[Translation]

Quarterly Report(The Second Quarter of 151st Business Term)
From July 1, 2019 to September 30, 2019

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

Hitachi, Ltd.

[Cover][Document Filed]

Quarterly Report (“Shihanki Hokokusho”)[Applicable Law]

Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

November 12 , 2019

[Fiscal Year]

The Second Quarter of 151st Business Term (from July 1, 2019 to September 30, 2019)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name of Representative]

Toshiaki Higashihara, President & CEO[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Masachika Sawada, Manager, Legal Division[Contact Address]

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

03-3258-1111[Contact Person]

Masachika Sawada, Manager, Legal Division[Place Where Available for PublicTokyo Stock Exchange, Inc.

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 Quarterly 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 of Japan.
The translation of the Confirmation Letter for the original Quarterly Report is included at the end of this document.
Unless the context indicates otherwise, the term “Company” refers to Hitachi, Ltd. and the term “Hitachi” refers to theCompany and its consolidated subsidiaries.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we havetruncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures presented incolumns or otherwise may not equal the total of the individual items. We have rounded all percentages to the nearest percent, onetenth 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 and Exchange Act
of Japan and other laws and regulations amending and/or supplementing the Financial Instruments and Exchange Act of Japan.

Contents
Part I Information on the Company ………………………………………………………………………………………………

1

I. Overview of the Company ……………………………………………………………………………………………………
1. Key Financial Data ………………………………………………………………………………………………………

1
1

2. Description of Business ……………………………………………………………………………………………………
II. Business Overview …………………………………………………………………………………………………………

1
4

1. Risk Factors ………………………………………………………………………………………………………………
2. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations and Cash Flows …

44

3. Material Agreements, etc. …………………………………………………………………………………………………
III. Information on the Company ………………………………………………………………………………………………

9
10

1. Information on the Company’s Stock, etc. ……………………………………………………………………………… 10(1) Total number of shares, etc. …………………………………………………………………………………………… 10(2) Information on the stock acquisition rights, etc. ……………………………………………………………………… 10(3) Information on moving strike convertible bonds, etc. ………………………………………………………………… 10(4) Changes in the total number of issued shares and the amount of common stock and other ………………………… 10(5) Major shareholders …………………………………………………………………………………………………… 11(6) Information on voting rights …………………………………………………………………………………………
2. Changes in Senior Management …………………………………………………………………………………………

12
13

IV. Financial Information ……………………………………………………………………………………………………… 13
Part II Information on Guarantors, etc. for the Company ………………………………………………………………………… 13[Condensed Quarterly Consolidated Financial Statements] ……………………………………………………………………… F1[Confirmation Letter] ……………………………………………………………………………………………………………… A1

Part I Information on the Company
I. Overview of the Company
1. Key Financial Data
Consolidated financial data, etc.
(Millions of yen, unless otherwise stated)
Six months ended
September 30, 2018

Six months ended
September 30, 2019

4,491,834

4,221,327[2,325,935][2,188,745]

Income from continuing operations, before
income taxes

352,920

288,976

516,502

Net income attributable to Hitachi, Ltd.
stockholders

192,995[87,750]

189,293[68,990]

222,546

204,468

131,271

171,140

Total Hitachi, Ltd. stockholders’ equity

3,449,257

3,341,211

3,262,603

Total equity

4,667,038

4,445,844

4,414,403

Total assets

10,060,173

9,719,596

9,626,592

199.86[90.87]196.02[71.44]230.47

199.69195.77230.25

34.3

34.4

33.9

Net cash provided by operating activities

211,994

205,688

610,025

Net cash used in investing activities(142,471)(207,079)(162,872)

59,971

70,137(320,426)

825,598

841,702807,593

Revenues

Comprehensive income attributable to Hitachi,Ltd. stockholders

Earnings per share attributable to Hitachi, Ltd.
stockholders, basic (yen)Earnings per share attributable to Hitachi, Ltd.
stockholders, diluted (yen)Total Hitachi, Ltd. stockholders’ equity ratio (%)

Net cash provided by (used in) financing
activities
Cash and cash equivalents at end of period

Year ended
March 31, 2019
9,480,619(Notes) 1. Hitachi's consolidated financial statements have been prepared in conformity with the International Financial ReportingStandards (“IFRS”) as issued by the International Accounting Standards Board.
2. Revenues do not include the consumption tax, etc.
3. The figures of “Revenues,” “Net income attributable to Hitachi, Ltd. stockholders” and “Earnings per share attributable
to Hitachi, Ltd. stockholders, basic” in square bracket are those for the three months ended September 30, 2018 and2019, respectively.
4. On October 1, 2018, the Company completed the share consolidation of every five (5) shares of common stock into one(1) share. The figures for basic and diluted earnings per share attributable to Hitachi, Ltd. stockholders are calculated on
the assumption that the Company conducted this share consolidation at the beginning of the fiscal year ended March 31,
2019.
2. Description of Business
There were no material changes in principal businesses of Hitachi during the six months ended September 30, 2019. The
Hitachi Group is comprised of the Company, 793 consolidated subsidiaries, and 444 equity-method associates and joint-ventures.
Effective from April 1, 2019, the Company reclassified its reportable segments in ten segments: five areas as IT, Energy,
Industry, Mobility and Smart Life, four listed subsidiary groups as Hitachi High-Technologies, Hitachi Construction Machinery,
Hitachi Metals and Hitachi Chemical, and Others.
Major business and the positioning of principal affiliated companies and changes in principal affiliated companies during thesix months ended September 30, 2019 were as follows. The Company mainly engages in manufacturing and sales of products andproviding services in the segments of IT, Energy, Industry, Mobility and Smart Life.

1

(As of September 30, 2019)
Main products and services
IT

Systems Integration, Consulting,Control Systems, Cloud Services,
Software, IT products (Storage,
Servers), ATMs

EnergyPower Generation Systems(Nuclear, Renewable Energy,
Thermal), Power Grid Systems
Industry
Industry & Distribution Systems,
Water & Environment Systems,
Industrial Machinery
Mobility
Building Systems (Elevators,
Escalators), Railway Systems
Smart Life
Medical Electronics,
Smart Life & Ecofriendly Systems(Refrigerators, Washing Machines,
Room Air Conditioners, AirConditioning Equipment),
Automotive Systems (Powertrain
Systems, Chassis Systems,
Advanced Driver Assistance
Systems)
Hitachi High-Technologies
Medical and Life Science Products,
Analytical Equipment,
Semiconductor Processing
Equipment, Manufacturing andInspection Equipment, Advanced
Industrial Products
Hitachi Construction Machinery
Hydraulic Excavators, Wheel
Loaders, Mining Machinery,
Maintenance and Services,
Construction Solutions, MineManagement Systems
Hitachi Metals
Specialty Steel Products,
Functional Components andEquipment, Magnetic Materials
and Power Electronics Materials,
Wires, Cables and Related
Products
Hitachi Chemical
Functional Materials (Electronics
Materials, Printed Wiring Boards
Materials, Electronics
Components), Advanced
Components and Systems(Mobility Components, Energy
Storage Devices, Life Sciencerelated Products)
Others
Optical Disk Drives, Property
Management

Positioning of principal affiliated companies
Manufacturing[Consolidated subsidiaries]
Hitachi Information & Telecommunication
Engineering, Ltd.
Hitachi-Omron Terminal Solutions, Corp.
Hitachi Computer Products (America), Inc.

[Consolidated subsidiaries]
Hitachi-GE Nuclear Energy, Ltd.
[Equity-method associates]
Mitsubishi Hitachi Power Systems, Ltd.
[Consolidated subsidiaries]
Hitachi Industrial Equipment Systems Co.,Ltd.
Hitachi Industrial Products, Ltd. (Note 2)[Equity-method associates]
Hitachi Kokusai Electric Inc.
[Consolidated subsidiaries]
Hitachi Elevator (China) Co., Ltd.
[Consolidated subsidiaries]
Hitachi Automotive Systems, Ltd.
Hitachi Global Life Solutions, Inc. (Note4)
Hitachi Automotive Systems Americas,
Inc.
Hitachi Consumer Products (Thailand),
Ltd.

Sales and services[Consolidated subsidiaries]
Hitachi Solutions, Ltd.
Hitachi Systems, Ltd.
Hitachi Consulting Corporation
Hitachi Global Digital Holdings
Corporation
Hitachi Payment Services Private Limited
Hitachi Vantara Corporation[Consolidated subsidiaries]
Hitachi Plant Construction, Ltd.
Hitachi Power Solutions Co., Ltd.
[Consolidated subsidiaries]
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Services Co., Ltd.
Sullair US Purchaser, Inc.
[Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi Rail Ltd. (Note 3)[Equity-method associates]
Johnson Controls-Hitachi Air Conditioning
Holding (UK) Ltd[Consolidated subsidiaries]
Hitachi High-Technologies Corporation[Consolidated subsidiaries]
Hitachi Construction Machinery Co., Ltd.

[Consolidated subsidiaries]
Hitachi Metals, Ltd.

[Consolidated subsidiaries]
Hitachi Chemical Company, Ltd.

[Consolidated subsidiaries]
Hitachi-LG Data Storage, Inc.

2

[Consolidated subsidiaries]
Hitachi Life, Ltd.
Hitachi Urban Investment, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.

(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the
Hitachi Group’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the HitachiGroup’s products.
2. Hitachi Industrial Products, Ltd. is the company which succeeded the electrical systems business and machinery systems
business through absorption-type company split from the Company on April 1, 2019.
3. Hitachi Rail Europe Ltd. changed its company name to Hitachi Rail Ltd. on April 1, 2019.
4. Hitachi Appliances, Inc. merged with Hitachi Consumer Marketing, Inc. and changed its company name to Hitachi Global
Life Solutions, Inc. on April 1, 2019.
5. In addition to the table above, the major equity-method associates are Hitachi Capital Corporation and Hitachi Transport
System, Ltd.

