership according to customer needs and the business environment whichvary by region and country.

-

We will continuously strive to optimize our business portfolio from the perspective of the growthpotential, profitability and competitiveness of businesses, by carrying out reorganization, including
partnerships with other companies, withdrawals and disposal by sale.

-

In order to secure the necessary funds for the growth of the Hitachi Group, we will strengthen our cashgenerating capabilities through cost structure reforms, including reduction of fixed costs, and selective
investment in focused fields.

-

By strengthening research and development to share issues with customers and create new solutions
together, we will further reinforce the role of R&D in bolstering the Hitachi Group’s profitability.

-

We will improve the environment where the diverse human resources, including female and foreign
employees, demonstrate their utmost performance, as well as foster a corporate culture that encourages
our employees to act independently and continue growing.

-

By providing our customers with high-quality and safe products and services, we will further gain thereliability in the Hitachi Group from society, and increase the value of the Hitachi brand.

-

We will ensure compliance with laws and international social standards and dedication to corporate
ethics based on a firm commitment to prevent the occurrence of misconduct within the Hitachi Group,and continuously strive to contribute to the environment and the communities.

(2) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
The Group invests a great deal of business resources in fundamental research and in the developmentof market-leading products and businesses that will bear fruit in the future, and realizing the benefits
from these management policies requires that they be continued for a set period of time. For this purpose,
the Company keeps its shareholders and investors well informed of not just the business results for eachperiod but also of the Company’s business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities and performancethat can be brought about through a change in management control, but it recognizes the necessity ofdetermining the impact on company value and the interests of all shareholders of the buying activities
and buyout proposals of parties attempting to acquire a large share of stock of the Company or a Group
company by duly examining the business description, future business plans, past investment activities,
and other necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor isthere a specific threat, neither does the Company intend to implement specified so-called anti-takeovermeasures in advance of the appearance of such a party, but the Company does understand that it is one of-17-

the natural duties bestowed upon it by the shareholders and investors to continuously monitor the state of
trading of the Company’s stock and then to immediately take what the Company deems to be the best
action in the event of the appearance of a party attempting to purchase a large share of the Company’s
stock. In particular, together with outside experts, the Company will evaluate the buyout proposal of theparty and hold negotiations with the buyer, and if the Company deems that said buyout will not maintainthe Company’s value and is not in the best interest of the shareholders, then the Company will quickly
determine the necessity, content, etc., of specific countermeasures and prepare to implement them. The
same response will also be taken in the event a party attempts to acquire a large percentage of the sharesof a Group company.
4. Risk Factors
We conduct business on a global scale across a broad range of business areas and utilize sophisticated,
specialized technologies to carry out our operations. Therefore, we are exposed to risks attributable to theeconomic environment, risks inherent in individual industrial sectors and business lines and risks related toour operations. Investment in our securities also involves risks. The following risks are based on theassumption we consider reasonable as of the filing date of this report.
Risks Related to Operations
Economic Trends
Our business is influenced by the global economy and economic conditions in certain regions orcountries. We are affected by downward economic trends in the U.S., Europe, China, emerging countries
and Japan. Such economic conditions could cause decline in consumer spending or capital investment andsubsequently reduced demand for our products and services, which could adversely affect our financial
condition, results of operations and cash flows.
Currency Exchange Rates Fluctuations
Since we conduct business in many foreign countries, our business activities are exposed to risks fromfluctuations in foreign currency exchange rates. We sell products, provide services and purchase raw
materials and components in local currencies, principally the U.S. dollar and the euro. Therefore,
fluctuations in foreign currency exchange rates may result in lower revenues or higher costs in yen to us
and thus affect our results of operations, which are reported in Japanese yen. Our price competitiveness,and thus our results of operations, may be harmed if we seek to increase prices in local currencies tocompensate for lower revenues or to increase prices in yen to absorb the higher cost. In addition, since wehold assets and liabilities denominated in foreign currencies, fluctuations in foreign currency exchange
rates may adversely affect our financial condition presented in Japanese yen through foreign currencytranslation. While we take measures to reduce the risks from fluctuations in foreign currency exchange
rates, such measures may not be effective.
Access to Liquidity and Long-term Financing
Our primary sources of funds are cash flows from operations, borrowings from banks and otherinstitutional lenders, and funding from capital markets, such as offerings of commercial paper and otherdebt securities, as well as equity securities. We need liquid funds to pay our operating expenses, theprincipal of and interest on our debt and dividends on our capital stock. We also need long-term financing
to fund, among other things, capital expenditures and research and development expenses. We currently
believe our cash flows from operations, borrowings from banks and other institutional lenders and funding
from the capital markets can provide sufficient funding for our operations and other liquidity needs.
However, a global economic downturn could adversely affect our cash flows from operations, businessresults and financial condition and may adversely affect our credit ratings. If our ratings are downgraded,
our ability to obtain additional financing on terms we consider favorable may be negatively affected.
Our reliance on banks and institutional lenders exposes us to risks related to rising interest rates, and we
may need to increase our reliance on external sources of funding. An increased reliance on debt
instruments may adversely affect our credit ratings, which might affect our ability to successfully obtain
additional financing on terms we consider favorable. The inability to successfully obtain such financing
may increase our financing costs, and therefore could adversely affect our financial condition and resultsof operations.
Furthermore, failure of one or more of our major lenders or a decision by one or more of them to change
the terms and conditions of their loans or to stop lending to us could have an adverse effect on our accessto funding.
-18-Marketable Securities Risks
We invest in marketable securities to maintain or promote our business or other relationships with othercompanies. These marketable securities are exposed to the risk of declining stock market prices. Suchdeclines may require that we write down equity securities that we hold. Further, contractual and otherobligations may require us to maintain our holdings of these securities despite declining share prices andthis may lead to material losses.
Material and Component Procurement
Our manufacturing operations rely on external suppliers for supplies of materials, parts, components andservices of adequate quality and quantity, delivered in a timely manner at a reasonable price. External
suppliers may not have sufficient capacity to meet all of our needs during periods of excess demand.
Shortages of materials, parts, components and services may cause a sharp rise in their prices. In addition,
prices of certain raw materials, parts and components which we purchase in local currencies, principally
the U.S. dollar and the euro, could be adversely affected by fluctuations in foreign currency exchange rates.
Increases in the market price of petroleum and other materials, such as copper, steel, synthetic resins, rare
metals and rare-earth minerals, can increase our production costs and may adversely affect our results ofoperations. Conversely, decreases in commodity prices, such as for raw materials, parts and components,
can result in write-downs of inventory.
If natural disasters disrupt the operations of our suppliers and damage supply chains, it may adversely
affect our production. Although we generally maintain multiple sources of supply and work closely with
our suppliers to avoid supply-related problems, such problems, including shortages and delays, may
continue to occur, which could harm our business, financial condition and results of operations.
Estimates, Fluctuations in Cost and Cancellation of Long-term Contracts
We enter into a substantial number of long-term contracts, particularly in connection with theconstruction of infrastructure systems. When the outcome of a construction can be estimated reliably, we
recognize revenue and expenses by reference to the stage of completion of the contract activity. In thiscase, we recognize revenue in an amount equal to estimated total revenue from the arrangement multipliedby the percentage that costs incurred to date bear to estimated total costs at completion based upon themost recently available information. When the outcome of a construction cannot be estimated reliably, we
recognize revenue only to the extent of contract costs incurred that it is probable will be recoverable, andrecognize contract costs as expenses in the period in which such costs are incurred. The revenue
recognition for such long-term contracts requires us to make significant assumptions about estimates of
total contract costs, remaining costs to completion, total contract revenues, contract risks and other factors.
We charge any anticipated losses on fixed price contracts to operations when we are able to estimate suchlosses. While we employ our best judgment based on available information, there can be no assurance thatthese estimates will, ultimately, prove to be correct. We regularly review these estimates and adjust themas we deem necessary. Fluctuations in costs can occur for a variety of reasons, many of which are beyond
our control. In addition, we or our counterparties may cancel these contracts. These factors would require
us to revise our initial assumptions regarding a particular contract, and may adversely affect our business,financial condition and results of operations.
Credit Risks Arising from Business Transactions
We make transactions with diverse customers and suppliers in Japan and other countries. We sell our
products to certain customers on credit and pay in advance for products or services provided by certain
suppliers. While we take measures to manage counterparty credit risk, such as regularly monitoring credit
conditions of such customers or suppliers and setting a limit on transaction amount according to their
credit conditions, credit deterioration or failure of one or more of them could adversely affect our financial
condition, results of operations and cash flows.
Supply and Demand Balance
Oversupply in the markets in which we compete may lead to declines in sales prices, revenues andprofitability. In addition, adjustment to demand may force us to dispose of excess supply or obsolete
equipment or reduce production, which can result in losses. For example, the imbalance between supply
and demand in construction machinery, automotive equipment and semiconductor processing equipment
industries and a resultant deterioration in market conditions could negatively affect our businesses.

-19-

Rapid Technological Innovation
New technologies are rapidly emerging in the segments in which we conduct business, with the pace oftechnological innovation. The development of new and advanced technologies, the continuous, timely andcost-effective incorporation of such technologies into products and services and the effective marketing ofsuch products and services are indispensable to remaining competitive. While introducing such products
and services requires a significant commitment to research and development, there can be no assurance
that our research and development will be successful. Failure in our endeavors to develop and incorporatesuch advanced technologies into products and services in a timely manner, or to achieve market
acceptance for such products and services, may negatively affect our business, financial condition andresults of operations.
Intense Competition
We are subject to intense competition in many of the markets in which we operate, and this may
adversely affect our results of operations. The industrial sectors and business lines in which we areengaged are experiencing increasingly intense competition. We compete with diverse competitors ranging
from huge global corporations to specialized companies. Competitors are increasingly manufacturing
products, including sophisticated electronic products, in low-cost jurisdictions. Low-cost manufacturing
and the globalization of world markets have accelerated the commoditization of certain products, which
has resulted in increasingly intense price competition for many of our products. Products which are facing
intense price competition or decreases in prices include computer-related products and home appliances.
To succeed in this competitive environment, we believe that our products and services must be pricecompetitive. The commoditization of such products affects our ability to set prices for our products. If weare unable to charge comparable prices to those of our competitors, our competitiveness and overallprofitability may be harmed. On the other hand, charging comparable prices to those of our competitors
may require us to sell products at a loss. Our products must also be competitive in terms of engineeringsophistication, quality and brand value. We must introduce our products and services to the markets in atimely manner. There can be no assurance that the products or services that we offer will be competitive.
The failure of such products or services to be competitive may negatively affect our business results.
Our Strategy to Strengthen Our Social Innovation BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure mainly by strengthening our Social Innovation Business, which supplies advanced social
infrastructure supported by information and communication technology. We plan to devote significant
resources including capital expenditures and R&Ds and are making investments in mergers andacquisitions and in new projects to strengthen our Social Innovation Business. In addition, we attempt todesign suitable organizational structure for promoting our Social Innovation Business more effectively inresponse to market changes. To implement this strategy, we have incurred and may continue to incur
considerable expenses. Our efforts to implement this strategy may be unsuccessful or less successful than
we currently anticipate. Even if these efforts are successful, there is no assurance that we will be able tosustain or increase profitability.
Acquisitions, Joint Ventures and Strategic Alliances
In every operating sector, we depend to some degree on acquisitions of other companies, joint venturesand strategic alliances with outside partners to design and develop key new technologies and products, tostrengthen competitiveness by scaling up and to expand into new regions through acquiring local bases or
distribution channels. Such transactions are inherently risky because of the difficulties in integrating
operations, technologies, products and personnel and achieving return of the investment. Integration issues
are complex, time-consuming and expensive and, without proper planning and implementation, could
adversely affect our business. Decisions made by or the performance of alliance partners that we cannot
control or adverse business trends may also negatively affect the success of our alliances. We may incur
significant acquisition, administrative and other costs in connection with these transactions, including
costs related to integration or restructuring of acquired businesses. There can be no assurance that thesetransactions will be beneficial to our business or financial condition. Even assuming these transactions are
beneficial, there can be no assurance that we will be able to successfully integrate acquired businesses orachieve all or any of the initial objectives of these transactions.

-20-Restructuring of Our BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure in part by: closing unprofitable operations;divesting our subsidiaries and affiliated companies;

reorganizing production bases and sales networks; andselling select assets.

Our restructuring efforts may not be implemented in a timely manner or at all, including due togovernmental regulations, employment issues or a lack of demand in the M&A market for businesses wemay seek to sell. In addition, we have a number of listed subsidiaries and from time to time the interests ofthese listed subsidiaries’ shareholders may conflict with our interests. Such conflicts of interest may resultin difficulties in timely implementing group-wide policies, including mergers, company splits and othersimilar transactions to which the listed subsidiaries are parties. Restructuring efforts may also bring about
unintended consequences, such as negative customer or employee perceptions, and have caused and may
continue to cause us to incur significant expenses and other costs, including additional impairment losses
on our fixed assets and intangible assets, write-offs of inventory and losses on the disposal of fixed assets
and losses related to the sale of securities.
Current and future restructuring efforts may be unsuccessful or less successful than we presently
anticipate and may adversely affect our financial condition and results of operations.
Worsening of Business Performance of Equity-Method Associates and Joint Ventures
We use the equity-method to account for a number of associates and joint ventures. If one or more ofsuch associates or joint ventures, accounted for using the equity-method, records a loss during a given
period, we must record that loss in a manner proportionate to our ownership interest in our consolidated
financial statements. In addition, if the carrying amount of our equity-method investments in associates orjoint ventures is below the recoverable amount of the investments, we could be required to record an
impairment loss.
Our Overseas Growth Strategies
We seek to expand our business, including our Social Innovation Business, in overseas markets as partof our business strategy. Through such overseas expansion, we aim to increase our revenues, reduce ourcosts and improve profitability. In many of these markets, we face barriers in the form of long-standing
relationships between our potential customers and their local suppliers. In addition, various factors inforeign countries where we operate may adversely affect our overseas business activities. These factors
include: changes in regulations relating to investments, exports, tariffs, antitrust, anti-bribery, consumer andbusiness taxation, intellectual property, foreign trade and exchange controls, environmental andrecycling requirements;differences in commercial and business customs such as contract terms and conditions;labor relations;public sentiment against Japan and local residents’ sentiment against us; andother political and social factors as well as economic trends and currency exchange rate fluctuations.

Because of these factors, there can be no assurance that we will be able to achieve the aims of ouroverseas growth strategy. This may adversely affect our business growth prospects and results ofoperations.
Overhaul of Cost Structure
We implement “the Hitachi Smart Transformation Project,” which promotes cost reductions bythoroughly overhauling our cost structure across the Group including procurement, production andadministrative operations. We seek to stabilize earnings and generate cash flows by improving ourmanagement efficiency through the Project. The Project may be less successful than we currently
anticipate. Even if the Project is successful, there is no assurance that we will be able to sustain or increase
profitability.
-21-

Dependence on Specially Skilled Personnel
We believe we can continue to remain competitive only if we can maintain and secure additional people
who are highly skilled in connection with our operations. However, the number of skilled personnel islimited and the competition for attracting and maintaining such personnel is intense. We cannot ensure that
we will be able to successfully attract new or maintain our current skilled personnel.
Intellectual Property
We depend in part on proprietary technology and our ability to obtain patents, trademarks and otherforms of intellectual property rights covering our products, product design, manufacturing processes andsoftware-based services in Japan and other countries. The fact that we hold such intellectual property
rights does not ensure that they will provide a competitive advantage to us. Various parties may challenge,
invalidate or circumvent our patents, trademarks and other intellectual property rights. There can be noassurance that claims allowed on any future patents will be sufficiently broad to protect our technology.
Effective patent, copyright and trade secret protection may be unavailable or limited in some of themarkets in which we operate, and our trade secrets may be vulnerable to disclosure or misappropriation by
employees, contractors and other persons.
We design many of our products to include software or other intellectual property licenses from third
parties. Competitors may not make their protected technology available to us, or may make it available tous only on unfavorable terms and conditions. There can be no assurance that we will be able to maintain alicense for such intellectual property if obtained, for economic or other reasons, or that such intellectual
property will give us the commercial advantages that we desire.
From time to time, we are sued or receive notices regarding patent and other intellectual property claims.
Whether or not these claims have merit, they may require significant resources to defend against and may
divert management attention from our business and operations and result in harm to our reputation. In
addition, a successful infringement claim and our inability to obtain the license for the infringed
technology or substitute similar non-infringing technology may adversely affect our business.
Litigation and Regulatory Investigations
We face risks of being involved in litigation and alternative dispute resolution and regulatory
investigation and actions in connection with our operations. Lawsuits or any other legal procedures forresolving disputes and regulatory actions may seek payment of large, indeterminate amounts or otherwise
limit our operations, and their existence and magnitude may remain unknown for substantial periods oftime.
In the past several years, we have been the subject of several investigations of alleged antitrust
violations in relation to certain product markets in Japan, Europe and North America, etc. and received
claims for damages from our customers, etc., which may have adverse effects on our financial condition or
profitability. See “Consolidated Financial Statements－Notes to Consolidated Financial Statements－(29)Commitments and Contingencies.” These investigations or disputes may result in significant penalties orcompensation for damages, etc. Such substantial legal liability or regulatory action could have an adverse
effect on our business, results of operations, financial condition, cash flows, reputation and credibility.
In addition, our business activities are subject to various governmental regulations in countries where we
operate, which include investment approvals, export regulations, tariffs, antitrust, anti-bribery, intellectual
property, consumer and business taxation, foreign trade and exchange controls, and environmental andrecycling requirements. These regulations limit, and other new or amended regulations may further limit,
our business activities or increase operating costs. In addition, the enforcement of such regulations,
including the imposition of fines or surcharges for violation of such regulations, may adversely affect our
results of operations, financial condition, cash flows, reputation and credibility.
Product Quality and Liability
We increasingly provide products and services utilizing sophisticated technologies, including but notlimited to components of power stations. Reliance on external suppliers reduces our control over quality
assurance. The occurrence of defects in our products and services could negatively affect our reputation
for quality of products and services, expose us to liability for damages caused by such defects andnegatively affect our ability to sell certain products. A significant product defect could adversely affect our
results of operations, financial condition and future business prospects.

-22-Significant Disasters and Similar Events
We have many facilities, including our R&D facilities, manufacturing facilities and our headquarters inJapan. Historically, Japan has experienced numerous natural disasters such as earthquakes, tsunamis andtyphoons. Natural disasters in the future may have a significantly adverse affect on an array of ourcorporate activities, from production to sales. We also have overseas facilities in Asia, the U.S. and Europe,
which are also subject to similar natural disasters. Natural disasters in each of the areas may cause damage
on certain of our plants and offices and the operations of our suppliers and customers. Such significant
natural disasters may directly damage or destroy our facilities, which could disrupt our operations, delay
new production and shipments of existing inventory or result in costly repairs, replacements or other costs,
all of which would result in significant losses. Furthermore, even if such significant natural disasters do
not directly affect our facilities, they could result in disruptions in distribution channels or supply chains.
The spread of infectious diseases and geopolitical and social instability, such as terrorism, crime, civil
disturbance and conflict, etc., may also disrupt our operations, render our employees unable to work,
reduce consumer demand for our products or disrupt our supply and distribution channels. In addition, we
are not insured against all potential losses, and even losses that insurance covers may not be fully covered
and may be subject to challenges of or delays in payment. Direct and indirect disruption of our operations
as a result of natural disasters or other events could have a negative impact on our operating activities,
results of operations and financial condition.
Dependence on Information Systems
With the increased importance of information systems to our operating activities, disruptions in such
systems due to computer viruses and other factors could have a negative impact on our operating activities,
results of operations and financial condition.
Management of Confidential Information
We maintain and manage personal information obtained from our customers, as well as confidential
information relating to our technology, research and development, or R&D, production, marketing andbusiness operations and those of our customers and clients, in various forms. Although we have
implemented controls to protect the confidentiality of such information, there can be no assurance thatsuch controls will be effective. Unauthorized disclosures of such information could subject us tocomplaints or lawsuits for damages or could otherwise have a negative impact on our business, financial
condition, results of operations, reputation and credibility.
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are key assumptions used inestimating pension costs including mortality, withdrawal and retirement rates, changes in wages and thediscount rate. We are required to make judgments regarding the key assumptions by taking into accountvarious factors including personnel demographics, market conditions and expected trends in interest rates.
Although management believes that its key assumptions are reasonable in light of the various underlying
factors, there can be no assurance that the key assumptions will correspond to actual results. If our key
assumptions differ from actual results, the consequent deviation of actual pension costs from estimatedcosts may have an adverse effect on our financial condition and results of operations. A decrease in the
discount rate may result in an increase in the amount of projected benefit obligations. In addition, we may
change these key assumptions, such as the discount rate. Changes in key assumptions may also have an
adverse effect on our financial condition and results of operations.
Risks Related to Our American Depositary Shares
Rights of ADS holders
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining our accounting books and records andexercising appraisal rights are available only to shareholders of record. Because the depositary, through its
custodian agents, is the record holder of the shares underlying the American Depositary Shares, or ADSs,
only the depositary can exercise those rights in connection with the deposited shares. The depositary will
make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders andwill pay dividends and distributions collected from us as and to the extent provided in the deposit
agreement. However, ADS holders will not be able to bring derivative actions, examine our accounting
books and records, or exercise appraisal rights through the depositary.
-23-

We are incorporated in Japan with limited liability. A significant portion of our assets are located outside
the United States. As a result, it may be more difficult for investors to enforce against us judgments
obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of theUnited States or judgments obtained in other courts outside Japan. There is doubt as to the enforceability
in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil
liabilities predicated solely upon the federal securities laws of the United States.
Unit Share System
The Companies Act allows companies to establish a “unit” of shares for the purpose of exercising voting
rights at the general meetings of shareholders. Under our articles of incorporation, one unit of our shares iscomposed of 1,000 shares, equivalent to 100 ADSs. Each unit of our shares has one vote. A holder who
owns shares or ADSs in other than multiples of 1,000 or 100, respectively, will own less than a whole unit
(i.e., for the portion constituting fewer than 1,000 shares, or fewer than 100 ADSs). Our articles ofincorporation, in accordance with the Companies Act, impose significant restrictions on the rights ofholders of shares constituting less than a whole unit, which include restrictions on the right to vote, toattend a shareholders meeting and to bring derivative actions. In addition, less than whole unit sharescannot be traded on Japanese stock markets. Under the unit share system, holders of our sharesconstituting less than one unit have the right to require us to purchase their shares and the right to require
us to sell them additional shares to create a whole unit of 1,000 shares. However, holders of our ADSs areunable to withdraw underlying shares representing less than one unit and, as a practical matter, are unable
to require us to purchase those underlying shares. The unit share system, however, does not affect thetransferability of ADSs, which may be transferred in lots of any number of whole ADSs.
Dilution of Your Shares by Issuances of Additional Shares
We may issue additional shares in the future within the unissued portion of our authorized share capitaland sell shares held as treasury stock, generally without shareholder vote unless the subscription or saleprice is significantly lower than the market price. Issuances and sales of our shares in the future may be at
prices below the prevailing market prices and may be dilutive.
Foreign Exchange Fluctuations
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition,
the amount of cash dividends or other cash payments made to holders of ADSs will decline if the value ofthe yen declines against the dollar.
5. Material Agreements, etc.
(1) Absorption-type Company Split
On January 13, 2016, the Company decided that it would succeed non-manufacturing divisions ofHitachi Medical Corporation and Hitachi Aloka Medical, Ltd. through an absorption-type company split(the “Company Split) and executed an absorption-type company split agreement, aiming to strengthen
Hitachi’s healthcare business and accelerate growth of this business. The Company Split became effective
on April 1, 2016 in accordance with the agreement. There was no allotment of shares or other assets as aresult of the Company Split.
(2) Cross License Agreement
Party
Hitachi, Ltd.
(The Company)

underContract
Country Item
contract
description
Cross license
International Business U.S.A. Information
handlingof patents
Machines Corp.
systems
Party

Hitachi, Ltd.
(The Company)

HP Inc.
Hewlett Packard
Enterprise Company

U.S.A.

All products Cross licenseand services of patents

Hitachi, Ltd.
(The Company)

EMC Corporation

U.S.A.

Information Cross license
handlingof patents
systems

U.S.A.

Nuclearreactorsystems

Hitachi-GE Nuclear GE-Hitachi Nuclear
Energy, Ltd.
Energy Americas(Consolidated
LLC
subsidiary)-24-

Contract period
From January 1, 2008 to
the expiration of thepatent under contracts
From March 31, 2010 tothe expiration of patents
applied on or before
December 31, 2014
From January 1, 2003 to
the expiration of patents
applied on or before
December 31, 2002

Cross license From October 30, 1991 toof patents and June 30, 2023
technology

6. Research and Development
The Hitachi Group (the Company and consolidated subsidiaries) is conducting business in a broad rangeof fields, from information and telecommunications systems to financial services. The Hitachi Group
places priority on allocating R&D resources on the Social Innovation Business, a core business of the
Hitachi Group, and makes efforts for continuing and developing business.
In order to strengthen the global competitiveness of the business, the Hitachi Group works in R&D
activities to identify, share and resolve the customers’ problems, and is focusing on developing
competitive products and services to lead globalization of operations. In addition, the Hitachi Group
conducts advanced research to cultivate future core businesses.
The Hitachi Group also works to improve the efficiency of R&D through close coordination between the
R&D divisions of the Company and group companies. Furthermore, the Hitachi Group is actively
expanding collaborations with universities and other research institutions as well as with outside firms.
The Company has established a new R&D framework to accelerate global growth through the Social
Innovation Business. In order to support the global growth, it aims to promote R&D that can meet local
needs quickly by expanding R&D facilities and personnel in North America, Europe, China, Asia, India
and South America and accelerating locally-led R&D. The Company reorganized its R&D facilities inJapan and overseas to establish a new R&D structure comprising the “Global Center for Social
Innovation,” which discovers customers’ issues and creates new solutions in collaboration with customers,
the “Center for Technology Innovation,” which creates innovative products and services and supports
development of new solutions by applying and integrating technology platforms in focused areas, and the“Center for Exploratory Research,” which cultivates new areas through exploratory basic research basedon our creative vision in the form of open innovation. With this new R&D structure, the Company aims tofurther promote R&D that will contribute to solving customers’ issues.
The Hitachi Group’s R&D expenditures for the fiscal year ended March 31, 2016 were ¥333.7 billion,
3.3% of revenues. A breakdown of R&D expenditures by segment is shown below.
Segment
Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Corporate Items
Total(Billions of yen)Amount
59.6
47.4
49.3
18.8
46.9
69.9
9.4
6.3
0.1
25.6
333.7

Notable achievements of R&D activities in the fiscal year ended March 31, 2016 are as follows.
-

Development of artificial intelligence issuing work orders based on understanding of demand
fluctuation and on-site kaizen activity (Information & Telecommunication Systems segment)
We developed artificial intelligence which provides appropriate work orders based onunderstanding of demand fluctuation and on-site kaizen activity derived from big data such as
business activities and business performance accumulated in business systems.

-

Development of control technology for autonomous mobile dual-arm robots (Others (Logistics andOther services) segment)
For automation of collecting products in logistics warehouses, we installed a mobile platform with aheight-adjustable lift mounted on it added with two commercial industrial arms and grippers (parts
equivalent to hands in manual labor) to manufacture an autonomous mobile dual-arm robot. We also
developed robot control technology that controls each mechanism with efficient coordination throughreduced communication traffic.

-25-

-

Development of an analytics platform that realizes improved reliability in manufacturing (Information& Telecommunication Systems segment)
We developed an analytics platform that realizes development of highly reliable infrastructure
products which operate stably in diverse environments. This is enabled through analyzing the risk offailure and remaining life of a product based on the on-site operational conditions of social
infrastructure products and measurement data of operational environment, and reflecting said analysis
results on the product design of mass production machines and next period development machines.

-

Development of prototype of portable breath-based alcohol detectors for smart keys (Automotive
Systems segment)
We developed miniaturized, power-saving sensor technology that can detect saturated water vapor
from human breath that can be integrated into smart keys capable of unlocking doors and starting
engines, and prototyped portable breath-based alcohol detectors that incorporates a system to display
the detected results on the vehicle’s display panels (jointly developed with Honda R&D Co., Ltd.).

-

Development of speech signal processing technology for smart devices (Information &Telecommunication Systems segment)
We developed speech signal processing technology that enables speech recognition in noisy
environments (70 dB) by enabling high-accuracy noise reduction using the time differences among
multiple microphones installed in general smart devices, as well as enables conversation withoutpressing any button to determine speech intervals through accurate automatic recognition of speechintervals.

-

Development of analysis technology that predicts the performance of social infrastructure productswith high accuracy in minimal time (Social Infrastructure & Industrial Systems segment)
In performance analysis technology of products composed of multiple components, such as air
conditioning systems for buildings, we realized multi-fidelity analysis technology that analyzes
components, subsystems and the overall product together by freely selecting, adjusting and combining
analysis models to meet the precision required in performance prediction. We also developed
technology that enables performance analysis of products overall with high accuracy in minimal timeby improving the accuracy of analysis using products’ operation data and accelerating analysis byusing big data analysis methods and statistical methods.

7. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows(1) Summary of Economic Environment and Business Strategy, etc.
1) Economic Environment
We conduct business operations such as manufacturing, marketing, and research and development
activities throughout the world. Therefore, the economic conditions in global markets where the Hitachi Group
conducts business, in particular Japan, Asia, North America and Europe, affect its results of operations.
During the year ended March 31, 2016, the U.S. economy continued to show an improvement in
employment and income conditions, and recovery trend in consumer spending. The European economy also
showed the signs of improvement with the support of quantitative easing policy. However, in the latter half ofthe year, exports and capital expenditures in these economies showed signs of slowing amid increasing
economic uncertainty around the world. The Chinese economic growth continued to decelerate owing to theslowdown in investment and production primarily in the manufacturing industry saddled with excessive
production capacity. Economic growth in emerging countries also slowed down owing to declines in crude oiland raw materials prices. The Japanese economy was on a recovery trend, due mainly to solid consumer
spending supported by improvement in employment and income conditions as well as a sustained recovery incorporate earnings. However, the pace of recovery slowed down because of downturn in economic growth of
China and emerging countries as well as the effect of the appreciation of yen.
2) Business Strategy
See “3. Challenges Facing Hitachi Group ‐ (1) Business and Financial Condition.”3) Business Reorganization
We continuously reorganize our business in order to further focus our business resources on the Social
Innovation Business. The important business reorganizations conducted in the year ended March 31, 2016 are
as follows:-26-

In May 2015, Hitachi Data Systems Corporation acquired Pentaho Corporation, a U.S. big data analytics
software developer and provider, to build a new infrastructure for the use and utilization of big data compatible
across diverse industries, and accelerate global development of the Social Innovation Business.
Hitachi Appliances, Inc. established a joint venture in relation to air-conditioning systems business withJohnson Controls Inc. to respond to a drastic change in the condition of the global air conditioning systems
market and accelerate its growth. The joint venture launched its business in October 2015.
In November 2015, we purchased from Finmeccanica S.p.A signaling systems and railway businesses inorder to strengthen our position in signaling and traffic management systems business and expands turnkey
operations business to further enhance Hitachi’s competitiveness in the global market.
The Company entered into an agreement to transfer a part of shares of Hitachi Transport System, Ltd.
stocks owned by the Company to SG Holdings Co., Ltd. in March 2016, and transferred them in May 2016.
Hitachi Transport System, Ltd. is accounted as the Company’s equity-method associate following the sharetransfer.
The Company entered into an agreement to transfer a part of shares of Hitachi Capital Corporation stocks
owned by the Company to Mitsubishi UFJ Financial Group, Inc. and Mitsubishi UFJ Lease & Finance Co., Ltd.
in May 2016, and plans to transfer in August 2016. Hitachi Capital Corporation will be accounted as theCompany’s equity-method associate following the share transfer.
(2) Changes in the year ended March 31, 2016
Effective from April 1, 2015, the Power Systems segment has been integrated to the Social Infrastructure& Industrial Systems segment. Figures for the Social Infrastructure & Industrial Systems segment, including
figures for the year ended March 31, 2015, reflect the new segmentation.
(3) Results of Operations
Year ended
March 31, 2015
(billions of yen)

Year ended
March 31, 2016(billions of yen)

Year overyear change

Revenues

9,774.9

10,034.3

103%

EBIT (Note)

534.0

531.0

99%

Income from continuing operations,
518.9
517.0
100%
before income taxes
Net income attributable to Hitachi, Ltd.
217.4
172.1
79%
stockholders(Note) EBIT represents earnings before interest and taxes, which is presented as income from continuing
operations, before income taxes less interest income plus interest charges.
1) Analysis of Statement of Operations
Revenues increased 3% to ¥10,034.3 billion, as compared with the year ended March 31, 2015. Thiswas due mainly to higher revenues in the Information & Telecommunication Systems, Social Infrastructure& Industrial Systems, High Functional Materials & Components and Automotive Systems segments, etc.
This increase was partially offset by lower revenues in the Construction Machinery, Smart Life &Ecofriendly Systems and Others (Logistics and Other services) segments, etc.
Cost of sales increased 4% to ¥7,459.0 billion, as compared with the year ended March 31, 2015, andthe ratio of cost of sales to revenues was 74%, which was the same level as the year ended March 31, 2015.
Gross profit was ¥2,575.2 billion, which was the same level as the year ended March 31, 2015.
Selling, general and administrative expenses were ¥1,940.3 billion, which was the same level as theyear ended March 31, 2015, and the ratio of selling, general and administrative expenses to revenues was
19%, as compared with 20% for the year ended March 31, 2015.
Other income increased ¥48.1 billion to ¥57.5 billion and other expenses decreased ¥25.9 billion to¥141.8 billion, as compared with the year ended March 31, 2015, respectively. The details are as follows.
Net loss on sales and disposal of fixed assets decreased ¥12.3 billion to ¥4.4 billion, as comparedwith the year ended March 31, 2015.
Impairment losses increased ¥2.6 billion to ¥44.7 billion, as compared with the year ended March 31,
2015. This mainly consisted of impairment losses recognized for certain assets as a result of businessportfolio restructuring in the Information & Telecommunication Systems segment.
Net gain on business reorganization and others was ¥55.2 billion, as compared with net loss of ¥55.0
billion in the year ended March 31, 2015. The net gain in the year ended March 31, 2016 was due mainly toposting a gain on sales of shares of UniCarriers Holdings Corporation by Hitachi Construction MachineryCo., Ltd. in the Construction Machinery segment and sales of shares of Hitachi Tool Engineering, Ltd. by
Hitachi Metals, Ltd. in the High Functional Materials & Components segment as well as the reorganizationof the air-conditioning systems business in the Smart Life & Ecofriendly Systems segment.
-27-

