[Translation]

Quarterly Report(The Third Quarter of 146th Business Term)
From October 1, 2014 to December 31, 2014

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 to]

Director, Kanto Local Finance Bureau[Filing Date]

February 13, 2015

[Fiscal Year]

The Third Quarter of 146th Business Term (from October 1, 2014 to December 31,
2014)[Company Name]

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

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

03-3258-1111[Contact Person]

Taro Kaiho, Manager, Legal Division[Contact Address]

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

03-3258-1111[Contact Person]

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

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

This is an English translation of the 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 are 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
have truncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures
presented in columns or otherwise may not equal the total of the individual items. We have rounded all percentages to thenearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be.
References in this document to the “Financial Instruments and Exchange Act” are to the Financial Instruments andExchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments andExchange Act of Japan.

Contents
Part I Information on the Company ............................................................................................................................. 1
I. Overview of the Company ................................................................................................................................... 1
1. Key Financial Data...................................................................................................................................... 1
2. Description of Business .............................................................................................................................. 1
II. Business Overview ............................................................................................................................................. 2
1. Risk Factors................................................................................................................................................. 2
2. Material Agreements, etc. ........................................................................................................................... 2
3. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows ................................. 2
III. Information on the Company .......................................................................................................................... 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) Information on shareholder right plans ................................................................................................ 10(5) Changes in the total number of issued shares and the amount of common stock and other ................ 10(6) Major shareholders ............................................................................................................................... 10(7) Information on voting rights................................................................................................................. 11
2. Change in Senior Management ................................................................................................................. 12
IV. Financial Information ..................................................................................................................................... 12Part II Information on Guarantors, etc. for the Company .......................................................................................... 12[Consolidated Financial Statements] ...........................................................................................................................F-1[Confirmation Letter] .................................................................................................................................................. A-1

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)
Nine months ended Nine months ended
Year ended
December 31, 2013 December 31, 2014 March 31, 2014
6,774,450[2,303,764]

6,818,047[2,321,274]

9,616,202

Income before income taxes

301,292

355,575

568,182

Net income attributable to Hitachi, Ltd.
stockholders

127,268[94,502]174,913[83,373]

264,975

Comprehensive income

507,293429,871

769,178

Total Hitachi, Ltd. Stockholders’ equity

2,419,987

2,873,408

2,651,241

Total equity

3,603,331

4,191,834

3,852,464

Total assets

11,006,564

12,315,745

11,016,899

Net income attributable to Hitachi, Ltd.
stockholders per share, Basic (yen)26.35[19.56]36.22[17.27]54.86

Net income attributable to Hitachi, Ltd.
stockholders per share, Diluted (yen)

26.34

36.20

54.85

Total Hitachi, Ltd. stockholders’ equity ratio (%)

22.0

23.3

24.1

Cash flows from operating activities

138,138

112,791

439,406

Cash flows from investing activities(276,365)(427,262)(491,363)

Cash flows from financing activities

237,201450,368

32,968Cash and cash equivalents at end of period

676,154752,910558,217

Revenues(Notes)

1. Our consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States.
2. Revenues do not include the consumption tax, etc.
3. The figures of “Revenues,” “Net income attributable to Hitachi, Ltd. stockholders” and “Net
income attributable to Hitachi, Ltd. stockholders per share, Basic” in square bracket are those in
the three months ended December 31, 2013 and 2014, respectively.

2. Description of Business
The Company’s consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States, and affiliates are disclosed based on the definitions of thoseaccounting principles. The same applies to “II. Business Overview.”
There was no material change in principal businesses of Hitachi during the nine months ended December
31, 2014. The Hitachi Group is comprised of the Company and 983 consolidated subsidiaries and 216
equity-method affiliates. Although the consolidated subsidiaries include variable interest entities, there is no
applicable variable interest entity as of December 31, 2014. Consolidated trust accounts are not included in thenumber of consolidated subsidiaries.
Changes of businesses in each segment and major consolidated subsidiaries during the nine months ended
December 31, 2014 were as follows. Effective from April 1, 2014, a company, which was previously included in
the Information & Telecommunication Systems segment, has been included in the Social Infrastructure &Industrial Systems segment, and some companies, which were previously included in the Digital Media &Consumer Products segment, have been included in the Others (Logistics and Other services) segment. As a1

result, the Company changed the name of the “Digital Media & Consumer Products” segment to the “Smart Life
& Ecofriendly Systems” segment.
Positioning of principal affiliated companies
Manufacturing
Sales and services
Social Infrastructure & Industrial Systems[Consolidated subsidiaries](Changed its name and reclassified its
segment)
Hitachi Industry & Control
Solutions, Ltd. (Note 1)[Consolidated subsidiaries]
Others (Logistics and Other services)(Reclassified its segment)(Reclassified its segment)
Hitachi-LG Data Storage, Inc. (Note 2)
Optical Disk Drives (Note 2)(Note) 1. Hitachi Information & Control Solutions, Ltd. changed its name to Hitachi Industry & Control Solutions, Ltd. andreclassified its segment from the Information & Telecommunication Systems segment into the Social Infrastructure& Industrial Systems segment in association with the reorganization of the information and control solution
business for industrial fields, the security system business and the printed-circuit board manufacturing business of
the Group as of April 1, 2014.
2. Effective from April 1, 2014, Hitachi-LG Data Storage, Inc. and its major products, optical disk drives, which werepreviously included in the Digital Media & Consumer Products segment, have been reclassified their segment into
the Others (Logistics and Other services) segment.
Segment

II. Business Overview
1. Risk Factors
There was no new risk factor recognized during the nine months ended December 31, 2014.
There were no material changes in the risk factors stated in the Annual Securities Report for the 145th
business term pursuant to the Financial Instruments and Exchange Act of Japan.
2. Material Agreements, etc.
No material agreements were entered into during the three months ended December 31, 2014.
3. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows(1) Outline of Business Results
The Company has adopted earnings before interest and taxes (“EBIT”), which is presented as income
before income taxes less interest income plus interest charges, as the measurement for the consolidated operating
results.
Effective from April 1, 2014, a company, which was previously included in the Information &Telecommunication Systems segment, has been included in the Social Infrastructure & Industrial Systems
segment, and some companies, which were previously included in the Digital Media & Consumer Products
segment, have been included in the Others (Logistics and Other services) segment. As a result, the Company
changed the name of the “Digital Media & Consumer Products” segment to the “Smart Life & Ecofriendly
Systems” segment. Figures for each segment, including figures for the nine months ended December 31, 2014
and for the nine months ended December 31, 2013, reflect the new segmentation.
Results of Operations
During the nine months ended December 31, 2014, the U.S. economy showed signs of recovery:
improving employment levels, and an ongoing recovery in consumer spending and the housing investment.
However, there were prolonged financial troubles and economic slowdowns in Europe, particularly with regard
to southern European countries, and signs of slowing economic growth in China.
The Japanese economy did not achieve full-fledged recovery, due mainly to sluggish personal
consumption as the effect of consumption tax hike or unseasonable weather, despite signs of recovery mainly
resulting from the government’s implementation of national growth strategies, improvement in employment
conditions and a rebound in corporate capital expenditures.
Under these conditions, total revenues increased 1% to ¥6,818.0 billion, as compared with the nine months
ended December 31, 2013, due mainly to higher revenues in the following segments: the Information &Telecommunication Systems segment, where system solutions business and storage solutions business posted
higher revenues; the Social Infrastructure & Industrial Systems segment, which was underpinned by a strong2performance by the elevator and escalator business in China; and the High Functional Materials & Components
segment, where automobile products business and electronics-related materials business performed solidly. This
increase was partially offset by decreased revenues in the Power Systems segment owing to the effects of theintegration of the thermal power generation systems business into MITSUBISHI HITACHI POWER SYSTEMS,
LTD., an equity-method affiliate.
Cost of sales was ¥4,979.4 billion, almost the same as the nine months ended December 31, 2013, and theratio of cost of sales to total revenues decreased to 73%, compared with 74% in the nine months ended
December 31, 2013.
Selling, general and administrative expenses increased 2% to ¥1,516.4 billion, as compared with the ninemonths ended December 31, 2013, and their ratio to revenues was 22%, which was the same level as in the ninemonths ended December 31, 2013.
Expenses related to competition law decreased ¥14.5 billion to ¥12.3 billion, as compared with the ninemonths ended December 31, 2013.
Impairment losses for long-lived assets decreased ¥0.9 billion to ¥3.7 billion, as compared with the ninemonths ended December 31, 2013.
Restructuring charges increased ¥4.9 billion to ¥17.9 billion, as compared with the nine months ended
December 31, 2013.
Interest income decreased ¥1.3 billion to ¥7.7 billion, as compared with the nine months ended December
31, 2013.
Dividend income decreased ¥0.2 billion to ¥6.4 billion, as compared with the nine months ended
December 31, 2013.
Other income increased ¥10.1 billion to ¥66.7 billion, as compared with the nine months ended December
31, 2013. This was due mainly to increased gain on securities.
Interest charges increased ¥0.3 billion to ¥19.9 billion, as compared with the nine months ended December
31, 2013.
Other deductions increased ¥14.6 billion to ¥15.9 billion, as compared with the nine months ended
December 31, 2013. This was due mainly to the posting of loss on sale and disposal of rental assets and otherproperty.
Equity in net earning of affiliated companies increased ¥17.6 billion to ¥22.4 billion, as compared with thenine months ended December 31, 2013. This was due mainly to the effects of the transfer of the thermal power
generation systems business.
As a result of the foregoing, income before income taxes increased 18% to ¥355.5 billion, as comparedwith the nine months ended December 31, 2013. EBIT increased 18% to ¥367.8 billion, as compared with thenine months ended December 31, 2013.
Income taxes amounted to ¥98.7 billion, a decrease of ¥7.3 billion compared with the nine months ended
December 31, 2013.
Net income increased 32% to ¥256.7 billion, as compared with the nine months ended December 31, 2013.
Net income attributable to noncontrolling interests amounted to ¥81.8 billion, an increase of ¥13.9 billion
compared with the nine months ended December 31, 2013.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders increased 37% to ¥174.9
billion, as compared with the nine months ended December 31, 2013.
Operations by Segment
The following is an overview of Hitachi’s results of operations by segment. Revenues for each segment
include intersegment transactions. The Company has adopted EBIT as the measurement of segment profitability.
Operating income or loss stated in this section is presented as total revenues less total cost of sales and selling,
general and administrative expenses in order to be consistent with financial reporting principles and practices
generally accepted in Japan.
(Information & Telecommunication Systems)
Revenues increased 6% to ¥1,410.5 billion, as compared with the nine months ended December 31, 2013,
due mainly to solid performances by system solutions business, centered on public systems and financial
systems, and to increased revenues from storage solutions business as a result of the effects of foreign exchange
rate fluctuations. This increase was also attributable to the positive impact of the consolidation of Prizm Payment
Services Pvt Ltd. in India and the establishment of Hitachi Systems Power Services, Ltd., both of which were
implemented in March 2014. The increase was, however, partially offset by a decline in revenues in thetelecommunications & network business due to a fall in demand.

3

Segment profit increased 5% to ¥50.3 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income mainly resulting from higher revenues and reduced effect of
unprofitable system solutions projects, despite lower profits in the telecommunications & network businessowing to the decreased revenues.
(Power Systems)
Revenues decreased 48% to ¥301.8 billion, as compared with the nine months ended December 31, 2013,
due mainly to the effect of the transfer of the thermal power generation systems business.
Segment loss worsened ¥37.1 billion to ¥26.1 billion, as compared with the nine months ended December
31, 2013, due mainly to lower revenues and recording operating loss owing to the additional costs for someprojects. The decrease was partially offset by posting of equity in net earning of affiliated companies related to
MITSUBISHI HITACHI POWER SYSTEMS, LTD.
(Social Infrastructure & Industrial Systems)
Revenues increased 7% to ¥1,010.8 billion, as compared with the nine months ended December 31, 2013,
due mainly to higher sales in the industrial equipment business and railway systems business in the U.K., as well
as a solid performance by the elevator and escalator business in China.
Segment profit increased 85% to ¥34.0 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income mainly resulting from higher revenues in the elevator andescalator business and the industrial equipment business, and reduced effect of unprofitable infrastructure
projects.
(Electronic Systems & Equipment)
Revenues increased 5% to ¥788.0 billion, as compared with the nine months ended December 31, 2013,
due mainly to higher sales of semiconductor manufacturing equipments and medical analysis equipments at
Hitachi High-Technologies Corporation and higher sales of semiconductor manufacturing equipments at Hitachi
Kokusai Electric Inc.
Segment profit increased 63% to ¥39.7 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income mainly resulting from higher revenues.
(Construction Machinery)
Revenues increased 4% to ¥555.3 billion, as compared with the nine months ended December 31, 2013,
due mainly to the positive impact of foreign exchange movements and higher sales of hydraulic excavators andother items primarily in North America and Europe, despite sluggish demand in Asia, including China.
Segment profit decreased 13% to ¥39.0 billion, as compared with the nine months ended December 31,
2013, due mainly to decreased operating income owing to lower sales in China, and decline in profitability
owing to changes in product mix.
(High Functional Materials & Components)
Revenues increased 7% to ¥1,084.7 bullion, as compared with the nine months ended December 31, 2013,
due mainly to the positive impact of the consolidation of Waupaca Foundry Holdings, Inc. in the U.S. by Hitachi
Metals, Ltd. in November 2014, as well as solid performances by automobile products primarily in North
America and China and certain electronics-related materials.
Segment profit increased 19% to ¥90.4 billion, as compared with the nine months ended December 31,
2013, due mainly to an increase in exchange gain, as well as increased operating income mainly resulting fromhigher revenues. The increase was partially offset by the posting of restructuring charges relating to thevoluntary early retirement program at Hitachi Chemical Company, Ltd.
(Automotive Systems)
Revenues increased 5% to ¥683.3 billion, as compared with the nine months ended December 31, 2013,
due mainly to robust demand in overseas automobile markets, such as North America and China.
Segment profit increased 64% to ¥24.7 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income, mainly resulting from higher revenues and associatedimprovement in capacity utilization, and a decrease in expenses related to competition law. This increase waspartially offset by the posting of exchange loss.