3

II. Business Overview
1. Risk Factors
There were no new risk factors recognized during the six months ended September 30, 2019.
There were no material changes in the risk factors stated in the Annual Securities Report for the 150th business term
pursuant to the Financial Instruments and Exchange Act of Japan.
2. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations and Cash Flows(1) Analysis of Results of Operations
Results of Operations
The results of operations in the six months ended September 30, 2019 were as follows.
Revenues decreased 6% to ¥4,221.3 billion, as compared with the six months ended September 30, 2018, due mainly to thedecreased revenues in the Smart Life segment affected by business sell-off of car information systems business, etc. inautomotive systems business, the Mobility segment, Hitachi Metals and Hitachi Chemical. This decrease was partially offset byincreased revenues in the IT segment and the Industry segment.
Cost of sales decreased 6% to ¥3,074.7 billion, as compared with the six months ended September 30, 2018, and the ratio of
cost of sales to revenues was 73%, which was the same level as for the six months ended September 30, 2018. Gross profit
decreased 5% to ¥1,146.5 billion, as compared with the six months ended September 30, 2018.
Selling, general and administrative expenses (“SG&A”) decreased 2% to ¥849.3 billion, as compared with the six months
ended September 30, 2018, and the ratio of SG&A to revenues increased 1% to 20%, as compared with the six months ended
September 30, 2018.
Adjusted operating income (presented as revenues less cost of sales as well as SG&A) decreased ¥47.3 billion to ¥297.2
billion, as compared with the six months ended September 30, 2018, despite the higher profits in the IT segment and the Smart
Life segment, etc. This decrease was due mainly to lower profits in Hitachi Construction Machinery, Hitachi Metals and Hitachi
Chemical.
Other income decreased ¥62 million to ¥38.1 billion, as compared with the six months ended September 30, 2018, due
mainly to the absence of the gains on business reorganization and others by selling shares of Hitachi Kokusai Electric Inc. stock
posted in the six months ended September 30, 2018. This decrease was partially offset by gains on business reorganization andothers by selling a part of shares of Agility Trains West (Holdings) Limited stock in the railway systems business and asettlement gain recognized at the time of the shift to a risk-sharing corporate pension plan. Other expenses increased ¥28.9 billion
to ¥75.9 billion, as compared with the six months ended September 30, 2018, due mainly to higher impairment losses owing to
the lower than expected revenues for the magnetic material business in Hitachi Metals.
Financial income (excluding interest income) decreased ¥9.5 billion to ¥4.9 billion and financial expenses (excludinginterest charges) increased ¥0.2 billion to ¥1.3 billion, as compared with the six months ended September 30, 2018, respectively.
Share of profits of investments accounted for using the equity method increased ¥24.3 billion to ¥27.5 billion, as comparedwith the six months ended September 30, 2018.
EBIT (earnings before interest and taxes, which is presented as income from continuing operations, before income taxes lessinterest income plus interest charges) decreased ¥61.8 billion to ¥290.5 billion, as compared with the six months ended
September 30, 2018, due mainly to the impairment losses recognized in Hitachi Metals as well as decreased adjusted operating
income.
Interest income increased ¥0.1 billion to ¥10.3 billion and interest charges increased ¥2.2 billion to ¥11.9 billion, as
compared with the six months ended September 30, 2018, respectively.
Income from continuing operations, before income taxes decreased ¥63.9 billion to ¥288.9 billion, as compared with the six
months ended September 30, 2018.
Income taxes decreased ¥2.1 billion to ¥90.6 billion, as compared with the six months ended September 30, 2018.
Loss from discontinued operations improved ¥3.2 billion to ¥0.7 billion as compared with the six months ended September
30, 2018.
Net income decreased ¥58.6 billion to ¥197.5 billion, as compared with the six months ended September 30, 2018.
Net income attributable to non-controlling interests decreased ¥54.9 billion to ¥8.2 billion, as compared with the six months
ended September 30, 2018.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders decreased ¥3.7 billion to ¥189.2 billion, as
compared with the six months ended September 30, 2018.
Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment include intersegment
transactions. Effective from April 1, 2019, the Company reclassified its reportable segments in ten segments: IT, Energy,
Industry, Mobility, Smart Life, Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals, Hitachi Chemical
and Others. Accordingly, the amounts previously reported for the six months ended September 30, 2018 have been restated inconformity with the new segments.

4

(IT)
Revenues increased 2% to ¥995.2 billion, as compared with the six months ended September 30, 2018, due mainly to higher
revenues from system integration business for social infrastructure, industry and public fields and higher sales of storage and PC
servers in Japan.
Adjusted operating income increased ¥10.8 billion to ¥109.1 billion, as compared with the six months ended September 30,
2018, due mainly to increased revenues. This increase was partially offset by an increase in strategic investment for expansion ofdigital solution business.
EBIT increased ¥17.5 billion to ¥105.8 billion, as compared with the six months ended September 30, 2018, due mainly to
the gains by selling the land of former production basis as well as increased adjusted operating income(Energy)
Revenues decreased 9% to ¥161.6 billion, as compared with the six months ended September 30, 2018, due mainly to theeffect of business transfer of power receiving and transforming facilities business for industry field and a decrease of projects
related to new regulations in nuclear power generation systems business.
Adjusted operating income decreased ¥5.1 billion to ¥0.2 billion, as compared with the six months ended September 30,
2018, due mainly to decreased revenues.
EBIT increased ¥5.8 billion to net earnings of ¥1.0 billion as compared with the six months ended September 30, 2018,
despite decreased adjusted operating income. The increase was due mainly to an improvement in share of profits of investments
accounted for using the equity method.
(Industry)
Revenues increased 2% to ¥366.7 billion, as compared with the six months ended September 30, 2018, due mainly to higher
revenues from air conditioning systems business for industry field.
Adjusted operating income increased ¥0.2 billion to ¥13.8 billion, as compared with the six months ended September 30,
2018, due mainly to increased revenues.
EBIT increased ¥5.4 billion to ¥20.6 billion, as compared with the six months ended September 30, 2018, due mainly to an
improvement in share of profits of investments accounted for using the equity method.
(Mobility)
Revenues decreased 9% to ¥529.9 billion, as compared with the six months ended September 30, 2018, due mainly todecreased revenues from railway systems business in the U.K. and the sales price down of building systems in China as well as
the impact of foreign currency translation.
Adjusted operating income increased ¥87 million to ¥38.6 billion, as compared with the six months ended September 30,
2018, despite decreased revenues. This increase was due mainly to profitability improvement resulted from cost reduction, etc. inbuilding systems business.
EBIT increased ¥28.7 billion to ¥63.9 billion, as compared with the six months ended September 30, 2018, due mainly to
the gains by selling a part of shares of Agility Trains West (Holdings) Limited stock.
.
(Smart Life)
Revenues decreased 12% to ¥708.9 billion, as compared with the six months ended September 30, 2018, due mainly to theeffect of business sell-off of car information systems, etc. in automotive systems business.
Adjusted operating income increased ¥10.3 billion to ¥28.8 billion, as compared with the six months ended September 30,
2018, due mainly to profitability improvement resulted from cost reduction in automotive systems business, home appliancesbusiness and healthcare business.
EBIT increased ¥26.8 billion to ¥27.9 billion, as compared with the six months ended September 30, 2018, due mainly tothe business reorganization expenses in automotive systems business posted in the six months ended September 30, 2018 as wellas the increased adjusted operating income.
(Hitachi High-Technologies)
Revenues decreased 5% to ¥346.3 billion, as compared with the six months ended September 30, 2018, despite higher salesof semiconductor processing equipment. The decrease was due mainly to lower sales of liquid crystal display exposure systems
and the impact of foreign currency translation.
Adjusted operating income decreased ¥4.8 billion to ¥30.8 billion, as compared with the six months ended September 30,
2018, due mainly to decreased revenues and the impact of foreign currency translation. EBIT decreased ¥3.1 billion to ¥30.7
billion, as compared with the six months ended September 30, 2018, due mainly to decreased adjusted operating income.
(Hitachi Construction Machinery)
Revenues decreased 2% to ¥480.5 billion, as compared with the six months ended September 30, 2018, despite higher sales
mainly in North America, Japan and Europe. The decrease was due mainly to the impact of foreign currency translation.
Adjusted operating income decreased ¥8.3 billion to ¥44.4 billion, as compared with the six months ended September 30,
2018, due mainly to an increase in indirect expenses and the impact of foreign currency translation.
EBIT decreased ¥6.5 billion to ¥42.8 billion for the six months ended September 30, 2018, as compared with the six months
ended September 30, 2018, due mainly to decreased adjusted operating income and posting of business reorganization expenses.

5

(Hitachi Metals)
Revenues decreased 12% to ¥456.8 billion, as compared with the six months ended September 30, 2018, due mainly to adecrease in demand for products for automobile, semiconductor and factory automation and the effect of business transfer ofaluminum wheels business.
Adjusted operating income decreased ¥27.1 billion to ¥5.9 billion, as compared with the six months ended September 30,
2018, due mainly to posting revaluation losses on inventories as well as decreased revenues.
EBIT worsened ¥94.4 billion to loss of ¥56.3 billion, as compared with the six months ended September 30, 2018, due
mainly to posting of impairment losses in the magnetic material business as well as decreased adjusted operating income.
(Hitachi Chemical)
Revenues decreased 8% to ¥316.6 billion, as compared with the six months ended September 30, 2018, due mainly to adecrease in demand for products for semiconductor and automobile.
Adjusted operating income decreased ¥7.9 billion to ¥16.8 billion, as compared with the six months ended September 30,
2018, due mainly to decreased revenues and EBIT decreased ¥8.0 billion to ¥15.5 billion, as compared with the six months ended
September 30, 2018, due mainly to decreased adjusted operating income.
(Others)
Revenues decreased 19% to ¥236.3 billion, as compared with the six months ended September 30, 2018, due mainly to theeffect of reorganization of Hitachi Kokusai Electric Inc.
Adjusted operating income decreased ¥5.9 billion to ¥11.8 billion, and EBIT decreased ¥5.2 billion to ¥14.2 billion, as
compared with the six months ended September 30, 2018, respectively.
Revenues by Market
Revenues in Japan was ¥2,125.9 billion, which was the same level as the six months ended September 30, 2018, despite
decreased revenues in the Smart Life segment owing to the effect of business sell-off in automotive systems business and the
Others segment owing to the effect of reorganization of Hitachi Kokusai Electric Inc. as well as decreased revenues in the Energy
segment and Hitachi Metals. The decrease was partially offset by increased revenues in the IT segment, the Industry segment and
Hitachi Construction Machinery.
Overseas revenues decreased 12% to ¥2,095.3 billion, as compared with the six months ended September 30, 2018, due
mainly to decreased revenues in Asia, mainly in the Mobility segment due mainly to lower sales from building systems business,and in Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals and Hitachi Chemicals, decreased revenues
in North America, particularly in Hitachi Metals, and decreased revenues in Europe, mainly in the Mobility segment due mainly
to lower sales from railway systems business and the IT segment. This decrease was also attributable to decreased revenues
owing to the effect of business sell-off in automotive systems business and reorganization of Hitachi Kokusai Electric Inc.
As a result, the ratio of overseas revenues to total revenues decreased 3% to 50%, as compared with the six months ended
September 30, 2018.
(2) Analysis of Financial Condition and Cash Flows
Liquidity and Capital Resources
During the six months ended September 30, 2019, there were no major changes in the Company’s policies of maintaining
liquidity and ensuring funds, efforts for improvement in fund management efficiency, and ideas regarding funding sources andfundraising.
Regarding debt ratings we received, Rating and Investment Information, Inc. (R&I) changed its long-term rating from A+ to
AA- and short-term rating from a-1 to a-1+, respectively, on August 29, 2019.

