(Translation)

Annual Securities Report(The 145th Business Term)
From April 1, 2013 to March 31, 2014

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

Hitachi, Ltd.

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

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

Director, Kanto Local Finance Bureau[Filing Date]

June 20, 2014

[Fiscal Year]

The 145th Business Term (from April 1, 2013 to March 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 Annual Securities Report filed with the Director of the Kanto Local Finance Bureau
via Electronic Disclosure for Investors’ NETwork (“EDINET”) pursuant to the Financial Instruments and Exchange Act ofJapan.
Certain information in “Part I. Information on the Company - II. Business Overview - 4. Risk Factors - Risks Related to
Our American Depositary Shares” is only included in this English translation of the Annual Securities Report for ADSs
holders and not included in the original report.
Certain information in “Part I. Information on the Company - V. Financial Information” in this document incorporates
financial statements prepared in conformity with accounting principles generally accepted in the United States andindependent auditor’s report instead of the English translation of the Annual Securities Report.
The translation of the Internal Control Report, the Independent Auditors’ Report and the Confirmation Letter for theoriginal Annual Securities Report are included at the end of this document.
In this document, the terms “we,” “us,” “our” and “Hitachi” refer to Hitachi, Ltd. and our consolidated subsidiaries or, as
the context may require, Hitachi, Ltd. on a non-consolidated basis and the term “the Company” refers to Hitachi, Ltd. on a
non-consolidated basis.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we
have truncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures
presented in columns or otherwise may not equal the total of the individual items. We have rounded all percentages to thenearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be.
References in this document to the “Financial Instruments and Exchange Act” are to the Financial Instruments andExchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments andExchange Act of Japan.
References in this document to the “Companies Act” are to the Companies Act of Japan and other laws and regulations
amending and/or supplementing the Companies Act of Japan.

Contents
Part I Information on the Company ................................................................................................................... 1
I. Overview of the Company ......................................................................................................................... 1
1. Key Financial Data............................................................................................................................ 1
2. History............................................................................................................................................... 3
3. Description of Business .................................................................................................................... 5
4. Information on Affiliates ................................................................................................................... 7
5. Employees ....................................................................................................................................... 15
II. Business Overview ................................................................................................................................. 16
1. Summary of Business Results ......................................................................................................... 16
2. Production, Orders Received and Sales .......................................................................................... 16
3. Challenges Facing Hitachi Group. .................................................................................................. 16
4. Risk Factors .................................................................................................................................... 17
5. Material Agreements, etc. ............................................................................................................... 23
6. Research and Development ............................................................................................................. 27
7. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows ...................... 29
III. Property, Plants and Equipment ............................................................................................................ 42
1. Summary of Capital Investment, etc. .............................................................................................. 42
2. Major Property, Plants and Equipment ........................................................................................... 43
3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc. .......................... 47
IV. Information on the Company ................................................................................................................ 48
1. Information on the Company’s Stock, etc. ...................................................................................... 48(1) Total number of shares, etc. ........................................................................................................ 48(2) Information on the stock acquisition rights, etc.......................................................................... 48(3) Information on moving strike convertible bonds, etc. ................................................................ 48(4) Information on shareholder right plans....................................................................................... 48(5) Changes in the total number of issued shares and the amount of common stock and other ....... 48(6) Shareholders composition........................................................................................................... 49(7) Major shareholders ..................................................................................................................... 49(8) Information on voting rights ....................................................................................................... 50(9) Details of stock option plans ...................................................................................................... 51
2. Information on Acquisition, etc. of Treasury Stock ........................................................................ 52
3. Dividend Policy .............................................................................................................................. 54
4. Changes in Share Prices .................................................................................................................. 54
5. Directors and Senior Management .................................................................................................. 55
6. Corporate Governance, etc. ............................................................................................................. 64
V. Financial Information ............................................................................................................................. 74
VI. Stock-Related Administration for the Company ................................................................................... 75
VII. Reference Information on the Company ............................................................................................. 76
Part II Information on Guarantors, etc. for the Company ................................................................................ 78[Consolidated Financial Statements]................................................................................................................. F-1
Consolidated Financial Statements of Hitachi, Ltd. and Subsidiaries. ..................................................... F-2
Reports of Independent Registered Public Accounting Firm .................................................................F-112[Internal Control Report (Translation)] ............................................................................................................. A-1[Independent Auditors’ Report (Translation)] ................................................................................................. A-3[Confirmation Letter (Translation)] .................................................................................................................. A-6

Part I

Information on the Company

I. Overview of the Company
1. Key Financial Data
(1) Consolidated financial data, etc.
Fiscal year
Year end(Millions of yen, unless otherwise stated)
141st
142nd
143rd
144th
145th
business term business term business term business term business term
March 2010 March 2011 March 2012 March 2013 March 2014
8,968,546
9,315,807
9,665,883
9,041,071
9,616,202
63,580432,201
557,730
344,537
568,182

Revenues
Income before income taxes
Net income (loss) attributable(106,961)
238,869
347,179
175,326
264,975
to Hitachi, Ltd. stockholders
Comprehensive income－
228,459
392,581420,680
769,178
Total Hitachi, Ltd.
1,284,658
1,439,865
1,771,782
2,082,560
2,651,241
stockholders’ equity
2,267,845
2,441,389
2,773,995
3,179,287
3,852,464
Total equity
Total assets
8,964,464
9,185,629
9,418,526
9,809,230
11,016,899
Total Hitachi, Ltd.
stockholders’ equity per share
287.13318.73382.26431.13549.02(yen)
Net income (loss) attributable
to Hitachi, Ltd. stockholders(29.20)
52.89
76.81
37.28
54.86
per share, basic (yen)Net income (loss) attributable
to Hitachi, Ltd. stockholders(29.20)
49.38
71.86
36.29
54.85
per share, diluted (yen)Total Hitachi, Ltd.
14.3
15.7
18.8
21.2
24.1
stockholders’ equity ratio (%)
Return on equity (%)
－
17.5
21.6
9.1
11.2
Price earnings ratio (times)
－
8.2
6.9
14.6
13.9
Net cash provided by operating
798,299
841,554447,155
583,508
439,406
activities
Net cash used in investing(530,595)(260,346)(195,584)(553,457)(491,363)
activities
Net cash provided by (used in)(502,344)(584,176)(167,838)(180,445)
32,968financing activities
Cash and cash equivalents at
577,584
554,810619,577
527,632
558,217
end of year
Number of employees
359,746
361,745
323,540
326,240
320,725[Average number of part-time[39,562][44,353][46,182][48,535][48,391]
employees, etc.](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 amount of “Total assets” for the 141st business term is restated in accordance with theprovisions of the Accounting Standards Codification (hereinafter “ASC”) 805 “Business
Combinations” of the U.S. Financial Accounting Standards Board, since evaluation of fair values
related to the business combinations implemented in March 2010 was completed during the142nd business term. In line with this change, the amount of “Total Hitachi, Ltd. stockholders’equity ratio” is also restated.
4. Effective from the 142nd business term, the Company has adopted the provisions of ASC 860“Transfers and Servicing” of the U.S. Financial Accounting Standards Board as amended by
Accounting Standards Update 2009-16 “Accounting for Transfers of Financial Assets” and theprovisions of ASC 810 “Consolidation,” as amended by Accounting Standards Update 2009-17“Improvements to Financial Reporting by Enterprises involved with Variable Interest Entities.”-1-(2) Financial data etc. of the Company
Fiscal year
Year end(Millions of yen, unless otherwise stated)
141st
142nd
143rd
144th
145th
business term business term business term business term business term
March 2010 March 2011 March 2012 March 2013 March 2014
1,938,810
1,795,306
1,870,475
1,911,529
2,070,147
59,204
127,564
48,92376,05017,887(35,120)
64,276
254,549
57,681
57,856
408,810409,129427,775
458,790458,790

Revenues
Ordinary income
Net income (loss)
Common stock
Number of issued shares
4,518,132
4,520,144
4,637,785
4,833,463
4,833,463(thousands of shares)
Total net assets
887,684
941,041
1,212,199
1,298,882
1,373,336
Total assets
3,327,698
3,146,337
3,331,589
3,423,417
3,570,087
Net assets per share (yen)198.40208.30261.52268.89284.39Dividends per share (yen)
－
8
8
10
10.5
[Of the above, interim
[－]
[5]
[3]
[5]
[5]
dividends per share (yen) ]Net income (loss) per share,(9.59)
14.23
56.31
12.27
11.98
basic (yen)Net income per share, diluted
－
13.32
52.70
11.94
－
(yen)
Stockholders’ equity ratio (%)
26.7
29.9
36.4
37.9
38.5
Return on equity (%)
－
7.0
23.6
4.6
4.3
Price earnings ratio (times)
－
30.4
9.4
44.3
63.6
Dividend payout ratio (%)
－
56.2
14.2
81.5
87.6
Number of employees
31,065[Average number of part-time
32,92632,90833,66533,500[3,162]
employees, etc.](Notes) 1. Revenues do not include the consumption tax, etc.
2. Interim dividends per share for the 142nd business term include a commemorative dividend of ¥2
for the Company’s centennial anniversary.
3. “Net income per share, diluted” is not stated for the 141st and 145th business terms since net loss
per share is recorded and since there is no dilutive shares, respectively.
4. Average number of part-time employees, etc. is not stated for the 142nd, 143rd, 144th and 145th
business terms since it was less than 10% of the number of employees.

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

HistoryFounded as a repair shop at Hitachi copper mine of Kuhara Mining Company
Incorporated as Hitachi, Ltd. with the Hitachi and Kameido Works
Acquired the Kasado shipyard from Nippon Kisen Co., Ltd. and established Kasado
Works
Equity participation in Kyousei Reiki Kogyo K.K. (later changed its name to Hitachi
Plant Engineering & Construction Co., Ltd.)
Merged Kokusan Industries, Ltd. and established 7 factories, including Totsuka Works
Established Taga Works, spun off Hitachi Research Laboratory from Hitachi Works
Established Mito Works
Established Central Research Laboratory
Merged Riken Vacuum Industry and established Mobara Works
Spun off Shimizu Works from Kameari Works
Spun off Tochigi Works from Taga Works
Established Hinode Shokai Co., Ltd. (currently Hitachi High-Technologies Corporation)
Established Higashi-Nippon Senikikai KK (currently Hitachi Medical Corporation)
Established Nitto Transport KK. (currently Hitachi Transport System, Ltd.)
Established Hitachi Sales Corporation
Spun off Hitachi Metals Industries, Ltd. (currently Hitachi Metals, Ltd.) and Hitachi
Cable, Ltd.
Established Hitachi Kiden Kogyo, Ltd.
Spun off Kokubu Works from Hitachi Works
Established Yokohama Works
Established Hitachi New York, Ltd. (currently Hitachi America, Ltd.)
Equity participation in Nippon Business Consultant Co., Ltd. (later changed its name to
Hitachi Information Systems, Ltd.)
Established Hitachi Geppan Corp. (later changed its name to Hitachi Credit
Corporation)
Spun off Naka Works from Taga Works;
Equity participation in Maxell Electric Industrial Co., Ltd. (currently Hitachi Maxell,
Ltd.)
Established Katsuta Works
Established Kanagawa Works
Spun off Narashino Works from Kameido Works
Spun off Hitachi Chemical Company, Ltd.
Established Mechanical Engineering Research Laboratory
Spun off Sawa Works from Taga Works, spun off Tokai Works from Yokohama Works,
and spun off Odawara Works from Kanagawa Works
Established Software Works
Established Ome Works
Established Omika Works
Spun off Hitachi Construction Machinery Co., Ltd.
Established Takasaki Works
Established Hitachi Software Engineering Co., Ltd.
Acquired Asahi Works from Hitachi Denshi, Ltd.
Established Production Engineering Research Laboratory
Established Systems Development Laboratory
Established Tsuchiura Works
Relocated Kameido Works and renamed to Nakajo Works-3-

Month/Year
June, 1982
April, 1985
February, 1989
February, 1991
August, 1991
February, 1992
August, 1992
February, 1993
August, 1993
August, 1994
October, 1994
February, 1995

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

April, 2002

October, 2002

January, 2003
April, 2003

June, 2003
October, 2004

History
Established Hitachi Europe Ltd.
Established Advanced Research Laboratory
Established Hitachi Asia Pte. Ltd. (currently Hitachi Asia Ltd.)
Integrated Sawa Works into Automotive Products Division
Integrated Katsuta Works into Materials Process Technology Division; integrated
Totsuka Works into Information & Telecommunication Division; integrated Naka Works
into Instruments Division
Integrated Yokohama Works and Tokai Works into AV Products Division
Changed operation unit of home appliances, computers and electronic devices
businesses from factory to business division
Integrated Semiconductor Technology Development Center, Musashi Works andTakasaki Works into Semiconductor Division
Integrated Shimizu Works into Air Conditioning Division, integrated Nakajo Works andNarashino Works into Industrial Equipment Division
Integrated Consumer Products Group and Image & Information Media Division andrenamed to Consumer Products & Information Media Systems Group
Established Hitachi (China), Ltd.
Reorganized business groups as Power & Industrial Systems Group, Consumer Products& Information Media Systems Group, Information Systems Group and Electronics
Components Group; integrated a part of R&D division and sales division into thebusiness groups
Merged Hitachi Sales Corporation
Reorganized business groups into de facto companies to independently operate eachbusiness group
Merged Hitachi Credit Corporation with Hitachi Leasing Corp. and changed its name to
Hitachi Capital Corporation
Split Instruments Group and Semiconductor Manufacturing Equipment Group via
company split and reorganized as Hitachi High-Technologies Corporation;
Split Industrial Machinery Systems Division via company split and reorganized as
Hitachi Industries Co., Ltd.
Split Home Appliance Group via company split and reorganized as Hitachi Home &Life Solutions, Inc.;
Split Industrial Equipment Group via company split and reorganized as Hitachi
Industrial Equipment Systems Co., Ltd.
Split Display Group via company split and established Hitachi Displays, Ltd.;
Split Telecommunication Equipment Division via company split and reorganized as
Hitachi Communication Technologies, Ltd.;
Turned Unisia Jecs Corporation (later changed its name to Hitachi Unisia Automotive,Ltd.) into a wholly owned subsidiary via share exchange
Acquired HDDs business from IBM Corp., and commenced operations as Hitachi
Global Storage Technologies Netherlands B.V.
Split semiconductor business, centering on system LSIs, via company split andestablished Renesas Technology Corp. (later merged with NEC Electronics Corporationand changed its name to Renesas Electronics Corporation, and later ceased to be an
equity-method affiliate of the Company due to a decrease in the Company’s ownership
percentage of voting rights)
Adopted committee system as the Company’s corporate governance structure
Merged TOKICO, Ltd. and Hitachi Unisia Automotive, Ltd.;
Split Mechatronics System Division, centering on ATMs, via company split andestablished Hitachi-Omron Terminal Solutions, Corp.

-4-

Month/Year
April, 2006

December, 2006
July, 2007
March, 2009
July, 2009

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

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

History
Split Social & industrial infrastructure business via company split and integrated with
Hitachi Plant Engineering & Construction Co., Ltd., Hitachi Kiden Kogyo, Ltd. andHitachi Industries Co., Ltd. and reorganized as Hitachi Plant Technologies, Ltd.;
Merged Hitachi Home & Life Solutions, Inc. with Hitachi Air Conditioning Systems
Co., Ltd. and changed its name to Hitachi Appliances, Inc.
Turned Clarion Co., Ltd. into a consolidated subsidiary via tender offer
Split nuclear power systems business via company split and reorganized as Hitachi-GE
Nuclear Energy, Ltd.
Turned Hitachi Koki Co., Ltd. into a consolidated subsidiary via tender offer;
Turned Hitachi Kokusai Electric Inc. into a consolidated subsidiary via tender offer
Merged Hitachi Communication Technologies, Ltd.;
Split Automotive Systems Group via company split and established Hitachi Automotive
Systems, Ltd.;
Split Consumer Business Group via company split and established Hitachi Consumer
Electronics Co., Ltd.
Reorganized business groups into in-house companies with independent accounting topromote quick business operation
Turned Hitachi Information Systems, Ltd., Hitachi Software Engineering Co., Ltd. andHitachi Systems & Services, Ltd. into wholly owned subsidiaries
Turned Hitachi Plant Technologies, Ltd. and Hitachi Maxell, Ltd. into wholly owned
subsidiaries via share exchanges (later turned Hitachi Maxell, Ltd. into an equitymethod affiliate of the Company via selling its shares)
Merged Hitachi Software Engineering Co., Ltd. with Hitachi Systems & Services, Ltd.
and changed its name to Hitachi Solutions, Ltd.
Merged Hitachi Electronics Services Co., Ltd. with Hitachi Information Systems, Ltd.
and changed its name to Hitachi Systems, Ltd.
Transferred HDDs business to Western Digital Corporation via share sale of Viviti
Technologies Ltd., a holding company for Hitachi Global Storage Technologies Inc., etc.
Transferred small and medium-sized displays business via share sale of Hitachi
Displays, Ltd.
Merged Hitachi Plant Technologies, Ltd.
Merged Hitachi Metals, Ltd. with Hitachi Cable, Ltd.
Split thermal power generating systems business via company split and transferred to
MITSUBISHI HITACHI POWER SYSTEMS, LTD.
Turned Hitachi Medical Corporation into a wholly owned subsidiary via share exchange

3. 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
those accounting principles. The same approach is applied to “II. Business Overview” and “III. Property,
Plants and Equipment.”
The Hitachi Group, which is comprised of the Company and 1,178 affiliates (947 consolidated
subsidiaries and 231 equity-method affiliates. Although the consolidated subsidiaries include variableinterest entities, there is no applicable variable interest entity as of March 31, 2014. Consolidated trust
accounts are not included in the number of consolidated subsidiaries.), engages in a broad range ofbusiness activities, from product development and manufacturing to sales and services, in 10 segments ofInformation & Telecommunication Systems, Power Systems, Social Infrastructure & Industrial Systems,
Electronic Systems & Equipment, Construction Machinery, High Functional Materials & Components,
Automotive Systems, Digital Media & Consumer Products, Others (Logistics and Other services) and
Financial Services. Effective from April 1, 2013, the Company changed the name of the “Others” segmentto the “Others (Logistics and Other services)” segment.
Major business outline for each segment and the positioning of principal affiliated companies aredescribed as follows. The Company mainly engages in manufacturing and sales of products and providing
services in the segments of Information & Telecommunication Systems, Power Systems, and Social
Infrastructure & Industrial Systems.
-5-

(As of March 31, 2014)
Main products and services
Information & Telecommunication
Systems
Systems Integration, Outsourcing
Services, Software, Disk Array
Subsystems, Servers, Mainframes,
Telecommunications Equipment, ATMs

Power Systems
Thermal, Nuclear and Renewable
Energy Power Generation Systems,
Transmission & Distribution Systems
Social Infrastructure & Industrial Systems
Industrial Machinery and Plants,
Elevators, Escalators, Railway Systems
Electronic Systems & Equipment
Semiconductor and LCDs
Manufacturing Equipment, Test and
Measurement Equipment, Advanced
Industrial Products, Medical Electronics
Equipment, Power Tools
Construction Machinery
Hydraulic Excavators, Wheel Loaders,Mining Machinery
High Functional Materials & Components
Semiconductor and Display RelatedMaterials, Circuit Boards and Materials,
Automotive Parts (Molded Plastics,etc.), Energy Storage Devices, Specialty
Steels, Magnetic Materials andComponents, High Grade Casting
Components and Materials, Wires andCablesAutomotive Systems
Engine Management Systems, ElectricPowertrain Systems, Drive Control
Systems, Car Information Systems
Digital Media & Consumer Products
Air-Conditioning Equipment, Room Air
Conditioners, Refrigerators, Washing
Machines, Optical Disk Drives, FlatPanel TVs
Others (Logistics and Other services)
Logistics, Property Management

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

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

[Consolidated subsidiaries]
Hitachi Consumer Marketing, Inc.

[Consolidated subsidiaries]
Hitachi Life, Ltd.
Hitachi Transport System, Ltd.
Hitachi Urban Investment, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.
Financial Services[Consolidated subsidiaries]
Leasing, Loan Guarantees
Hitachi Capital Corporation(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the HitachiGroup’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the Hitachi Group’s products.
2. Hitachi Information & Control Solutions, Ltd. changed its name to Hitachi Industry & Control Solutions, Ltd. in association
with the reorganization of the information and control solution business for industrial fields, the security system business andthe printed-circuit board manufacturing business of the Group as of April 1, 2014.

-6-

4. Information on Affiliates(1) Consolidated subsidiaries

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2014)
Relationship(%)

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

Information &1,000 Telecommunication
Systems

100.0

HitachiInformation &Control Solutions,
Ltd.

Information &2,270 Telecommunication
Systems

100.0

Hitachi-Omron
ShinagawaTerminal Solutions,ku, Tokyo
Corp.