4

(Smart Life & Ecofriendly Systems)
Revenues increased 3% to ¥570.4 billion, as compared with the nine months ended December 31, 2013,
due mainly to higher sales in overseas markets, particularly for air-conditioning business.
Segment profit increased 45% to ¥25.7 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income mainly resulting from higher revenues and the effect of new
product launches.
(Others (Logistics and Other services))
Revenues decreased 13% to ¥897.6 billion, as compared with the nine months ended December 31, 2013,
due mainly to the conversion of Hitachi Maxell, Ltd., which had been a consolidated subsidiary, into an
equity-method affiliate, despite higher revenues at Hitachi Transport System, Ltd.
Segment profit increased 11% to ¥28.3 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income mainly resulting from a decrease in expenses related to businessrestructuring, despite lower revenues.
(Financial Services)
Revenues increased 9% to ¥268.8 billion, as compared with the nine months ended December 31, 2013,
due mainly to a strong performance in overseas business, particularly in Europe, and the positive effect offoreign exchange rate fluctuation.
Segment profit increased 11% to ¥29.4 billion, as compared with the nine months ended December 31,
2013, due mainly to increased operating income resulting from higher revenues in the overseas business.
Revenues by Market
Revenues in Japan were ¥3,593.7 billion, a decrease of 2% compared with the nine months ended
December 31, 2013, due mainly to lower revenues in the Power Systems segment owing to the effect of thetransfer of the thermal power generation systems business and in the Others (Logistics and Other services)segment owing to the conversion of Hitachi Maxell, Ltd. into an equity-method affiliate, despite higher revenues
in the Information & Telecommunication Systems and the Electronic Systems & Equipment segments.
Overseas revenues were ¥3,224.2 billion, an increase of 3% compared with the nine months ended
December 31, 2013, due mainly to higher revenues in Europe, particularly in the Social Infrastructure &Industrial Systems segment mainly resulting from higher sales in railway system business in the U.K., and in theElectronic Systems & Equipment segment, in particular at Hitachi High-Technologies Corporation. This increase
was also attributable to higher revenues in North America, mainly in the Information & Telecommunication
Systems, the Construction Machinery and the Automotive Systems segments, and in Asia, particularly in China
where the elevator and escalator business. This increase was partially offset by decreased revenues in the Power
Systems segment owing to the effect of the transfer of the thermal power generation systems business.
As a result, the ratio of overseas revenues to total revenues was 47%, compared with 46% in the ninemonths ended December 31, 2013.
(2) Summary of Financial Condition, etc.
Liquidity and Capital Resources
During the nine months ended December 31, 2014, 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 and fundraising.
Cash Flows(Cash flows from operating activities)
Net income amounted to ¥256.7 billion in the nine months ended December 31, 2014, a ¥61.6 billion
increase compared with the nine months ended December 31, 2013. Increase in inventories in the nine months
ended December 31, 2014 was ¥314.9 billion, a ¥7.8 billion increase compared with the nine months ended
December 31, 2013. Decrease in payables in the nine months ended December 31, 2014 was ¥78.2 billion, a¥25.2 billion increase compared with the nine months ended December 31, 2013. Decrease in receivables in thenine months ended December 31, 2014 was ¥85.7 billion, a ¥29.9 billion decrease compared with the ninemonths ended December 31, 2013. Accrued income taxes was amounted a decrease of ¥36.7 billion in the ninemonths ended December 31, 2014, compared with an increase of ¥2.9 billion in the nine months ended
December 31, 2013. This is primarily because consolidated subsidiaries paid accrued income taxes. Increase in5other current liabilities in the nine months ended December 31, 2014 was ¥8.5 billion, a ¥53.3 billion decrease
compared with the nine months ended December 31, 2013, due mainly to payment of account payables. As aresult of the foregoing, cash flows from operating activities recorded net cash inflow of ¥112.7 billion in the ninemonths ended December 31, 2014, a decrease of ¥25.3 billion compared with the nine months ended December
31, 2013.
(Cash flows from investing activities)
A net sum of ¥395.7 billion in the nine months ended December 31, 2014 was recorded as investments
mainly related to property, plant and equipment, where the collection of investments in leases, the proceeds from
disposal of property, plant and equipment and the proceeds from disposal of tangible assets and software to beleased were subtracted from the amount of the capital expenditures, the purchase of intangible assets and thepurchase of tangible assets and software to be leased. This net sum increased by ¥4.5 billion compared with thenine months ended December 31, 2013. Purchase of investments in securities and shares of newly consolidated
subsidiaries in the nine months ended December 31, 2014 was ¥122.8 billion, a ¥99.9 billion increase comparedwith the nine months ended December 31, 2013, due mainly to the acquisition of Waupaca Foundry Holdings,
Inc. As a result of the foregoing, cash flows from investing activities recorded net cash outflow of ¥427.2 billion
in the nine months ended December 31, 2014, an increase of ¥150.8 billion compared with the nine months
ended December 31, 2013.
(Cash flows from financing activities)
Net increase in short-term debt was ¥307.7 billion in the nine months ended December 31, 2014, a ¥249.6
billion increase compared with the nine months ended December 31, 2013. A net sum of ¥241.5 billion in thenine months ended December 31, 2014 was recorded as proceeds related to long-term debt, where the payments
on long-term debt were subtracted from the proceeds from long-term debt. This net inflow decreased by ¥30.1
billion compared with the nine months ended December 31, 2013. As a result of the foregoing, cash flows fromfinancing activities recorded net cash inflow of ¥450.3 billion in the nine months ended December 31, 2014, anincrease of ¥213.1 billion compared with the nine months ended December 31, 2013.
As a result of the foregoing, cash and cash equivalents as of December 31, 2014 was ¥752.9 billion, an
increase of ¥194.6 billion from March 31, 2014. Free cash flows, the sum of cash flows from operating andinvesting activities, were an outflow of ¥314.4 billion in the nine months ended December 31, 2014, an increaseof ¥176.2 billion compared with the nine months ended December 31, 2013.
Assets, Liabilities and Equity
Total assets as of December 31, 2014 were ¥12,315.7 billion, an increase of ¥1,298.8 billion from March
31, 2014. This was due mainly to an increase in inventories owing to seasonal factors, the acquisition of
Waupaca Foundry Holdings, Inc., an increase in the value of assets denominated in foreign currency owing to
the depreciation of yen, and increases in trade receivables and lease receivables in line with business expansion
primarily overseas in the Financial Services segment.
Total interest-bearing debt as of December 31, 2014, which is the sum of short-term debt, long-term debt
and non-recourse borrowings of consolidated securitization entities, was ¥3,578.6 billion, a ¥755.5 billion
increase from March 31, 2014. This was due mainly to an increase in long-term debt to meet funding demand for
growth in the Social Innovation Business, funding for the acquisition of Waupaca Foundry Holdings Inc., andhigher demand for funds in line with business expansion in the Financial Services segment.
Total Hitachi, Ltd. stockholders’ equity as of December 31, 2014 increased by ¥222.1 billion from March
31, 2014, to ¥2,873.4 billion, due mainly to posting of net income attributable to Hitachi, Ltd. stockholders. The
ratio of stockholders’ equity to total assets was 23.3%, compared with 24.1% as of March 31, 2014.
Noncontrolling interests as of December 31, 2014 increased by ¥117.2 billion from March 31, 2014, to¥1,318.4 billion.
The ratio of the interest-bearing debt to the total equity (the sum of total Hitachi, Ltd. stockholders’ equity
and noncontrolling interests) increased to 0.85, compared with 0.73 as of March 31, 2014.

6

(3) Challenges Facing Hitachi Group
1) Business and Financial Condition
There was no material change in Hitachi’s business strategy during the nine months ended December 31,
2014.
2) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
The Group invests a great deal of business resources in fundamental research and in the development ofmarket-leading products and businesses that will bear fruit in the future, and realizing the benefits from thesemanagement policies requires that they be continued for a set period of time. For this purpose, the Company
keeps its shareholders and investors well informed of not just the business results for each period but also of theCompany’s business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities and performance thatcan 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 share of stock of the Company or a Group company by duly examining
the business description, future business plans, past investment activities, and other necessary aspects of such aparty.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor is therea specific threat, neither does the Company intend to implement specified so-called anti-takeover measures inadvance of the appearance of such a party, but the Company does understand that it is one of the natural duties
bestowed upon it by the shareholders and investors to continuously monitor the state of trading of theCompany’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 hold negotiations with thebuyer, and if the Company deems that said buyout will not maintain the Company’s value and is not in the bestinterest 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 acquire a large percentage of the shares of a Group company.
(4) Research and Development
There was no material changes in the research and development of the Hitachi Group (the Company andconsolidated subsidiaries) stated in the Annual Securities Report for the 145th business term pursuant to the
Financial Instruments and Exchange Act of Japan. The Hitachi Group’s R&D expenditures in the nine months
ended December 31, 2014 were ¥244.6 billion, 3.6% of revenues. A breakdown of R&D expenditures bysegment is shown below.
(Billions of yen)
Nine months ended
December 31, 2014
52.1
8.2
21.4
36.1
12.7
34.1
45.7
8.9
5.3
0.2
19.5
244.6

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

7

(5) Property, Plants and Equipment
The Company
The major property, plants and equipment materially changed during the nine months ended December 31,
2014 are as follows. This was due mainly to the absorption-type company split in which the Company
transferred its elevator and escalator business in Japan to Hitachi Building Systems Co., Ltd. on April 1, 2014.

Facility(Main location)

Segment(As of December 31, 2014)
Book value (Millions of yen)
NumberDetails ofLand
Machinery [Area in Lease
major facilities
ofandOthers Total employees
and equipment Buildings
assetsthousands
equipmentof m2]

Urban PlanningSocialand Development Infrastructure R&D facilities
Systems Company & Industrial for elevatorsand escalators(Hitachinaka,
Systems
Ibaraki)

4,642

371

43
[476]

-

88

5,146

249

Overseas subsidiary
Hitachi Metals, Ltd. made Waupaca Foundry, Inc. its consolidated subsidiary on November 10, 2014. The
property, plants and equipment of Waupaca Foundry, Inc. are as follows.
(As of December 31, 2014)
Book value (Millions of yen)
NumberDetails ofLand
Facility
Machinery [Area in Lease
Segment
major facilitiesof(Main location)
andOthers Total employees
and equipment Buildings
assetsthousands
equipmentof m2]High
Manufacturing
Waupaca Foundry, Functional
facilities for414
Inc.
17,38136,810- 2,564 57,169
4,077
Materials & automotive[4,203](Wisconsin, U.S.A.) Components components(6) Forward-Looking Statements
Certain statements found in “3. Analyses of Consolidated Financial Condition, 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 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 projectedor implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements”
are based upon current assumptions of future events which may not prove to be accurate. Undue reliance should
not be placed on “forward-looking statements,” as such statements speak only as of the date of this report.
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 majorindustrial sectors Hitachi serves, including, without limitation, the information, electronics, automotive,
construction and financial sectors;
exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant sales or inwhich Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;
uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;
uncertainty as to general market price levels for equity securities, declines in which may require Hitachi towrite down equity securities that it holds;

8

•
•
•
•
•
•
•
•
•
•
•

•
•
•
•
•
•
•
•
•

uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate newtechnologies on a timely and cost-effective basis and to achieve market acceptance for such products;
rapid technological innovation;
the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts for which
Hitachi uses the percentage-of-completion method to recognize revenue from sales;
fluctuations in the price of raw materials including, without limitation, petroleum and other materials, suchas copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials,
parts and components;
fluctuations in product demand and industry capacity;
uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact offluctuations in product demand, exchange rates and/or price of raw materials or shortages of materials, partsand components;
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 restructuring efforts to improve management efficiency by divesting orotherwise exiting underperforming businesses and to strengthen competitiveness;
uncertainty as to the success of cost reduction measures;
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 andbusiness customs including, without limitation, contract terms and conditions and labor relations;
uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may notcontrol, with other corporations in the design and development of certain key products;
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;
the potential for significant losses on Hitachi’s investments in equity-method affiliates;
the possibility of disruption of Hitachi’s operations by earthquakes, tsunamis or other natural disasters;
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;
uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its significant employee
benefit-related costs; anduncertainty as to Hitachi’s ability to attract and retain skilled personnel.

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

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

Common stock

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

Total

10,000,000,000

Class2) Issued shares

Class

Number of shares
Number of sharesissued as of the end issued as of the filing Stock exchange on whichof third quarter ofdate (shares)
the Company is listed
fiscal year (shares)(February 13, 2015)(December 31, 2014)

Commonstock

4,833,463,387

4,833,463,387

Total

4,833,463,387

4,833,463,387

Tokyo, Nagoya

Description
The number ofshares per one unit ofshares is 1,000
shares.

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

Date
From October 1, 2014
to December 31, 2014

Change in the Balance of the Change in Balance of Change in Balance of
total number total number of common
commoncapitalcapitalof issued
stock
stock
reserve
reserveissued sharesshares(Millions of (Millions of (Millions of (Millions of(shares)(shares)
yen)
yen)
yen)
yen)
－ 4,833,463,387(6) Major shareholders
Not applicable.

10－458,790－

176,757

(7) Information on voting rights
Information on voting rights as of September 30, 2014 is stated in this item because the Company does not
identify the number of voting rights as of December 31, 2014 due to the lack of information on the number of
the Company’s shares held by the entity which the Company holds one quarter or more of total voting rights ofsuch entity as of December 31, 2014.
1) Issued sharesClassification

Number of shares (shares)

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

－

－

－

－

－

－

－

－

－

－

－

Common stock

4,791,000

Common stock

4,804,831,000

4,804,831－

Common stock

23,841,387－－

4,833,463,387－－

4,804,831－

Number of issued shares
Total number of voting rights(Note)(As of September 30, 2014)
Number of voting
Description
rights－The “Shares with full voting right (others)” column includes 26,000 shares registered in the name ofJapan Securities Depository Center, Incorporated (account for managing stocks whose shareholders
have not transferred titles) and 26 voting rights for those shares.
2) Treasury stock, etc.

Name ofshareholder

Hitachi, Ltd.
Aoyama Special
Steel Co., Ltd.
ISHIIDENKOSHA
Co., Ltd.
SAITAKOUGYOU CO.,LTD.

Address

6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo
9-11, Shinkawa 2-chome,
Chuo-ku, Tokyo
1-11, Oroshishinmachi
3-chome, Higashi-ku,
Niigata-shi, Niigata

Number of
Number ofshares held
shares held
under theunder own name names of(shares)others(shares)(As of September 30, 2014)
Ownership
percentage to
Total shares
the total
held (shares)
number ofissued shares(%)

4,620,000－

4,620,000

0.10

10,000－10,000

0.00

1,000

－

1,000

0.00

88,000－88,000

0.00

5,000

－

5,000

0.00

5-3, Takinogawa 5-chome,
Kita-ku, Tokyo

52,000－52,0000.00

Mizuho Co., Inc.

9-5, Minami-Shinagawa
4-chome, Shinagawa-ku,
Tokyo
3268, Nagaoka,
Ibarakimachi,
Higashiibaraki-gun, Ibaraki
4-1, Koishikawa 5-chome,
Bunkyo-ku, Tokyo

15,000－15,000

0.00

Total

－

4,791,000－

4,791,000

0.10

NIKKO SHOKAI
CO., LTD.
Nitto Jidosha
Kiki K.K.