Cash Flows(Cash Flows from Operating Activities)
Net income in the six months ended September 30, 2019 decreased by ¥58.6 billion, as compared with the six months ended
September 30, 2018. Net cash inflow from a change in trade receivables and contract assets decreased by ¥41.4 billion, as
compared with the six months ended September 30, 2018. Net cash outflow from a change in trade payables increased by ¥19.6
billion, as compared with the six months ended September 30, 2018. Net cash outflow from a change in inventories decreased by¥36.6 billion, as compared with the six months ended September 30, 2018.
As a result of the foregoing, net cash provided by operating activities was ¥205.6 billion in the six months ended September
30, 2019, a decrease of ¥6.3 billion, compared with the six months ended September 30, 2018.
(Cash Flows from Investing Activities)
Net amount of investments related to property, plant and equipment* was ¥198.9 billion in the six months ended September
30, 2019. This net sum decreased by ¥25.4 billion compared with the six months ended September 30, 2018. Proceeds from saleof investments in securities and other financial assets (including investments in subsidiaries and investments accounted for using
the equity method) in the six months ended September 30, 2019 decreased by ¥64.8 billion, as compared with the six months
ended September 30, 2018. Purchase of investments in securities and other financial assets (including investments in subsidiaries
and investments accounted for using the equity method) in the six months ended September 30, 2019 increased by ¥23.0 billion,6

as compared with the six months ended September 30, 2018, due mainly to the purchase of shares of Yungtay Engineering Co.,Ltd.
As a result of the foregoing, net cash used in investing activities was ¥207.0 billion in the six months ended September 30,
2019, an increase of ¥64.6 billion compared with the six months ended September 30, 2018.
* The sum of the purchase of property, plant and equipment and the purchase of intangible assets, less the proceeds from sale ofproperty, plant and equipment, and intangible assets.
(Cash Flows from Financing Activities)
Net cash outflow related to long-term debt** in the six months ended September 30, 2019 increased by ¥80.2 billion, as
compared with the six months ended September 30, 2018. Dividends paid to Hitachi, Ltd. stockholders in the six months ended
September 30, 2019 increased by ¥9.5 billion, as compared with the six months ended September 30, 2018. Net cash inflow froma change in short-term debt in the six months ended September 30, 2019 increased by ¥103.4 billion, as compared with the six
months ended September 30, 2018.
As a result of the foregoing, net cash flows provided in financing activities were ¥70.1 billion in the six months ended
September 30, 2019, an increase of ¥10.1 billion compared with the six months ended September 30, 2018.
** The proceeds from long-term debt, less the payments on long-term debt.
As a result of the foregoing, cash and cash equivalents as of September 30, 2019 were ¥841.7 billion, an increase of ¥34.1
billion from March 31, 2019. Free cash flows, the sum of cash flows from operating and investing activities, were an outflow of¥1.3 billion in the six months ended September 30, 2019, a decrease of ¥70.9 billion compared with the six months ended
September 30, 2018.
Assets, Liabilities and Equity
The following is an overview of Hitachi’s assets, liabilities and equity as of September 30, 2019.
Total assets were ¥9,719.5 billion, an increase of ¥93.0 billion from March 31, 2019, despite cash collection of trade
payables. This increase was due mainly to the impact of adopting IFRS 16 "Leases" and an increase in inventories.
Total interest-bearing debt, the sum of short-term debt and long-term debt, was ¥1,387.3 billion, an increase of ¥382.5
billion from March 31, 2019. This was due mainly to the impact of adopting IFRS 16 "Leases" and an increase in short-term debt.
Total Hitachi, Ltd. stockholders’ equity increased by ¥78.6 billion from March 31, 2019, to ¥3,341.2 billion. The ratio of
total Hitachi, Ltd. stockholders’ equity to total assets was 34.4%, as compared with 33.9% as of March 31, 2019.
Non-controlling interests were ¥1,104.6 billion, a decrease of ¥47.1 billion from March 31, 2019.
Total equity was ¥4,445.8 billion, an increase of ¥31.4 billion from March 31, 2019. The ratio of interest-bearing debt tototal equity was 0.31, as compared with 0.23 as of March 31, 2019.
(3) Management Policy
There were no material changes in Hitachi’s management policy during the six months ended September 30, 2019.
(4) Challenges Hitachi Group Faces
1) Business and Financial Challenges Hitachi Group Faces
There were no material changes in Hitachi’s business strategy during the six months ended September 30, 2019.
2) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial and Business Policies
The Group invests a great deal of business resources in fundamental research and in the development of market-leading
products and businesses that will bear fruit in the future, and realizing the benefits from these management policies requiresthat they be continued for a set period of time. For this purpose, the Company keeps its shareholders and investors wellinformed of not just the business results for each period 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 performance that can be brought
about through a change in management control, but it recognizes the necessity of determining 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 shareof 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 is there a specificthreat, neither does the Company intend to implement specified so-called anti-takeover measures in advance of the appearanceof such a party, but the Company does understand that it is one of the natural duties bestowed upon it by the shareholders andinvestors 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 the party and holdnegotiations with the buyer, and if the Company deems that said buyout will not maintain the Company’s value and is not in
the best interest of the shareholders, then the Company will quickly determine the necessity, content, etc., of specificcountermeasures and prepare to implement them. The same response will also be taken in the event a party attempts to acquirea large percentage of the shares of a Group company.
7(5) Research and Development
There were no material changes in the research and development of the Hitachi Group (the Company and consolidated
subsidiaries) stated in the Annual Securities Report for the 150th business term pursuant to the Financial Instruments andExchange Act of Japan. The Hitachi Group’s R&D expenditures in the six months ended September 30, 2019 were ¥142.2
billion, 3.4% of revenues. A breakdown of R&D expenditures by segment is shown below.
(Billions of yen)Segment

Six months ended
September 30, 2019

IT

25.5

Energy3.7

Industry

5.6

Mobility

14.4

Smart Life

30.0

Hitachi High-Technologies

15.3

Hitachi Construction Machinery

12.3

Hitachi Metals

8.2

Hitachi Chemical

16.1

Others0.8

Corporate Items

9.9
Total

142.2

(6) Property, Plant and Equipment
Hitachi Metals, Ltd. recognized impairment losses on property, plant and equipment such as machinery of ¥22.4 billion forthe six months ended September 30, 2019, due to the lower than expected future revenue projected for the magnetic material
business. Details of these impairment losses are described in “Condensed Quarterly Consolidated Financial Statements －Notes
to Condensed Quarterly Consolidated Financial Statements －(11) Other Income and Expenses.”(7) Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations in Japan and overseas, andhas not decided on specific plans to newly install or expand each of facilities as of the end of the consolidated fiscal year andeach quarter of the consolidated 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, 2020 is updated as follows (new installation andexpansions, based on the amount recorded as tangible fixed assets and the investment property) from the amount initially planned
as of March 31, 2019.
The amount of capital investment
for the fiscal year ending March 31, 2020
Segment(Billions of yen)
Initial Plan
Updated Plan
IT
Energy

390
60

390
60

Industry
Mobility

170
200

170
200

Smart Life
Hitachi High-Technologies

770
290

770
380

Hitachi Construction Machinery
Hitachi Metals

700
600

700
500

Hitachi Chemical
Others

460
260

460
270

Subtotal
Corporate Items & Elimination

3,900
100

3,900
100

Total

4,000

4,000

(Notes) 1. The figures in the above table include the amount of the right-of-use assets and the investment property, each ofwhich is recorded as property, plant and equipment 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 toroutine upgrading.
8(8) Forward-Looking Statements
Certain statements found in “2. Management’s Discussion and Analysis of Consolidated Financial Conditions, Operating
Results and Cash Flows” and other descriptions in this 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 withrespect to certain future events and financial performance and include any statement that does not directly relate to any historicalor current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar
expressions which indicate future events and trends may identify “forward-looking 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 “forwardlooking statements” are based upon current assumptions of future events which may not prove to be accurate. Undue relianceshould not be placed on “forward-looking statements,” as such statements speak only as of the date of this report.
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’s major 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 or in which Hitachi’s
assets and liabilities are denominated;• 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 to write down
equity securities that it holds;• fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as 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 thepercentage-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 of fluctuations in productdemand, 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 new technologies on a timely
and cost-effective basis and to achieve market acceptance for such products;• uncertainty as to Hitachi’s ability to attract and retain skilled personnel;• 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 and the possibility of
incurring related expenses;• uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise 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 access to, or ability to protect, certain intellectual property;• 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; and• uncertainty 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 elsewhere in this report and inother materials published by Hitachi.
3. Material Agreements, etc.
No material agreements were entered into during the six months ended September 30, 2019.
9

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

Total number of shares authorized to
be issued (shares)

Common stock

2,000,000,000

Total

2,000,000,0002) Issued shares

Class

Number of sharesissued as of the end of
second quarter (shares)(September 30, 2019)

Number of sharesissued as of thefiling date (shares)(Note)(November 12, 2019)

Stock exchange on which
the Company is listed

Description

The number of shares per

Commonstock

967,280,477

967,280,477

Tokyo, Nagoya

Total

967,280,477

967,280,477-

one unit of shares is 100
shares.
-(Note) The "Number of shares issued as of the filing date" does not include shares issued upon exercise of stock acquisition rightsfrom November 1, 2019 to the filing date.
(2) Information on the stock acquisition rights, etc.
1) Details of stock option plans
Not applicable.
2) Details of other stock acquisition rights, etc.
Not applicable.
(3) Information on moving strike convertible bonds, etc.
Not applicable.
(4) Changes in the total number of issued shares and the amount of common stock and other

Date

From July 1, 2019
to September 30, 2019

Change in
the total
number ofissued shares(shares)－

Balance of thetotal number ofissued shares(shares)

Change incommonstock(Millionsof yen)Balance ofcommonstock(Millionsof yen)Change incapitalreserve(Millionsof yen)Balance ofcapitalreserve(Millionsof yen)967,280,477－

459,862－

177,82810

(5) Major shareholders(As of September 30, 2019)

Name

Address

The Master Trust Bank of Japan, Ltd.

11-3, Hamamatsucho 2-chome,(Trust Account)

Minato-ku, TokyoJapan Trustee Services Bank, Ltd.
(Trust Account)Hitachi Employees’ Shareholding
Association

Share
Ownership(shares)

Ownership
percentage to thetotal number ofissued shares(excluding treasury
stock) (%)

73,533,600

7.61

8-11, Harumi 1-chome, Chuo-ku, Tokyo

60,532,549

6.26

6-6, Marunouchi 1-chome, Chiyoda- ku,
Tokyo20,596,676

2.13

18,922,399

1.96

8-11, Harumi 1-chome, Chuo-ku, Tokyo

18,824,500

1.95State Street Bank and Trust Company
505001

P.O. Box 351
Boston, Massachusetts 02101 U.S.A.

17,751,942

1.84(Standing proxy: Mizuho Bank, Ltd.)(15-1, Konan 2-chome, Minato-ku, Tokyo)

State Street Bank and Trust Company

P.O. Box 351

505223(Standing proxy: Mizuho Bank, Ltd.)