Restructuring charges increased ¥10.1 billion to ¥36.8 billion, as compared with the year ended
March 31, 2015. This mainly consisted of expenses for business restructuring in the Information &Telecommunication Systems segment.
Expenses related to competition law and others decreased ¥3.5 billion to ¥22.3 billion, as comparedwith the year ended March 31, 2015.
Financial income (excluding interest income) increased ¥2.8 billion to ¥10.6 billion and financial
expenses (excluding interest charges) increased ¥27.0 billion to ¥30.2 billion, as compared with the year
ended March 31, 2015, respectively. This was due mainly to an increase in exchange loss from ¥23.9 billion
to ¥26.5 billion, as compared with the year ended March 31, 2015.
Share of profits of investments accounted for using the equity method decreased ¥46.5 billion to ¥0.1
billion due mainly to deterioration of profitability of overseas equity-method associates, as compared withthe year ended March 31, 2015.
EBIT decreased ¥3.0 billion to ¥531.0 billion, as compared with the year ended March 31, 2015.
Interest income decreased ¥0.5 billion to ¥12.0 billion and interest charges decreased ¥1.6 billion to¥25.9 billion, as compared with the year ended March 31, 2015, respectively.
Income from continuing operations, before income taxes decreased ¥1.9 billion to ¥517.0 billion, as
compared with the year ended March 31, 2015.
Income taxes increased ¥43.1 billion to ¥165.2 billion, as compared with the year ended March 31,
2015, due mainly to tax expense recognized for partial transfer of shares of Hitachi Transport System, Ltd.
and Hitachi Capital Corporation.
Loss from discontinued operations increased ¥3.5 billion to ¥57.0 billion, as compared with the year
ended March 31, 2015.
Net income decreased ¥48.6 billion to ¥294.7 billion, as compared with the year ended March 31,
2015.
Net income attributable to non-controlling interests decreased ¥3.3 billion to ¥122.5 billion, as
compared with the year ended March 31, 2015.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders decreased ¥45.3
billion to ¥172.1 billion, as compared with the year ended March 31, 2015.
2) Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment include
intersegment transactions. Segment profit is measured by EBIT.
(Information & Telecommunication Systems)
Revenues increased 4% to ¥2,109.3 billion, as compared with the year ended March 31, 2015, due
mainly to solid performances by the system solutions business centered on financial systems and higher
revenues from the storage solutions business as a result of the effects of foreign exchange rate fluctuations.
Segment profit increased ¥3.0 billion to ¥109.1 billion, as compared with the year ended March 31,
2015, due mainly to higher profits in the system solutions business resulting from increased revenues. This
increase was partially offset by lower profits in the platform business owing to the effect of reduction incapital investment by Japanese telecommunications carriers in the telecommunications & network business,to decreased demand for high-end storage in North America and to posting expenses related to businessrestructuring.
(Social Infrastructure & Industrial Systems)
Revenues increased 13% to ¥2,333.1 billion, as compared with the year ended March 31, 2015, due
mainly to significantly increased revenues from the railway systems business resulting from the acquisitionof relevant businesses from Finmeccanica S.p.A. and to solid performances by the power generation systems
business and the elevators and escalators business.
Segment profit decreased ¥81.2 billion to ¥29.1 billion, as compared with the year ended March 31,
2015. This decrease was due mainly to increased losses from Middle Eastern projects in the infrastructure
systems business, to a decrease in share of profits of investments accounted for using the equity method, toposting expenses related to business restructuring and currency exchange loss, and to the absence of net gain
on business reorganization and others relating to Mitsubishi-Hitachi Metals Machinery, Inc. posted in theyear ended March 31, 2015.
(Electronic Systems & Equipment)
Revenues were ¥1,127.6 billion, which was the same level as the year ended March 31, 2015. Hitachi
High-Technologies Corporation posted higher revenues due mainly to higher sales of electron microscopes
and clinical analyzers, and Hitachi Koki Co., Ltd. also posted higher revenues due mainly to higher sales ofpower tools in North America. These results were offset by lower revenues at Hitachi Kokusai Electric Inc.,
which was affected by a drop in post-earthquake reconstruction demand following Great East Japan
Earthquake.
-28-

Segment profit increased ¥0.5 billion to ¥64.3 billion, as compared with the year ended March 31,
2015. This increase was due mainly to non-recurring gain posted for the shift to defined contribution
pension plan at Hitachi High-Technologies Corporation, and to improved profit in the healthcare businessresulting from the effect of business restructuring. Hitachi Kokusai Electric Inc. posted decreased profit
owing to lower revenue, and Hitachi Koki Co., Ltd. also posted decreased profit owing to the effect of theforeign exchange rate fluctuations and economic slowdown in emerging countries and resource-producing
countries.
(Construction Machinery)
Revenues decreased 7% to ¥758.3 billion, as compared with the year ended March 31, 2015, due
mainly to sluggish market conditions in Asia, in particular China, as well as Oceania and Russia.
Segment profit decreased ¥34.7 billion to ¥25.8 billion, as compared with the year ended March 31,
2015, due mainly to lower revenues and to a higher proportion of compact models with lower profitability inthe product mix owing to exhaust emission regulations in Japan and changes in product mix for China
market. This decrease was also attributable to disposal of inventories, foreign exchange losses owing to thedepreciation of emerging-market currencies, and posting expenses for business restructuring. This decrease
was partially offset by net gain on business reorganization and others related to the sale of shares of
UniCarriers Holdings Corporation.
(High Functional Materials & Components)
Revenues increased 2% to ¥1,564.0 billion, as compared with the year ended March 31, 2015. This
increase was due mainly to the effects of the consolidation of Waupaca Foundry Holdings, Inc. by Hitachi
Metals, Ltd. in November 2014 and of CSB Battery Co., Ltd. by Hitachi Chemical Company, Ltd. inJanuary 2015, and to solid performances for automobile-related products. This increase was partially offset
by the impact of slowdown in Chinese market and decreased demand for electronics-related products.
Segment profit increased ¥29.6 billion to ¥153.5 billion, as compared with the year ended March 31,
2015. This increase was due mainly to higher revenues, the effects of business restructuring and posting net
gain on business reorganization and others related to the sale of a part of equity interest in Hitachi Tool
Engineering, Ltd. by Hitachi Metals, Ltd.
(Automotive Systems)
Revenues increased 7% to ¥1,001.1 billion, as compared with the year ended March 31, 2015, due
mainly to growth in sales driven by robust demand for automobiles in North America and China.
Segment profit increased ¥18.9 billion to ¥53.9 billion, as compared with the year ended March 31,
2015, due mainly to higher revenues, a decrease in expenses related to competition law and others, and adecrease in exchange loss.
(Smart Life & Ecofriendly Systems)
Revenues decreased 10% to ¥681.0 billion, as compared with the year ended March 31, 2015, due
mainly to the effect of reorganization of the air-conditioning systems business. This decrease was partially
offset by solid performance in the home appliances business such as refrigerators and washing machines.
Segment profit increased ¥7.4 billion to ¥41.9 billion, as compared with the year ended March 31,
2015, due mainly to the net gain on business reorganization and others related to the reorganization of the
air-conditioning systems business, despite lower revenues.
(Others (Logistics and Other services))
Revenues decreased 2% to ¥1,252.7 billion, as compared with the year ended March 31, 2015, due
mainly to lower revenues of optical disk drives business owing to weaker demand.
Segment profit decreased ¥10.4 billion to ¥40.6 billion, as compared with the year ended March 31,
2015, due mainly to expenses related to business restructuring in optical disk drives business, despite
increased profits at Hitachi Transport System, Ltd resulting from improved profitability.
(Financial Services)
Revenues increased 3% to ¥365.3 billion, as compared with the year ended March 31, 2015, due
mainly to solid performance in Japan and strong performance in overseas business, particularly in North
America.
Segment profit increased ¥11.2 billion to ¥46.6 billion, as compared with the year ended March 31,
2015, due mainly to higher revenues, the absence of expenses related to business restructuring posted in theyear ended March 31, 2015, and the effects of such business restructuring.

-29-3) Revenues by Geographic Area
The following is an overview of revenues attributed to geographic areas based on customer location.
Japan
Revenues in Japan were ¥5,231.5 billion, which was the same level as the year ended March 31, 2015.
This was due mainly to higher revenues from the system solutions business centered on financial systems in
the Information & Telecommunication Systems segment, and higher revenues from the power generation
systems business and the infrastructure systems business in the Social Infrastructure & Industrial Systems
segment, despite lower revenues in the High Functional Materials & Components and Automotive Systems
segments, etc.
Overseas(Asia)
Revenues in Asia decreased 3% to ¥2,112.3 billion, as compared with the year ended March 31, 2015.
This was due mainly to lower revenues in the Smart Life & Ecofriendly Systems segment, which wasaffected by the reorganization of the air-conditioning systems business, and in the Construction Machinery
segment mainly because of decreased sales particularly in China, despite higher revenues in the Automotive
Systems and Social Infrastructure & Industrial Systems segments, etc.
(North America)
Revenues in North America increased 20% to ¥1,280.3 billion, as compared with the year ended
March 31, 2015. This increase was due mainly to higher revenues in the High Functional Materials &Components segment as a result of the effects of the consolidation of Waupaca Foundry Holdings, Inc. byHitachi Metals, Ltd., and in the Automotive Systems segment, despite lower revenues in the Construction
Machinery and Others (Logistics and Other services) segments.
(Europe)
Revenues in Europe increased 13% to ¥951.1 billion, as compared with the year ended March 31,
2015. This increase was due mainly to higher revenues in the Social Infrastructure & Industrial Systems
segment which reported increased revenues from the railway systems business, and in the Information &Telecommunication Systems segment, despite lower revenues in the Construction Machinery and Smart
Life & Ecofriendly Systems segments.
(Other Areas)
Revenues in other areas decreased 2% to ¥459.0 billion, as compared with the year ended March 31,
2015. This decrease was due mainly to lower revenues in the Construction Machinery and Smart Life &Ecofriendly Systems segments, despite higher revenues in the Social Infrastructure & Industrial Systems
segment which reported increased revenues from the railway systems business.
As a result of the foregoing, overseas revenues increased 5% to ¥4,802.7 billion, as compared withthe year ended March 31, 2015, and the ratio to total revenues was 48%, compared with 47% for the year
ended March 31, 2015.
(4) Summary of Financial Condition, etc.
1) Liquidity and Capital Resources
Our management considers maintaining an appropriate level of liquidity and securing adequate funds
for current and future business operations to be important financial objectives. Through efficientmanagement of working capital and selective investment in new plants and equipment, we are working to
optimize the efficiency of capital utilization throughout our business operations. We endeavor to improve
our group cash management by centralizing such management among us and our overseas financial
subsidiaries. Our internal sources of funds include cash flows generated by operating activities and cash on
hand. Our management also considers short-term investments to be an immediately available source offunds. In addition, we raise funds both in the capital markets and from Japanese and internationalcommercial banks in response to our capital requirements. Our management’s policy is to finance capital
expenditures primarily by internally generated funds and to a lesser extent by funds raised through theissuance of debt and equity securities in domestic and foreign capital markets. In order to flexibly accessfunding, we maintain our shelf registration with the maximum outstanding balance of ¥300.0 billion.

-30-

We maintain commitment line agreements with a number of domestic banks under which we may
borrow in order to ensure efficient access to necessary funds. These commitment line agreements generally
provide for a one-year term, renewable upon mutual agreement between us and each of the lending banks, aswell as another commitment line agreement with a contract term of three years and two months ending inJuly 2016. These committed credit arrangements are, in general, subject to financial and other covenants andconditions both prior to and after drawdown, the most restrictive of which require maintenance of minimum
issuer rating or long-term debt ratings from Rating and Investment Information, Inc. (R&I) of BBB-. As of
March 31, 2016, our unused commitment lines totaled ¥553.0 billion, including these of ¥400.0 billion
which the Company maintained.
We receive debt ratings from Moody’s Japan K.K. (Moody’s), Standard & Poor’s Rating Japan (S&P),
as well as R&I. Our debt ratings as of March 31, 2016 were as follows.
Rating Company

Long-term

Short-term

Moody’s

A3

P-2

S&P

A-

A-2

R&I

A+

a-1

With our current ratings, we believe that our access to the global capital markets will remain
sufficient for our financing needs. We seek to improve our credit ratings in order to ensure financial
flexibility for liquidity and capital management, and to continue to maintain access to sufficient funding
resources through the capital markets.
2) Cash Flows(Cash Flows from Operating Activities)
Net income in the year ended March 31, 2016 decreased ¥48.6 billion, as compared with the year
ended March 31, 2015. Changes in working capital in the year ended March 31, 2016 from collection ofreceivables, a decrease in inventories and changes in trade payables improved net cash flow by ¥148.3
billion, ¥160.6 billion and ¥16.4 billion, respectively. As a result of the foregoing, net cash provided byoperating activities was ¥812.2 billion in the year ended March 31, 2016, an increase of ¥360.4 billion
compared with the year ended March 31, 2015.
(Cash Flows from Investing Activities)

Proceeds from sales of investments in securities and other financial assets (including investments in
subsidiaries and investments accounted for using the equity method) increased by ¥16.2 billion as comparedwith the year ended March 31, 2015. Net amount of investments related to property, plant and equipment*was ¥652.3 billion in the year ended March 31, 2016, an increase of ¥83.7 billion as compared with the year
ended March 31, 2015. Purchase of investments in securities and other financial assets (including
investments in subsidiaries and investments accounted for using the equity method) in the year ended March
31, 2016 was ¥196.6 billion, an increase of ¥43.7 billion as compared with the year ended March 31, 2015,
due mainly to the acquisition of relevant businesses from Finmeccanica S.p.A. and the acquisition ofPentaho Corporation by Hitachi Data Systems Corporation. As a result of the foregoing, net cash used ininvesting activities was ¥730.7 billion in the year ended March 31, 2016, an increase of ¥118.2 billion
compared with the year ended March 31, 2015.
* The sum of the purchase of property, plant and equipment, the purchase of intangible assets and thepurchase of leased assets, less the proceeds from sale of property, plant, equipment and intangible
assets, the proceeds from sale of leased assets and the collection of lease receivables(Cash Flows from Financing Activities)
Net cash outflow from a decrease in short-term debt increased by ¥206.7 billion as compared with theyear ended March 31, 2015. Proceeds related to long-term debt** in the year ended March 31, 2016 was¥180.6 billion, a decrease of ¥25.4 billion as compared with the year ended March 31, 2015. As a result of
the foregoing, net cash used in financing activities was ¥26.4 billion in the year ended March 31, 2016, anincrease in net cash outflow of ¥259.6 billion compared with the year ended March 31, 2015.
** The proceeds from long-term debt, less the payments on long-term debt
As a result of the above items, as of March 31, 2016, cash and cash equivalents amounted to ¥699.3
billion, net decrease of ¥2.3 billion from March 31, 2015. Free cash flows, the sum of cash flows fromoperating and investing activities, represented an inflow of ¥81.4 billion in the year ended March 31, 2016,an increase in net cash inflow of ¥242.1 billion from the year ended March 31, 2015.

-31-

3) Assets, Liabilities and Equity
As of March 31, 2016, total assets amounted to ¥12,551.0 billion, an increase of ¥117.2 billion fromMarch 31, 2015. This was due mainly to the effect of the acquisition of the signaling systems and railway
businesses of Finmeccanica S.p.A. and the acquisition of Pentaho Corporation by Hitachi Data Systems
Corporation, and an increase in trade receivables associated with business expansion, especially for foreign
markets, in the Financial Services segment. This increase was partially offset by the effect of reorganizationof the air-conditioning systems business, decreases in the value of assets denominated in foreign currency
owing to the appreciation of yen, the effect of lower stock price and the effect of inventory reduction. Cashand cash equivalents as of March 31, 2016 amounted to ¥699.3 billion, a decrease of ¥2.3 billion from theamount as of March 31, 2015.
As of March 31, 2016, total interest-bearing debt, the sum of short-term debt and long-term debt,
amounted to ¥3,604.4 billion, an increase of ¥47.0 billion from March 31, 2015. As of March 31, 2016,short-term debt, consisting mainly of borrowings from banks and commercial paper, amounted to ¥871.4
billion, a decrease of ¥106.2 billion from March 31, 2015, due mainly to the repayment of commercial paperby the Company. As of March 31, 2016, current portion of long-term debt amounted to ¥651.5 billion, an
increase of ¥167.9 billion from March 31, 2015. As of March 31, 2016, long-term debt (excluding current
portion), consisting mainly of debentures, debentures with stock acquisition rights, medium-term notes andloans principally from banks and insurance companies, amounted to ¥2,081.5 billion, a decrease of ¥14.6
billion from March 31, 2015, due mainly to increased amount of debt maturing in the year ending March 31,
2017, despite higher demand for funds in line with business expansion in the Financial Services segment.
As of March 31, 2016, total Hitachi, Ltd. stockholders’ equity amounted to ¥2,735.0 billion, adecrease of ¥207.2 billion from March 31, 2015, due mainly to a decrease in the accumulated othercomprehensive income owing primarily to the appreciation of yen, lower stock prices, and lower interest
rates, despite posting of net income attributable to Hitachi, Ltd. stockholders. As a result, the ratio of total
Hitachi, Ltd. stockholders’ equity to total assets as of March 31, 2016 was 21.8%, compared with 23.7% asof March 31, 2015.
Non-controlling interests as of March 31, 2016 was ¥1,390.4 billion, an increase of ¥36.4 billion fromMarch 31, 2015.
Total equity as of March 31, 2016 was ¥4,125.5 billion, a decrease of ¥170.7 billion from March 31,
2015. The ratio of interest-bearing debt to total equity increased to 0.87, compared with 0.83 as of March 31,
2015.
(5) Important Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires ourmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period. Management considers that certain accounting
estimates to be critical, and that their significance to the financial statements and the possibility that future
events affecting the estimate may differ significantly from management’s current assumptions could have amaterial impact on the presentation of our financial condition, changes in financial condition or results ofoperations. First, the estimates require us to make assumptions about matters that are highly uncertain at thetime the accounting estimates are made. Second, there could be different estimates that we reasonably could
have used for the accounting estimate in the current period, or changes in the accounting estimate that arereasonably likely to occur as time proceeds. Details of important accounting policies and estimates aredescribed in “Consolidated Financial Statements ― Notes to Consolidated Financial Statements ― (3)Summary of Significant Accounting Policies.”(6) Forward-Looking Statements
Certain statements found in “3. Challenges Facing Hitachi Group,” “4. Risks Factors” and “7.
Analyses of Consolidated Financial Condition, Operating Results and Cash Flows” and other descriptions inthis report may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Such “forward-looking statements” reflect management’s current views with respect tocertain future events and financial performance and include any statement that does not directly relate to any
historical or current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,”“plan,” “project” and similar expressions which indicate future events and trends may identify “forwardlooking statements.” Such statements are based on currently available information and are subject to various
risks and uncertainties that could cause actual results to differ materially from those projected or implied in
the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based
upon current assumptions of future events which may not prove to be accurate. Undue reliance should not be
placed on “forward-looking statements,” as such statements speak only as of the date of this report.

-32-

Factors that could cause actual results to differ materially from those projected or implied in any“forward-looking statement” and from historical trends include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

•
•
•
•
•
•
•
•

economic conditions, including consumer spending and plant and equipment investment in Hitachi’smajor markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the
major industrial sectors Hitachi serves;
exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant sales orin which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;
uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;
uncertainty as to general market price levels for equity securities, declines in which may require Hitachi towrite down equity securities that it holds;
fluctuations in the price of raw materials including, without limitation, petroleum and other materials, suchas copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials,
parts and components;
the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts for which
Hitachi uses the percentage-of-completion method to recognize revenue from sales;credit conditions of Hitachi’s customers and suppliers;
fluctuations in product demand and industry capacity;
uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact offluctuations in product demand, exchange rates and/or price of raw materials or shortages of materials,
parts and components;
uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate newtechnologies on a timely and cost-effective basis and to achieve market acceptance for such products;
increased commoditization of and intensifying price competition for products;
uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social
Innovation Business;
uncertainty as to the success of acquisitions of other companies, joint ventures and strategic alliances andthe possibility of incurring related expenses;
uncertainty as to the success of restructuring efforts to improve management efficiency by divesting orotherwise exiting underperforming businesses and to strengthen competitiveness;the potential for significant losses on Hitachi’s investments in equity-method associates and joint ventures;
general socioeconomic and political conditions and the regulatory and trade environment of countries
where Hitachi conducts business, particularly Japan, Asia, the United States and Europe, including,
without limitation, direct or indirect restrictions by other nations on imports and differences in commercial
and business customs including, without limitation, contract terms and conditions and labor relations;
uncertainty as to the success of cost structure overhaul;
uncertainty as to Hitachi’s ability to attract and retain skilled personnel;
uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights;
uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which
the Company, its subsidiaries or its equity-method associates and joint ventures have become or may
become parties;
the possibility of incurring expenses resulting from any defects in products or services of Hitachi;
the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes and tsunamis,the spread of infectious diseases, and geopolitical and social instability such as terrorism and conflict;uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s
ability to protect its confidential information or that of its customers; anduncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefit-related
costs.

The factors listed above are not all-inclusive and are in addition to other factors contained elsewherein this report and in other materials published by Hitachi.

-33-

III. Property, Plants and Equipment
1. Summary of Capital Investment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) selectively invests in R&D and productfields expected to grow over the long term, and it also invests to streamline manufacturing process, etc.
and to improve the reliability of its products.
Capital investment (based on the amount recorded as tangible fixed assets and the investment property) in
the fiscal year ended March 31, 2016 was ¥528.5 billion. A breakdown of capital investment by segment is
as follows. Effective from April 1, 2015, the Power Systems segment has been integrated to the Social
Infrastructure & Industrial Systems segment. From the fiscal year ended March 31, 2016, capital
investment is stated exclusive of investment in lease assets classified as finance lease. Figures shown in
the table below including those for the preceding fiscal year reflect these changes.
Segment

Change from
Capitalpreceding fiscal
investment(Billions of yen)year (%)

Information &Telecommunication
Systems

49.4

113

Social Infrastructure &Industrial Systems

61.2

102

Electronic Systems &Equipment

20.0

98

Construction Machinery

23.7

133

High Functional Materials& Components

85.8

115

Automotive Systems

72.5

94

17.0

94

56.3

114

133.6

205

Smart Life & Ecofriendly
Systems
Others (Logistics andOther services)
Financial Services

Main purpose of investment
Cloud services equipment, streamline
development and production of other products
Facility for nuclear power generation system,
streamline development and production of otherproducts, antiseismic reinforcement
Streamline development and production of
products
Streamline production of construction
machinery, assets for leasing business(construction machinery)
Increase and streamline production of high grade
metal products, magnetic materials, high-grade
functional components and wires and cables, etc.
Increase production of automotive equipment,
etc.
Streamline development and production of
products
Transportation facilities, R&D facilities,
system development facilities
Assets for leasing business (computers and otherinformation-related equipment, industrial
machinery and machine tools, vehicles andmedical equipment related to lease agreements)－

Subtotal
519.9
122
Corporate Items &8.6－－
Eliminations
Total
528.5
123
－
(Notes) 1. The figures in the above table include the amount of the tangible fixed assets leased under financelease transactions and the investment property, each of which is recorded as property, plant andequipment and other non-current assets, respectively.
2. These investments were mostly financed with the Hitachi Group’s own capital.

-34-

2. Major Property, Plants and Equipment
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse business operationsin Japan and overseas. It discloses information on major property, plants and equipment represented inbreakdown by segment and major facilities of the Company and consolidated subsidiaries.
The situation at the end of the fiscal year ended March 31, 2016 is as follows.
(1) Breakdown by Segment(As of March 31, 2016)
Book value (Millions of yen)Tools,
Machineryfurniture
Other
and vehicles
andfixtures

Land[Area inthousandsof m2]

Buildings
andstructures

Information &Telecommunication
Systems

29,429[1,635]78,39428,54055,16323,512

2,190

217,228

76,451Social Infrastructure &Industrial Systems

102,651[12,591]

138,186

54,76524,84013,85451,876386,172

73,651

Electronic Systems &Equipment
Construction
MachineryHigh Functional
Materials &Components

36,116[1,955]62,31520,981

16,587

3,018

3,713

142,730

25,80053,814[8,315]91,916

58,202

6,715

59,274

7,795

277,716

20,90880,754[16,854]

137,591

200,941

27,3883,435

30,323

480,432

47,28353,542[5,947]

69,989131,514

21,1271,445

30,307

307,924

33,214

9,068[2,342]

15,304

19,908

9,663

724

1,448

56,115

11,99791,360[4,767]

127,372

32,05926,68734,386

4,855

316,719

38,826

2,377

307,582

4,552

134,884 2,492,618

332,682

Segment

Automotive Systems
Smart Life &Ecofriendly Systems
Others (Logistics andOther services)
Financial Services
Subtotal
Corporate Items &Eliminations
Total(Notes)296[9]457,030[54,416]

1,410

13,4232,109

287,967

722,477

560,333

190,279

427,615(30,461)[1,030]26,179

458

3,161

(934)

426,569[55,446]

748,656

560,791

193,440

426,681Constructionin progress

9,205

Total

Number of
employees

7,608

2,562

144,089 2,500,226

335,244

1. The “Book value - Other” column includes the amount of finance lease assets, etc.
2. The figures in the above table include ¥342,187 million of operating lease assets for leasing business, mainly owned
by Hitachi Capital Corporation.
3. The figures in the above table include ¥61,593 million of lease assets concerning finance lease transactions leased
from within the Hitachi Group, mainly from Hitachi Capital Corporation.
4. Except for the figures in the above table, there are operating lease assets leased, mainly machinery, etc. The annual
lease fee for such assets was ¥150,243 million.

-35-

(2) The Company(As of March 31, 2016)
Book value (Millions of yen)
Details ofTools,
Land
Number of
Facility
Segment
major facilities [Area in Buildings Machinery furniture
Construction(Main location)
employees
and
and
Total
Other
and equipment thousands
andin progressstructures vehicles
2
fixturesof m ]
Systemdevelopment
Information &Information & facilities,
Telecommunication
Telecommuni- manufacturing
15,71554,216
2,694 25,898 3,235
504 102,264
16,414
Systems Company
facilities forcation[603](Shinagawa-ku,
servers,
Systems
Tokyo)
mainframes,
etc.
Research &OthersDevelopment(Logistics and
6,017
R&D facilities
14,743
5,490
3,696
1
54 30,004
2,775
Group
Other
[776]
(Kokubunji, Tokyo) services)
Manufacturing
facilities forindustrial
machinery andplants,SocialInfrastructure
3,646
Infrastructure switchboards
11,657
7,540
2,038 2,353
239 27,477
3,557
Systems Company[764]& Industrial and calculation(Hitachi, Ibaraki)
control
Systems
equipment,
systemdevelopment
facilities
Corporate Hospital
Medical63
10,35521877
704
9,051 21,072
1,404
Group
Corporatefacilities[53](Hitachi, Ibaraki)
Manufacturing
Socialfacilities forPower Systems
10,099Infrastructure
power
5,534
2,780
826
766
50 20,057
1,656
Company[3,374]& Industrial
generating(Hitachi, Ibaraki)
Systems
equipment, etc.
IT Services
OthersSystem－Division(Logistics and
1,618
0 16,507－
332 18,457
423
development[－](Chiyoda-ku,
Otherfacilities
Tokyo)
services)Rail Systems
SocialManufacturing
Company
Infrastructure facilities for
846
10,2914,857
646
12
233 16,889
2,001(Kudamatsu,& Industrial railway[667]
Yamaguchi)
Systems
vehicles, etc.
Area Operations
8,291
Corporate
Other facilities
6,236
12
273
5
－ 14,820
1,275(Osaka, Osaka)[50]
Head Office
5,328(Chiyoda-ku,
Corporate
Other facilities
6,884
423
2,010
－
154 14,801
965
[928]
Tokyo)
Defense Systems
SocialSystem107
Company
Infrastructure
6,496
629
569
178
－
7,982
472
development[7](Yokohama,& Industrial
facilities
Kanagawa)
Systems-36-

(3) Domestic subsidiaries

Facility(Main location)

Segment

Hitachi Automotive
Systems, Ltd.
Automotive(Hitachinaka,
Systems
Ibaraki)High
Hitachi Metals,
Functional
Ltd., Yasugi Works
Materials &(Yasugi, Shimane)Components
HitachiConstruction
Machinery Co.,
Construction
Ltd., Tsuchiura
Machinery
Works(Tsuchiura, Ibaraki)
HitachiConstruction
Machinery Co.,
Construction
Ltd., HitachinakaMachinery
Rinko Works(Hitachinaka,Ibaraki)(As of March 31, 2016)
Book value (Millions of yen)
Details ofTools,
Land
Number ofmajor facilities [Area in Buildings Machinery furniture
Construction
employees
and
and
Total
Other
and equipment thousands
andin progressstructures vehicles
2
fixturesof m ]
Manufacturing
facilities for
9,172
25,90534,8995,479
01,878 77,333
7,128
automotive[2,480]equipment
Manufacturing
facilities forhigh grade steel

8,119[1,104]

8,305

20,210

2,382

－

7,541

46,557

1,539

Manufacturing
facilities forconstruction
machinery

6,917[5,135]

11,508

14,107

1,202

－

168

33,904

3,004

Manufacturing
facilities forconstruction
machinery

12,330[495]

16,546

4,716

163

－

4

33,762

268

Hitachi HighTechnologies
Corporation,
Naka Area(Hitachinaka,Ibaraki)Electronic
Systems &Equipment

Manufacturing
facilities forsemiconductor
processing
equipment andtest andmeasurement
equipment, etc.

82
[115]

16,943

2,928

4,764

－

878

25,5972,253

Hitachi Building
Systems Co., Ltd.,
Head Office(Chiyoda-ku,
Tokyo)

SocialInfrastructure
Other facilities& Industrial
Systems

8,002
[119]

10,773

578

1,472

－

224

21,049

1,726

4,799
[869]

9,056

1,963

1,685

211

1,642

19,356

1,750

High
Hitachi Metals,
Functional
Ltd., Ibaraki Works
Materials &(Hitachi, Ibaraki)
Components

Manufacturing
facilities forwires and cables
and lubber
product, etc.
Manufacturing
facilities forcircuit board
materials, etc.

Hitachi Chemical HighCompany, Ltd.,
Functional
4,154
6,675
6,526
533
20
239 18,149
1,472
Shimodate Works Materials &[658](Chikusei, Ibaraki) Components
HitachiConstruction
Manufacturing
Machinery Co.,
Construction facilities for
1,998
8,078
7,626
72
－
1 17,776
229
Ltd., Hitachinaka
Machinery
construction
[214]
Works
machinery(Hitachinaka,Ibaraki)
Hitachi Chemical HighManufacturing
Company, Ltd.,
Functional
facilities for
891
8,064
6,987
393
34
440 16,811
936
Yamazaki Works
Materials &semiconductor[454](Hitachi, Ibaraki)
Components materials, etc.
(Note) Except for the figures in the above table, there are operating lease assets for leasing business, mainly owned by Hitachi
Capital Corporation.

-37-

(4) Overseas subsidiaries

Subsidiary(Main location)

Segment(As of March 31, 2016)
Book value (Millions of yen)
Details ofTools,
Land
Number of
major
Buildings Machinery
Construction
furniturefacilities and [Area in
employees
and
and
Total
Other
and
in progressequipment thousands
structures vehicles
2
fixturesof m ]

SocialLand, etc. for
63,364
Infrastructure
210
2
1,402
－
46,915 111,893
320
nuclear power[4,430]& Industrial
plant
SystemsHigh
Manufacturing
Waupaca Foundry,
Functional
facilities for
683
16,26434,037
3,532－
2,096 56,612
3,931
Inc.
Materials & automotive[4,850](Wisconsin, U.S.A.)
Components components
Hitachi Automotive
Manufacturing
Systems Mexico,
Automotive facilities for
3,182
6,369
19,112
2,011－
10,295 40,969
2,772
S.A. de C.V.
Systems
automotive[488](Querétaro, Mexico)equipment
Hitachi Data
Information &Systems
Telecommuni- Other－－
23,165 14,460 101－ 37,726
6,446
Corporation
cationfacilities[－](California, U.S.A.) Systems
Hitachi Automotive
Manufacturing
Systems Americas, Automotive facilities for
384
7,111
18,052
5,149－
3,996 34,692
3,375
Inc.
Systems
automotive[1,242](Kentucky, U.S.A.)
equipment(Notes) 1.
The figures for Horizon Nuclear Power Limited and Hitachi Data Systems Corporation are presented in consolidated
basis of each company.
2.
Except for the figures in the above table, there are operating lease assets for leasing business, mainly owned byoverseas subsidiaries of Hitachi Capital Corporation.
Horizon Nuclear
Power Limited(Gloucester, U.K.)-38-

3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations in Japanand overseas, and has not decided on specific plans to newly install or expand each of facilities as of theend of the fiscal year. For this reason, it discloses amounts of capital investment by segment.
The amount of capital investment for the fiscal year ending March 31, 2017 will be ¥425.0 billion (newinstallation and expansions, based on the amount recorded as tangible fixed assets and the investment
property), and a breakdown by segment is as follows. Effective from April 1, 2016, the Company changed
the name of the “Others (Logistics and Other services)” segment to the “Others” segment.
Segment
Information &Telecommunication
Systems

Amount(Billions of yen)
45.0

Main purpose of investment
Streamline development and production of products
Facility for nuclear power generation system,
manufacturing facilities for wind power generation systemequipment, manufacturing facilities for railway systems,
streamline development and production of other products
Increase production of semiconductor processing
equipment, streamline development and production ofother products
Streamline production of construction machinery, assets
for leasing business (construction machinery)
Increase and streamline production of high grade metal
products, magnetic materials, high-grade functional
components and wires and cables, etc.

Social Infrastructure &Industrial Systems

70.0

Electronic Systems &Equipment

20.0

Construction Machinery

20.0

High Functional Materials& Components

110.0

Automotive Systems

80.0

Increase production of automotive equipment, etc.

Smart Life & Ecofriendly
Systems

15.0

Streamline development and production of products

Others20.0

R&D facilities, system development facilities

Financial Services

45.0

Assets for leasing business

Subtotal
Corporate Items &Eliminations
Total

425.0

－

0.0

－

425.0

－

(Notes) 1. The figures in the above table include the amount of the tangible fixed assets leased under financelease transactions and the investment property, each of which is recorded as property, plant andequipment and other non-current assets, respectively.
2. These planned investments are expected to be mostly financed with the Hitachi Group’s own
capital.
3. There are no plans to dispose or sell principal facilities, with the exception of disposing and selling
facilities due to routine upgrading.

-39-

IV. Information on the Company
1. Information on the Company’s Stock, etc.
(1) Total number of shares, etc.
1) Total number of shares

Common stock

Total number of shares authorized to
be issued (shares)
10,000,000,000

Total

10,000,000,000

Class2) Issued shares
Number of shares
Number of sharesissued as of the end
issued as of theof fiscal year (shares) filing date (shares)(March 31, 2016)(June 22, 2016)

Class

Stock exchange on which
the Company is listed

Commonstock

4,833,463,387

4,833,463,387

Tokyo, Nagoya

Total

4,833,463,387

4,833,463,387－

Description
The number of shares
per one unit of sharesis 1,000 shares.
－(2) Information on the stock acquisition rights, etc.
Not applicable.
(3) Information on moving strike convertible bonds, etc.
Not applicable.
(4) Information on shareholder right plans
Not applicable.
(5) Changes in the total number of issued shares and the amount of common stock and other

Datein Balance of Change in Balance of
Change in the Balance of the Changecommoncapitalcapitalcommontotal number of total number ofstockreserve
reservestock
issued shares issued shares (Millions of (Millions of (Millions (Millions of(shares)(shares)of yen)
yen)
yen)
yen)

From April 1, 2011 (Note)
117,640,353 4,637,785,317
18,646to March 31, 2012
From April 1, 2012 (Note)
195,678,070 4,833,463,387
31,015to March 31, 2013
From April 1, 2013
－ 4,833,463,387－
to March 31, 2014
From April 1, 2014
－ 4,833,463,387－
to March 31, 2015
From April 1, 2015
－ 4,833,463,387－
to March 31, 2016
(Note) Changes due to conversion of stock acquisition rights into stocks.
(6) Shareholders composition

427,775

18,646

145,742458,790

31,015

176,757

458,790－

176,757

458,790－

176,757

458,790－

176,757(As of March 31, 2016)
Status of shares (one unit of stock: 1,000 shares)
Number of
Foreigncorporations,shares less
Financial
Class ofGovernment Financial instruments Otheretc.
than one
Individuals Total
shareholders
and
unit
and
othersinstitution
business
institution
Nonmunicipality(shares)
operator
individuals Individuals
Number of
2
258
100
3,028
825
141 321,738
326,092－
shareholders
Shareownership
46 1,455,645 150,644
92,960 1,922,832
589 1,188,266 4,810,982 22,481,387(units)Ownership
percentage of
0.00
30.26
3.13
1.93
39.97
0.01
24.70
100.00－shares (%)(Notes) 1. Of 5,247,929 shares of treasury stock, 5,247 units are included in the “Individuals and others”
column, while 929 shares are included in the “Number of shares less than one unit” column.
2. Of the shares registered in the name of Japan Securities Depository Center, Incorporated (accountfor managing stocks whose shareholders have not transferred titles), 26 units are included in the“Other institution” column and 827 shares are included in the “Number of shares less than one
unit” column.
-40-(7) Major shareholders(As of March 31, 2016)
Ownership
Share
percentage to the
Ownership
total number of(shares)issued shares (%)

Name

Address

The Master Trust Bank of Japan,
Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd.
(Trust Account)Hitachi Employees’ Shareholding
Association

294,474,000

6.09

282,694,415

5.85

99,633,384

2.06

93,265,195

1.93Japan Trustee Services Bank, Ltd.
(Trust Account 9)
THE BANK OF NEW YORKMELLON SA/NV 10(Standing proxy: The Bank ofTokyo-Mitsubishi UFJ, Ltd.)State Street Bank West ClientTreaty 505234(Standing proxy: Mizuho Bank,Ltd.)
The Dai-ichi Life Insurance
Company, Limited
State Street Bank and Trust
Company 505225(Standing proxy: Mizuho Bank,
Ltd.)
Japan Trustee Services Bank, Ltd.
(Trust Account 7)

11-3, Hamamatsucho 2-chome,
Minato-ku, Tokyo
8-11, Harumi 1-chome, Chuo-ku,
Tokyo
6-6, Marunouchi 1-chome, Chiyodaku, Tokyo
6-6, Marunouchi 1-chome, Chiyodaku, Tokyo
8-11, Harumi 1-chome, Chuo-ku,
Tokyo
Rue Montoyerstraat 46, 1000
Brussels, Belgium(7-1, Marunouchi 2-chome, Chiyodaku, Tokyo)
1776 Heritage Drive, North Quincy,
MA 02171, U.S.A.
(15-1, Konan 2-chome, Minato-ku,
Tokyo)
13-1, Yurakucho 1-chome, Chiyodaku, Tokyo
P.O. Box 351
Boston, Massachusetts 02101 U.S.A.
(15-1, Konan 2-chome, Minato-ku,
Tokyo)
8-11, Harumi 1-chome, Chuo-ku,
Tokyo76,826,000

1.59

73,447,113

1.52

71,729,327

1.48

71,361,222

1.48

68,111,932

1.41

67,288,000

1.39

Total

－

1,198,830,588

24.80

Nippon Life Insurance Company(Notes)1. The number of shares held by The Dai-ichi Life Insurance Company, Limited includes its
contribution of 6,560,000 shares to the retirement allowance trust (the holder of said shares, as
listed in the Shareholders’ Register, is “Dai-ichi Life Insurance Account, Retirement Allowance
Trust, Mizuho Trust & Banking Co., Ltd.”).
2. The Company has received copies of reports on substantial shareholdings under the Financial
Instruments and Exchange Act. However, the information in the reports is not described in theabove table since the Company does not confirm the actual status of shareholdings as of the endof fiscal year. The major contents of the reports are as follows.

Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares
Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares

Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares

Mitsubishi UFJ Trust and Banking Corporation and threeother persons
May 23, 2011
237,294,613 shares
5.24 %
BlackRock Japan Co. Ltd and nine other persons
March 31, 2014
255,857,172 shares
5.29%

Sumitomo Mitsui Trust Bank, Limited and two otherpersons
July 31, 2014
244,372,374 shares
5.06%

-41-

(8) Information on voting rights
1) Issued sharesClassification

Number of shares (shares)

Shares without voting right
Shares with restricted voting
right (treasury stock, etc.)
Shares with restricted voting
right (others)
Shares with full voting right(treasury stock, etc.)
Shares with full voting right(others)
Shares less than one unit

－

－

－

－

－

－

－

－

－

－

－

Common stock

5,413,000

Common stock

4,805,569,000

4,805,569－

Common stock

22,481,387－－

4,833,463,387－－

4,805,569－

Number of issued shares
Total number of voting rights(Note)(As of March 31, 2016)
Number of voting
Description
rights－The “Shares with full voting right (others)” column includes 26,000 shares registered in the name ofJapan Securities Depository Center, Incorporated (account for managing stocks whose shareholders
have not transferred titles) and 26 voting rights for those shares.

2) Treasury stock, etc.

Name ofshareholder

Hitachi, Ltd.

Address

6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo
9-11, Shinkawa 2-chome,
Chuo-ku, Tokyo
1-11, Oroshishinmachi 3chome, Higashi-ku,
Niigata-shi, Niigata(As of March 31, 2016)
Ownership
Number ofpercentage toshares held
Number of
the total
under the Total sharesshares held
under own name names of held (shares) number ofissued shares
others(shares)(%)(shares)
5,247,000－

5,247,000

0.11

Aoyama Special
Steel Co., Ltd.
ISHIIDENKOSHA
Co., Ltd.
SAITATakinogawa 5-chome,
KOUGYOU CO., 5-3,
Kita-ku, TokyoLTD.
3268, Nagaoka,
Nitto Jidosha
Ibarakimachi,
Kiki K.K.
Higashiibaraki-gun, Ibaraki

10,000－10,000

0.00

1,000

－

1,000

0.00

88,000－88,0000.00

52,000－52,0000.00

Mizuho Co., Inc.

4-1, Koishikawa 5-chome,
Bunkyo-ku, Tokyo

15,000－15,000

0.00

Total

－

5,413,000－

5,413,000

0.11

-42-

(9) Details of stock option plans
The Compensation Committee resolved to grant stock options as stock-based compensation (stockacquisition rights) to the Company’s Executive Officers in accordance with the Article 409 of theCompanies Act.
Date of resolution

May 13, 2016

Category and number of person to whom
stock acquisition rights will be granted
Class of shares to be issued upon exerciseof stock acquisition rights

Executive Officers of the Company (Note 1)

Number of shares to be issued upon
exercise of stock acquisition rights
Amount to be paid in upon exercise ofstock acquisition rights
Exercise period of stock acquisitionrightsConditions for the exercise of stockacquisition rights
Matters regarding acquisition of stockacquisition rights through transfer

Common stock
The number of stock acquisition rights to be issued to
Executive Officers in the fiscal year commencing on April 1,2016 shall be 17,205. The number of shares to be issued upon
exercise of each stock acquisition right (hereinafter, the“Number of Shares to be Issued”) shall be 100 shares.
(Note 1, 2)¥1 per share
30 years from the day immediately following the date ofallotment of the stock acquisition rights(Note 3, 4)
Acquisition of stock acquisition rights through transfer shallbe subject to the approval of the Board of Directors.

Matters regarding substitute payment－

Matters regarding grant of stockacquisition rights upon organizational－
restructuring(Notes) 1. The Company will grant similar stock options as stock-based compensation to its Corporate
Officers. (The number of stock acquisition rights issued to them shall be 7,014.)
2. If the Company implements a stock split (including gratis allotment of shares of common stock;
the same shall apply to references to a stock split hereinafter) or a reverse stock split with respect
to common stock of the Company after the date of allotment of the stock acquisition rights, theNumber of Shares to be Issued with respect to the stock acquisition rights not exercised at that time
will be adjusted in accordance with following formula:
Number of Shares to be Issued =after adjustment

Number of Shares to be
Issued before adjustment

×

Ratio of stock split orreverse stock split

In addition, if there is an unavoidable ground requiring an adjustment of the Number of Shares to
be Issued, the Number of Shares to be Issued may be adjusted to the extent necessary by aresolution of the Board of Directors.
Any fractions of less than one share resulting from the adjustment will be rounded down.
3. A holder of stock acquisition rights may exercise all the stock acquisition rights together only
within 10 days (in case the last day is not a business day, the following business day) from the day
immediately following the date on which he/she ceases to be an Executive Officer, a Director or a
Corporate Officer of the Company.
4. The number of stock acquisition rights which a holder of stock acquisition rights may exercise
shall be determined based on the ratio of (i) the total shareholder return for shares of Hitachi forthree years from the beginning of the fiscal year in which the date of allotment of the stockacquisition rights falls to (ii) the growth rate of TOPIX (Tokyo Stock Price Index) for the same
period (the “TSR/TOPIX Growth Rate Ratio”), in accordance with the stock price conditions:a. In case the TSR/TOPIX Growth Rate Ratio is 120% or more
All the stock acquisition rights allotted (the “Allotted Rights”) may be exercised.
b. In case the TSR/TOPIX Growth Rate Ratio is 80% or more but less than 120%
Only a part of the Allotted Rights may be exercised according to the degree of the
TSR/TOPIX Growth Rate Ratio (*).
*Number of stock acquisition = Number of
TSR/TOPIX
rights exercisable
Allotted Rights ×{( Growth Rate Ratio × 1.25) – 0.5}
Any fraction less than one stock acquisition right will be rounded down.
c. In case the TSR/TOPIX Growth Rate Ratio is less than 80%
No Allotted Rights may be exercised.

-43-

2. Information on Acquisition, etc. of Treasury StockClass of shares
Acquisition of common stock under Article 155, Item 7 of the Companies Act and acquisition ofcommon stock under Article 155, Item 13 of the Companies Act(1) Acquisition of treasury stock resolved at the general meeting of shareholders
Not applicable.
(2) Acquisition of treasury stock resolved at the Board of Directors meetings
Not applicable.
(3) Details of acquisition of treasury stock not based on the resolutions of the general meeting ofshareholders or the Board of Directors meetings
Acquisition of stock less than one unit shares due to purchase requests from shareholders under
Article 192, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

Total amount (yen)Treasury stock acquired during the401,996
294,162,919
fiscal year ended March 31, 2016
Treasury stock acquired during the24,986
12,444,378
current period (Note)(Note) The number of treasury stock acquired due to requests to purchase stock less than one unit sharesfrom June 1, 2016 to filing date is not included.
Acquisition of treasury stock due to purchase requests from shareholders dissenting the absorptiontype company split that the Company succeeded the system solutions business in the social
infrastructure, financial, and government & public sectors in Hitachi Solutions, Ltd. under Article
797, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2016
Treasury stock acquired during thecurrent period

Total amount (yen)1,000

792,000－－(4) Status of the disposition and holding of acquired treasury stock
Fiscal year ended March 31, 2016
Classification
Acquired treasury stock which wasoffered to subscribers
Acquired treasury stock which wascanceled

Current period (Note)

Number of Total disposition Number of Total disposition
shares (shares) amount (yen) shares (shares) amount (yen)
－

－

－

－

－

－

－

－

－

－

－

－

Others (Acquired treasury stock which
was sold due to requests fromshareholders holding shares less than
one unit shares to sell additional
shares)41,90530,459,603

3,502

2,539,229

Total number of treasury stock held

5,247,929－

5,269,413－

Acquired treasury stock which wastransferred due to merger, shareexchange or company split(Note)The number of treasury stock which was sold due to requests from shareholders holding less than
one unit shares to sell additional shares from June 1, 2016 to the filing date and that of treasury stockacquired due to purchase requests from shareholders holding shares less than one unit shares from
June 1, 2016 to the filing date are not included.
-44-

3. Dividend Policy
The Company views enhancement of the long-term and overall interests of shareholders as an importantmanagement objective.
The industrial sector encompassing energy, information systems, social infrastructure and other primarybusinesses of the Company is undergoing rapid technological innovation and changes in market structure.
This makes vigorous upfront investment in R&D and plant and equipment essential for securing andmaintaining market competitiveness and improving profitability. Dividends are therefore decided based on
medium-to-long term business plans with an eye to ensuring the availability of internal funds forreinvestment and the stable growth of dividends, with appropriate consideration of a range of factors,
including the Company’s financial condition, results of operations and dividend payout ratio.
The Company provides in its Articles of Incorporation that distribution of surplus will be made toshareholders of record as of March 31 and September 30 of each year and that the company may makefurther distribution of surplus to shareholders of record as of another record date for the purpose of
distributing surplus. The Company also provides in its Articles of Incorporation that the Company may
make distribution of surplus by resolution of its Board of Directors, without resolution at the General
Meeting of Shareholders.
The Company believes that the repurchase of its shares should be undertaken, when necessary, as part ofits policy on distribution to shareholders to complement the dividend payout. In addition, the Company
will repurchase its own shares in order to flexibly implement a capital strategy, including businessrestructuring, to maximize shareholder value so far as consistent with the dividend policy. Such action will
be taken by the Company after considering its future capital requirement under its business plans, market
conditions and other relevant factors.
Based on the above policy, annual dividends of ¥12.0 per share were paid for the fiscal year ended
March 31, 2016. At the Board of Directors meeting held on October 28, 2015, it was resolved to pay
interim dividends of ¥6.0 per share, resulting in the total amount of interim dividends of ¥28,970 million.
In addition, at the Board of Directors meeting held on May 13, 2016, it was resolved to pay year-end
dividends of ¥6.0 per share, resulting in the total amount of year-end dividends of ¥28,969 million.
4. Changes in Share Prices(1) Highest and lowest share prices in each of the recent five fiscal years
Fiscal year

143rd
144th
145th
146th
147th
business term business term business term business term business term

Year end

March 2012

Highest(yen)
Lowest(yen)

March 2013

March 2014

March 2015

March 2016

547

578

877

939.9

858.0

360

401

508

660

431.0

January
2016

February
2016

March
2016

Highest
744.2
736.9
754.6
692.9
615.0
(yen)
Lowest
610.6
678.6
668.1
547.1
431.0
(yen)
(Note) The share prices are market prices on the first section of the Tokyo Stock Exchange.

543.1(2) Highest and lowest share prices in each of the recent six months
Month

October2015

November
2015

December
2015

-45-

459.3

5. Directors and Senior Management
Men: 44 persons, Women: 2 persons(Women’s percentage to total number of Directors and Senior Management: 4%)
The Company is a company with Nominating Committee, etc. pursuant to the Companies Act. (See “ 6.
Corporate Governance, etc. － (1) Corporate governance － 1) Outline of corporate organizations.”)
Information on its Directors and Executive Officers is as follows.
(1) Directors
Share
Date of Business experience, including experience Term of ownershipbirth
in Hitachi, and functions
office(shares)
10/1983 Joint Managing Director,
Bharat Forge Limited
6/1994 Managing Director, Bharat
Forge Limited
Baba
Jan. 70(Note 1)
8/1997 Chairman & Managing
Kalyani
1949
Director, Bharat Forge Limited(Currently in office)6/2016 Director, Hitachi, Ltd.
10/1991 General Manager, Foil
Products, Alcan Inc.
1/1996 Managing Director, Aughinish
Alumina Ltd., Alcan Inc.
10/1998
President, Bauxite, Alumina
Member ofandSpeciality Chemicals,
Cynthia
Nov.
13,
Nominating(Note 1)
2,000
Alcan
Inc.
Carroll
1956
Committee
1/2002 President & CEO, Primary
Metal Group, Alcan Inc.
3/2007 CEO, Anglo American plc.
(Retired in April 2013)
6/2013 Director, Hitachi, Ltd.
6/2002 President and Representative
Member of the Board, Toray
Industries, Inc.
6/2010 Chairman of the Board andMember ofRepresentative Member of theBoard, Toray Industries, Inc.
Nominating
Mar. 22,
Committee and Sadayuki(Note 1)
30,0006/2013 Director, Hitachi, Ltd.
Sakakibara
1943
Compensation
6/2014 Chairman of the Board, Toray
Committee
Industries, Inc.
6/2015 Chief Senior Advisor and Chief
Senior Counselor, Toray
Industries, Inc.
(Currently in office)2/1993 Chief Technology Officer,
Motors, Drives and Appliances,
Emerson Electric Company
9/1994 President, US Electrical
Motors, Emerson ElectricCompany
7/1997 President, Mercury Marine
Division and Corporate Vice
President, Brunswick
Corporation
4/2000 President and Chief Operating
Officer, Brunswick Corporation
GeorgeFeb. 23,
15,000
Buckley1947
6/2000 Chairman and Chief Executive (Note 1)
Officer, Brunswick Corporation
12/2005 Chairman of the Board,
President and Chief Executive
Officer, 3M Company
2/2012 Executive Chairman of theBoard, 3M Company (Retired
in May 2012)
6/2012 Chairman, Arle Capital Partners
Limited (Retired in December
2015)
Director, Hitachi, Ltd.

Position Responsibility

Director

Director

Director

Director

Name

-46-

Position Responsibility

Director

NameLouisePentlandMember of
Audit
Committee,
Nominating
Harufumi
Director Committee
Mochizuki(Chair) andCompensation
Committee(Chair)Member of
Audit
Director Committee and Takatoshi
Compensation Yamamoto
Committee

Share
Date of Business experience, including experience Term of ownershipbirth
in Hitachi, and functions
office(shares)
8/1997 Admitted as a Solicitor (UK)
7/2001 Senior Legal Counsel, Nokia
Networks, Nokia Corporation
1/2004 Vice President and Head of
Legal, Enterprise Solutions,Nokia Corporation
9/2007 Vice President, Acting Chief
Legal Officer and Head of IP
Legal, Nokia Corporation
7/2008 Senior Vice President and Chief
Legal Officer, Nokia
Corporation
Apr. 11,(Note 1)01972
6/2009 Admitted to New York StateBar Association
2/2011 Executive Vice President andChief Legal Officer, Nokia
Corporation (Retired in May,2014)
4/2015 General Counsel, PayPal, eBay
Inc.
6/2015 Director, Hitachi, Ltd.
7/2015 Senior Vice President and Chief
Legal Officer, PayPal Holdings,
Inc. (Currently in office)7/2002 Director-General for Commerceand Distribution Policy,
Minister’s Secretariat, Ministryof Economy, Trade andIndustry of Japan (“METI”)
7/2003 Director-General, Small andMedium Enterprise Agency,
METI
7/2006 Director-General, Agency for
Natural Resources and Energy,
METI
7/2008 Vice-Minister of Economy,
Trade and Industry of Japan
Jul. 26,7,000
1949
8/2010 Special Advisor to the Cabinet (Note 1)of Japan (Retired in September
2011)
10/2010 Senior Adviser to the Board,
Nippon Life Insurance
Company (Retired in April
2013)
6/2012 Director, Hitachi, Ltd.
6/2013 President and Representative
Director, Tokyo Small andMedium Business Investment& Consultation Co., Ltd.
(Currently in office)12/1995 Managing Director, Morgan
Stanley Japan Limited
6/1999 Managing Director and Vice
Chairman, Tokyo Branch,
Morgan Stanley Japan Limited
7/2005 Managing Director and Vice
Chairman, UBS Securities
Oct. 20,(Note 1)
20,000Japan Co., Ltd.
1952
6/2009 Managing Director, CASIOCOMPUTER CO., LTD.
6/2011 Advisor, CASIO COMPUTER
CO., LTD. (Retired in June2012)
6/2016 Director, Hitachi, Ltd.

-47-

Position Responsibility

Director

Name

Philip Yeo

Director

Audit
Committee(Chair)Hiroaki
Yoshihara

Director

Member of
Audit
Committee

Kazuyuki
TanakaShare
Date of Business experience, including experience Term of ownershipbirth
in Hitachi, and functions
office(shares)
6/1970 Joined Ministry of Defense of
Singapore
9/1979 Permanent Secretary, Ministryof Defense of Singapore
1/1986 Chairman, Economic
Development Board ofSingapore
2/2001 Chairman, Agency for Science,
Technology and Research ofSingapore
Oct. 29, 4/2007 Senior Advisor for Science and (Note 1)
36,0001946
Technology to the Ministry ofTrade & Industry, Singapore(Retired in September 2008)
Special Advisor in Economic
Development, Prime Minister’s
Office, Government ofSingapore (Retired in August
2011)
Chairman, SPRING Singapore(Currently in office)6/2012 Director, Hitachi, Ltd.
11/1978 Joined Peat Marwick Mitchell& Co.
7/1996 National Managing Partner, thePacific Rim Practice, KPMG
LLP
Feb. 9, 10/1997 The Board Member, KPMG
(Note 1)
3,000
1957
LLP
10/2003 Vice Chairman and Global
Managing Partner, KPMGInternational(Retired in April 2007)
6/2014 Director, Hitachi, Ltd.
4/1977 Joined Hitachi Chemical
Company, Ltd.
4/2005 Executive Officer, Hitachi
Chemical Company, Ltd.
4/2006 Senior Executive Director,
Hitachi Media Electronics Co.,Ltd.
6/2006 Representative Director andPresident, Hitachi MediaElectronics Co., Ltd.
4/2008 Vice President and Executive
Officer, Hitachi Chemical
Company, Ltd.
Apr. 29,(Note 1)
12,0001953
4/2009 Representative Executive
Officer, President & Chief
Executive Officer, Hitachi
Chemical Company, Ltd.
6/2009 Director, Representative
Executive Officer, President &Chief Executive Officer,
Hitachi Chemical Company,
Ltd.
4/2016 Chairman of the Board, Hitachi
Chemical Company, Ltd.
(Currently in office)6/2016 Director, Hitachi, Ltd.

-48-

ShareDate of Business experience, including experience in Term of ownership
birth
Hitachi, and functions
office (shares)
4/1970 Joined Hitachi, Ltd.
4/2003 General Manager, Global Business
6/2003 Vice President and Executive
Officer
4/2004 Senior Vice President and Executive
Officer
6/2005 Senior Vice President and Executive
Officer, Hitachi, Ltd.
Chairman and Chief Executive
Officer, Hitachi Global Storage
Technologies, Inc.
Chairman Member of
HiroakiMar. 14, 4/2006 Executive Vice President andNominatingof the(Note 1) 128,000
Nakanishi
1946
Committee
Board
Executive Officer, Hitachi, Ltd.
(Retired in December 2006)
4/2009 Executive Vice President andExecutive Officer, Hitachi, Ltd.
4/2010 President, Hitachi, Ltd.
6/2010 President and Director, Hitachi, Ltd.
4/2014 Chairman & CEO and Director,
Hitachi, Ltd.
4/2016 Chairman of the Board andRepresentative Executive Officer,
Hitachi, Ltd.
4/1975 Joined Hitachi, Ltd.
1/2006 General Manager, Finance
Department I
4/2007 Senior Vice President and Executive
OfficerMember of
6/2007
SeniorVice President, Executive
ToyoakiAug. 3,(Note 1)
63,000
Director Audit
Officer and Director
Nakamura
1952
Committee
6/2009SeniorVice
President
andExecutive(Standing)
Officer
4/2012 Executive Vice President andExecutive Officer (Retired in March2016)
6/2016 Director
4/1977 Joined Hitachi, Ltd.
4/2006 Chief Operating Officer,
Information & Telecommunication
Systems
4/2007 Vice President and Executive
Officer (Retired in March 2008)
4/2008 President, Hitachi Power EuropeGmbH
4/2010 President and Chief Executive
Officer, Hitachi Plant Technologies,
Ltd.
Member of
Feb. 16, 6/2010 President and Representative
Director Compensation Toshiaki(Note 1)58,000Higashihara 1955
Committee
Director, Hitachi Plant
Technologies, Ltd.
4/2011 Vice President and Executive
Officer, Hitachi, Ltd.
4/2013 Senior Vice President and Executive
Officer, Hitachi, Ltd.
4/2014 President & COO, Hitachi, Ltd.
6/2014 President & COO and Director,
Hitachi, Ltd.
4/2016 President & CEO and Director,
Hitachi, Ltd.
374,000
Total
Position Responsibility

Name(Notes) 1. The term of office of the Directors starts upon the election at the Annual General Meeting of
Shareholders on June 22, 2016 and expires at the close of the Annual General Meeting of
Shareholders for the fiscal year ending March 31, 2017.
2. Messrs. Baba Kalyani, Sadayuki Sakakibara, George Buckley, Harufumi Mochizuki, Takatoshi
Yamamoto, Philip Yeo and Hiroaki Yoshihara and Mses. Cynthia Carroll and Louise Pentland are
directors who fulfill the qualification requirements to be outside directors as provided for in Article 2,
Item 15 of the Companies Act.
-49-

(2) Executive Officers
Position

Responsibility

NameDate ofbirth

Business experience, including
Term of Shareexperience in Hitachi, and functions office ownership(shares)

Representative
Executive
See “(1) See “(1) Directors”
Overall operations Toshiaki
Officer
Higashihara
Directors”
President &CEO
4/1976 Joined Hitachi, Ltd.
10/2009 Chief Marketing Officer,
Information &Telecommunication
Representative Assistant to theGroup, Information &President,
Executive
Telecommunication
marketing and
Officer
RyuichiFeb. 4,
Systems Company
Executive Vice sales, and social
Kitayama
1952
President and innovation
4/2010 Vice President andbusiness
Executive
Executive Officer
promotion
Officer
4/2014 Senior Vice President andExecutive Officer
4/2015 Executive Vice President
and Executive Officer
4/1979 Joined Hitachi, Ltd.
10/2009 President & CEO,
Representative
Information & Control
Executive
AssistanttotheSystems Company
Officerand open Yutaka Saito Dec. 11,
4/2010 Vice President andExecutive Vice President
1954
Executive Officer
President and innovation
promotion
4/2012 Senior Vice President andExecutive
Executive Officer
Officer
4/2014 Executive Vice President
and Executive Officer
4/1974 Joined Hitachi, Ltd.
Representative
5/2006 General Manager, Hitachi
Executive
Works, Power Systems
Officer
22,
Koji Tanaka Jan.
Executive Vice Assistant to the
4/2007
Vice
President and1952
President and President
Executive Officer
Executive
4/2011 Executive Vice President
Officerand Executive Officer
4/1980 Joined Hitachi, Ltd.
4/2010 Senior Manager, Strategy& Project Office,Representative
Supervisory Office for
Executive
Assistant to theManagement Reforms
Officer
ToshikazuJan. 9,and
Executive Vice President
4/2011Vice
President andNishino1955
President and management
Executive
Officerstrategies
Executive
4/2013 Senior Vice President andOfficer
Executive Officer
4/2015 Executive Vice President
and Executive Officer
4/1977 Joined Hitachi, Ltd.
4/2012 President and Director,
Hitachi Industrial
Equipment Systems Co.,
Senior Vice
Ltd. (Currently in office)President and Industrial products Masakazu
Jun. 23, 10/2014 Vice President and
Aoki
1954
business
Executive
Executive Officer,
Officer
Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer,
Hitachi, Ltd.
4/1978 Joined Hitachi, Ltd.
9/2008 General Manager,
Cost structure
Senior Vice
Corporate Procurement
reform andPresident andShinichiro
Feb. 6,
Division
information
Omori
1956
4/2012Vice
President andExecutive
technology
Executive Officer
Officerstrategies
4/2016 Senior Vice President andExecutive Officer-50-(Note 2)58,000(Note 2)29,000(Note 2)26,000(Note 2)44,000(Note 2)

12,000(Note 2)6,000

(Note 2)25,000Position

Responsibility

Name

Representative
Executive
Officer
Senior Vice
President andExecutive
Officer

Corporate
communications
Toshiakiand CSR, legal
Kuzuokamatters, risk
management andcorporate auditing

Senior Vice
President andExecutive
Officer

Service & platform Keiji
business
KojimaSenior Vice
President andExecutive
Officer

Building systems
business

HiroshiSato

Senior Vice
President andExecutive
Officer

ICT businessKeiichi
Shiotsuka

Senior Vice
President andExecutive
Officer

Government &external relations

Yasuo
TanabeShare
Date ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1978 Joined Hitachi, Ltd.
4/2001 General Manager, Legal
Division
Nov. 3,(Note 2) 211,000
4/2007
Vice
President and1954
Executive Officer
4/2011 Senior Vice President andExecutive Officer
4/1982 Joined Hitachi, Ltd.
4/2011 General Manager, Hitachi
Research Laboratory
Oct. 9,4/2012Vice
President and(Note 2) 18,000
1956
Executive Officer
4/2016 Senior Vice President andExecutive Officer
4/1973 Joined Hitachi, Ltd.
4/2004 CIO, Urban Planning andDevelopment Systems,
General Manager of Sales
Division
4/2010 Vice President, Board
Director, Hitachi
Automotive Systems, Ltd.
4/2011
Senior Vice President,
Aug. 3,(Note 2) 16,000
Board
Director, Hitachi
1950
Automotive Systems, Ltd.
4/2013 President and COO,
Representative Director,
Hitachi Automotive
Systems, Ltd. (Retired in
March 2015)
4/2015 Senior Vice President andExecutive Officer,
Hitachi, Ltd.
4/1977 Joined Hitachi, Ltd.
4/2012 Chief Operating Officer,
System Solutions
Business, Information &Telecommunication
Systems Company,
May. 8,(Note 2) 21,000
Information &1954
Telecommunication
Systems Group
4/2013 Vice President andExecutive Officer
4/2015 Senior Vice President andExecutive Officer
4/1978 Joined Ministry ofInternational Trade andIndustry
8/2006 Deputy Director-General,
Economic Affairs Bureau,
Ministry of Foreign
Affairs (Retired in MarchOct. 5,2010)(Note 2) 17,000
1954
6/2010 Joined Hitachi, Ltd.
4/2011 Vice President andExecutive Officer,
Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer,
Hitachi, Ltd.

-51-

Position

Senior Vice
President andExecutive
Officer

Representative
Executive
Officer
Senior Vice
President andExecutive
Officer

Vice President
and Executive
Officer

Vice President
and Executive
Officer

ShareBusiness experience, including
Term of ownershipexperience in Hitachi, and functions office (shares)
2/2001 Director of Business
Development, Alstom
Transport U.K. Ltd.
6/2003 Joined Hitachi Europe Ltd.
10/2009 Managing Director, Hitachi
Rail Europe Ltd.
9/2012 Executive Chairman andCEO, Hitachi Rail Europe
Railway systems
AlistairAug. 29,Ltd. (Currently in office)(Note 2)0business
Dormer1963
4/2014 Global CEO of Rail
Systems business,
Hitachi, Ltd.
4/2015 Vice President andExecutive Officer,
Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer,
Hitachi, Ltd.
4/1979 Joined Hitachi, Ltd.
4/2008 General Manager, Finance
Department I
4/2011 Executive Officer,
Hitachi Cable, Ltd.
(Currently Hitachi Metals,
Ltd.)
6/2012 Executive Officer, Board
Director,
Hitachi Cable, Ltd.
4/2013 Vice President andExecutive Officer, Board
Finance andDirector, Hitachi Cable,
MitsuakiSep.
25,(Note 2)7,000
corporate pension Nishiyama
Ltd.
1956
system7/2013 Vice President andManaging Officer,
Hitachi Metals, Ltd.
4/2014 Vice President andExecutive Officer,
Hitachi Metals, Ltd.
(Retired in March 2015)
4/2015 Vice President andExecutive Officer,
Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer,
Hitachi, Ltd.
4/1982 Joined Hitachi, Ltd.
4/2015 Chief Operating Officer ofSystems & Services
Business, Information &Telecommunication
Manufacturing & Hiroyuki
Jun. 19,
Systems Company,(Note 2)8,000
commerce business Ugawa
1959
Information &Telecommunication
Systems Group
4/2016 Vice President andExecutive Officer
4/1981 Joined Hitachi, Ltd.
4/2014 Chief Strategy Officer andGeneral Manager of Group
Business Development
Division, Information &Telecommunication
ICT businessMar. 15,
Ryuichi(Note 2) 20,000
Systems Company,(platform business) Otsuki
1958
Information &Telecommunication
Systems Group
4/2015 Vice President andExecutive Officer
Responsibility

NameDate of
birth

-52-

ShareDate ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1980 Joined Hitachi, Ltd.
4/2015 General Manager ofTransmission &Distribution Systems
Division, Energy
Vice President Electric power
Solutions Company andFeb. 19,
Atsushi
24,000and Executive business
Chief Operating Officer (Note 2)
Oda
1958
Officerof Power Systems
Company, Power &Infrastructure Systems
Group
4/2016 Vice President andExecutive Officer
4/1977 Joined Hitachi, Ltd.
Vice President Marketing and sales Kaoru
4/2011 General Manager,
Jun. 25,(Note 2)
26,050and Executive (industrial products Kawano
Kansai Area Operation
1952
business)
Officer
4/2012 Vice President andExecutive Officer
4/1979 Joined Hitachi, Ltd.
Vice President Regional strategies Kenichi
4/2011 President, Hitachi
Nov. 25,(China) Ltd.
16,000and Executive (China)(Note 2)
Kokubo1955
Officer
4/2014 Vice President andExecutive Officer
4/1983 Joined Hitachi, Ltd.
5/2015 Chief Operating Officerof Industrial Products
Vice President Urban solutions
Keizo
Jan.
23,
Company, Power &7,000
and Executive business(Note 2)
Kobayashi
1960
Infrastructure Systems
OfficerGroup
4/2016 Vice President andExecutive Officer
4/1975 Joined Hitachi, Ltd.
10/2009 President & CEO,Defense Systems
Company
Vice President
Dec.
23,
Kunizo4/2013Vice
President and(Note 2)
19,000and Executive Water business
Sakai
1952
Executive Officer
Officer
4/2015 Senior Vice President
and Executive Officer
4/2016 Vice President andExecutive Officer
4/1982 Joined Hitachi, Ltd.
4/2014 Chief Operating Officer
of Systems & Solutions
Business, and General
Manager of Service
Division Group,
Information &Telecommunication
Systems Company,
Information &Telecommunication
Systems Group
Vice President
SetsuoFeb. 3,4/2015 Chief Strategy Officer of (Note 2)
and Executive ICT business
24,000
Shibahara
1958
Information &Officer
Telecommunication
Systems Company, andChief Operating Officer
of Systems & Services
Business, Information &Telecommunication
Systems Company,
Information &Telecommunication
Systems Group
4/2016 Vice President andExecutive Officer
Position

Responsibility

Name

-53-

Position

Responsibility

Name

Vice President Government &and Executive external relations
Officer

Akira
Shimizu

Vice President Research &and Executive development
Officer

Norihiro
SuzukiMarketing andVice President sales (ICTand Executive business andhealthcare
Officerbusiness)

Yoshitaka
Tsuda

Vice President Regional strategies John
and Executive (Americas)
Domme
Officer

Vice President
and Executive Human capital
Officer

Hidenobu
Nakahata

Cost structureand supply
Vice President reformchainmanagementand Executive (MONOZUKURI Hiroshi
Nakayama
Officerand quality
assurance)
Vice President Nuclear powerand Executive systems business
Officer

KatsumiNagasawa

Share
Date ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1979 Joined Hitachi, Ltd.
10/2012 General Manager,
Nov. 3,
International Strategy
8,000(Note 2)
1954
Division
4/2013 Vice President andExecutive Officer
4/1986 Joined Hitachi, Ltd.
10/2014 General manager ofCentral ResearchLaboratory
4/2015 General Manager of
Global Center for Social
Dec. 5,2,000
Innovation, Research & (Note 2)
1961
Development Group, andGeneral Manager ofCentral ResearchLaboratory Group
4/2016 Vice President andExecutive Officer
4/1979 Joined Hitachi, Ltd.
4/2012 Chief Marketing Officer,
Information &Jul. 3,
Telecommunication(Note 2) 49,000
1955
Systems Company
4/2014 Vice President andExecutive Officer
9/2001 Vice President ofStrategy & ProductEngineering,
Storagenetworks, Inc.
3/2003 Joined Hitachi Data
Systems Corporation
5/2007 COO, Hitachi Data
Systems Corporation
7/2008 CEO, Hitachi Data
Systems Corporation
Dec. 27,(Currently in office)
4,000
1961
4/2014 COO, Platform Systems (Note 2)
Business, Information &Telecommunication
Systems Company,
Information &Telecommunication
Systems Group, Hitachi,
Ltd.
4/2015 Vice President andExecutive Officer,
Hitachi, Ltd.
4/1983 Joined Hitachi, Ltd.
General Manager,
Jan. 24, 10/2013 Deputy
Human
Capital Group(Note 2) 18,000
1961
4/2014 Vice President andExecutive Officer
4/1977 Joined Hitachi, Ltd.
4/2011 President & CEO, Rail
Dec. 15,
Systems Company(Note 2) 49,000
1953
4/2012 Vice President andExecutive Officer

Oct. 18,
1956

-54-

4/1980 Joined Hitachi, Ltd.
4/2012 General Manager,
Hitachi Works, Power
Systems Company
4/2014 Vice President andExecutive Officer(Note 2)33,000Business experience, including
experience in Hitachi, andfunctions
4/1978 Joined Hitachi, Ltd.
4/2013 General Manager, Chubu
Area Operation
4/2015 Vice President andExecutive Officer

Name

Date ofbirthMarketing andsales (nuclear
Vice President power systems
and Executive business, electric Isao
Narukawa
Officer
power businessand energy
solutions business)

Sep. 8,
1955

Vice President Energy solutions
and Executive
business
Officer

MasaakiNomotoSep. 17,
1958

Vice President Railway systems
and Executive
business
Officer

KentaroMasai

May. 22,
1959

Vice President Managementand Executive strategies
Officer

MamoruMoritaApr. 12,1959

Vice President Healthcare
and Executive business
Officer

MasayaWatanabeJan. 31,1958

Representative General
Executive
management
Officer

HiroakiSee “(1)Nakanishi Directors” See “(1) Directors”

Position(Notes)Responsibility

4/1984 Joined Hitachi, Ltd.
4/2015 President & CEO of
Energy Solutions
Company
4/2016 Vice President andExecutive Officer
4/1982 Joined Hitachi, Ltd.
4/2014 President & CEO of Rail
Systems Company,
Infrastructure Systems
Group
4/2016 Vice President andExecutive Officer
4/1983 Joined Hitachi, Ltd.
4/2015 General Manager ofStrategy Planning
Division
4/2016 Vice President andExecutive Officer
4/1982 Joined Hitachi, Ltd.
4/2011 Chief Strategy Officer,
Information &Telecommunication
Systems Company
4/2012 Vice President andExecutive Officer

Share
Term of ownershipoffice (shares)(Note 2)26,000(Note 2)

15,000(Note 2)

16,000(Note 2)38,000(Note 2)40,000(Note 2)

128,000

Total
1,060,050
1. The “Responsibility” column describes matters delegated to each of the Executive Officers by the
Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2017.

