Strategy to Strengthen
the Social Innovation Business－ Plans to Wholly Own Five Publicly Listed Companies －Takashi Kawamura
Chairman, President and Chief Executive Officer
Hitachi, Ltd.
July 28, 2009
Copyright © Hitachi,Ltd.2009 All rights reserved

1.1 Hitachi’s Social Innovation Business
Establish a Stable, High Profit Structure Create environmental value with Group’s collective strengths
 Develop highly reliable social infrastructure and related service globally Create safe and secure social infrastructure using IT
Differentiate
by coordination

Develop and apply superior
Differentiatetechnologies

Rebuildbusiness models

Coordination

Strong businesses
Power systems

Urban development
Environmental, industrial
and transportation systems
and health systems

Materials, key devices and services fordifferentiating Social Innovation BusinessGroup operating base
R&D capabilities

Sales force

Information and telecommunication systems

MONOZUKURI, quality
and cost reform
Advanced
Human resourcesIT
infrastructure
capabilities
Copyright © Hitachi,Ltd.2009 All rights reserved11.2 Initiatives to Strengthen the Social Innovation Business
Steadily implementing measures to strengthen the Social Innovation Business
Major initiatives to strengthen theSocial Innovation Business inrecent years

09/10 (Planned)
Merge Hitachi Electronics Services Co., Ltd.
and Hitachi HBM Co., Ltd.
09/7 Merged
Hitachi Communication Technologies, Ltd.
07/10 Commenced operations at
Hitachi Rail Maintenance(Ashford, U.K.)

09/3 Converted Hitachi Koki Co., Ltd. andHitachi Kokusai Electric Inc. into
consolidated subsidiaries

07/6 Started global alliancewith GE in nuclear power business
09/7 split off the consumer andautomotive systems businesses

Main initiatives to rebuild
business portfolio

09/4 Entered into negotiations to integrate business
operations of Renesas Technology Corp.
(Established 03/4) and NEC Electronics Corp.
by April 2010
07/10
Withdrew fromconsumer PC
business

２００７

08/3 Investment by Canon Inc.
and Panasonic Corp. in Hitachi Displays, Ltd.
08/3 Investment by Panasonic in IPS Alpha Technology , Ltd.,
conversion into consolidated subsidiary

２００８

２００９
Copyright © Hitachi,Ltd.2009 All rights reserved22.1 Significance of Group Restructuring
Designed to strengthen the Social Innovation Business

Strengthen integrated management by making
core Group companies in the Social Innovation Business
wholly owned subsidiaries
Integrated response to rapid and dynamic change in global business environment
Cutting-edge response with collective strengths to global environmental issues
Coordinated response to building all types of infrastructure in emerging nations
Rebuild business model ahead of changes in information and telecommunication systems
marketAccelerate business coordination for creating a Social Innovation Business for a new era
Create high-value-added social infrastructure underpinned by secure information systems
Innovate using batteries and other key devices in Social Innovation Business
Promote optimal utilization of R&D, personnel and other resources
Improve cost competitiveness through integrated management
Copyright © Hitachi,Ltd.2009 All rights reserved32.2 Outline of Group Restructuring

Conduct public tender offers for the stock of five publicly listedcompanies that play central roles in the Social Innovation Businessto turn into wholly owned subsidiaries before the end of March 2010.

Target Companies
Hitachi Information Systems, Ltd.
(TSE, 1st Section)

Fiscal 2008 Results (Million yen)
Established
Operating Hitachi, Ltd.
Revenues Income(loss)
shares1959.6 192,007

11,60651.98%

1970.9 165,820

12,35851.55%

1978.9 126,203

7,300

51.20%

1929.6 395,693

7,361

68.88%

1960.9 172,652(2,336)51.67%

Hitachi Software Engineering Co., Ltd.
(TSE, 1st Section)

Hitachi Systems & Services, Ltd.
(TSE, 2nd Section)

Hitachi Plant Technologies, Ltd.
(TSE, 1st Section)

Hitachi Maxell, Ltd.
(TSE, 1st Section)

Copyright © Hitachi,Ltd.2009 All rights reserved4

2.3 Strengthening
the Information and Telecommunication Systems
Aim to turn Hitachi Information Systems, Hitachi Software Engineering,and Hitachi Systems & Services into wholly owned subsidiaries
Strengthen capabilities of system integration and reform its business model, to meetcustomers' demand for efficient system use and operation including outsourcing,
SaaS , etc.
Provide valuable one-stop services throughout the entire lifecycle of IT systems

Main strategies for strengthening business
Develop “green” data center operations using state-of-the-art “green” IT
Develop outsourcing and cloud computing-related businesses using networking
and security technologies
Expand businesses globally, particularly consulting and data center operations
Strengthen system integration response structures and proposal capabilities, for financial
institution mission-critical systems, public-sector optimization systems, and information
systems for Small and Medium Businesses in industrial and logistics fields
Expand structural development for embedded software, and middle software

Copyright © Hitachi,Ltd.2009 All rights reserved52.4 Strengthening the Social Infrastructure Systems Business
Aim to make Hitachi Plant Technologies a wholly owned subsidiary
Strengthen integrated response using Group’s collective strengths to cater to expanding
industrial systems market, including power, transportation, road, water and other public
systems, particularly in emerging countries, and demand in developed countries forrenovation, supported by advanced information and telecommunications technologies,
which should have a smaller impact on the global environment going forward.