Boston, Massachusetts 02101 U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

17,670,106

1.83

17,501,808

1.81

17,118,522

1.77

15,274,087

1.58

277,726,189

28.74

Nippon Life Insurance Company
Japan Trustee Services Bank, Ltd.
(Trust Account 5)

JP Morgan Chase Bank 385151

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

25 Bank Street, Canary Wharf,(Standing proxy: Mizuho Bank, Ltd.)

London, E14 5JP, United Kingdom(15-1, Konan 2-chome, Minato-ku, Tokyo)

Nats Cumco

C/O City Bank, New York 111
Wall Street, New York, NY, U.S.A.

(Standing proxy: Mizuho Bank, Ltd.)(15-1, Konan 2-chome, Minato-ku, Tokyo)

State Street Bank West Client-1776 Heritage Drive, North Quincy, MA

Treaty 505234(Standing proxy: Mizuho Bank, Ltd.)

02171, U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

Total

-

(Notes) 1. Nats Cumco is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of the Company’s American
Depositary Receipts (ADRs) holders.
2. Some reports on substantial shareholdings regarding the Company under the Financial Instruments and Exchange Act areavailable for public inspection. However, the information in the reports is not described in the above table since theCompany does not confirm the actual status of shareholdings as of September 30, 2019. The major contents of the reports
are as follows. On October 1, 2018, the Company completed the share consolidation of every five shares into one share forits common stock. The reports whose date on which the duty to file report is prior to the effective date of the shareconsolidation show the number of shares before the share consolidation.
Holders

BlackRock Japan Co. Ltd and seven other persons

Date on which the duty to file report

April 14, 2017

Number of shares

304,755,969 shares

Ownership percentage to the total number
of issued shares

6.31%

11

Sumitomo Mitsui Trust Asset Management Co., Ltd. and one other

Holders

personDate on which the duty to file reportFebruary 15, 2019

Number of shares

48,728,827 shares

Ownership percentage to the total number
of issued shares

5.04%

Mitsubishi UFJ Trust and Banking Corporation and two other

Holders

persons

Date on which the duty to file report

June 10, 2019

Number of shares

45,175,020 shares

Ownership percentage to the total number
of issued shares

4.67%

Holders

Asset Management One Co., Ltd. and four other persons

Date on which the duty to file report

September 13, 2019

Number of shares

49,553,000 shares

Ownership percentage to the total number
of issued shares

5.12%(6) Information on voting rights
1) Issued shares(As of September 30, 2019)
Classification

Number of shares (shares)

Number of voting
rightsDescription

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.)

Common stock

1,063,800

Shares with full voting right (others)

Common stock

963,680,500

Shares less than one unit

Common stock2,536,177－－

967,280,477－－

Number of issued shares
Total number of voting rights－

9,636,805

9,636,805－－(Note) The “Shares with full voting right (others)” column includes 5,300 shares registered in the name of Japan Securities
Depository Center, Incorporated (account for managing stocks whose shareholders have not transferred titles) and 53 voting
rights for those shares.

122) Treasury stock, etc.
(As of September 30, 2019)

Name ofshareholder

Hitachi, Ltd.

Address

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

Aoyama Special Steel

9-11, Shinkawa 2-chome, Chuo-

Co., Ltd.

ku, Tokyo

ISHII DENKOSHA
Co., Ltd.

Number ofshares held
under thenames ofothers(shares)

Total shares
held (shares)

Ownership
percentage tothe total
number ofissued shares(%)

1,030,400－

1,030,400

0.11

2,100

－

2,100

0.00

200

－

200

0.00

17,600－17,6000.00

10,500－10,500

0.00

3,000

－

3,000

0.00

1,063,800－

1,063,800

0.11

1-11, Oroshishinmachi 3chome, Higashi-ku, Niigata-shi,
Niigata

SAITA KOUGYOU

5-3, Takinogawa 5-chome, Kita-

CO., LTD.

ku, Tokyo

Nitto Jidosha

3268, Nagaoka, Ibarakimachi,

Kiki K.K.

Higashiibaraki-gun, Ibaraki

Mizuho Co., Inc.

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

Total

Number ofshares held
under own name(shares)－

2. Changes in Senior Management
There were no changes in senior managements from the filing date of the Annual Securities Report for the 150th businessterm pursuant to the Financial Instruments and Exchange of Act of Japan to September 30, 2019.

IV. Financial Information
Refer to the condensed quarterly consolidated financial statements incorporated in this Quarterly Report.

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

13

Condensed Quarterly Consolidated Financial Statements
Condensed Quarterly Consolidated Statement of Financial Position
Millions of yen
Note
AssetsCurrent assets
Cash and cash equivalents
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets

6
7

Total current assets
Non-current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Intangible assets
Other non-current assets

7
3
3

Total non-current assets
Total assets
Liabilities
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities

3,7
7

Total current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities

3,7
8

September 30, 2019

March 31, 2019841,7022,156,742
1,481,539
275,520
222,275

807,5932,399,933
1,356,762
284,267
187,238

4,977,778

5,035,793

767,166
548,025
2,144,037
911,983
370,607724,461
568,349
1,956,685
960,016
381,288

4,741,818

4,590,799

9,719,596

9,626,592

340,828
206,430
193,783
1,226,922
585,272
605,010
411,997

111,031
185,250
257,792
1,406,012
653,676
553,510438,289

3,570,242

3,605,560

840,065
505,628
357,817708,490526,688371,451

Total non-current liabilities
Total liabilities

1,703,510

1,606,629

5,273,752

5,212,189

EquityHitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, at cost

459,862
460,557
2,440,055(15,541)(3,722)458,790
463,786
2,287,587
56,360(3,920)3,341,211

3,262,603

9

Total Hitachi, Ltd. stockholders’ equity
Non-controlling interests

1,104,633

1,151,800

Total equity

4,445,844

4,414,403

Total liabilities and equity

9,719,596

9,626,592

See accompanying notes to condensed quarterly consolidated financial statements.

F-1

Condensed Quarterly Consolidated Statement of Profit or Loss
Six months ended September 30, 2019 and 2018
Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using the equity
methodEBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income from continuing operations, before income taxes
Income taxes
Income from continuing operations
Loss from discontinued operations
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
DilutedEarnings per share attributable to Hitachi, Ltd. stockholders
Basic
DilutedMillions of yen
Note
10

8,11
11
12
12

13

2019
4,221,327(3,074,791)
1,146,536(849,333)
38,156(75,904)
4,920(1,364)2018
4,491,834(3,279,482)
1,212,352(867,762)
38,218(46,972)
14,484(1,152)27,506

3,166

290,517
10,397(11,938)
288,976(90,646)
198,330(796)
197,534

352,334
10,238(9,652)352,920(92,751)
260,169(4,003)
256,166

189,2938,241

192,995
63,171

196.84
196.60Yen
204.01203.83196.02
195.77199.86
199.6914

14

Condensed Quarterly Consolidated Statement of Comprehensive Income
Six months ended September 30, 2019 and 2018
Note

Millions of yen

Net income

2019
197,534

2018
256,166

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

20,049133
20,182(23,750)421(23,329)

Items 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(96,172)
4,645(16,972)(108,499)

34,388(3,231)
10,642
41,799(88,317)
109,217

18,470274,636

131,271(22,054)

204,468
70,168Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
See accompanying notes to condensed quarterly consolidated financial statements.
F-2

Condensed Quarterly Consolidated Statement of Profit or Loss
Three months ended September 30, 2019 and 2018

Millions of yen
Note

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using the equity
methodEBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income from continuing operations, before income taxes
Income taxes
Income from continuing operations
Loss from discontinued operations
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
DilutedEarnings per share attributable to Hitachi, Ltd. stockholders
Basic
Diluted2019
2,188,745(1,586,401)
602,344(429,529)
4,079(83,953)
5,112
(478)

2018
2,325,935(1,693,086)
632,849(436,407)
199(38,181)1,165(2,067)

10,431

14,300108,006
5,434(6,336)
107,104(49,420)
57,684(387)
57,297

171,858
5,668(5,068)172,458(43,840)
128,618(9,879)118,739

68,990(11,693)

87,75030,989

71.84
71.75

Yen
101.10101.01

71.44
71.35

90.87
90.79

14

14

Condensed Quarterly Consolidated Statement of Comprehensive Income
Three months ended September 30, 2019 and 2018
Note

Millions of yen

Net income

201957,297

2018
118,739

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

19,921
108
20,029(23,862)97(23,765)

Items 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(29,503)
4,350(21,560)(46,713)30,770(2,949)7,551
35,372(26,684)
30,613

11,607130,346

53,821(23,208)

91,34738,999Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
See accompanying notes to condensed quarterly consolidated financial statements.
F-3

Condensed Quarterly Consolidated Statement of Changes in Equity
Six months ended September 30, 2019

Millions of yen
2019

Commonstock

CapitalsurplusRetainedearnings(note 9)458,790

463,786

2,287,587

Balance at beginning of period
Cumulative effects of changes inaccounting policies (note 3)
Restated balance

Accumulated
othercomprehensive
income (loss)
56,360Treasurystock,
at cost(3,920)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

3,262,603

1,151,800

4,414,403--(2,596)--(2,596)(1,075)(3,671)

458,790

463,786

2,284,991

56,360(3,920)3,260,007

1,150,725

4,410,732

Changes in equity
Reclassified into retained earnings--

14,051(14,051)

-

-

-

-

Net income--

189,293--

189,293

8,241

197,534

Other comprehensive loss

-

-

-

(58,022)-(58,022)(30,295)(88,317)

Dividends to Hitachi, Ltd. stockholders--(48,280)--(48,280)-(48,280)(26,207)

Dividends to non-controlling interests

-

-

-

-

-

-

(26,207)

Acquisition of treasury stock

-

-

-

-

(75)

(75)

-

(75)

Sales of treasury stock

-

(138)

-

-

273

135

-

135

Issuance of new shares

1,072

1,072

-

-

-

2,144

-

2,144

-

(4,163)-172-(3,991)

2,169(1,822)

Total changes in equity

1,072(3,229)155,064(71,901)

198

81,204(46,092)

35,112

Balance at end of period

459,862

460,557

2,440,055(15,541)(3,722)

3,341,211

1,104,633

4,445,844

Changes in non-controlling interests

Six months ended September 30, 2018

Millions of yen
2018

Balance at beginning of period
Cumulative effects of changes inaccounting policies
Restated balance

Accumulated
othercomprehensive
incomeTreasurystock,
at cost

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests(note 5)

Total equity

Commonstock

CapitalsurplusRetainedearnings(note 9)458,790575,809

2,105,395

142,167(4,137)

3,278,024

1,233,647

4,511,671

-

-

3,209

-

-

3,209

(1,406)

1,803

458,790575,809

2,108,604

142,167(4,137)

3,281,233

1,232,241

4,513,474

Changes in equity
Reclassified into retained earnings--

19,166(19,166)

-

-

-

-

Net income--

192,995--

192,995

63,171

256,166

Other comprehensive income

-

-

-

11,473-

11,473

6,997

18,470

Dividends to Hitachi, Ltd. stockholders--(38,621)--(38,621)-(38,621)

Dividends to non-controlling interests

-

-

-

-

-

-

(22,919)(22,919)

Acquisition of treasury stock

-

-

-

-

(112)

(112)

-

(112)

Sales of treasury stock

-

(236)

-

-

432

196

-

196

Changes in non-controlling interests

-

1,540

-

553

-

2,093

(61,709)(59,616)

Total changes in equity

-

1,304

173,540(7,140)320

168,024(14,460)

153,564

Balance at end of period

458,790

577,1132,282,144

135,027(3,817)3,449,257

1,217,781

4,667,038

See accompanying notes to condensed quarterly consolidated financial statements.