-55-

6. Corporate Governance, etc.
(1) Corporate governance1) Outline of corporate organizations
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming toestablish a framework for quick business operation and to realize highly transparent management byseparating responsibilities for management oversight and those for execution of business operations.
Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and supervises
the execution of the duties of executive officers and directors in order to sustainably enhance
corporate value and the shareholders’ common interests. The basic management policy includes
medium-term management plan and annual budget compilation. The Board of Directors focuses on
strategic issues related to the basic management policy as well as other items to be resolved that areprovided in laws, regulations, the Articles of Incorporation and Board of Directors Regulations. As ofJune 22, 2016, the Board of Directors was made up of 13 Directors, and nine of whom are outside
Directors and two concurrently serve as Executive Officers. Within the Board of Directors, there arethree statutory committees of the Nominating Committee, the Audit Committee and theCompensation Committee with outside Directors accounting for the majority of members of eachcommittee. The Board of Directors meetings were held 8 days during the fiscal year ended March 31,
2016, and the attendance rate of Directors at those meetings was 100%. The Nominating Committee
meetings were held 6 days, the Audit Committee meetings were held 16 days, and the Compensation
Committee meetings were held 9 days during the fiscal year ended March 31, 2016.
The Nominating Committee has the authority to determine particular proposals submitted to thegeneral meeting of shareholders for the election and dismissal of Directors, and consists of four
Directors, three of whom are outside Directors.
The Audit Committee has the authority to audit the execution of duties of Directors and Executive
Officers and to determine on proposals submitted to the general meeting of shareholders for theelection and dismissal of accounting auditors, and consists of five Directors, including three outside
Directors and one standing Audit Committee member. Mr. Hiroaki Yoshihara, the Chair of the Audit
Committee, has considerable knowledge of finance and accounting based on his long experience at
KPMG Group with businesses related to accounting, etc. Mr. Toyoaki Nakamura, the member of the
Audit Committee, has considerable knowledge of finance and accounting due to his long experienceas the General Manager of accounting and finance of the Company as well as Executive Officer
responsible for accounting and finance for many years.
The Compensation Committee has the authority to determine remuneration policies for Directors
and Executive Officers and remuneration for individuals based on them. The Compensation
Committee consists of four Directors, three of whom are outside Directors.
With regard to the number of Directors and their election, the Company stipulates in its Articles ofIncorporation that the Company shall have not more than twenty (20) Directors. With regard to theadoption of resolution for the election of Directors, the Company stipulates in its Articles ofIncorporation that the presence of shareholders representing one-third or more of the voting, that
resolutions for the election of Directors shall be approved by attending shareholders possessing onethird or more of all voting rights of the shareholders who are entitled to exercise their votes, and thatthe resolution shall not be made by cumulative voting.
The Company maintains a limited liability agreement (hereinafter referred to as “Agreement”)
stipulated in Article 427, Paragraph 1 of the Companies Act with each director (excluding Executive
Director, etc.) The general intent of the Agreement is to limit the liability of Directors to theaggregate amount stipulated in each item under Article 425, Paragraph 1 of the Companies Act.
Executive Officers
Executive Officers decide on matters delegated to them by the Board of Directors and execute theCompany’s business affairs within the scope of assignments determined by the Board of Directors.
As of June 22, 2016, the Company has 35 Executive Officers.
The Company stipulates in its Articles of Incorporation that the Company shall have not more thanforty (40) Executive Officers.

-56-

Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides onimportant managerial matters, which may affect the Company or the Hitachi Group business, throughdiscussing from diverse viewpoints. It consists of eight members as of June 22, 2016; President &CEO, four Executive Vice President and Executive Officers and three Senior Vice President andExecutive Officers.
2) Matters determined by resolution of the Board of Directors without resolution at the general meetingof shareholders pursuant to the provisions of the Articles of Incorporation
The Company stipulates in the Articles of Incorporation that it may, unless otherwise provided in
the applicable laws, determine on matters specified in each item of Article 459, Paragraph 1 of theCompanies Act by the resolution of the Board of Directors, without resolution at the general meetingof shareholders.
For the repurchase of the company’s own its shares (Article 459, Paragraph 1, Item 1 of theCompanies Act), the Board of Directors shall determine on the matter in order to enable timely
implementation of capital strategies.
Regarding reduction of capital reserve or earned surplus reserve (Article 459, Paragraph 1, Item
2 of the Companies Act), appropriation of surplus (excluding dividends of surplus and disposal of
the property of the Company) (Article 459, Paragraph 1, Item 3 of the Companies Act) anddividends of surplus (Article 459, Paragraph 1, Item 4 of the Companies Act), since the Company
was a company with committees as of the date of enforcement of the Companies Act, it was deemedthat its Articles of Incorporation had stipulations that the Board of Directors was able to decide theabove matters without resolution at the general meeting of shareholders and that it should not
stipulate that such matters shall be resolved at the resolution of the general meeting of shareholders,in accordance with Article 57 of the Act on Arrangement of Relevant Acts Incidental to Enforcementof the Companies Act (July 26, 2005, Act No. 87). Even after the enforcement of the Companies Act,
the Company has made it a rule to timely decide on these important business judgments by the
Board of Directors to enhance the shareholders’ common interests.
The Company has stipulated in its Articles of Incorporation that it may, by resolution of theBoard of Directors, exempt any Director (including former Director) and Executive Officer(including former Executive Officer) from liabilities as provided Article 423, Paragraph 1 of theCompanies Act to the extent as provided in laws or regulations.
3) Requirement for special resolution of the general meeting of shareholders
To enable to securely meet the quorum of the general meeting of shareholders under Article 309,
Paragraph 2 of the Companies Act, the Company stipulates in its Articles of Incorporation that any
resolution as provided in Article 309, Paragraph 2 of the Companies Act shall be adopted at a
general meeting of shareholders where shareholders representing one-third or more of the voting
rights of all the shareholders shall be present, by a majority of two-thirds or more of the voting
rights of the shareholders who are present in such meeting and are entitled to vote.
4) Internal control system and risk management system
Outlines of the internal control system and the risk management system of the Company are as
follows. In addition, these systems were resolved by the Board of Directors as the basic policy forinternal control system under the Companies Act.
i) The following measures shall be taken to ensure the effectiveness of audits by the Audit
Committee.
(a) When necessary, the Board of Directors may appoint one or more director(s), who does notserve concurrently as an executive officer, as a director responsible for assisting with theduties of the Audit Committee. In addition, the Board of Directors’ Office (the “Office”)
shall be established specifically to assist with the duties of each Committee and the Boardof Directors.
(b) In order to ensure the independence of the Office personnel from Executive Officers andthe effect of instructions by the Audit Committee, the Office is staffed with personnel who
work only for the Office and are not subject to orders and instructions of Executive
Officers, and the Audit Committee shall be informed in advance of planned transfers of the
Office personnel.
-57-

(c) Executive Officers and employees shall report without delay to the members of the Audit
Committee significant matters affecting the Company and its subsidiaries, results of internal
audits, and the implementation status of reporting under the internal reporting system. It shallbe provided for in the company regulation that reporters using the internal reporting system,
which applies to the employees of the Company and its subsidiaries, shall not receive
disadvantageous treatment for reason of having made a report, and the secretariat of thesystem shall thoroughly administer this provision.
(d) The Office shall be in charge of payment for the expenses incurred in connection with theexecution of the duties of the Audit Committee members and other administrative duties,
and shall promptly process the payment for the expense or debt except in the case where
the expense or debt of the claim is clearly found to be unnecessary to the execution of theduties of them.
(e) Standing Committee member(s) shall be appointed to the Audit Committee, and activity
plans of the Audit Committee shall be prepared in coordination with the audit plans ofInternal Auditing Office.
ii) The following measures shall be effective to ensure the adequacy of business operations within
the Company and the Hitachi Group.
(a) Such fundamental policies as the emphasis of the social responsibilities of businessenterprises shall be shared with the subsidiaries of the Company.
(b) Each subsidiary of the Company shall develop systems to ensure the appropriateness ofoperations corresponding to its size and other characteristics, basic framework of which issimilar to ones employed in the Company. In order to ensure development of such systems
in each subsidiary, directors and auditors shall be sent from the Company to its subsidiary,
and regular audits shall be conducted for the subsidiary.
(c) A reporting system to Directors shall be established to ensure that the execution of duties
by Executive Officers of the Company is in compliance with laws, regulations, and the
Articles of Incorporation.
(d) Information pertaining to the execution of duties by Executive Officers of the Company
shall be prepared and maintained in accordance with internal rules.
(e) A structure shall be established in which each relevant department shall establish
regulations and guidelines, conduct training, prepare and distribute manuals, and carry out
other such measures with respect to various risks. Efforts shall be made to identify
possible new risks through such things as progress reports on business operations and,should it become necessary to respond to a new risk, an Executive Officer responsible forresponding thereto shall be appointed promptly.
(f) Efficient performance of duties of the Executive Officers of the Company, and Directors
and Executive Officers of the subsidiaries shall be ensured through the following business
management systems.
- The Senior Executive Committee shall be established in order to deliberate on andfacilitate the formulation of decisions based on due consideration of diverse factors
regarding important issues that affect the Company and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on
which performance management is based, shall be prepared in order to operate businessin a planned and efficient manner.
- Internal audits of the Company and its subsidiaries shall be conducted to monitor andidentify the status of their business operations and to facilitate improvements.
- The Audit Committee shall receive the audit plans of the accounting auditors in advance,
and the prior approval of the Audit Committee shall be required with respect to the feesto be paid to the accounting auditors.
- Documented business processes for matters to be reflected in financial reports shall be
executed at the Company and its subsidiaries, and internal and external auditors shall
examine said processes in order to ensure the reliability of financial reports.
-58-

- A structure for the adequate and efficient conduct of business operations common to the
Hitachi Group companies shall be established.
(g) Continuous maintenance of a legal and regulatory compliance structure shall be ensured
through the following business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal
and regulatory compliance activities. Furthermore, an internal reporting system for
employees of the Company and its subsidiaries shall be established and education on
legal and regulatory compliance shall be provided.
- Various policies and rules on compliance with laws shall be established, aiming to ensurethat the employees are aware of the internal control systems overall and that the systems
are effective.
(h) A system shall be established, in which the subsidiaries report on important issues and theprogress in measures for operations to the Company through the Company’s Senior
Executive Committee, medium-term business plans and the budget system.
(i) The policy on transactions within the Hitachi Group is to trade fairly based on market
prices.
5) Internal audit and audit by the Audit Committee(a) Internal audit
The Internal Auditing Office is in charge of internal audit within Hitachi Group and audits
business units, corporate divisions of headquarters and subsidiaries and affiliates. The number ofstaff of the Internal Auditing Office is 38 as of March 31, 2016.
The Internal Auditing Office monitors and assesses whether overall business operations,
including marketing, personnel management, labor management, compliance, procurementtransactions, production, environment, disaster prevention, export regulations, information
system, accounting and financing activities, and property management of Hitachi Group areproperly carried out pursuant to audit standards established by the Company, and points out items
required to be improved based on the results of auditing and follows up their improvements. The
Internal Auditing Office reports in advance its internal audit plan to the Audit Committee, andreports results of auditing to the President & CEO and the Audit Committee. Furthermore,
relating to the internal control over financial reporting, the internal control division in theInternal Audit Office promotes to establish and maintain the internal control systems pursuant to
the Company’s guideline, assesses its effectiveness, and reports the results to the President &CEO and the Audit Committee.
(b) Audit by the Audit Committee
The Audit Committee conducts audits for whether corporate administration by Directors andExecutive Officers are properly carried out under appropriate internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives
reports or conducts hearing for execution of duties from Directors and Executive Officers. In
addition, the members of the Audit Committee, who are in charge of internal investigation,
investigate business units of the Company and receive reports from subsidiaries in order to check
whether business transaction and property management are properly carried out, and then report
the results to the Audit Committee. Furthermore, such members of the Audit Committee attend
the important meetings including the budget meeting and the Senior Executive Committee,
inspect audit reports from internal audit divisions, and provide internal audit divisions with
instructions about divisions to be subject to auditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of
the audit from the accounting auditor, and based on the reports, verifies results of financial audits
and internal control audits. In addition, the Audit Committee receives reports and explanations ofquality control systems of the accounting auditor. Furthermore, the Company makes it a rule toobtain the prior approval of the Audit Committee for remuneration to the accounting auditor.
6) Outside Directors(a) Qualification for the outside Directors and criteria for the independency
For electing an outside Director, the Nominating Committee of the Company considers, in-59-

addition to the following criteria for the independency, whether the outside Director has thehighest personal and professional ethics, integrity and insight, and distinguished records ofleadership or experience at policy making levels in business, law, administration, accounting or
education, etc.
For the independency of an outside Director, the Company considers the outside director to
be independent unless:- his or her immediate family member* is, or has been within the last three years, an
executive director or an executive officer, of the Company or any of its subsidiaries;- he or she is currently an executive director, an executive officer or an employee of acompany that has made payments to, or received payments from, the Company forproperty or services in an amount which, in any of the last three fiscal years, exceeds 2%of any of the companies’ consolidated gross revenues;- he or she has received during any of the last three fiscal years more than ¥10 million in
direct compensation for his or her service as a specialist in law, accounting or tax, or as aconsultant from the Company, other than director compensations; or- he or she serves as an executive officer or director of a not-for-profit organization, and theCompany’s discretionary charitable contributions to the organization in any of the last
three fiscal years are more than ¥10 million and 2% of that organization’s annual grossrevenues.
* An “immediate family member” includes a person’s spouse, parents, children, siblings,
grand-parents, grand-children, mothers and fathers-in-law, sons and daughters-in-law,
spouses of siblings, grand-children-in-law, and brothers and sisters-in-law.
(b) Function of the outside Directors
Following the policy stated in “(a) Qualification for outside Directors and criteria for the
independency,” the Company has elected nine persons; Messrs. Baba Kalyani, Sadayuki
Sakakibara, George Buckley, Harufumi Mochizuki, Takatoshi Yamamoto, Philip Yeo and Hiroaki
Yoshihara and Mses. Cynthia Carroll and Louise Pentland, as outside Directors under Article 2,
Item 15 of the Companies Act. Each outside Director is expected to enhance functions of theCompany’s Board of Directors through supervising execution of duties of Executive Officers andothers from an independent perspective, based on rich experiences and insights as top executiveof major global companies in the cases of Ms. Cynthia Carroll and Messrs. Baba Kalyani,
Sadayuki Sakakibara and George Buckley, based on deep insight into corporate legal matters andcorporate governance gained through her rich experience as the chief legal officer of major
global companies in the case of Ms. Louise Pentland, based on diverse experiences and insights
in such areas as public administration in the cases of Messrs. Harufumi Mochizuki and Philip
Yeo, based on a broad range of insight in business and management gained through his
experience in the area of corporate analysis and global corporate management in the case of Mr.
Takatoshi Yamamoto and based on rich experiences and insights in the area of global corporate
management and accounting in the case of Mr. Hiroaki Yoshihara.
(c) Supervising by the outside Directors
Outside Directors, comprising of majority of Directors, supervise execution of duties of
Executive Officers from an independent perspective. As described in the item “5) Internal audit
and audit by the Audit Committee” above, the Audit Committee, of which majority members areoutside Directors, receives reports and explanations about results of internal audits, accounting
audit and internal control audit, and verifies the matters reported or explained. In addition, theAudit Committee reports the results of its verification to the Board of Directors.
(d) Relationship between outside Directors and the Company
Each of outside Directors has no relationship with the Company regarding his or her
independency as described in “(a) Qualification for the outside Directors and criteria for the
independency.” In addition, there is no particular conflict of interest between each of outside
Directors and the Company.
The Company considers that all outside Directors are independent, and therefore has notified
them as independent directors to each of the Company’s listing stock exchanges in Japan.
In addition, the number of shares of the Company owned by each outside Director isdescribed in “5. Directors and Senior Management.”-60-7) Status of accounting audit
Certified public accountants (CPAs) who executed accounting audit of the Company are as follows.
In addition, other CPAs and staff belonging to Ernst & Young ShinNihon LLC assisted execution of
accounting audit works as instructed by the three CPAs.
CPA having executed accounting audit works
Koichi Tsuji
Takahiro Saga
Takuya Tanaka

Audit corporation to which CPA belongs
Ernst & Young ShinNihon LLC
Ernst & Young ShinNihon LLC
Ernst & Young ShinNihon LLC

8) Compensation to Directors and Executive Officers(a) Policy on the determination of Compensation of Directors and Executive Officers[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the policy on the determination of theamount of compensation, etc. of each Director and Executive Officer pursuant to applicableprovisions of the Companies Act.
[Summary of Policy](i) Matters relating to both Directors and Executive Officers
Compensation will be commensurate with the ability required of, and the responsibilities
to be borne by, the Company’s Directors and Executive Officers, taking into considerationcompensation packages at other companies.
(ii) Matters relating to Directors
Compensation for Directors will consist of a monthly remuneration and a year-end
allowance.
- Monthly remuneration will be decided by adjusting basic remuneration that reflect fulltime or part-time status, committee membership and position, travel from place ofresidence, etc.
- Year-end allowance will be a pre-determined amount equivalent to about 20% of the
Director’s annual income based on monthly remuneration, although this amount may be
reduced depending on financial results.
A Director concurrently serving as an Executive Officer will not be paid compensation asa Director.
(iii) Matters relating to Executive Officers
Compensation for Executive Officers will consist of a monthly remuneration, aperformance-linked component and a medium and long-term incentive compensation. The
higher position Executive Officers hold, the higher proportion of variable pay (the sum of
performance-linked component and medium and long-term incentive compensation, except
monthly remuneration as fixed pay) will be set to the total annual compensation.
- Monthly remuneration will be decided by adjusting a basic amount to reflect the resultsof an assessment. The basic amount is set in accordance with the relevant position.
- Performance-linked component will be decided by adjusting a basic amount to reflect
financial results and individual performance. The basic amount is set within the range ofabout 25 to 35% of the total annual compensation of each Executive Officer inaccordance with the relevant position.
- Medium and long-term incentive compensation* will be stock options as stock-based
compensation with share price conditions (stock acquisition rights with the strike price of¥1), the number of which to be granted will be determined within the range of about 10
to 40% of the total annual compensation of each Executive Officer in accordance withthe relevant position. As for expatriates, cash award based on the value of the Company’s
share price with the similar conditions will be substituted for the stock options.
* It was decided at the Compensation Committee meeting held on May 13, 2016 thatmedium and long-term incentive compensation will be introduced as a component of
the compensation from the fiscal year commencing on April 1, 2016.

-61-

(iv) Miscellaneous
It was decided at the Compensation Committee meetings held on December 18, 2007 andMarch 26, 2008 that the compensation structure for Directors and Executive Officers will be
re-examined starting with the compensation for fiscal 2008 and that the retirement allowance
will be abolished. The payment of retirement allowance to Directors and Executive Officers
due to the abolition of the retirement allowance system will be in an amount determined by theCompensation Committee at the time of the retirement of a relevant Director or Executive
Officer.
(b) Amount of compensation

Category

Total amount ofcompensation, etc.
(Millions of yen)

Total amount of each type(Millions of yen)
Year-end
allowanceandMonthly
performanceremuneration
linkedcomponent

Number of
persons

Directors(excluding outside
Directors)
Outside Directors

117

105

12

3

280

265

14

8

Executive Officers

1,763

1,275

487

28

Total
2,161
1,647
514
39
(Notes) 1. The number of Directors indicated excludes two Directors who concurrently serve as
Executive Officers.
2. The amount of compensation to Directors (excluding outside Directors) includes the monthly
remuneration for one Director, who retired due to expiration of his term of office at the closeof the 146th Annual General Meeting of Shareholders held on June 25, 2015.
In addition, Directors or Executive Officers whose compensation from the Company and its
subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:
Total amount of each type
Total
(Millions of yen)amount ofcompenName
Company
Category sation, etc. Monthly Performance- Basic
Incentive
Othersremunelinked
remune(Millions
Short- Long- (Note 4)
rationcomponent
rationof yen)term
term
Executive
Hiroaki
Hitachi, Ltd.
161
115
46
－
－
－
－
Nakanishi (The Company) Officer(Note 1)
Executive
Toshiaki
Hitachi, Ltd.
136
97
39
－
－
－
－
Officer
Higashihara (The Company)(Note 1)
Hitachi Rail
AlistairEurope Ltd.
Executive
Dormer(Consolidated Chairman
161
－
－
70
61
28
－
(Note 2)subsidiary)
and CEO(Note 3)
HitachiInformation &Telecommuni- Chairman
Johncation Systems
Domme
Global Holding of the
900
－
－
144
185
558
12
Board
Corporation(Note 2)and CEO(Consolidated
subsidiary)(Note 3)(Notes) 1. Although concurrently serving as Director, Messrs. Hiroaki Nakanishi and Toshiaki
Higashihara do not receive compensation as Director.
2. Although concurrently served as Executive Officer of the Company for the fiscal year ended
March 31, 2016, Messrs. Alistair Dormer and John Domme did not receive compensation as
Executive Officer of the Company.
3. The basic remuneration paid in Sterling pounds and US dollars is converted into yen using
average exchange rate for each quarter of the fiscal year ended March 31, 2016. The othercompensations paid in Sterling pounds and US dollars are converted into yen using averageexchange rate for the fiscal year ended March 31, 2016.
4. The “Others” column represents the amount of fringe benefits.
-62-9) Information on shareholdings(a) Equity securities held for purposes other than pure investment
Number of stock names:
332 stock names
Total amount recorded in the balance sheet: ¥239,993 million(b) Stock name, number of shares, amount recorded in the balance sheet, and purpose of holding
regarding equity securities held for purposes other than pure investment(Fiscal year ended March 31, 2015)
Specified investment securities
Stock name

Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Purpose of holding

6,250,000

Received in relation to theetc. of Renesas
114,059 reorganization,
Technology Corp. which was anaffiliate of the Company
and enhancing business
68,354 Maintaining
relationship

900,000

and enhancing business
19,570 Maintaining
transactions

Yungtay Engineering Co., Ltd.

31,817,168

and enhancing business
8,882 Maintaining
relationship

East Japan Railway Company

812,400

and enhancing business
7,831 Maintaining
transactions

Electric Power Development
Co., Ltd.

1,307,580

and enhancing business
5,295 Maintaining
transactions

ShinMaywa Industries, Ltd.

4,000,337

and enhancing business
5,100 Maintaining
transactions

NIPPON TELEGRAPH AND
TELEPHONECORPORATION

612,000

and enhancing business
4,526 Maintaining
transactions

Shin-Etsu Chemical Co., Ltd.

521,000

and enhancing business
4,089 Maintaining
transactions

Seibu Holdings Inc.

1,286,900

and enhancing business
3,995 Maintaining
transactions

The Chiba Bank, Ltd.

3,269,000

and enhancing business
2,883 Maintaining
transactions

The Chugoku Electric Power
Co., Inc.

1,812,622

and enhancing business
2,838 Maintaining
transactions

Renesas Electronics
Corporation
Western Digital Corporation
Central Japan Railway
Company

127,725,748

Oclaro, Inc.

11,900,000

The Japan Steel Works, LTD.

5,050,000

Japan Display Inc.

5,474,400

JX Holdings, Inc.

4,888,149

Received as consideration for theof Oclaro, Inc. and
2,831 reorganization
Opnext, Inc. which was an affiliate of
the Company
and enhancing business
2,550 Maintaining
transactions
Received in relation to theof Hitachi Displays,
2,364 reorganization
Ltd. which was a subsidiary of theCompany
and enhancing business
2,259 Maintaining
transactions

The Dai-ichi Life Insurance
Company, Limited
Sompo Japan Nipponkoa
Holdings, Inc.

1,210,000

and enhancing business
2,112 Maintaining
transactions

500,000

JOYO BANK, Ltd.

2,956,000

and enhancing business
1,867 Maintaining
transactions
and enhancing business
1,826 Maintaining
transactions-63-

Balance sheet
amount(Millions of yen)

Stock name

Number ofshares(shares)

Chubu Electric Power Co., Inc.

1,200,254

and enhancing business
1,721 Maintaining
transactions

Ono Pharmaceutical Co., Ltd.

120,000

and enhancing business
1,629 Maintaining
transactions

NGK INSULATORS, LTD.

607,000

and enhancing business
1,556 Maintaining
transactions

NOF Corporation

1,700,000

and enhancing business
1,516 Maintaining
transactions

euglena Co., Ltd.

750,000

Purpose of holding

Sapporo Holdings Limited

2,988,000

Tohoku Electric Power Co.,Inc.

1,010,000

Maintaining and enhancing
1,482 cooperative relationship in the area of
R&D
and enhancing business
1,422 Maintaining
transactions
and enhancing business
1,379 Maintaining
transactionsWest Japan Railway Company

215,000

and enhancing business
1,355 Maintaining
transactions

2,842,913

and enhancing business
1,253 Maintaining
transactions

Kintetsu Corporationand enhancing business
1,238 Maintaining
transactions
and enhancing businessToho Gas Co., LTD.
1,524,471
1,068 Maintaining
transactions(Note) Since the number of stock of which balance sheet amount exceeds 1% of the amount of theCompany’s common stock on the balance sheet is less than 30, the top 30 stocks in balance
sheet amount are listed.
Tokyo Gas Co., Ltd.

1,638,000(Fiscal year ended March 31, 2016)
Specified investment securities
Stock name

Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Purpose of holding

6,250,000

Received in relation to theetc. of Renesas
92,473 reorganization,
Technology Corp. which was anaffiliate of the Company
and enhancing business
33,268 Maintaining
relationshipCentral Japan Railway
Company

900,000

and enhancing business
17,914 Maintaining
transactions

East Japan Railway Company

812,400

and enhancing business
7,890 Maintaining
transactions

Yungtay Engineering Co., Ltd.

31,817,168

and enhancing business
5,105 Maintaining
relationshipElectric Power Development
Co., Ltd.

980,780and enhancing business
3,447 Maintaining
transactions

ShinMaywa Industries, Ltd.

4,000,337

and enhancing business
3,192 Maintaining
transactions

Seibu Holdings Inc.

1,286,900

and enhancing business
3,064 Maintaining
transactions

Shin-Etsu Chemical Co., Ltd.

521,000

and enhancing business
3,034 Maintaining
transactions

Ono Pharmaceutical Co., Ltd.

120,000

and enhancing business
2,859 Maintaining
transactions

The Chugoku Electric Power
Co., Inc.

1,412,622

and enhancing business
2,147 Maintaining
transactions

Renesas Electronics
Corporation
Western Digital Corporation

127,725,748-64-

Balance sheet
amount(Millions of yen)

Stock name

Number ofshares(shares)

The Chiba Bank, Ltd.

3,269,000

and enhancing business
1,833 Maintaining
transactions

The Japan Steel Works, LTD.

5,050,000

and enhancing business
1,792 Maintaining
transactions

Sapporo Holdings Limited

2,988,000

and enhancing business
1,673 Maintaining
transactions

Purpose of holdingWest Japan Railway Company

215,000

Received as consideration for theof Oclaro, Inc. and
1,612 reorganization
Opnext, Inc. which was an affiliate of
the Company
and enhancing business
1,494 Maintaining
transactions

Chubu Electric Power Co., Inc.

900,254and enhancing business
1,414 Maintaining
transactions

The Dai-ichi Life Insurance
Company, Limited

1,000,000

and enhancing business
1,362 Maintaining
transactions

Kintetsu Corporation

2,842,913

and enhancing business
1,296 Maintaining
transactions

607,000

and enhancing business
1,261 Maintaining
transactions

Toho Gas Co., LTD.

1,524,471

and enhancing business
1,218 Maintaining
transactions

Sotetsu Holdings, Inc.

1,570,518

and enhancing business
1,083 Maintaining
transactions

Japan Tobacco Inc.

225,000

Keio Corporation

1,032,873

Oclaro, Inc.

NGK INSULATORS, LTD.

2,650,000

Maintaining and enhancing business
transactions
Maintaining and enhancing business
1,020 transactions
1,055

Maintaining and enhancing business
transactions
Maintaining and enhancing business
TOYO DENKI SEIZO K.K.
2,100,000
829
relationship
Maintaining and enhancing business
Hokuriku Electric Power518,400
825
Companytransactions
Maintaining and enhancing business
NOF Corporation
1,000,000
798
transactions
Maintaining and enhancing business
DAIICHI SANKYO
300,000
750
COMPANY, LIMITED
transactions
Maintaining and enhancing business
TOKYU CORPORATION
788,032
743
transactions(Note) Since the number of stock of which balance sheet amount exceeds 1% of the amount of theCompany’s common stock on the balance sheet is less than 30, the top 30 stocks in balance
sheet amount are listed.
Benefit One Inc.

400,000(c) Equity securities held for pure investment
None.

-65-

1,015

(2) Audit Fees
1) Fees to Certified Public Accountants
Fiscal year ended March 31, 2015
Category

Fiscal year ended March 31, 2016

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company

554

35

439

92

Consolidated
subsidiaries

1,467

138

1,219

187

Total

2,021

173

1,658

279

2) Other fees
Audit fees paid by the Company and its consolidated subsidiaries to the Company’s accounting
auditor, Ernst & Young ShinNihon LLC Group (including Ernst & Young and its group firms which
belong to the same network as Ernst & Young ShinNihon LLC), were ¥3,952 million for the fiscal
year ended March 31, 2015, and ¥3,628 million for the fiscal year ended March 31, 2016,
respectively. These fees are mainly paid for audit services to its overseas consolidated subsidiaries.
3) Descriptions of non-audit services to the Company
Non-audit services to the Company in the fiscal year ended March 31, 2015 and the fiscal year
ended March 31, 2016 were various consulting services.
4) Policy on determination of audit fees
For determining the amount of audit fees, the Company conducts hearing of the audit plan andverify efficiency of audit services, including the number of days, hours for auditing, the number ofsubjects to be audited and the scope of audit, etc., and appropriateness of the estimate. The Company
also discusses with the accounting auditor taking into consideration the formation of auditors andaudit fees for the preceding fiscal year. In addition, the Audit Committee receives the audit plans of
the accounting auditors and the results of discussion between the auditors and Executive Officers of
the Company and approves the amount of the fees in advance of the Company’s decision.
V. Financial Information
Refer to the consolidated financial statements incorporated in this Annual Securities Report.

-66-

VI. Stock-Related Administration for the Company
Fiscal year

From April 1 to March 31

Annual General
Meeting of
Shareholders

To be held within three months from the following day of the end of every fiscal
year

Record date

End of every fiscal year

Record date for
distribution of surplus End of March and end of September
Number of shares
1,000 sharesconstituting one unit
Purchase and sale ofshares less than one unit
(Special account)
Kanda Nishikicho 3-chome Building 6th Floor, 11, Kanda Nishikicho 3-chome,
Handling office
Chiyoda-ku, Tokyo
Main Office, Tokyo Securities Transfer Agent Co., Ltd.
(Special account)
Transfer agent
Tokyo Securities Transfer Agent Co., Ltd.
Forward office-

Purchasing andselling fee

Free of charge

The Company’s method of public notice is through electronic public notice.
if the Company cannot use the above-mentioned method of public notice
Method of public notice However,
due to an accident or other inevitable reasons, Nihon Keizai Shimbun will be
adopted as its medium.
Special benefit for
None
Shareholders(Notes) 1. Under the Articles of Incorporation, distribution of surplus through dividend payment, if any, will
be made to shareholders of record as of March 31 and September 30 of each year. In addition, theCompany may make further distributions of surplus to shareholders of record as of anotherrecord date.
2. The Articles of Incorporation provide that a holder of shares representing less than one unit does
not have any other rights of a shareholder in respect of those shares, other than those specified in
the Articles of Incorporation. This includes:(1)
Rights under each item of Article 189, Paragraph 2 of the Companies Act;
(2)
Rights to be allotted rights to subscribe for free for new shares and stock acquisition rights
when such rights are granted to shareholders; or(3)
Rights stipulated in the Articles of Incorporation-67-VII. Reference Information on the Company
1. Information on a Parent Company, etc. of the Company
The Company has no parent company.
2. Other Reference Information
The Company filed the following documents during the period from the commencing date of the
fiscal year ended March 31, 2016 to the filing date of the Annual Securities Report.
(1)

Annual Securities Report and documents attached, and Confirmation
Letter(The 146th business term (from April 1, 2014 to March 31, 2015))

Filed with the Director of the
Kanto Local Finance Bureau
on June 25, 2015

(2)

Internal Control Report

Filed with the Director of the
Kanto Local Finance Bureau
on June 25, 2015

(3)

Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 9-2 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on June 26, 2015

(4)

Shelf Registration Statement and documents attached

Filed with the Director of the
Kanto Local Finance Bureau
on June 26, 2015

(5)

Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 7 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on July 21, 2015

(6)

Quarterly Report and Confirmation Letter(The First Quarter of the 147th business term (from April 1, 2015 toJune 30, 2015))

Filed with the Director of the
Kanto Local Finance Bureau
on August 7, 2015(7)

Quarterly Report and Confirmation Letter(The Second Quarter of the 147th business term (from July 1, 2015
to September 30, 2015))

Filed with the Director of the
Kanto Local Finance Bureau
on November 12, 2015(8)

Amended Extraordinary Report(Amendment to Extraordinary Report (5) above)

Filed with the Director of the
Kanto Local Finance Bureau
on January 13, 2016

(9)

Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 9 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on February 4, 2016(10)

Quarterly Report and Confirmation Letter(The Third Quarter of the 147th business term (from October 1, 2015
to December 31, 2015))

Filed with the Director of the
Kanto Local Finance Bureau
on February 12, 2016(11)

Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on March 30, 2016(12)

Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on May 13, 2016(13)

Amended Shelf Registration Statement(Amended Shelf Registration Statement concerning the Shelf
Registration Statement (4) above)

Filed with the Director of the
Kanto Local Finance Bureau
on July 21, 2015
January 13, 2016
February 4, 2016
March 30, 2016 andMay 13, 2016

Part II

Information on Guarantors, etc. for the Company
Not applicable.

-68-Consolidated Financial Statements
Page
NumberConsolidated Financial Statements of Hitachi, Ltd. and Subsidiaries:
Consolidated Statements of Financial Position as ofMarch 31, 2016 and 2015

F-2

Consolidated Statements of Profit or Loss andConsolidated Statements of Comprehensive Income for the years ended
March 31, 2016 and 2015

F-3

Consolidated Statements of Changes in Equity for the years ended
March 31, 2016 and 2015

F-4

Consolidated Statements of Cash Flows for the years ended
March 31, 2016 and 2015

F-5

Notes to Consolidated Financial Statements

F-6

Reports of Independent Registered Public Accounting Firm

F-1

F-72

Consolidated Financial Statements
Consolidated Statements of Financial Position
Millions of yen

AssetsCurrent assets
Cash and cash equivalents (note 25)
Trade receivables (notes 6, 7 and 25)
Lease receivables (notes 8 and 25)
Inventories (note 9)
Other current assets
Total current assets
Non-current assets
Investments accounted for using the equity method (note 10)
Investments in securities and other financial assets (note 25)
Lease receivables (notes 8 and 25)
Property, plant and equipment (note 11)
Intangible assets (note 12)
Other non-current assets (note 13)
Total non-current assets
Total assets
Liabilities
Current liabilities
Short-term debt (note 25)
Current portion of long-term debt (notes 8 and 25)
Other financial liabilities (note 25)
Trade payables (note 14)
Accrued expenses
Advances received (note 7)
Other current liabilities (notes 15 and 29)
Total current liabilities
Non-current liabilities
Long-term debt (notes 8 and 25)
Other financial liabilities (note 25)
Retirement and severance benefits (note 16)
Other non-current liabilities (notes 13 and 15)
Total non-current liabilities
Total liabilities
EquityHitachi, Ltd. stockholders' equity
Common stock (note 17)
Capital surplus (note 17)
Retained earnings (notes 17 and 19)
Accumulated other comprehensive income (note 18)
Treasury stock, at cost (note 17)
Total Hitachi, Ltd. stockholders' equity
Non-controlling interests
Total equity
Total liabilities and equity

See accompanying notes to consolidated financial statements.