11

2. Change in Senior Management
Changes in the senior managements from the filing date of the Annual Securities Report for the 145th
business term pursuant to the Financial Instruments and Exchange Act of Japan to December 31, 2014 were as
follows.
New Executive Officer [Effective October 1, 2014]
Name (Date of birth)

Position (Responsibility)

Masakazu Aoki
(Jun. 23, 1954) ............. Vice President and Executive Officer(Business strategies for industrial
products)

Business experience, including experiencein the Company, and functions

Term ofofficeShareownership

4/1977 Joined Hitachi, Ltd.
4/2012 President and Director, Hitachi
Industrial Equipment Systems
Co., Ltd. (Currently in office)10/2014 Vice President and Executive
Officer, Hitachi, Ltd.

(Note 2)

3,000
shares(Notes) 1. The responsibility in bracket in “Position (Responsibility)” column describes matters delegated to the Executive Officer
by the Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2015.

Changes in Responsibility of Executive Officers [Effective October 1, 2014]
New Position (Responsibility)
Name
Tatsuro Ishizuka.............. Representative Executive Officer
Executive Vice President and Executive Officer(Power systems business and infrastructure
systems business)

Former Position (Responsibility)
Representative Executive Officer
Executive Vice President and Executive Officer(Cost structure reform, power systems businessand infrastructure systems business)

Shinjiro Iwata.................. Representative Executive Officer
Executive Vice President and Executive Officer(Cost structure reform and information
technology strategies)

Representative Executive Officer
Executive Vice President and Executive Officer(Information technology strategies)

Yutaka Saito.................... Representative Executive Officer
Executive Vice President and Executive Officer(Information & telecommunication systems
business and energy solutions business)

Representative Executive Officer
Executive Vice President and Executive Officer(Information & telecommunication systems
business)

Yoshifumi Kanda ............ Vice President and Executive Officer(Marketing and sales, power systems business(sales operations) and energy solutions business(sales operations))

Vice President and Executive Officer(Marketing and sales, and power systems
business (sales operations))

Hiroshi Nakayama .......... Vice President and Executive Officer(Cost structure reform and supply chain
management (MONOZUKURI and quality
assurance))

Vice President and Executive Officer(Supply chain management (MONOZUKURI
and quality assurance))(Note)The responsibility in bracket in “New position (Responsibility)” column and “Former position (Responsibility)” column
describes matters delegated to each of the Executive Officers by the Board of Directors.

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

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

12

CONSOLIDATED BALANCE SHEETS
Hitachi, Ltd. and Subsidiaries
December 31, 2014 and March 31, 2014
AssetsCurrent assets:
Cash and cash equivalents (note 6)
Short-term investments (note 3)
Trade receivables:
Notes (notes 4, 6, 13 and 21)
Accounts (notes 4, 6 and 21)
Investments in leases (notes 6 and 21)
Current portion of financial assets transferred
to consolidated securitization entities (notes 6 and 21)
Inventories (note 5)
Prepaid expenses and other current assets
Total current assets
Investments and advances, including affiliated companies (note 3)
Property, plant and equipment:
Land
Buildings
Machinery and equipment
Construction in progress
Less accumulated depreciation
Net property, plant and equipment
Intangible assets (note 7):
Goodwill
Other intangible assets
Total intangible assets
Financial assets transferred toconsolidated securitization entities (notes 6 and 21)
Other assets (note 21)
Total assets
See accompanying notes to consolidated financial statements.

F-1

December 31,
2014

Millions of yen
March 31,2014

752,9108,337

558,217
9,172

174,4022,823,246
295,920

143,675
2,654,260
262,953

46,7801,752,160
704,358
6,558,113

52,212
1,407,055
616,326
5,703,870

1,232,262

1,220,800

502,253
1,943,567
5,047,037
118,537
7,611,394
5,058,745
2,552,649

492,383
1,900,779
4,901,505
94,972
7,389,639
5,047,548
2,342,091

471,487
469,645
941,132

339,148
422,333
761,481

167,723
863,866
12,315,745

185,818
802,839
11,016,899

December 31,
2014

Millions of yen
March 31,2014

1,023,367
448,294

647,269
464,234

46,96249,895

19,716
1,360,169
908,543
31,380352,027
545,428
4,735,886

18,926
1,331,288
937,401
72,839298,483
470,430
4,290,765

1,926,488

1,512,720

133,513727,318
600,706
8,123,911

148,931749,913462,106
7,164,435

Equity (note 12):
Common stock (note 9)
Capital surplus
Retained earnings (note 11)
Accumulated other comprehensive income (loss)
Treasury stock, at cost (note 10)
Total Hitachi, Ltd. stockholders’ equity
Noncontrolling interests
Total equity

458,790
610,258
1,706,775
101,034(3,449)2,873,408
1,318,426
4,191,834

458,790
617,468
1,587,394(9,265)(3,146)
2,651,241
1,201,223
3,852,464

Total liabilities and equity

12,315,745

11,016,899

Liabilities and Equity
Current liabilities:
Short-term debt
Current portion of long-term debt
Current portion of non-recourse borrowingsof consolidated securitization entities (note 6)
Trade payables:
Notes
Accounts
Accrued expenses (note 13)
Income taxes
Advances received
Other current liabilities
Total current liabilities
Long-term debt
Non-recourse borrowings of consolidated
securitization entities (note 6)
Retirement and severance benefits
Other liabilities
Total liabilities
Commitments and contingencies (note 13)

See accompanying notes to consolidated financial statements.

F-2

CONSOLIDATED STATEMENTS OF OPERATIONSAND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Hitachi, Ltd. and Subsidiaries
Nine months ended December 31, 2014 and 2013
Consolidated Statements of Operations

Revenues

Millions of yen
2014
2013
6,818,047
6,774,450

Cost of sales
Selling, general and administrative expenses(4,979,403) (4,985,777)(1,516,459) (1,493,192)

Expenses related to competition law (note 14)
Impairment losses for long-lived assets
Restructuring charges (note 15)
Interest income
Dividend income
Other income (note 16)
Interest charges
Loss on sale of stock of an affiliated company
Other deductions (note 16)
Equity in net earning of affiliated companies
Income before income taxes(12,350)(3,795)(17,925)
7,735
6,488
66,700(19,998)(15,922)
22,457355,575(26,918)(4,740)(12,987)
9,101
6,732
56,567(19,604)(5,915)(1,280)4,855
301,292

Income taxes
Net income(98,778)
256,797(106,137)
195,155

Less net income attributable to noncontrolling interests
Net income attributable to Hitachi, Ltd. stockholders

81,884
174,91367,887
127,268

36.22
36.20

Yen
26.35
26.34

Net income attributable to Hitachi, Ltd. stockholders per share (note 17):
Basic
DilutedConsolidated Statements of Comprehensive Income

Net income

Millions of yen
2014
2013
256,797
195,155

Other comprehensive income arising during the period (note 12):
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Total other comprehensive income arising during the period
Comprehensive income
Less comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Hitachi, Ltd. stockholders

203,551
43,3358,900(82,712)173,074
429,871
145,915
283,956

See accompanying notes to consolidated financial statements.
F-3

170,163
49,040106,772(13,837)
312,138
507,293
116,248
391,045

CONSOLIDATED STATEMENTS OF OPERATIONSAND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Hitachi, Ltd. and Subsidiaries
Three months ended December 31, 2014 and 2013
Consolidated Statements of Operations

Revenues

Millions of yen
2014
2013
2,321,274
2,303,764

Cost of sales
Selling, general and administrative expenses(1,699,243) (1,683,474)(513,870)(498,290)

Expenses related to competition law (note 14)
Impairment losses for long-lived assets
Restructuring charges (note 15)
Interest income
Dividend income
Other income (note 16)
Interest charges
Other deductions (note 16)
Equity in net earning of affiliated companies
Income before income taxes(4,627)(1,979)(15,479)
2,716
1,831
56,427(7,112)(3,753)9,884
146,069(7,857)(2,921)(1,811)
2,742
1,895
55,485(6,788)(328)
3,318
165,735

Income taxes
Net income(34,103)111,966(39,945)
125,790

Less net income attributable to noncontrolling interests
Net income attributable to Hitachi, Ltd. stockholders

28,593
83,37331,28894,502

17.27
17.26

Yen
19.56
19.56

Net income attributable to Hitachi, Ltd. stockholders per share (note 17):
Basic
DilutedConsolidated Statements of Comprehensive Income

Net income

Millions of yen
2014
2013
111,966
125,790

Other comprehensive income arising during the period (note 12):
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain (loss) on available-for-sale securities
Cash flow hedges
Total other comprehensive income arising during the period
Comprehensive income
Less comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Hitachi, Ltd. stockholders

146,318
13,526(20,353)(36,122)103,369
215,335
68,953
146,382

See accompanying notes to consolidated financial statements.
F-4

101,214
17,341
23,041(14,166)
127,430
253,220
60,917
192,303

CONSOLIDATED STATEMENTS OF CASH FLOWS
Hitachi, Ltd. and Subsidiaries
Nine months ended December 31, 2014 and 2013

2014

Millions of yen
2013

256,797

195,155

252,084
92,910
3,795(22,457)(53,748)523
12,66585,771(314,932)(24,241)(78,282)(85,981)(36,713)
8,569(1,020)17,051
112,791

245,543
89,6284,740(4,855)(37,750)
1,496(2,846)
115,751(307,060)(78,417)(53,029)(105,542)
2,999
61,967
5,991
4,367
138,138(256,144)(89,301)(315,610)
11,591
23,335
230,333(122,808)(279,166)(83,316)(307,778)
20,77522,716
235,514(22,860)

91,356(14)(427,262)

94,72843,022(276,365)

Cash flows from financing activities:
Increase in short-term debt, net
Proceeds from long-term debt
Payments on long-term debt
Proceeds from sale of common stock by subsidiaries
Dividends paid to Hitachi, Ltd. stockholders
Dividends paid to noncontrolling interests
Acquisition of common stock for treasury
Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from noncontrolling interest holders
Proceeds from sale of shares of consolidated subsidiaries to noncontrolling interest holders
Other
Net cash provided by financing activities

307,765
675,262(433,707)
5,485(55,529)(30,978)(324)
23(17,827)339(141)
450,368

58,130545,619(273,942)
5,591(48,287)(23,888)(315)
16(25,462)(261)
237,201

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period

58,796
194,693558,21749,548148,522527,632

Cash and cash equivalents at end of period

752,910676,154

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation
Amortization
Impairment losses for long-lived assets
Equity in net earning of affiliated companies
Gain on sale of investments in securities and other
Impairment of investments in securities(Gain) loss on disposal of rental assets and other property
Decrease in receivables
Increase in inventories
Increase in prepaid expenses and other current assets
Decrease in payables
Decrease in accrued expenses and retirement and severance benefits
Increase (decrease) in accrued income taxes
Increase in other current liabilities
Net change in lease receivables related to the Company’s and its subsidiaries’ products
Other
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Purchase of intangible assets
Purchase of tangible assets and software to be leased
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of tangible assets and software to be leased
Collection of investments in leases
Purchase of investments in securities and shares of newly consolidated subsidiaries
Proceeds from sale of investments in securities and shares of consolidated
subsidiaries resulting in deconsolidation
Other
Net cash used in investing activities

See accompanying notes to consolidated financial statements.

F-5

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

(1)

Nature of Operations
Hitachi, Ltd. (the Company) is a Japanese corporation, whose principal office is located in Japan. The
Company’s and its subsidiaries’ businesses are global and diverse, and include manufacturing and services
such as information and telecommunication systems, power systems, social infrastructure and industrial
systems, electronic systems and equipment, construction machinery, high functional materials andcomponents, automotive systems, smart life and ecofriendly systems and others including logistics andother services, as well as financial services.

(2)

Basis of Presentation and Summary of Significant Accounting Policies(a) Basis of Presentation
The Company and its domestic subsidiaries maintain their books of account in accordance with thefinancial accounting standards of Japan, and its foreign subsidiaries in accordance with mainly
those of the countries of their domicile.
The consolidated financial statements presented herein have been prepared to reflect theadjustments which are necessary to conform to accounting principles generally accepted in the
United States of America. Management of the Company has made a number of estimates andassumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets
and liabilities to prepare these financial statements. Actual results could differ from thoseestimates.
(b)

Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its majority-owned
subsidiaries and all variable interest entities (VIEs) for which the Company or any of its
consolidated entities is the primary beneficiary. The definition of a VIE is included in AccountingStandards Codification (ASC) 810, “Consolidation.” This guidance addresses how a businessenterprise should evaluate whether it has a controlling financial interest in an entity through meansother than voting rights and accordingly should consolidate the entity. The consolidated financial
statements include accounts of certain subsidiaries whose closing dates differ from December 31
by 93 days or less to either comply with local statutory requirements or facilitate timely reporting.
There have been no significant transactions, which would materially affect the Company’s
financial position and results of operations, with such subsidiaries during the period from theirclosing dates to December 31. Intercompany accounts and significant intercompany transactions
have been eliminated in consolidation.
Investments in corporate joint ventures and affiliated companies, where the Company has theability to exercise significant influence over operational and financial policies generally by holding
20 - 50% ownership, are accounted for under the equity method. Investments where the Company
does not have significant influence are accounted for under the cost method.

(c)

Income Taxes
The Company computes interim income tax provisions by applying an estimated annual effective
tax rate, which is reasonably determined considering the factors that will affect the tax rate
including non-taxable transactions, tax credits and valuation allowances, to income before income
taxes in accordance with the provisions for interim reporting included in ASC 740, “Income
Taxes.” The effect of a change in judgment about the realization of deferred tax assets in futureyears is recognized in the interim period in which the change occurs.