F-4

Condensed Quarterly Consolidated Statement of Cash FlowsSix months ended September 30, 2019 and 2018

Millions of yen
Note

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 (profits) losses of investments accounted for using the equity method
Financial income and expenses
Net (gain) loss on business reorganization and others(Gain) loss on sale of property, plant and equipment
Change in trade receivables and contract assets
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

3

2019

2018

197,534

256,166

207,830
69,66990,645(27,506)(1,415)(28,086)
1,030
251,569(185,832)
2,290(140,314)(20,167)(118,901)
5,137

179,384
26,29390,145(3,166)(3,742)(37,236)2,175
293,004(222,468)(25,759)(120,687)(16,516)(114,622)(3,081)

303,483
13,1207,148(12,267)(105,796)

299,8908,326
8,576(11,393)(93,405)

205,688

211,994(167,342)(41,796)
10,180(197,873)(41,754)
15,247(48,038)(25,026)

Cash flows from investing activities:
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment, and intangible assets
Purchase of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)Other
Net cash provided by (used in) investing activities

46,001(6,084)

110,878(3,943)(207,079)(142,471)

Cash flows from financing activities:
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
Other

242,723
44,889(145,990)
2,603(48,163)(24,772)(75)
135(1,205)(8)

139,294
35,975(56,876)
4,892(38,591)(23,396)(112)
196(1,397)(14)

70,13759,971

Net cash provided by (used in) financing activities

3

Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents(34,637)(1,860)34,109127,634

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

807,593
841,702697,964
825,598

See accompanying notes to condensed quarterly consolidated financial statements.

F-5

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
condensed quarterly consolidated financial statements of the Company as of and for the six months ended September 30, 2019
comprise the Company, its subsidiaries and the Company’s interests in associates and joint ventures. The Company’s and its
subsidiaries’ businesses are global and diverse, and include manufacturing and services in ten segments consisting of IT, Energy,
Industry, Mobility, Smart Life, Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals, Hitachi Chemicaland others.
(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 Quarterly Consolidated
Financial Statements (Cabinet Office Ordinance No.64 of 2007), the condensed quarterly consolidated financial statements of theCompany have been prepared in accordance with International Accounting Standards (IAS) 34 “Interim Financial Reporting,” aspermitted by the provision of Article 93 of the Ordinance. They do not include all the information and disclosures required for acomplete set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), and should
be read in conjunction with the financial statements and notes included in the Company’s annual consolidated financial statements
for the year ended March 31, 2019.
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 condensed quarterly
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 thereporting period in which the change was made and in future periods.
Judgments, estimates and assumptions that could have a material effect on these condensed quarterly consolidated financial
statements are basically the same as those disclosed in the Company’s annual consolidated financial statements for the year ended
March 31, 2019.

F-6

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(3) Significant Accounting Policies
Significant accounting policies adopted in preparation of the condensed quarterly consolidated financial statements are consistent
with those used in the preparation of the Company’s annual consolidated financial statements for the year ended March 31, 2019,
except for the following matters.
(a) Leases(i) Lessee
The Company and certain subsidiaries lease facilities, mainly buildings, machines, and vehicles, and recognize a right-of-use
asset, a right to use the underlying asset, and a lease liability, an obligation to make lease payments, and recognize lease costs
as depreciation charges for right-of-use assets and interest expenses on lease liabilities. Lease payments for short-term leases
with a lease term of 12 months or less are recognized in profit or loss on a straight-line basis.
Right-of-use asset
A lessee shall apply a cost model to measure the right-of-use asset, and shall present the corresponding amount in Property,
Plant and Equipment or Intangible assets as the amount of the right-of-use asset at cost at the commencement date of thelease less any accumulated depreciation and any accumulated impairment losses. The right-of-use asset at cost includes theamount of the initial measurement of the lease liability and the initial direct cost incurred by the lessee. The lessee shalldepreciate the right-of-use asset from the commencement date of the lease to the earlier of the end of the useful life of theunderlying asset or the end of the lease term on a straight-line basis. Changes in the useful life or the lease term are accounted
for on a prospective basis as a change in accounting estimate.
Lease liability
The lease liability is measured at the present value of lease payments that are not paid at the commencement date of the lease,
discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate, and is included in the
Current portion of long-term debt or Long-term debt. Interest expense on the lease liability in each period during the leaseterm that produce a constant periodic rate of interest on the remaining balance of the lease liability is recognized in profit orloss over the lease term and is included in Interest charges in the condensed quarterly consolidated statement of profit or loss.
(ii) Lessor
The Company and certain subsidiaries, as lessors, lease facilities, mainly buildings, machines, and equipment, whereby
substantially all the risks and rewards incidental to the ownership of items of property, plant and equipment are transferred to
the lessee. Therefore, such leases are classified as finance leases with the recognition of the underlying asset discontinued andthe present value of the total amount of lease payments is used to recognize and measure the net investment in the lease.
If substantially all the risks and rewards incidental to the ownership remain with the lessor in a lease, it is classified as an
operating lease, and the underlying asset is continuously recognized, and lease income is recognized over the lease term on astraight-line basis.
Changes in Accounting Policies
From the beginning of the fiscal year ending March 31, 2020, the Company has adopted IFRS 16 “Leases” (IFRS 16). IFRS
16 sets out the principles for the recognition, measurement, presentation and disclosure of leases, and lessees are required toaccount for all leases under a single on-balance sheet model. As a transitional measure upon the adoption of IFRS 16, theCompany applies this standard and the method of recognizing the cumulative effect of the initial application as an adjustment
to the beginning balance of retained earnings at the date of initial application.
The Company’s leases consist mainly of the leasing of real estate, and the impact of adopting IFRS 16 on the condensed
quarterly consolidated statement of financial position at the beginning of the fiscal year ending March 31, 2020 includes anincrease in assets of ¥218,161 million associated with the recognition of right-of-use assets, an increase in liabilities of¥221,832 million associated with the recognition of lease liabilities, and a decrease in equity of ¥3,671 million associatedwith the recognition of an adjustment to the beginning balance of retained earnings, etc. at the date of initial application. The
impact on the condensed quarterly consolidated statement of profit or loss was not material. In addition, with respect to thecondensed quarterly consolidated statement of cash flows, while lease payments for operating leases were previously
included in cash flows from operating activities, adjustments for depreciation charges for right-of-use assets are included in
cash flows from operating activities and payments of lease liabilities are included in cash flows from financing activities as aresult of adopting IFRS 16; therefore, compared with the previous accounting standard, cash flows from operating activities
increased while cash flows from financing activities decreased.

F-7

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
The Company elects to use the practical expedient under which it is not required to perform a review for the existence of alease in a contract judged under IAS 17 “Lease” (hereinafter “IAS 17”) and IFRIC 4 “Determining whether an Arrangement
contains a Lease” in prior periods at the commencement date of IFRS 16. In addition, when IFRS 16 is applied to a lease thatis classified as an operating lease under IAS 17, the following practical expedients are mainly elected to use.
・A lessee accounts for the leases for which the lease term ends within 12 months of the date of initial application, in thesame way as short-term leases.
・A lessee uses hindsight, in determining the lease term if the contract contains options to extend or terminate the lease.
The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized in the condensed quarterly
consolidated statement of financial position at the beginning of the fiscal year ending March 31, 2020 is 1.46%.
The difference between the future minimum lease payments of ¥135,963 million under non-cancelable operating leases as ofMarch 31, 2019 disclosed in accordance with IAS 17 and the lease liabilities of ¥273,812 million recognized in thecondensed quarterly consolidated statement of financial position at the beginning of the fiscal year ending March 31, 2020 is¥137,849 million. The main factors for the reconciliation from the future minimum lease payments based on non-cancelable
operating leases as of March 31, 2019 to lease liabilities recognized in the condensed quarterly consolidated statement offinancial position at the beginning of the fiscal year ending March 31, 2020 include decreases of ¥32,940 million due to theapplication of the practical expedient related to short-term leases, ¥17,980 million due to the separation of non-lease
components of the contract and ¥9,456 million due to the measurement of the discounted present value of lease liabilities,
and increases of ¥149,026 million due to the impact of periods covered by extension options and termination options
included in the lease term and ¥49,199 million due to the inclusion of lease liabilities classified as finance leases under IAS
17.
(b) Income Taxes
Income taxes for the six months ended September 30, 2019 are computed using the estimated annual effective tax rate.

F-8

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(4) Segment Information
The operating segments of the Company are the components for which separate financial information is available and which isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company discloses its business in ten reportable segments, corresponding to categories of activities classified primarily by thesimilarities for the nature of markets, products and services, and economic characteristics. Several operating segments areaggregated into IT, Industry, Mobility and Smart Life for financial reporting purposes so that users of the financial statements
better understand the Company’s financial position and business performance. The Company aggregates operating segments basedon the similarities of economic characteristics mainly using gross profit margin ratios of operating segments. The primary products
and services included in each segment are as follows:IT:
Systems integration, Consulting, Control systems, Cloud services, Software, IT products (Storage, Servers) and ATMs
Energy:Power generation systems (Nuclear, Renewable energy, Thermal) and Power grid systems
Industry:
Industry & distribution systems, Water & environment systems and Industrial machinery
Mobility:
Building systems (Elevators, Escalators) and Railway systems
Smart Life:
Medical electronics, Smart life & ecofriendly systems (Refrigerators, Washing machines, Room air conditioners, Air-conditioning
equipment) and Automotive systems (Powertrain systems, Chassis systems, Advanced driver assistance systems)
Hitachi High-Technologies:
Medical and life science products, Analytical equipment, Semiconductor processing equipment, Manufacturing and inspection
equipment, and Advanced industrial products
Hitachi Construction Machinery:Hydraulic excavators, Wheel loaders, Mining machinery, Maintenance and services, Construction solutions and Mine management
systems
Hitachi Metals:
Specialty steel products, Functional components and equipment, Magnetic materials and power electronics materials, and Wires,
cables and related products
Hitachi Chemical:
Functional materials (Electronics materials, Printed wiring boards materials, Electronics components) and Advanced components
and systems (Mobility components, Energy storage devices, Life science-related products)
Others:
Optical disk drives, Property management and others
Effective from April 1, 2019, the Company changed its business structure in order to increase customer’s social, environmental
and economic values by accelerating the Social Innovation Business. Accordingly, the Company reclassified its reportablesegments in ten segments which include five focused areas as IT, Energy, Industry, Mobility and Smart Life, four listed subsidiarygroups as Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals and Hitachi Chemical, and Others. Figures
for the six months ended September 30, 2018 have been restated on the basis of the reclassification.