F-2

As of March 31, 2016

As of March 31, 2015

699,315
2,992,770
338,758
1,299,855
541,857
5,872,555

701,7032,870,042
337,353
1,458,119
515,195
5,882,412

676,960
1,329,974
727,485
2,500,226
1,070,403
373,4026,678,450
12,551,005

681,623
1,449,734
680,620
2,472,497
933,582
333,259
6,551,315
12,433,727

871,417651,518
280,048
1,451,918
727,402480,457
531,456
4,994,216

977,701
483,521296,425
1,426,523
759,191374,241
461,876
4,779,478

2,081,520
115,155
783,670
450,874
3,431,219
8,425,435

2,096,134
117,535
724,223420,015
3,357,907
8,137,385

458,790586,790
1,609,761
83,543(3,806)
2,735,078
1,390,492
4,125,570
12,551,005

458,790
608,416
1,477,517
401,100(3,542)
2,942,281
1,354,061
4,296,342
12,433,727

Consolidated Statements of Profit or Loss
Years ended March 31, 2016 and 2015

Millions of yen

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income (note 20)
Other expenses (note 20)
Financial income (note 21)
Financial expenses (note 21)
Share of profits of investments accounted for using the equity method (note 10)
EBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income from continuing operations, before income taxes
Income taxes (note 13)
Income from continuing operations
Loss from discontinued operations (notes 15 and 22)
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share from continuing operations,
attributable to Hitachi, Ltd. stockholders (note 23)
Basic
DilutedEarnings per share attributable to Hitachi, Ltd. stockholders (note 23)
Basic
Diluted2016
10,034,305(7,459,073)
2,575,232(1,940,363)
57,539(141,881)
10,615(30,295)
156
531,003
12,028(25,991)
517,040(165,206)
351,834(57,081)294,7532015
9,774,930(7,198,232)
2,576,698(1,935,373)
9,415(167,781)
7,727(3,284)46,657534,059
12,529(27,594)
518,994(122,075)
396,919(53,501)
343,418

172,155
122,598

217,482
125,936

47.48
47.44

Yen
56.12
56.08

35.65
35.62

45.04
45.00

Consolidated Statements of Comprehensive Income
Years ended March 31, 2016 and 2015

Millions of yen
2016
294,7532015
343,418

Remeasurements of defined benefit plans
Share of OCI of investments accounted for using the equity method
Total items not to be reclassified into net income(50,323)(140,844)(4,275)(195,442)

57,95727,0395,633
90,629Items that can be reclassified into net income
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total items that can be reclassified into net income(190,099)
32,785(26,239)(183,553)

188,619(16,850)(74,604)
97,165

Other comprehensive income (OCI)
Comprehensive income (loss)(378,995)(84,242)

187,794531,212Comprehensive income (loss) attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests(127,557)
43,315337,578
193,634

Net income
Other comprehensive income (OCI) (note 18)
Items not to be reclassified into net income
Net changes in financial assets measured at fair value through OCI

See accompanying notes to consolidated financial statements.

F-3

Consolidated Statements of Changes in Equity
Year ended March 31, 2016

Millions of yen
2016

Commonstock(note 17)
Balance at beginning of year

458,790

Accumulated
Total Hitachi,
TreasuryotherLtd.
comprehensive stock, at coststockholders'(note 17)
incomeequity(note 18)
1,477,517
401,100(3,542)
2,942,281

Retainedearnings(notes 17
and 19)

Capitalsurplus(note 17)
608,416

Noncontrollinginterests

Total equity

1,354,061

4,296,342

Changes in equity
Reclassified into retained earnings--

18,030(18,030)

-

-

-

-

Net income--

172,155--

172,155

122,598

294,753(378,995)

Other comprehensive loss

-

-

-

(299,712)-(299,712)(79,283)

Dividends to Hitachi, Ltd. stockholders--(57,941)--(57,941)-(57,941)

Dividends to non-controlling interests

-

-

-

-

-

-

(39,502)(39,502)

Acquisition of treasury stock

-

-

-

-

(295)

(295)

-

(295)

Sales of treasury stock

-

(4)

-

-

31

27

-

27

Changes in non-controlling interests-(21,622)

-

185

-

(21,437)

32,618

11,181

Total changes in equity-(21,626)

132,244(317,557)(264)(207,203)

36,431(170,772)

Balance at end of year

458,790586,790

1,609,761

83,543(3,806)

2,735,078

1,390,492

4,125,570

Year ended March 31, 2015

Millions of yen
2015

Balance at beginning of year
Changes in equity

Accumulated
Total Hitachi,
TreasuryotherLtd.
comprehensive stock, at coststockholders'(note 17)
incomeequity(note 18)
1,277,970
317,547(3,146)
2,668,657

Retainedearnings(notes 17
and 19)

Capitalsurplus(note 17)

Commonstock(note 17)

Noncontrollinginterests

Total equity

1,200,174

3,868,831

458,790

617,496

Reclassified into retained earnings
Net income--

37,597
217,482(37,597)--

217,482

125,936

343,418

Other comprehensive income
Dividends to Hitachi, Ltd. stockholders
Dividends to non-controlling interests
Acquisition of treasury stock
Sales of treasury stock
Changes in non-controlling interests-

3(9,083)(55,532)-

120,096
1,054

(421)
25
-

120,096(55,532)(421)
28(8,029)67,698(32,578)(7,169)187,794(55,532)(32,578)(421)
28(15,198)

458,790(9,080)608,416

199,547
1,477,517

83,553401,100(396)(3,542)

273,624
2,942,281

153,887
1,354,061

427,511
4,296,342

Total changes in equity
Balance at end of year

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statements of Cash Flows
Years ended March 31, 2016 and 2015

Millions of yen
2016

2015

294,753

343,418

507,790
44,781
164,812

481,02142,109121,467604
4,172(55,235)
4,475(53,092)
44,342(9,665)(1,602)(67,175)
59,852
13,529952,341
12,23432,385(27,356)(157,378)
812,226(46,589)7,897
55,016
16,355(201,423)(116,328)(19,724)(18,041)(65,602)
7,608
4,278
611,462
13,423
14,525(28,225)(159,360)
451,825(369,494)(116,438)(539,420)
22,632
23,834326,497(358,141)(128,808)(444,223)
32,52827,122302,899(196,608)(152,842)

137,852(19,654)(730,799)

121,616(12,696)(612,545)(69,801)
717,810(537,188)
1,034(57,907)(41,671)(295)
27

136,973
835,140(629,063)
3,171(55,443)(32,143)(421)
28(38,361)(25,232)(115)(26,467)427(231)
233,206

Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents(57,348)(2,388)68,560141,046

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

701,703699,315560,657
701,703

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization
Impairment losses
Income taxes
Share of (profit) loss of investments accounted forusing the equity method
Financial income and expenses
Net (gain) loss on business reorganization and others
Loss on sale of property, plant and equipment
Change in trade receivables
Change in inventories
Change in other assets
Change in trade payables
Change in retirement and severance benefits
Change in other liabilities
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities (note 24):
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of leased assets
Proceeds from sale of property, plant and equipment, and intangible assets
Proceeds from sale of leased assets
Collection of lease receivables
Purchase of investments in securities and other financial assets(including investments in subsidiaries andinvestments accounted for using the equity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries andinvestments accounted for using the equity method)Other
Net cash provided by (used in) investing activities
Cash flows from financing activities (note 24):
Change in short-term debt, net
Proceeds from long-term debt
Payments on long-term debt
Proceeds from payments from non-controlling interests
Dividends paid to Hitachi, Ltd. stockholders
Dividends paid to non-controlling interests
Acquisition of common stock for treasury
Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from
non-controlling interests
Proceeds from partial sales of shares of consolidated
subsidiaries to non-controlling interests
Other
Net cash provided by (used in) financing activities

See accompanying notes to consolidated financial statements.

F-5

Notes to Consolidated Financial Statements(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
accompanying consolidated financial statements comprise the Company, its subsidiaries and the Company’s interests inassociates and joint ventures. The Company’s and its subsidiaries’ businesses are global and diverse, and include
manufacturing and services in nine segments consisting of information and telecommunication systems, social infrastructure
and industrial systems, electronic systems and equipment, construction machinery, high functional materials andcomponents, automotive systems, smart life and ecofriendly systems, others (logistics and other services) and financial
services.
(2) Basis of Presentation
As the Company meets the requirements of a “Specified Company applying Designated International Financial ReportingStandards” pursuant to Article 1-2 of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated
Financial Statements (Ordinance of the Ministry of Finance of Japan No. 28 of 1976), the consolidated financial statementsof the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by theInternational Accounting Standards Board (IASB), as permitted by the provision of Article 93 of the Ordinance. The
Company’s fiscal year begins on April 1 and ends on March 31 of the following calendar year.
The Company’s consolidated financial statements have been prepared on a historical cost basis, except for derivative assets
and liabilities, financial assets and liabilities measured at fair value through profit or loss (FVTPL), financial assets
measured at fair value through other comprehensive income (FVTOCI) and assets and liabilities associated with defined
benefit plans.
The consolidated financial statements are presented in millions of Japanese yen, the functional currency of the Company.
Management of the Company has made a number of judgments, estimates and assumptions relating to the application of
accounting policies, reporting of revenues and expenses and assets and liabilities in the preparation of these consolidated
financial statements. Actual results could differ from those estimates.
Estimates and assumptions are continually evaluated. The effect of a change in accounting estimates, if any, is recognized in
the reporting period in which the change was made and in future periods.
The information regarding judgments used in applying accounting policies that could have a material effect on the
Company’s consolidated financial statements is included in the following notes:
・note 3. (a) Basis of Consolidation・note 3. (d) Financial Instruments and note 25. Financial Instruments and Related Disclosures
The information regarding uncertainties arising from assumptions and estimates that could result in material adjustments inthe subsequent consolidated financial statements is included in the following notes:
・note 3. (h) Impairment of Non-financial Assets
・note 3. (i) Retirement and Severance Benefits and note 16. Employee Benefits
・note 3. (j) Provisions, note 3. (k) Contingencies, note 15. Provisions and note 29. Commitments and Contingencies
・note 3. (l) Revenue Recognition and note 7. Construction Contracts
・note 3. (m) Income Taxes and note 13. Deferred Taxes and Income Taxes(3) Summary of Significant Accounting Policies(a) Basis of Consolidation(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control is obtained when the Company has risks or rights tovariable returns from its involvement with the entity and has the ability to use its power over the entity to affectthe variable returns.
The Company consolidates all subsidiaries from the date on which the Company acquires control until the date on
which the Company loses control.
Subsidiaries’ financial statements are adjusted as necessary if their accounting policies differ from those of theCompany.

F-6Notes to Consolidated Financial Statements
Changes in ownership interests in subsidiaries without a loss of control are accounted for as equity transactions.
Changes in ownership interests in subsidiaries with a loss of control are accounted for by derecognizing assets
and liabilities, non-controlling interests, equity and accumulated other comprehensive income (AOCI)
attributable to the subsidiaries.
(ii)

Associates and Joint Ventures
Associates are entities over whose operational and financial policies the Company has the ability to exercise
significant influence but which are not controlled by the Company.
Joint ventures are jointly controlled by more than one party, including the Company, and require unanimous
agreement of all parties in deciding operational and financial policies of the entity.
Investments in associates and joint ventures are accounted for using the equity method. The consolidated
financial statements of the Company include changes in profit or loss and other comprehensive income (OCI) of
these associates and joint ventures from the date on which the Company obtains significant influence or joint
control to the date on which it loses significant influence or joint control. The financial statements of theassociates and joint ventures are adjusted as necessary if their accounting policies differ from those of theCompany.

(iii) Structured Entities
The Company consolidates structured entities in case it is exposed or has rights to variable returns from its
involvement with such entities and has the ability to affect those returns through its power over the entities. The
consolidated structured entities are primarily trusts for securitizations of trade receivables and lease receivables.
(b) Cash Equivalents
Cash equivalents are highly liquid investments with insignificant risk of changes in value, with original maturities ofthree months or less from the date of acquisition.
(c) Foreign Currency Translation
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency.
(i)

Foreign Currency Transactions
Foreign currency transactions are converted into the functional currency of each company using the exchange rate
prevailing at the transaction date or a rate that approximates such rate. Monetary assets and liabilities
denominated in foreign currencies are converted into the functional currency using the exchange rate at the end of
the reporting period. Foreign exchange gains and losses resulting from the currency conversion and settlement arerecognized in profit or loss, except where gains and losses on assets or liabilities are recognized in OCI, foreignexchange effects relating to such assets or liabilities are also recognized in OCI, and presented in AOCI.

(ii)

Foreign Operations
Assets and liabilities of foreign entities are translated into Japanese yen using the exchange rate at the end of thereporting period, and revenue and expense items are translated using the average exchange rates during the period.
Gains or losses derived from translating foreign entities’ financial statements are recognized in OCI, andpresented in AOCI.

(d) Financial Instruments
The Company has adopted IFRS 9 “Financial Instruments” (IFRS 9) (issued in November 2009, amended in October2010).
(i)

Non-derivative Financial Assets
The Company initially recognizes trade and other receivables on the date such receivables arise. All otherfinancial assets are initially recognized at the transaction date, on which the Company becomes a party to theagreement.

F-7

Notes to Consolidated Financial Statements
The Company derecognizes financial assets when contractual rights to cash flows from the financial assets expire
or when the contractual rights to receive cash flows from the financial assets are transferred in transactions where
the risks and economic rewards of owning the financial assets are substantially transferred. In transactions where
the risks and economic rewards of owning the financial assets are neither substantially transferred nor retained,
the Company continues to recognize the financial assets to the extent of its continuing involvement andderecognizes such financial assets only if its control is transferred.
The classification and measurement model of non-derivative financial assets is summarized as follows:
Financial Assets Measured at Amortized Cost
Financial assets are subsequently measured at amortized cost in case they meet the following requirements:
・The financial asset is held within a business model with the objective of collecting contractual cash flows.
・The contractual terms of the financial asset provide cash flows on specified dates that are solely payments ofprincipal and interest on the principal amount outstanding.
Financial assets measured at amortized cost are initially measured at fair value (including direct transaction costs).
The carrying amount of financial assets measured at amortized cost is subsequently measured using the effective
interest method. Interest accrued on financial assets measured at amortized cost is included in Interest income inthe consolidated statements of profit or loss.
FVTOCI Financial Assets
The Company holds certain equity instruments with the purpose of expanding its revenue base by maintaining
and strengthening business relations with the investees. These equity instruments are classified as FVTOCI
financial assets by designation. They are initially and subsequently measured at fair value, and the changes in fairvalue are recognized in OCI. The cumulative amount of OCI is recognized in equity as AOCI. Dividends onequity instruments designated as FVTOCI are recognized in profit or loss, except where they are considered to bea return of the investment.
FVTPL Financial Assets
Equity instruments not designated as FVTOCI financial assets and debt instruments not classified as financial
assets measured at amortized cost are classified as FVTPL financial assets. These instruments are subsequently
measured at fair value and the changes in fair value are recognized in profit or loss.
Impairment of Financial Assets Measured at Amortized Cost
On a regular basis, but no less frequently than at the end of each quarterly reporting period, the Company
evaluates financial assets measured at amortized cost for impairment. Impairment is deemed to have occurred if
there is an objective evidence of impairment after initial recognition and in case the estimated future cash flows
from the financial assets falls below their respective carrying amounts. Objective evidence of impairment
includes historical credit loss experience, existence of overdue payments, extended payment terms, negativeevaluation by third party credit rating agencies, and deteriorated financial position and operating results, such as acapital deficit.
Impairment losses on debt securities are recognized if the carrying amount of the financial asset exceeds either its
estimated future cash flows discounted by the initial effective interest rate or its estimated fair value using theobservable market price, and measured as the difference.
Assessing impairment losses on trade receivables and other receivables requires a considerable amount of
judgment, involving historical experience and analysis, including the current creditworthiness of each customer.
The Company measures an impairment loss based on the credit loss ratio calculated taking into consideration
factors including historical experience or the estimate of collectible amount after assessing multiple potential
risks associated with the country in which a debtor conducts business or business environment including special
business customs particular to the region.

F-8

Notes to Consolidated Financial Statements
Impairment losses on debt instruments directly reduce the carrying amount of the assets, while the impairment
losses on trade receivables and other receivables indirectly reduce the carrying amount through the use of anallowance account. For trade receivables and other receivables, account balances are generally written off against
the allowance only after all means of collection have been exhausted and the potential for recovery is consideredremote. In case that subsequent events or circumstances decrease the amount of the impairment loss recognized,
the impairment loss is reversed through profit or loss.
(ii)

Non-derivative Financial Liabilities
The Company initially recognizes debt instruments on the date of issuance. All other financial liabilities are
initially recognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial liabilities if extinguished, or if the obligation in the contract is redeemed or
the liability is discharged, cancelled or expires.
Non-derivative financial liabilities the Company holds include bonds, debts, trade payables and other financial
liabilities. They are initially measured at fair value (less direct transaction costs), and bonds and long-term debt
are subsequently measured at amortized cost using the effective interest method. Interest accrued on thesefinancial liabilities is included in Interest charges in the consolidated statements of profit or loss.

(iii) Derivatives and Hedge Accounting
The Company uses derivative instruments including forward exchange contracts, cross currency swaps andinterest rate swaps in order to hedge foreign currency exchange risks and interest rate risks. All derivatives aremeasured at fair value irrespective of the objective and intent of holding them.
The Company accounts for hedging derivatives as follows:・ Fair value hedge: a hedge of the fair value of a recognized asset or liability or of an unrecognized firm
commitment. The changes in fair value of the recognized assets or liabilities or unrecognized firm
commitments and the related derivatives are both recorded in profit or loss if the hedge is considered highly
effective.
・ Cash flow hedge: a hedge of a forecast transaction or of the variability of cash flows to be received or paid
related to a recognized asset or liability. The changes in fair value of the derivatives designated as cash flow
hedges are recorded in OCI if the hedge is considered highly effective. This treatment continues until profit orloss is affected by the variability of cash flows or the unrecognized firm commitment of the designatedhedged item, at which point changes in fair value of the derivative are recognized in profit or loss.
The Company follows the documentation requirements as prescribed by International Accounting Standards(IAS) 39 “Financial Instruments: Recognition and Measurement,” which includes the risk management objective
and strategy for undertaking various hedge transactions. In addition, a formal assessment is made at the hedge’s
inception and subsequently on a periodic basis, as to whether the derivative used in hedging activities is highly
effective in offsetting changes in fair values or cash flows of the hedged items. Hedge accounting is discontinued
if a hedge becomes ineffective.
(iv) Offsetting Financial Assets and Liabilities
Financial assets and liabilities are offset and reported as net amounts in the consolidated statements of financial
position, only if the Company currently has a legally enforceable right to set off the recognized amounts andintends to settle on a net basis or to realize the asset and settle the liability simultaneously.
(e) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the specific identification
method or by the moving average method for finished goods, semi-finished goods and work in process, and generally
by the moving average method for raw materials. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary to sell.

F-9Notes to Consolidated Financial Statements(f)

Property, Plant and Equipment
Property, plant and equipment are measured using the cost model and stated at cost less accumulated depreciation andaccumulated impairment losses. Acquisition cost includes direct costs of acquisition, costs of dismantling, removing
and restoration of the assets. Each asset is depreciated mainly using the straight-line method over the following
estimated useful lives for major classes of assets:
Buildings and structures
2 to 60 years
Machinery, equipment and vehicles
2 to 20 years
Tools, furniture and fixtures
2 to 20 years
Estimated useful lives and the method of depreciation are reviewed at the fiscal year end. Changes in estimated useful
lives or depreciation method are accounted for on a prospective basis as a change in accounting estimate.

(g) Intangible Assets
Intangible assets with finite useful lives are measured using the cost model and stated at cost less accumulated
amortization and impairment losses. Each asset is amortized mainly using the straight-line method over the following
estimated useful lives for major classes of assets:
Software for internal use
2 to 10 years
Software for sale
2 to 10 years
Other
2 to 20 years
Intangible assets with indefinite useful lives and goodwill are stated at cost less accumulated impairment losses.
(h) Impairment of Non-Financial Assets
For each non-financial asset, the Company reviews the carrying amount and tests for impairment if there are events orcircumstances indicating an asset’s carrying amount may not be recoverable. For an asset that does not generate cash
flows that are largely independent of the cash flows from other assets, the Company considers indicators of impairment
based on a cash generating unit (CGU) or a group of CGUs. Irrespective of any indicators of impairment, the Company
tests goodwill and intangible assets with indefinite-lives for impairment annually, mainly in the fourth quarter, by
estimating the recoverable amount of each CGU (or group of CGUs) to which such assets are allocated.
The Company measures the recoverable amount of an asset or a CGU (or a group of CGUs) as the higher of fair valueless costs of disposal and value in use. In measuring fair values, the Company and its subsidiaries primarily use theincome approach (present value technique) based on the estimated future cash flows expected to result from the use of
the asset and its eventual disposal or the market approach to derive reasonable estimates of values in orderly market
transactions, such as comparisons of similar public companies and the current gross value of the asset. The Company
consults with outside specialists, as appropriate, depending on the complexity of estimating fair values. Value in use iscalculated by the estimated future cash flows based on business plans approved by management, discounted at thediscount rate which is derived from the weighted average cost of capital. The business plan used is based on external
information, reflects historical experiences, and generally has a maximum of five years. Since the Company and its
subsidiaries are engaged in a wide range of business activities from development, production and sales of diverse
products and the provision of various services, appropriate external information for each business activity is used forevaluating value in use for each business. Estimated cash flows beyond the period covered by the business plan arecalculated using the estimated growth rate not exceeding the long-term average growth rate of the market to which theasset belongs.
If the carrying amount of the asset or the CGU (or the group of CGUs) exceeds its recoverable amount, an impairment
loss is recognized at the excess amount.
For an asset or a CGU (or a group of CGUs) other than goodwill, its recoverable amount is subsequently estimated if
there is a significant change in facts and circumstances and there is an indication that an impairment loss previously
recognized on the asset may no longer exist or has decreased. If the estimated recoverable amount exceeds the carrying
amount, the impairment loss recognized previously is reversed to the extent of the carrying amount that would havebeen recorded, net of depreciation or amortization, if impairment had not been recognized previously.

F-10

Notes to Consolidated Financial Statements(i)

Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans and severance lump-sum payment plans toprovide retirement and severance benefits to employees. The present value of defined benefit obligations and retirement
benefit costs are measured based on the projected unit credit method.
The present value of defined benefit obligations and the fair value of plan assets are remeasured as of the end ofreporting period. Actuarial differences arising during the year and changes in fair value of plan assets (excludinginterest income) are recognized in OCI and are not subsequently reclassified into profit or loss. Any prior service cost,which arises at the time of a plan amendment, is recognized immediately in profit or loss when such an amendment
occurs.
The present value of defined benefit obligations less the fair value of plan assets is presented as the net amount ofdefined benefit liability or asset in non-current liabilities or assets.

(j)

Provisions
The Company recognizes provisions if it has a present obligation (legal or constructive) as a result of past events, it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, and theamount of obligation can be reliably estimated.
In case that the time to settle an obligation is expected to be long, and thus the time value of money is material, theamount of a provision is measured at the present value of the amount of expenditures expected to be required to settle
the obligation.

(k) Contingencies
The Company discloses contingent liabilities in accordance with IAS 37 “Provisions, Contingent Liabilities andContingent Assets” if an obligation does not meet the recognition criteria of provisions prescribed above in (j)Provisions, excluding those where the possibility of an outflow of resources is remote.
The Company and its subsidiaries have financial guarantee contracts that require them to make payments tocompensate the holder for a loss it incurs if a specified debtor defaults on payment based on the terms of a debt
instrument.
(l)Revenue Recognition(i) Sale of Goods
Revenue from the sale of goods is recognized when all of the following conditions are met.
 The significant risks and rewards of ownership of the goods have been transferred to the customer
 The Company has neither continuing managerial involvement nor effective control over the goods sold
 The amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured
reliably It is probable that the economic benefits associated with the transaction will flow to the Company
Revenue from the sale of goods is recognized upon delivery of goods to the customer. Typical revenue is from thesale of information technology system products, software licenses, construction equipment, disk drives, airconditioners, high functional materials, cable products, automotive equipment, semiconductor processing
equipment, test and measurement equipment, railway vehicles, medical devices, industrial machinery andequipment, elevators and escalators. Revenue from a software arrangement that requires significant production,
modification or customization of software is recognized using the percentage of completion method, provided
that there are reasonable and reliable estimates related to contract revenue, cost and the extent of progress toward
completion.
(ii)

Rendering of Services
Revenue from the rendering of services is recognized when all of the following conditions are met.
 The stage of completion of the transaction at the end of the reporting period can be measured reliably
 The amount of revenue and the costs incurred for the transaction at the end of the reporting period can bemeasured reliably
 It is probable that the economic benefits associated with the transaction will flow to the Company

F-11

Notes to Consolidated Financial Statements
Service revenues from facility maintenance, facility operations, outsourcing, logistics and others are recognized
as services are provided. Revenue from long-term fixed price service contracts such as support or maintenancecontracts is recognized ratably over the contractual period. If historical data shows that service cost does not
accrue ratably over the contractual period and the service is rendered in proportion to the accrual of the cost forthe service, revenue is recognized based on the pattern of the cost accrual. Finance lease income is recognizedusing the effective interest method, and operating lease income is recognized on a straight-line basis over the termof the lease.
(iii) Construction Contracts
The operating cycles of construction contracts, such as infrastructure systems, are generally greater than one year.
Revenues from these long-term construction contracts are recognized using the percentage of completion method,
provided that the progress of the construction can be reliably estimated. Revenue under the percentage ofcompletion method is calculated by the latest estimate of the total selling price multiplied by the ratio of the cost
incurred to date to the estimated total cost of the construction. Any anticipated losses on fixed price contracts are
expensed in profit or loss when such losses are estimated. If the outcome of a construction contract cannot be
reliably estimated, revenue is recognized only to the extent that the recoverability of contract costs incurred ishighly probable, and contract costs are recognized as an expense in the period in which they are incurred.
(iv) Multiple Element Transactions
The Company offers multiple solutions to meet its customers’ needs. Those solutions may involve the delivery or
performance of multiple elements, such as goods and services, and performance may occur at different points intime or over different periods of time. When one element is delivered prior to the other in an arrangement,
revenue is deferred until the last element is delivered, unless transactions are such that the delivered item has
value to the customer on a standalone basis, or delivery or performance of the undelivered item is considered
probable and substantially in the control of the Company if the arrangement includes a general right of return
relative to the delivered item.
If both described conditions above are met, each element in an arrangement is considered to be separately
identifiable, and consideration is allocated to the separately identifiable components of a single arrangement
based on the relative selling price of each component. The Company determines the relative selling price bytaking into account various factors such as an overall market conditions, including geographically or regionallyspecific market factors, competitors’ prices for similar items, profit objective and pricing practices.
(m) Income Taxes
Deferred tax assets and liabilities resulting from temporary differences and others are accounted for based on the asset
and liability approach. A deferred tax liability is not recognized for temporary differences arising from goodwill,
temporary differences arising from an asset or liability in a transaction other than a business combination, which at thetime of transaction affects neither accounting nor taxable income; and future taxable difference arising frominvestments in subsidiaries, associates and joint ventures where that the Company is able to control the timing ofreversal of the temporary difference while it is probable that the temporary difference will not reverse in the foreseeable
future. A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available
against which unused tax loss carryforwards, unused tax credits and future deductible temporary differences can beutilized. Current tax and deferred tax on items recognized in OCI are also recognized in OCI.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be reversed. The effect on deferred tax assets and liabilities of achange in tax rates is recognized in profit or loss and OCI in the period that includes the enactment date.
(n) Consumption Tax
Consumption tax collected and remitted to taxing authorities is excluded from revenues, cost of sales and expenses in
the consolidated statements of profit or loss.
(o) Earnings per Share
Basic earnings per share (EPS) for net income attributable to Hitachi, Ltd. stockholders is calculated based on theweighted average number of ordinary shares outstanding during the period. Diluted EPS for net income attributable to
Hitachi, Ltd. stockholders is calculated based on the sum of weighted average number of ordinary shares outstanding
during the period and the conversion of securities with dilutive effects or the number of authorized shares.

F-12

Notes to Consolidated Financial Statements(p) Business Combinations
Business combinations are accounted for using the acquisition method. Consideration is measured as the sum of the fairvalue of the consideration transferred at acquisition date and the non-controlling interests in the acquiree. The
Company determines, on a transaction by transaction basis, whether to measure non-controlling interests at fair value
or by the appropriate share in the fair value of identifiable net assets of the acquiree. Acquisition related costs are
expensed in the period in which the costs are incurred.
(q) New Accounting Standards not yet Adopted by the Company
The following table lists the principal new accounting standards and interpretations issued or amended prior to theapproval date of the consolidated financial statements that are not yet adopted by the Company as of the reporting date.
The Company is currently evaluating the potential impact of adopting these new standards and amendments on its
financial position and business performance.
IFRSs

Title

IFRS 9Financial Instruments

January 1, 2018

To bedetermined

IFRS 15

Revenue from Contracts
with Customers
LeasesJanuary 1, 2018

To bedetermined
To bedetermined

IFRS 16

Mandatory effective To be adopted bydate
the Company(Fiscal year beginning on
or after)January 1, 2019

F-13

Description of new standards andamendments

Amendments for hedge accounting(amended in November 2013)
Amendments for the classificationand measurement of financial
instruments, and adoption of
expected credit loss impairment
model
for
financialassets(amended in July 2014)
Revised accounting standard forrevenue recognition and disclosure
Revised lease definition and mainly
lessee accounting

Notes to Consolidated Financial Statements(4) Segment Information
Business Segments
The operating segments of the Company are the components for which separate financial information is available and whichis evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing
performance.
The Company discloses its business in nine reportable segments, corresponding to categories of activities classified
primarily by the similarities for the nature of markets, products and services, and economic characteristics. Several operating
segments are aggregated into Social Infrastructure & Industrial Systems, Electronic Systems & Equipment and High
Functional Materials & Components for financial reporting purposes so that financial statement users better understand theCompany’s financial position and business performance. The Company aggregates operating segments based on thesimilarities of economic characteristics mainly using profit margin ratios of operating segment. The primary products andservices included in each segment are as follows:
Information & Telecommunication Systems:
Systems integration, Consulting, Cloud services, Servers, Storage, Software, Telecommunication & network and ATMs
Social Infrastructure & Industrial Systems:
Industrial machinery and plants, Elevators, Escalators, Railway systems and Thermal, Nuclear and Renewable energy power
generation systems, Transmission & distribution systems
Electronic Systems & Equipment:
Semiconductor processing equipment, Test and measurement equipment, Advanced industrial products, Medical electronics
equipment and Power tools
Construction Machinery:Hydraulic excavators, Wheel loaders and Mining machinery
High Functional Materials & Components:
Semiconductor and display related materials, Circuit boards and materials, Automotive parts (molded plastics, etc.), Energy
storage devices, Specialty steels, Magnetic materials and components, High grade casting components and materials andWires and cables
Automotive Systems:
Engine management systems, Electric power train systems, Drive control systems and Car information systems
Smart Life & Ecofriendly Systems:
Air-conditioning equipment, Room air conditioners, Refrigerators and Washing machines
Others (Logistics and Other services):
Logistics, Optical disk drives, Property management and others
Financial Services:
Leasing and Loan guarantees
Effective from April 1, 2015, due to a change in management reporting, the "Power Systems" was unified to the "Social
Infrastructure & Industrial Systems". Figures for the segment, including the previous fiscal year, reflect the changed
segmentation.
Effective from April 1, 2016, the Company changed its business structure into the service-focused businesses and the
product-focused businesses, in order to strengthen front-line functions. Although the Company reclassified a part of its
operating segments, as a result of this transition the Company does not reclassify its reportable segments.

F-14

Notes to Consolidated Financial Statements
The following tables show business segment information for the years ended March 31, 2016 and 2015.
Revenues from Outside Customers

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items
Total

Millions of yen
2016
2015
1,858,364
1,813,757
2,051,214
1,788,247
1,016,350
1,017,981
742,306
812,174
1,499,180
1,459,273
996,074
934,367
646,847
717,667
878,663
896,468
342,801
334,238
10,031,799
9,774,172
2,506
758
10,034,305
9,774,930

Revenues from Intersegment Transactions

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items and Eliminations
Total

Millions of yen
2016
2015
250,957
220,265
281,930
277,974
111,258
113,715
16,025
3,618
64,87270,161
5,118
2,567
34,17136,603374,099
377,783
22,552
22,053
1,160,982
1,124,739(1,160,982)(1,124,739)-

Total Revenues

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items and Eliminations
Total

Millions of yen
2016
2015
2,109,321
2,034,022
2,333,144
2,066,221
1,127,608
1,131,696
758,331815,792
1,564,052
1,529,434
1,001,192
936,934
681,018754,270
1,252,762
1,274,251
365,353356,291
11,192,781
10,898,911(1,158,476)(1,123,981)
10,034,305
9,774,930

F-15

Notes to Consolidated Financial Statements
Segment Profit

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items and Eliminations
Total
Interest income
Interest charges
Income from continuing operations,
before income taxes

Millions of yen
2016
2015
109,141
106,049
29,108110,336
64,37063,771
25,84760,599153,553
123,943
53,94735,01941,96734,55340,60951,013
46,66535,436565,207620,719(34,204)(86,660)
531,003
534,059
12,02812,529(25,991)(27,594)
517,040

518,994

Segment profit is measured by EBIT.
Intersegment transactions are generally recorded at the same prices used in arm’s length transactions. Corporate items
include unallocated corporate expenses, such as expenditures for leading-edge R&D and others.
Total Assets

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate assets and Eliminations
Total

Millions of yen
As of March As of March
31, 2016
31, 2015
1,654,008
1,729,392
3,217,211
2,912,042
1,082,782
1,060,070
996,117
1,110,061
1,596,464
1,655,118
728,451
716,166
322,466
470,797
1,983,923
1,919,373
3,091,487
2,953,614
14,672,909
14,526,633(2,121,904)(2,092,906)
12,551,005
12,433,727

Corporate assets mainly consist of cash and cash equivalents, investments in securities and other financial assets.

F-16

Notes to Consolidated Financial Statements
Investments Accounted for Using the Equity Method

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items and Eliminations
Total

Millions of yen
As of March As of March
31, 2016
31, 2015
12,75810,756
482,507
512,635
325
525
18,41531,60245,87931,8796,899
6,753
45,93023,7986,722
6,491
20,32919,341
639,764
643,780
37,196
37,843676,960
681,623

Depreciation and Amortization

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items and Eliminations
Total

Millions of yen
2016
2015
113,161
97,98743,27742,16322,477
21,86041,28539,59673,07869,65848,31042,176
17,116
20,93449,07047,942
96,573
94,858504,347
477,174
3,443
3,847
507,790
481,021

Depreciation consists of depreciation of property, plant and equipment and investment properties.
Impairment Losses

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Total

Millions of yen
2016
2015
18,120
6,772
12,092
15,034
3,113
4,261
2,987
487
2,599
6,668
64
784
1,267
3,010
4,442
2,742
97
2,351
44,781
42,109Impairment losses mainly consist of impairment losses recognized on property, plant and equipment, investment properties
and intangible assets.

F-17

Notes to Consolidated Financial Statements
Share of Profits of Investments Accounted for Using the Equity Method
Millions of yen
2016
2015
Information & Telecommunication Systems
1,313
1,272
Social Infrastructure & Industrial Systems(20,425)
28,988
Electronic Systems & Equipment
51(27)
Construction Machinery
234
1,454
High Functional Materials & Components
3,651
4,436
Automotive Systems
759
943
Smart Life & Ecofriendly Systems
6,054
5,271
Others (Logistics and Other services)400
367
Financial Services
1,776
1,640
Subtotal(6,187)44,344
Corporate items and Eliminations
6,343
2,313
Total
156
46,657
Capital Expenditures

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate items and Eliminations
Total

Millions of yen
2016
2015
97,757116,340
84,21575,63528,324
26,04027,903
20,976
93,118
81,10584,29689,39318,767
19,91265,35858,374
156,889
137,610
656,627625,385
9,161
4,541
665,788629,926

Capital expenditures represent additions to property, plant and equipment, investment properties and intangible assets.

F-18

Notes to Consolidated Financial Statements
Geographic Information
The following table shows revenues attributed to geographic areas based on the location of the customers for the years
ended March 31, 2016 and 2015.