Information &8,500 Telecommunication
Systems

55.0

Hitachi Solutions,Ltd.

Shinagawaku, Tokyo

Information &38,758 Telecommunication
Systems

100.0

Hitachi Systems,
Ltd.

Shinagawaku, Tokyo

Information &19,162 Telecommunication
Systems

100.0

Hitachi,
Ibaraki-7-

The Company
outsources design,development,
manufacturing,evaluation andvalidation of servers
and telecommunication
networks equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsources
development of
information control
systems, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
purchases ATMs andother informationequipment. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources
development of
information systems
and software, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources calculation,
development ofsoftware, installationand maintenance of
telecommunicationequipment andcomputers. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal business voting rights(As of March 31, 2014)
Relationship(%)

Hitachi Computer
Products(America), Inc.

Oklahoma,
U.S.A.

(Thousands of
US dollars)

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

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

Texas,U.S.A.

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

California,
U.S.A.

(Thousands of
US dollars)**Hitachi
Information &Telecommunication
Systems Global
Holding
Corporation

California,
U.S.A.

(Thousands of
US dollars)

Hitachi-GE
Nuclear Energy,
Ltd.

Hitachi,
IbarakiInformation &Telecommunication
14,000 Systems

Information &Telecommunication
15,245 Systems

Information &Telecommunication
733,348 Systems

Information &Telecommunication
531,651 Systems

Information &Telecommunication
894,154 Systems

5,000 Power Systems-8-

The Company supplies
parts for computer
peripherals. The
Company’s Directors,[100.0]Executive Officers or
100.0
employees
concurrently holdposition of directors orofficers.
The Company supplies
parts for computer
peripherals. The
Company’s Directors,
100.0 Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Company
outsources consulting
services. The
Company’s Directors,[99.9]
Executive Officers or
99.9
employees
concurrently holdposition of directors orofficers.
Sales company for theCompany’s disk array
subsystems, etc. The
Company’s Directors,[100.0]Executive Officers or
100.0
employees
concurrently holdposition of directors orofficers.
Holding company for
Hitachi Consulting
Corporation and
Hitachi Data Systems
Corporation, etc. The
100.0 Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Company delivers
nuclear power
generation equipment,
etc. The Company’s
80.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2014)
Relationship(%)

Hitachi Power
Solutions Co.,Ltd.

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

4,000 Power Systems(Thousands ofSterling pounds)

615,000

Power Systems

Hitachi Building Chiyoda-ku,
Systems Co., Ltd. Tokyo

Social5,105 Infrastructure &Industrial Systems

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

Social
10,000 Infrastructure &Industrial Systems

Hitachi Plant
Toshima-ku,
Construction, Ltd. Tokyo

Social3,000 Infrastructure &Industrial Systems

Hitachi Elevator(China) Co., Ltd.

Guangzhou,
China

SocialInfrastructure &64,880 Industrial Systems(Thousands of
US dollars)-9-

The Company
purchases power plantparts, and outsources
maintenance of power
generation equipment[9.6] and control equipment,
100.0 etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Nuclear power
production company in
the U.K. The[100.0] Company’s Directors,
100.0 Executive Officers or
employees concurrently
hold position of
directors or officers.
Sales, installation andmaintenance of theCompany’s elevatorsand escalators. The
100.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
purchases motors,
pumps and otherindustrial equipment.
The Company’s
100.0
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Construction of theCompany’s power andindustrial plants, etc.
The Company’s
100.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Manufacturing, sales,
installation andmaintenance of theCompany’s elevatorsand escalators in China.
[70.0]The Company’s
70.0
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2014)
Relationship(%)*Hitachi HighTechnologies
Corporation

Minato-ku,
Tokyo

7,938

Electronic Systems& Equipment

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

17,813

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

Chiyoda-ku,
Tokyo

10,058

Electronic Systems& Equipment

[0.0]
52.3

Hitachi Medical
Corporation

Chiyoda-ku,
Tokyo

13,884

Electronic Systems& Equipment

100.0

**
*HitachiConstruction
Machinery Co.,Ltd.

Bunkyo-ku,
Tokyo81,576

Construction
Machinery

[0.6]
51.5

*Hitachi Chemical Chiyoda-ku,
Company, Ltd.
TokyoHigh Functional
15,454 Materials &Components

[0.1]
51.4

*Hitachi Metals,
Ltd.

High Functional
26,283 Materials &Components

[0.5]
54.1

Minato-ku,
Tokyo

-10-

The Company sells andpurchases informationequipment and powerrelated parts throughthis company. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases electronicequipment and parts,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company supplies
parts for medical
equipment. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases electronicmaterials, organic
chemical materials, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases specialty
steels, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2014)
Relationship(%)*Clarion Co., Ltd.

Chuo-ku,
Saitama,
Saitama

26,100Automotive
Systems

HitachiAutomotive
Systems, Ltd.

Hitachinaka,Ibaraki

15,000Automotive
Systems

HitachiAutomotive
Systems
Americas, Inc.

Kentucky,
U.S.A.

HitachiAppliances, Inc.

Minato-ku,
Tokyo

20,000Digital Media &Consumer Products

Hitachi Consumer Minato-ku,
Marketing, Inc.
Tokyo

3,000

Digital Media &Consumer Products

Hitachi-LG Data
Storage, Inc.

5,460

Digital Media &Consumer Products

Minato-ku,
Tokyo

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

(Thousands of
US dollars)

86,278(Thousands ofThai Baht)

2,472,000

Automotive
Systems

Digital Media &Consumer Products-11-

The Company supplies
parts for car navigation
systems, etc. The
Company’s Directors,
64.0
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
purchases parts forrailway vehicles, etc.
The Company’s
100.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Manufacturing andsales company in North[100.0]America for the Hitachi
100.0Group’s automotive
systems products.
The Company
purchases electronicparts, etc. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently
hold position of
directors or officers.
Sales company for the
100.0 Hitachi Group’s home
appliances in Japan.
Development,
manufacturing andsales company for the
Hitachi Group’s opticaldisk drives. The
51.0
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Manufacturing andsales company for the[80.1] Hitachi Group’s
80.1 refrigerators andwashing machines, etc.
in Thailand.

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2014)
Relationship(%)

Hitachi,
Ibaraki

1,000

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

16,802Others (Logistics
and Other services)

Hitachi Urban
Investment, Ltd.

2,000

Others (Logistics
and Other services)

Hitachi Life, Ltd.

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

Hitachi Asia Ltd.

Singapore(Thousands of
US dollars)

2,278,396

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

118,770

and Other services)-12-

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

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(As of March 31, 2014)
Relationship(%)

Hitachi (China),Ltd.

Beijing,
China(Thousands of
US dollars)

Others (Logistics
and Other services)

Hitachi Europe
Ltd.

Maidenhead,
U.K.

(Thousands ofSterling pounds)

Others (Logistics
and Other services)(Thousands ofIndian rupee)

Others (Logistics
and Other services)

Hitachi India Pvt. New Delhi,
Ltd.
India

*Hitachi Capital
Corporation

Minato-ku,
Tokyo

Others- 907 companies－

226,380

205,965

344,000

9,983 Financial Services

－

－

-13-

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

(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen,unless otherwise specified.
2. Companies with two asterisks (**) in the “Company name” column are specified subsidiaries.
3. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
4. The name of segment in which the companies classified is shown in the “Principal business”
column.
5. The amounts in brackets in upper row of the “Ownership percentage of voting rights” column
represent the percentage of voting rights owned indirectly by subsidiaries, of the total ownership
percentage.
6. Companies with negative net worth are shown below, along with the amount of liabilities inexcess of assets.
Hitachi Vehicle Energy, Ltd.
¥42,871 million
Hitachi Consumer Electronics Co., Ltd.
¥18,387 million
Hitachi Media Electronics Co., Ltd.
¥10,348 million
7. Hitachi Information & Control Solutions, Ltd. changed its name to Hitachi Industry & Control
Solutions, Ltd. 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) Equity-method affiliates

Company nameLocation

Commonstock

Ownership
percentage ofPrincipal business voting rights(As of March 31, 2014)
Relationship(%)

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

100,000 Power Systems

Others- 230 companies－(Notes)

－

－

35.0

－

The Company supplies
equipments for thermal
power generation
system. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
－

1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen.
2. The name of segment in which the companies classified is shown in the “Principal business”
column.
3. Companies with negative net worth are shown below, along with the amount of liabilities inexcess of assets.
Agility Trains West (Holdings) Limited¥11,263 million-14-5. Employees(1) Consolidated basis(As of March 31, 2014)
Name of segment
Number of employees
Information & Telecommunication
76,534
Systems[14,768]
10,164
Power Systems[2,998]Social Infrastructure & Industrial
48,779Systems[8,992]
24,617
Electronic Systems & Equipment[－]
19,570Construction Machinery[－]
High Functional Materials &43,059Components[－]
30,594
Automotive Systems[－]
25,022
Digital Media & Consumer Products[4]
Others (Logistics and Other
34,700services)[3,737]
4,685
Financial Services
[－]
3,001
Corporate (Head Office and others)[3,001]
320,725
Total[33,500](Notes) 1. In addition to those listed above, the average number of part-time employees for the fiscal year was
48,391.
2. The number in brackets in the lower row of the “Number of Employees” column is the number of
employees of the Company included in each of the numbers in the upper row.
(2) The Company
Number of employees
Average age
Average length of service
33,50040.7
18.3 years(Note) Average annual salary includes bonuses and extra wages.

(As of March 31, 2014)
Average annual salary¥8,275,105(3) Relationship with labor union
The Company’s labor union, Hitachi Workers Union, is a member of the Japanese Electrical Electronic& Information Union.
The relationship between management and labor unions in the Hitachi Group is stable and smooth.

-15-

II. Business Overview
1. Summary of Business Results
See “7. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows.”
2. Production, Orders Received and Sales
The Hitachi Group does not present production and orders received in amount or volume terms for eachsegment since it produces and sells a wide variety of products, there are variety of specifications in samekinds of products and certain products are mass-produced.
Regarding sales, see “7. Analyses of Consolidated Financial Condition, Operating Results and Cash
Flows.”
3. Challenges Facing Hitachi Group(1) Business and Financial Condition
While the forecast of the world economy still remains uncertain, the Hitachi Group will promote thefollowing measures in order to establish ourselves as a major global player through the development of ourSocial Innovation Business under the “2015 Mid-term Management Plan.”-

By having overseas business bases draft and promote strategies, we will accurately seize business
opportunities, and establish a structure that can respond swiftly to customer and regional needs. In
addition, we will support the expansion of our businesses around the world by achieving optimal
placement of diverse human resources.

-

Leveraging the Hitachi Group’s wide-ranging technologies and expertise related to IT and social
infrastructure, we will promote the services business including operation and maintenance of products
and systems, and provision of solutions that address the management challenges of our customers.

-

We will work to further bolster profitability by reinforcing the technical and sales capabilities of highly
competitive products such as escalators and elevators, storage, and railway vehicles.

-

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

-

While continuing to work on increasing profitability through cost structure reform, we will focus on
improving cash flow by utilizing IT in an effort to increase the efficiency of funding throughout theentire business, from demand projections to provision of products and services.

-

Through our R&D bases in Japan and overseas, we will promote research and development based on thechallenges faced by customers and communities around the world. Furthermore, we will strengthen
collaboration with external R&D institutions.

-

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

-

We will intensify our focus on “Basics and Ethics” worldwide based on a firm commitment to eliminate
misconduct within the Hitachi Group, and continuously strive to contribute to the environment and thecommunities.

(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 fromthese management policies requires that they be continued for a set period of time. For this purpose, theCompany keeps its shareholders and investors well informed of not just the business results for eachperiod but also of the Company’s business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities and performancethat can be brought about through a change in management control, but it recognizes the necessity ofdetermining the impact on company value and the interests of all shareholders of the buying activities andbuyout 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, andother necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor isthere a specific threat, neither does the Company intend to implement specified so-called anti-takeover-16-

measures in advance 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 the Company’s stock and then to immediately take what the Company deems to be the best
action in the event of the appearance of a party attempting to purchase a large share of the Company’s
stock. In particular, together with outside experts, the Company will evaluate the buyout proposal of theparty and hold negotiations with the buyer, and if the Company deems that said buyout will not maintainthe Company’s value and is not in the best interest of the shareholders, then the Company will quickly
determine the necessity, content, etc., of specific countermeasures and prepare to implement them. The
same response will also be taken in the event a party attempts to acquire a large percentage of the shares ofa Group company.
4. Risk Factors
We conduct business on a global scale across a broad range of business areas and utilize sophisticated,
specialized technologies to carry out our operations. Therefore, we are exposed to risks attributable to theeconomic environment, risks inherent in individual industrial sectors and business lines and risks related toour operations. Investment in our securities also involves risks. The following risks are based on theassumption we consider reasonable as of the filing date of this report.
Risks Related to Operations
Economic Trends
Our business is influenced by conditions in the global and domestic economies. During the year ended
March 31, 2014, the U.S. economy continued to recover at a moderate pace. However, the trend ofrecovery of the global economy continuously showed signs of slowing, such as decelerating economic
growth in India and Brazil, since the weak European economy was prolonged and differences in the paceof growth of emerging economies have widened. The global economic recovery may also be harmed bysovereign debt crisis in Europe, which could cause instability of global capital markets, as well as thepotential inability of emerging markets to maintain economic growth. The Japanese economy has
improved due to increased exports spurred by the depreciation of yen resulting from monetary easing andincreased consumer spending. However, there is no assurance that such recovery trend will continue.
There is also no assurance that such trend of yen depreciation against foreign currency, such as the U.S.
dollar and the euro, will continue. If Japanese yen begins to appreciate in the future, such strong yen may
negatively affect corporate earnings and exports.
If the recent gradual recovery in the global and domestic economic conditions is halted or reversed, ourrevenues may decrease, with a resultant adverse impact on our profitability.
Currency Exchange Rates Fluctuations
Since we conduct business in many foreign countries, the portion of our assets and liabilities
denominated in various currencies is exposed to risks from fluctuations in foreign currency exchange rates.
In addition, we sell products, provide services and purchase raw materials and components in local
currencies, principally the U.S. dollar and the euro. Therefore, fluctuations in foreign currency exchange
rates may result in lower revenues or higher costs in yen to us and thus affect our financial results, which
are reported in Japanese yen. Our price competitiveness, and thus our financial results, may be harmed if
we seek to increase prices in local currencies to compensate for lower revenues or to increase prices in yen
to absorb the higher cost. While we take measures to reduce the risks from fluctuations in foreign currency
exchange rates, such measures may only delay or temporarily mitigate the adverse impact of such
fluctuations and may not be effective.
Access to Liquidity and Long-term Financing
Our primary sources of funds are cash flows from operations, borrowings from banks and otherinstitutional lenders, and funding from capital markets, such as offerings of commercial paper and otherdebt securities, as well as equity securities. We need liquid funds to pay our operating expenses, theprincipal of and interest on our debt and dividends on our capital stock. We also need long-term financing
to fund, among other things, capital expenditures and research and development expenses. We currently
believe our cash flows from operations, borrowings from banks and other institutional lenders and funding
from the capital markets can provide sufficient funding for our operations and other liquidity needs.
However, a global economic downturn could adversely affect our cash flows from operations, businessresults and financial condition and may adversely affect our credit ratings. If our ratings are downgraded,
our ability to obtain additional financing on terms we consider favorable may be negatively affected.
-17-

Our reliance on banks and institutional lenders exposes us to risks related to rising interest rates, and we
may need to increase our reliance on external sources of funding. An increased reliance on debt
instruments may adversely affect our credit ratings, which might affect our ability to successfully obtain
additional financing on terms we consider favorable. The inability to successfully obtain such financing
may increase our financing costs, and therefore could adversely affect our financial condition and resultsof operations.
Furthermore, failure of one or more of our major lenders or a decision by one or more of them to change
the terms and conditions of their loans or to stop lending to us could have an adverse effect on our accessto funding.
Marketable Securities Risks
We invest in marketable securities to maintain or promote our business or other relationships with othercompanies. These marketable securities are exposed to the risk of declining stock market prices. Suchdeclines may require that we write down equity securities that we hold. This may have an adverse effecton our financial condition and results of operations. Further, contractual and other obligations may require
us to maintain our holdings of these securities despite declining share prices and this may lead to material
losses.
Rapid Technological Innovation
New technologies are rapidly emerging in the segments in which we conduct business, with the pace oftechnological innovation. The development of new and advanced technologies, the continuous, timely andcost-effective incorporation of such technologies into products and services and the effective marketing ofsuch products and services are indispensable to remaining competitive. While introducing such products
and services requires a significant commitment to research and development, there can be no assurance
that our research and development will be successful. Failure in our endeavors to develop and incorporatesuch advanced technologies into products and services in a timely manner, or to achieve market
acceptance for such products and services, may negatively affect our business, financial condition andresults of operations.
Estimates, Fluctuations in Cost and Cancellation of Long-term Contracts
We enter into a substantial number of long-term contracts, particularly in connection with theconstruction of power plants and infrastructure systems. We use the percentage-of-completion method torecognize revenue from sales of tangible products under these long-term contracts. Under the percentageof-completion method, we recognize revenue from a sale in an amount equal to estimated total revenue
from the arrangement multiplied by the percentage that costs incurred to date bear to estimated total costs
at completion based upon the most recently available information. The use of the percentage-ofcompletion method requires us to make significant assumptions about estimates of total contract costs,
remaining costs to completion, total contract revenues, contract risks and other factors. We charge any
anticipated losses on fixed price contracts to operations when we are able to estimate such losses. While
we employ our best judgment based on available information, there can be no assurance that theseestimates will, ultimately, prove to be correct. We regularly review these estimates and adjust them as wedeem necessary. Fluctuations in costs can occur for a variety of reasons, many of which are beyond ourcontrol. In addition, we or our counterparties may cancel these contracts. These factors would require us torevise our initial assumptions regarding a particular contract, and may adversely affect our business,financial condition and results of operations.
Material and Component Procurement
Our manufacturing operations rely on third parties for supplies of materials, parts, components andservices of adequate quality and quantity, delivered in a timely manner at a reasonable price. External
suppliers may have other customers and may not have sufficient capacity to meet all of our needs during
periods of excess demand. Shortages of materials, parts, components and services may cause a sharp risein their prices. Prices of certain raw materials, parts and components that we purchase, such as petroleum
products, copper, aluminum and semiconductor memory chips, may be highly volatile. In addition, pricesof certain raw materials, parts and components which we purchase in local currencies, principally the U.S.
dollar and the euro, could be adversely affected by fluctuations in foreign currency exchange rates.
Increases in the market price of petroleum and other materials, such as copper, steel, synthetic resins, rare
metals and rare-earth minerals, can increase our production costs and may adversely affect our results ofoperations. Conversely, decreases in commodity prices, such as for raw materials, parts and components,
can result in write-downs of inventory.
-18-

If natural disasters disrupt the operations of our suppliers and damage supply chains, it may adversely
affect our production. Although we generally maintain multiple sources of supply and work closely with
our suppliers to avoid supply-related problems, such problems, including shortages and delays, may
continue to occur, which could materially harm our business, financial condition and results of operations.
Supply and Demand Balance
Oversupply in the markets in which we compete may lead to declines in sales prices, revenues andprofitability. In addition, adjustment to demand may force us to dispose of excess supply or obsolete
equipment or reduce production, which can result in losses. For example, the imbalance between supply
and demand in construction machinery, high functional materials & components, automotive equipment,
semiconductor and LCD industries and a resultant deterioration in market conditions could negatively
affect our businesses.
Intense Competition
We are subject to intense competition in many of the markets in which we operate, and this may
adversely affect our results of operations. The industrial sectors and business lines in which we areengaged are experiencing increasingly intense competition. We compete with diverse competitors ranging
from huge global corporations to specialized companies. Competitors are increasingly manufacturing
products, including sophisticated electronic products, in low-cost jurisdictions. Low-cost manufacturing
and the globalization of world markets have accelerated the commoditization of certain products, which
has resulted in increasingly intense price competition for many of our products. Products which are facing
intense price competition or decreases in prices include computer-related products and home appliances.
To succeed in this competitive environment, we believe that our products and services must be pricecompetitive. The commoditization of such products affects our ability to set prices for our products. If weare unable to charge comparable prices to those of our competitors, our competitiveness and overallprofitability may be harmed. On the other hand, charging comparable prices to those of our competitors
may require us to sell products at a loss. Our products must also be competitive in terms of engineeringsophistication, quality and brand value. We must introduce our products and services to the markets in atimely manner. There can be no assurance that the products or services that we offer will be competitive.
The failure of such products or services to be competitive may negatively affect our business results.
Our Strategy to Strengthen Our Social Innovation BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure mainly by strengthening our Social Innovation Business, which supplies advanced social
infrastructure supported by information and communication technology. We plan to devote significant
resources including capital expenditures and R&Ds and are making investments in mergers andacquisitions and in new projects to strengthen our Social Innovation Business. To implement this strategy,
we have incurred and may continue to incur considerable expenses. Our efforts to implement this strategy
may be unsuccessful or less successful than we currently anticipate. Even if these efforts are successful,there is no assurance that we will be able to increase profitability, and even if profitability is achieved, we
may be unable to sustain or increase it on a quarterly or annual basis.
Acquisitions, Joint Ventures and Strategic Alliances
In every operating sector, we depend to some degree on acquisitions of other companies, joint venturesand strategic alliances with outside partners to design and develop key new technologies and products andto strengthen competitiveness. Such transactions are inherently risky because of the difficulties in
integrating operations, technologies, products and personnel and achieving return of the investment.
Integration issues are complex, time-consuming and expensive and, without proper planning andimplementation, could adversely affect our business. Decisions made by or the performance of alliancepartners that we cannot control or adverse business trends may also negatively affect the success of ouralliances. We may incur significant acquisition, administrative and other costs in connection with thesetransactions, including costs related to integration or restructuring of acquired businesses. There can be noassurance that these transactions will be beneficial to our business or financial condition. Even assumingthese transactions are beneficial, there can be no assurance that we will be able to successfully integrateacquired businesses or achieve all or any of the initial objectives of these transactions.