Main strategies for strengthening business
Promote rationalization of plant construction in globally developing
the power plant business
Provide total solutions, ranging from the supply of water circulation-related equipment
and systems to the management and operation of facilities
Propose energy-conservation solutions for data centers
Offer full turn-key services overseas, from the delivery of railway vehicles to the laying of
tracks and the building of assembly, inspection and repair facilities in the transportation
systems business

Copyright © Hitachi,Ltd.2009 All rights reserved

62.5 Strengthening Lithium-ion Battery Business
Aim to convert Hitachi Maxell into a wholly owned subsidiary
To expand the Lithium-ion and other types batteries business that are essential tolower environmental impact, by strengthening development capabilities andcost competitiveness, as well as accelerate development of social and industrial systemapplications with the Group’s collective strengths.

Main strategies for strengthening business
Strengthen and differentiate highly reliable lithium-ion battery-related business byfostering strong collaboration among Hitachi Group Companies
Propose solutions that integrate the Hitachi Group’s social and industrial system
integration capabilities and key devices such as lithium-ion batteries, motors andinverters.
Build strong relationships for collaborative creation with customers in the automotive,
railway and industrial sectors
Speed up R&D, reduce total investment burden and accelerate business development,
all by sharing R&D, production lines and other resources
Copyright © Hitachi,Ltd.2009 All rights reserved

73.1 Promote Management Reforms (1)Accelerate Global Development ①

Simultaneously promote various initiatives to strengthen the Social Innovation Business

Strengthen Global Sales Capabilities(Established Supervisory Office for Sales and Promotion 09/4)
Strengthen global marketing in the Social Innovation Business, identify market trends
and potential projects in each region
Accelerate efforts to enhance regional sales base to strengthen sales in emerging
countries and regions using the Hitachi Group’s collective strengths(Middle East, Latin America, Inland China, etc.)
Strengthen response to major economic stimulus measures in various countries
by drawing on the Hitachi Group’s collective strengths

Strengthen Overseas Plant Business(Established Supervisory Office for Overseas Plant Construction Business 09/4)
Bolster risk control and project management to generate high earnings and accelerate
global development of businesses constructing nuclear power plants, highly efficientcoal-fired thermal power plants, railway systems and other plants and systems
Build strong relationships for collaborative creation based on mutual understanding
and trust with outstanding local partners

Copyright © Hitachi,Ltd.2009 All rights reserved

8Promote Management Reforms (2)Accelerate Global Development ②

3.2(billions of yen) Europe

Revenues
Others600

Power and Industrial systems
Information andtelecommunication systems

400

Recent Major Projects in field of
the Social Innovation Business(Refer to Next page)③(billions of yen)

100

400

２００５

２００５

⑪ ⑧

２００８
⑮

⑱

(billions of yen)North America

100

100

⑨

⑤

600

146

200

⑦ ２００８
⑩

④

China

600

200

②
⑥
①

155

⑰

⑯

⑬

⑫

⑳

⑭

112

400

(billions of yen)

200

600

Asia and Others

100

100

２００５

２００８

400

２００５

２００８

200

⑲
FY2008 Revenues (Billion yen)
Revenues (Billion yen) *Employees

CompaniesJapan

5,861.4（５９％）

２６０，６７７４０４Overseas

4,138.9（４１％）

１３９，４５２

５４０

Total

10,000.3（１００％）

４００，１２９９４４* Breakdown of Overseas Revenues
Asia (excluding China) 8%, China 11%, North America
9%, Europe 9%, Others 4%, Total 41%
Copyright © Hitachi,Ltd.2009 All rights reserved