Japan
Asia
North America
EuropeOther Areas
Overseas Revenues Subtotal
Total Revenues

Millions of yen
2016
2015
5,231,530
5,220,349
2,112,334
2,178,222
1,280,326
1,064,127
951,105
841,966
459,010
470,266
4,802,775
4,554,581
10,034,305
9,774,930

Revenues in China for the years ended March 31, 2016 and 2015 were ¥1,055,576 million and ¥1,110,351 million,
respectively. Revenues in the U.S.A. for the years ended March 31, 2016 and 2015 were ¥ 1,168,164 million and ¥ 966,441
million, respectively. Revenues from outside customers attributable to any individual country and region other than Japan,
China and the U.S.A. were not material for the years ended March 31, 2016 and 2015.
The following table shows the balances of property, plant and equipment, investment properties and intangible assets foreach geographic area as of March 31, 2016 and 2015.
Millions of yen
As of March As of March
31, 2016
31, 2015
Japan
2,099,182
2,084,888
Asia
435,969
494,038
North America
474,536
451,788
Europe501,180
333,133
Other Areas
80,27770,291
Subtotal
3,591,144
3,434,138
Corporate items and Eliminations
33,87528,167
Total
3,625,019
3,462,305
The balances of property, plant and equipment, investment properties and intangible assets in any individual country andregion other than Japan were not material as of March 31, 2016 and 2015.
Significant Customer Information
There was no concentration of revenues from a specific customer for the year ended March 31, 2016 and 2015.

F-19

Notes to Consolidated Financial Statements(5) Business Acquisitions and Divestitures
On May 13, 2016, the Company has concluded an agreement regarding the transfer of common stocks of Hitachi Capital
Corporation (Hitachi Capital), a subsidiary of the Company in the Financial Services segment, in order to strengthen financefunctions and accelerate the concentration of management resources in the Social Innovation Business. In accordance withthis agreement, a certain number of shares of Hitachi Capital common stocks owned by the Company will be transferred to
Mitsubishi UFJ Financial Group, Inc. and Mitsubishi UFJ Lease & Financial Co., Ltd in the fiscal year ending March 31,
2017. As a result of this transfer of shares, the Company’s ownership ratio of voting rights in Hitachi Capital will decrease
from 60.6% to 33.4%, and Hitachi Capital will cease to be the Company’s consolidated subsidiary and will be its associateaccounted for using the equity-method. The effects of this transaction on the Company’s consolidated financial statements
are currently being evaluated.
On March 30, 2016, the Company has concluded an agreement regarding the transfer of common stocks of Hitachi
Transport System, Ltd. (HTS), a subsidiary of the Company included in the Others (Logistics and Other services) insegment information, in order to expand the scope of the Social Innovation Business by enhancing logistics platforms. In
accordance with this agreement, a certain number of shares of HTS common stocks owned by the Company weretransferred to SG Holdings Co., Ltd. on May 19, 2016. As a result of this transfer of shares, the Company’s ownership ratioof voting rights in HTS decreased from 59.02% to 30.01%, and HTS ceased to be the Company’s consolidated subsidiaryand became its associate accounted for using the equity-method. The effects of this transaction on the Company’s
consolidated financial statements are currently being evaluated.
Hitachi Rail Italy S.p.A. (HRI) and Hitachi Rail Italy Investments S.r.L. (HRII), subsidiaries of the Company in the Social
Infrastructure & Industrial Systems segment, signed binding agreements with Finmeccanica S.p.A. (FNM) to acquire;1) the current business of AnsaldoBreda S.p.A. (Breda), a manufacturer of rail vehicles for mass transit, with theexclusion of some revamping activities and certain residual contracts,
2) the entire interest owned by FNM in Ansaldo STS S.p.A. (STS) , a company engaged in the design and implementationand management of systems for signaling and supervision of railways, equal to approximately 40% of the share capital,
in order to strengthen our manufacturing footprint and expand our customer base in the global railway business. On
November 2, 2015 (the acquisition date), HRI and HRII closed the deal and acquired the business of Breda and the entire
interest owned by FNM in STS in accordance with the binding agreements. The Company obtained control of STS, due tofactors such as the acquisition of the share capital and the fact that the Company’s recommended directors represent the
majority of the board of directors elected at the shareholders’ meeting held on the acquisition date, and therefore STS
became a consolidated subsidiary of the Company effective on the same date.
The total consideration, paid in cash, for the business of Breda was EUR 30 million (¥4,041 million) and the total
consideration, paid in cash, for the shares of STS was EUR 761 million (¥101,184 million). HRII acquired a part of the restof STS shares, as a result, the ownership ratio of voting rights reached to 50.77% as of March 31, 2016.

F-20

Notes to Consolidated Financial Statements
The following table summarizes the fair value of the consideration paid for STS and the business of Breda, and the amountsof the assets acquired and liabilities assumed recognized as of the acquisition date.

Cash and cash equivalents
Trade receivables
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

30,115
131,343
37,42434,494

Millions of yen
the businessof Breda
2,706
61,31533,496
17,44455,82023,238
312,434

241
115,202

Current liabilities
Non-current liabilities
Total

124,044
20,606
144,650

107,401
3,760
111,161

Cash paid for acquisitionNon-controlling interests
Total

101,184
66,600167,784

4,041
4,041

STS

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Non-controlling interests are measured by the appropriate share in the fair value of identifiable net assets of the STS.
HRI repaid EUR 111 million (¥14,754 million) of loans from FNM which were included in the business of Breda, in
addition to the acquisition.
The results of operations of STS and the business of Breda for the period from the acquisition date to March 31, 2016 were
not material.
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition date
for STS and the business of Breda of April 1, 2015 would not differ materially from the amounts reported in the
consolidated financial statements for the year ended March 31, 2016.

F-21

Notes to Consolidated Financial Statements
On February 7, 2015, Hitachi Data Systems Corporation (HDS), a subsidiary of the Company in the Information &Telecommunications Systems segment, signed a definitive agreement with the shareholders of Pentaho Corporation(Pentaho) to acquire all the shares of Pentaho, for enhancing big-data technologies and solutions. Pentaho integrates data,
develops technologies for big-data analysis and visualization, and delivers solutions and supports. On May 29, 2015, HDS
acquired all the shares of Pentaho in accordance with the definitive agreement, and HDS obtained control of Pentaho, and it
became a wholly owned subsidiary.
The following table summarizes the fair value of the consideration paid for Pentaho, the assets acquired and liabilities
assumed recognized as of the acquisition date.
Millions of yen
988
807
182
82

Cash and cash equivalents
Trade receivables
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

55,901
10,275
68,235Current liabilities
Non-current liabilities
Total

3,449
9
3,458

Cash paid for acquisition

64,777

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
The results of operations of Pentaho for the period from the acquisition date to March 31, 2016 were not material.
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition date
for Pentaho of April 1, 2015 would not differ materially from the amounts reported in the consolidated financial statements
for the year ended March 31, 2016.

F-22

Notes to Consolidated Financial Statements
On August 19, 2014, Hitachi Metals, Ltd. (Hitachi Metals), a subsidiary of the Company in the High Functional Materials& Components segment, in order to strengthen its global iron casting business on a medium and long term basis, signed adefinitive agreement with WF Global II B.V., an entity which was owned by private equity funds managed and controlled
by KPS Capital Partners, LP (KPS), to acquire all the shares of Waupaca Foundry Holdings, Inc. (Waupaca HD), which
held a 100% stake in Waupaca Foundry, Inc. (Waupaca), engaged in the iron casting business for transportation machineryin the North America market and headquartered in the U.S.A. On November 10, 2014 (the acquisition date), Hitachi Metals
acquired all the shares of Waupaca HD in accordance with the definitive agreement. Accordingly, Hitachi Metals obtained
control of Waupaca HD and it became a wholly owned subsidiary.
The following table summarizes the fair value of the consideration paid for Waupaca HD, the assets acquired and liabilities
assumed recognized as of the acquisition date.
Millions of yen
888
26,446
12,13257,280Cash and cash equivalents
Trade receivables
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

70,99035,109202,845

Current liabilities
Non-current liabilities
Total

27,801
83,148110,949

Cash paid for acquisition

91,896

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
The results of operations of Waupaca HD for the period from the acquisition date to March 31, 2015 were not material.
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition datefor Waupaca HD of April 1, 2014 would not differ materially from the amounts reported in the consolidated financial
statements for the year ended March 31, 2015.
(6) Trade Receivables
The components of trade receivables are as follows:
Millions of yen
March 31, 2016 March 31, 2015
Accounts receivable
Others2,836,953
155,8172,716,738
153,304

Total

2,992,770

2,870,042

Trade receivables are stated net of the allowance for doubtful receivables.
Others include notes receivable and electronically recorded monetary claims.

F-23

Notes to Consolidated Financial Statements(7) Construction Contracts
The costs incurred, profits recognized, advances received and retentions for construction contracts in progress as of March
31, 2016 and 2015 are as follows:

March 31, 2016
Total costs incurred and profits recognized
Advances received
Retentions

2,373,255
178,191
10,802Millions of yen
March 31, 2015
1,502,587
110,151
947

Gross amount due from and due to customers for contract work as of March 31, 2016 and 2015 are as follows:

March 31, 2016
Gross amount due from customers forcontract work
Gross amount due to customers forcontract work

Millions of yen
March 31, 2015

459,386

338,236

244,004

136,446

Revenues recognized from construction contracts for the years ended March 31, 2016 and 2015 were ¥920,474 million and¥809,833 million, respectively.

F-24

Notes to Consolidated Financial Statements(8) Leases(a) Lessee
The Company and certain subsidiaries use leased facilities and equipment, including buildings, machinery andequipment and vehicles under finance lease or operating lease.
The following table shows the undiscounted amounts and present value of minimum lease payments under financeleases as of March 31, 2016 and 2015.
Millions of yen
March 31, 2016
Minimum
lease
payments

March 31, 2015

Present valueof minimum
lease
payments

Minimum
lease
payments

Present valueof minimum
lease
payments

Within 1 year

12,792

12,011

12,541

11,589After 1 year but not more than 5 years

31,03929,516

34,57132,292More than 5 years

3,552

3,073

7,533

6,430

Total

47,38344,60054,64550,311

Finance charges(2,783)(4,334)Present value of minimum lease
payments, total

44,60050,311

The following table shows the future minimum lease payments under non-cancelable operating leases as of March 31,
2016 and 2015.
Millions of yen
March 31, 2016

March 31, 2015

Within 1 year

40,05635,602After 1 year but not more than 5 years

99,78789,646More than 5 years

50,372

46,492

Total

190,215

171,740

Total operating lease expenses for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen
2016
Operating lease expenses

150,243

F-25

2015
160,562

Notes to Consolidated Financial Statements(b) Lessor
The Company and certain subsidiaries lease certain assets such as manufacturing machinery and equipment underfinance and operating lease arrangements.
The following table shows the undiscounted amounts and present value of minimum lease payments receivable underfinance leases as of March 31, 2016 and 2015.
Millions of yen
March 31, 2016
Gross
investment
in lease

Present valueof minimum
lease
payments
receivable

March 31, 2015
Gross
Present value
investmentof minimumin leaselease
payments
receivable

Within 1 year

363,815334,311After 1 year but not more than 5 years

677,698

More than 5 years

96,843

Total

1,138,356

Unearned income(63,415)
1,074,941(35,615)(86,402)
1,031,113(33,860)

1,039,326

997,253

Net investment in the lease
Unguaranteed residual value
Present value of minimum lease
payments receivable

360,315

308,037

621,855

648,122570,002

83,160109,078

119,214

1,039,326

1,117,515

997,253

The amounts of the allowance for uncollectable minimum lease payments receivable as of March 31, 2016 and 2015
were ¥8,698 million and ¥13,140million, respectively.
The following table shows the future minimum lease payments receivable under non-cancelable operating leases as ofMarch 31, 2016 and 2015.
Millions of yen
March 31, 2016

March 31, 2015

Within 1 year

58,88353,732After 1 year but not more than 5 years

67,65066,746More than 5 years
Total

2,043

1,572

128,576

122,050F-26

Notes to Consolidated Financial Statements(9) Inventories
The components of inventories are as follows:
Millions of yen
March 31, 2016 March 31, 2015
Finished goods
Semi-finished goods and work in process
Raw materials
Total

587,431483,712228,712
1,299,855

634,345562,645
261,129
1,458,119

For the years ended March 31, 2016 and 2015, the amounts of inventories expensed and included as cost of sales were
¥5,775,548 million and ¥6,437,013 million, respectively, and the write-downs of inventories were ¥41,824 million and¥20,738 million, respectively.
(10) Investments Accounted for Using the Equity Method
The aggregated carrying amounts of investments accounted for using the equity method that are not individually material asof March 31, 2016 and 2015, and the summarized financial information for the years ended March 31, 2016 and 2015 are as
follows:
Millions of yen
Joint ventures

Associates
Carrying amount of investments

March 31, 2016
641,246

March 31, 2015
633,291

March 31, 2016
35,714

March 31, 2015
48,332Millions of yen

Associates
2016
Net income (loss) fromcontinuing operations
Other comprehensive income (loss)
Total comprehensive income (loss)

Joint ventures2015(3,377)(16,751)(20,128)

2016
32,311
21,51453,825

2015

3,533(13,763)(10,230)

14,346(90,485)(76,139)

These amounts represent the Company and certain subsidiaries’ share of ownership interests per ownership percentage.
As of March 31, 2016 and 2015, the Company and certain subsidiaries’ interests in certain joint ventures operating at a loss
have the cumulative loss exceeding the Company’s investments, and thus the negative amount of ¥112,260 million and¥98,363 million, respectively, were recognized in other non-current liabilities.

F-27

Notes to Consolidated Financial Statements(11) Property, Plant and Equipment
The following table shows the changes in the net carrying amounts of property, plant and equipment.
Millions of yen
Land

Buildings
andstructures

MachineryandvehiclesTools,
furnitureandfixtures

Other

Constructionin progress

Total

Net carrying amountMarch 31, 2014

433,345742,268

483,932

159,850

343,989

95,5492,258,933

Additions
Transfers between
accounts

2,325

8,702

40,70832,730136,940

255,774

477,179

778

46,840131,471

41,9994,940(226,028)-

Sales and disposals
Depreciation
Impairment losses
Acquisitions anddivestitures
Currencytranslation effectOther(2,253)(5,604)(7,470)(58,682)(14,126)(7,071)(116,902)(10,080)(4,318)(72,315)(2,150)(25,931)(100,177)-(1,331)(1,838)(48,374)(348,076)(33,798)

1,868

24,40036,807

4,287

528

2,713

70,603

4,609(1,484)

20,493(4,773)31,040(5,462)

8,600
20,724

6,965
16,2195,877(6,778)77,584
18,446

March 31, 2015

433,584

757,652

584,443

189,407383,473

123,938

2,472,497

124

12,131

49,11030,919153,202279,120524,606

4,422
(535)
(1,972)

68,489(12,427)(62,049)(11,615)

112,453(7,489)(124,235)(7,445)49,590(5,244)(74,000)(1,931)

3,133(21,145)(103,857)(253)(238,087)(438)(1,646)(47,278)(364,141)(24,862)

Additions
Transfers between
accounts
Sales and disposals
Depreciation
Impairment losses
Acquisitions anddivestitures
Currencytranslation effect
Other

644

7,615

(22,675)(1,620)

1,806

3,906

(10,324)(8,651)(1,047)(17,442)
6,302(23,217)(154)(7,475)
13,794(12,123)
22,445(13,566)(9,138)(82,474)
32,202

March 31, 2016

426,569

748,656

560,791

193,440

426,681

144,089

2,500,226

The amount of depreciation recognized is included in Cost of sales and Selling, general and administrative expenses in the
consolidated statements of profit or loss. Impairment losses are included in Other expenses in the consolidated statements ofprofit or loss.
Finance lease assets are included in Other in the table above, and their carrying amounts as of March 31, 2016 and 2015
were ¥84,489 million and ¥79,926 million, respectively.

F-28

Notes to Consolidated Financial Statements
The following table shows the gross carrying amounts and accumulated depreciation and impairment losses of property,
plant and equipment.
Millions of yen
Land

Buildings
andstructures

MachineryandvehiclesTools,
furnitureand fixtures

March 31, 2014

456,518

1,867,372

2,311,888

949,742

1,662,395

101,894

7,349,809

March 31, 2015

456,319

1,905,337

2,448,847

993,613

1,571,316

131,800

7,507,232

March 31, 2016
Accumulated depreciationand impairment losses
March 31, 2014

446,536

1,900,807

2,362,660

975,628

1,498,628

146,260

7,330,519(23,173)(1,125,104)(1,827,956)(789,892)(1,318,406)(6,345)(5,090,876)

March 31, 2015

(22,735)(1,147,685)(1,864,404)(804,206)(1,187,843)(7,862)(5,034,735)

March 31, 2016

(19,967)(1,152,151)(1,801,869)(782,188)(1,071,947)(2,171)(4,830,293)

Other

Constructionin progress

Total

Gross carrying amount

Impairment Losses Recognized for the Year Ended March 31, 2016:
The Social Infrastructure & Industrial Systems segment recognized impairment losses of ¥11,697 million, of which ¥7,485
million was attributable to the lower than expected future revenue projected for its power semiconductor business, due tochange in market trends. The recoverable amount of the CGU was recorded at nominal value because the previously forecast
future cash flows in the business plan are no longer expected.
The Information & Telecommunication Systems segment recognized impairment losses of ¥3,275 million, due to idle assetsof buildings and structures and machinery.
The Construction Machinery segment recognized impairment losses of ¥2,854 million, due to the lower than expected future
revenue projected in its construction machinery market because of severe competition at construction market.
Impairment Losses Recognized for the Year Ended March 31, 2015:
The Social Infrastructure & Industrial Systems segment recognized impairment losses of ¥14,725 million, of which ¥10,134
million was attributable to the lower than expected future revenue projected for its transmission and distribution systems
business. The recoverable amount of the CGU was principally determined on the basis of fair value less costs of disposal,
which was measured at ¥5,729 million as of March 31, 2015. A market approach was used in measuring the fair value of therelevant assets. These fair value measurements were based on real estate appraisal value which includes adjustments to thevalues of properties in comparable transactions, or published market prices to reflect specific factors inherent in the asset
subject to the appraisal, and thus classified as Level 3 of fair value hierarchy.
The High Functional Materials & Components segment recognized impairment losses of ¥6,492 million, due to the lower
than expected future revenue projected for the part of its magnetic materials business and on idle assets and others of themagnetic materials business and of the wire and cable business.
The Electronic Systems & Equipment segment recognized impairment losses of ¥4,124 million, due to the lower than
expected future revenue projected for its land held for lease.

F-29

Notes to Consolidated Financial Statements(12) Intangible Assets
The following table shows the changes in the net carrying amounts of goodwill and other intangible assets.
Millions of yen
Goodwill

Software forinternal use

Software forsale

Intangible
lease assets

Other

Total

Net carrying amountMarch 31, 2014

327,116

131,399

52,18841,182

180,353732,238

Internal developments
Purchases
Transfers between accounts
Amortization
Impairment losses
Disposals
Acquisitions and divestitures
Currency translation effect(637)
99,576
12,076

2,051
12,20948,453(53,389)(3,495)
(76)
29
1,046

333
829
40,294(37,904)
(27)
(202)
286

19,421(15,939)1

87,01327,294(88,747)(23,006)(1,604)(45)
72,466
4,614

89,39759,753(130,238)(5,763)(121)
171,869
18,023-(1,693)(5,475)

159

5,433

(1,576)

March 31, 2015

438,131

136,534

50,322

44,824

263,771933,582

Internal developments
Purchases
Transfers between accounts
Amortization
Impairment losses
Disposals
Acquisitions and divestitures
Currency translation effectOther(14,525)
137,274(32,315)-

3,186
12,26144,371(53,052)(2,223)(3,183)
(611)
(985)
140

2,924
252
38,757(38,787)
(424)
(192)
184
195
3,982

20,706(17,244)(1,343)
1,509

75,58022,328(83,128)(32,160)(2,743)(1,212)
52,130(8,522)
13,691

81,69055,547(141,243)(19,915)(5,930)188,977(41,627)
19,322

March 31, 2016

528,565

136,438

57,21348,452299,735

1,070,403

Other

The amount of amortization recognized is included in Cost of sales and Selling, general and administrative expenses in the
consolidated statements of profit or loss. Impairment losses are included in Other expenses in the consolidated statements ofprofit or loss.
The following table shows the gross carrying amount and accumulated amortization and impairment losses of goodwill andother intangible assets.
Millions of yen
Goodwill

Software forinternal use

Software forsale

Intangible
lease assets

Other

Total

Gross carrying amountMarch 31, 2014

330,251584,640

472,099

280,931367,5132,035,434

March 31, 2015

441,266

627,149

502,194

264,399471,580

2,306,588

March 31, 2016
Accumulated
amortization andimpairment losses
March 31, 2014

534,533

648,278

540,503

253,706

528,1392,505,159(3,135)(453,241)(419,911)(239,749)(187,160)(1,303,196)

March 31, 2015

(3,135)(490,615)(451,872)(219,575)(207,809)(1,373,006)

March 31, 2016

(5,968)(511,840)(483,290)(205,254)(228,404)(1,434,756)

The Company writes off goodwill if it has been fully impaired.

F-30

Notes to Consolidated Financial Statements

Impairment Losses Recognized for the Year Ended March 31, 2016:
The Information & Telecommunication Systems segment recognized impairment losses of ¥14,845 million, of which¥13,235 million was attributable to a partial withdrawal from the consulting business in North America and Europe. The
amount of goodwill and other intangible assets related to the business withdrawn was fully written down.
Impairment Losses Recognized for the Year Ended March 31, 2015:
The Information & Telecommunication Systems segment recognized impairment losses of ¥4,340 million, due to a decreasein the profitability of its service business provided for financial institutions.
The carrying amounts of intangible assets with indefinite useful lives as of March 31, 2016 and 2015 amounted to ¥10,849
million and ¥6,451 million, respectively. The main components of such assets are acquired brands and trademarks. They areassessed to have indefinite useful lives because there is no foreseeable limit to the period over which such assets are
expected to generate net cash inflows for the entity.
Expenditures on research activities aimed at obtaining new scientific or technical knowledge or understanding are expensed
when incurred. Expenditures on development activities for a new or major improvement of production plan or design prior
to the beginning of commercial production or use are capitalized as an internally generated intangible asset only when such
expenditures attributable to the intangible asset can be reliably measured, it is feasible for the Company to complete thedevelopment, and it is highly probable that the Company will obtain the future economic benefit. Otherwise, theexpenditures are recognized as an expense when incurred.
The carrying amounts of internally generated intangible assets (at cost less accumulated amortization and impairment losses)
as of March 31, 2016 and 2015 amounted to ¥196,791 million and ¥182,742 million, respectively. These assets are mainly
included in software for internal use or software for sale.
Research and development expenditures recognized as an expense for the years ended March 31, 2016 and 2015 were¥333,730 million and ¥334,814 million, respectively, and they are included in Cost of sales and Selling, general andadministrative expenses in the consolidated statements of profit or loss.
The Company tests goodwill acquired through business combinations for impairment by comparing the carrying amount andthe recoverable amount per CGU (or group of CGUs).
As of March 31, 2016 and 2015, the group of CGUs with a significant proportion of goodwill allocated is the Information &Telecommunication Systems segment, and the carrying amounts of goodwill allocated to the Information &Telecommunication Systems segment were ¥207,293 million and ¥172,159 million, respectively. The recoverable amountused for impairment test of goodwill of the Information & Telecommunication Systems segment for the years ended March
31, 2016 and 2015 was the fair value less cost of disposal. The fair value was estimated by a combination of prices ofsimilar businesses, present value calculations and other inputs. Judgments and assumptions required for future plans of
relevant businesses were based on certain assumptions deemed reasonable at the time of estimate. For the years ended
March 31, 2016 and 2015, cash flows were projected over 5 years, the discount rates used were 5.72% and 5.55%,
respectively, and the growth rate used was 1.0% for both years. These fair value measurements were classified as level 3 ofthe fair value hierarchy based on the inputs used. Effective from April 1, 2016, the Company changed its business structure
in order to strengthen front-line functions. Due to this transition, the Company reclassified the group of CGUs of theInformation & Telecommunication Systems segment. The Company exercised impairment test based on the group of CGUs
after the reclassification, in addition to the impairment test above, and the value in use of goodwill in each group of CGUs
exceeded each carrying amount.
The Company considers it unlikely for the carrying amount of each CGU (or group of CGUs), together with allocatedgoodwill, would exceed the respective recoverable amounts of the CGU (or group of CGUs) even if the primary
assumptions used for the impairment test changed within a reasonable range.

F-31

Notes to Consolidated Financial Statements(13) Deferred Taxes and Income Taxes
The components of income taxes recognized in the consolidated statements of profit or loss and deferred taxes recognized in
the consolidated statements of comprehensive income are as follows:
Millions of yen
2015

2016
Income taxes
Current tax expense
Deferred tax expense
Temporary differences originated and reversed
Changes in realizability of deferred tax assets
Adjustments to deferred tax assets and liabilities for enactedchanges in tax laws and tax rates in Japan
Total
Deferred taxes recognized in OCI
Net changes in financial assets measured at fair value through
OCI
Remeasurements of defined benefit plans
Net changes in cash flow hedges
Foreign currency translation adjustments
Total

156,177

144,281

78,149(80,005)

41,270(68,685)

10,885
165,206

5,209
122,075(25,602)

22,167(15,771)(4,168)433(3,255)(1,556)-(45,108)

17,356

For the year ended March 31, 2016, the Company and its domestic Japanese subsidiaries were subject to a national corporate
tax of 23.9%, an inhabitant tax of between 12.9% and 16.3% of the national corporate tax and combined deductible businesstax and special local corporation tax between 3.1% and 8.7%, which in the aggregate resulted in a combined statutory
income tax rate of approximately 33.0%.
For the year ended March 31, 2015, the Company and its domestic Japanese subsidiaries were subject to a national corporate
tax of 25.5%, an inhabitant tax of between 17.3% and 20.7% of the national corporate tax and combined deductible businesstax and special local corporation tax between 3.8% and 10.1%, which in the aggregate resulted in a combined statutory
income tax rate of approximately 35.5%.
The Company and certain subsidiaries file consolidated income tax returns in certain jurisdictions.
On March 29, 2016, amendments to corporation tax law were enacted in Japan, resulting in lower corporate tax rates. Thosechanges became effective on April 1, 2016. As a result, the aggregate statutory income tax rate for domestic companies will
be approximately 30.8% for the years beginning on or after April 1, 2016 and 30.5% for the years beginning on or after
April 1, 2018. The effect of those changes on the Company’s deferred tax balances amounted to ¥10,885 million of
additional expenses and is included in Income taxes.
On March 31, 2015, amendments to corporation tax law were enacted in Japan, resulting in lower corporate tax rates. Thosechanges became effective on April 1, 2015. As a result, the aggregate statutory income tax rate for domestic companies will
be approximately 33.0% for the year beginning on or after April 1, 2015 and 32.2% for the years beginning on or after April
1, 2016. The effect of those changes on the Company’s deferred tax balances amounted to ¥5,209 million of additional
expenses and is included in Income taxes.

F-32

Notes to Consolidated Financial Statements
Reconciliations between the combined statutory income tax rate and the effective income tax rate are as follows:
2016
Combined statutory income tax rate
Share of profits of investments accounted for using the equity
methodChange in excess amounts over the tax basis of investments in
subsidiaries and investments accounted for using the equity
methodGain or loss on sale of investments in subsidiaries andinvestments accounted for using the equity method
Expenses not deductible for tax purposes
Enacted changes in tax laws and rates
Impairment of goodwill
Change in realizability of deferred tax assets
Difference in statutory tax rates of foreign subsidiaries
Other, net
Effective income tax rate

2015

33.0％

35.5％

0.0

(3.2)

9.8

1.4

2.2
2.3
2.1
0.9
(15.5)
(3.2)
0.4
32.0％

3.8
2.7
1.0
0.0
(13.2)
(4.7)
0.2
23.5％

Changes in deferred tax assets and liabilities are as follows:

Deferred tax assets, net at beginning of year
Recognized in profit or loss
Recognized in OCI
Acquisitions, divestitures and others
Discontinued operations
Deferred tax assets, net at end of year

March 31, 2016
85,208(9,029)45,108(9,241)
400
112,446

Millions of yen
March 31, 2015
99,283
22,206(17,356)(19,543)
618
85,208Significant components of the deferred tax assets and liabilities are as follows:
Consolidated statements offinancial position
March 31,
March 31,2016
2015
Deferred tax assets
Retirement and severance benefits
Accrued expenses
Depreciation of property, plant andequipment
Net operating loss carryforwards
Other
Total deferred tax assets
Deferred tax liabilities
Deferred profit on sale of properties
Investments in securities
Tax purpose reserves regulated by
Japanese tax laws
Intangible assets
Other
Total deferred tax liabilities
Net deferred tax assets

Millions of yen
Consolidated statements ofprofit or loss
2016

2015

108,322
71,19077,60689,305

13,349(14,067)

10,842
15,74524,982
22,747
194,848
422,089

17,426
18,333
169,981372,651(1,685)45
14,03011,672(1,356)(7,356)34,90752,782(14,071)(89,142)(11,089)(85,483)(2,982)(36,780)

(748)
8,716

(51,355)(61,226)(93,849)(309,643)
112,446(51,829)(47,768)(91,274)(287,443)
85,208341
7,907
10,813(20,701)(9,029)(45,254)
4,331
2,379
(30,576)
22,206F-33

Notes to Consolidated Financial Statements
Net deferred tax assets are included in the following accounts in the consolidated statements of financial position.
Millions of yen
March 31, 2016 March 31, 2015
Other non-current assets
Other non-current liabilities
Total

222,369(109,923)
112,446

175,492(90,284)
85,208Deferred tax liabilities are not recognized for excess amounts over the tax basis of investments in subsidiaries andinvestments accounted for using the equity method that are considered to be reinvested indefinitely, for such differences will
unlikely reverse in the foreseeable future. The temporary differences related to undistributed earnings of subsidiaries forwhich deferred tax liabilities are not recognized were ¥710,921 million and ¥744,549 million, respectively, as of March 31,
2016 and 2015.
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income in specific tax jurisdictions during the periods in which these deductible differences
become deductible. Although realization is not assured, the Company carries out an assessment of the scheduled reversals ofdeferred tax liabilities and projected future taxable income, including the execution of certain available tax strategies if
needed. Based on these factors, the Company believes it is more likely than not it will realize the benefits of these deductible
differences as of March 31, 2016.
Deductible temporary differences and net operating loss carryforwards for unrecognized deferred tax assets are as follows:
Millions of yen
March 31, 2016 March 31, 2015
Deductible temporary differences
Net operating loss carryforwards
Total

1,301,576
592,352
1,893,928

2,296,620
833,673
3,130,293

Net operating loss carryforwards for unrecognized deferred tax assets will expire as follows:
Millions of yen
March 31, 2016 March 31, 2015
Within 5 years
After 5 years but not more than 10 years
More than 10 years
Total

286,736
146,712
158,904
592,352F-34

414,539
283,466
135,668
833,673

Notes to Consolidated Financial Statements(14) Trade Payables
The components of trade payables are as follows:
Millions of yen
March 31, 2016 March 31, 2015
Accounts payable
OthersTotal

1,365,736
86,182
1,451,918

1,404,974
21,5491,426,523

Others include electronically recorded monetary claims and notes payable.
(15) Provisions
Changes in the balance and components of provisions for the year ended March 31, 2016 are as follows:

March 31, 2015
AdditionsUtilized
Acquisitions and divestitures
Currency translation effects,
and others
March 31, 2016
Current
Non-current

Asset retirement
obligations
21,830Restructuringprovisions
754

Product warranty
provisions
44,077

Millions of yen
Otherprovisions
148,390

4,272
(895)

36,801(36,169)

15,800(18,504)

95,257(29,849)(45)-(2,976)420(77)
25,08545
1,431(2,303)36,094(4,064)
210,154

348

1,372

25,684

200,744

24,73759

10,4109,410

Other provisions include provisions made for expenses including competition law and others. As information required by
IAS 37 could adversely affect the outcome of litigations and other disputes, the details of these provisions are not disclosed.
Asset Retirement Obligations
The Company and its subsidiaries recognize asset retirement obligations principally based on the estimated future
expenditures using historical experience when the Company and its subsidiaries have a legal or contractual obligation
associated with the retirement of tangible fixed assets used in normal operations, such as lease dilapidations of factory
facilities and premises.
Restructuring Provisions
Restructuring provision is recognized when the Company and its subsidiaries have a detailed formal plan for the
restructuring of the business or a part of business and have raised a valid expectation in those affected that it will carry out
the restructuring by starting to implement the plan or announcing its main features to those affected. The provision isrecognized based on the estimated amount of direct expenditures attributable to restructuring.
Product Warranty Provisions
The Company and its subsidiaries provide warranties for certain products and services. Product warranty provisions arerecognized by estimating future expenditures based principally on historical experience of warranty claims.

F-35

Notes to Consolidated Financial Statements(16) Employee Benefits(a) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans and severance lump-sum payment plans, aswell as defined contribution pension plans to provide retirement and severance benefits to substantially all employees.
The principal defined benefit pension plan is a corporate pension plan based on the Japanese Defined Benefit Corporate
Pension Plan Act (the Act). Additionally, certain corporate pension plans adopt cash balance plans. Benefits under cash
balance plans are calculated per each plan participant with a notional account balance, based on the contribution credits
per salary level and interest credits based on market interest rate trends.
Pursuant to the Act, the Company has an obligation to make contributions to the Hitachi Corporate Pension Fund (theFund) that manages the corporate pension plans. The directors of the Fund are responsible for faithfully executing
operations in compliance with laws and regulations, and any orders issued by the Minister of Health, Labor andWelfare, and the director-generals of Regional Bureaus of Health and Welfare based on laws and regulations, as well as
the rules of the Fund and the resolution of the Board of Representatives. The Fund prohibits the directors from acts that
constitute conflicts of interests in the management and operation of the funds contributed for benefit payments (thecontributions). If breached, the board members are jointly and severally held responsible.
The Fund is legally independent from the Company. The Board of Representatives comprises an equal number ofrepresentatives selected by the company and certain subsidiaries and representatives from the employee side. The
proceedings of a Board of Representatives are decided by a majority vote of the members attending. In case of a tied
vote, the chairman has the power to decide, except for exceptionally significant matters.
The actual management of the contributions is conducted by trustees in accordance with rules approved by the Board ofRepresentatives. The Fund is responsible for managing the contributions to safely and efficiently manage thecontributions by establishing the basic management policy of the contributions and preparing the management
guidance in line with the policy submitted to the trustees.
The Company has future obligations to make contributions as defined by the Fund. The amount of contribution isperiodically reviewed to the extent allowed by law.
The severance lump-sum payment plans provide a lump-sum payment at the time of retirement, and the benefit iscalculated based on factors such as the salary level at retirement and the years of service. The Company and certain
subsidiaries have an obligation to pay benefits directly to beneficiaries.
Defined contribution plans require companies to make contributions over a participation period, and plan participants
themselves are responsible for the management of plan assets. Benefits are paid by the trustee, and the Company andcertain subsidiaries’ responsibility is limited to making contributions.