-19-Restructuring of Our BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure in part by: closing unprofitable operations;divesting our subsidiaries and affiliated companies;

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

Our restructuring efforts may not be implemented in a timely manner or at all, including due togovernmental regulations, employment issues or a lack of demand in the M&A market for businesses wemay seek to sell. In addition, we have a number of listed subsidiaries and from time to time the interests ofthese listed subsidiaries’ shareholders may conflict with our interests. Such conflicts of interest may resultin difficulties in timely implementing group-wide policies, including mergers, company splits and othersimilar transactions to which the listed subsidiaries are parties. Restructuring efforts may also bring about
unintended consequences, such as negative customer or employee perceptions, and have caused and may
continue to cause us to incur significant expenses and other costs, including additional impairment losses
on our long-lived assets and intangible assets, write-offs of inventory and losses on the disposal of fixed
assets and losses related to the sale of securities.
Current and future restructuring efforts may be unsuccessful or less successful than we presently
anticipate and may adversely affect our financial condition and results of operations.
Cost Reduction Measures
We implemented “the Hitachi Smart Transformation Project,” which promotes cost reductions bythoroughly overhauling our cost structure across the Group including procurement, production andadministrative operations. We seek to improve our management efficiency and stabilize earnings throughthe Project. The Project may be less successful than we currently anticipate. Even if the Project issuccessful, there is no assurance that we will be able to increase profitability, and even if profitability isachieved, we may be unable to sustain or increase it on a quarterly or annual basis.
Our Overseas Growth Strategies
We seek to expand our business, including our Social Innovation Business, in overseas markets as partof our business strategy. Through such overseas expansion, we aim to increase our revenues, reduce ourcosts and improve profitability. In many of these markets, we face barriers in the form of long-standing
relationships between our potential customers and their local suppliers. In addition, various factors inforeign countries where we operate may adversely affect our overseas business activities. These factors
include: changes in regulations relating to investments, exports, tariffs, antitrust, anti-bribery, consumer andbusiness taxation, intellectual property, foreign trade and exchange controls, environmental andrecycling requirements;differences in commercial and business customs such as contract terms and conditions;labor relations;public sentiment against Japan and local residents’ sentiment against us; andother political and social factors as well as economic trends and currency exchange rate fluctuations.

Because of these factors, there can be no assurance that we will be able to achieve the aims of ouroverseas growth strategy. This may adversely affect our business growth prospects and results ofoperations.

-20-

Intellectual Property
We depend in part on proprietary technology and our ability to obtain patents, licenses, trademarks andother forms of intellectual property rights covering our products, product design and manufacturing
processes in Japan and other countries. The fact that we hold such intellectual property rights does not
ensure that they will provide a competitive advantage to us. Various parties may challenge, invalidate or
circumvent our patents, trademarks and other intellectual property rights. There can be no assurance thatclaims allowed on any future patents will be sufficiently broad to protect our technology. Effective patent,
copyright and trade secret protection may be unavailable or limited in some of the markets in which we
operate, and our trade secrets may be vulnerable to disclosure or misappropriation by employees,
contractors and other persons.
We design many of our products to include software or other intellectual property licenses from third
parties. Competitors may not make their protected technology available to us, or may make it available tous only on unfavorable terms and conditions. There can be no assurance that we will be able to maintain alicense for such intellectual property if obtained, for economic or other reasons, or that such intellectual
property will give us the commercial advantages that we desire.
From time to time, we are sued or receive notices regarding patent and other intellectual property claims.
Whether or not these claims have merit, they may require significant resources to defend against and may
divert management attention from our business and operations and result in harm to our reputation. In
addition, a successful infringement claim and our inability to obtain the license for the infringed
technology or substitute similar non-infringing technology may adversely affect our business.
Litigation and Regulatory Investigations
We face risks of litigation and regulatory investigation and actions in connection with our operations.
Lawsuits, including regulatory actions, may seek recovery of large, indeterminate amounts or otherwise
limit our operations, and their existence and magnitude may remain unknown for substantial periods oftime.
In the past several years, we have been the subject of several investigations of alleged antitrust
violations in relation to certain product markets in Japan, Europe and North America, etc. which may havesignificant effects our financial condition or profitability. See “Consolidated Financial Statements－Notes
to Consolidated Financial Statements－(18) Commitments and Contingencies.”
Relevant authorities in the above markets in which we operate continue to investigate us and may
initiate similar investigations in the same or other markets in the future. These investigations may result insignificant penalties in multiple jurisdictions, and we may become involved in disputes with private parties
seeking compensation for damages resulting from the relevant violations. Such substantial legal liability or
regulatory action could have a material adverse effect on our business, results of operations, financial
condition, cash flows, reputation and credibility.
In addition, our business activities are subject to various governmental regulations in countries where we
operate, which include investment approvals, export regulations, tariffs, antitrust, anti-bribery, intellectual
property, consumer and business taxation, foreign trade and exchange controls, and environmental andrecycling requirements. These regulations limit, and other new or amended regulations may further limit,
our business activities or increase operating costs. In addition, the enforcement of such regulations,
including the imposition of fines or surcharges for violation of such regulations, may adversely affect our
results of operations, financial condition, cash flows, reputation and credibility.
Product Quality and Liability
We increasingly provide products and services utilizing sophisticated technologies, including but notlimited to components of power stations. Reliance on external suppliers reduces our control over quality
assurance. The occurrence of defects in our products and services could negatively affect our reputation
for quality of products and services, expose us to liability for damages caused by such defects andnegatively affect our ability to sell certain products. A significant product defect could materially andadversely affect our results of operations, financial condition and future business prospects.
Worsening of Business Performance of Equity-Method Affiliates
We have a number of equity-method affiliates. If one or more of these equity-method affiliates records aloss during a given period, we must record that loss in a manner proportionate to our ownership interest in
our consolidated financial statements. In addition, a decline in the fair value of our investments in ourequity-method affiliates below the carrying amount of the investments that is deemed other than temporary
could require us to record an impairment loss.
-21-

Significant Disasters and Similar Events
We have many facilities, including our research and development facilities, manufacturing facilities andour headquarters in Japan. Historically, Japan has experienced numerous natural disasters such as
earthquakes, tsunamis and typhoons. Natural disasters in the future may have a significantly adverse affecton an array of our corporate activities, from production to sales. We also have overseas facilities in Asia,
the U.S. and Europe, which are also subject to similar natural disasters. Natural disasters in each of theareas may cause damage on certain of our plants and offices and the operations of our suppliers andcustomers. Such significant natural disasters may directly damage or destroy our facilities, which could
disrupt our operations, delay new production and shipments of existing inventory or result in costly repairs,
replacements or other costs, all of which would result in significant losses. Furthermore, even if suchsignificant natural disasters do not directly affect our facilities, they could result in disruptions in
distribution channels or supply chains. The spread of infectious diseases, such as a new flu virus, andgeopolitical and social instability, such as terrorism, crime, civil disturbance and conflict, etc., may also
disrupt our operations, render our employees unable to work, reduce consumer demand for our products or
disrupt our supply and distribution channels. In addition, we are not insured against all potential losses,
and even losses that insurance covers may not be fully covered and may be subject to challenges of ordelays in payment. Direct and indirect disruption of our operations as a result of natural disasters or otherevents could have a negative impact on our operating activities, results of operations and financial
condition.
Dependence on Information Systems
With the increased importance of information systems to our operating activities, disruptions in such
systems due to computer viruses and other factors could have a negative impact on our operating activities,
results of operations and financial condition.
Management of Confidential Information
We maintain and manage personal information obtained from our customers, as well as confidential
information relating to our technology, research and development, or R&D, production, marketing andbusiness operations and those of our customers and clients, in various forms. Although we have
implemented controls to protect the confidentiality of such information, there can be no assurance thatsuch controls will be effective. Unauthorized disclosures of such information could subject us tocomplaints or lawsuits for damages or could otherwise have a negative impact on our business, financial
condition, results of operations, reputation and credibility.
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are key assumptions used inestimating pension costs including mortality, withdrawal and retirement rates, changes in wages, thediscount rate and expected return on plan assets. We are required to make judgments regarding the key
assumptions by taking into account various factors including personnel demographics, market conditions
and expected trends in interest rates. Although management believes that its key assumptions arereasonable in light of the various underlying factors, there can be no assurance that the key assumptions
will correspond to actual results. If our key assumptions differ from actual results, the consequentdeviation of actual pension costs from estimated costs may have a material adverse effect on our financial
condition and results of operations. A decrease in the discount rate may result in an increase in the amountof the actuarial loss which we amortize into income over the service lives of employees. In addition, we
may change these key assumptions, such as the discount rate or the expected return on plan assets.
Changes in key assumptions may also have a material adverse effect on our financial condition and resultsof operations.
Dependence on Specially Skilled Personnel
We believe we can continue to remain competitive only if we can maintain and secure additional people
who are highly skilled in the fields of management and technology. However, the number of skilled
personnel is limited and the competition for attracting and maintaining such personnel is intense. We
cannot ensure that we will be able to successfully attract new or maintain our current skilled personnel.

-22-

Risks Related to Our American Depositary Shares
Rights of ADS holders
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining our accounting books and records andexercising appraisal rights are available only to shareholders of record. Because the depositary, through its
custodian agents, is the record holder of the shares underlying the American Depositary Shares, or ADSs,
only the depositary can exercise those rights in connection with the deposited shares. The depositary will
make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders andwill pay dividends and distributions collected from us as and to the extent provided in the deposit
agreement. However, ADS holders will not be able to bring derivative actions, examine our accounting
books and records, or exercise appraisal rights through the depositary.
We are incorporated in Japan with limited liability. A significant portion of our assets are located outside
the United States. As a result, it may be more difficult for investors to enforce against us judgments
obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of theUnited States or judgments obtained in other courts outside Japan. There is doubt as to the enforceability
in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil
liabilities predicated solely upon the federal securities laws of the United States.
Unit Share System
The Companies Act allows companies to establish a “unit” of shares for the purpose of exercising voting
rights at the general meetings of shareholders. Under our articles of incorporation, one unit of our shares iscomposed of 1,000 shares, equivalent to 100 ADSs. Each unit of our shares has one vote. A holder who
owns shares or ADSs in other than multiples of 1,000 or 100, respectively, will own less than a whole unit
(i.e., for the portion constituting fewer than 1,000 shares, or fewer than 100 ADSs). Our articles ofincorporation, in accordance with the Companies Act, impose significant restrictions on the rights ofholders of shares constituting less than a whole unit, which include restrictions on the right to vote, toattend a shareholders meeting and to bring derivative actions. In addition, less than whole unit sharescannot be traded on Japanese stock markets. Under the unit share system, holders of our sharesconstituting less than one unit have the right to require us to purchase their shares and the right to require
us to sell them additional shares to create a whole unit of 1,000 shares. However, holders of our ADSs areunable to withdraw underlying shares representing less than one unit and, as a practical matter, are unable
to require us to purchase those underlying shares. The unit share system, however, does not affect thetransferability of ADSs, which may be transferred in lots of any number of whole ADSs.
Dilution of Your Shares by Issuances of Additional Shares
We may issue additional shares in the future within the unissued portion of our authorized share capitaland sell shares held as treasury stock, generally without shareholder vote unless the subscription or saleprice is significantly lower than the market price. Issuances and sales of our shares in the future may be at
prices below the prevailing market prices and may be dilutive.
Foreign Exchange Fluctuations
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition,
the amount of cash dividends or other cash payments made to holders of ADSs will decline if the value ofthe yen declines against the dollar.
5. Material Agreements, etc.
(1) Business Integration
The Company and Mitsubishi Heavy Industries, Ltd. have respectively concluded absorption-typecompany split agreements (the “Absorption-type Company Split Agreements” (including subsequent
amendments)) with MITSUBISHI HITACHI POWER SYSTEMS, LTD. (the “Integrated Company”) inorder to integrate the business (the “Business Integration”) in fields centered on the thermal power
generation systems by way of company split on July 31, 2013. The Business Integration became effective on
February 1, 2014 in accordance with the Absorption-type Company Split Agreements.
The Company concluded an agreement where the Company guarantees collections of a part of theCompany’s subsidiaries’ receivables transferred to the subsidiaries of the Integrated Company associatedwith the Business Integration.
-23-

(2) Absorption-type Company Split
The Company and Hitachi Plant Engineering & Services, Ltd. (“Hitachi Plant Engineering &Services”) have concluded an absorption-type company split agreement in order to transfer the Company’s
construction business for power plants, transportation systems and industrial plants (the “transferredbusinesses”) and integrate them in Hitachi Plant Engineering & Services (the “Absorption-type Company
Split”) on August 6, 2013, which became effective on October 1, 2013. The Absorption-type Company Splitis expected to strengthen Hitachi’s capabilities for providing solutions for large-scale infrastructure systems,
such as power plants, transportation systems and smart cities. It is also aimed at winning more orders inJapan and overseas.
The outline of the Absorption-type Company Split is as follows.
(i) Absorption-type Company Spilt Method and Allotment
This is an absorption-type company split in which the Company is the transferring company and
Hitachi Plant Engineering & Services, a wholly owned subsidiary of the Company, is the successor
company. Hitachi Plant Engineering & Services allotted one share of common stock to the Company on
October 1, 2013.
(ii) Transferred Business
Construction and construction engineering for power plants, transportation systems and industrial
plants as well as design, manufacturing and construction for dust collection systems(iii) Rights and Obligations Transferred to the Successor Company
Hitachi Plant Engineering & Services succeeded to assets, claims and obligations, contractual status
and intellectual property of the Company relating only to the transferred businesses.
Furthermore, the statuses under contract of labor agreements with employees of the Company
engaging in the transferred businesses and the rights and obligations based on these agreements were nottransferred to Hitachi Plant Engineering & Services in relation to the Absorption-type Company Split.
The employees remain in the employment of the Company, and the Company loans them out to Hitachi
Plant Engineering & Services, which engages the employees in the transferred businesses.
Accounts and amounts of assets and liabilities transferred are as follows.
(As of October 1, 2013)
AmountCategory
Details(million yen)
Assets
Accounts receivable, inventory, tangible and intangible
31,283fixed assets, etc.
Liabilities
Accounts payable, advances received, etc.
25,382(iv) Overview of the Successor Company (As of October 1, 2013)
Company Name
Hitachi Plant Construction, Ltd.
Head office
1-3, Higashi-Ikebukuro 3-Chome, Toshima-ku, Tokyo
Nobuho Goto
Representative
President
Paid-in Capital
3,000 million yen
Construction, construction engineering and construction
services for power plants, transportation systems and industrial
Description of Businessplants as well as design, manufacturing and construction for
dust collection systems-24-

(3) Share Exchange
The Company and Hitachi Medical Corporation (“Hitachi Medical”) concluded a share exchange
agreement related to the share exchange through which the Company becomes the wholly-owning parent
company and Hitachi Medical becomes the wholly-owned subsidiary (the “Share Exchange”) (the “Share
Exchange Agreement”) on February 6, 2014. The Share Exchange became effective on March 1, 2014. The
Share Exchange is expected to improve the corporate value of Hitachi Group by building a more stable
capital relationship with Hitachi Medical and conducting business management in an integrated manner withthe healthcare-related businesses of the Company’s in-house companies.
The outline of the Share Exchange is as follows.
(i) Share Exchange Method and Allotment
Upon the Share Exchange Agreement, the Company delivered to shareholders of Hitachi Medical(exclusive of the Company) as of the time immediately before the Company acquired all of the issued
shares of Hitachi Medical (exclusive of Hitachi Medical shares owned by the Company) through the
Share Exchange, the number of the Company shares calculated by multiplying the total number ofHitachi Medical shares owned by the relevant shareholders by 2.187, in exchange for Hitachi Medical
shares owned by the shareholders. Because fractional shares arose in the number of shares to be delivered
through the Share Exchange, the Company delivered an amount of money in proportion to the fractions
attributed to each shareholder in accordance with Article 234 of the Companies Act and other applicablelaws and regulations.
As a result, Hitachi Medical became a wholly-owned subsidiary of the Company.
(ii) Basis of calculation for the allotment related to the Share Exchange
The Company and Hitachi Medical deliberately considered on the share exchange ratio in the Share
Exchange on the assumption that the estimated value of Hitachi Medical shares is equal to the purchaseprice of that in the tender offer that the Company conducted during the period from November 14 toDecember 19, 2013 (the “Tender Offer”), referring to the valuation of the share exchange ratio provided
by their respective third party valuation institutions. The Company and Hitachi Medical also negotiatedand discussed on the share exchange ratio taking into consideration the various conditions and results of
the Tender Offer, the market price of the Company shares and various other factors.
As a result, the Company and Hitachi Medical determined that the share exchange ratio set out in “(i)Share Exchange Method and Allotment” above is appropriate and is not prejudicial to the shareholders of
the Company and Hitachi Medical.
(iii) Overview of the wholly-owning parent company (As of March 1, 2014)
Hitachi, Ltd.
Company Name
6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Head OfficeHiroaki Nakanishi, President
Representative¥458,790 million
Paid-in Capital
Development, manufacturing and sales of products andprovision of service across 10 segments: Information &Telecommunication Systems, Power Systems, Social
Infrastructure & Industrial Systems, Electronic Systems &Description of Businesses
Equipment, Construction Machinery, High Functional Materials& Components, Automotive Systems, Digital Media &Consumer Products, Others (Logistics and Other services) and
Financial Services-25-

(4) Cross License Agreement
Party

Party

Country

Item undercontract

Hitachi, Ltd.
(The Company)

International Business
Machines Corp.

U.S.A.

Information
handling
systems

Hitachi, Ltd.
(The Company)

Hewlett-Packard Co.

U.S.A.

All products
and services

Hitachi, Ltd.
(The Company)

EMC Corporation

U.S.A.

Information
handling
systems

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

GE-Hitachi Nuclear
Energy Americas LLC

U.S.A.