F-9

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
The following tables show business segment information for the six months ended September 30, 2019 and 2018.
Revenues from Outside Customers
Millions of yen
2019

2018

IT

921,911895,674

EnergyIndustry

133,726
292,686

144,159
283,052

Mobility
Smart Life

525,105
689,922574,058
786,847

Hitachi High-Technologies
Hitachi Construction Machinery

299,708
480,385

312,794490,200

Hitachi Metals
Hitachi Chemical

442,125
306,856

502,027
333,365

Others123,916

163,843

Subtotal

4,216,340

4,486,019

4,987

5,815

4,221,327

4,491,834

Corporate items
Total
Revenues from Intersegment Transactions

Millions of yen
2019

2018

IT
Energy73,33527,89780,51832,972

Industry
Mobility

74,025
4,849

76,892
6,985

Smart Life
Hitachi High-Technologies

19,041
46,66619,99750,294

Hitachi Construction Machinery
Hitachi Metals

174
14,763

213
16,931

Hitachi Chemical
Others

9,772
112,385

10,153
128,800

Subtotal
Corporate items and Eliminations

382,907(382,907)

423,755(423,755)

-

-

Total
Total Revenues

Millions of yen
2019

2018

IT

995,246

976,192

EnergyIndustry

161,623
366,711

177,131359,944

Mobility
Smart Life529,954
708,963

581,043806,844

Hitachi High-Technologies
Hitachi Construction Machinery

346,374
480,559

363,088
490,413

Hitachi Metals
Hitachi Chemical

456,888316,628

518,958
343,518

Others236,301

292,643

Subtotal

4,599,247

4,909,774

Corporate items and Eliminations(377,920)(417,940)

Total

4,221,327

4,491,834

F-10

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
Segment Profit (Loss)
Millions of yen
2019

2018

IT

105,841

88,312

EnergyIndustry

1,071
20,648(4,750)15,206

Mobility
Smart Life

63,92827,94635,166
1,135

Hitachi High-Technologies
Hitachi Construction Machinery

30,77942,85533,97049,372

Hitachi Metals
Hitachi Chemical(56,329)
15,512

38,104
23,572Others

14,253

19,470Subtotal

266,504

299,557

Corporate items and Eliminations

24,013

52,777

Total
Interest income

290,517
10,397352,334
10,238Interest charges(11,938)(9,652)

Income from continuing operations, before income taxes

288,976352,920

Segment profit (loss) is measured by EBIT.
Intersegment transactions are generally recorded at the same prices used in arm’s length transactions. Corporate items include
corporate expenses not allocated to individual business segments, such as expenditures for leading-edge R&D, a part of net gain (loss)
on business reorganization and share of profits (losses) of investments accounted for using the equity method, and others.

F-11

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(5) Business Acquisitions and Divestitures
The following are the main Business Acquisitions and Divestitures for the six months ended September 30, 2019, including theperiod up to the approval date of the condensed quarterly consolidated financial statements.
(a) Reorganization of automotive systems business
On October 30, 2019, the Company and Hitachi Automotive Systems, Ltd. (HiAMS), a consolidated subsidiary of theCompany in the Smart Life segment, signed an agreement with Honda Motor Co., Ltd. (Honda), and Keihin Corporation,
Showa Corporation, and Nissin Kogyo Co., Ltd. (together, “the Associates of Honda”), to integrate management of HiAMS
and the Associates of Honda, in order to strengthen development and distribution of global and competitive solutions in the
CASE area.
HiAMS and the Associates of Honda plan to conduct an absorption-type merger in which HiAMS will be the surviving
company (the Integrated Company) and each of the Associates of Honda will be the disappearing companies after they become
wholly-owned subsidiaries of Honda through tender offers to be conducted by Honda for the common shares of the Associatesof Honda. The consideration will be the common shares of the Integrated Company. After the merger, the Company's
ownership ratio of shares of the Integrated Company will become 66.6% and the Integrated Company will become aconsolidated subsidiary of the Company. The effects of this transaction on the Company’s consolidated financial statements are
currently being evaluated.
(b) Acquisition of Chassis Brakes International B.V. (Chassis Brakes)
On July 24, 2019, the Company and HiAMS, a consolidated subsidiary of the Company in the Smart Life segment, signed anagreement with Caliper Acquisition International S.à r.l. (Caliper), a special purpose vehicle of KPS Capital Partners, for
HiAMS to acquire all shares of Chassis Brakes in order to further strengthen core businesses and build HiAMS’s global
presence. On October 11, 2019, the acquisition was executed. The total consideration for the shares of Chassis Brakes was
EUR 506 million (¥60,078 million). Furthermore, Hitachi International (Holland) B.V., a consolidated subsidiary of theCompany, repaid EUR 194 million (¥23,066 million) of certain loans owed by Chassis Brakes, in addition to the acquisition
cost.
Due to the short period of time between the acquisition date and the issuance date of the condensed quarterly consolidated
financial statements, the initial accounting for the business combination is incomplete and therefore the Company is unable toprovide disclosures related to the amounts recognized as of the acquisition date for each major class of assets acquired andliabilities assumed and the amount of goodwill.
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition date forthe business of April 1, 2019 would not differ materially from the amounts reported in the condensed quarterly consolidated
financial statements for the six months ended September 30, 2019.
(c) Acquisition of JR Automation’s robotic systems integration business
On April 23, 2019, the Company signed an agreement with JR Intermediate Holdings, LLC (JR Intermediate) to acquire therobotic systems integration business mainly operated by JR Automation Technologies, LLC, an American subsidiary of JR
Intermediate, in order to expand the robotic systems integration business globally. The acquisition is expected to be executedby the end of 2019. The consideration is expected to be USD 1,425 million (¥153,786 million). The effects of this transaction
on the Company’s consolidated financial statements are currently being evaluated.
The following are the main Business Acquisitions and Divestitures for the six months ended September 30, 2018.
(a) Sale of shares and business reorganization of Hitachi Kokusai Electric Inc. (Hitachi Kokusai)
On April 26, 2017, the Company signed a basic agreement with HKE Holdings K.K. (HKE), which is indirectly held andoperated by a related investment fund whose equity interests are wholly owned by Kohlberg Kravis Roberts & Co. L.P. andwith HVJ Holdings Inc. (HVJ), in which is invested by funds which are managed, operated, provided with information and thelike by Japan Industrial Partners, Inc., regarding (i) a tender offer to be conducted by HKE for the common shares of Hitachi
Kokusai, which was a consolidated subsidiary of the Company included in Others under segment information and a shareconsolidation of the share of Hitachi Kokusai, and the acquisition of treasury shares by Hitachi Kokusai, through which Hitachi
Kokusai becomes a wholly-owned subsidiary of HKE, (ii) an absorption-type company split of the thin-film process solutions
business of Hitachi Kokusai, whereby HKE is the company succeeding in the absorption-type split, to be conducted by HKE
and Hitachi Kokusai after Hitachi Kokusai becomes a wholly-owned subsidiary of HKE, and (iii) the transfer by HKE of 20%of the share of Hitachi Kokusai to the Company and 20% of the share of Hitachi Kokusai to HVJ to take place after theabsorption-type company split, and other transactions that are incidental or related to those transactions. Furthermore, on
October 11, 2017, on November 24, 2017 and on March 30, 2018, the Company signed a memorandum of understanding toamend the basic agreement (the Amendment Memorandum) with HKE and HVJ.
F-12

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
HKE commenced the tender offer on October 12, 2017 pursuant to the Amendment Memorandum, and the tender offer wascompleted on December 8, 2017. Following the completion of the tender offer, the above related transactions, such as the shareconsolidation of Hitachi Kokusai shares, took place and the all related transactions were completed on June 4, 2018. As aresult, the Company's ownership ratio of shares of Hitachi Kokusai decreased from 51.7% to 20.0% and Hitachi Kokusai
turned into an equity-method associate of the Company. A gain on the sale of shares of Hitachi Kokusai in the amount of¥32,049 million was recognized in Other income in the condensed quarterly consolidated statement of profit or loss. Changes
in non-controlling interests in the condensed quarterly consolidated statement of changes in equity include derecognition of non-controlling interest in Hitachi Kokusai as a result of its deconsolidation.
On June 1, 2018, HKE changed its name to Kokusai Electric Corporation.
The following is a material Business Acquisition other than the above.
(a) Acquisition of ABB's power grids business
On December 17, 2018, the Company decided to acquire the power grids business from ABB Ltd (ABB) and signed anagreement with ABB in order to strengthen and expand energy solutions business globally. The Company plans to acquire an
80.1% stake in the company operating the power grids business that will be divested by ABB in the first half of 2020 and makeit a consolidated subsidiary of the Company. The consideration is expected to be approximately USD 6.4 billion(approximately ¥690.7 billion). Furthermore, the Company is expected to repay certain loans owed by the company operating
the power grids business to be divested by ABB, in addition to the acquisition cost. The effects of this transaction on the
Company’s consolidated financial statements are currently being evaluated.

F-13

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(6) Trade Receivables and Contract Assets
The components of trade receivables and contract assets are as follows:
Millions of yen
September 30, 2019
Accounts receivable

March 31, 2019

1,528,223

1,790,520

Contract assets

469,717432,881

Others158,802

176,532

2,156,742

2,399,933

Total trade receivables and contract assets

Trade receivables and contract assets are stated as net of the allowance for doubtful receivables.
Others include notes receivable and electronically recorded monetary claims.
(7) Fair Value of Financial Instruments(a) Fair Value Measurements
The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Trade receivables, Short-term loans receivable, Other accounts receivable, Short-term debt,
Other accounts payable and Trade payables
The carrying amount approximates the fair value because of the short maturity of these instruments.
Investments in securities and other financial assets
The fair value of lease receivables is based on the present value of lease payments receivable calculated for each group of years
to maturity using discount rates that reflect the time to maturity and credit risk.
Investment securities with quoted market prices are estimated using the quoted share prices. In the absence of an active market
for investment securities, quoted prices for similar investment securities, quoted prices associated with transactions that are notdistressed 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 areunobservable, the Company uses price information provided by financial 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 the interest rateapplicable to an additional loan of the same type.
Derivative assets are measured at fair value based on quoted prices associated with transactions that are not distressed, prices ininactive 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 other available information.
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 themarket 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 not distressed, 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 other available information.