F-6

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(d)

Subsequent Events
The Company has evaluated up to February 13, 2015, the date on which its consolidated financial
statements were available to be issued in accordance with the provisions of ASC 855, "Subsequent
Events."F-7

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

(3)

Investments in Securities and Affiliated Companies
Short-term investments as of December 31, 2014 and March 31, 2014 are as follows:
Millions of yen
December 31,
March 31,2014
2014
Investments in securities:
Available-for-sale securities
Government debt securities
3,402
5,701
Corporate debt securities
4,735
3,300
Other securities
171
Held-to-maturity securities
200
8,337
9,172
Investments and advances, including affiliated companies as of December 31, 2014 and March 31,
2014 are as follows:
Millions of yen
December 31,
March 31,2014
2014
Investments in securities:
Available-for-sale securities
Equity securities
396,601
405,214
Government debt securities
1,566
1,555
Corporate debt securities
4,357
5,839
Other securities
14,026
11,247
Held-to-maturity securities
60
359
Cost-method investments
45,242
44,461
Investments in affiliated companies
643,377
608,687
Advances and other
127,033
143,438
1,232,262
1,220,800

F-8

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables are summaries of the amortized cost basis, gross unrealized holding gains, grossunrealized holding losses and aggregate fair value of available-for-sale securities by the consolidatedbalance sheet classifications as of December 31, 2014 and March 31, 2014.
Millions of yen
December 31, 2014
Amortized
Gross
Gross
Aggregatecost basis
gains
lossesfair value
Short-term investments:
Government debt securities
3,401
1
3,402
Corporate debt securities
4,494
241
4,735
7,895
242
8,137
Investments and advances:
Equity securities
113,784
284,289
1,472
396,601
Government debt securities
1,536
30
1,566
Corporate debt securities
4,310
47
4,357
Other securities
13,598428
14,026133,228
284,794
1,472
416,550
141,123
285,036
1,472
424,687

Amortized
cost basis
Short-term investments:
Government debt securities
Corporate debt securities
Other securities
Investments and advances:
Equity securities
Government debt securities
Corporate debt securities
Other securities

Millions of yen
March 31, 2014
Gross
Aggregate
lossesfair value

Gross
gains

5,701
3,304
169
9,174

3
2
5

7
7

5,701
3,300
171
9,172

136,021
1,532
5,532
10,387
153,472
162,646

269,94023
307
860
271,130
271,135

747
747
754

405,214
1,555
5,839
11,247423,855
433,027

F-9

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables are summaries of gross unrealized holding losses on available-for-sale securities
and the fair value of the related securities, aggregated by investment category and length of time that
individual securities have been in a continuous unrealized loss position, as of December 31, 2014 andMarch 31, 2014.
Millions of yen
December 31, 2014
Less than 12 months
12 months or longer
Aggregate
Gross
Aggregate
Grossfair value
lossesfair value
lossesInvestments and advances:
Equity securities
6,155
1,378
1,166
94
6,155
1,378
1,166
94
Millions of yen
March 31, 2014
12 months or longer
Aggregate
Grossfair value
lossesLess than 12 months
Aggregate
Grossfair value
lossesShort-term investments:
Corporate debt securities
Investments and advances:
Equity securities

1,593

7

-

-

2,265
3,858

424
431

1,912
1,912

323
323

Equity securities consist primarily of stocks issued by Japanese and the U.S.A. listed companies.
Government debt securities consist primarily of Japan treasury bonds. Corporate debt securities consist
primarily of structured bonds. Other securities consist primarily of investment funds.

F-10

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following table represents the purchases, proceeds from the sale, gross realized gains on the sale,and gross realized losses on the sale of available-for-sale securities for the nine months ended
December 31, 2014 and 2013.
Millions of yen
Nine months
Nine months
ended
ended
December 31,
December 31,
2014
2013
Purchases
2,054
3,431
Proceeds from the sale76,114
91,128Gross realized gains on the sale51,80045,512Gross realized losses on the sale
19
2
The following table represents the purchases, proceeds from the sale, gross realized gains on the sale,and gross realized losses on the sale of available-for-sale securities for the three months ended
December 31, 2014 and 2013.
Millions of yen
Three months
Three months
ended
ended
December 31,
December 31,
2014
2013
Purchases
1,394
545
Proceeds from the sale
73,65685,877Gross realized gains on the sale
50,37344,409Gross realized losses on the sale17
The contractual maturities of debt securities and other securities classified as investments and advancesin the consolidated balance sheet as of December 31, 2014 are as follows:
Held-tomaturity
Due within five years
Due after five years through ten years
Due after ten years

60
60Millions of yen
Availablefor-sale
Total
4,006
1,994
13,94919,9494,066
1,994
13,94920,009

Expected redemptions may differ from contractual maturities because some of these securities are
redeemable at the option of the issuers.
The aggregate carrying amounts of cost-method investments which were not evaluated for impairment
as of December 31, 2014 and March 31, 2014 were ¥45,242 million and ¥44,412 million, respectively,
mainly because it was not practicable to estimate the fair value of the investments due to lack of amarket price and difficulty in estimating fair value without incurring excessive cost and the Company
did not identify any events or changes in circumstances that might have had a significant adverse effecton their fair value.

F-11

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

(4) Allowances for doubtful receivables
Allowances for doubtful receivables as of December 31, 2014 and March 31, 2014 are as follows:

Allowances for doubtful receivables

December 31,
2014
35,187

Millions of yen
March 31,2014
31,270(5) Inventories
Inventories as of December 31, 2014 and March 31, 2014 are summarized as follows:

Finished goods
Work in process
Raw materials

December 31,
2014
680,600
795,718
275,842
1,752,160

F-12

Millions of yen
March 31,2014
564,700
596,523
245,832
1,407,055

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(6) Securitizations
The Company and certain subsidiaries securitize certain financial assets, such as lease, trade andmortgage loans receivable, and arrange other forms of asset-backed financing for the purpose ofproviding diversified and stable fund raising as part of their ongoing securitization activities.
Historically, they have used Special Purpose Entities (SPEs) sponsored by third party financial
institutions to execute part of the securitization transactions of these financial assets funded withcommercial paper and other borrowings. These financial institutions operate those SPEs as a part oftheir business, accordingly, the amount of assets transferred by the Company and its subsidiaries is
considerably small compared to the total assets of the SPEs sponsored by these financial institutions
that purchase a large amount of assets from entities other than the Company and its subsidiaries. In
certain transactions, the Company’s subsidiaries retain subordinated interests in the transferred assets
and/or investors have recourse with a scope that is considerably limited. These securitizationtransactions are similar to those used by many financial institutions.
Investors in these entities only have recourse to the assets owned by the entity and not to their generalcredit, unless noted below. The Company and certain subsidiaries do not provide non-contractual
support to SPEs and do not have implicit support arrangements with any SPEs. The majority of theirinvolvement with SPEs related to the securitization activities are financing of an entity, providing
limited credit enhancements, servicing the assets and receiving fees for services provided.
The transferred assets have similar risks and characteristics to the Company’s and certain subsidiaries’
receivables recorded on the consolidated balance sheets. Accordingly, the performance, such ascollections or expected credit loss, of these transferred assets has been similar to the receivables
recorded on the consolidated balance sheets for the Company and certain subsidiaries; however, theblended performance of the pools of transferred assets reflects the eligibility screening requirementsthat the Company and certain subsidiaries apply to determine which receivables are selected fortransfer. Therefore, the blended performance may differ from receivables recorded on the consolidatedbalance sheets.
Consolidated SPEs
The Company consolidated SPEs mainly because the Company has both the power to direct theactivities of the SPEs that most significantly impact the SPEs’ economic performance and theobligation to absorb losses or the right to receive benefits that could potentially be significant to theSPEs. The consolidated SPEs are mainly trusts for the securitizations of lease receivables and mortgage
loans receivable.

F-13

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The tables below summarize the assets and liabilities of the consolidated SPEs as of December 31,
2014 and March 31, 2014 by type of transferred financial assets that those SPEs hold:Millions of yen
December 31, 2014
Mortgage
Lease
loans
Receivables
receivable
OthersTotal
Cash and cash equivalents
9,847
1,695
1,535
13,077
Current portion of financial assets transferred toconsolidated securitization entities
33,157
8,454
5,169
46,780Financial assets transferred to consolidated
securitization entities
62,331
95,674
9,718
167,723
Current portion of non-recourse borrowings ofconsolidated securitization entities：
Loans, mainly from banks
Beneficial interests in trusts

Non-recourse borrowings ofconsolidated securitization entities:
Loans, mainly from banks
Beneficial interests in trusts

9,445
22,56332,008

9,964
9,964

1,473
3,517
4,990

10,91836,04446,962

10,78745,19455,981940
67,86468,804

1,682
7,046
8,728

13,409120,104
133,513Millions of yen
March 31, 2014

Cash and cash equivalents
Current portion of financial assets transferred toconsolidated securitization entities
Financial assets transferred to consolidated
securitization entities
Current portion of non-recourse borrowings ofconsolidated securitization entities：
Loans, mainly from banks
Beneficial interests in trusts

Non-recourse borrowings ofconsolidated securitization entities:
Loans, mainly from banks
Beneficial interests in trusts

Lease
Receivables
8,965

Mortgageloans
receivable
2,101

Others
1,264

Total
12,33037,079

9,552

5,581

52,212

69,406

105,839

10,573

185,818

12,843
20,52833,371

11,45911,459

1,975
3,090
5,065

14,81835,07749,895

17,59841,90659,50480,27780,277

2,706
6,444
9,150

20,304
128,627
148,931

F-14

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The assets and liabilities of the consolidated SPEs on the table above exclude intercompany balancesthat are eliminated in consolidation. Substantially, all of the assets of the consolidated SPEs can only be
used to settle obligations of those SPEs.
Transfers to unconsolidated entities
The following information is related to financial assets transferred to unconsolidated entities andaccounted for as sales. Those financial assets are transferred mainly to SPEs sponsored by financial
institutions.
Securitizations of lease receivables:
Hitachi Capital Corporation and certain other subsidiaries sold lease receivables to unconsolidated
SPEs and other entities. During the nine months ended December 31, 2014 and 2013, proceeds fromthe transfer of lease receivables were ¥60,711 million and ¥74,317 million, respectively, and net gains
recognized on those transfers were ¥1,541 million and ¥2,480 million, respectively. During the threemonths ended December 31, 2014 and 2013, proceeds from the transfer of lease receivables were¥14,289 million and ¥23,497 million, respectively, and during the three months ended December 31,
2014 and 2013, net gains recognized on those transfers were ¥415 million and ¥731 million,
respectively. The subsidiaries retained servicing responsibilities, but did not record a servicing asset or
liability because the cost to service the receivables approximated the servicing income.
The amounts of the initial fair value of the subordinated interests for the nine months ended December
31, 2014 and 2013 were ¥7,006 million and ¥9,561 million, respectively. The amounts of the initial fairvalue of the subordinated interests for the three months ended December 31, 2014 and 2013 were
¥1,767 million and ¥3,458 million, respectively. The subordinated interests relating to securitizations oflease receivables are initially classified as Level 3 assets within the fair value hierarchy. The initial fairvalue of the subordinated interests is determined based on economic assumptions including
weighted-average life, expected credit risks, and discount rates.

F-15

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Quantitative information about delinquencies, net credit losses, and components of lease receivables
subject to transfer and other assets managed together as of and for the nine months ended December 31,
2014 and as of and for the year ended March 31, 2014 is as follows:
Millions of yen
December 31, 2014
Principal
amount of
Total
receivables
principal 90 days or
amount of more past Net credit
receivablesdue
loss
Total assets managed or transferred:
Lease receivables
Assets transferred
Assets held in portfolio

1,211,653(263,401)
948,252

305

232

Millions of yen
March 31, 2014
Principal
amount of
Total
receivables
principal 90 days or
amount of more past Net credit
receivablesdue
loss
Total assets managed or transferred:
Lease receivables
Assets transferred
Assets held in portfolio

1,147,759(284,555)
863,204170367

As of December 31, 2014 and March 31, 2014, the amounts of the maximum exposures to losses were
¥104,521 million and ¥108,487 million, respectively. They mainly consist of the subordinated interests
and the obligations to purchase assets with a scope that is considerably limited relating to thesesecuritizations of lease receivables. As of December 31, 2014 and March 31, 2014, the amounts of thesubordinated interests measured at fair value relating to these securitizations of lease receivables were¥61,963 million and ¥64,671 million, respectively.
Securitizations of trade receivables:
The Company and certain subsidiaries sold trade receivables to unconsolidated SPEs and other entities.
During the nine months ended December 31, 2014 and 2013, proceeds from the transfer of tradereceivables were ¥387,735 million and ¥499,855 million, respectively, and net losses recognized on
those transfers were ¥405 million and ¥1,606 million, respectively. During the three months ended
December 31, 2014 and 2013, proceeds from the transfer of trade receivables were ¥135,177 millionand ¥180,234 million, respectively, and net losses recognized on those transfers were ¥138 million and¥796 million, respectively. The Company and certain subsidiaries retained servicing responsibilities,
but did not record a servicing asset or liability because the cost to service the receivables approximatedthe servicing income.

F-16

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The amounts of the initial fair value of the subordinated interests for the nine months ended December
31, 2014 and 2013 were ¥406 million and ¥6,972 million, respectively. The amounts of the initial fairvalue of the subordinated interests for the three months ended December 31, 2014 and 2013 were ¥120
million and ¥4,422 million, respectively. The subordinated interests relating to securitizations of tradereceivables are initially classified as Level 3 assets within the fair value hierarchy. The initial fair valueof the subordinated interests is determined based on economic assumptions including weighted-average
life, expected credit risks, discount rates, and prepayment rates.
Quantitative information about delinquencies, net credit losses, and components of trade receivables
subject to transfer and other assets managed together as of and for the nine months ended December 31,
2014 and as of and for the year ended March 31, 2014 is as follows:
Millions of yen
December 31, 2014
Principal
amount of
Total
receivables
principal 90 days or
amount of more past Net credit
receivablesdue
loss
Total assets managed or transferred:
Trade receivables
1,222,503
4,640
1,202
Assets transferred(229,282)
Assets held in portfolio
993,221
Millions of yen
March 31, 2014
Principal
amount of
Total
receivables
principal 90 days or
amount of more past Net credit
receivablesdue
loss
Total assets managed or transferred:
Trade receivables
Assets transferred
Assets held in portfolio

1,016,943(273,946)
742,997

3,092

1,279

As of December 31, 2014 and March 31, 2014, the amounts of the maximum exposures to losses were¥28,484 million and ¥43,549 million, respectively. They mainly consist of the subordinated interests
and the obligations to purchase assets with a scope that is considerably limited relating to thesesecuritizations of trade receivables. As of December 31, 2014 and March 31, 2014, the amounts of thesubordinated interests relating to these securitizations of trade receivables were ¥16,350 million and¥26,024 million, respectively.