F-36

Notes to Consolidated Financial Statements
Changes in the present value of defined benefit obligations and the fair value of plan assets for the years ended March
31, 2016 and 2015 are as follows:

March 31, 2016
Defined benefit obligations
At beginning of year
Service cost
Interest cost
Plan amendments
Actuarial losses
Benefits paid
Acquisitions and divestitures
Transfer to defined contribution pension plan
Settlements/curtailments
Currency translation effectAt end of year
Fair value of plan assets
At beginning of year
Interest income
Return on plan assets (excluding interest income)
Employers’ contributions
Employees’ contributions
Benefits paid
Acquisitions and divestitures
Transfer to defined contribution pension plan
Settlements/curtailments
Currency translation effectAt end of year
Effect of asset ceiling
Net liability amount recognized in the consolidated statementsof financial position

Millions of yen
March 31, 2015

2,384,173
84,20621,993(163)
117,413(131,296)(14,518)(25,703)(1,244)(17,941)2,416,920

2,258,736
80,66327,525
2,282
104,800(123,396)
25,320(1,782)(4,198)14,2232,384,173

1,703,201
18,280(38,290)
110,287
227(96,523)(17,589)(4,431)(1,272)(11,248)
1,662,642
6,651

1,504,738
20,267
128,607
120,082304(88,373)
5,072
(881)
(1,135)
14,5201,703,201
4,385

760,929685,357

March 31, 2016
(107,660)
792(10,545)

Millions of yen
March 31, 2015
(85,260)(5,136)(14,404)

The components of actuarial gain or loss are as follows:

Arising from changes in financial assumptions
Arising from changes in demographic assumptions
Other

The Company and certain subsidiaries remeasure the defined benefit obligations and plan assets at the end of the fiscal
year. The discount rates used in actuarial calculation of defined benefit obligations are as follows:

March 31, 2016
0.6

Discount rate

Percentage
March 31, 2015
1.0

If, at March 31, 2016, the discount rate rose by 0.5%, the defined benefit obligations would decrease by ¥148,318
million, and if the discount rate decreased by 0.5%, the defined benefit obligations would increase by ¥132,257 million.
The sensitivity analysis is based on an assumption that all other variables other than the one analyzed are held constant;in reality, changes in other assumptions may impact the outcome of the analysis.
The Fund’s plan asset management is based on the safe and efficient management of the contributions, diversified
investments and determination of the investment ratio that should be sustained over the long term. The Fund seeks tomaintain current value of assets sufficient for future obligations. A target rate of return is established to ensure a stable
long term rate of return on assets. A diversified investment strategy is carried out while a target asset allocation is

F-37

Notes to Consolidated Financial Statements
established to achieve the target rate of return. The target asset allocation is based on the expected rate of return by eachclass of asset, the standard deviation of the rate of return and the correlation coefficient among the assets. It is currently
approximately 20% in equity, 50% in public and corporate bonds, and 30% in hedge funds, private equity funds, life
insurance general accounts and other assets. If market values fluctuate exceeding certain levels, the investment ratio isadjusted to the target allocation ratio in order to control risks.
In selecting trustees or asset management companies, the Fund takes into account appropriate quantitative andqualitative evaluations. The Fund also presents its management policies to the trustees or asset management companies,
and periodically receives asset management reports.
The fair values of plan assets invested as of March 31, 2016 and 2015 are as follows:
Millions of yen
With quoted market
price in an active
marketMarch 31, 2016
With no quoted market
price in an active
market29,155

187

29,342

157,718
46,012
7,435
240,320

32,176
71,24541,31358,076
156
151,793
1,041,190
26,186
1,422,322

189,894
71,24541,31358,076
46,168
151,793
1,041,190
33,621
1,662,642

With quoted market
price in an active
marketMarch 31, 2015
With no quoted market
price in an active
market27,963290

28,253

148,177
23,15929,407228,706

10,24965,48044,08558,412
138
146,504
1,128,294
21,043
1,474,495

158,426
65,48044,08558,412
23,297
146,504
1,128,294
50,4501,703,201

EquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

Total

Millions of yen

EquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

F-38

Total

Notes to Consolidated Financial Statements
As of March 31, 2016, investments in equity were allocated to approximately 30% in stocks listed in Japan and 70% instocks listed in foreign markets. As of March 31, 2015, investments in equity were approximately 40% in stocks listed
in Japan and 60% in stocks listed in foreign markets.
As of March 31, 2016, Japanese government bonds made up approximately 60% of the government bonds andmunicipal debt securities, the majority of which were Japanese national bonds. As of March 31, 2015, Japanese
government bonds made up approximately 50% of the government bonds and municipal debt securities, the majority ofwhich were Japanese national bonds. Foreign public bonds, as of March 31, 2016, took approximately 40%, themajority of which were foreign national bonds, and as of March 31, 2015, foreign public bonds took approximately
50%, the majority of which were foreign national bonds.
As of March 31, 2016 and 2015, investments in corporate bonds and other debt securities were allocated to nearly
100% in foreign corporate bonds and debt instruments.
Hedge funds invested in are primarily in relative value strategy funds, event driven funds, equity long or short funds,
and macroeconomic and Commodity Trading Advisor (CTA) funds.
Commingled funds represent pooled institutional investments. As of March 31, 2016, commingled funds were allocatedto 30% in listed stocks, 50% in government bonds, 5% in corporate bonds and other debt securities, 10% in cash andcash equivalents and 5% in other assets. As of March 31, 2015, they were allocated to 30% in listed stocks, 40% ingovernment bonds, 5% in corporate bonds and other debt securities, 10% in cash and cash equivalents and 15% in otherassets.
Funding by the Fund is conducted by taking into account various factors such as funded status, the limit of tax
deductions, and actuarial calculations. For the purpose of maintaining balanced finance into the future, the bylaws of
the Fund require recalculation of the contribution amounts at the end of fiscal year every five years. Basic assumptions(expected interest rates, mortality rates, withdrawal rate, etc.) are reviewed to recalculate the appropriate level ofcontribution.
The amount of contributions expected to be paid by the Company and its subsidiaries to the plan assets for the year
ending March 31, 2017 is ¥95,691 million.
The weighted average duration (expected average maturity) of defined benefit obligations as of March 31, 2016 and2015 were 13.1 years and 13.3 years, respectively.
Contributions made to defined contribution plans and expensed in profit or loss in the years ended March 31, 2016 and2015 were ¥29,243 million and ¥25,997 million, respectively.
(b) Employee Benefit Expenses
The aggregated amounts of employee benefit expenses including salary recognized in the consolidated statements ofprofit or loss for the years ended March 31, 2016 and 2015 were ¥2,604,950 million and ¥2,514,095 million,
respectively.

F-39

Notes to Consolidated Financial Statements(17) Equity(a) Common Stock
Number of shares
March 31, 2016
Total number of authorized shares

March 31, 2014
March 31, 2015
March 31, 2016

March 31, 2015

10,000,000,000

10,000,000,000

Issued shares outstanding(Number of shares)
4,833,463,387
4,833,463,387
4,833,463,387

Capital amount(Millions of yen)
458,790458,790458,790

Shares issued by the Company are non-par value common stock. The issued shares above include treasury stock. Thechanges in treasury stock for the years ended March 31, 2016 and 2015 are as follows:
Treasury stock(Number of shares)(Millions of yen)
3,146
4,407,424
421
515,108(25)(35,694)
3,542
4,886,838
295
402,996(31)(41,905)
3,806
5,247,929

March 31, 2014
Acquisition of treasury stock
Sales of treasury stock
March 31, 2015
Acquisition of treasury stock
Sales of treasury stock
March 31, 2016

The number of shares of the Company held by the Company’s associates as of March 31, 2016 and 2015 were 167,000
shares, respectively.
(b) Surplus(i) Capital Surplus
The Companies Act of Japan mandates that at least half of paid-in capital be appropriated as common stock and therest be appropriated as legal reserve within capital surplus.
The changes in capital surplus include the effect of changes in the Company’s ownership interest in its consolidated
subsidiaries. For the year ended March 31, 2016, the changes in capital surplus were due mainly to the additionalpurchase of Ansaldo STS S.p.A. by Hitachi Rail Italy Investments S.r.L. and for the year ended March 31, 2015,
the changes in capital surplus were due mainly to the purchase of Kokusai Electric Korea Co., Ltd. by Hitachi
Kokusai Electric Inc., for the purpose of converting the subsidiary into a wholly owned subsidiary.
(ii) Retained Earnings
The Companies Act of Japan requires that ten percent of retained earnings appropriated for dividends be retained
until the total amount of earned reserves included in capital reserve and retained earnings reaches a quarter of thenominal value of common stock. Earned reserves may be available for dividends by resolution at the shareholders’meeting.

F-40

Notes to Consolidated Financial Statements(18) Accumulated Other Comprehensive Income (AOCI) and Other Comprehensive Income (OCI)
Components of AOCI, net of related tax effects, presented in the consolidated statements of changes in equity, and changes
in each component for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen
2016

2015

Foreign currency translation adjustments
Balance at beginning of year
OCI, net of reclassification
Net transfer of non-controlling interests
Balance at end of year

253,474
ሺ135,099)
260
118,635

105,211147,258
1,005
253,474

Remeasurements of defined benefit plans
Balance at beginning of year
OCI
Net transfer of non-controlling interests
Reclassified into retained earnings

86,136
ሺ127,743)
(56)
(674)

59,737
26,447
48(96)

Balance at end of year

(42,337)

86,136

Net changes in financial assets measured at FVTOCIBalance at beginning of year
OCI
Net transfer of non-controlling interests
Reclassified into retained earnings
Balance at end of year

213,415
ሺ48,205)(2)(17,356)
147,852

194,994
55,921
1(37,501)
213,415

Net changes in cash flow hedges
Balance at beginning of year
OCI, net of reclassification
Net transfer of non-controlling interests
Balance at end of year

ሺ151,925)
11,335(17)
ሺ140,607)(42,395)(109,530)(151,925)

Total AOCI
Balance at beginning of year
OCI, net of reclassification
Net transfer of non-controlling interests
Reclassified into retained earnings
Balance at end of year

401,100
ሺ299,712)
185
ሺ18,030)
83,543

317,547
120,096
1,054(37,597)
401,100

F-41

Notes to Consolidated Financial Statements
The following shows a reconciliation of OCI, including non-controlling interests, to profit or loss items and deferred income
tax effect per components of OCI during the years ended March 31, 2016 and 2015.
Millions of yen
2016
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total(183,133)(156,615)(75,925)
36,535(30,369)(409,507)(433)
15,77125,602
2,543
5,999
49,482

ሺ183,566)
ሺ140,844)
ሺ50,323)
39,078
ሺ24,370)
ሺ360,025)

Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total(6,533)(7,918)(6,144)(20,595)

1,625
1,625

(6,533)(6,293)(6,144)(18,970)

OCI, net of reclassification adjustments:
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet in changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total(189,666)(156,615)(75,925)
28,617(36,513)(430,102)(433)
15,77125,602
4,168
5,999
51,107

ሺ190,099)
ሺ140,844)
ሺ50,323)
32,785
ሺ30,514)
ሺ378,995)

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Total

ሺ60,388)
ሺ16,259)
ሺ3,235)599
ሺ79,283)

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total

ሺ129,711)
ሺ124,585)
ሺ47,088)
32,186
ሺ30,514)
ሺ299,712)

F-42

Notes to Consolidated Financial Statements
Millions of yen
2015
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total

189,844
23,78480,124(18,540)(91,128)
184,084

3,255(22,167)
1,955
22,287
5,330

189,844
27,03957,957(16,585)(68,841)
189,414

Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total(1,225)134(130)(1,221)

(399)
(399)

(1,225)(265)(130)(1,620)

OCI, net of reclassification adjustments:
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total

188,619
23,78480,124(18,406)(91,258)
182,863

3,255(22,167)
1,556
22,287
4,931

188,619
27,03957,957(16,850)(68,971)
187,794

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Total

60,328
5,984
2,277
(891)
67,698

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments
Remeasurements of defined benefit plans
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total

128,291
21,05555,680(15,959)(68,971)
120,096

F-43

Notes to Consolidated Financial Statements(19) Dividends
Dividends paid on common stock for the years ended March 31, 2016 and 2015 are as follows:

Decision

Cash dividends(millions of yen) Appropriation fromCashdividends
per share(yen)

Record date

Effective date

The Board of Directors
on October 28, 2015

28,970Retained earnings

6.0

September 30, 2015

November 26, 2015

The Board of Directors
on May 14, 2015

28,971Retained earnings

6.0

March 31, 2015

June 1, 2015

The Board of Directors
on October 29, 2014

28,973Retained earnings

6.0

September 30, 2014

November 26, 2014

The Board of Directors
on May 12, 2014

26,559Retained earnings

5.5

March 31, 2014

June 2, 2014

The dividend on common stock whose record date falls in the year ended March 31, 2016 and the effective date falls in thenext fiscal year is as follows:

Decision
The Board of Directors
on May 13, 2016

Cash dividends(millions of yen) Appropriation from28,969Retained earnings

F-44

Cash
dividends
per share(yen)

Record date

6.0

March 31, 2016

Effective date
May 30, 2016

Notes to Consolidated Financial Statements(20) Other Income and Expenses
The main components of other income and expenses for the years ended March 31, 2016 and 2015 are as follows:

2016(4,475)(44,781)
55,235(36,801)(22,327)

Net loss on sales and disposals of fixed assets
Impairment losses
Net gain (loss) on business reorganization and others
Restructuring charges
Expenses related to competition law and others

Millions of yen
2015(16,820)(42,109)(55,016)(26,680)(25,897)

Impairment losses are mainly recognized on property, plant and equipment, investment properties and intangible assets. Net
gain (loss) on business reorganization and others include gains and losses related to obtaining and losing control of investees
and gains and losses related to obtaining and losing significant influence over investees. Expenses related to competition law
and others include losses related to paying a fine in relation to competition law violations and settlements with customers.

(21) Financial Income and Expenses
Main components of financial income and expenses for the years ended March 31, 2016 and 2015 are as follows:

2016
Dividends received
Exchange loss

7,386
(26,579)

Millions of yen
2015
7,727
(2,604)

Dividends received for the years ended March 31, 2016 and 2015 are from FVTOCI financial assets.

F-45

Notes to Consolidated Financial Statements(22) Discontinued Operations
In the Social Infrastructure & Industrial Systems, the Company classified the part of thermal power generation systembusiness which was not transferred to Mitsubishi Hitachi Power Systems, Ltd. for business integration in the thermal power
generation systems business with Mitsubishi Heavy Industries, Ltd. but was operated by the Company and certain
subsidiaries as discontinued operations in the consolidated statements of profit or loss since the projects were completed in
the previous fiscal year.
Profit or loss and cash flows from the discontinued operations for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen
2015

2016
Profit or loss from discontinued operations
Revenues
Cost of sales and expenses
Loss from discontinued operations, before taxes
Income taxes

9,002(66,477)(57,475)
394(57,081)

Loss from discontinued operations

Millions of yen
2015

2016
Cash flows from discontinued operations
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities(9,221)
16
9,611

F-46

29,460(83,569)(54,109)608(53,501)(25,016)
1,565
24,614

Notes to Consolidated Financial Statements(23) Earnings Per Share (EPS) Information
The computations of net income attributable to Hitachi, Ltd. stockholders used to derive basic and diluted EPS are as
follows:
Number of shares
2015

2016
Weighted average number of shares on which basic
EPS is calculated
Effect of dilutive securities
Number of shares on which diluted EPS is
calculated

4,828,366,279-

4,828,815,878-

4,828,366,279

4,828,815,878
Millions of yen
2015

2016
Net income from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Other
DilutedNet loss from discontinued operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Other
Diluted
Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Other
Diluted229,236

270,983(185)
229,051(191)
270,792(57,081)(53,501)(57,081)(53,501)

172,155

217,482(185)
171,970(191)
217,291
Yen

2016

2015

EPS from continuing operations, attributable
to Hitachi, Ltd. stockholders
Basic
DilutedEPS from discontinued operations, attributable
to Hitachi, Ltd. stockholders
Basic
Diluted

47.48
47.44

56.12
56.08

(11.82)(11.82)(11.08)(11.08)

EPS attributable to Hitachi, Ltd. stockholders
Basic
Diluted

35.65
35.62

45.04
45.00

F-47

Notes to Consolidated Financial Statements(24) Supplementary Cash Flow Information
Non-cash investing and financing activities for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen
2015

2016
Finance lease assets acquired and obligations incurred

5,890

F-48

6,502

Notes to Consolidated Financial Statements(25) Financial Instruments and Related Disclosures(a) Capital Management
The Company manages its capital under the policy of maintaining appropriate level of assets, liabilities and capital for
current and future business operations, as well as optimizing the efficiency of capital utilization throughout the business
operations.
The Company uses the total Hitachi, Ltd. stockholders’ equity ratio as an important indicator in capital management.
The target is set in the mid-term management plan and is regularly monitored. The total Hitachi, Ltd. stockholders’equity ratio as of March 31, 2016 and 2015 were 21.8% and 23.7%, respectively.
The Company is not subject to any capital requirements except for the general rules such as the Japanese Company
Law.
(b) Financial Risks
The Company is engaged in business activities world-wide, and constantly exposed to various risks such as market
risks (mainly currency exchange risk and interest rate risk), credit risk and liquidity risk. The Company implements risk
management policies to avoid or mitigate these financial risks.
(i)Currency Exchange Risk
The Company and its subsidiaries hold assets and liabilities exposed to currency exchange risk. In order to hedge
this risk, the management uses forward exchange contracts or cross currency swaps.
For trade receivables and payables denominated in foreign currencies, the Company and its subsidiaries measure
the net future cash flows per currency on a monthly basis, and enter into forward exchange contracts using a
constant ratio with the purpose of fixing the future cash flows arising from receivables and payables andforecasted transactions denominated in foreign currencies. The terms of forward exchange contracts are largely
within one year. If necessary, the Company and its subsidiaries establish a risk control policy and a risk
management approach specific to each transaction by reviewing the business characteristics, the structure ofincome and expenditure, and conditions of the contract. The Company and its subsidiaries hedge the risk
exposure arising from specific transactions based on the risk control policy and the risk management approach.
To fix cash flows from long-term debt denominated in foreign currencies, the Company and its subsidiaries enter
into cross currency swap agreements with the same maturities as the underlying debt. The hedging relationshipbetween the forward exchange contracts or cross currency swaps and the underling hedged items is highly
effective in offsetting the impact from changes in foreign currency exchange rates.
The sensitivity analysis for currency exchange rates shown below indicates the impact on income fromcontinuing operations, before income taxes, in the Company’s consolidated statements of profit or loss, if theJapanese yen depreciated by 1% on the foreign-currency denominated financial instruments held by the Company
and its subsidiaries as of March 31, 2016 and 2015, while all other variables are held constant.

Impact on income from continuing
operations, before income taxes

Currency
US Dollar
Euro
British Pound

F-49

2016
544
426
698

Millions of yen
2015
1,303
416
11

Notes to Consolidated Financial Statements(ii)Interest Rate Risk
The Company and its subsidiaries are exposed to interest rate risk related principally to long-term debt
obligations. In order to minimize this risk, the Company and its subsidiaries enter into interest rate swap
agreements to control fluctuation risk of cash flows. The interest rate swaps entered into are receive-variable,
pay-fixed interest rate swaps. Under the interest rate swaps, the Company and its subsidiaries receive variableinterest rate payments on long-term debt associated with medium-term notes (MTN) and make fixed interest rate
payments, thereby creating fixed interest rate long-term debt.
Certain financing subsidiaries raise funds by issuing long-term debt with a fixed interest rate and lending it atvariable interest rates, creating interest rate risk. In order to minimize this risk, interest rate swaps are used toconvert, in effect, the fixed rate to a variable rate to manage fluctuations in fair value resulting from interest raterisk. Under the interest rate swaps, certain financing subsidiaries receive fixed interest rate payments associatedwith long-term debt, including MTN, and make variable interest rate payments, thereby creating variable-ratelong-term debt. The hedging relationship between the interest rate swaps and the underlying hedged items ishighly effective in offsetting the impact from changes in cash flows and fair value resulting from interest rate risk.
The sensitivity analysis for interest rate shown below indicates the impact on income from continuing operations,
before income taxes, in the consolidated statements of profit or loss, if interest rates increased by 1% on thefinancial instruments (floating-interest financial assets and liabilities measured at amortized cost, FVTPL
financial assets and liabilities and derivatives) held by the Company and its subsidiaries as of March 31, 2016 and2015, while all other variables are held constant.
Millions of yen
2015

2016
Impact on income from continuing
operations, before income taxes(8,322)(5,510)(iii) Credit Risk
Trade receivables, lease receivables and other receivables resulting from operating activities of the Company andits subsidiaries are exposed to credit risk of the customers. Investments in debt securities held for managing cash
surplus and equity instruments held for strategic purposes are exposed to credit risk of the issuers. Derivativetransactions entered into in order to lower market risks are exposed to credit risk of the counter-party financial
institutions.
For credit risk of customers, the Company conducts periodic credit checks as appropriate for the products soldand the customers’ financial conditions and credit ratings. A credit limit is set according to the credit risk. For
cash surplus, investment is restricted to low risk debt securities, and derivative transactions are entered into withfinancial institutions with high credit rating only.
No significant concentration of credit risk is present in a particular region or a customer, as the Company and its
subsidiaries are engaged in diverse industries worldwide.
The maximum exposure to the credit risk equals the financial assets’ carrying amount after impairment in the
consolidated statements of financial position, if collateral held is not included. The maximum exposure to thecredit risk from guarantee obligations is disclosed in note 29.
The Company considers that trade receivables, lease receivables and other receivables neither past due nor
impaired as of the end of each fiscal year are all collectible.

F-50

Notes to Consolidated Financial Statements
The following table presents the aging of trade receivables, lease receivables and other receivables past due but
not impaired as of March 31, 2016 and 2015.

March 31, 2016
63,001
42,94636,73831,092
173,777

Past due within 30 days
Past due between 31 and 90 days
Past due between 91 days and 1 year
Past due over 1 year
Total

Millions of yen
March 31, 2015
52,88528,26118,0195,750
104,915

When trade receivables, lease receivables and other receivables are impaired, the Company reduces the receivablebalance through the use of an allowance account, instead of directly reducing the carrying amount. The changes
in the balance of allowance for doubtful receivables are as follows:
Millions of yen
Trade receivables

Lease receivables

Other financial
assets measured atamortized cost
1,977

At March 31, 2014
31,196
11,930
Impairment loss
provision
8,742
2,300
492
Amounts written off(6,269 )(686 )(538 )
Other
1,544(404 )
325
At March 31, 2015
35,213
13,1402,256
Impairment loss
provision or reversals
12,746690(293 )
Amounts written off(7,503 )(5,124 )
(74 )
Other
513
(8 )
(307 )At March 31, 2016
40,9698,698
1,582
Other includes the impact from business acquisitions and divestitures and currency translation effect.

Total
45,103
11,534(7,493 )1,465
50,60913,143(12,701 )198
51,249As of March 31, 2016 and 2015, the total balances of trade receivables, lease receivables and other receivables
individually determined to be impaired were ¥95,932 million and ¥93,590 million, respectively, and theallowance for doubtful receivables corresponding to such receivables was recorded in the amounts of ¥33,565
million and ¥34,674 million, respectively.

F-51

Notes to Consolidated Financial Statements(iv) Liquidity Risk
Trade payables and financial liabilities, such as long-term debts, held by the Company and its subsidiaries are
exposed to liquidity risk. With respect to this risk, the Company and its subsidiaries try to optimize capitalefficiency through efficient management of working capital, and maintain cash control through a centralized cash
management system. They are also able to raise funds, as necessary, from capital markets through the issuance ofdebt and equity securities, and from commercial banks through borrowings and commitment lines. The total
unused commitment lines as of March 31, 2016 are disclosed in note 29.
Hitachi Capital Corporation and its subsidiaries provide loan guarantees for customers. In case of a default, they
will be held liable for the loan. The maximum exposure of these guarantees is the balance of the loan guarantees.
The balance of loan guarantees as of March 31, 2016 is disclosed in note 29.
The following tables present the maturities of non-derivative financial liabilities. Trade payables are not includedin the tables since the carrying amounts agree with the contractual cash flows and they all mature in less than one
year.
Millions of yen
Carrying
amountShort-term debt
Long-term debt
Lease payables
Bonds
Long-term debt

Contractual
cash flows

March 31, 2016
Within 1 year

871,417873,553

873,553

After 1 year
but not morethan 5 years-

44,600742,941
1,945,497

47,383765,680
1,988,640

12,792
148,726
519,81031,039425,914
1,216,069

More than 5
years

3,552
191,040
252,761-

Millions of yen
Carrying
amountShort-term debt
Long-term debt
Lease payables
Bonds
Long-term debt

Contractual
cash flows

March 31, 2015
Within 1 year

977,701

980,088980,088

After 1 year
but not morethan 5 years-

50,311
797,510
1,731,834

54,646
838,022
1,768,225

12,073
175,742
316,889

35,040449,691
1,135,302

More than 5
years

7,533
212,589
316,034-

The weighted average interest rate for short-term debt is 0.9%, and the weighted average interest rate for longterm debt is 1.0% with maturities ranging from 2016 to 2030.

F-52

Notes to Consolidated Financial Statements
The details on each bond issued are provided below. The subsidiary redeemed the entire outstanding unsecured
convertible debenture, by early redemption, at March 31, 2016.

IssuerName of bond

The
CompanyThe
CompanyThe
CompanyThe
Company

Unsecureddebenture #14
Unsecureddebenture #15
Unsecureddebenture #16
Unsecureddebenture #17

Subsidiaries
Subsidiary
Total

Unsecureddebentures
Unsecuredconvertible
debenture

IssuedMarch 31,2016

March 31,2015

Security

Millions of yen
Interest
Mature
rates
in
(%)

2005

-

50,000Unsecured

1.6

2015

2013

10,00010,000Unsecured

0.3

2018

2013

30,00030,000Unsecured

0.8

2023

2013
2006
2016

20,00020,000Unsecured

682,941

683,020

Unsecured

1.4
0.1
3.0

2028
2016
2026

742,941

4,490
797,510

Unsecured

-

2019

2007

The following table shows the maturities of the main types of derivatives, expressed in gross amounts, even fornet settlement derivatives.
Millions of yen
Within 1 year
Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

In
Out
In
Out
In
Out
In
Out

10,703
7,630
9,123
4,820
6
425
169
47

March 31, 2016
After 1 year
More than 5
but not more
years
than 5 years
8,490
53,068
8,889
63
8,014
37
4,471
4,034
6,061
-

Total
19,19360,69818,075
12,834
43
8,930
6,230
47
Millions of yen

Within 1 year
Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

In
Out
In
Out
In
Out
In
Out

5,357
4,726
2,283
12,296
164
286
23
15

F-53

March 31, 2015
After 1 year
More than 5
but not more
years
than 5 years
325
296
64,249
713
6,724
163
17,424
61
2,607
2,044
-

Total
5,978
69,6889,170
29,720
225
4,937
23
15

Notes to Consolidated Financial Statements(c) Fair Value of Financial Instruments(i) Fair Value Measurements
The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Short-term loans receivable, Short-term debt, Other payables and Trade
payablesThe carrying amount approximates the fair value because of the short maturity of these instruments.
Trade receivables
Fair value is measured by the present value of future cash flows discounted by risk-free rates after considering
early settlements, cancellation and the balance of doubtful accounts, for each type of receivable, class ofreceivable based on collection records and term of collection.
Lease receivables
Fair value is based on the present value of lease payments receivable based on years to maturity, using discountrates that reflect the time to maturity and credit risk.
Investments in securities and Other financial assets
Investment securities with quoted market prices are estimated using the quoted share prices. In the absence of anactive market for investment securities, quoted prices for similar investment securities, quoted prices associatedwith transactions that are not distressed for identical or similar investment securities or other relevant information
including market interest rate curves, referenced credit spreads or default rates, are used to determine fair value. If
significant inputs of fair value measurement are unobservable, the Company uses price information provided byfinancial institutions to evaluate such investments. The information provided is corroborated by the income
approach using its own valuation model, or the market approach using comparisons with prices of similar
securities.
The fair value of long-term loans receivable is estimated based on the present value of future cash flows using theinterest rate applicable to an additional loan of the same type.
Derivative assets are measured at fair value based on quoted prices associated with transactions that are notdistressed, prices in inactive markets, or based on models using interest rate curves and forward and spot prices
for currencies and commodities. If significant inputs are unobservable, the Company mainly uses the income
approach or the market approach to corroborate relevant information provided by financial institutions and otheravailable information.
Fair values of subordinated interests and beneficiary interests in trust that are retained in transactions oftransferring financial assets are estimated by discounting future cash flows based on economic assumptions
including expected rate of credit loss and discount rate since significant inputs for estimation of the fair value areunobservable.
Long-term debt
The fair value of long-term debt is estimated based on quoted market prices or the present value of future cash
flows using the market interest rates applicable to the same contractual terms.
Other financial liabilities
Derivative liabilities are measured at fair value based on quoted prices associated with transactions that are notdistressed, prices in inactive markets, or based on models using interest rate curves and forward and spot prices
for currencies and commodities. If significant inputs are unobservable, the Company uses mainly the income
approach or the market approach to corroborate relevant information provided by financial institutions and otheravailable information.
Contract guarantee deposits are financial liabilities received from some customers and other parties as a credit
enhancement to trade and lease receivables, and normally returned after the underlying assets are fully collected.
The fair value of contract guarantee deposits is measured by discounting the sum of the principals over the time

F-54

Notes to Consolidated Financial Statements
to the contractual return dates, using the risk-free discount rate.
(ii)

Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost are as
follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 ofthe fair value hierarchy.
Millions of yen
March 31, 2016
Carrying
amounts

March 31, 2015

Estimated
fair values

Carrying
amounts

Estimated
fair values

AssetsTrade receivables [1]3,676,298

3,691,667

3,556,315

3,574,933

Lease receivables

1,066,243

1,104,607

1,017,973

1,050,232

75,32675,31985,72585,75890,944

91,77385,48187,379Investments in securities and otherfinancial assets [2]Debt securities
Long-term loans receivable
Liabilities
Long-term debt [3]Lease obligations

44,60044,69650,31150,035

Bonds

742,941755,325

797,510805,668

1,945,497

1,970,687

1,731,834

1,747,654

31,987

31,52836,88235,567Long-term debt
Other financial liabilities
Contract guarantee deposits[1] Trade receivables are included in Trade receivables and Investments in securities and other financial assets inthe consolidated statements of financial position.
[2] Investments in securities and other financial assets are included in Other current assets and Investments insecurities and other financial assets in the consolidated statements of financial position.
[3] Long-term debt is included in Current portion of long-term debt and Long-term debt in the consolidated
statements of financial position.
(iii) Financial Instruments Measured at Fair Value in Consolidated Statements of Financial Position
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into
three levels of the fair value hierarchy based on the measurement inputs’ observability as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2: Valuations measured by direct or indirect observable inputs other than Level 1
Level 3: Valuations measured by significant unobservable inputs
When several inputs are used for a fair value measurement, the level is determined based on the input that issignificant with the lowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

F-55

Notes to Consolidated Financial Statements
The following tables present the assets and liabilities that are measured at fair value on a recurring basis.
March 31, 2016
Class of financial instruments
FVTPL financial assets:
Investments in securities and otherfinancial assets[1]Equity securities

Millions of yen
Level 1

Level 2

Level 3

Total

16

-

1,781

1,797

12,051

7,427

38,02557,503-37,4896,061

43,550Investments in securities and otherfinancial assets[1]Equity securities

280,978220

115,536

396,734

Total financial assets at fair value

293,045

45,136

161,403499,584-

82,617-

82,617-

82,617-

82,617

Debt securities
Derivatives
FVTOCI financial assets:

FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value
March 31, 2015
Class of financial instruments
FVTPL financial assets:
Investments in securities and otherfinancial assets[1]Equity securities

Millions of yen
Level 1

Level 2

Total

-

1,799

12,665

7,807

57,29977,771-

15,478-15,478Investments in securities and otherfinancial assets[1]Equity securities

392,977

1,413

110,833

505,223

Total financial assets at fair value408,266

24,698

169,931602,895-

104,730-

104,730-

104,730-

104,730

Debt securities
Derivatives

2,624

Level 3

4,423

FVTOCI financial assets:

FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value[1] Investments in securities and other financial assets are included in Other current assets and Investments insecurities and other financial assets in the consolidated statements of financial position.

F-56

Notes to Consolidated Financial Statements
The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended
March 31, 2016 and 2015.
Millions of yen

2016
Level 3 financial assets
Balance at beginning of year
Loss in profit or loss [1]Gain in OCI [2]Equitysecurities
112,632(310)

Debt
securities
57,299
(442)

3,196

Derivatives

Total
-

169,931
(752)

-

-

3,196

Purchases

2,499

2,721

6,061

11,281

Sales and redemption(2,692)(21,769)-(24,461)

Acquisitions and divestitures

7,306

364

-

7,670

Transfer from Level 3 [3](4,874)--(4,874)

(440)

(148)

-

(588)

117,317

38,025

6,061

161,403

(311)

(410)

-

(721)

Other
Balance at end of year
Unrealized loss relating to financial assets
still held at end of year [4]Millions of yen

2015
Level 3 financial assets
Balance at beginning of year
Gain (loss) in profit or loss [1]Equitysecurities
108,125
303

Debt
securities
82,006(1,202)Derivatives

Total
-

190,131(899)

Gain in OCI [2]

2,544

-

-

2,544

Purchases

2,470

2,014

-

4,484

Sales and redemption(1,281)(25,947)-(27,228)

Acquisitions and divestitures

215

(37)

-

178

Other

256

465

-

721

112,632

57,299-169,931

3,501

13

-

3,514

Balance at end of year
Unrealized gain relating to financial assets
still held at end of year [4][1] Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial
expenses in the consolidated statements of profit or loss.
[2] Gain in OCI related to FVTOCI financial assets is included in Net changes in financial assets measured at fairvalue through OCI in the consolidated statements of comprehensive income.
[3] Transfer from Level 3 for the year ended March 31, 2016 is mainly the result of an investee being listed on thestock market.
[4] Unrealized gain (loss) related to FVTPL financial assets still held at the end of year are included in Financial
income and Financial expenses in the consolidated statements of profit or loss.

F-57

Notes to Consolidated Financial Statements
Valuation techniques and unobservable inputs used for measuring financial instruments categorized as Level 3 ona recurring basis as of March 31, 2016 and 2015 are as follows:
March 31, 2016
Level 3 financial instruments
Subordinated interests and beneficiary interests
in trusts that are retained relating tosecuritization of financial assets

March 31, 2015
Level 3 financial instruments
Subordinated interests and beneficiary interests
in trusts that are retained relating tosecuritization of financial assets

Fair value
25,389Fair value
43,391

Valuationtechnique
DCF

Valuationtechnique
DCF

Unobservable inputs

Millions of yen
Range

Discount rate

0.05-1.25%

Expected rate of credit loss ofthe entire transferred financial
assets

0.15-0.36%

Unobservable inputs

Millions of yen
Range

Discount rate

0.14-0.88%

Expected rate of credit loss ofthe entire transferred financial
assets

0.15-0.36%

The impact on the fair value is not material if unobservable inputs are changed to reasonably possible alternative
assumptions in estimating the fair value of subordinated interests and beneficiary interests in trusts that are
retained relating to securitization of financial assets.
Fair values are measured by the Finance Department of the Company in accordance with the Company’s policies
and procedures. Valuation models are determined so that they reflect each financial instrument’s nature,
characteristics and risks most appropriately. The Finance Department continually examines changes in important
inputs that could affect the fair value. In case the fair value of a financial instrument was significantly impaired,
the Finance Department administrators reviews and approves the impairment loss.
Equity instruments held with the objective of maintaining and strengthening business relations with the issuers
are classified as FVTOCI financial assets. The following is a list of principal equity instruments designated as
FVTOCI and their fair values.
Millions of yen
March 31, 2016
Principal FVTOCI financial assets
Fair value
Renesas Electronics Corporation
92,473
Western Digital Corporation
33,268JECC Corporation
19,011
Central Japan Railway Company
17,914
World Trade Center Building, Inc.
13,014
East Japan Railway Company
7,911
Yungtay Engineering Co., Ltd.
7,663
Nippon Steel Kowa Real Estate Co., Ltd.
7,511
Honda Motor Co., Ltd.
6,272
Nitto Denko Corporation
6,257

F-58

Notes to Consolidated Financial Statements
Millions of yen
March 31, 2015
Principal FVTOCI financial assets
Renesas Electronics Corporation
Western Digital Corporation
Central Japan Railway Company
JECC Corporation
Yungtay Engineering Co., Ltd.
World Trade Center Building, Inc.
Nitto Denko Corporation
Honda Motor Co., Ltd.
East Japan Railway Company
Nippon Steel Kowa Real Estate Co., Ltd.

Fair value
114,059
68,354
19,57019,011
13,336
11,443
8,136
7,923
7,851
5,900

See note 21 for dividends received from investment securities classified as FVTOCI financial assets.
Accumulated gains and losses on valuation of FVTOCI financial assets are reclassified into retained earnings
when derecognized during the fiscal year. The net gains reclassified, net of taxes, for the years ended March 31,
2016 and 2015 were ¥17,356 million and ¥37,501 million, respectively. These financial assets were derecognized
upon disposal of shares after reviewing particular business relations, or reclassified as investments in subsidiaries
or investments accounted for using the equity method.
The information on FVTOCI financial assets that were derecognized for the years ended March 31, 2016 and2015 is as follows:

Fair value at the time of derecognition
Accumulated gains at the time of derecognition

2016
45,57927,621Millions of yen
2015
84,83057,321(d) Derivatives and Hedging Activities(i) Fair Value Hedge
Changes in the fair value of recognized assets and liabilities, and of derivatives designated as a fair value hedgeof these assets and liabilities are recognized in profit or loss for the period in which the changes occur.
Derivatives designated as a fair value hedge include forward exchange contracts associated with operatingtransactions, cross currency swaps agreements and interest rate swaps associated with financing transactions.
(ii)

Cash Flow Hedge
Foreign Currency Risk
Changes in the fair value of forward exchange contracts designated as an effective cash flow hedge of forecasted
transactions are recognized in OCI. AOCI is subsequently reclassified into profit or loss when the hedged items
affect profit for the period.