9

3.3

Promote Management Reforms (3)Accelerate Global Development ③〔North America〕①2003～2007: Super-critical coal-fired thermal power plantsfor MidAmerican Energy②2007: Super-critical coal-fired thermal power plants for
EPCOR and TransAlta, Canada(Under Construction)③2007・2008: Strengthening global consulting business(Purchase 2 companies)④2006～: Provided inverters for GM’s Hybrid car③2008: Awarded orders from GM for lithium-ion batteries⑤2009: Awarded orders from American Municipal Power for
Super-critical coal-fired thermal power plants⑥2009: Hitachi construction Machinery makes Wenco,
Canadian mine operating management systemcompany to its consolidated subsidiary.
〔China〕⑫2007～: Energy conservation project in Yunnan Province⑬2008: 6 Double decked elevator and Working
management system with finger vain certification
for the Shanghai Global Finance Center⑭2008 Awarded orders for Train control system ofHigh speed line through Guangzhou to Shenzhen⑮2009 Established Data center operating company
in China (Service will start at 2010. (Planned))〔Europe〕⑦2005 Awarded orders for 174 railcars and maintenanceservice for CTRL(*1), England⑧2006 Super-critical coal-fired thermal power plants for
STEAG and EVN (Walsum ,Germany)(Under Construction)⑨2007 3 Coal-fired thermal power plants for Electrabel(Holland、Germany) (Under Construction)⑩2007・2009 Strengthening global consulting business(Purchase 2 companies in England)⑪2009 Preferred bidder for IEP(*2) high speed railcar(*1) Channel Tunnel Rail Link(*2) Intercity Express Programme〔Asia, Japan and others〕⑯1998～2003 Constructed Mubarak Pumping Station/Egypt⑰2006 Awarded order from L&T(*3), India
for H-25 Gas turbine⑱2007 Awarded orders for 39 elevator s and 8 escalatorsfrom Al Hamra, Kuwait⑲2007・2008 Awarded order Boiler for Super-critical coal-fired
thermal power plants from Eskom, South Africa(Under Construction)⑳・Shinkansen (Bullet train): Cumulative deliveries ofover 2,000 railcars
・ No.1 share in ABWRs in Japan・2009 Established Eco-friendly data center “the Yokohama
3rd Center”(*3) Larsen & Toubro Limited

Copyright © Hitachi,Ltd.2009 All rights reserved

10

3.4

Promote Management Reforms (4)Innovation Through Business Coordination
Promote coordination of information, power and industrial system businesses(Established Supervisory Office for Business Coordination 09/4)

Innovate in social infrastructure through business coordination for creating the added
value and reducing the environmental impact demanded by society
Promote advanced R&D and early commercialization of coordinated businesses inmarkets that are expected to expand globally, including eco-friendly data
centers, next-generation transportation information systems and smart grid-related
businesses

Environment
EnergySmart grids
・Utilization of new energy
・Optimization of equipment

Government
Medical…

Transportation

Green IT・Eco-friendly data centers
・Environmental assessments

Next-generationtransportation
systems
・Operation control
・Digital signage

ＩＴ

Networks
Finance・・・

Data centers
Copyright © Hitachi,Ltd.2009 All rights reserved

11

Management Reforms (5)3.5 Promote
Strengthen Environmental Management and Operating Base
Draw on the Hitachi Group’s collective strengths to expand environmental-related
businesses and reduce environmental impact
Mutually utilize the Group’s technologies to make all products Eco-Products by 2025
Systematically promote plan to reduce annual CO2 emissions by 100 million tons throughHitachi products (2025 compared with 2005)

Strengthen Operating Base—Steadily Promote“Strengthening The Base ’08’-09”-A Group Workforce Activity
Draw on the Group’s collective strengths to bolster cost competitivenessto become globally competitive
Achieve Fiscal 2009 targets of reducing fixed costs by approx. 200.0 billion yen andmaterials costs by approx. 300.0 billion yen
Rigorously execute Group-wide measures to meet cost challenges- Strengthen development and purchasing power capabilities, including global sourcing planfrom development stage- Expanding centralized and collective purchasing globally- Rigorously decide whether to produce in-house or outside to differentiate, and strengthen
cooperation with leading EMSs
- Optimize role and deployment between domestic “Mother” bases, which are key for differentiation,and local bases- Strengthen highly efficient IT platform, including global SCM- Pursue profit maximization over entire lifecycle by drawing on the Group’s collective strengths

Develop and optimally deploy human resources that will spearhead global businesses
Copyright © Hitachi,Ltd.2009 All rights reserved

12

3.6

Promote Management Reforms (6)Enhance Group Consolidated Management
Bolster Group consolidated management
Reexamine and reinforce the in-house company system:
Clarify targets and responsibilities of each business division, speed up decision-making
and business operations
Manage approx. 40 companies (including in-house companies) in parallel
Create high-value-added value chains through closer cooperation, especially in theSocial Innovation BusinessGroup Corporate

Hitachi, Ltd.
(Business Holding Company)① Management support functions ：structural reforms, Optimized allocation of Group
resources

7 Companies
Information Systems Company
Power Systems Company
Industrial Systems Company
Information Control Systems
Company
Urban Development Systems
Company
Defense Systems Company②Use of common Group resources ：R&D,Sales, Finance, Human
Resource, Manufacturing technologies Procurements ,IT and others.