F-17

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

(7) Goodwill and Other Intangible Assets
Goodwill and other intangible assets included in other assets as of December 31, 2014 and March 31,
2014 are as follows:
Millions of yen
December 31, 2014
March 31, 2014
Accumulated
amortization

Net carrying
amountGrosscarrying
amountAccumulated
amortization

Net carrying
amount471,487-

471,487

339,148-

339,148755,809615,630
51,917358,175
1,781,531

666,222
470,487
48,688139,351
1,324,748

89,587145,143
3,229
218,824
456,783

752,413577,168
50,586
301,917
1,682,084

659,299
439,688
47,856124,034
1,270,877

93,114137,480
2,730
177,883
411,207

12,862-

12,862

11,126-

11,126Gross
carrying
amountGoodwill
Amortized intangible assets:
Software
Software for internal use
Patents
Other

Indefinite-lived
intangible assets(8) Retirement and Severance Benefits
Net periodic benefit cost for the contributory funded benefit pension plans and the unfunded lump-sum
payment plans for the nine months ended December 31, 2014 and 2013 consists of the following
components:

Nine months ended
December 31, 2014
62,13819,657(28,566)(10,107)58,702
178(166)
101,836

Service cost
Interest cost
Expected return on plan assets for the period
Amortization of prior service benefit
Amortization of actuarial loss
Transfer to defined contribution pension plan
Settlements loss
Employees’ contributions

F-18

Millions of yen
Nine months ended
December 31, 2013
65,873
19,524(26,579)(12,104)
66,937
1,249
496
(120)
115,276

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Net periodic benefit cost for the contributory funded benefit pension plans and the unfunded lump-sum
payment plans for the three months ended December 31, 2014 and 2013 consists of the following
components:

Three months ended
December 31, 2014
20,536
6,683(9,660)(3,333)
19,681
178(47)
34,038Service cost
Interest cost
Expected return on plan assets for the period
Amortization of prior service benefit
Amortization of actuarial loss
Settlements loss
Employees’ contributions

Millions of yen
Three months ended
December 31, 2013
21,174
6,526(8,863)(4,038)22,370(41)
37,128(9) Common Stock
Issued shares of common stock as of December 31, 2014 and March 31, 2014 are as follows:
December 31,
2014
4,833,463,387

Issued shares of common stock

Issued shares
March 31,2014
4,833,463,387(10) Treasury Stock
Shares of treasury stock as of December 31, 2014 and March 31, 2014 are as follows:
December 31,
2014
4,778,672

Shares of treasury stock

SharesMarch 31,2014
4,407,424(11) Dividends

Decision
The Board of
Directors on
May 12, 2014

Class ofsharesCashdividends(Millionsof yen)Commonstock

26,559Retainedearnings

5.5

March
31, 2014

June
2, 2014The Board of
Directors on
October 29,
2014

Commonstock

28,973Retainedearnings

6.0

September
30, 2014

November26, 2014

Appropriation
from

F-19

Cash
dividends
per share(Yen)

Recorddate

Effective
dateHITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(12) Equity
The changes in the equity for the nine months ended December 31, 2014 and 2013 are summarized asfollows:

Balance at beginning of period
Dividends to Hitachi, Ltd. stockholders
Dividends to noncontrolling interests
Equity transactions and otherComprehensive income
Net income
Other comprehensive income, net ofincome taxes and reclassification adjustments:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on
available-for-sale securities
Cash flow hedges
Comprehensive income
Balance at end of period

Balance at beginning of period
Dividends to Hitachi, Ltd. stockholders
Dividends to noncontrolling interests
Equity transactions and otherComprehensive income
Net income
Other comprehensive income, net ofincome taxes and reclassification adjustments:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on
available-for-sale securities
Cash flow hedges
Comprehensive income
Balance at end of period

Millions of yen
Nine months ended December 31, 2014
Total Hitachi, Ltd.
stockholders’Noncontrolling
equityinterests
Total equity
2,651,241
1,201,223
3,852,464(55,532)(55,532)(28,491)(28,491)(6,257)(221)(6,478)
174,91381,884

256,797

141,670
40,43061,881
2,905

203,551
43,335

8,593(81,650)
283,956
2,873,408

307(1,062)
145,915
1,318,426

8,900(82,712)429,871
4,191,834

Millions of yen
Nine months ended December 31, 2013
Total Hitachi, Ltd.
stockholders’Noncontrolling
equityinterests
Total equity
2,082,560
1,096,727
3,179,287(48,304)(48,304)(23,253)(23,253)(5,314)(6,378)(11,692)

F-20

127,268

67,887

195,155

127,471
46,43342,692
2,607

170,163
49,040104,524(14,651)
391,0452,419,987

2,248
814
116,248
1,183,344

106,772(13,837)
507,293
3,603,331

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The changes in accumulated other comprehensive income (loss), net of income taxes, for the ninemonths ended December 31, 2014 and 2013 are as follows:

Balance at beginningof period
Equity transactions andother
Other comprehensive
income, net ofreclassification
adjustments
Other comprehensive
income arising during
the period
Reclassification
adjustments forrealized net loss
included in net income
Other comprehensive
income, net ofreclassification
adjustments
Balance at end of period

Millions of yen
Nine months ended December 31, 2014
Net unrealized
holding gain on
available-for-sale
Cash flow
securities
hedges
Total

Foreigncurrencytranslation
adjustments

Pensionliability
adjustments

34,049(186,595)

186,162(42,881)(9,265)

1,364

(106)

(2)

-

1,256

142,158(210)

41,119(79,666)

103,401(488)

40,640(32,526)(1,984)

5,642

141,670

40,4308,593(81,650)

109,043

177,083(146,271)

194,753(124,531)

101,034

F-21

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Balance at beginningof period
Equity transactions andother
Other comprehensive
income, net ofreclassification
adjustments
Other comprehensive
income arising during
the period
Reclassification
adjustments forrealized net loss
included in net income
Other comprehensive
income, net ofreclassification
adjustments
Balance at end of period

Millions of yen
Nine months ended December 31, 2013
Net unrealized
holding gain on
available-for-sale
Cash flow
securities
hedges
Total

Foreigncurrencytranslation
adjustments

Pensionliability
adjustments(91,314)(308,724)

61,482(29,778)(368,334)

(475)

(915)

132

4

(1,254)

128,543

1,136

132,757(14,087)

248,349(1,072)45,297(28,233)(564)

15,428

127,471

46,433

104,524(14,651)

263,777

35,682(263,206)

166,138(44,425)(105,811)

F-22

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following table represents the reclassification adjustments for realized net (gain) loss included in net
income by each classification of other comprehensive income for the nine months and three months
ended December 31, 2014 and 2013 with location in consolidated statements of operations.
Millions of yen
Reclassification adjustments for realized net loss included in net income
Nine months ended Nine months ended
December 31, 2014 December 31, 2013
Location
Foreign currency translation
adjustments:
Before-tax amountTax benefit (expense)

(488)
(488)
-

(1,072)(1,072)-Other income
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders

Net-of-tax amount(488)(1,072)

Pension liability adjustment:
Prior service benefit
Actuarial loss
Before-tax amountTax benefit (expense)(8,918)53,101
44,183(3,543)(10,334)
62,89052,556(7,259)Net-of-tax amount

40,64045,297

Before-tax amountTax benefit (expense)(50,433)(50,433)
17,907(45,361)(45,361)
17,128Net-of-tax amount(32,526)(28,233)(2,111)(455)

Other income(1,583)751(2,943)
959

(918)
505
(868)
304

(1,984)(564)

Other income
Interest charges
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders

5,642

15,428Net income attributable to
Hitachi, Ltd. stockholders(a)(a)
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders

Net unrealized holding gain on
available-for-sale securities:

Cash flow hedges:
Forward exchange contracts
Cross currency swap
agreements
Interest rate swaps
Before-tax amountTax benefit (expense)
Net-of-tax amount
Reclassification adjustments forrealized net loss included in net
incomeOther income
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. Stockholders(a) These accumulated other comprehensive income (loss) components are included in the computationof net periodic benefit cost (see note 8).

F-23

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Millions of yen
Reclassification adjustments for realized net gain included in net income
Three months ended Three months ended
December 31, 2014 December 31, 2013
Location
Foreign currency translation
adjustments:
Before-tax amountTax benefit (expense)

-

1,323
1,323
-

Other income
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders

Net-of-tax amount

-

1,323

Pension liability adjustment:
Prior service benefit
Actuarial loss
Before-tax amountTax benefit (expense)(2,936)
17,74114,805(1,207)(3,805)22,141
18,336(2,015)Net-of-tax amount

13,59816,321

Before-tax amountTax benefit (expense)(49,734)(49,734)
17,656(44,350)(44,350)
16,783Net-of-tax amount(32,078)(27,567)(1,618)290

Other income

(348)
309
(1,657)
576

(895)
217
(388)
41

(1,081)(347)

Other income
Interest charges
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders(19,561)(10,270)

Net income attributable to
Hitachi, Ltd. stockholders(a)(a)
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders

Net unrealized holding gain on
available-for-sale securities:

Cash flow hedges:
Forward exchange contracts
Cross currency swap
agreements
Interest rate swaps
Before-tax amountTax benefit (expense)
Net-of-tax amount
Reclassification adjustments forrealized net gain included in net
incomeOther income
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. Stockholders(a) These accumulated other comprehensive income (loss) components are included in the computationof net periodic benefit cost (see note 8).

F-24

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(13) Commitments and Contingencies
The Company and its subsidiaries are contingently liable for loan guarantees and other guarantees to its
affiliates and others in the amount of approximately ¥149,954 million as of December 31, 2014. This
includes credit guarantees of ¥40,720 million for collections of receivables associated with the integrationof its thermal power systems business.
Hitachi Capital Corporation (HCC) and subsidiaries in financial services segment provide guarantees tofinancial institutions for extending loans to customers of the subsidiaries. As of December 31, 2014, theundiscounted maximum potential future payments under such guarantees amounted to ¥196,847 million.
For providing these guarantees, the subsidiaries obtain collateral appropriate for the amount of theguarantees, and therefore, the Company considers the risk to be low. The Company accrued ¥6,325 million
as an obligation to stand ready to perform over the term of the guarantees in the event the customer cannot
make scheduled payments.
The Company and HCC provide loan commitments to affiliates and others.
The outstanding balance of loan commitments as of December 31, 2014 is as follows:
Millions of yen
110,446
38,38972,057

Total commitment available
Less amount utilized
Balance available

The amount of total commitment available in the table above includes lines of credits which require an
additional credit approval prior to funding, and it may not be fully utilized.
The Company and its subsidiaries have line of credit arrangements with banks in order to secure a financing
source for business operations. The total unused lines of credit as of December 31, 2014 amounted to¥524,596 million, primarily related to unused lines of credit belonging to the Company. The Company
maintains commitment line agreements with a number of banks and pays commitment fees as consideration.
These commitment agreements generally provide a one-year term, and are subject to renewal at the end of
the term. The unused availability under these agreements as of December 31, 2014 amounted to ¥200,000
million. The Company also maintains another commitment line agreement, whose three years and twomonths term ends in July 2016, with financing companies. The unused availability under this agreement asof December 31, 2014 amounted to ¥200,000 million.
It is a common practice in Japan for companies, in the ordinary course of business, to receive promissory
notes in the settlement of trade accounts receivable and to subsequently discount such notes to banks or totransfer them by endorsement to suppliers in the settlement of accounts payable. As of December 31, 2014
and March 31, 2014, the Company and subsidiaries were contingently liable for trade notes discounted andendorsed in the following amounts:
Millions of yen
December 31,
March 31,2014
2014
Notes discounted
1,018
1,158
Notes endorsed
1,312
1,128

F-25

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The Company and its subsidiaries provide warranties for certain of their products. The accrued productwarranty costs are based primarily on historical experience of actual warranty claims. The changes in
accrued product warranty costs for the nine months ended December 31, 2014 and 2013 are summarized asfollows:

Balance at beginning of period
Expense recognized upon issuance of
warranties
Usage
Acquisitions and divestitures
Other, including effect of foreign currencytranslation
Balance at end of period

Nine months ended
December 31, 2014
41,265

Millions of yen
Nine months ended
December 31, 2013
40,114

6,353(8,741)-

9,627(9,101)
(156)

3,346
42,223

1,504
41,988The changes in accrued product warranty costs for the three months ended December 31, 2014 and 2013 aresummarized as follows:

Balance at beginning of period
Expense recognized upon issuance of
warranties
Usage
Acquisitions and divestitures
Other, including effect of foreign currencytranslation
Balance at end of period

Three months ended
December 31, 2014
40,597

Millions of yen
Three months ended
December 31, 2013
39,8191,907(2,585)-

3,859(3,113)
(156)

2,304
42,223

1,579
41,988

F-26

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

In December 2006, the Company and a subsidiary in Europe received requests for information from theEuropean Commission in respect of alleged antitrust violations relating to liquid crystal displays.
In November 2007, a subsidiary in the U.S.A. received a grand jury subpoena in connection with theinvestigation conducted by the Antitrust Division of the U.S. Department of Justice in respect ofalleged antitrust violations relating to cathode ray tubes. In addition, in November 2007, two
subsidiaries in Asia and in Europe received requests for information from the European Commission.
Furthermore, in November 2007, a subsidiary in Canada received requests for information from the
Canadian Competition Bureau.
In June 2009, a subsidiary in Japan received a grand jury subpoena in connection with the investigation
conducted by the Antitrust Division of the U.S. Department of Justice and received requests for
information from the European Commission in respect of alleged antitrust violations relating to opticaldisk drives. In November 2011, the Japanese subsidiary paid a fine in relation to the investigation fromthe Antitrust Division of the U.S. Department of Justice. In July 2012, the Japanese subsidiary received
a statement of objections from the European Commission in respect of alleged antitrust violations. Two
subsidiaries in Japan and in Korea accrued the reasonably estimated amount for the loss.
In July 2011, a subsidiary and a former affiliated company in Japan received a statement of objections
from the European Commission in respect of alleged antitrust violations relating to high-voltage power
cables. In April 2014, the European Commission ordered these companies to pay fines for infringementof EU antitrust rules. The subsidiary in Japan paid the fine in June 2014.
In July 2011, a subsidiary in the U.S.A. was investigated by and received a grand jury subpoena fromthe Antitrust Division of the U.S. Department of Justice, the Company and a subsidiary in Europe
received requests for information from the European Commission, and a subsidiary in Canada received
requests for information from the Canadian Competition Bureau, 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 a fine.
In June 2014, a subsidiary in Japan was investigated by the Japan Fair Trade Commission in respect ofalleged antitrust violations relating to capacitors. The subsidiaries in Europe, the U.S.A., and others arebeing investigated by competition authorities in each country or region, all in respect of alleged
antitrust violations relating to capacitors.
The Company and its subsidiaries and affiliated companies have cooperated with the competentauthorities. 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 thesecompanies have arisen in a number of countries, including in the U.S.A. and Canada. A reasonably
estimated amount was accrued for the potential losses in relation to certain of these civil disputes.
In August 2012, a subsidiary in Europe received a complaint filed by a customer in Europe seeking
compensation for consequential losses of EUR 1,058 million (¥155,126 million), additional costs andinterest allegedly incurred by the delay in the construction process of a power plant against, jointly andseverally, the Company, the subsidiary in Europe, a consortium including the Company and the subsidiaryin Europe, and two other companies. In addition, in October 2013, the subsidiary in Europe received an
additional complaint requesting compensation for consequential losses of EUR 239 million (¥35,095
F-27