F-14

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(b) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as of September 30 andMarch 31, 2019 are as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 of the fair value
hierarchy.
Millions of yen
September 30, 2019
Carrying amounts

March 31, 2019

Estimated
fair values

Carrying amounts

Estimated
fair values

AssetsInvestments in securities and otherfinancial assets
Lease receivables

89,06990,232

95,07396,377

Debt securities

72,361

72,366

72,41872,422Long-term loans receivable

96,72898,081

105,061

106,390

Bonds

154,528

159,129

170,498

174,747

Long-term borrowings

623,686

628,079

674,043

678,481

Liabilities
Long-term debt [1][1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the condensed quarterly consolidated
statement of financial position.
(c) Financial Instruments Measured at Fair Value
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into three levels of thefair 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 is significant with thelowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

F-15

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
The following tables present the assets and liabilities that are measured at fair value on a recurring basis as of September 30 andMarch 31, 2019.
September 30, 2019
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

FVTPL financial assets:
Investments in securities and otherfinancial assets
Equity securities
Debt securities

-

-

3,453

3,453

9,421

4,946

8,801

23,168-40,826

6,863

47,689183,213-99,933

283,146

192,634

45,772

119,050

357,456-

27,575-27,575-27,575-27,575Derivatives
FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value
March 31, 2019
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

FVTPL financial assets:
Investments in securities and otherfinancial assets
Equity securities
Debt securities
Derivatives

-

-

2,743

2,743

10,127

4,895

9,344

24,366-25,2697,059

32,328

183,585-

102,334

285,919

193,71230,164

121,480

345,356-

23,078-23,078-23,078-23,078FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

F-16

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
The following tables present the changes in Level 3 instruments measured on a recurring basis for the six months ended
September 30, 2019 and 2018.
September 30, 2019
Level 3 financial assets

Millions of yen
Equitysecurities

Debt
securities

Derivatives

Total

Balance at beginning of period

105,077

9,344

7,059

121,480

Gain (loss) in profit or loss [1]Gain in OCI [2]

(19)
883

3
-

(196)
-

(212)
883

Purchases
Sales and redemption

1,996(1,090)

372
(892)

-

2,368
(1,982)Acquisitions and divestitures
Other

(45)
(3,416)

(26)

-

(45)
(3,442)

Balance at end of period

103,386

8,801

6,863

119,050

(19)

25

(196)

(190)

Unrealized gain (loss) relating tofinancial assets held at end of period [4]September 30, 2018
Level 3 financial assets

Millions of yen
Equitysecurities

Debt
securities

Derivatives

Total

Balance at beginning of period

114,734

9,590

7,760

132,084

Gain (loss) in profit or loss [1]Gain in OCI [2]

33
3,805

99
-

(833)
-

(701)
3,805

Purchases
Sales and redemption

1,084(1,126)

2,316(1,163)-3,400(2,289)Acquisitions and divestitures
Transfer from Level 3 [3](5,232)
(378)

(55)
-

-

(5,287)
(378)

Other
Balance at end of period(3)112,917(190)
10,597

6,927

(193)
130,441

33

98

(833)

(702)

Unrealized gain (loss) relating tofinancial assets held at end of period [4][1] Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial expenses in thecondensed quarterly consolidated statement of profit or loss.
[2] Gain in OCI related to FVTOCI financial assets is included in Net changes in financial assets measured at fair value throughOCI in the condensed quarterly consolidated statement of comprehensive income.
[3] Transfer from Level 3 is mainly the result of an investee being listed on the stock market.
[4] Unrealized gain (loss) relating to FVTPL financial assets held at the end of period is included in Financial income andFinancial expenses in the condensed quarterly consolidated statement of profit or loss.
Written put options on non-controlling interests of subsidiaries are not included in the above table. Such put options areclassified as Level 3 financial liabilities measured on a recurring basis, and changes in fair value are recognized in Capitalsurplus. The fair value of the put options above as of September 30 and March 31, 2019 were ¥10,222 million and ¥17,678
million, respectively, included in Other financial liabilities in the condensed quarterly consolidated statement of financial
position.
Fair values are measured by the finance departments 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 departments continually examine changes in important inputs that could affect the fair value. In case the fair value of afinancial instrument was significantly impaired, administrators review and approve the impairment loss.

F-17

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(8) Employee Benefits(Revision of defined benefit pension plan)
On April 1, 2019, for current employees participating in the defined benefit pension plan managed by the Hitachi Pension Fund,
the Company and Hitachi Industrial Products, Ltd., a consolidated subsidiary of the Company in the Industry segment, introduced
a risk-sharing corporate pension plan. Under this plan, a risk reserve contribution is determined in advance in accordance with therules governing the plan, and the pension benefits are adjusted annually based on the financial position of the plan to maintainbalanced finance.
In terms of the corresponding accounting treatment for retirement benefits, risk-sharing corporate pension plans, for which anentity accepts contribution obligations to the extent stipulated in the rules but has no further obligations to make any additional
contributions, are classified as defined contribution plans. Since this risk-sharing corporate pension plan imposes no additional
contribution obligations, at the time of the shift to the revised plan, the difference between the defined benefit obligations related tothe portion transferred to the revised plan and the amount of assets transferred to the revised plan corresponding to the decrease in
defined benefit obligations, ¥21,206 million, was recognized as a settlement gain in Other income in the condensed quarterly
consolidated statement of profit or loss, and Retirement and severance benefits in the condensed quarterly consolidated statementof financial position decreased by ¥21,206 million. The amount of risk reserve contributions to be paid for the fiscal year ending
March 31, 2020 are not material.
(9) Dividends
Dividends paid on the Company’s common stock for the six months ended September 30, 2019 are as follows:

Decision
The Board of Directors
on May 10, 2019

Cash dividends

Appropriation

Cash dividends(millions of yen)fromper share (yen)48,280Retained earnings

50.0

Record date

Effective date

March 31, 2019

May 31, 2019

Dividends on the Company's common stock whose record date falls in the six months ended September 30, 2019 and the effective
date falls in the next period are as follows:

Decision
The Board of Directors
on October 30, 2019

Cash dividends(millions of yen)
43,481

Appropriation
from
Retained earnings

Cash dividends
per share (yen)Record date

Effective date

45.0 September 30, 2019 November 29, 2019

Dividends paid on the Company’s common stock for the six months ended September 30, 2018 are as follows:

Decision
The Board of Directors
on May 10, 2018

Cash dividends

Appropriation

Cash dividends(millions of yen)fromper share (yen)38,621Retained earnings

8.0

Record date

Effective date

March 31, 2018

May 29, 2018

Note: Dividends per share do not reflect the share consolidation with an effective date of October 1, 2018.
Dividends on the Company's common stock whose record date falls in the six months ended September 30, 2018 and the effective
date falls in the next period are as follows:

Decision
The Board of Directors
on October 26, 2018

Cash dividends

Appropriation

Cash dividends(millions of yen)fromper share (yen)38,625Retained earnings

Record date

8.0 September 30, 2018 November 27, 2018

Note : Dividends per share do not reflect the share consolidation with an effective date of October 1,2018.

F-18

Effective date

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(10) Revenues(a) Disaggregation of revenue
The Company derives revenues primarily from contracts with customers. The following table shows the disaggregation ofrevenue attributable to each reportable segment and geographic area.
Effective from April 1, 2019, the Company reclassified its reportable segments. Accordingly, figures for the six months ended
September 30, 2018 have been restated on the basis of the reclassification. Details of the reclassification are described in note 4.
(Millions of yen)
September 30, 2019
Overseas
Revenues
Subtotal

Total
Revenues

18,549274,486995,246

2,017

1,850

20,052

161,623

25,101

5,398

11,17585,301

366,711

181,583

19,635

147,651

20,013368,882

529,954

416,951

112,016

113,250

38,97827,768292,012

708,963

Hitachi High-Technologies

127,879

107,037

56,42746,052

8,979

218,495

346,374

Hitachi Construction Machinery

99,924

108,534

92,13773,807106,157

380,635

480,559

Hitachi Metals

207,673

85,708130,40922,524

10,574249,215456,888

Hitachi Chemical

115,415

137,004

24,11030,8939,206

201,213

316,628

Others

195,327

26,645

8,637

2,584

3,108

40,974

236,301

Subtotal

2,467,982

902,263

567,854443,769

217,379

2,131,265

4,599,247

Corporate items and Eliminations(342,040)(25,774)(4,782)(2,892)(2,432)(35,880)(377,920)

Total

2,125,942

876,489

563,072

440,877

214,947

2,095,385

4,221,327

North
America

Japan

Asia

IT

720,760

87,447

94,62573,865

Energy141,571

12,662

3,523

Industry

281,410

43,627

Mobility

161,072

Smart Life

Europe

Other
Areas

(Millions of yen)
September 30, 2018
Overseas
Revenues
Subtotal

Total
Revenues

20,582

289,142976,192

3,016

2,001

20,887

177,131

26,832

7,068

13,692

93,746359,944

196,482

26,462

183,547

19,402425,893581,043443,531138,254

144,608

43,24037,211

363,313806,844

Hitachi High-Technologies

133,478

138,328

27,893

46,791

16,598229,610363,088

Hitachi Construction Machinery

89,734

128,371

79,29368,307

124,708

400,679

490,413

Hitachi Metals

226,713104,331

155,705

26,576

5,633

292,245518,958

Hitachi Chemical

123,255

153,555

24,54934,723

7,436

220,263

343,518

Others214,475

56,29913,428

5,375

3,066

78,168292,643

Subtotal

2,495,828

1,060,585

600,816502,216

250,329

2,413,946

4,909,774

Corporate items and Eliminations(373,960)(28,993)(5,305)(7,967)(1,715)(43,980)(417,940)

Total

2,121,868

1,031,592

595,511494,249

248,6142,369,966

4,491,834

North
America

Japan

Asia

IT

687,050

86,65098,337

83,573

Energy156,244

12,161

3,709

Industry

266,198

46,154

Mobility

155,150

Smart Life

F-19

Europe

Other
Areas

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
The IT segment consists of Front Business and Services & Platforms, for which revenue amounted to ¥667,922 million and¥378,846 million for the six months ended September 30, 2019 and ¥649,559 million and ¥377,330 million for the six months
ended September 30, 2018, respectively (including intersegment transactions). Front Business is operated mainly in Japan, andServices & Platforms is operated mainly in Japan, North America and Europe.
(b) Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services of eachreportable segment.
(IT)
Front Business primarily provides services such as system integration, consulting and cloud services. The business provides
goods and services according to customers’ specifications over a specified period of time, and revenue is recognized based on
the pattern of the cost accrual or the passage of time as performance obligations are satisfied over time.
Many of the contracts require payments based on milestones, and in some cases, payments are made before performanceobligations are satisfied.
Services & Platforms primarily sells control systems, software and IT products. Revenue is recognized when control over the
goods is transferred to customers as performance obligations are satisfied at the point in time upon the completion or upondelivery of the goods. The Company’s general terms and conditions apply, and there are no significant transactions in which
payment terms include deferred payments, etc.
(Energy, Industry and Mobility)
The Energy segment includes revenue from businesses such as power generation systems, and the Industry segment includes
revenue from businesses such as industry & distribution systems. These segments are operated mainly in Japan. The Mobility
segment includes revenue from building systems and railway systems businesses. The building systems business is operated
mainly in China and the railway systems business is operated mainly in Europe.
Contracts such as construction in these segments involve manufacturing and providing goods based on customers’
specifications over a long period of time. As performance obligations are satisfied over time, revenue is recognized based on
the pattern of the cost accrual. In addition, these segments provide certain services promised in the contracts such as
maintenance throughout the duration of the contract, and recognize revenue over time based on the passage of time. Many of
the contracts require payments based on milestones, and, in some cases, payments are made before performance obligations
are satisfied.
Further, in the sale of industrial equipment, etc. included in the Industry segment, and in the sale of elevators, etc. included in
the Mobility segment, revenue is recognized when control over the goods is transferred to customers as performanceobligations are satisfied at the point in time upon the completion or upon delivery of the goods. The Company’s generalterms and conditions apply, and there are no significant transactions in which payment terms include deferred payments, etc.
(Other)In the Smart Life, Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals, and Hitachi Chemical
segments, performance obligations are generally satisfied at a point in time upon completion of the sale and customers’
acceptance and inspection of the goods, and revenue is recognized when control over goods is transferred to customers. The
Company’s general terms and conditions apply, and there are no significant transactions in which payment terms include
deferred payments, etc.
These segments provide certain services promised in the contracts such as maintenance throughout the duration of thecontract, and they recognize revenue over time based on the passage of time. The Company’s general terms and conditions
apply, and there are no significant transactions in which payment terms include deferred payments, etc.