Nuclearreactorsystems

LicenseeCountry

Contract
description

Contract period

From January 1,
2008 to the
Cross license of
expiration of thepatents
patent undercontracts
From March 31,
2010 to the
expiration of
Cross license ofpatents applied on
patentsor before
December 31,
2014
From January 1,
2003 to the
expiration of
Cross license ofpatents applied on
patentsor before
December 31,
2002
Cross license of From October 30,
patents and1991 to June 30,
technology
2023(5) As Licensor
Licensor

Item undercontract

Contract
description

Contract period

From August 10,
2007 to the
MCP Canada Limited
Rare earth
Canadaexpiration of thePartnershipmagnets
patents undercontracts
From March 8,
Hitachi Metals,
Beijing Zhong Ke San
License of2013 to theLtd.
Rare earth
Huan High-Tech Co.,
China
patents
expiration of the(Consolidated
magnets
Ltd.
(Note 2)patents undersubsidiary)
contracts
From April 26,
Hitachi Metals,
License of2013 to theLtd.
Ningbo Yunsheng Co.,
Rare earthChinapatents
expiration of the(ConsolidatedLtd.
magnets(Note 2)patents undersubsidiary)
contracts(Notes) 1. A lump-sum payment has been received, and royalties are received in installments until the end of
the contract period.
2. A lump-sum payment has been received, and a certain percentage of sales of the item is received as
royalties.
Hitachi Metals,
Ltd.
(Consolidated
subsidiary)

License ofpatents(Note 1)-26-

6. Research and Development
The Hitachi Group (the Company and consolidated subsidiaries) is conducting research anddevelopment activities in a broad range of fields, from information and telecommunications systems tofinancial services. The Hitachi Group places priority on allocating R&D resources on core businesses ofthe Hitachi Group and make efforts for selecting R&D themes carefully and commercializing them quickly.
Currently, in order to strengthen the global competitiveness of the Social Innovation Business, the HitachiGroup works in R&D activities to identify, share and resolve the customers’ problems, and is focusing on
developing technologies combining social infrastructure with information and telecommunications
systems, competitive products and services to lead globalization of operations. In addition, the HitachiGroup conducts advanced research to cultivate future core businesses.
The Hitachi Group also works to improve the efficiency of R&D through close coordination between the
Company’s corporate research laboratories, development divisions at in-house companies and factories,
and research laboratories of group companies. Furthermore, the Hitachi Group is actively expanding
collaborations with universities and other research institutions as well as with outside firms.
The Company has established a new R&D framework to accelerate global growth through the Social
Innovation Business. In order to support the global growth, it aims to promote R&D that can meet local
needs quickly by expanding R&D facilities and personnel in North America, Europe, China, Asia, India
and South America and accelerating locally-led R&D. Three corporate research laboratories aim topromote integration of technologies from basic research to applied research, to create synergies by
consolidating R&D in the social infrastructure field, and to combine enhanced efficiency in information
technology research with manufacturing.
The Hitachi Group’s R&D expenditures for the fiscal year ended March 31, 2014 were ¥351.4 billion,
3.7% of revenues. A breakdown of R&D expenditures by segment is shown below.
Segment
Information & Telecommunication
Systems
Power Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Digital Media & Consumer Products
Others (Logistics and Other services)
Financial Services
Corporate Items
Total(Billions of yen)Amount
76.6
19.2
27.2
48.0
17.9
44.1
59.7
17.6
11.3
0.6
28.6
351.4

Notable achievements of R&D activities in the fiscal year ended March 31, 2014 are as follows.
-

Development of underwater and land robots capable of remotely exploring wide areas by modifying
shape and posture (Power Systems segment)
In order to remotely explore wide areas by avoiding obstacles even in narrow spaces, such asreactor buildings and containment vessels at the Fukushima Daiichi Nuclear Power Station, wedeveloped a submersible crawling and swimming robot which can freely change its posture to swim
and crawl both horizontally and vertically against a wall in water, and a transformational land based
robot which can travel within pipes with a diameter of 100 mm as well as stably traverse unevensurfaces.

-

Development of remote work support system with 3D data processing and AR (Augmented Reality)
image (Social Infrastructure & Industrial Systems segment)
In order to enable supervisors in remote locations to support on-site operators working, such as theconstruction sites of overseas plants, we developed technology to rapidly extract differences between
the 3D data obtained from the actual work site view and the 3D data of completion generated from thedesign blueprint and work manual, thus enabling real time monitoring of the work progress.
Additionally, by utilizing AR technology which can augment the environment perceived by humaneyes as the real world through the addition of computer-generated information, this technology also-27-

makes it possible for the operator and the supervisor to share in real-time AR images, in which theoperator’s field of view is overlaid with work instructions, manuals, specifications and other related
information given by the supervisor.
-

Development of safe and efficient autonomous movement technology of service robots (Corporate
Items)In order to ensure safe and efficient mobility of autonomous movement robots, which have been
designed to serve as guides in offices and other public facilities, we developed technology that would
enable the robot to store information on location and speed of pedestrians as database it encounteredon its rounds. Based on such data, the robot can estimate whether any unexpected pedestrians may pop
out of a blind corner, select the optimal speed and route to be taken depending on the degree of theestimated danger, and then take appropriate avoidance actions.

-

Development of enhanced security technology without impairing convenience of users (Social
Infrastructure & Industrial Systems segment)
We developed new enhanced security technology to be used in security systems of large-scale
important facilities such as mega-event halls and airports, including personal authentication
technology using a touch panel that allows light to pass through for finger vein authentication while
the passcode is being entered; dangerous substance detection technology capable of simultaneously
inspecting dangerous substance from multiple points within a facility using one mass spectrometerthat collects air samples from multiple points; and suspect-tracking technology to identify suspects
based on clothing, hand luggage and route taken by automatically extracting information on featuresof different body parts, linking such data to information on the route taken and storing suchinformation in a database. By integrating these technologies with IT system, we have developed thisnew security technology that enables higher safety levels without impairing convenience of the
facility-users.

-

Development of adsorbent capable of simultaneously removing radioactive cesium and strontium at ahigh absorption rate (Power Systems segment)
By applying a special treatment to titanate compounds, we developed absorbent that is capable ofremoving more than 99% of radioactive cesium and strontium from sea water whose volume is three
thousands times larger than that of the absorbent itself. This absorbent maintains high adsorption
performance even under sea water conditions because of its high selectivity for cesium and strontium
without adsorbing sodium and calcium in sea water.

-28-

7. Analyses of Consolidated Financial Condition, Operating Results and Cash Flows(1) Summary of Business Results, etc.
Economic Environment
We conduct business operations such as manufacturing, marketing, and research and development
activities throughout the world. Therefore, the economic conditions in global markets where the Hitachi Group
conducts business, in particular Japan, Asia, North America and Europe, affect its results of operations. The
U.S. economy continued to recover due primarily to improvements in employment and wage levels. However,
the weak European economy continued since sovereign debt crisis and unstable employment situation wereprolonged. Economic growth in India and Brazil continuously showed signs of slowing. The Japanese
economy maintained its recovery due primarily to increased exports spurred by the depreciation of yen
resulting from monetary easing, increased consumer spending and last-minute demand in the latter half of theyear ended March 31, 2014 ahead of the scheduled consumption tax rate increase.
We conduct business in many foreign countries, and a portion of our assets and liabilities denominated incurrencies other than the Japanese yen is exposed to risks from fluctuations in foreign currency exchange rates.
In addition, we export products and import components and raw materials in local currencies, principally the
U.S. dollar and the euro. Therefore, fluctuations in foreign currency exchange rates may affect our financial
results, which are reported in Japanese yen. The Japanese yen on average weakened against the U.S. dollar andthe euro in the year ended March 31, 2014. We employ forward exchange contracts and cross-currency swap
agreements to reduce the impact of foreign currency exchange rate fluctuations. In addition, to alleviate theadverse effects of foreign currency exchange rate fluctuations, when we believe it is appropriate, we seek tomanufacture outside Japan and procure materials and parts locally.
Business Strategy
We have formulated “2015 Mid-term management plan” to end in the year ending March 31, 2016, toachieve growth and promote transformation driven by Social Innovation Business. In this plan, we aim to
expand the Social Innovation Business globally, realizing innovations by strengthening service businesses andto establish globally standardized operations and management bases which can quickly respond to changes.
In order to contribute to building a sustainable society, we will identify issues from perspectives ofcustomers and societies and will globally provide solutions on combination of our products, services andinformation technologies, fostering close ties of the Hitachi Group. For example, we plan to expand ourservice businesses to provide solutions from equipment maintenance, operation and outsourcing tomanagement support. Further, in order to support our service businesses, we will utilize our information
technologies in collection, storage, analysis and evaluation of data and will provide products that meet regional
needs.
Moreover, in order to support the global growth of our Social Innovation Business, we are engaged instrengthening regional functions as well as promoting R&D and global operations tailored to the needs of eachregion. We are also working to assign optimal placement of personnel on a global basis, utilizing personnel
evaluation standards shared throughout the Hitachi Group. Furthermore, in order to establish globally
standardized operations, we are promoting business structure reforms including the streamlining of the Groupstructure, the expansion of global usage of shared services, and the global standardization and integration of IT
and operational systems, in addition to conventional cost structure reforms such as overhauling our cost
structure including procurement costs and administrative operations.
Business Reorganization
We continuously reorganize our business in order to further focus our business resources on the Social
Innovation Business. The important business reorganizations conducted in the year ended March 31, 2014 are
as follows:
We entered into an agreement with Mitsubishi Heavy Industries, Ltd. to integrate and jointly operate
both companies’ businesses centered on the thermal power systems business in order to address strong global
demand for thermal power generation systems with superior technologies, quality and reliability, and to prevailover intensifying global competition. We integrated the business into MITSUBISHI HITACHI POWER
SYSTEMS, LTD. on February 1, 2014.
We made Hitachi Medical Corporation, which had been a listed subsidiary, into a wholly-owned
subsidiary on March 1, 2014, in order to improve the corporate value through building a more stable capital
relationship with the Company and conducting business management in an integrated manner with thehealthcare-related business of our in-house companies.

-29-

Results of Operations
Effective from April 1, 2013, the Company adopted earnings before interest and taxes (“EBIT”), which
is presented as income before income taxes less interest income plus interest charges, as the measurement forthe consolidated operating results. The Company also changed the name of the “Others” segment to the“Others (Logistics and Other services)” segment.
Summary
In the year ended March 31, 2014, total revenues increased 6% to ¥9,616.2 billion, as compared withthe year ended March 31, 2013. Income before income taxes increased ¥223.6 billion to ¥568.1 billion, andEBIT increased ¥222.1 billion to ¥580.1 billion, as compared with the year ended March 31, 2013. In the year
ended March 31, 2014, net income attributable to Hitachi, Ltd. stockholders increased ¥89.6 billion to ¥264.9
billion, as compared with the year ended March 31, 2013.
Analysis of Statement of Operations
Total revenues increased 6% to ¥9,616.2 billion compared with the year ended March 31, 2013. Thiswas due primarily to higher revenues in the Information & Telecommunication Systems segment mainly
resulting from increased revenues from services business, and in the Social Infrastructure & Industrial Systems
segment mainly resulting from strong performance of elevators and escalators in China. The increase in total
revenues was also attributable to increased revenues in the Electronic Systems & Equipment, Automotive
Systems, Digital Media & Consumer Products and Others (Logistics and Other services) segments. However,this increase was partially offset by decreased revenues in the Power Systems segment owing to the effects of
the integration of the thermal power generation systems business into MITSUBISHI HITACHI POWER
SYSTEMS, LTD., an equity-method affiliate. Our overseas revenues increased 17% to ¥4,312.7 billion
compared with the year ended March 31, 2013, due primarily to higher revenues in Asia, North America andEurope.
Cost of sales increased 5% to ¥7,083.3 billion compared with the year ended March 31, 2013. The ratioof cost of sales to total revenues was 74%, a decrease of 1% compared with the year ended March 31, 2013.
Selling, general and administrative expenses increased 7% to ¥2,000.0 billion compared with the year
ended March 31, 2013. The ratio of selling, general and administrative expenses to total revenues was 21%,
which was approximately the same as in the year ended March 31, 2013.
Expenses related to competition law and others were posted in the amount of ¥76.8 billion in the year
ended March 31, 2014. A breakdown of these expenses is as follows. We posted expenses of ¥19.0 billion in
the Automotive Systems Segment owing to the fact that Hitachi Automotive Systems, Ltd. has agreed with theUnited States Department of Justice to conclude a plea agreement regarding alleged violations of U.S. antitrust
laws. In other cases, we posted expenses in relation to investigation in respect of alleged antitrust violations in
Europe, certain civil disputes, occurring in connection with investigations and alleged antitrust violations in
the U.S., and settlements of certain consequential losses involving dispute with customers.
Impairment losses for long-lived assets increased ¥10.5 billion to ¥33.7 billion, as compared with theyear ended March 31, 2013. The Automotive Systems segment recognized impairment losses of ¥8.9 billion,
due primarily to the battery businesses for automobiles projected lower-than-expected future income becauseof changes in market conditions. The Electronic Systems & Equipment segment recognized impairment lossesof ¥6.4 billion, primarily due to the medical equipment business projected lower-than-expected future income
because of severe market competition. The High Functional Materials & Components segment recognizedimpairment losses of ¥5.1 billion, due primarily to the deterioration of the profitability of the high-grade metal
products and materials business because of decreased demand. The above impairment losses were determinedon the basis of fair value estimates based primarily on discounted future cash flows.
Restructuring charges decreased ¥2.2 billion to ¥28.2 billion, as compared with the year ended March
31, 2013. In the year ended March 31, 2014, special termination benefits were ¥28.1 billion. This mainly
consisted of special termination benefits expensed for rationalizing the workforce in the Information &Telecommunication Systems segment, for withdrawal from TV parts and other business in the Digital Media &Consumer Products segment, and for restructuring wires, cables and other relevant products business, which
was undertaken to address the deterioration of the business environment, in the High Functional Materials &Components segment.
Interest income increased ¥0.9 billion to ¥14.1 billion, as compared with the year ended March 31, 2013.

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Dividend income increased ¥1.7 billion to ¥8.1 billion, as compared with the year ended March 31,
2013.
Other income increased ¥156.8 billion to ¥183.1 billion, as compared with the year ended March 31,
2013. This increase was due primarily to an increase in the net gain on securities, which increased ¥155.8
billion to ¥173.1 billion, as compared with the year ended March 31, 2013. The net gain on securities mainly
consisted of a gain associated with the transfer of the thermal power generation systems business.
Interest charges decreased ¥0.6 billion to ¥26.1 billion, as compared with the year ended March 31,
2013.
Loss on sale of stock of an affiliated company was posted in the amount of ¥5.9 billion in the year
ended March 31, 2014.
Other deductions increased ¥5.2 billion to ¥7.7 billion, as compared with the year ended March 31,
2013.
Equity in net earning of affiliated companies in the year ended March 31, 2014 was ¥8.6 billion, as
compared with net loss of ¥40.4 billion in the year ended March 31, 2013. This was due primarily to the factthat Renesas Electronics Corporation, which had reported losses in the year ended March 31, 2013, ceased tobe our equity-method affiliate.
Income before income taxes increased ¥223.6 billion to ¥568.1 billion, and EBIT increased ¥222.1
billion to ¥580.1 billion, as compared with the year ended March 31, 2013.
Income taxes increased ¥ 97.3 billion to ¥204.1 billion due primarily to the increase in income before
income taxes, as compared with the year ended March 31, 2013.
Net income increased ¥126.3 billion to ¥364.0 billion, as compared with the year ended March 31, 2013.
Net income attributable to noncontrolling interests increased ¥36.6 billion to ¥99.0 billion, as comparedwith the year ended March 31, 2013.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders increased ¥89.6 billion
to ¥264.9 billion, as compared with the year ended March 31, 2013.
Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment include
intersegment transactions.
Effective April 1, 2013, the Company changed its measurement of segment profitability from operating
income, which 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,
to EBIT. Accordingly, the amounts previously reported for the year ended March 31, 2013 have been restatedin conformity with the new measure of segment profit or loss.
Effective April 1, 2013, the Company changed the name of “Others” to “Others (Logistics and Other
services).”(Information & Telecommunication Systems)
Revenues were ¥1,954.9 billion, an increase of 9% compared with the year ended March 31, 2013. This
increase was due primarily to increased sales in the services business and of ATMs for the overseas market, as
well as increased revenues from the storage solution business due to the effects of foreign exchange rate
fluctuations.
Segment profit decreased 5% to ¥98.5 billion, as compared with the year ended March 31, 2013. Thisdecrease was due primarily to increased restructuring charges, partially offset by the increase in profits fromthe services business due mainly to higher revenues.

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(Power Systems)
Revenues were ¥777.3 billion, a decrease of 14% compared with the year ended March 31, 2013. Thisdecrease was due primarily to the effect of the transfer of the thermal power generation systems business and asignificant decline in revenues from preventive maintenance services for nuclear power generation systems.
Segment profit increased 409% to ¥152.9 billion, as compared with the year ended March 31, 2013. This
increase was due primarily to posting a gain associated with the transfer of the thermal power generation
systems business, partially offset by the decrease in operating income owing to lower revenues.
(Social Infrastructure & Industrial Systems)
Revenues were ¥1,446.6 billion, an increase of 10% compared with the year ended March 31, 2013. The
increase was due primarily to higher sales of elevators and escalators in China and other markets, and higher
revenues from the railway systems business for overseas markets.
Segment profit decreased 7% to ¥59.1 billion, as compared with the year ended March 31, 2013. Thisdecrease was due primarily to the decrease in operating income owing to lower earnings from overseas
projects in social infrastructure systems business, partially offset by the higher profits from elevators andescalators and in the railway systems business resulting from increased revenues.
(Electronic Systems & Equipment)
Revenues were ¥1,116.7 billion, an increase of 10% compared with the year ended March 31, 2013. This
increase was due primarily to increased sales of semiconductor manufacturing equipments and medical
analysis systems at Hitachi High-Technologies Corporation and increased sales of semiconductor
manufacturing equipments at Hitachi Kokusai Electric Inc., as well as increased revenues at Hitachi Koki Co.,
Ltd. and Hitachi Medical Corporation.
Segment profit increased 62% to ¥52.6 billion, as compared with the year ended March 31, 2013. This
increase was due primarily to the increase in operating income resulting from higher revenues and the effect ofbusiness restructuring.
(Construction Machinery)
Revenues were ¥767.3 billion, an increase of 1% compared with the year ended March 31, 2013. This
increase was due primarily to higher sales of hydraulic excavators in Japan and China, partially offset by lower
sales of mining machinery in North America, Asia and Oceania.
Segment profit increased 9% to ¥63.3 billion, as compared with the year ended March 31, 2013. This
increase was due primarily to the increase in operating income resulting from the effect of foreign exchange
rate fluctuations and progress with cost-cutting programs, partially offset by the absence of large gains on thesale of subsidiary shares due to business restructuring that were recorded in the year ended March 31, 2013.
(High Functional Materials & Components)
Revenues were ¥1,363.2 billion, an increase of 2% compared with the year ended March 31, 2013. This
increase was due primarily to the higher sales of automotive- and electronics-related products, partially offset
by lower demand for HDD-related products and the effect of the withdrawal from unprofitable businesses.
Segment profit increased 90% to ¥96.5 billion, as compared with the year ended March 31, 2013. This
increase was due primarily to the increase in operating income resulting from higher revenues, the effect of
cost-cutting programs and business restructuring for the wires and cables business, and the absence of writeoffs of inventories associated with a decrease in raw material prices that were recorded at Hitachi Metals, Ltd.
in the year ended March 31, 2013. This increased segment profit was also attributable to the decrease in
restructuring charges for the wires and cables business, etc.
(Automotive Systems)
Revenues were ¥892.1 billion, an increase of 11% compared with the year ended March 31, 2013. This
increase was due primarily to higher demand for automobile in overseas markets and the last-minute demandahead of the scheduled consumption tax rate increase in Japan.
Segment profit decreased 86% to ¥4.9 billion compared with the year ended March 31, 2013. Thisdecrease was due primarily to posting expenses related to competition law and others owing to the fact that
Hitachi Automotive Systems, Ltd. has agreed with the United States Department of Justice to conclude a plea
agreement regarding alleged violations of U.S. antitrust laws, and posting impairment losses for the battery
businesses for automobiles, partially offset by the increase in operating income resulting from higher revenues
and associated improvement in capacity utilization.
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(Digital Media & Consumer Products)
Revenues were ¥890.8 billion, an increase of 9% compared with the year ended March 31, 2013. This
increase was due primarily to the last-minute demand ahead of the scheduled consumption tax rate increase inJapan and higher sales of air-conditioning equipments both in Japan and overseas.
Segment loss worsened ¥2.0 billion to ¥2.9 billion, as compared with the year ended March 31, 2013.
This was due primarily to the increase in restructuring charges, partially offset by increased operating income
resulting from higher revenues.
(Others (Logistics and Other services))
Revenues were ¥1,233.6 billion, an increase of 11% compared with the year ended March 31, 2013. This
increase was due primarily to increased revenues at Hitachi Transport System, Ltd. resulting from businessexpansion through the consolidation of Japanese and overseas companies, and increased revenues at Hitachi
Maxell, Ltd. owing to the succession of the LCD projectors business.
Segment profit increased 44% to ¥48.1 billion, as compared with the year ended March 31, 2013. This
increase was due primarily to the increase in operating income resulting from higher revenues and the effects
of promoting cost-cutting programs, as well as decreased restructuring charges.
(Financial Services)
Revenues were ¥338.5 billion, a decrease of 1% compared with the year ended March 31, 2013. Thisdecrease was due primarily to the absence of recording revenues related to a large cancellation in the year
ended March 31, 2013, partially offset by higher revenues from the overseas business.
Segment profit increased 18% to ¥34.6 billion, as compared with the year ended March 31, 2013. This
increase was due primarily to the increase in operating income resulting from higher earnings from theoverseas business and higher earnings as a result of the decrease in credit costs in Japan, as well as decreased
restructuring charges.