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

million). Although the Company, the subsidiary in Europe and the consortium will vigorously defend
themselves against this lawsuit, there can be no assurance that they will not be held liable for any amounts
claimed.
In December 2013, the Company, a subsidiary in Europe, and a consortium consisting of the Company
and the subsidiary in Europe, jointly and severally received a request from a customer in Europe torefer a dispute to arbitration seeking compensation for EUR 606 million (¥88,919 million) including
consequential losses allegedly incurred by the delay in the construction process of a power plant. As of
December 31, 2014, the amount of a request for compensation from the customer was changed to EUR
637 million (¥93,371 million). Although the Company, the subsidiary in Europe, and the consortium
consisting of the Company and the subsidiary in Europe, will vigorously defend themselves against thisclaim, there can be no assurance that they will not be held liable for any amounts claimed.
In November 2014, the Company received a compensation claim from a customer in Japan for ¥10,635
million for a consequential loss mainly caused by delay in the operation system development. The
Company partially acknowledges there is certain delay, but does not agree to the amount claimed by
the customer.
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 these proceedings. Accordingly, except as otherwise stated, noaccrual for potential loss has been made. The actual amount of fines, surcharge payments or any otherpayments resulting from these legal proceedings may be different from the accrued amounts.
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 and determined will not, in the opinion of management, have amaterial adverse effect on the consolidated financial position or results of operations of the Company
and subsidiaries.
(14) Expenses Related to Competition Law
For the nine months and three months ended December 31, 2014, a change in accrual of settlements ofconsequential losses involving disputes with certain customers was recognized.
During the nine months ended December 31, 2013, a subsidiary in the Automotive Systems segmentagreed with the U.S. Department of Justice to conclude a plea agreement paying a fine in the amount of
US$195 million (¥19,061 million), regarding violations of U.S. antitrust laws occurring in connection
with the sales of certain automotive parts to certain OEM customers. In addition, for the nine months andthe three months ended December 31, 2013, the company accrued the reasonably estimated amounts forthe potential losses in certain civil disputes, including class action lawsuits, occurring in connection withinvestigations and alleged antitrust violations in the U.S.A.

F-28

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(15) Restructuring Charges
Certain losses incurred in the reorganization of the Company’s operations are considered restructuring
charges. Components and related amounts of the restructuring charges, before the related tax effects, forthe nine months ended December 31, 2014 and 2013 are as follows:
Nine months ended
December 31, 2014
17,714211
17,925Special termination benefits
Loss on fixed assets

Millions of yen
Nine months ended
December 31, 2013
12,987
12,987

Components and related amounts of the restructuring charges, before the related tax effects, for the threemonths ended December 31, 2014 and 2013 are as follows:

Special termination benefits
Loss on fixed assets

Three months ended
December 31, 2014
15,354125
15,479Millions of yen
Three months ended
December 31, 2013
1,811
1,811

The Company and certain subsidiaries provided special termination benefits to those employees
voluntarily leaving the companies. The accrued special termination benefits were recognized at the timevoluntary termination was offered and benefits were accepted by the employees. An analysis of theaccrued special termination benefits for the nine months ended December 31, 2014 and 2013 is asfollows:
Nine months ended
December 31, 2014
12,171
17,714(14,250)
133
15,768

Balance at beginning of the period
New charges
Cash payments
Divestitures
Foreign currency exchange rate changes
Balance at end of the period

F-29

Millions of yen
Nine months ended
December 31, 201315,293
12,987(23,988)(1,707)44
2,629

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

An analysis of the accrued special termination benefits for the three months ended December 31, 2014
and 2013 is as follows:

Balance at beginning of the period
New charges
Cash payments
Divestitures
Foreign currency exchange rate changes
Balance at end of the period

Three months ended
December 31, 2014
2,166
15,354(1,867)115
15,768Millions of yen
Three months ended
December 31, 2013
7,427
1,811
(4,914)(1,707)12
2,629

The following represents the significant restructuring activities for the nine months ended December 31,
2014 by reportable segment:
1. The High Functional Materials & Components segment restructured in order to rationalize theworkforce of its domestic chemical business. The accrued special termination benefits expensed
during the nine months ended December 31, 2014 amounted to ¥13,003 million. The liabilities for
special termination benefits amounting to ¥12,973 million as of December 31, 2014 will be paid by
March 31, 2015. Total restructuring charges during the nine months ended December 31, 2014
amounted to ¥13,129 million.
2. The Information & Telecommunication Systems segment restructured in order to rationalize theworkforce of its platform and telecommunication business. The accrued special termination benefits
expensed during the nine months ended December 31, 2014 amounted to ¥3,237 million. The
liabilities for special termination benefits amounting to ¥1,539 million as of December 31, 2014 will
be paid by March 31, 2015. Total restructuring charges during the nine months ended December 31,
2014 consisted only of special termination benefits.
3. Electronic Systems & Equipment segment restructured due to withdrawal from the chip mounterbusiness. The accrued special termination benefits expensed during the nine months ended December
31, 2014 amounted to ¥1,218 million. The liabilities for special termination benefits amounting to¥1,171 million as of December 31, 2014 will be paid by March 31, 2015. Total restructuring charges
during the nine months ended December 31, 2014 consisted only of special termination benefits.
The following represents the significant restructuring activities for the nine months ended December 31,
2013 by reportable segment:
1. The Others (Logistics and Other services) restructured due to withdrawal from the TV parts business.
The accrued special termination benefits expensed during the nine months ended December 31, 2013
amounted to ¥4,469 million. The liabilities for special termination benefits amounting to ¥1,202
million as of December 31, 2013 were paid by March 31, 2014. Total restructuring charges during thenine months ended December 31, 2013 consisted only of special termination benefits.
2. The Information & Telecommunication Systems segment restructured in order to rationalize theworkforce of its software service business. The accrued special termination benefits expensed during
the nine months ended December 31, 2013 amounted to ¥3,131 million. The liabilities for special
termination benefits amounting to ¥817 million as of December 31, 2013 were paid by March 31,
2014. Total restructuring charges during the nine months ended December 31, 2013 consisted only of
F-30

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

special termination benefits.
3. The High Functional Materials & Components segment restructured in order to reorganize its wires,
cables and other relevant products business, which was undertaken to address the deterioration of thebusiness environment. The accrued special termination benefits expensed during the nine months
ended December 31, 2013 amounted to ¥2,642 million. The liabilities for special termination benefits
amounting to ¥301 million as of December 31, 2013 were paid by March 31, 2014. Total restructuring
charges during the nine months ended December 31, 2013 consisted only of special termination
benefits.
The following represents the significant restructuring activities for the three months ended December 31,
2014 by reportable segment:
1. The High Functional Materials & Components segment restructured in order to rationalize theworkforce of its domestic chemical business. The accrued special termination benefits expensed
during the three months ended December 31, 2014 amounted to ¥12,911 million. The liabilities for
special termination benefits amounting to ¥12,973 million as of December 31, 2014 will be paid by
March 31, 2015. Total restructuring charges during the nine months ended December 31, 2014
amounted to ¥13,036 million.
2. The Information & Telecommunication Systems segment restructured in order to rationalize theworkforce of its platform business. The accrued special termination benefits expensed during the threemonths ended December 31, 2014 amounted to ¥1,357 million. The liabilities for special termination
benefits amounting to ¥1,539 million as of December 31, 2014 will be paid by March 31, 2015. Total
restructuring charges during the three months ended December 31, 2014 consisted only of special
termination benefits.
3. Electronic Systems & Equipment segment restructured due to withdrawal from the chip mounterbusiness. The accrued special termination benefits expensed during the three months ended December
31, 2014 amounted to ¥1,028 million. The liabilities for special termination benefits amounting to¥1,171 million as of December 31, 2014 will be paid by March 31, 2015. Total restructuring charges
during the three months ended December 31, 2014 consisted only of special termination benefits.
The restructuring charges for the three months ended December 31, 2013 mainly consist of special
termination benefits for the early-terminated employees of subsidiaries for the purpose of improving
profitability in the Information & Telecommunication Systems segment and Social Infrastructure &Industrial Systems segment by rationalizing its workforce.

F-31

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(16) Other Income and Other Deductions
The following items are included in other income or other deductions for the nine months ended
December 31, 2014 and 2013.

Net gain on securities
Net gain (loss) on sale and disposal ofrental assets and other property
Exchange gain

Nine months ended
December 31, 2014
53,478Millions of yen
Nine months ended
December 31, 2013
34,357(15,691)
13,222

1,606
18,833

The following items are included in other income or other deductions for the three months ended
December 31, 2014 and 2013.

Net gain on securities
Net gain (loss) on sale and disposal ofrental assets and other property
Exchange gain

Three months ended
December 31, 2014
50,350Millions of yen
Three months ended
December 31, 2013
36,512(3,736)
6,077

2,183
16,790The major component of net gain on securities for the nine months and three months ended December 31,
2014 and 2013 is related to a sale of shares of Western Digital Corporation.

F-32

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(17) Net Income Per Share Information
The reconciliations of the numbers and the amounts used in the basic and diluted net income attributable
to Hitachi, Ltd. stockholders per share computations for the nine months ended December 31, 2014 and2013 are as follows:
Number of shares
Nine months ended
Nine months ended
December 31, 2014
December 31, 2013
Weighted average number of shares on which basic net
income per share is calculated
4,828,831,622
4,830,318,575
Effect of dilutive securities
Number of shares on which diluted net income per shareis calculated
4,828,831,622
4,830,318,575

Net income attributable to Hitachi, Ltd. stockholders
Effect of dilutive securities:
Other
Net income attributable to Hitachi, Ltd. stockholders
on which diluted net income per share is calculated

Nine months ended
December 31, 2014
174,913Millions of yen
Nine months ended
December 31, 2013
127,268

(128)

(56)

174,785

127,212Yen
Net income attributable to Hitachi, Ltd. stockholders
per share:
Basic
Diluted

F-33

36.22
36.20

26.35
26.34

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The reconciliations of the numbers and the amounts used in the basic and diluted net income attributable
to Hitachi, Ltd. stockholders per share computations for the three months ended December 31, 2014 and2013 are as follows:
Number of shares
Three months ended
Three months ended
December 31, 2014
December 31, 2013
Weighted average number of shares on which basic net
income per share is calculated
4,828,706,084
4,830,189,779
Effect of dilutive securities
Number of shares on which diluted net income per shareis calculated
4,828,706,084
4,830,189,779

Net income attributable to Hitachi, Ltd. stockholders
Effect of dilutive securities:
Other
Net income attributable to Hitachi, Ltd. stockholders
on which diluted net income per share is calculated

Three months ended
December 31, 2014
83,373

Millions of yen
Three months ended
December 31, 2013
94,502(41)(19)

83,332

94,483Yen
Net income attributable to Hitachi, Ltd. stockholders
per share:
Basic
Diluted

F-34

17.27
17.26

19.56
19.56

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(18) Concentrations of Credit Risk
The Company and its subsidiaries generally do not have significant concentrations of credit risk to any
counterparties nor any regions because they are diversified and spread globally.
(19) Derivative Instruments and Hedging Activities
Overall risk profile
The major manufacturing bases of the Company and its subsidiaries are located in Japan and Asia. The
selling bases are located globally, and the Company and its subsidiaries generated approximately 50%of their sales from overseas for the nine months ended December 31, 2014. These overseas sales aremainly denominated in the U.S. dollar or Euro. As a result, the Company and its subsidiaries are
exposed to market risks from changes in foreign currency exchange rates.
The Company’s financing subsidiaries mainly in the U.K. issue variable rate medium-term notes
mainly through the Euro markets to finance their overseas long-term operating capital. As a result, theCompany and its subsidiaries are exposed to market risks from changes in foreign currency exchange
rates and interest rates.
The Company and its subsidiaries are also exposed to credit-related losses in the event of
non-performance by counterparties to derivative financial instruments, but it is not expected that any
counterparties will fail to meet their obligations because most of the counterparties are internationallyrecognized financial institutions that are rated A or higher and contracts are diversified into a number ofmajor financial institutions.
The Company and its subsidiaries have an insignificant amount of derivative instruments containing
credit-risk-related contingent features, such as provisions that require the Company’s debt to maintainan investment grade credit rating from each of the major credit rating agencies.
Risk management policy
The Company and its subsidiaries assess foreign currency exchange rate risk and interest rate risk by
regularly monitoring changes in these exposures and by evaluating hedging opportunities. It is theCompany’s principal policy not to enter into derivative financial instruments for speculation purposes.
Foreign currency exchange rate risk management
The Company and its subsidiaries have assets and liabilities which are exposed to foreign currency
exchange rate risk and, as a result, they enter into forward exchange contracts and cross currency swap
agreements for the purpose of hedging these risk exposures.
In order to fix the future net cash flows principally from trade receivables and payables recognized,
which are denominated in foreign currencies, the Company and its subsidiaries on a monthly basis
measure the volume and due date of future net cash flows by currency. In accordance with theCompany’s policy, a certain portion of measured net cash flows is covered using comprehensive
forward exchange contracts, which principally mature within one year. If necessary, the Company andits subsidiaries establish the risk control policy and the risk management approach specific to eachtransaction by reviewing the business characteristics, the structure of the income and expenditure, andconditions of the contract. The Company and its subsidiaries hedge the risk exposure arising from
specific transactions based on the risk control policy and the risk management approach.