F-20

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(11) Other Income and Expenses
The main components of other income and expenses for the six months ended September 30, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Net gain (loss) on sales and disposals of fixed assets(1,038)(2,636)

Impairment losses(69,669)(26,293)

Net gain (loss) on business reorganization and others

28,08637,236

Special termination benefits(5,052)(3,632)(81)(1,730)

Expenses related to competition law and others

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.
Restructuring charges (structural reform expenses) included in other expenses for the six months ended September 30, 2019 and2018 were ¥74,832 million and ¥29,925 million, respectively. Restructuring charges (structural reform expenses) mainly include
impairment losses and special termination benefits.
Impairment losses for the six months ended September 30, 2019 mainly include ¥61,431 million due to the lower than expected
future revenue projected for the magnetic materials business in the Hitachi Metals segment consisting of impairment losses onproperty, plant and equipment of ¥22,479 million and on intangible assets of ¥38,952 million. The recoverable amount wasdetermined on the basis of value in use, which was measured at ¥106,313 million as of September 30, 2019, the date on which
impairment losses were recognized. The value in use was discounted at 9.6% (before tax), which was derived from the weighted
average cost of capital.
(12) Financial Income and Expenses
The main components of financial income and expenses for the six months ended September 30, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Dividends received

3,699

4,203

Exchange gain (loss)

1,209

10,281Dividends received for the six months ended September 30, 2019 and 2018 are from FVTOCI financial assets.

F-21

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(13) Discontinued Operations
In the Energy segment, the Company classified the part of thermal power generation systems business which was not transferredto 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 thecondensed quarterly consolidated statement of profit or loss since the projects were completed in the year ended March 31, 2015.
Profit or loss and cash flows from the discontinued operations for the six months ended September 30, 2019 and 2018 are as
follows:
Millions of yen
2019

2018

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

20(6,429)

(817)

(180)

(797)

(6,609)

1

2,606

(796)

(4,003)
Millions of yen

2019

2018

Cash flows from discontinued operations
Cash flows from operating activities(1,805)870

Cash flows from investing activities--

Cash flows from financing activities

1,851

(779)

F-22

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(14) Earnings Per Share (EPS) Information
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders for the six months ended September 30, 2019and 2018 are as follows:
Six months ended September 30
Number of shares
2019
Weighted average number of shares on which basic EPS is calculated

2018

965,694,756

965,647,549

Stock options

876,160

827,602

Restricted stock

319,930-

966,890,846

966,475,151

Effect of dilutive securities

Number of shares on which diluted EPS is calculated

Millions of yen
2019

2018

Net income from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

190,089

196,998--

190,089

196,998(796)(4,003)

-

-

(796)

(4,003)

189,293

192,995--

189,293

192,995

Net loss from discontinued operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted
Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

Yen
2019

2018

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

196.84204.01

Diluted

196.60203.83Basic(0.82)(4.15)

Diluted(0.82)(4.14)

Basic

196.02199.86

Diluted195.77

199.69EPS from discontinued operations,
attributable to Hitachi, Ltd. stockholders

EPS attributable to Hitachi, Ltd. stockholders

Note: On October 1, 2018, the Company completed the share consolidation of every five (5) shares of common stock into one (1)share. The figures for basic and diluted EPS attributable to Hitachi, Ltd. stockholders are calculated on the assumption that
the Company conducted this share consolidation at the beginning of the fiscal year ended March 31, 2019.

F-23

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders for the three months ended September 30,
2019 and 2018 are as follows:
Three months ended September 30
Number of shares
2019
Weighted average number of shares on which basic EPS is calculated

2018

965,701,551

965,640,482

Stock options

876,160

840,760

Restricted stock

310,871-

966,888,582

966,481,242

Effect of dilutive securities

Number of shares on which diluted EPS is calculated

Millions of yen
2019

2018

Net income from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted69,377

97,629--69,377

97,629(387)(9,879)Net loss from discontinued operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

-

-

(387)

(9,879)68,99087,750Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

--68,99087,750
Yen

2019

2018

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

71.84

101.10

Diluted71.75

101.01Basic(0.40)(10.23)

Diluted(0.40)(10.22)

Basic

71.44

90.87

Diluted

71.35

90.79

EPS from discontinued operations,
attributable to Hitachi, Ltd. stockholders

EPS attributable to Hitachi, Ltd. stockholders

Note: On October 1, 2018, the Company completed the share consolidation of every five (5) shares of common stock into one (1)share. The figures for basic and diluted EPS attributable to Hitachi, Ltd. stockholders are calculated on the assumption that
the Company conducted this share consolidation at the beginning of the fiscal year ended March 31, 2019.

F-24

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019(15) Contingencies(a) Litigation
In July 2011, a subsidiary in the U.S.A. received a grand jury subpoena from the Antitrust Division of the U.S. Department ofJustice, 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, all in respect of alleged
antitrust violations relating to automotive equipment. In November 2013, a subsidiary in Japan, 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 theinvestigation from the European Commission reached a settlement with the European 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. In August 2016, a subsidiary in Japan, which had been also primarily responsible for responding to theinvestigation, concluded an agreement in which the subsidiary will pay fines, and paid fines in March 2017.
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 class action
lawsuits, involving the Company and some of these companies have arisen in a number of countries, including in 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 November 2017, a subsidiary in Japan received a complaint that was filed against three companies, namely a construction
company of a condominium complex, the subsidiary and a secondary subcontractor, by a contractee in Japan seeking
approximately ¥45.9 billion in compensation for expenses allegedly incurred arising from concerns over partial deficienciesof piling work during the construction phases of the condominium complex, which the subsidiary contracted as the primary
subcontractor. In July 2018, the compensation claim against these three companies was amended to approximately ¥51.0
billion by the contractee.
In relation to the aforementioned lawsuit, in April 2018, the subsidiary in Japan received a complaint that was filed against
the subsidiary and the secondary subcontractor, by the construction company of the condominium complex seeking
approximately ¥49.6 billion in compensation for expenses allegedly incurred arising from the aforementioned lawsuit. In July
2018, the compensation claim against these two companies was amended to approximately ¥54.8 billion by the construction
company of the condominium complex. Although the subsidiary in Japan will address these claims and explain its position,
there can be no assurance that it will not be held liable for any amounts claimed.
In December 2017, a subsidiary and an associate in Europe received a complaint filed by a customer in Europe seeking
compensation for consequential losses of EUR 263 million (¥31,045 million) and interest allegedly incurred by performance
defects of a power plant. As of September 30, 2019, the amount of compensation claimed by the customer was changed to
EUR 270 million (¥31,869 million). Although the subsidiary and the associate in Europe will vigorously defend themselves
against this lawsuit, there can be no assurance that they will not be held liable for any amounts claimed.
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. There is a possibility products or services provided by the Company and its subsidiaries contain defects. As
the result of price adjustments, or in compensation for defects in products or services etc. there is a possibility that theCompany pays for any amounts.
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, of many of theseproceedings. The actual amount of fines, surcharge payments or any other payments resulting from these legal proceedings
may be different from the accrued amounts.

F-25

Notes to Condensed Quarterly Consolidated Financial Statements
September 30, 2019
In addition to the above, the Company and its subsidiaries are subject to legal proceedings and claims which have arisen in
the ordinary course of business and have not been finally adjudicated. These actions when ultimately concluded anddetermined will not, in the opinion of management, have a material adverse effect on the condensed quarterly consolidated
financial statements of the Company and subsidiaries.
(b) 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 spin-off in the form of an absorptiontype company-split. As part of this business integration, assets and liabilities associated with boiler construction projects forMedupi 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 theircontractual status in relation to customers, and rights 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 ofcompany 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 ofcompany split and confirmation of estimated project cash flows based on such schedule between the parties, and settle thedifference with the provisional price.
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 thedetails of the demand letter lacked legal grounds under any agreement and thus the Company cannot accept it.
On January 31, 2017, MHI extended the amount above and requested the Company to pay ZAR 89,700 million(approximately ¥763.4 billion when ZAR 1 = ¥8.51). The Company again replied to MHI that the Company cannot accept therequest since it lacks legal grounds under any agreement as does the request of March 2016. On August 21, 2017, theCompany received a notice from the Japan Commercial Arbitration Association (hereinafter, the “JCAA”) stating that MHI
had filed a request for arbitration with the JCAA on July 31, 2017 in order to claim for payment of ZAR 90,779 million(approximately ¥774.3 billion when ZAR 1 = ¥8.53) as the said transfer price adjustment, etc. against the Company. The
Company will address this claim and explain its position in the arbitration proceedings.
The Company has recorded provisions based on reasonable estimates for the aforementioned agreement related to the South
African Business. The amount of the said transfer price adjustment, etc. to be determined under the agreement may bedifferent from the accrued amount.
(16) Approval of Condensed Quarterly Consolidated Financial Statements
The condensed quarterly consolidated financial statements were approved on November 12, 2019 by Toshiaki Higashihara,
President and CEO of the Company.

F-26

[Cover][Document Filed][Applicable Law]

Confirmation Letter
Article 24-4-8, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with][Filing Date]

Director, Kanto Local Finance Bureau
November 12, 2019

[Company Name][Company Name in English]

Kabushiki Kaisha Hitachi Seisakusho
Hitachi, Ltd.

[Title and Name of Representative][Name and title of CFO]

Toshiaki Higashihara, President & CEO
Mitsuaki Nishiyama, Senior Vice President and Executive Officer[Address of Head Office][Place Where Available for Public Inspection]

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Tokyo Stock Exchange, Inc.
(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 Adequacy of Statements Contained in the Quarterly Report
Mr. Toshiaki Higashihara, President & CEO, and Mr. Mitsuaki Nishiyama, Senior Vice President and Executive Officer,
confirmed that statements contained in the Quarterly Report for the second quarter of the 151st fiscal year (from July 1, 2019 to
September 30, 2019) were adequate under the Financial Instruments and Exchange Act.
2. Special Notes
None.

A-2