Revenues by Geographic Area
The following is an overview of revenues attributed to geographic areas based on customer location.
(Japan)
Revenues in Japan were ¥5,303.4 billion, a decrease of 1% compared with the year ended March 31,
2013. This decrease was due primarily to the significant decrease in revenues in the Power Systems segmentowing to the effects of the transfer of the thermal power generation systems business, and the decrease inrevenues in the High Functional Materials & Components segment owing to the withdrawal from unprofitablebusinesses, partially offset by the increases in revenues in the Information & Telecommunications Systems,
Electronic Systems & Equipment, Construction Machinery and Digital Media & Consumer Products segments,
etc.
(Asia)
Revenues in Asia were ¥2,063.5 billion, an increase of 21% compared with the year ended March 31,
2013. This increase was due to the increases in revenues in all segments, including the Information &Telecommunication Systems segment, which reported higher sales of ATMs in China, the Social Infrastructure& Industrial Systems segment, which reported higher sales of elevators and escalators mainly resulting fromthe effects of foreign exchange rates fluctuations, and the Digital Media & Consumer Products segment, which
reported higher revenues resulting from higher sales of air-conditioning equipments and the effects of theforeign exchange rates fluctuations.
(North America)
Revenues in North America were ¥910.2 billion, an increase of 13% compared with the year ended
March 31, 2013. This increase was due primarily to the increase in revenues in the Information &Telecommunication Systems segment, resulting from the effects of the foreign exchange rates fluctuations, theElectronic Systems & Equipment, High Functional Materials & Components, Automotive Systems and Others(Logistics and Other services) segments, partially offset by the decrease in revenues in the Construction
Machinery segment owing to the lower sales of mining machinery.

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(Europe)
Revenues in Europe were ¥812.1 billion, an increase of 28% compared with the year ended March 31,
2013. This increase was due to the increases in revenues in all segments, including the Information &Telecommunication Systems segment, which reported increased revenues resulting from the effects of theforeign exchange rates fluctuations, the Social Infrastructure & Industrial Systems segment, which reported
increased revenues from the railway systems business and the Construction Machinery segment, which
reported increased revenues in the U.K.
(Other Areas)
Revenues in other areas were ¥526.7 billion, a decrease of 1% compared with the year ended March 31,
2013. This decrease was due primarily to the decrease in revenues in the Power Systems segment owing to theeffects of the transfer of the thermal power generation systems business, and in the Construction Machinery
segment owing to decreased sales of mining machinery in Australia, etc. However, this decrease was partially
offset by the increased revenues in the Others (Logistics and Other services) segment due to the consolidationof a Turkish company by Hitachi Transport System, Ltd.
(2) Summary of Financial Condition, etc.
Liquidity and Capital Resources
Our management considers maintaining an appropriate level of liquidity and securing adequate funds for
current and future business operations to be important financial objectives. Through efficient management ofworking capital and selective investment in new plants and equipment, we are working to optimize theefficiency of capital utilization throughout our business operations. We endeavor to improve our group cash
management by centralizing such management among us and our overseas financial subsidiaries. Our internalsources of funds include cash flows generated by operating activities and cash on hand. Our management also
considers short-term investments to be an immediately available source of funds. In addition, we raise funds
both in the capital markets and from Japanese and international commercial banks in response to our capitalrequirements. Our management’s policy is to finance capital expenditures primarily by internally generated
funds and to a lesser extent by funds raised through the issuance of debt and equity securities in domestic andforeign capital markets. In order to flexibly access funding, we maintain our shelf registration with the
maximum outstanding balance of ¥300.0 billion and issued the straight bonds of ¥60.0 billion on December 13,
2013 for the purpose of repaying short-term debts (commercial paper) and meeting demand for funds for
growth of the Social Innovation Business.
We maintain commitment line agreements with a number of domestic banks under which we may
borrow in order to ensure efficient access to necessary funds. These commitment line agreements generally
provide for a one-year term, renewable upon mutual agreement between us and each of the lending banks, aswell as another commitment line agreement with a contract term of three years and two months ending in July
2016. These committed credit arrangements are, in general, subject to financial and other covenants andconditions both prior to and after drawdown, the most restrictive of which require maintenance of minimum
issuer rating or long-term debt ratings from Rating and Investment Information, Inc. (R&I) of BBB-. As of
March 31, 2014, our unused commitment lines totaled ¥515.1 billion, including these of ¥400.0 billion which
the Company maintained.
We receive debt ratings from Moody’s Japan K.K. (Moody’s), Standard & Poor’s Rating Japan (S&P), as
well as R&I. Our debt ratings as of March 31, 2014 were as follows.
Rating Company

Long-term

Short-term

Moody’s

A3

P-2

S&P

A-

A-2

R&I

A+

a-1

With our current ratings, we believe that our access to the global capital markets will remain sufficientfor our financing needs. We seek to improve our credit ratings in order to ensure financial flexibility for
liquidity and capital management, and to continue to maintain access to sufficient funding resources throughthe capital markets.

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Cash Flows(Cash Flows from Operating Activities)
Net income amounted to ¥364.0 billion in the year ended March 31, 2014, an increase of ¥126.3 billion
compared to the year ended March 31, 2013, due primarily to increases in operating income and net gain on
securities. In the year ended March 31, 2014, trade receivables increased by ¥308.4 billion due primarily to theincrease in revenues, whereas in the year ended March 31, 2013, a decrease in trade receivables of ¥71.7
billion was recorded. Inventories increased by ¥70.7 billion in the year ended March 31, 2014, whereas adecrease in inventories of ¥7.8 billion was recorded in the year ended March 31, 2013. Compared with thedecrease in payables of ¥187.6 billion in the year ended March 31, 2013, payables increased by ¥54.3 billion in
the year ended March 31, 2014. As a result of the foregoing, the net cash provided by operating activities was¥439.4 billion in the year ended March 31, 2014, a decrease of ¥144.1 billion compared with the year ended
March 31, 2013.
(Cash Flows from Investing Activities)
A net sum of ¥561.0 billion in the year ended March 31, 2014 was recorded as investments related toproperty, plant and equipment, where the collection of investments in leases, the proceeds from disposal ofproperty, plant and equipment and the proceeds from disposal of tangible assets and software to be leased weresubtracted from the amount of the capital expenditures, the purchase of intangible assets and the purchase of
tangible assets and software to be leased, an increase of ¥72.7 billion from the year ended March 31, 2013. In
addition, purchase of investments in securities and shares of newly consolidated subsidiaries decreased by¥84.1 billion and amounted to ¥87.5 billion, due mainly to the absence of stock acquisitions related to theacquisition of Horizon Nuclear Power Limited in the year ended March 31, 2013. Proceeds from sale ofinvestments in securities and shares of consolidated subsidiaries resulting in deconsolidation increased by¥42.1 billion and amounted to ¥122.8 billion in the year ended March 31, 2014, due mainly to selling a part ofshares of Western Digital Corporation. As a result of the foregoing, the net cash used in investing activities was¥491.3 billion in the year ended March 31, 2014, a decrease of ¥62.0 billion compared with the year ended
March 31, 2013.
(Cash Flows from Financing Activities)
Net decrease in short-term debt in the year ended March 31, 2014 was ¥203.8 billion, whereas net
increase of ¥74.6 billion was recorded in the year ended March 31, 2013. A net sum of ¥338.8 billion wasrecorded as proceeds related to long-term debt, where the payments on long-term debts were subtracted fromthe proceeds from long-term debt, an increase of ¥495.4 billion from the year ended March 31, 2013. As aresult of the foregoing, the net cash provided by financing activities was ¥32.9 billion in the year ended March
31, 2014, whereas the net cash of ¥180.4 billion was used in financing activities in the year ended March 31,
2013.
As a result of the above items, as of March 31, 2014, cash and cash equivalents amounted to ¥558.2
billion, net increase of ¥30.5 billion from March 31, 2013. Free cash flows, the sum of cash flows fromoperating and investing activities, represented an outflow of ¥51.9 billion in the year ended March 31, 2014,
whereas an inflow of ¥30.0 billion was recorded in the year ended March 31, 2013.
Assets, Liabilities and Equity
As of March 31, 2014, total assets amounted to ¥11,016.8 billion, an increase of ¥1,207.6 billion fromMarch 31, 2013. This increase was due primarily to an increase in accounts receivables mainly resulting fromincreased revenues, an increase in the value of foreign currency-denominated assets resulting from thetranslation due to the depreciation of yen, an increase in the value of marketable securities in line with higher
stock market prices, and the effects of the consolidation of NBL Co., Ltd. at Hitachi Capital Corporation forstrengthening the financial services business. Total cash and cash equivalents and short-term investments as ofMarch 31, 2014 amounted to ¥567.3 billion, an increase of ¥29.3 billion from the amount as of March 31,
2013.
As of March 31, 2014, total interest-bearing debt, which represents the sum of short-term debt, long-term
debt and non-recourse borrowings of consolidated securitization entities, amounted to ¥2,823.0 billion, an
increase of ¥452.9 billion from March 31, 2013. This increase was due primarily to the issuance of straightbonds, the procurement of new long-term debt by the Company, and the effects of the consolidation of NBL
Co., Ltd. at Hitachi Capital Corporation. As of March 31, 2014, short-term debt, consisting mainly ofborrowings from banks and commercial paper, amounted to ¥647.2 billion, a decrease of ¥26.5 billion fromMarch 31, 2013, due primarily to the repayment of commercial paper by the Company. As of March 31, 2014,
long-term debt (excluding current portion), consisting mainly of debentures, debentures with stock acquisitionrights, medium-term notes and loans principally from banks and insurance companies, amounted to ¥1,512.7-35-billion, an increase of ¥205.9 billion from March 31, 2013, due primarily to the issuance of straight bonds andthe procurement of new long-term debt by the Company.
As of March 31, 2014, total Hitachi, Ltd. stockholders’ equity amounted to ¥2,651.2 billion, an increaseof ¥568.6 billion from March 31, 2013, due primarily to posting of net income attributable to Hitachi, Ltd.
stockholders and a decrease in the accumulated other comprehensive loss resulting from the depreciation of
yen and higher stock market prices. As a result, the ratio of total Hitachi, Ltd. stockholders’ equity to total
assets as of March 31, 2014 was 24.1%, compared with 21.2% as of March 31, 2013.
Noncontrolling interests as of March 31, 2014 was ¥1,201.2 billion, an increase of ¥104.4 billion fromMarch 31, 2013.
The ratio of interest-bearing debt to total equity (the sum of total Hitachi, Ltd. stockholders’ equity andnoncontrolling interests) decreased to 0.73, compared with 0.75 as of March 31, 2013.
(3) Important Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires ourmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Certain accounting estimates are particularly sensitive
because of their significance to the financial statements and because of the possibility that future eventsaffecting the estimate may differ significantly from management’s current assumptions. Management
considers the accounting estimates discussed in this section to be critical accounting estimates for two reasons.
First, the estimates require us to make assumptions about matters that are highly uncertain at the time theaccounting estimate is made. Second, different estimates that we reasonably could have used for theaccounting estimate in the current period, or changes in the accounting estimate that are reasonably likely tooccur from period to period, could have a material impact on the presentation of our financial condition,changes in financial condition or results of operations. Management believes the following represent ourcritical accounting policies.
Revenue Recognition for Sales under Long-term Construction Arrangements
We use the percentage-of-completion method to recognize revenue from sales of tangible products underlong-term construction type arrangements, in connection with the construction of nuclear, thermal andhydroelectric power plants and customization of software. Under the percentage-of-completion method, we
recognize revenue from a sale in an amount equal to estimated total revenue from the arrangement multipliedby the percentage that costs incurred to date bear to estimated total costs at completion based upon the mostrecently available information. The use of the percentage-of-completion method requires us to makesignificant assumptions about estimates of total contract costs, remaining costs to completion, total contract
revenues, contract risks and other factors. We regularly review these estimates and adjust them as we deem
necessary. We charge any anticipated losses on fixed price contracts to operations when we are able toestimate such losses. We make provisions for contingencies in the period in which they become known to us
under the specific terms and conditions of the relevant contract and are estimable by us.
Impairment of Long-Lived Assets
We review the carrying value of our long-lived assets held and used whenever events or changes incircumstances indicate that the carrying value of the assets may not be recoverable. Such events or changes
include, but are not limited to:changes in production due to trends of supply and demand in the markets;rapid changes in selling prices of products or purchasing prices of materials and components;

unexpected technological innovation causing obsolescence of present products; and

unpredictable changes in business assumptions, which cause revision of business plans that result inchanges in the extent or manner in which we use long-lived assets.

We perform an initial impairment review using estimates of undiscounted future cash flows. If thecarrying value of the asset is greater than our estimates of undiscounted cash flows, an impairment charge isrecorded for the amount by which the carrying value of the asset exceeds its estimated fair value. In estimating,
we use available quoted market prices and present value techniques, if appropriate, based on the estimatedfuture cash flow expected to result from the use of the assets and their eventual disposition.
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Although management believes that the estimates of future cash flows and fair value are reasonable,changes in estimates resulting in lower future cash flows and fair value due to unforeseen changes in businessassumptions could negatively affect the valuations of long-lived assets.
For the year ended March 31, 2014, we recognized ¥33.7 billion of impairment losses for long-lived assets,
mainly relating to battery businesses for automobiles in the Automotive Systems segment, medical equipment
business in the Electronic Systems & Equipment segment, high-grade metal products and materials business inthe High Functional Materials & Components segment and a change of manner in use of its IT system for
management purpose in the Construction Machinery segment.
Goodwill and Intangible Assets
We do not amortize goodwill and other intangible assets with indefinite useful lives but we test them for
impairment in accordance with Accounting Standards Codification, or ASC 350, “Intangibles—Goodwill andOther,” on an annual basis, normally in the fourth quarter after our annual forecasts have been determined, ormore frequently if events occur or circumstances change in a manner that would more likely than not reduce
the fair value of these assets below their respective carrying values. Such an event might include the current
global economic and financial market crisis. An impairment of these assets is recorded if their calculated fairvalues are less than their carrying amounts.
We determine the fair value of our reporting units mainly using an income approach (i.e., present value
technique). When determining such fair value, we may, however, also use the fair value of that unit based on acomparison of comparable publicly traded companies or based on that unit’s stand-alone market capitalization.
Depending on the complexity, we consult with external experts when appropriate.
The determination requires estimates based on quoted market prices, prices of comparable businesses,
present value or other valuation techniques, or a combination thereof, requiring management to makesubjective judgments and assumptions, including assumptions about future operating results for the relevantbusiness unit and discount rates.
In estimating future cash flows, we base the forecasted operational results on currently available
assumptions considered by management to be reasonable. However, actual results may differ materially fromthose projected, including due to:economic trends in Japan, North America, Asia and other major markets where we do business;

supply in excess of demand leading to a decline in selling prices or production volumes;

intense price competition or decreases in prices;a sharp rise in the purchasing prices of material and components; andcurrency exchange rate fluctuations.

We base our discount rate assumptions for purposes of estimating the fair value of our reporting units on
our cost of capital and liabilities. Stock market trends and changes in interest rates affect these assumptions.
Although management believes that the estimates of future cash flows and fair value are reasonable, changes
in estimates resulting in lower future cash flows and fair value due to unforeseen changes in the businessenvironment could result in additional goodwill impairment charges.
While our businesses are diverse, the number of reporting units to which goodwill has been allocated islimited. Therefore, a decrease in our market capitalization will not necessarily have a proportional or direct
effect on the carrying value of goodwill.
As of March 31, 2014, our carrying amount of goodwill was ¥339.1 billion. The majority of goodwill
consists of the Information & Telecommunication Systems segment (¥151.6 billion) and the High Functional
Materials & Components segment (¥59.4 billion).
The carrying amount of goodwill of the Information & Telecommunication Systems segment at March 31,
2014 mainly relates to our information and telecommunication business. Our information andtelecommunication business is sensitive to customers’ motivation to invest in information-technology systems
affected by macro-economic conditions. We may be required to record an impairment in goodwill in thissegment if any economic downturn is expected to be prolonged beyond current estimates of our management.
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The carrying amount of goodwill of the High Functional Materials & Components segment at March 31,
2014 mainly relates to our metals business. The metals business is sensitive to increases in materials prices andproduct demand. We may need to recognize an impairment loss for goodwill in this segment if there is asustained increase in materials prices or an unforeseen decrease in demand.
In order to evaluate the sensitivity of the fair value calculations on the significant goodwill impairment
analysis, we applied a hypothetical and approximate 10% decrease to the fair value of each reporting unit. As aresult of our sensitivity analysis, as of March 31, 2014, we do not have any reporting units that are at risk thatthe carrying amount of the reporting unit would reasonably likely exceed its fair value.
Deferred Tax Assets
In assessing the realizability of deferred tax assets, management considers whether it is more likely than
not that we will not realize a portion or all of our deferred tax assets. The ultimate realization of our deferred
tax assets is dependent on whether we are able to generate sufficient future taxable income in specific tax
jurisdictions during the periods in which temporary differences become deductible. Management hasscheduled the expected future reversals of the temporary differences and projected future taxable income,including the execution of certain available tax strategies if appropriate, in making this assessment. Actual
results may differ materially from forecasted operating results, which are the basis for projecting future taxable
income, and may be subject to adjustment because of factors such as economic trends in major markets where
we do business, trends of supply and demand in the markets, prices of products and services, purchasing prices
of materials and components, currency exchange rate fluctuations and rapid technological innovation. As aresult, the differences could negatively affect the amount of deferred tax assets and valuation allowances. The
realizability of deferred tax assets is assessed for each taxable unit in each taxable jurisdiction, and the resultsof the assessment may differ from unit to unit due to different products or jurisdictions even if they operate thesame kind of business. Based on these factors, management believes that it is more likely than not that we willrealize the benefits of these temporary differences, net of the existing valuation allowance as of March 31,
2014. However, the amount of deferred tax assets may be different if we do not realize estimated future taxable
income during the carry forward periods as originally expected.
Retirement Benefits
We have a significant amount of accrued employee retirement benefit costs that are developed from
actuarial valuations. Inherent in these valuations are key assumptions in estimating pension costs including
mortality, withdrawal, retirement, changes in compensation, discount rates and expected return on plan assets.
We are required to make key assumptions by taking into account various factors including personnel
demographics, current market conditions and expected trends in interest rates. We determine the discount rates
by looking at available information about rates implicit in the return on high-quality fixed-income governmentand corporate bonds. Accordingly, the discount rate is likely to change from period to period based on theseratings. A decrease in the discount rate results in an increase in actuarial pension benefit obligations. Increases
and decreases in the pension benefit obligation affect the amount of the actuarial gain or loss that is amortized
into income over the service lives of employees. Changes in the key assumptions may have a material effect on
our financial condition and results of operations. Management believes that estimation of the key assumptions
is reasonable in light of the various underlying factors.
The table below shows the sensitivity to a change in discount rates and the expected rate of return on plan
assets to pre-tax income and projected benefit obligation (PBO), holding all other assumptions constant.
Effect on pre-tax
Effect on PBO
income for theas of March 31,
year ending
2014
March 31, 2015
(Millions of yen)
Discount rates:
0.5% decrease .........................................................................................
0.5% increase ..........................................................................................
Expected rate of return on plan asset:
0.5% decrease .........................................................................................
0.5% increase ..........................................................................................

(8,308)
8,405

179,584(165,111)(7,531)
7,531-

The objective of our investment policy is to ensure a stable return from the plans’ investments over thelong term, which allows our and our subsidiaries’ pension funds to meet their future obligations, and we andcertain of our subsidiaries attempt to maintain the pension funds in sound condition.
-38-

Allowance for Doubtful Accounts
We estimate the collectability of our trade receivables as well as of our investments in leases to measure
our incurred losses (that is those amounts with regard to which collection is not probable based on current
information). Assessing the ultimate realization of these receivables, based on historical experience andanalyses, including the current creditworthiness of each customer, requires a considerable amount of judgment.
Each company in our consolidated group considers factors which are relevant to its business and circumstances,including business practices that are unique to the respective country or region in which it operates. Suchfactors which have been present on a historical basis and have contributed to losses at our subsidiaries in thepast include: historical credit loss experience; existence of overdue payments; extended payment terms;
negative evaluation by third-party credit rating agencies; excessive debt; and evaluation of deteriorating
financial condition and operating results. Specifically, we consider probability of credit losses if overdue
payments exist or if extended payment terms are subsequently granted. However, we also consider the otherfactors noted above in determining probability of credit losses when outstanding balances are current but otherfactors indicate significant doubt about customers’ ability to make future payments in full. In addition, we
perform a retrospective review of the assumptions relied upon in establishing allowances for doubtfulreceivables, including comparisons of such assumptions to actual collections experience in order to adjust ourloss estimation methods to reduce the difference between estimated losses and actual subsequent charge-offs.
Our policies require that we refrain from writing off overdue receivables until after exhaustive collection
efforts have been undertaken. Account balances are generally written off against the allowance only after allmeans of collection have been exhausted and the potential for recovery is considered remote. Write-offs
generally occur only when a debtor enters bankruptcy or liquidation because collection efforts normallycontinue until that point. In addition, in Japan and certain other countries where we operate, tax deductions foruncollectible receivables are only allowed upon the debtor’s bankruptcy, liquidation or when legal proceedings
are concluded. This policy, which is driven by business practices and income tax regulations, results inpotentially long collection and write-off cycles.
We have recorded changes in required reserves in recent periods and may record them in the future due tothe market environment and financial condition of customers. Any deterioration in customers’ financial
conditions or in their credit ratings, or increases in levels or amounts of delinquency may adversely affect net
income.
Investments in Securities
We hold various investments in securities and equity-method investments.
A decline in the fair value of equity securities classified as available-for-sale, cost-method or equitymethod investments below their carrying value that is deemed other than temporary results in a write-down of
the carrying value to the fair value as a new cost basis. The amount of the write-down is included in earnings.
Fair value is determined based on quoted market prices, projected discounted cash flows or other valuation
techniques as appropriate and maximizing the use of observable inputs. Management periodically reviews each
equity security classified as an available-for-sale, cost-method and equity-method investment for possible
impairment based on criteria such as the extent to which the carrying value exceeds fair value, the length oftime the fair value has been below the carrying value and the financial condition and near-term specificprospects of the issuer.
Whether a decline in fair value of debt securities classified as available-for-sale or held-to-maturity below
carrying value that is deemed other than temporary is recognized in earnings depends on whether we intend tosell the impaired debt security or it is more likely than not that we will be required to sell the security before
recovery. If we do not intend to sell the security and it is not more likely than not that we will be required tosell the security before recovery, the component of the other-than-temporary impairment related to the credit
loss is recognized in earnings and the component of the other-than-temporary impairment related to otherfactors is recognized in other comprehensive income (loss). Management periodically reviews each debt
security classified as available-for-sale or held-to-maturity for the existence of impairment that is other than
temporary based on criteria such as whether there is intent to sell the impaired debt security, it is more likely
than not that the impaired debt security will be required to be sold before recovery, or the holder is notexpected to recover the entire amortized cost basis of the security for any other reason.
A decline in market prices or a change in the financial condition of an issuer could negatively affect thefair value of an investment in a security.