Interest Rate Risk
Changes in the fair value of interest rate swaps designated as a hedge of the variability of cash flows associatedwith long-term debt are recognized in OCI. AOCI is subsequently reclassified to interest charges over the period
in which the interest on the debt affects profit or loss.
As of March 31, 2016, the period in which the cash flows from the hedged items are expected to occur and inwhich they are expected to affect profit or loss is between April 2016 and March 2028.

F-59

Notes to Consolidated Financial Statements
The fair values of the main types of derivatives designated as hedging instruments are as follows:
Millions of yen
March 31, 2015
Asset
Liability

March 31, 2016
Asset
Liability
Fair value hedge
Forward exchange contracts
Cross currency swaps
Interest rate swaps
Total
Cash flow hedge
Forward exchange contracts
Cross currency swaps
Interest rate swaps
Total

6,407
3,031
9,438

1,462
5,251
861
7,574

2,899
2,562
171
5,632

2,803
6,300
492
9,595

11,825
14,86943
26,73746,423
7,049
8,068
61,540

2,115
6,594
54
8,763

59,36823,347
4,356
87,071

The fair values of derivative assets and liabilities for which hedge accounting was not applied as of March 31,
2016 and 2015 were ¥7,366 million and ¥978 million for derivative assets, and ¥13,406 million and ¥7,679
million for derivative liabilities, respectively.
The contract amounts and notional amounts of the main types of derivatives are as follows:

March 31, 2016
Forward exchange contracts
To sell foreign currencies
To buy foreign currencies
Cross currency swaps
To sell foreign currencies
To buy foreign currencies
Interest rate swaps
Option contracts

F-60

Millions of yen
March 31, 2015

752,975
304,571458,334
154,300

16,709345,396696,854-

41,013379,398
644,5295,768

Notes to Consolidated Financial Statements
The following table, “Effective portion of derivatives designated as hedging instruments and related hedged items”
shows the effects of derivative instruments for fair value hedges in the consolidated statement of profit or loss forthe year ended March 31, 2016.
Effective Portion of Derivatives Designated as Hedging Instruments and Related Hedged Items
Hedging instruments

Derivatives
Forwardexchange contracts
Cross
currency swaps
Total

Millions of yen Hedged items
Millions of yen
Recognized instatement of financial
Recognized in
AmountRecognized in
Amountposition
profit or loss
recognizedprofit or loss
recognized
Financial expenses
4,887
Trade receivables and Financial expenses(5,505)
trade payables
Financial expenses
454
Long-term debt
Financial expenses
(447)
5,341

Total

(5,952)

The amounts recognized in the consolidated statement of profit or loss and consolidated statements ofcomprehensive income for the year ended March 31, 2016, related to cash flow hedges are detailed in thefollowing tables:“Gain (loss) recognized in OCI, Effective portion of derivatives designated as hedging instruments,”“Gain (loss) reclassified from OCI into profit or loss, Effective portion of derivatives designated as hedging
instruments,” and“Gain (loss) on derivatives designated as cash flow hedging instruments, ineffective portion.”
Gain (Loss) Recognized in OCI, Effective Portion of Derivatives Designated as Hedging Instruments
Derivatives

Millions of yen

Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

19,764
16,200
(868)
193

Total

35,289Gain (Loss) Reclassified from OCI into Profit or Loss, Effective Portion of Derivatives Designated as
Hedging Instruments
Derivatives
Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

Recognized in profit or loss
Revenues and Financial expenses
Financial expenses
Cost of sales and Interest charges
Financial expenses

Total

Millions of yen
2,609
8,373
(2,855 )(193 )
7,934

Gain (Loss) on Derivatives Designated as Cash Flow Hedging Instruments, Ineffective Portion
Derivatives
Forward exchange contracts
Interest rate swaps

Recognized in profit or loss
Financial expenses
Cost of sales and Interest charges

Total

Millions of yen(4,460 )18(4,442 )F-61

Notes to Consolidated Financial Statements
The following table, “Effective portion of derivatives designated as hedging instruments and related hedged items”
shows the effects of derivative instruments for fair value hedges in the consolidated statement of profit or loss forthe year ended March 31, 2015.
Effective Portion of Derivatives Designated as Hedging Instruments and Related Hedged Items
Hedging instruments

Derivatives
Forwardexchange contracts
Cross
currency swaps
Total

Millions of yen Hedged items
Millions of yen
Recognized instatement of financial
Recognized in
AmountRecognized in
Amountposition
profit or loss
recognizedprofit or loss
recognized
Financial expenses(7,928) Trade receivables and Financial expenses
8,076
trade payables
Financial expenses
2,047
Long-term debt
Financial expenses(2,009)(5,881)

Total

6,067

The amounts recognized in the consolidated statement of profit or loss and consolidated statements ofcomprehensive income for the year ended March 31, 2015, related to cash flow hedges are detailed in thefollowing tables:“Gain (loss) recognized in OCI, Effective portion of derivatives designated as hedging instruments,”“Gain (loss) reclassified from OCI into profit or loss, Effective portion of derivatives designated as hedging
instruments,” and“Gain (loss) on derivatives designated as cash flow hedging instruments, ineffective portion.”
Gain (Loss) Recognized in OCI, Effective Portion of Derivatives Designated as Hedging Instruments
Derivatives

Millions of yen

Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts(16,591)(5,904)(1,784)
(482)

Total

(24,761)

Gain (Loss) Reclassified from OCI into Profit or Loss, Effective Portion of Derivatives Designated as
Hedging Instruments
Derivatives
Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

Recognized in profit or loss
Financial expenses
Financial expenses
Cost of sales and Interest charges
Financial expenses

Total

Millions of yen(3,639 )4,385(1,947 )482(719 )

Gain (Loss) on Derivatives Designated as Cash Flow Hedging Instruments, Ineffective Portion
Derivatives
Forward exchange contracts
Cross currency swaps
Interest rate swaps

Recognized in profit or loss
Financial expenses
Financial expenses
Cost of sales and Interest charges

Total

Millions of yen(8,121 )250(10 )(7,881 )F-62

Notes to Consolidated Financial Statements(e) Securitization of Financial Assets
For the purpose of providing diversified and stable financing, the Company and certain subsidiaries securitize certain
financial assets, such as lease and trade receivables, through structured entities formed by third parties. These
structured entities procure funds by issuing commercial paper and other borrowings. These securitization transactions
are similar to those used by many financial institutions.
Basically, investors in these structured entities only have recourse to the assets owned by the entity, and not to otherassets held by the Company and its subsidiaries. The Company and certain subsidiaries do not provide non-contractual
support to structured entities and do not have implicit support arrangements with any of them. The majority of theirinvolvement with these structured entities related to securitization activities are financing of an entity, providing limited
credit enhancements, servicing the assets and receiving fees for services provided.
(i)Consolidated Structured Entities for Securitization Purposes
The assets and liabilities held by the consolidated structured entities for securitization purposes as of March 31,
2016 and 2015 are as follows:

Cash and cash equivalents
Trade receivables
Lease receivables
Total current assets
Trade receivables
Lease receivables
Total non-current assets
Current portion of long-term debt
Total current liabilities
Long-term debt
Total non-current liabilities

March 31, 2016
16,44816,453
56,11889,01993,522
109,110
202,632
71,674
71,674
165,350
165,350

Millions of yen
March 31, 2015
12,53013,53739,92965,996
103,753
84,403
188,156
53,60853,608151,564
151,564

Substantially, all of the assets held by the consolidated structured entities for securitization purposes can only be
used to settle obligations of these entities.
(ii)

Risks Associated with the Company’s Interests in Unconsolidated Structured Entities for Securitization
Purposes
The Company and certain subsidiaries use structured entities sponsored by financial institutions to securitize
certain financial assets, such as lease and trade receivables. These financial institutions operate those structured
entities as a part of their ordinary business. The amount of assets transferred by the Company and certain
subsidiaries is considerably small compared to the total assets of the structured entities sponsored by thesefinancial institutions that purchase a large amount of assets from entities other than the Company and certain
subsidiaries. The Company and certain subsidiaries have little relevance to the evaluation of exposures to therisks these structured entities hold.
With respect to securitization of certain assets, certain subsidiaries structure trusts upon investors’ requests andsell interests in the trusts to the investors and hold limited interests of these trusts.
In some cases, the Company and certain subsidiaries retain subordinated interests in the financial assets
transferred to structured entities, mainly to secure liquidity and provide limited credit enhancement, and/or
investors have recourse with a scope that is considerably limited. As of March 31, 2016 and 2015, the amounts ofthe maximum exposures to losses associated with the Company’s interests in the unconsolidated structured
entities for securitization were ¥67,757 million and ¥105,202 million, respectively, and these amounts areincluded in the balances of the subordinated interests and the obligations to purchase assets or the carrying
amounts of the transferred assets that are not derecognized in their entirety.

F-63

Notes to Consolidated Financial Statements(iii) Transfers of Financial Assets by Securitization
 Transfers of Financial Assets Derecognized in their Entirety
The Company and certain subsidiaries transferred lease and trade receivables to unconsolidated structured
entities and other entities. During the years ended March 31, 2016 and 2015, net losses from the transfers oflease and trade receivables that were derecognized in their entirety were ¥264 million and ¥371 million,
respectively.
The Company and certain subsidiaries retain servicing responsibilities for financial assets derecognized in their
entirety, but did not record a servicing asset or liability because the amounts of the cost to service thereceivables and the servicing income are not material.
As of March 31, 2016 and 2015, the maximum exposures to losses from continuing involvement with thefinancial assets derecognized in their entirety, which is the sum of subordinated interests and the obligations topurchase assets under limited conditions, are included in the maximum exposures to losses described in “Risks
associated with the Company’s interests in unconsolidated structured entities for securitization purposes.” Transfers of Financial Assets not Derecognized in their Entirety
The Company and certain subsidiaries do not derecognize financial assets when they retain substantially all
credit risks and economic value related to the transferred financial assets through holding subordinated interests.
As of March 31, 2016 and 2015, the carrying amounts of the financial assets that continue to be recognized intheir entirety and the related liabilities are as follows:

Trade receivables
Lease receivables
Total current assets
Lease receivables
Total non-current assets
Carrying amount of transferred financial assets
Short-term debt
Current portion of long-term debt
Total current liabilities
Long-term debt
Total non-current liabilities
Carrying amount of related liabilities

March 31, 2016
69,77622,335
92,111
35,10635,106
127,217
40,522
29,73370,25533,99233,992104,247

Millions of yen
March 31, 2015
96,896
24,468
121,364
58,174
58,174
179,538
109,046
26,117135,163
48,88948,889184,052

As of March 31, 2016 and 2015, the fair values of the financial assets whose transferee has a recourse right only
to the transferred financial assets and the fair values of the related liabilities and their net positions are
summarized as follows:

Fair value of financial assets
Cash and cash equivalents related to collection oftransferred financial assets
Fair value of related liabilities
Net position

March 31, 2016
127,523

Millions of yen
March 31, 2015
179,758

4,086
102,52229,087

27,244
180,742
26,260Substantially, all of the financial assets transferred to investors can only be used to settle the obligations of theinvestor.

F-64

Notes to Consolidated Financial Statements(26) Pledged Assets
As a general contractual term for long-term and short-term debt, banks may demand collateral and guarantees for present
and future obligations, and retain rights to offset the liabilities with bank deposits when repayment is overdue or any breachof contract occurs.
Per trustee agreements of secured bonds and particular secured or unsecured loan agreements, trustees or lenders generally
have the right to pre-approve profit distributions including dividend payments and new stock issues, as well as the right todemand additional collateral or mortgage.
The Company and its subsidiaries pledged a portion of their assets as collateral primarily for bank loans as follows:

March 31, 2016
4,870
5,137
7
846
1,970
7,178
25,72445,732

Trade receivables
Inventories
Other current assets
Investments in securities and other financial assets
Land
Buildings and structures
Machinery and other property, plant and equipment
Total

F-65

Millions of yen
March 31, 2015
10,168
14,849
1,628
877
2,167
6,124
30,60066,413

Notes to Consolidated Financial Statements(27) Principal Subsidiaries
The Company’s consolidated financial statements include the following subsidiaries listed below.

Reporting segment
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Information &Telecommunication Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems
Social Infrastructure &Industrial Systems

Hitachi Information & Telecommunication
Engineering, Ltd.
Hitachi-Omron Terminal Solutions, Corp.

Yokohama, Kanagawa

Ownership
percentage
of votingrights (%)
100.0

Shinagawa-ku, Tokyo

55.0

Hitachi Solutions, Ltd.

Shinagawa-ku, Tokyo

100.0

Hitachi Systems, Ltd.

Shinagawa-ku, Tokyo

100.0

Hitachi Computer Products (America), Inc.

100.0

Hitachi Financial Equipment System (Shen Zhen)
Co., Ltd.
Hitachi Information & Telecommunication
Systems Global Holding Corporation
Hitachi Building Systems Co., Ltd.

Oklahoma,
U.S.A.
Ardon,
FranceTexas,U.S.A.
California,
U.S.A.
Shenzhen,
China
California,
U.S.A.
Chiyoda-ku, Tokyo

Hitachi-GE Nuclear Energy, Ltd.

Hitachi, Ibaraki

80.0

Hitachi Industrial Equipment Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi Industry & Control Solutions, Ltd.

Hitachi, Ibaraki

100.0

Hitachi Plant Construction, Ltd.

Toshima-ku, Tokyo

100.0

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0

Hitachi Power Solutions Co., Ltd.

Hitachi, Ibaraki

100.0

Hitachi Elevator (China) Co., Ltd.

Guangzhou,
China
London,U.K.
Gloucester,
U.K.

70.0

Name of subsidiary

Hitachi Computer Products (Europe) S.A.S.
Hitachi Consulting Corporation
Hitachi Data Systems Corporation

Hitachi Rail Europe Ltd.
Horizon Nuclear Power Limited

F-66

Business location

100.0
100.0
100.0
100.0
100.0
100.0

100.0
100.0

Notes to Consolidated Financial Statements

Electronic Systems &Equipment
Electronic Systems &Equipment
Electronic Systems &Equipment
Electronic Systems &Equipment
Construction Machinery

Hitachi High-Technologies Corporation

Minato-ku, Tokyo

Ownership
percentage
of votingrights (%)
51.8

Hitachi Koki Co., Ltd.

Minato-ku, Tokyo

51.2

Hitachi Kokusai Electric Inc.

Chiyoda-ku, Tokyo

51.8

Hitachi Medical Corporation

Chiyoda-ku, Tokyo

100.0

Hitachi Construction Machinery Co., Ltd.

Bunkyo-ku, Tokyo

51.5

High Functional Materials &Components
High Functional Materials &Components
Automotive Systems

Hitachi Chemical Company, Ltd.

Chiyoda-ku, Tokyo

51.4

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.5

Clarion, Co., Ltd.

Saitama, Saitama

64.0

Automotive Systems

Hitachi Automotive Systems, Ltd.

Hitachinaka, Ibaraki

100.0

Automotive Systems

Hitachi Automotive Systems Americas, Inc.

100.0

Smart Life & Ecofriendly
Systems
Smart Life & Ecofriendly
Systems
Smart Life & Ecofriendly
Systems
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Others(Logistics and Other services)
Financial Services

Hitachi Appliances, Inc.

Kentucky,
U.S.A.
Minato-ku, Tokyo

Hitachi Consumer Marketing, Inc.

Minato-ku, Tokyo

100.0

Hitachi Consumer Products (Thailand), Ltd.

80.1

Hitachi-LG Data Storage, Inc.

Prachinburi,
ThailandMinato-ku, Tokyo

Hitachi Life, Ltd.

Hitachi, Ibaraki

100.0

Hitachi Transport System, Ltd.

Koto-ku, Tokyo

59.0

Hitachi Urban Investment, Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi America, Ltd.

New York,
U.S.A.
Singapore

100.0

Beijing,
China
Maidenhead,
U.K.
New Delhi,
India
Minato-ku, Tokyo

100.0

Reporting segment-

Name of subsidiary

Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.
Hitachi Capital Corporation
Other 1,013 companies

F-67

Business location

100.0

51.0

100.0

-

100.0
100.0
60.6
-

Notes to Consolidated Financial Statements(28) Related Party Transactions(a) Related Party Transactions
The Company’s and its subsidiaries’ receivable and payable balances with associates and joint ventures are as follows:

With associates
Trade receivables
Short-term loans receivable [1]Other receivables [1]Long-term loans receivable [2]Trade payables
Advances received

March 31, 2016
67,952
15,962
12,83566,45352,043
1,394

Millions of yen
March 31, 2015
80,244
14,541
2,090
12,19538,194
15,964

With joint ventures
Trade receivables
Other receivables [1]Trade payables

March 31, 2016
116,586
12,353
9,055

Millions of yen
March 31, 2015
69,612
17,424
10,226[1] Included in Other current assets in the consolidated statements of financial position.
[2] Included in Investments in securities and other financial assets in the consolidated statements of financial position.
Revenue and purchase transactions of the Company and its subsidiaries with associates and joint ventures are as
follows:

With associates
Revenues
Purchases

2016

With joint ventures
Revenues
Purchases

2016

211,957
86,219Millions of yen
2015
242,637
94,372

143,706
31,130Millions of yen
2015
87,842
33,791(b) Compensation for Directors and Executive Officers of the Company
Millions of yen
2015

2016
Monthly salaries, year-end allowances andperformance-linked compensations

2,323

F-68

2,468

Notes to Consolidated Financial Statements(29) Commitments and Contingencies(a) Loan Commitments(i) Loan Commitments to Associates and Others
The Company and Hitachi Capital Corporation provide loan commitments to associates and others. The outstandingbalance of loan commitments as of March 31, 2016 is as follows:

Total commitments available
Less amount utilized
Balance available

Millions of yen
March 31, 2016
110,230
75,00035,230Since some loan commitments require credit approval before execution, the amount of total commitments available
may not be necessarily utilized in full.
(ii) Commitments with Financial Institutions
The Company and certain subsidiaries have line of credit arrangements with banks in order to secure efficientfinancing for business operations. The total unused line of credit as of March 31, 2016 amounted to ¥553,073
million, primarily belonging to the Company. The Company has commitment line agreements with a number ofbanks and pays commitment fees as consideration. These commitment agreements generally provide a one year
term with renewal at the end of the term. The unused line of credit under these arrangements as of March 31, 2016
amounted to ¥200,000 million. The Company also maintains other commitment line agreements with several
financial institutions, with terms of 3 years and 2 months ending in July 2016. The unused line of credit under thesearrangements as of March 31, 2016 amounted to ¥200,000 million.
(b) Commitments for Acquisition of Assets
As of March 31, 2016, outstanding commitments made to purchase property, plant and equipment were ¥51,299
million.
(c) Guarantee Obligations
The Company and certain subsidiaries provide debt guarantees to their associates, joint ventures and third parties. As of
March 31, 2016, the balance of the guarantee obligations was ¥96,830 million. It consisted of guarantees to associatesof ¥13,382 million, to joint ventures of ¥64,868 million and to third parties of ¥18,580 million. The balance toassociates included a guarantee obligation of ¥3,299 million related to the partial collection of trade receivablestransferred due to the integration of the thermal power generation systems business.
Hitachi Capital Corporation and its subsidiaries provide guarantees to financial institutions for extending loans tocustomers making purchases with loans. As of March 31, 2016, the balance of loan guarantee obligations was ¥124,363
million. In providing these guarantees, they obtain collateral appropriate for the amount of the guarantees, and therefore,
the Company considers the risk of default to be low. The Company accrued ¥3,611 million as a liability for theseguarantees.
(d) Litigation
In June 2009, a subsidiary in Japan received a grand jury subpoena in connection with the investigation conducted by
the Antitrust Division of the U.S. Department of Justice and received requests for information from the European
Commission in respect of alleged antitrust violations relating to optical disk drives. In November 2011, the subsidiaryin Japan paid a fine in relation to the investigation from the Antitrust Division of the U.S. Department of Justice. In
July 2012, the subsidiary in Japan received a statement of objections from the European Commission in respect ofalleged antitrust violations. In October 2015, the European Commission announced the amount of the fine for thesubsidiary in Japan in respect of alleged antitrust violations. Two subsidiaries in Japan and Korea made provision for
estimated loss on a reasonable basis.
In July 2011, a subsidiary in the U.S.A. received a grand jury subpoena from the Antitrust Division of the U.S.
Department of Justice, the Company and a subsidiary in Europe received requests for information from the European
Commission, and a subsidiary in Canada received requests for information from the Canadian Competition Bureau, allin respect of alleged antitrust violations relating to automotive equipment. In November 2013, a subsidiary in Japan,

F-69Notes to Consolidated Financial Statements
which had been also primarily responsible for responding to the investigation from the Antitrust Division of the U.S.
Department of Justice, paid fines. In January 2016, the Company and the subsidiary in Japan which had been also
primarily responsible for responding to the investigation from European Commission reached a settlement with theEuropean Commission, and paid fines in April 2016.
In April 2014, a subsidiary in the U.S.A. received a grand jury subpoena in connection with the investigation
conducted by the Antitrust Division of the U.S. Department of Justice in respect of alleged antitrust violations relating
to automotive equipment. A subsidiary in Japan which had been also primarily responsible for responding to theinvestigation made provision for estimated loss on a reasonable basis.
In June 2014, a subsidiary in Japan was investigated by the Japan Fair Trade Commission in respect of alleged
antitrust violations relating to capacitors. In March 2016, the subsidiary received a notice that the investigation wasover from the Japan Fair Trade Commission. The subsidiary in Japan and subsidiaries in Europe, the U.S.A., andothers are being investigated by competition authorities in each country or region, all in respect of alleged antitrust
violations relating to capacitors. In April 2016, the subsidiary in Japan concluded an agreement in which thesubsidiary will pay fines. In November 2015, the subsidiaries in Japan received a statement of objections from theEuropean Commission in respect of alleged antitrust violations. The subsidiary in Japan made provision for estimatedloss on a reasonable basis.
In addition to the above, the Company, its subsidiaries and associates have cooperated with the competent authorities.
Depending upon the outcome of these matters, fines or surcharge payments, the amount of which is uncertain, may be
imposed on them. Also, in connection with pending and settled antitrust violations, civil disputes, including classaction lawsuits, involving the Company and some of these companies have arisen in a number of countries, includingin the U.S.A. and Canada. An amount, which was considered to be a reasonable estimate in respect of these claims,
was accrued for the potential losses in relation to certain of these civil disputes.
In August 2012, a subsidiary in Europe received a complaint filed by a customer in Europe seeking compensation forconsequential losses of EUR 1,058 million (¥135,182 million), additional costs and interest allegedly incurred by thedelay in the construction process of a power plant against, jointly and severally, the Company, the subsidiary inEurope, a consortium including the Company and the subsidiary in Europe, and two other companies. In addition, in
October 2013 and February 2016, the subsidiary in Europe received additional complains requesting compensation forconsequential losses of EUR 239 million (¥30,583 million) and EUR 105 million (¥13,362 million), respectively.
Although the Company, the subsidiary in Europe and the consortium will vigorously defend themselves against thislawsuit, there can be no assurance that they will not be held liable for any amounts claimed.
In December 2013, the Company, a subsidiary in Europe and a consortium consisting of the Company and thesubsidiary in Europe, jointly and severally received a request from a customer in Europe to refer a dispute toarbitration seeking compensation for EUR 606 million (¥77,487 million) including consequential losses allegedly
incurred by the delay in the construction process of a power plant. As of March 31, 2016, the amount of compensation
claimed by the customer was changed to EUR 637 million (¥81,367 million). In December 2015, these companies,
jointly and severally received a request for arbitration from the customer demanding EUR 161 million (¥20,601
million) in compensation for performance related deficiencies of a power plant. Although the Company, the subsidiaryin Europe, and the consortium consisting of the Company and the subsidiary in Europe, will vigorously defend
themselves against this claim, there can be no assurance that they will not be held liable for any amounts claimed.
In June 2015, the Company, a subsidiary and associates, joint ventures in Asia, and one other entity received asummons from a partner in the joint ventures involving the Company and the subsidiary demanding an injunction
against certain competing business operations claiming these are in breach of the joint venture agreements. However
the claims were withdrawn.
In January 2016, a subsidiary in Europe notified its customer in Europe that the subsidiary had commenced arbitration
proceedings to resolve a disagreement about construction of a power plant, and then the arbitration was started. While
the subsidiary is seeking payments of the unpaid amounts based on the contract, a counterclaim was filed by thecustomer. Thus, there can be no assurance that the subsidiary will not be held liable for any amounts.
The Company and its subsidiaries execute a number of business reorganizations, including mergers, acquisitions anddivestitures. Contracts for these reorganizations include clauses for transaction price adjustments subsequent to thereorganizations. As the result of price adjustments, etc. there is a possibility that the Company pays for any amounts.

F-70

Notes to Consolidated Financial Statements
Depending upon the outcome of the above legal proceedings, there may be an adverse effect on the consolidated
financial position or results of operations. Currently, the Company is unable to estimate the adverse effect, if any, ofmany of these proceedings. Accordingly, except as otherwise stated, no accrual for potential loss has been made. The
actual amount of fines, surcharge payments or any other payments resulting from these legal proceedings may bedifferent from the accrued amounts.
In addition to the above, the Company and its subsidiaries are subject to legal proceedings and claims which havearisen in the ordinary course of business and have not been finally adjudicated. These actions when ultimately
concluded and determined will not, in the opinion of management, have a material adverse effect on the consolidated
financial position or results of operations of the Company and subsidiaries.
(e) Other
On February 1, 2014 (hereinafter the “effective date of company split”), the Company and Mitsubishi Heavy
Industries, Ltd. (hereinafter “MHI”) integrated their thermal power generation systems businesses into MHI’s
consolidated subsidiary, MITSUBISHI HITACHI POWER SYSTEMS, LTD. (hereinafter “MHPS”), through a spinoff in the form of an absorption-type company-split. As part of this business integration, assets and liabilities
associated with boiler construction projects for Medupi and Kusile Power Stations for which the Company’s
consolidated subsidiaries in the Republic of South Africa, Hitachi Power Africa Proprietary Limited (hereinafter“HPA”) and other companies received orders in 2007, as well as their contractual status in relation to customers, andrights and obligations thereof were transferred from HPA to MHI’s consolidated subsidiary, Mitsubishi Hitachi Power
Systems Africa Proprietary Limited (hereinafter “MHPS Africa”) (hereinafter, the “Transfer of South African
Business”).
Under the agreement executed between the Company and MHI regarding the Transfer of South African Business, theCompany and HPA shall be liable for contingent liabilities resulting from events that occurred before the effective
date of company split as well as claims that had already been made as of the said date, while MHPS and MHPS Africa
shall be held responsible for the execution of business on and after the effective date of company split. Given these
conditions, it has been agreed upon to determine the final transfer price upon agreement on future construction
schedule as of the effective date of company split and confirmation of estimated project cash flows based on suchschedule between the parties, and settle the difference with the provisional price.
The said transfer price adjustment for the Transfer of South African Business is still under discussion between the
Company and MHI and not yet agreed upon at the moment. On March 31, 2016, MHI requested the Company to pay
ZAR 48,200 million (approximately ¥379.0 billion when ZAR 1 = ¥7.87) to MHPS Africa as a portion of transfer
price adjustment, etc. The Company replied to MHI on April 6, 2016 that the details of the demand letter lacked legal
grounds under any agreement and thus the Company cannot accept it.
The Company has recorded provisions based on reasonable estimates for the aforementioned agreement related to theSouth African Business. The actual amount of payment resulting from the transfer price adjustment may be different
from the accrued amount.
(30) Subsequent Events
The Company resolved to grant stock options as stock-based compensation (stock acquisition rights) with stock priceconditions, whose exercise price is ¥1 per share, to Executive Officers at the meeting of the compensation committee heldon May 13, 2016. Furthermore, the Company will grant similar stock options as stock-based compensation (stockacquisition rights) to Corporate Officers.
(31) Approval of Consolidated Financial Statements
The consolidated financial statements were approved on June 22, 2016 by Toshiaki Higashihara, President and CEO of theCompany.

F-71

Independent Auditor’s Report

To the Stockholders and Board of Directors ofHitachi, Ltd.
We have audited the accompanying consolidated financial statements of Hitachi, Ltd. and its consolidated
subsidiaries, which comprise the consolidated statement of financial position as at March 31, 2016, and theconsolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for the year thenended and notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with International Financial Reporting Standards, and for designing and operating such internal control
as management determines is necessary to enable the preparation and fair presentation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Hitachi, Ltd. and its consolidated subsidiaries as at March 31, 2016, and theirconsolidated financial performance and cash flows for the year then ended in conformity with International
Financial Reporting Standards.
/s/ Ernst & Young ShinNihon LLC
June 22, 2016
Tokyo, Japan

F-72

(Translation)
Following is an English translation of the Internal Control Report filed under the Financial Instruments
and Exchange Act of Japan. We have made the assessment of internal control over financial reporting inaccordance with assessment standards for internal control over financial reporting generally accepted inJapan.
[Cover][Document Filed]Internal Control Report[Applicable Law]

Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 22, 2016

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English] Hitachi, Ltd.
[Title and Name ofToshiaki Higashihara, President & CEO

Representative][Name and title of CFO]

Mitsuaki Nishiyama, Senior Vice President and Executive Officer[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)A-1

1. Matters Related to Basic Framework of Internal Control over Financial Reporting
Mr. Toshiaki Higashihara, President & CEO, and Mr. Mitsuaki Nishiyama, Senior Vice President andExecutive Officer, are responsible for establishing and maintaining internal control over financial
reporting of Hitachi, Ltd. (the “Company”) and have established and maintained internal control overfinancial reporting in accordance with the basic framework for internal control set forth in the “On the
Revision of the Standards and Practice Standards for Management Assessment and Audit concerning
Internal Control Over Financial Reporting (Council Opinions)” published by the Business Accounting
Council.
The internal control over financial reporting is designed to achieve its objectives to the extent
reasonable through the effective function and combination of its basic elements. Therefore, there is apossibility that internal control over financial reporting may not completely prevent or detect
misstatements.
2. Matters Related to Scope of Assessment, Record Date, and Assessment Procedure
We assessed the effectiveness of our internal control over financial reporting on the record date as ofMarch 31, 2016. We made this assessment in accordance with assessment standards for internal control
over financial reporting generally accepted in Japan.
In making this assessment, we evaluated internal control which may have a material effect on theentire financial reporting on a consolidated basis (“company-level controls”) and based on the result of
this assessment, we appropriately selected business processes to be evaluated, analyzed these selectedbusiness processes, identified key controls that may have a material impact on the reliability of our
financial reporting, and assessed the design and operation of these key controls. These procedures haveallowed us to evaluate the effectiveness of our internal controls.
We determined the required scope of assessment of internal control over financial reporting for theCompany, as well as its consolidated subsidiaries, equity-method associates and joint ventures, from theperspective of the materiality that may affect the reliability of our financial reporting. The materiality that
may affect the reliability of our financial reporting is determined taking into account the materiality ofquantitative and qualitative impacts. We confirmed that we had reasonably determined the scope ofassessment of internal controls over business processes in light of the results of assessment of companylevel controls conducted for the Company, its consolidated subsidiaries, equity-method associates and joint
ventures. We did not include a part of consolidated subsidiaries, equity-method associates and joint
ventures which do not have any quantitatively or qualitatively material impact on the consolidated
financial statements in the scope of assessment of company-level controls.
Regarding the scope of assessment of internal control over business processes, we accumulated
business units in descending order of total revenues (after elimination of intercompany transactions) forthe previous fiscal year, and those business units whose combined amount of revenues reaches
approximately 80% of total revenues on a consolidated basis were selected as “significant business units.”
In addition, some of our equity-method associates and joint ventures which have a significant effect to ourconsolidated financial statements were selected as “significant business units.” At the selected significant
business units, we included, in the scope of assessment, those business processes leading to revenues,
accounts receivables and inventories and those business processes relating to greater likelihood of material
misstatements and significant account involving estimates or forecasts as significant accounts that may
have a material impact on our business objectives. Further, not only at selected significant business units,
but also at other business units, we added to the scope of assessment, as business processes having greater
materiality considering their impact on the financial reporting, those business processes relating tobusinesses or operations dealing with high-risk transactions.
3. Matters Related to Results of Assessment
As a result of the assessment above, we concluded that our internal control over financial reporting
was effective as of March 31, 2016.
4. Supplementary Matters
None.
5. Special Notes
None.
A-2

TRANSLATION
Following is an English translation of the Independent Auditors’ Report filed under the Financial Instruments andExchange Act of Japan. This report is presented merely as supplemental information.
There are differences between an audit of internal control over financial reporting under the Financial Instruments andExchange Act and an audit of internal control over financial reporting conducted under the attestation standards establishedby the American Institute of Certified Public Accountants.
In an audit of internal control over financial reporting under the Financial Instruments and Exchange Act, the auditors
express an opinion on management’s report on internal control over financial reporting, and do not express an opinion on
the Company’s internal control over financial reporting taken as a whole.

Independent Auditors’ Report(filed under the Financial Instruments and Exchange Act of Japan)
June 22, 2016
Mr. Toshiaki Higashihara, President & CEO
Hitachi, Ltd.

Ernst & Young ShinNihon LLC
Designated and Engagement Partner,
Certified Public Accountant:

Koichi Tsuji

Designated and Engagement Partner,
Certified Public Accountant:

Takahiro Saga

Designated and Engagement Partner,
Certified Public Accountant:

Takuya Tanaka[Audit of Financial Statements]
Pursuant to the Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements included in the Financial Section, namely, the consolidated statement offinancial position as at March 31, 2016 of Hitachi, Ltd. (the “Company”) and its consolidated subsidiaries, andthe related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows
for the year then ended, including notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statementsin accordance with International Financial Reporting Standards pursuant to the provision of Article 93 of theRegulation for Terminology, Forms and Preparation of Consolidated Financial Statements, and for suchinternal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
A-3

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments, the auditor considers
internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient an appropriate to provide a basis for our audit
opinion.

Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the Company and its consolidated subsidiaries as at March 31, 2016, andthe results of their operations and their cash flows for the year then ended in conformity with International
Financial Reporting Standards.

[Audit of Internal Control]
Pursuant to the Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited
management’s report on internal control over financial reporting of the Company and its consolidated
subsidiaries as of March 31, 2016.

Management’s Responsibility for the Report on Internal Control
The Company’s management is responsible for designing and operating effective internal control overfinancial reporting and for the preparation and fair presentation of its report on internal control in conformity
with assessment standards for internal control over financial reporting generally accepted in Japan. There is apossibility that misstatements may not be completely prevented or detected by internal control over financial
reporting.

Auditors’ Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our internal
control audit as independent position. We conducted our internal control audit in accordance with auditing
standards for internal control over financial reporting generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether management’s report on internal
control is free from material misstatement.
An internal control audit involves performing procedures to obtain audit evidence about the results of theassessment of internal control over financial reporting in management’s report on internal control. The
procedures selected depend on the auditors’ judgment, including the significance of effects on reliability offinancial reporting. An internal control audit includes examining representations on the scope, procedures andresults of the assessment of internal control over financial reporting made by management, as well as
evaluating the overall presentation of management’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

A-4

Audit Opinion
In our opinion, management’s report on internal control referred to above, which represents that the internal
control over financial reporting of the consolidated financial statements of the Company and its consolidated
subsidiaries as of March 31, 2016 is effectively maintained, presents fairly, in all material respects, the resultsof the assessment of internal control over financial reporting in conformity with assessment standards forinternal control over financial reporting generally accepted in Japan.

Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Act.

(The above represents a translation, for convenience only, of the original report issued in the Japanese
language.)A-5

(Translation)
Following is an English translation of the Confirmation Letter filed under the Financial Instruments andExchange Act of Japan.
[Cover][Document Filed]

Confirmation Letter[Applicable Law]

Article 24-4-2, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 22, 2016

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English] Hitachi, Ltd.
[Title and Name ofToshiaki Higashihara, President & CEO

Representative][Name and title of CFO]

Mitsuaki Nishiyama, Senior Vice President and Executive Officer[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)A-6

1. Matters Related to Adequacy of Statements Contained in the Annual Securities Report
Mr. Toshiaki Higashihara, President & CEO, and Mr. Mitsuaki Nishiyama, Senior Vice President andExecutive Officer, confirmed that statements contained in the Annual Securities Report for the 147th fiscal
year (from April 1, 2015 to March 31, 2016) were adequate under the Financial Instruments and ExchangeAct.
2. Special Notes
None.

A-7