F-35

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The Company and its subsidiaries enter into cross currency swap agreements with the same maturities as
underlying debt to fix cash flows from long-term debt denominated in foreign currencies. The hedging
relationship between the derivative financial instrument and its hedged item is highly effective inachieving offsetting changes in foreign currency exchange rates.
Interest rate risk management
The Company’s and its subsidiaries’ exposure to interest rate risk is related principally to long-term
debt obligations. Management believes it is prudent to minimize the variability caused by interest raterisk.
To meet this objective, the Company and its subsidiaries principally enter into interest rate swaps tomanage fluctuations in cash flows. The interest rate swaps entered into are receive-variable, pay-fixedinterest rate swaps. Under the interest rate swaps, the Company and its subsidiaries receive variableinterest rate payments on long-term debt associated with medium-term notes and make fixed interest
rate payments, thereby creating fixed interest rate long-term debt.
Certain financing subsidiaries mainly finance a portion of their operations using long-term debt with afixed interest rate and lend funds at variable interest rates. Therefore, such subsidiaries are exposed tointerest rate risk. Management believes it is prudent to minimize the variability caused by interest raterisk. To meet this objective, certain financing subsidiaries principally enter into interest rate swaps
converting the fixed rate to a variable rate to manage fluctuations in fair value resulting from interest
rate risk. Under the interest rate swaps, certain financing subsidiaries receive fixed interest rate
payments associated with long-term debt, including medium-term notes, and make variable interest rate
payments, thereby creating variable-rate long-term debt.
The hedging relationship between the interest rate swaps and its hedged item is highly effective inachieving offsetting changes in cash flows and fair value resulting from interest rate risk.
Fair value hedge
Changes in the fair value of both recognized assets and liabilities, and derivative financial instruments
designated as fair value hedges of these assets and liabilities are recognized in other income(deductions). Derivative financial instruments designated as fair value hedges include forward
exchange contracts associated with operating transactions, cross currency swap agreements and interest
rate swaps associated with financing transactions.
Cash flow hedge
Foreign currency exposure:
Changes in the fair value of forward exchange contracts designated and qualifying as cash flow hedgesof forecasted transactions are reported in accumulated other comprehensive income (AOCI). Theseamounts are reclassified into earnings in the same period as the hedged items affect earnings.
Interest rate exposure:
Changes in fair values of interest rate swaps designated as hedging instruments for the variability of cash
flows associated with long-term debt obligations are reported in AOCI. These amounts subsequently arereclassified into interest charges as a yield adjustment in the same period in which the hedged debt
obligations affect earnings.

F-36

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(20) Fair Value
ASC 820,”Fair Value Measurement” establishes a fair value hierarchy that prioritizes the use ofobservable inputs in markets over the use of unobservable inputs when measuring fair value as follows:
Level 1
Quoted prices for identical assets or liabilities in active markets.
Level 2
Quoted prices for similar assets or liabilities in active markets; quoted prices associated withtransactions that are not distressed for identical or similar assets or liabilities in markets that are notactive; or valuations whose significant inputs are derived from or corroborated by observable market
data.
Level 3
Valuations using inputs that are not observable.
Investments in debt and equity securities
Investment securities of which quoted market prices are available to determine their fair value areincluded in Level 1. Level 1 securities include available-for-sale securities such as listed stocks on
exchange markets, debt securities such as Japan treasury bonds and U.S.A. treasury bonds andexchange traded funds.
In the absence of an active market for investment securities, quoted prices for similar investment
securities, quoted prices associated with transactions that are not distressed for identical or similar
investment securities or other relevant information including market interest rate curves, referenced
credit spreads or default rates, are used to determine fair value. These investments are included in Level
2. Level 2 securities include short-term investments and available-for-sale securities such as listed
stocks traded over-the-counter, investment funds and debt securities traded over-the-counter.
In infrequent circumstances, the significant inputs of fair value for investment securities areunobservable and such investment are included in Level 3. The Company uses price information
provided by financial institutions to evaluate these investments while corroborating the information
mainly with prices estimated using an income approach based on its own valuation models or a market
approach such as comparison with prices of similar securities. Level 3 securities include
available-for-sale securities such as subordinated debentures and structured bonds with little market
activity.
Derivatives
Closing prices are used for derivatives included in Level 1, which are traded on active markets. The
majority of derivatives are traded on over-the-counter markets, which the Company does not deem torepresent active markets. Derivative assets and liabilities for which fair value is based on quoted prices
associated with transactions that are not distressed, in markets that are not active, or based on models
using interest rate curves and forward and spot prices for currencies and commodities are included in
Level 2. Derivatives included in Level 2 primarily consist of interest rate swaps, cross-currency swaps
and foreign currency and commodity forward and option contracts. In infrequent circumstances, thesignificant inputs of fair value are unobservable and the Company mainly uses an income or market
approach to corroborate relevant information provided by financial institutions. These derivatives areincluded in Level 3.

F-37

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Subordinated interests resulting from securitization
When fair value is determined using observable inputs, including prices of recent transactions inmarkets that are not distressed, subordinated interests are included in Level 2. When significant inputs
are not observable, fair value is determined based on economic assumptions used in measuring the fairvalue of the subordinated interests, including weighted-average life, expected credit risks, and discountrates, and the subordinated interests are included in Level 3.
The Company uses its own valuation models to evaluate these investments categorized within Level 3
and periodically reviews the appropriateness of consistent application of the models as well as updatingof the inputs in consideration of recent changes in economic conditions. The Company also analyses
whether the sensitivity in the valuation of these investments has any material adverse effects on the
consolidated financial statements.

F-38

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables present the assets and liabilities that are measured at fair value on a recurring
basis and the fair value hierarchy classification as of December 31, 2014 and March 31, 2014. The
carrying values on the consolidated balance sheets are recorded by the fair value of these assets andliabilities:

Assets:Investments in securities
Equity securities
Government debt securities
Corporate debt securities
Other
Derivatives
Subordinated interests resulting
from securitization
Liabilities:
Derivatives

Assets:Investments in securities
Equity securities
Government debt securities
Corporate debt securities
Other
Derivatives
Subordinated interests resulting
from securitization
Liabilities:
Derivatives

Total

Millions of yen
December 31, 2014
Fair value hierarchy classification
Level 1
Level 2
Level 3396,601
4,968
9,092
14,026
11,842395,642
4,649
13,611
-

959
319
5,113
415
11,842

3,979-

78,313514,842

413,902

18,64878,31382,292(124,766)-(124,766)

-

Total

Millions of yen
March 31, 2014
Fair value hierarchy classification
Level 1
Level 2
Level 3405,214
7,256
9,139
11,4188,239

404,339
6,937
10,786
-

875
319
4,747
632
8,239

4,392
-

90,695531,961

422,062

14,812

90,69595,087(71,777)-(71,777)-

F-39

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables present the changes in Level 3 instruments measured on a recurring basis for thenine months ended December 31, 2014 and 2013.
Millions of yen
Nine months ended December 31, 2014
Subordinatedinterests
Corporate
resultingdebt
fromsecurities
securitization
Total
4,392
90,69595,087
7,412
7,412
(400)
(21,511)(21,911)

Balance at beginning of period
Purchases
Settlements
Total gains or losses (realized/unrealized)
Included in earnings (a)
(3)
134
131
Included in other comprehensive income (loss)
(10)
1,583
1,573
Balance at end of period
3,979
78,31382,292
The amount of total gains or losses for the period
included in earnings attributable to the change inunrealized gains or losses relating to assets still held at
December 31, 2014(a) Level 3 gains or losses included in earnings for the nine months ended December 31, 2014 arereported in other income (deductions) for corporate debt securities and are reported in revenue forsubordinated interests resulting from securitization.

Millions of yen
Nine months ended December 31, 2013
Subordinatedinterests
Corporate
resultingdebt
fromsecurities
securitization
Total
13,637
84,68898,325
16,534
16,534(1,937)(1,937)(3,736)(18,222)(21,958)

Balance at beginning of period
Purchases
Sales
Settlements
Total gains or losses (realized/unrealized)
Included in earnings (a)
(3)
140
137
Included in other comprehensive income
259
5,096
5,355
Balance at end of period
8,220
88,23696,456
The amount of total gains or losses for the period
included in earnings attributable to the change inunrealized gains or losses relating to assets still held at
December 31, 2013(a) Level 3 gains or losses included in earnings for the nine months ended December 31, 2013 arereported in other income (deductions) for corporate debt securities and are reported in revenue forsubordinated interests resulting from securitization.

F-40

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables present the changes in Level 3 instruments measured on a recurring basis for thethree months ended December 31, 2014 and 2013.
Millions of yen
Three months ended December 31, 2014
Subordinatedinterests
Corporate
resultingdebt
fromsecurities
securitization
Total
4,386
82,48586,871
1,887
1,887
(400)
(7,018)(7,418)

Balance at beginning of period
Purchases
Settlements
Total gains or losses (realized/unrealized)
Included in earnings (a)3838Included in other comprehensive income
(7)
921
914
Balance at end of period
3,979
78,31382,292
The amount of total gains or losses for the period
included in earnings attributable to the change inunrealized gains or losses relating to assets still held at
December 31, 2014(a) Level 3 gains or losses included in earnings for the three months ended December 31, 2014 arereported in other income (deductions) for corporate debt securities and are reported in revenue forsubordinated interests resulting from securitization.

Millions of yen
Three months ended December 31, 2013
Subordinatedinterests
Corporate
resultingdebt
fromsecurities
securitization
Total
10,56383,75594,3187,881
7,881(1,937)(1,937)(639)(5,490)(6,129)Balance at beginning of period
Purchases
Sales
Settlements
Total gains or losses (realized/unrealized)
Included in earnings (a)
(1)
42
41
Included in other comprehensive income
234
2,048
2,282
Balance at end of period
8,220
88,23696,456
The amount of total gains or losses for the period
included in earnings attributable to the change inunrealized gains or losses relating to assets still held at
December 31, 2013(a) Level 3 gains or losses included in earnings for the three months ended December 31, 2013 arereported in other income (deductions) for corporate debt securities and are reported in revenue forsubordinated interests resulting from securitization.

F-41

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Assets that are measured at fair value during the period on a non-recurring basis because they are
deemed to be impaired are not included in the above tables.
The Company writes down the carrying amount of equity-method and cost-method investments on the
consolidated balance sheets when the Company deems the decline of fair value to beother-than-temporary. The fair value of the equity-method investments which are listed on an active
market is included in Level 1. The fair value of equity-method investments determined using an
income approach, based on discounted cash flows using unobservable inputs is included in Level 3.
Also, a weighted-average fair value determined using both a market approach and an income approach,which incorporate both observable inputs, such as quoted market prices of comparable companies, anddiscounted cash flow using unobservable inputs, is included in Level 3. The Company calculates
discounted cash flows of these equity-method investments based on business forecasts, market trends,
and assumptions of projected business plans. The Company uses both a market approach and an
income approach to determine the fair value of the cost-method investments. The fair value based on
observable inputs such as quoted market prices of similar investments is included in Level 2. The fairvalue primarily based on discounted cash flows using unobservable inputs based on business forecasts,
market trends, and assumptions of projected business plans is included in Level 3.
The Company also writes down the carrying amount of long-lived assets on the consolidated balance
sheets mainly when the Company deems the carrying amount of certain long-lived assets is notrecoverable and exceeds its fair value. The Company mainly uses an income approach or a market
approach to calculate the fair value of long-lived assets. These measurements are included in Level 3
since they are based primarily on discounted cash flows using unobservable inputs based on business
forecasts, market trends, and assumptions of projected business plans.

F-42

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables present the assets measured at fair value on a non-recurring basis and the gains orlosses recognized for the nine months ended December 31, 2014 and 2013.
Millions of yen
Nine months ended December 31, 2014
Fair value hierarchy classification
Total gains
Level 1
Level 2
Level 3
(losses)Long-lived assets (a)Electronic Systems & Equipment
segment
Financial Services segment
Other
Total

-

-

1,806
679
2,485

(1,336)(1,675)(784)(3,795)(a) The carrying value as of December 31, 2014 is not equal to the fair value at the time of
impairment because of depreciation expense subsequent to impairment.
Millions of yen
Nine months ended December 31, 2013
Fair value hierarchy classification
Total gains
Level 1
Level 2
Level 3
(losses)Long-lived assets (a)High Functional Materials &Components segment
Others (Logistics and Other services)segment
Other
Total

-

-

128

(2,399)

-

-

21
9
158

(1,396)(945)(4,740)(a) The carrying value as of December 31, 2013 is not equal to the fair value at the time of
impairment because of depreciation expense subsequent to impairment.

F-43

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables present the assets measured at fair value on a non-recurring basis and the gains orlosses recognized for the three months ended December 31, 2014 and 2013.
Millions of yen
Three months ended December 31, 2014
Fair value hierarchy classification
Total gains
Level 1
Level 2
Level 3
(losses)Long-lived assets
Financial Services segment
Other
Total

-

-

674
674

(1,675)(304)(1,979)Millions of yen
Three months ended December 31, 2013
Fair value hierarchy classification
Total gains
Level 1
Level 2
Level 3
(losses)Long-lived assets
High Functional Materials &Components segment
Other
Total

-

F-44

-

5
10
15

(2,216)(705)(2,921)HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(21) Financing Receivables and Allowance for Doubtful Receivables
The Company classifies financing receivables aggregated and categorized as finance leases, installment
loans, mortgage loans, and other financing receivables, based on the nature of risks and characteristics as
described below.
Financing receivables from equipment leases, installment arrangements, mortgage loans, and otherreceivables with a contractual maturity of one year or more are subject to disclosure as reported in thisnote. Trade receivables from sale of products or services that have contractual maturities of one year orless are excluded from this note. Finance lease receivables are recorded based on the total minimum
payments to be received and unguaranteed residual values less executory costs and unearned income.
Installment loans, mortgage loans and other financing receivables are reported on the amortized costbasis.
Finance leases are receivables from lease arrangements, including products manufactured by theCompany and certain of its subsidiaries, such as information technology equipment, manufacturingmachinery and equipment and construction machinery, typically secured by underlying assets. The
primary locations of finance leases are Japan, U.S.A., U.K. and China. The lease term ranges mainly
from three to six years. The non-specific allowance for doubtful receivables is collectively determinedon the basis of past collection experience, consideration of current economic conditions and changes inour customer collection trends as well as other factors that may affect the customers’ ability to pay.
Installment loans represent receivables from arrangements with customers and dealers to provide
financing primarily for products manufactured by the Company and certain of its subsidiaries, such as
manufacturing machinery. Installment loans are typically secured by underlying assets. The primarylocations of installment loans are Japan, U.S.A., U.K. and China. The loan term is generally less than
three years. The non-specific allowance is collectively determined on the basis of past collection
experience, consideration of current economic conditions and changes in our customer collection trends
as well as other factors that may affect the customers’ ability to pay.
Mortgage loans are financing receivables from residential loan arrangements for individuals. Mortgage
loans are usually arranged with collateral. The primary location of mortgage loans is Japan; more thanfifty percent of mortgage loans are arranged for employees of the Company and its domestic subsidiaries.
The term of mortgage loans is usually less than 30 years. The non-specific allowance is collectively
determined on the basis of past collection experience, consideration of current economic conditions andchanges in our customer collection trends as well as other factors that may affect the customers’ ability
to pay.
Other financing receivables are the financing service receivables provided by the subsidiaries in thefinancial services segment such as factoring, loan servicing, and other forms of commercial financing.
The contractual maturities associated with those services generally range over one to three years. The
non-specific allowance is collectively determined on the basis of past collection experience,
consideration of current economic conditions and changes in our customer collection trends as well asother factors that may affect the customers’ ability to pay.
In addition, common to all financing receivables, the Company and its subsidiaries individually evaluate
collectability of financing receivables either by discounted cash flow analyses when they determine
principal and interest of a financing receivable cannot be collected or by estimating the fair value of
related collateral when applicable and further estimating the allowance for doubtful receivables. The
Company and its subsidiaries have proprietary credit quality indicators appropriate to the unique
F-45

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

characteristics of their operations and the nature of their financing receivable portfolios. Based on such
indicators as the duration of overdue payments, the unpaid amounts, the existence of extended payment
terms, evaluation by third-party credit agencies, and the degree of debtors’ excessive debt, the Company
and its subsidiaries classify and monitor their financial receivables into two categories: the individually
evaluated receivables, and the collectively evaluated receivables.
Interest income for long-term financing receivables is recognized on the accrual basis.
As of December 31, 2014 and March 31, 2014, financing receivables include past due receivables in theamount of ¥52,556 million and ¥36,990 million, respectively. Of these amounts, financing receivables
past due 90 days or more and still accruing interest amounted to ¥21,218 million and ¥13,049 million,
respectively.
The following tables present the allowance for doubtful receivables and recorded investment infinancing receivables as of December 31, 2014 and 2013, and changes in the allowance for the ninemonths ended December 31, 2014 and 2013.