-39-

Recently Issued Accounting Guidance
In May 2014, FASB issued Accounting Standards Updates 2014-09, “Revenue from Contracts with
Customers,” which supersedes all existing revenue guidance. The guidance establishes a five-step model thatwill apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the typeof revenue transaction or the industry. All entities must adopt the guidance no later than the beginning of theirfirst fiscal year beginning after December 15, 2016, including interim periods within that reporting period. We
are currently evaluating the effect of adopting the guidance on our consolidated financial position and resultsof operations.
(4) Forward-Looking Statements
Certain statements found in “3. Challenges Facing Hitachi Group,” “4. Risks Factors” and “7. Analyses ofConsolidated 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 of1995. 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 anduncertainties that could cause actual results to differ materially from those projected or implied in the“forward-looking statements” and from historical trends. Certain “forward-looking statements” are based uponcurrent 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 “forwardlooking statement” and from historical trends include, but are not limited to:
•

•
•
•
•
•
•
•
•
•
•
•
•
•
•

•
•

economic conditions, including consumer spending and plant and equipment investment in Hitachi’smajor markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the
major industrial sectors Hitachi serves, 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 orin which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;
uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;
uncertainty as to general market price levels for equity securities, declines in which may require Hitachi towrite down equity securities that it holds;
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,
parts and 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
and business 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;
-40-

•
•
•
•
•
•
•

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 inthis report and in other materials published by Hitachi.

-41-III. Property, Plants and Equipment
1. Summary of Capital Investment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) selectively invests in R&D and productfields expected to grow over the long term, and it also invests to streamline manufacturing process, etc.
and to improve the reliability of its products.
Capital investment (based on the amount recorded as tangible fixed assets) in the fiscal year ended
March 31, 2014 was ¥849.8 billion. A breakdown of capital investment by segment is as follows. Effectivefrom April 1, 2013, the Company changed the name of the “Others” segment to the “Others (Logistics andOther services)” segment.
Segment

Change from
Capital investment preceding
fiscal(Billions of yen)year (%)

Information &Telecommunication
Systems

40.2

76.3

Power Systems

20.2

81.1

Social Infrastructure &Industrial Systems

35.2

107.8

Electronic Systems &Equipment

28.2

142.7

Construction Machinery

37.1

54.9

High Functional Materials& Components

63.9

77.8

Automotive Systems

75.1

145.2

Digital Media & Consumer
Products

22.2

101.5

Others (Logistics andOther services)

63.6

138.3

Financial Services

478.5

138.7

Main purpose of investment
Expand data centers,
streamline development and productionof other products
Streamline development and productionof products
Increase production of elevators andescalators,
streamline development and productionof other products,
antiseismic reinforcement
Antiseismic reinforcement,
streamline development and productionof products
Increase and streamline production of
construction machinery,
antiseismic reinforcement
Increase and streamline production ofhigh grade metal products, magnetic
materials, high-grade functional
components, wires and cables, powder
metal products, display relatedmaterials, etc.
Increase production of automotive
equipment, etc.,
antiseismic reinforcement
Increase production of air-conditioning
equipment,
streamline development and productionof other products
Transportation facilities,
increase production of batteries
Assets for leasing business (computersand other information-related equipment,
industrial machinery and machine tools,
vehicles and medical equipment related
to lease agreements)－

Subtotal
864.6
116.1
Corporate Items &(14.7)－－
Eliminations
Total
849.8
114.5
－
(Notes) 1. The figures in the above table include the amount of the tangible fixed assets leased under nontransferable finance lease transactions.
2. These investments were mostly financed with the Hitachi Group’s own capital.

-42-

2. Major Property, Plants and Equipment
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse business operationsin Japan and overseas. It discloses information on major property, plants and equipment represented inbreakdown by segment and major facilities of the Company and consolidated subsidiaries.
The situation at the end of the fiscal year under review is as follows.
(1) Breakdown by Segment(As of March 31, 2014)
Segment

Book value (Millions of yen)
Land
[Area
in
Lease
Machineryand
Buildings
thousands
assetsequipmentof m2]

Others

Total

Number of
employees

Information &Telecommunication
Systems

86,97570,26532,050[1,686]

16,751

3,951

209,992

76,534

Power Systems

24,701

14,79584,814[8,468]

7,419

14,105

145,834

10,164

97,34058,00230,259[3,739]

9,512

8,274

203,387

48,77962,13135,556

95,331
132,260

SocialInfrastructure &Industrial Systems
Electronic Systems& Equipment
Construction
MachineryHigh Functional
Materials &Components
Automotive
Systems
Digital Media &Consumer Products
Others (Logistics
and Other services)

597

2,673

142,932

24,617

122,966

41,975[2,093]59,537[9,497]

3,137

14,586295,557

19,570173,340

93,394[13,288]

2,437

17,860419,291

43,05948,602
1,520
24,396232,070
30,594[5,583]
17,159896
29,11958,946
2,851
108,971
25,022[3,659]109,082
16,180148,933
39,672
19,945
333,81234,700[4,884]129
10,472Financial Services
1,921
225,586
4,270
242,3784,685[13]517,001
68,921 112,911 2,334,224 317,724
Subtotal
737,754897,637[52,910]
Corporate Items &(24,618)(789)
28,982
3,986
306
7,867
3,001
[1,167]
Eliminations
492,383
68,132 113,217 2,342,091 320,725
Total
766,736
901,623[54,078](Notes) 1. The “Book value - Others” column represents the total amount of vehicles and construction inprogress.
2. The figures in the above table include ¥288,178 million of operating lease assets for leasing
business, mainly owned by Hitachi Capital Corporation.
3. The figures in the above table include ¥47,258 million of lease assets concerning non-transfer
ownership finance lease transactions leased from within the Hitachi Group, mainly from Hitachi
Capital Corporation.
4. Except for the figures in the above table, there are operating lease assets leased, mainly machinery,etc. The annual lease fee for such assets was ¥141,662 million.
59,04398,509-43-

(2) The Company

Facility(Main location)
Information &Telecommunication
Systems Company(Shinagawa-ku,
Tokyo)
Research &Development Group(Kokubunji, Tokyo)

Segment(As of March 31, 2014)
Book value (Millions of yen)
Details ofLand
Number of
Machinery [Area in Lease
major facilities
employees
andOthersTotal
and equipment Buildings
assetsequipment thousands
2of m ]

Information &Telecommunication Systems

Systemdevelopment
facilities,
manufacturing
facilities forservers,
mainframes, etc.

52,916

26,907

1,905
[673]

1,869

1,656 85,256

13,306

Others(Logistics andOther services)

R&D facilities

15,198

8,078

6,044
[805]

95

3,424 32,840

3,009

11,614

6,419

10,630[3,455]843

931 30,440

2,313

11,492

11,346

3,955
[831]

2,161

359 29,314

6,406

1,488

17,125－[－]－487 19,100

466

7,925

2,911

6,995

Manufacturing
facilities forPower Systems
power generating
equipment, etc.
Manufacturing
facilities for
Information & industrial
Telecommuni- machinery andcation Systems, plants,
Infrastructure
Power Systems switchboards andSystems Company
calculationand Social(Hitachi, Ibaraki)
Infrastructure & control
equipment,
Industrial
systemSystems
development
facilities
OthersSystemIT Services Division(Logistics and development(Chiyoda-ku, Tokyo)
Other services) facilities
Head Office
Corporate
Other facilities(Chiyoda-ku, Tokyo)
Area Operations
Corporate
Other facilities(Osaka, Osaka)
Ibaraki HospitalCenterCorporate
Medical facilities(Hitachi, Ibaraki)
Rail Systems
SocialManufacturing
Company
Infrastructure & facilities for(Kudamatsu,
Industrial
railway vehicles,
Yamaguchi)
Systemsetc.
Urban Planning andSocialManufacturing
Development
Infrastructure & facilities for
Systems Company
Industrial
elevators and(Hitachinaka,
Systems
escalators
Ibaraki)Power Systems
Company(Hitachi, Ibaraki)0

131 16,480

1,386

355

5,511
[1,055]
8,346
[59]

9

0 15,707

1,529

12,088

1,340

63
[53]

1,516

173 15,181

1,374

8,584

5,052

855
[679]

5

299 14,796

1,783

10,738

3,099

60
[499]

29

362 14,290

1,218

-44-

(3) Domestic subsidiaries(As of March 31, 2014)
Facility(Main location)

Segment

Hitachi Automotive
Systems, Ltd.
Automotive(Hitachinaka,
Systems
Ibaraki)
HitachiConstruction
Machinery Co.,
Construction
Ltd., HitachinakaMachinery
Rinko Works(Hitachinaka,Ibaraki)
HitachiConstruction
Machinery Co.,
Construction
Ltd., Tsuchiura
Machinery
Works(Tsuchiura, Ibaraki)High
Hitachi Metals,
Functional
Ltd., Yasugi Works
Materials &(Yasugi, Shimane)Components
Hitachi HighTechnologies
Corporation
Naka Area(Hitachinaka,Ibaraki)
Hitachi Building
Systems Co., Ltd.,
Head Office(Chiyoda-ku,
Tokyo)
Hitachi Solutions,Ltd., Head Office(Shinagawa-ku,
Tokyo)
HitachiConstruction
Machinery Co.,
Ltd., Hitachinaka
Works(Hitachinaka,Ibaraki)
Hitachi Chemical
Company, Ltd.,
Yamazaki Works(Hitachi, Ibaraki)
Hitachi Chemical
Company, Ltd.,
Shimodate Works(Chikusei, Ibaraki)

Details of major
facilities andequipment

Buildings

Book value (Millions of yen)
Land
Machinery [Area in
Lease
and
Othersassetsequipment thousands
2of m ]

Total

Number of
employees

Manufacturing
facilities forautomotive
equipment

21,75929,987

7,492[2,528]－

1,826

61,066

6,474

Manufacturing
facilities forconstruction
machinery

18,490

5,578

12,245
[495]

－

722

37,036

281

Manufacturing
facilities forconstruction
machinery

9,025

17,5096,936[5,137]－

1,294

34,765

3,066

Manufacturing
facilities for highgrade steel

6,713

15,386

8,180[1,110]－3,734

34,013

1,488

Manufacturing
facilities forsemiconductor
manufacturing
equipment andtest andmeasurement
equipment, etc.

16,714

6,880

622
[125]

－

735

24,952

2,227

SocialInfrastructure
Other facilities& Industrial
Systems

12,038

1,701

10,131
[165]

－

754

24,626

1,454

Information &TelecommuniOther facilities
cationSystems

9,004

467

12,393
[17]

1,011

－

22,8782,277

Construction
Machinery

Manufacturing
facilities forconstruction
machinery

9,145

9,951

1,980
[214]

－

33

21,111251

High
Functional
Materials &Components
High
Functional
Materials &Components

Manufacturing
facilities forsemiconductormaterials, etc.
Manufacturing
facilities forcircuit board
materials, etc.

8,570

8,493

788
[485]

40

1,197

19,089

1,094

7,459

6,144

4,391
[743]

39

274

18,3091,603

Electronic
Systems &Equipment(Note) Except for the figures in the above table, there are ¥186,205 million of operating lease assets for leasing
business, mainly owned by Hitachi Capital Corporation.

-45-

(4) Overseas subsidiaries(As of March 31, 2014)
Facility(Main location)
Horizon Nuclear
Power Limited(Gloucester, U.K.)
Hitachi Automotive
Systems Americas,
Inc.
(Kentucky, U.S.A.)
Hitachi Data
Systems
Corporation(California, U.S.A.)
HitachiConstruction
Machinery (China)
Co., Ltd.
(Hefei, China)
Tata Hitachi
Construction
Machinery
Company Limited(Bangalore, India)(Notes)Book value (Millions of yen)
Land
Machinery [Area in
Lease
and
Othersassetsthousands
equipmentof m2]

Segment

Details of major
facilities andequipment

Power Systems

Land for nuclear
power plant

92

281

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

4,662

14,428

Information &Telecommunication Systems

Other facilities－

21,504

Construction
Machinery

Manufacturing
facilities forconstruction
machinery

5,918

6,270

－
[－]

－

7,317

19,5052,213

Construction
Machinery

Manufacturing
facilities forconstruction
machinery

6,491

9,065

609
[1,141]－534

16,6991,995

Buildings

Total

Number of
employees

66,857[4,418]－ 12,386 79,616

131

351
[1,231]

－

－
[－]

－

7,740

27,181

2,782－ 21,504

5,811

1. The figures for Horizon Nuclear Power Limited and Hitachi Data Systems Corporation arepresented in consolidated basis of each company.
2. Except for the figures in the above table, there are ¥95,194 million of operating lease assets forleasing business.

-46-

3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations in Japanand overseas, and has not decided on specific plans to newly install or expand each of facilities as of theend of the fiscal year. For this reason, it discloses amounts of capital investment by segment.
The amount of capital investment for the fiscal year ending March 31, 2015 will be ¥870.0 billion (newinstallation and expansions, based on the amount recorded as tangible fixed assets), and a breakdown by
segment is 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
a result, the Company changed the name of the “Digital Media & Consumer Products” segment to the“Smart Life & Ecofriendly Systems” segment. Figures shown in the table below are presented on the basisof the new segmentation.
Segment

Amount(Billions of yen)

Main purpose of investment

Information &Telecommunication
Systems

50.0

Power Systems

27.0

Social Infrastructure &Industrial Systems

44.0Electronic Systems &Equipment

26.0

Construction Machinery

35.0

High Functional Materials& Components

86.0

Automotive Systems

68.0

Increase production of automotive equipment, etc.

Smart Life & Ecofriendly
Systems

19.0

Streamline development and production of products

Others (Logistics and Other
services)

60.0

Transportation facilities

Financial Services

470.0

Assets for leasing business

Subtotal
Corporate Items &Eliminations
Total

Replacement of data centers,
streamline development and production of other products
Facility for nuclear power generation system,
streamline development and production of other products
Increase production of elevators and escalators,
manufacturing facilities for railway systems,
streamline development and production of other products,
antiseismic reinforcement
Streamline development and production of products
Increase and streamline production of construction
machinery, antiseismic reinforcement
Streamline production of high grade metal products,
increase production of magnetic materials, high-grade
functional components, wires and cables,
streamline development and production of other products

885.0

－

(15.0)

－

870.0

－

(Notes) 1. The figures in the above table include the amount of the fixed assets leased under non-transferable
finance lease transactions.
2. These planned investments are expected to be mostly financed with the Hitachi Group’s own
capital.
3. There are no plans to dispose or sell principal facilities, with the exception of disposing and selling
facilities due to routine upgrading.

-47-

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

Common stock

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

Total

10,000,000,000

Class2) Issued shares
Number of shares
Number of sharesissued as of the end
issued as of theof fiscal year (shares) filing date (shares)(March 31, 2014)(June 20, 2014)

Class

Stock exchange on which
the Company is listed

Commonstock

4,833,463,387

4,833,463,387

Tokyo, Nagoya

Total

4,833,463,387

4,833,463,387－

Description
The number ofshares per one unitof shares 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

Change in the Balance of the Change in Balance of Change in Balance of
total number total number of common
commoncapitalcapitalstockof issuedstockreserve
reserveissued shares (Millions of (Millions of (Millions (Millions ofshares(shares)of yen)(shares)
yen)
yen)
yen)

From April 1, 2009 (Note)
6,309 4,518,132,365
1
to March 31, 2010
From April 1, 2010 (Note)
2,012,599 4,520,144,964
319
to March 31, 2011
From April 1, 2011 (Note) 117,640,353 4,637,785,317
18,646to March 31, 2012
From April 1, 2012 (Note) 195,678,070 4,833,463,387
31,015to March 31, 2013
From April 1, 2013
－ 4,833,463,387－
to March 31, 2014
(Note) Changes due to conversion of stock acquisition rights into stocks.

-48-

408,8101

126,777

409,129319

127,096427,775

18,646

145,742458,790

31,015

176,757

458,790－

176,757

(6) Shareholders composition(As of March 31, 2014)
Status of shares (one unit of stock: 1,000 shares)
Number of
Foreigncorporations,shares less
Financial
Class of Government Financial instruments
etc.
than one
Individuals
Other
shareholders
Total
and
unit
businessandothersinstitution
institution
Nonmunicipality(shares)
operator
individuals Individuals
Number of
2
244
92
2,869
882
103
291,511295,703－
shareholders
Shareownership
46 1,362,518 100,294
87,580 2,195,888
443 1,062,301 4,809,070 24,393,387(units)Ownership
percentage
0.00
28.33
2.09
1.82
45.66
0.01
22.09
100.00－of shares(%)(Notes) 1. Of 4,407,424 shares of treasury stock, 4,407 units are included in the “Individuals and others”
column, while 424 shares are included in the “Number of shares less than one unit” column.
2. Of the shares registered in the name of Japan Securities Depository Center, Incorporated (accountfor managing stocks whose shareholders have not transferred titles), 26 units are included in the“Other institution” column and 827 shares are included in the “Number of shares less than one
unit” column.
(7) Major shareholders

Name

Address(As of March 31, 2014)
Ownership
percentage to theSharetotal number ofOwnership
issued shares(shares)(%)

The Master Trust Bank of Japan,
Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd.
(Trust Account)11-3, Hamamatsucho 2-chome,
Minato-ku, Tokyo
8-11, Harumi 1-chome, Chuo-ku,
Tokyo

330,607,000

6.84

246,969,800

5.11

Hitachi Employees’ Shareholding
Association

6-6, Marunouchi 1-chome, Chiyodaku, Tokyo

106,072,384

2.19

Nippon Life Insurance Company

95,817,610

1.98

NATS CUMCO(Standing proxy: Mizuho Bank,
Ltd.)
State Street Bank and Trust
Company 505225(Standing proxy: Mizuho Bank,Ltd.)
The Dai-ichi Life Insurance
Company, Limited
THE BANK OF NEW YORKMELLON SA/NV 10(Standing proxy: The Bank ofTokyo-Mitsubishi UFJ, Ltd.)State Street Bank West ClientTreaty(Standing proxy: Mizuho Bank,
Ltd.)
Japan Trustee Services Bank, Ltd.
(Trust Account 1)

6-6, Marunouchi 1-chome, Chiyodaku, Tokyo
C/O Citibank New York, 111 WallStreet, New York NY, U.S.A.
(16-13, Tsukishima 4-chome, Chuoku, Tokyo)
P.O. Box 351
Boston, Massachusetts 02101 U.S.A.
(16-13, Tsukishima 4-chome, Chuoku, Tokyo)
13-1, Yurakucho 1-chome, Chiyodaku, Tokyo
Rue Montoyerstraat 46, 1000
Brussels, Belgium(7-1, Marunouchi 2-chome, Chiyodaku, Tokyo)
1776 Heritage Drive, North Quincy,
MA 02171, U.S.A.
(16-13, Tsukishima 4-chome, Chuoku, Tokyo)
8-11, Harumi 1-chome, Chuo-ku,
Tokyo82,935,280

1.72

75,526,617

1.56

71,361,222

1.48

70,329,859

1.46

58,866,327

1.22

57,777,000

1.20

Total

－

1,196,263,099

24.75(Notes)1. NATS CUMCO is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of
the Company’s American Depositary Receipts (ADRs) holders.
2. The number of shares held by The Dai-ichi Life Insurance Company, Limited includes its
contribution of 6,560,000 shares to the retirement allowance trust (the holder of said shares, as
listed in the Shareholders’ Register, is “Dai-ichi Life Insurance Account, Retirement Allowance
Trust, Mizuho Trust & Banking Co., Ltd.”).