Major Subsidiaries (Group companies)
Continue to implement the most appropriate businessstructure reforms along with other reforms aimed
improving holistic strengthen of the social innovation
business as Hitachi group.

Battery Systems Company

Approximately 40 “Companies” Copyright © Hitachi,Ltd.2009 All rights reserved 13

3.7 Targeting a New Growth Trajectory

Fiscal 2009

Revitalize through intensive reforms

Fiscal 2010

Capture the benefits of reforms

Move onto a new growth trajectory by taking the lead in
the Social Innovation Business globally with high-valueadded and highly reliable systems
Copyright © Hitachi,Ltd.2009 All rights reserved

14

Cautionary Statement
Certain statements found in this document may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements” reflect
management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or current fact. Words such as “anticipate,”“believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends may identify “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 “forward-looking statements” are based upon current assumptions of future events which may not prove to be accurate. Undue reliance should not be placed on “forward-looking
statements,” as such statements speak only as of the date of this document.
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 investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the majorindustrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;•fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment;•increased commoditization of information technology products and digital media related products and intensifying price competition for such products, particularly in the Information & Telecommunication Systems
segment, Electronic Devices segment and Digital Media & Consumer Products segment;•uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technology on a timely and cost-effective basis and to achieve market acceptance for such products;•rapid technological innovation, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment;•exchange rate fluctuation for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;•fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins;•uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rate and/or the price of raw materials;•general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct orindirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;
uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;•uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties;•the possibility of incurring expenses resulting from any defects in products or services of Hitachi;•uncertainty as to the success of restructuring efforts to improve management efficiency and to strengthen competitiveness;•uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products;•uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing; and•uncertainty as to general market price levels for equity securities in Japan, declines in which may require Hitachi to write down equity securities it holds.

The factors listed above are not all-inclusive and are in addition to other factors contained in Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.
Other Cautionary Matters-In accordance with the provisions of Article 167, Paragraph 3 of the Financial Instruments and Exchange Law and Article 30 of its Enforcement Regulations, anyone having read this news release is considered a
primary recipient of information from the viewpoint of insider trading regulations. Hitachi accordingly urges you to exercise due care as you may be prohibited from purchasing the shares of Hitachi Information Systems,
Hitachi Software Engineering, Hitachi Systems & Services, Hitachi Plant Technology and Hitachi Maxell (hereinafter collectively referred to as the “target companies”) before 12 hours have passed from the time of thisannouncement. If you are held liable under criminal, civil, or administrative laws for making such a prohibited purchase, Hitachi notes that it will assume no responsibility whatsoever.
-This news release is to announce the tender offer for shares of the target companies (hereinafter referred to as the “Tender Offer”) and has not been prepared for the purpose of soliciting an offer to sell shares.
If shareholders wish to make an offer to sell their shares, they should first read the Explanatory Document for the Tender Offer and make their own decision. This news release does not constitute, nor form part of, any
offer or invitation to buy, sell, exchange or otherwise dispose of, or issue, or any solicitation of any offer to sell or issue, exchange or otherwise dispose of, buy or subscribe for, any securities. In addition, this news
release does not constitute, or form part of, any offer or invitation to sell, or any solicitation of any offer to purchase any securities in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form thebasis of or be relied on in connection with any agreement thereof.
-The Tender Offer is targeted at the common stock of the target companies, all of which are incorporated in Japan. The Tender Offer is to be conducted in compliance with the procedures and information
disclosure standards prescribed in the Financial Instruments and Exchange Law of Japan. These procedures and standards are not necessarily the same as the procedures and information disclosure standards in the
United States. In particular, Section 13(e) and Section 14(d) of the U.S. Securities and Exchange Act of 1934 and the regulations stipulated thereunder are not applicable to the Tender Offer and the Tender Offer does
not conform to those procedures and standards. Further, as the Hitachi is a company incorporated outside the U.S. and most officers of the Hitachi are residents outside the U.S., it may be impossible to exercise rights
and claims that may be asserted under the securities-related laws of the U.S. There is also a chance that it may be difficult to institute proceedings in a court outside the U.S. against a company outside the U.S. or its
officers based on a violation of the securities-related laws of the U.S. Additionally, there is no guarantee that it would be possible to make a company outside the U.S. and its subsidiary or affiliate subject to thejurisdiction of a U.S. court.
-Some countries or regions may impose restrictions on the announcement, issue or distribution of this news release. In such cases, please take note of such restrictions and comply with them. In countries orregions where the implementation of the Tender Offer is illegal, even upon receiving this news release, such receipt shall not constitute a solicitation of an offer to sell or an offer to buy shares relating to the Tender
Offer and shall be deemed a distribution of materials for informative purposes only.

Copyright © Hitachi,Ltd.2009 All rights reserved

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Copyright © Hitachi,Ltd.2009 All rights reserved

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