FinanceleasesAllowance for doubtfulreceivables
Balance, March 31, 2014
Provision
RecoveryWrite off
Balance, December 31,
2014
Applicable to amounts;
Individually evaluatedfor impairment
Applicable to amounts;
Collectively evaluatedfor impairment
Financing receivables
Balance, December 31,
2014
Applicable to amounts;
Individually evaluatedfor impairment
Applicable to amounts;
Collectively evaluatedfor impairment

Installment
loans

Mortgageloans

Millions of yen
December 31, 2014
Other
financingreceivables
Total

13,4755,030(1,922)
(606)

2,651
1,645
(157)
(1,009)

144
77
(44)
(11)

3,543
3,157
(1,286)(1,256)

19,813
9,909(3,409)(2,882)

15,977

3,130

166

4,158

23,431

9,755

1,027

60

3,092

13,934

6,222

2,103

106

1,066

9,497

964,229455,205

135,390

490,5622,045,386

23,468

1,737

237

6,895

32,337940,761

453,468

135,153483,667

2,013,049

F-46

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

FinanceleasesAllowance for doubtfulreceivables
Balance, March 31, 2013
Provision
RecoveryWrite off
Acquisitions anddivestitures
Balance, December 31,
2013
Applicable to amounts;
Individually evaluatedfor impairment
Applicable to amounts;
Collectively evaluatedfor impairment
Financing receivables
Balance, December 31,
2013
Applicable to amounts;
Individually evaluatedfor impairment
Applicable to amounts;
Collectively evaluatedfor impairment

Installment
loans

Millions of yen
December 31, 2013
Other
financingreceivables
Total

Mortgage
loans

9,946
5,240
(2,592)
(334)

2,209
2,119
(812)
(1,130)

153
59
(40)
-

5,082
3,462
(2,979)(1,064)

17,39010,880(6,423)(2,528)

1,820

73

-

165

2,058

14,080

2,459

172

4,666

21,377

8,238

824

56

3,508

12,626

5,842

1,635

116

1,158

8,751

871,026

297,176

156,030

354,932

1,679,164

21,343

978

212

8,174

30,707

849,683

296,198

155,818

346,758

1,648,457

F-47

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables present the changes in the allowance for the three months ended December 31,
2014 and 2013.

FinanceleasesAllowance for doubtfulreceivables
Balance, September 30,
2014
Provision
RecoveryWrite off
Balance, December 31,
2014

Mortgageloans

14,324
2,261
(223)
(385)

2,762
846
(54)
(424)

137
40
(11)

3,268
1,605
(76)
(639)

20,491
4,752(353)(1,459)15,977

3,130

166

4,158

23,431

FinanceleasesAllowance for doubtfulreceivables
Balance, September 30,
2013
Provision
RecoveryWrite off
Balance, December 31,
2013

Installment
loans

Millions of yen
December 31, 2014
Other
financingreceivables
Total

Installment
loans

Mortgageloans

Millions of yen
December 31, 2013
Other
financingreceivables
Total

12,407
2,180
(389)
(118)

2,511
458
(273)
(237)

153
25
(6)
-

5,767
955
(1,694)(362)

20,8383,618(2,362)(717)

14,080

2,459

172

4,666

21,377

In addition, as of December 31, 2014 and March 31, 2014, the amounts of impaired loans relating toreceivables which arose from sales of products or services were ¥49,203 million and ¥37,383 million,
respectively.

F-48

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(22) Acquisitions and Divestitures
On August 19, 2014, Hitachi Metals, Ltd. (Hitachi Metals), a subsidiary of the Company in the High
Functional Materials & Components segment, in order to strengthen its global iron casting business in a
medium and long term basis, signed a definitive agreement with WF Global II B.V., an entity which isowned by private equity funds managed and controlled by KPS Capital Partners, LP (KPS), to acquire
all the shares of Waupaca Foundry Holdings, Inc. (Waupaca HD), which holds 100% stake of Waupaca
Foundry, Inc. (Waupaca), which is engaged in the iron casting business for transportation machinery in
the North America market and headquartered in the U.S.A. On November 10, 2014, Hitachi Metals
acquired all the shares of Waupaca HD in accordance with the definitive agreement. Accordingly,
Hitachi Metals obtained control of Waupaca HD and it became a wholly owned subsidiary effective
November 10, 2014 (the acquisition date).
The following table summarizes the consideration paid for Waupaca HD, the provisional amounts of theassets acquired and liabilities assumed and recognized as of the acquisition date.

Current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Current liabilities
Non-current liabilities

Cash paid for acquisition (Purchase amount of all
the shares of Waupaca HD)

Millions of yen
43,82754,28796,018
4,097
198,229(28,196)(74,314)(102,510)(95,719)

The total acquisition price was US$1,338 million (¥152,990 million), which included amount of
repayment of bank loans of Waupaca (US$501 million) in addition to purchase amount of all the sharesof Waupaca HD (US$837 million).
The Company is currently evaluating the fair values to be assigned to assets and liabilities of Waupaca
HD at the acquisition date, and therefore the above amounts are subject to change.
The results of operations of Waupaca HD for the period from the acquisition date to December 31, 2014
were not material.
On a pro forma basis, revenue, net income attributable to Hitachi, Ltd. stockholders and the per share
information of the Company with assumed acquisition date for Waupaca HD of April 1, 2013 would not
differ materially from the amounts reported in the accompanying consolidated financial statements forthe nine months and three months ended December 31, 2014 and 2013.

F-49

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014(23) Segment Information
The operating segments of the Company are the components for which separate financial information
is available and for which segment profit or loss amounts are evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. The Company hasaggregated certain operating segments into reportable segments for financial reporting purposes, sincesuch aggregation helps financial statement users better understand the Company’s performance.
The reportable segments correspond to categories of activities classified primarily by markets, products
and services.
The Company discloses its business in ten reportable segments: Information & Telecommunication
Systems, Power Systems, Social Infrastructure & Industrial Systems, Electronic Systems & Equipment,
Construction Machinery, High Functional Materials & Components, Automotive Systems, Smart Life
& Ecofriendly Systems, Others (Logistics and Other services) and Financial Services.
The primary products and services included in each segment are as follows:
Information & Telecommunication Systems:
Systems integration, Outsourcing services, Software, Disk array subsystems, Servers, Mainframes,
Telecommunication equipment and ATMs
Power Systems:
Thermal, Nuclear and Renewable energy power generation systems and Transmission & distribution
systems
Social Infrastructure & Industrial Systems:
Industrial machinery and plants, Elevators, Escalators and Railway systems
Electronic Systems & Equipment:
Semiconductor and LCDs manufacturing equipment, Test and measurement equipment, Advanced
industrial products, Medical electronics equipment and Power tools
Construction Machinery:Hydraulic excavators, Wheel loaders and Mining machinery
High Functional Materials & Components:
Semiconductor and display related materials, Circuit boards and materials, Automotive parts (molded
plastics, etc.), Energy storage devices, Specialty steels, Magnetic materials and components, High
grade casting components and materials, and Wires and cables
Automotive Systems:
Engine management systems, Electric powertrain systems, Drive control systems and Car information
systems
Smart Life & Ecofriendly Systems:
Air-conditioning equipment, Room air conditioner, Refrigerators, Washing machines and Flat-panel
TVs

F-50

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Others (Logistics and Other services):
Logistics, Optical disk drives, Property management and others
Financial Services:
Leasing and Loan guarantees
Effective April 1, 2014, due to a change in management reporting, Hitachi Information & Control
Solutions, Ltd. and Ibaraki Hitachi Information Service, Ltd. which were previously included in the
Information & Telecommunication Systems, have been included in the Social Infrastructure &Industrial Systems.
In April 2014, both companies were merged and the corporate name was changed to Hitachi Industry& Control Solution, Ltd.
Also, effective April 1, 2014, the Optical disk drives business, which was previously included in the
Digital Media & Consumer Products, has been included in the Others (Logistics and Other services).
As a result, the Company changed the name of the Digital Media & Consumer Products to the Smart
Life & Ecofriendly Systems. Accordingly, the corresponding data for the nine months ended December
31, 2013 and for the three months ended December 31, 2013 have been restated to conform with thechange.
The following tables show segment information for the nine months ended December 31, 2014 and2013.
Revenues from Outside Customers

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

F-51

Nine months
ended
December 31,
2014

Millions of yen
Nine months
ended
December 31,
2013

1,258,409
253,413885,345
701,682553,963
1,033,142
681,601
543,089
655,056
252,274
6,817,974
73
6,818,047

1,191,399
521,972
796,348
662,097
531,778
964,219
646,975
523,573
706,412229,450
6,774,223
227
6,774,450

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Revenues from Intersegment Transactions

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

Nine months
ended
December 31,
2014

Millions of yen
Nine months
ended
December 31,
2013

152,184
48,462
125,458
86,385
1,364
51,6391,760
27,402
242,597
16,566753,817(753,817)-

133,478
53,694147,430
90,205
1,553
52,234
1,793
29,055319,904
17,557
846,903(846,903)-

Nine months
ended
December 31,
2014

Millions of yen
Nine months
ended
December 31,
2013

1,410,593
301,875
1,010,803
788,067
555,327
1,084,781
683,361
570,491
897,653
268,840
7,571,791(753,744)
6,818,047

1,324,877
575,666
943,778
752,302533,331
1,016,453
648,768
552,628
1,026,316
247,007
7,621,126(846,676)
6,774,450

Total Revenues

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

F-52

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Segment Profit (Loss)
Nine months
ended
December 31,
2014

Millions of yen
Nine months
ended
December 31,
2013

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

50,305(26,171)
34,08039,77939,00990,47324,78725,78828,37429,453335,877
31,961
367,838

48,01010,952
18,42324,43444,80676,071
15,12017,76825,49826,460307,542
4,253
311,795

Interest income
Interest charges
Income before income taxes

7,735(19,998)
355,575

9,101(19,604)
301,292

Intersegment transactions are generally recorded at the same prices used in transactions with third parties.
Corporate items include unallocated corporate expenses, such as leading edge R&D expenditures, andothers.

F-53

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Operating Income

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

Nine months
ended
December 31,
2014

Millions of yen
Nine months
ended
December 31,
2013

52,882(33,120)
31,776
41,47539,181
84,29939,58920,08826,57628,642
331,388(9,203)322,185

48,1106,372
12,537
24,052
46,87373,262
32,344
12,84322,451
25,143303,987(8,506)295,481

Operating income is presented as total revenues less total cost of sales and selling, general andadministrative expenses in order to be consistent with financial reporting principles and practices
generally accepted in Japan.

F-54

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

The following tables show segment information for the three months ended December 31, 2014 and2013.
Revenues from Outside Customers

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

F-55

Three months
ended
December 31,
2014

Millions of yen
Three months
ended
December 31,
2013

422,72180,589311,862
229,641
181,671379,284
236,551
173,557
223,732
81,6442,321,252
22
2,321,274

404,893
181,878
275,262
220,887
174,844
328,472
221,436
170,110248,204
77,6922,303,678
86
2,303,764

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Revenues from Intersegment Transactions

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

Three months
ended
December 31,
2014

Millions of yen
Three months
ended
December 31,
2013

52,88016,181
39,23429,601390
16,805554
8,616
80,041
5,387
249,689(249,689)-

43,823
17,48548,38031,534427
18,388547
9,672
114,089
5,633
289,978(289,978)-

Three months
ended
December 31,
2014

Millions of yen
Three months
ended
December 31,
2013

475,601
96,770351,096259,242
182,061
396,089
237,105
182,173
303,773
87,0312,570,941(249,667)
2,321,274

448,716
199,363
323,642
252,421
175,271
346,860
221,983
179,782
362,293
83,3252,593,656(289,892)
2,303,764

Total Revenues

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

F-56

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Segment Profit (Loss)
Three months
ended
December 31,
2014

Millions of yen
Three months
ended
December 31,
2013

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

14,959(2,236)
13,813
13,767
13,09527,838
5,121
7,904
13,5009,430
117,191
33,274150,465

19,288
7,475
11,745
15,132
18,133
26,832
13,1108,860
12,951
9,040
142,566
27,215
169,781Interest income
Interest charges
Income before income taxes

2,716(7,112)
146,069

2,742(6,788)
165,735

Intersegment transactions are generally recorded at the same prices used in transactions with third parties.
Corporate items include unallocated corporate expenses, such as leading edge R&D expenditures, andothers.

F-57

HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014

Operating Income

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

Three months
ended
December 31,
2014

Millions of yen
Three months
ended
December 31,
2013

16,048(10,516)
13,53813,54914,15231,31911,401
5,763
11,35010,140116,744(8,583)
108,161

17,3404,197
9,250
13,416
17,42623,983
11,510
7,006
10,609
9,066
123,803(1,803)122,000

Operating income is presented as total revenues less total cost of sales and selling, general andadministrative expenses in order to be consistent with financial reporting principles and practices
generally accepted in Japan.

F-58

[Cover][Document Filed]

Confirmation Letter[Applicable Law]

Article 24-4-8, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed to]

Director, Kanto Local Finance Bureau[Filing Date]

February 13, 2015

[Company Name]

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

Representative][Name and title of CFO]

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

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

1. Matters Related to Adequacy of Statements Contained in the Annual Securities Report
Mr. Toshiaki Higashihara, President & COO, and Mr. Toyoaki Nakamura, Executive Vice President
and Executive Officer, confirmed that statements contained in the Quarterly Report for the third quarter of146th fiscal year (from October 1, 2014 to December 31, 2014) were adequate under the Financial
Instruments and Exchange Act.
2. Special Notes
None.

A-2