-49-

3. The Company has received copies of reports on substantial shareholdings under the Financial
Instruments and Exchange Act. However, the information in the reports is not described in theabove table since the Company does not confirm the actual status of shareholdings as of the endof fiscal year. The major contents of the reports are as follows.
Holders
Mitsubishi UFJ Trust and Banking Corporation and three other persons
Date on which the duty May 23, 2011
to file report
Number of shares
237,294,613 shares
Ownership percentage tothe total number of
5.24%
issued shares
Holders
BlackRock Japan Co. Ltd and nine other persons
Date on which the duty March 31, 2014
to file report
Number of shares
255,857,172 shares
Ownership percentage tothe total number of
5.29%
issued shares(8) Information on voting rights
1) Issued sharesClassification

Number of shares (shares)

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

－

－

－

－

－

－

－

－

－

－

－

Common stock

4,578,000

Common stock

4,804,492,000

4,804,492－

Common stock

24,393,387－－

4,833,463,387－－

4,804,492－

Number of issued shares
Total number of voting rights(Note)(As of March 31, 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.

-50-2) Treasury stock, etc.

Name ofshareholder

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

Address(As of March 31, 2014)
Ownership
Number ofpercentage toshares held
Number of
the total
under the Total sharesshares held
under own name names of held (shares) number ofissued shares
others(shares)(%)(shares)

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

4,407,000－

4,407,000

0.09

10,000－10,000

0.00

1,000

－

1,000

0.00

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

88,000－88,000

0.00

5,000

－

5,000

0.00

52,000－52,0000.00

Mizuho Co., Inc.

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

15,000－15,000

0.00

Total

－

4,578,000－

4,578,000

0.09

Nitto Jidosha
Kiki K.K.

(9) Details of stock option plans
Not applicable.

-51-2. Information on Acquisition, etc. of Treasury StockClass of shares
Acquisition of common stock under Article 155, Item 3 of the Companies Act, acquisition of common
stock under Article 155, Item 7 of the Companies Act, acquisition of common stock under Article 155,
Item 9 of the Companies Act and acquisition of common stock under Article 155, Item 13 of theCompanies Act(1) Acquisition of treasury stock resolved at the general meeting of shareholders
Not applicable.
(2) Acquisition of treasury stock resolved at the Board of Directors meetings
Acquisition of stock resolved at the Board of Directors meetings pursuant to the Articles ofIncorporation of the Company in order to Article 459, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

The resolution of the Board of
Directors on February 4, 2014
(Acquisition period : From February 5,
2014 to March 31, 2014)
Treasury stock acquired prior to thefiscal year ended March 31, 2014
Treasury stock acquired during the
fiscal year ended March 31, 2014
Total number and amount of shares tobe acquired
Ratio of the shares yet to be acquired
as of the end of fiscal year (%)
Treasury stock acquired during thecurrent period
Ratio of the shares yet to be acquired
as of the filing date (%)

Total amount (yen)5,000,000

5,000,000,000－－

5,000,000

4,002,977,000－

997,023,000

－

19.9

－

－

－

19.9

(3) Details of acquisition of treasury stock not based on the resolutions of the general meeting ofshareholders or the Board of Directors meetings
Acquisition of stock less than one unit shares due to purchase requests from shareholders under
Article 192, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

Total amount (yen)Treasury stock acquired during the598,679
428,388,039
fiscal year ended March 31, 2014
Treasury stock acquired during the47,55835,072,141
current period (Note)(Note) The number of treasury stock acquired due to requests to purchase stock less than one unit sharesfrom June 1, 2014 to filing date is not included.
Acquisition of treasury stock due to purchase requests from shareholders dissenting the absorptiontype corporate split that the Company succeeded the car information systems business of Hitachi
Automotive Systems, Ltd. under Article 797, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2014
Treasury stock acquired during thecurrent period-52-

Total amount (yen)200

93,600－－Acquisition of fractional shares arising from the share exchange with Hitachi Medical Corporation
under Article 234 of the Companies Act
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2014
Treasury stock acquired during thecurrent period

Total amount (yen)392

295,960－－

Acquisition of treasury stock due to purchase requests from shareholders dissenting the shareexchange with Hitachi Medical Corporation under Article 797, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2014
Treasury stock acquired during thecurrent period

Total amount (yen)
－

－

1,000

688,000(4) Status of the disposition and holding of acquired treasury stock
Fiscal year ended March 31, 2014
Classification
Acquired treasury stock which wasoffered to subscribers
Acquired treasury stock which wascanceled

Current period (Note)

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

－

－

－

－

－

－

－

4,055,445

2,892,140,602－－

Others (Acquired treasury stock which
was sold due to requests fromshareholders holding shares less than
one unit shares to sell additional
shares)35,553

20,555,839

4,393

3,136,621

Total number of treasury stock held

4,407,424－

4,451,589－

Acquired treasury stock which wastransferred due to merger, shareexchange or company split(Note)The number of treasury stock which was sold due to requests from shareholders holding less than
one unit shares to sell additional shares from June 1, 2014 to the filing date and that of treasury stockacquired due to purchase requests from shareholders holding shares less than one unit shares from
June 1, 2014 to the filing date are not included.

-53-

3. Dividend Policy
The Company views enhancement of the long-term and overall interests of shareholders as an importantmanagement objective.
The industrial sector encompassing energy, information systems, social infrastructure and other primarybusinesses of the Company is undergoing rapid technological innovation and changes in market structure.
This makes vigorous upfront investment in R&D and plant and equipment essential for securing andmaintaining market competitiveness and improving profitability. Dividends are therefore decided based on
medium-to-long term business plans with an eye to ensuring the availability of internal funds forreinvestment and the stable growth of dividends, with appropriate consideration of a range of factors,
including the Company’s financial condition, results of operations and dividend payout ratio.
The Company provides in its Articles of Incorporation that distribution of surplus will be made toshareholders of record as of March 31 and September 30 of each year and that the company may makefurther distribution of surplus to shareholders of record as of another record date for the purpose of
distributing surplus. The company also provides in its Articles of Incorporation that the Company may
make distribution of surplus by resolution of its Board of Directors, without resolution at the General
Meeting of Shareholders.
The Company believes that the repurchase of its shares should be undertaken, when necessary, as part ofits policy on distribution to shareholders to complement the dividend payout. In addition, the Company
will repurchase its own shares in order to flexibly implement a capital strategy, including businessrestructuring, to maximize shareholder value so far as consistent with the dividend policy. Such action will
be taken by the Company after considering its future capital requirement under its business plans, market
conditions and other relevant factors.
Based on the above policy, annual dividends of ¥10.5 per share were paid for the fiscal year ended
March 31, 2014. At the Board of Directors meeting held on October 29, 2013, it was resolved to pay
interim dividends of ¥5 per share, resulting in the total amount of interim dividends of ¥24,151 million. In
addition, at the Board of Directors meeting held on May 12, 2014, it was resolved to pay year-end
dividends of ¥5.5 per share, resulting in the total amount of year-end dividends of ¥26,559 million.
4. Changes in Share Prices(1) Highest and lowest share prices in each of the recent five fiscal years
Fiscal year

141st
142nd
143rd
144th
145th
business term business term business term business term business term

Year end

March 2010

Highest(yen)
Lowest(yen)

March 2011

March 2012

March 2013

March 2014

404

523

547

578

877

227

313

360

401

508

January2014

February
2014

March
2014

Highest
696
780
798
877
825
(yen)
Lowest
606
672
730
766
746
(yen)
(Note) The share prices are market prices on the first section of the Tokyo Stock Exchange.

832(2) Highest and lowest share prices in each of the recent six months
Month

October2013

November
2013

December
2013

-54-

698

5. Directors and Senior Management
The Company has adopted the Committee System pursuant to the Companies Act. Information on its
Directors and Executive Officers is as follows.
(1) Directors
Share
Date of Business experience, including experience Term of ownershipbirth
in Hitachi, and functions
office(shares)
4/2003 Representative Director,
President and CEO, Member ofthe Board, Marubeni
Nominating
Corporation
Committee
4/2008 Chairman, Member of the(Chair),Board, Marubeni Corporation
Nobuo
Dec. 5, 6/2011 Director, Hitachi, Ltd.
Member of
33,000(Note 1)
Katsumata
1942
Audit
4/2013
SeniorCorporate
Advisor,Committee andMember of the Board,
Compensation
Marubeni Corporation
Committee
6/2013 Senior Corporate Advisor,
Marubeni Corporation(Currently in office)10/1991 General Manager, Foil
Products, Alcan Inc.
1/1996 Managing Director, Aughinish
Alumina Ltd., Alcan Inc.
10/1998 President, Bauxite, Alumina
and Speciality Chemicals,
CynthiaNov. 13,(Note 1)0
Alcan Inc.
Carroll
1956
1/2002 President & CEO, Primary
Metal Group, Alcan Inc.
3/2007 CEO, Anglo American plc.
(Retired in April 2013)
6/2013 Director, Hitachi, Ltd.
6/2002 President and Representative
Member of the Board, Toray
Member ofIndustries, Inc.
Nominating
SadayukiMar.
22,
6/2010Chairman of the Board and19,000Committee and Sakakibara
1943
Representative Member of the (Note 1)
Compensation
Board, Toray Industries, Inc.
Committee(Currently in office)6/2013 Director, Hitachi, Ltd.
2/1993 Chief Technology Officer,
Motors, Drives and Appliances,
Emerson Electric Company
9/1994 President, US Electrical
Motors, Emerson ElectricCompany
7/1997 President, Mercury Marine
Division and Corporate Vice
President, Brunswick
Corporation
4/2000 President and Chief Operating
GeorgeFeb. 23,
Officer, Brunswick Corporation (Note 1)
7,000
Buckley1947
6/2000 Chairman and Chief Executive
Officer, Brunswick Corporation
12/2005 Chairman of the Board,
President and Chief Executive
Officer, 3M Company
2/2012 Executive Chairman of theBoard, 3M Company (Retired
in May 2012)
6/2012 Chairman, Arle Capital Partners
Limited (Currently in office)Director, Hitachi, Ltd.

Position Responsibility

Director

Director

Director

Director

Name

-55-

Position Responsibility

Name

Member of
Nominating
Committee andHarufumi
Director Audit
Mochizuki
Committee,
Compensation
Committee(Chair)Director

Philip Yeo

Member of
Director Audit
Committee

Hiroaki
Yoshihara

Share
Date of Business experience, including experience Term of ownershipbirth
in Hitachi, and functions
office(shares)
7/2002 Director-General for Commerceand Distribution Policy,
Minister’s Secretariat, Ministryof Economy, Trade andIndustry of Japan (“METI”)
7/2003 Director-General, Small andMedium Enterprise Agency,
METI
7/2006 Director-General, Agency for
Natural Resources and Energy,
METI
7/2008 Vice-Minister of Economy,
Trade and Industry of Japan
Jul. 26,3,000
1949
8/2010 Special Advisor to the Cabinet (Note 1)of Japan (Retired in September
2011)
10/2010 Senior Adviser to the Board,
Nippon Life Insurance
Company (Retired in April
2013)
6/2012 Director, Hitachi, Ltd.
6/2013 President and Representative
Director, Tokyo Small andMedium Business Investment& Consultation Co., Ltd.
(Currently in office)6/1970 Joined Ministry of Defense of
Singapore
9/1979 Permanent Secretary, Ministryof Defense of Singapore
1/1986 Chairman, Economic
Development Board ofSingapore
2/2001 Chairman, Agency for Science,
Technology and Research ofSingapore
Oct. 29, 4/2007 Senior Advisor for Science and (Note 1)
18,0001946
Technology to the Ministry ofTrade & Industry, Singapore(Retired in September 2008)
Special Advisor in Economic
Development, Prime Minister’s
Office, Government ofSingapore (Retired in August
2011)
Chairman, SPRING Singapore(Currently in office)6/2012 Director, Hitachi, Ltd.
11/1978 Joined Peat Marwick Mitchell& Co.
7/1996 National Managing Partner, thePacific Rim Practice, KPMG
LLP
Feb. 9, 10/1997 The Board Member, KPMG
(Note 1)
0
1957
LLP
10/2003 Vice Chairman and Global
Managing Partner, KPMGInternational(Retired in April 2007)
6/2014 Director, Hitachi, Ltd.

-56-

ShareBusiness experience, including
Term of ownershipexperience in Hitachi, and functions
office(shares)
4/1970 Joined Hitachi, Ltd.
4/2003 General Manager, Global
Business
6/2003 Vice President and Executive
Officer
4/2004 Senior Vice President andExecutive Officer
6/2005 Senior Vice President andExecutive Officer, Hitachi, Ltd.
Chairman and Chief Executive
Member of
Officer, Hitachi Global Storage
HiroakiMar. 14,
Director Nominating(Note 1) 109,000
Technologies, Inc.
Nakanishi
1946
Committee
4/2006 Executive Vice President andExecutive Officer, Hitachi, Ltd.
(Retired in December 2006)
4/2009 Executive Vice President andExecutive Officer, Hitachi, Ltd.
4/2010 President, Hitachi, Ltd.
6/2010 President and Director, Hitachi,
Ltd.
4/2014 Chairman & CEO and Director,
Hitachi, Ltd.
4/1970 Joined Hitachi, Ltd.
4/2003 General Manager, Legal andCorporate Communications andGeneral Manager, Corporate
Auditing
6/2003 Vice President and Executive
Officer
4/2004 Senior Vice President andExecutive Officer
4/2006
Executive
Vice President andTakashiJan. 27,
Executive
Officer (Retired in
Director(Note 1)75,000Hatchoji
1947
March 2007)
6/2007 President and Director, Hitachi
Research Institute, Ltd.
4/2009 Executive Vice President andExecutive Officer, Hitachi, Ltd.
(Retired in March 2011)
4/2011 Chairman of the Board, Hitachi
America, Ltd. (Currently in
office)6/2011 Director, Hitachi, Ltd.
4/1977 Joined Hitachi, Ltd.
4/2006 Chief Operating Officer,
Information &Telecommunication Systems
4/2007 Vice President and Executive
Officer (Retired in March 2008)
4/2008 President, Hitachi Power
Europe GmbH
4/2010 President and Chief Executive
Officer, Hitachi Plant
Member of
Feb. 16,
Technologies, Ltd.
Director Compensation Toshiaki(Note 1)50,000Higashihara 1955
Committee
6/2010 President and Representative
Director, Hitachi Plant
Technologies, Ltd.
4/2011 Vice President and Executive
Officer, Hitachi, Ltd.
4/2013 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2014 President & COO, Hitachi, Ltd.
6/2014 President & COO and Director,
Hitachi, Ltd.
Position Responsibility

NameDate of
birth

-57-

Position Responsibility

Name

Audit
Director Committee(Chair)(Standing)

TakashiMiyoshiMember of
Director Audit
Committee(Standing)Nobuo
MochidaShareBusiness experience, including
Term of ownershipexperience in Hitachi, and functions
office(shares)
4/1970 Joined Hitachi, Ltd.
4/2003 General Manager, Finance
6/2003 Executive Officer
4/2004 Senior Vice President andExecutive Officer
6/2004 Senior Vice President,
Executive Officer and Director
4/2006 Executive Vice President,
Executive Officer and Director
4/2007 Director (Retired in June 2007)
6/2007 Chairman of the Board, Hitachi
Global Storage Technologies,
Inc.
Sep. 25,(Note 1)77,0004/2008
Executive
Vice President and1947
Executive Officer, Hitachi
Systems & Services, Ltd.
(Currently Hitachi Solutions,Ltd.)
6/2008 President, Chief Executive
Officer and Director, Hitachi
Systems & Services, Ltd.
4/2009 Executive Vice President andExecutive Officer, Hitachi, Ltd.
6/2009 Executive Vice President,
Executive Officer and Director,
Hitachi, Ltd.
4/2012 Director, Hitachi, Ltd.
4/1970 Joined Hitachi Metals, Ltd.
6/2006 President and Chief Executive
Officer and Director, Hitachi
Metals, Ltd.
4/2010 Executive Vice President andApr. 1,
Executive Officer, Hitachi, Ltd. (Note 1)
30,0001947(Retired in March 2014)
Chairman of the Board, Hitachi
Metals, Ltd.
4/2013 Director, Hitachi Metals, Ltd.
(Currently in office)6/2014 Director, Hitachi, Ltd.
421,000
Total
Date ofbirth(Notes) 1. The term of office of the Directors starts upon the election at the Ordinary General Meeting of
Shareholders on June 20, 2014 and expires at the close of the Ordinary General Meeting of
Shareholders for the fiscal year ending March 31, 2015.
2. Mr. Nobuo Katsumata, Ms. Cynthia Carroll, and Messrs. Sadayuki Sakakibara, George Buckley,
Harufumi Mochizuki, Philip Yeo and Hiroaki Yoshihara are directors who fulfill the qualification
requirements to be outside directors as provided for in Article 2, Item 15 of the Companies Act.

-58-

(2) Executive Officers
Position

Responsibility

Name

Share
Date ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)

Representative
Executive
GeneralHiroakiSee “(1)
Officer
See “(1) Directors”(Note 2)
management
Nakanishi
Directors”
Chairman &CEO
Representative
Executive
See “(1)Overall operations Toshiaki
Officer
See “(1) Directors”(Note 2)
Higashihara
Directors”
President &COO
4/1978 Joined Hitachi, Ltd.
10/2009
General Manager, Hitachi
Representative
Works, Power Systems
Cost structure
Executive
Company
reform, power
Officer
TatsuroDec.
23,
4/2011Vice President and(Note 2)
Executive Vice systems business Ishizuka
1955
Executive Officer
President and and infrastructure
4/2013 Senior Vice President andsystems business
Executive
Executive Officer
Officer
4/2014 Executive Vice President
and Executive Officer
4/1972 Joined Hitachi, Ltd.
10/2007 Executive Vice President,
Hitachi Global Storage
Technologies, Inc.
Representative
Executive
4/2009 Vice President andInformation
Officer
Executive Officer,
ShinjiroJun. 6,(Note 2)
Executive Vice technology
Hitachi, Ltd.
Iwata
1948
President and strategies
4/2011 Senior Vice President andExecutive
Executive Officer,
Officer
Hitachi, Ltd.
4/2013 Executive Vice President
and Executive Officer,
Hitachi, Ltd.
4/1979 Joined Hitachi, Ltd.
10/2009 President & CEO,
Representative
Information & Control
Executive
Systems Company
Information &OfficerDec.
11,
4/2010Vice
President andExecutive Vice telecommunication Yutaka Saito 1954
(Note 2)
Executive Officer
President and systems business
4/2012 Senior Vice President andExecutive
Executive Officer
Officer
4/2014 Executive Vice President
and Executive Officer
4/1974
JoinedHitachi, Ltd.
Representative
5/2006 General Manager, Hitachi
Executive
Works, Power Systems
Officerof Koji Tanaka Jan. 22,
4/2007 Vice President and(Note 2)
Executive Vice Strengthening
1952
Executive Officer
President and products
4/2011 Executive Vice President
Executive
and Executive Officer
Officer
5/1972 Joined Hitachi, Ltd.
4/2005 Chief Operating Officer,
Information &Telecommunication
Executive Vice
Systems
Feb. 8,President and Regional strategies Junzo(Note 2)4/2006
Vice
President and(Asia Pacific)
Nakajima
1949
Executive
Executive
Officer
Officer
4/2009 Senior Vice President andExecutive Officer
4/2011 Executive Vice President
and Executive Officer-59-

109,000

50,00036,00036,00022,00040,00041,000Position

Responsibility

Representative
Executive
Finance andOfficer
Executive Vice corporate pension
systemPresident andExecutive
Officer

Senior Vice
President andExecutive
Officer

Healthcare
business

Representative
Executive
Officer
Senior Vice
President andExecutive
OfficerMarketing andsales

Representative
Executive
Officer
Senior Vice
President andExecutive
Officer

Corporate
communications
and CSR, legal
matters,
government &external relations,risk management
and corporate
auditing

Senior Vice
President andExecutive
OfficerManagement
strategies

Share
Date ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1975 Joined Hitachi, Ltd.
1/2006 General Manager,
Finance Department I
4/2007 Senior Vice President andExecutive Officer
ToyoakiAug. 3,6/2007 Senior Vice President,(Note 2)51,000Nakamura 1952
Executive Officer andDirector
6/2009 Senior Vice President andExecutive Officer
4/2012 Executive Vice President
and Executive Officer
4/1980 Joined Hitachi, Ltd.
4/2007 Chief Strategy Officer
and General Manager,
Strategy Planning &Development Office,Information &Telecommunication
Systems
4/2009 Vice President andExecutive Officer
Masahiro Nov. 23,(Note 2)
23,0504/2012President and CEO,Kitano1955
Hitachi Medical
Corporation
6/2012 President and CEO, andDirector, Hitachi Medical
Corporation
4/2014 Senior Vice President andExecutive Officer,
Hitachi, Ltd.
Director, Hitachi Medical
Corporation
4/1976 Joined Hitachi, Ltd.
10/2009 Chief Marketing Officer,
Information &Telecommunication
Group, Information &RyuichiFeb. 4,
Telecommunication(Note 2)25,000Kitayama
1952
Systems Company
4/2010 Vice President andExecutive Officer
4/2014 Senior Vice President andExecutive Officer
4/1978 Joined Hitachi, Ltd.
4/2001 General Manager, Legal
Division
4/2007 Vice President andToshiakiNov. 3,(Note 2) 207,000
Executive Officer
Kuzuoka
1954
4/2011 Senior Vice President andExecutive Officer
NameToshikazu
NishinoJan. 9,1955-60-

4/1980 Joined Hitachi, Ltd.
4/2010 Senior Manager, Strategy& Project Office,Supervisory Office forManagement Reforms(Note 2)4/2011 Vice President andExecutive Officer
4/2013 Senior Vice President andExecutive Officer

10,000Position

Responsibility

Name

Vice President
and Executive
Officer

Infrastructure
systems business Toshio(urban planning Ikemura
and development
systems business)

Vice President
and Executive
Officer

Power systems
business (nuclear Hiroto
Uozumipower systems
business)

Vice President
and Executive
Officer

Supply chain
management(procurement)

Vice President
and Executive
Officer

Infrastructure
systems business Kaoru(sales operations) Kawano

Vice President
and Executive
OfficerMarketing andsales, and power Yoshifumi
systems business Kanda(sales operations)

Vice President
and Executive
Officer

Finance andcorporate pension Yoshihito
Kitamatsu
systemVice President
and Executive
OfficerMarketing andsales

Vice President
and Executive
Officer

KenichiRegional
strategies (China) Kokubo

Vice President
and Executive
Officer

Research &development

Vice President
and Executive
Officer

Infrastructure
Kunizosystems business Sakai

Shinichiro
Omori

Kazuhiro
Kurihara

Keiji
KojimaShare
Date ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1978 Joined Hitachi, Ltd.
4/2007 President andRepresentative Director,
Dec. 2,
Hitachi Building(Note 2)9,000
1953
Systems Co., Ltd.
4/2011 Vice President andExecutive Officer,
Hitachi, Ltd.
4/1975 Joined Hitachi, Ltd.
4/2011 President andRepresentative Director,
Mar. 10,
Hitachi-GE Nuclear
83,860(Note 2)
1953
Energy, Ltd.
4/2013 Vice President andExecutive Officer,
Hitachi, Ltd.
4/1978 Joined Hitachi, Ltd.
9/2008 General Manager,
Feb. 6,
Corporate Procurement (Note 2)
21,0001956
Division
4/2012 Vice President andExecutive Officer
4/1977 Joined Hitachi, Ltd.
4/2011 General Manager,
Jun. 25,(Note 2)
22,050Kansai Area Operation
1952
4/2012 Vice President andExecutive Officer
4/1974 Joined Hitachi, Ltd.
Manager,Mar. 10, 12/2008 General
Area Operation (Note 2)
Chugoku
23,0001952
4/2011 Vice President andExecutive Officer
4/1980 Joined Hitachi, Ltd.
4/2011 General Manager,
Finance & Accounting
Oct. 8,Department, Finance
38,511(Note 2)
1956
Group
4/2013 Vice President andExecutive Officer
4/1976 Joined Hitachi, Ltd.
4/2010 General Manager, Chubu
Dec. 6,29,350Area Operation(Note 2)
1952
4/2011 Vice President andExecutive Officer
4/1979 Joined Hitachi, Ltd.
4/2011 President, Hitachi
Nov. 25,
1,000(China) Ltd.
(Note 2)
1955
4/2014 Vice President andExecutive Officer
4/1982 Joined Hitachi, Ltd.
4/2011 General Manager,
Oct. 9,Hitachi Research
11,000(Note 2)
1956
Laboratory
4/2012 Vice President andExecutive Officer
4/1975 Joined Hitachi, Ltd.
10/2009 President & CEO,
Dec. 23,
Defense Systems
15,000(Note 2)1952
Company
4/2013 Vice President andExecutive Officer-61-

Position

Responsibility

Name

Vice President Information &and Executive telecommunication Kaichirosystems business Sakuma
Officer

Information &Vice President telecommunication
business Keiichi
and Executive systems(system solutions Shiotsuka
Officerand services
business)

Vice President Marketing andand Executive sales
Officer

Akira
Shimizu

Vice President Government &and Executive external relations
Officer

Yasuo
Tanabe&Vice President Information
Yoshitakaand Executive telecommunication
systems business Tsuda
Officer(sales operations)

Vice President
and Executive Human capital
Officer

Hidenobu
Nakahata

Supply chain
Vice President managementand Executive (MONOZUKURI Hiroshi
Nakayama
and quality
Officer
assurance)

Share
Date ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1979 Joined Hitachi, Ltd.
4/2008 President & Chief
Executive Officer, Hitachi
Information &Telecommunication
Systems Global Holding
Corporation
Jan. 29, 4/2009 Vice President and39,000(Note 2)
1954
Executive Officer,
Hitachi, Ltd.
4/2013 President and Director,
Hitachi Solutions, Ltd.
(Currently in office)4/2014 Vice President andExecutive Officer,
Hitachi, Ltd.
4/1977 Joined Hitachi, Ltd.
4/2012 Chief Operating Officer,
System Solutions
Business, Information &Telecommunication
May. 8,Systems Company,
17,000(Note 2)
1954
Information &Telecommunication
Systems Group
4/2013 Vice President andExecutive Officer
4/1979 Joined Hitachi, Ltd.
10/2012 General Manager,
Nov. 3,
International Strategy
4,000(Note 2)Division
1954
4/2013 Vice President andExecutive Officer
4/1978 Joined Ministry ofInternational Trade andIndustry
8/2006 Deputy Director-General,
Economic Affairs Bureau,
Ministry of Foreign
Oct. 5,9,000
Affairs (Retired in March (Note 2)
1954
2010)
6/2010 Joined Hitachi, Ltd.
4/2011 Vice President andExecutive Officer,
Hitachi, Ltd.
4/1979 Joined Hitachi, Ltd.
4/2012 Chief Marketing Officer,
Information &Jul. 3,38,000
Telecommunication(Note 2)
1955
Systems Company
4/2014 Vice President andExecutive Officer
4/1983 Joined Hitachi, Ltd.
Jan. 24, 10/2013 Deputy General Manager,
7,000
Human Capital Group(Note 2)1961
4/2014 Vice President andExecutive Officer
4/1977 Joined Hitachi, Ltd.
& CEO, Rail
Dec. 15, 4/2011 President
37,000
Systems Company(Note 2)
1953
4/2012 Vice President andExecutive Officer-62-

ShareDate ofBusiness experience, including
Term of ownershipbirth experience in Hitachi, and functions office (shares)
4/1980 Joined Hitachi, Ltd.
4/2012 General Manager, Hitachi
Vice President Power systems
Works, Power Systems
KatsumiOct. 18,and Executive business(Note 2)25,000Company
Nagasawa
1956
Officer
4/2014 Vice President andExecutive Officer
4/1982 Joined Hitachi, Ltd.
Information &4/2011 Chief Strategy Officer,
Information &Vice President telecommunication
Jan. 31,
business Masaya
Telecommunicationand Executive systems(Note 2)26,000(global service
Watanabe
1958
Systems Company
Officerbusiness
4/2012 Vice President andpromotion)
Executive Officer
Total
1,105,821(Notes) 1. The “Responsibility” column describes matters delegated to each of the Executive Officers by the
Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2015.
Position

Responsibility

Name

-63-

6. Corporate Governance, etc.
(1) Corporate governance1) Outline of corporate organizations
The Company has adopted the Committee System under the Companies Act, aiming to establish aframework for quick business operation and to realize highly transparent management by separating
responsibilities for management oversight and those for execution of business operations.
Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and supervises
the execution of the duties of executive officers and directors in order to sustainably enhance
corporate value and the shareholders’ common interests. The basic management policy includes
medium-term management plan and annual budget compilation. The Board of Directors focuses on
strategic issues related to the basic management policy as well as other items to be resolved that areprovided in laws, regulations, the Articles of Incorporation and Board of Directors Regulations. As ofJune 20, 2014, the Board of Directors was made up of 12 Directors, and seven of whom are outside
Directors and two concurrently serve as Executive Officers. Within the Board of Directors, there arethree statutory committees of the Nominating Committee, the Audit Committee and theCompensation Committee with outside Directors accounting for the majority of members of eachcommittee. The Board of Directors meetings were held 10 days during the fiscal year ended March
31, 2014, and the attendance rate of Directors at those meetings was 99%. The Nominating
Committee meetings were held 5 days, the Audit Committee meetings were held 15 days, and theCompensation Committee meetings were held 4 days during the fiscal year ended March 31, 2014.
The Nominating Committee has the authority to determine particular proposals submitted to thegeneral meeting of shareholders for the election and dismissal of Directors, and consists of four
Directors, three of whom are outside Directors.
The Audit Committee has the authority to audit the execution of duties of Directors and Executive
Officers and to determine on proposals submitted to the general meeting of shareholders for theelection and dismissal of accounting auditors, and consists of five Directors, including three outside
Directors and two standing Audit Committee members. Mr. Takashi Miyoshi, the Chair of the Audit
Committee, has considerable knowledge of finance and accounting due to his long experience as theGeneral Manager of accounting and finance of the Company as well as Executive Officer responsible
for accounting and finance for many years.
The Compensation Committee has the authority to determine remuneration policies for Directors
and Executive Officers and remuneration for individuals based on them. The Compensation
Committee consists of four Directors, three of whom are outside Directors.
With regard to the number of Directors and their election, the Company stipulates in its Articles ofIncorporation that the Company shall have not more than twenty (20) Directors. With regard to theadoption of resolution for the election of Directors, the Company stipulates in its Articles ofIncorporation that the presence of shareholders representing one-third or more of the voting, that
resolutions for the election of Directors shall be approved by attending shareholders possessing onethird or more of all voting rights of the shareholders who are entitled to exercise their votes, and thatthe resolution shall not be made by cumulative voting.
Executive Officers
Executive Officers decide on matters delegated to them by the Board of Directors and execute theCompany’s business affairs within the scope of assignments determined by the Board of Directors.
As of June 20, 2014, the Company has 31 Executive Officers.
The Company stipulates in its Articles of Incorporation that the Company shall have not more thanforty (40) Executive Officers.

-64-Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides onimportant managerial matters, which may affect the Company or the Hitachi Group business, throughdiscussing from diverse viewpoints. It consists of 10 members as of June 20, 2014; Chairman &CEO, President & COO, five Executive Vice President and Executive Officers and three Senior Vice
President and Executive Officers.
2) Matters determined by resolution of the Board of Directors without resolution at the general meetingof shareholders pursuant to the provisions of the Articles of Incorporation
The Company stipulates in the Articles of Incorporation that it may, unless otherwise provided in
the applicable laws, determine on matters specified in each item of Article 459, Paragraph 1 of theCompanies Act by the resolution of the Board of Directors, without resolution at the general meetingof shareholders.
For the repurchase of the company’s own its shares (Article 459, Paragraph 1, Item 1 of theCompanies Act), the Board of Directors shall determine on the matter in order to enable timely
implementation of capital strategies.
Regarding reduction of capital reserve or earned surplus reserve (Article 459, Paragraph 1, Item
2 of the Companies Act), appropriation of surplus (excluding dividends of surplus and disposal of
the property of the Company) (Article 459, Paragraph 1, Item 3 of the Companies Act) anddividends of surplus (Article 459, Paragraph 1, Item 4 of the Companies Act), since the Company
was a company with committees as of the date of enforcement of the Companies Act, it was deemedthat its Articles of Incorporation had stipulations that the Board of Directors was able to decide theabove matters without resolution at the general meeting of shareholders and that it should not
stipulate that such matters shall be resolved at the resolution of the general meeting of shareholders,in accordance with Article 57 of the Act on Arrangement of Relevant Acts Incidental to Enforcementof the Companies Act (July 26, 2005, Act No. 87). Even after the enforcement of the Companies Act,
the Company has made it a rule to timely decide on these important business judgments by the
Board of Directors to enhance the shareholders’ common interests.
The Company has stipulated in its Articles of Incorporation that it may, by resolution of theBoard of Directors, exempt any Director (including former Director) and Executive Officer(including former Executive Officer) from liabilities as provided Article 423, Paragraph 1 of theCompanies Act to the extent as provided in laws or regulations.
3) Requirement for special resolution of the general meeting of shareholders
To enable to securely meet the quorum of the general meeting of shareholders under Article 309,
Paragraph 2 of the Companies Act, the Company stipulates in its Articles of Incorporation that any
resolution as provided in Article 309, Paragraph 2 of the Companies Act shall be adopted at a
general meeting of shareholders where shareholders representing one-third or more of the voting
rights of all the shareholders shall be present, by a majority of two-thirds or more of the voting
rights of the shareholders who are present in such meeting and are entitled to vote.
4) Internal control system and risk management system
Outlines of the internal control system and the risk management system of the Company are as
follows. In addition, these systems were resolved by the Board of Directors as the basic policy forinternal control system under the Companies Act.
(a) When necessary, the Board of Directors may appoint one or more director(s), who does notserve concurrently as an executive officer, as a director responsible for assisting with theduties of the Audit Committee. In addition, the Board of Directors Office (the “Office”)
shall be established specifically to assist with the duties of each Committee and the Board of
Directors and staffed with personnel who are not subject to orders and instructions of
Executive Officers.
(b) In order to ensure the independence of the Office personnel from Executive Officers, theAudit Committee shall be informed in advance of planned transfers of the Office personnel.
(c) Executive Officers and employees shall report without delay to the members of the Audit
-65-

(d)

(e)
(f)
(g)

(h)

(i)

(j)

Committee significant matters affecting the whole Company, results of internal audits, andthe implementation status of reporting under the internal reporting system.
In order to ensure the effectiveness of audits by the Audit Committee, standing Committee
member(s) shall be appointed to the Audit Committee, and activity plans of the Audit
Committee shall be prepared in coordination with the audit plans of Internal Auditing Office.
A reporting system to Directors shall be established to ensure that the execution of duties by
Executive Officers is in compliance with laws, regulations, and the Articles of Incorporation.
Information pertaining to the execution of duties by Executive Officers shall be preparedand maintained in accordance with internal rules.
A structure shall be established in which each relevant department shall establish
regulations and guidelines, conduct training, prepare and distribute manuals, and carry out
other such measures with respect to various risks. Efforts shall be made to identify possible
new risks through such things as progress reports on business operations and, should it
become necessary to respond to a new risk, an Executive Officer responsible for responding
thereto shall be appointed promptly.
Efficient performance of duties shall be ensured through the following business
management systems.
- The Senior Executive Committee shall be established in order to deliberate on andfacilitate the formulation of decisions based on due consideration of diverse factors
regarding important issues that affect the Company and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets,on which performance management is based, shall be prepared in order to operatebusiness in a planned and efficient manner.
- Internal audits shall be conducted by Internal Auditing Office to monitor and identify
the status of business operations and to facilitate improvements.
- The Audit Committee shall receive the audit plans of the accounting auditors inadvance, and the prior approval of the Audit Committee shall be required with respect
to the fees to be paid to the accounting auditors.
- Documented business processes shall be executed, and internal and external auditors
shall examine said processes in order to ensure the reliability of financial reports.
Continuous maintenance of a legal and regulatory compliance structure shall be ensured
through the following business management systems.
- Internal audits shall be conducted, and various committees shall be established forlegal and regulatory compliance activities. Furthermore, an internal reporting systemshall be established and education on legal and regulatory compliance shall be
provided.
- Various corporate rules and regulations shall be established, and efforts shall be madeto ensure that the employees are aware of the internal control systems overall and thatthe systems are effective.
The following measures shall be effective to ensure the adequacy of business operations
within the Hitachi Group.
- Such fundamental policies as the emphasis of the social responsibilities of businessenterprises shall be shared with the Group companies.
- A group-wide policy for compliance with applicable laws and regulations shall beestablished as necessary.
- Internal audits of Company departments and Group companies shall be conductedperiodically, and Directors and Corporate Auditors shall be sent from the Company toGroup companies. Each company shall execute documented business processes onmatters that should be reflected in financial reports, and Corporate Auditors andothers shall examine said processes.
- A structure for the adequate and efficient conduct of business operations common toGroup companies shall be established.
- The policy on transactions within the Hitachi Group is to trade fairly based on market
prices.

-66-5) Internal audit and audit by the Audit Committee(a) Internal audit
The Internal Auditing Office is in charge of internal audit within Hitachi Group and audits inhouse companies, corporate divisions of headquarters and subsidiaries and affiliates. The numberof staff of the Internal Auditing Office is 39 as of March 31, 2014.
The Internal Auditing Office monitors and assesses whether overall business operations,
including marketing, personnel management, labor management, procurement transactions,production, information system, accounting and financing activities, and property managementof Hitachi Group are properly carried out pursuant to audit standards established by the Company,
and points out items required to be improved based on the results of auditing and follows up theirimprovements. The Internal Auditing Office reports in advance its internal audit plan to the Audit
Committee, and reports results of auditing to the President & COO and the Audit Committee.
Furthermore, relating to the internal control over financial reporting, the internal control divisionin the Internal Audit Office promotes to establish and maintain the internal control systems
pursuant to the Company’s guideline, assesses its effectiveness, and reports the results to the
President & COO and the Audit Committee.
In addition, each division in charge of compliance, information security, environment andexport regulations investigates and evaluates compliance with related laws and regulations, andinstructs improvements if necessary.
(b) Audit by the Audit Committee
The Audit Committee conducts audits for whether corporate administration by Directors andExecutive Officers are properly carried out under appropriate internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives
reports or conducts hearing for execution of duties from Directors and Executive Officers. In
addition, the members of the Audit Committee, who are in charge of internal investigation,
investigate in-house companies of the Company and receive reports from subsidiaries in order tocheck whether business transaction and property management are properly carried out, and thenreport the results to the Audit Committee. Furthermore, such members of the Audit Committee
attend the important meetings including the budget meeting and the Senior Executive Committee,
inspect audit reports from internal audit divisions, and provide internal audit divisions with
instructions about divisions to be subject to auditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of
the audit from the accounting auditor, and based on the reports, verifies results of financial audits
and internal control audits. In addition, the Audit Committee receives reports and explanations ofquality control systems of the accounting auditor. Furthermore, the Company makes it a rule toobtain the prior approval of the Audit Committee for remuneration to the accounting auditor.
6) Outside Directors(a) Qualification for the outside Directors and criteria for the independency
For electing an outside Director, the Nominating Committee of the Company considers, inaddition to the following criteria for the independency, whether the outside Director has thehighest personal and professional ethics, integrity and insight, and distinguished records ofleadership or experience at policy making levels in business, law, administration, accounting or
education, etc.
For the independency of an outside Director, the Company considers the outside director to
be independent unless:- his or her immediate family member* is, or has been within the last three years, an
executive director or an executive officer, of the Company or any of its subsidiaries;- he or she is currently an executive director, an executive officer or an employee of acompany that has made payments to, or received payments from, the Company forproperty or services in an amount which, in any of the last three fiscal years, exceeds
2% of any of the companies’ consolidated gross revenues;- he or she has received during any of the last three fiscal years more than ¥10 million-67-

in direct compensation for his or her service as a specialist in law, accounting or tax,
or as a consultant from the Company, other than director compensations; or- he or she serves as an executive officer or director of a not-for-profit organization,and the Company’s discretionary charitable contributions to the organization in anyof the last three fiscal years are more than ¥10 million and 2% of that organization’sannual gross revenues.
* An “immediate family member” includes a person’s spouse, parents, children,
siblings, grand-parents, grand-children, mothers and fathers-in-law, sons anddaughters-in-law, spouses of siblings, grand-children-in-law, and brothers and sistersin-law.
(b) Function of the outside Directors
Following the policy stated in “(a) Qualification for outside Directors and criteria for the
independency,” the Company has elected seven persons; Mr. Nobuo Katsumata, Ms. Cynthia
Carroll, and Messrs. Sadayuki Sakakibara, George Buckley, Harufumi Mochizuki, Philip Yeo
and Hiroaki Yoshihara, as outside Directors under Article 2, Item 15 of the Companies Act. Eachoutside Director is expected to enhance functions of the Company’s Board of Directors throughsupervising execution of duties of Executive Officers and others from an independent perspective,
based on diverse experiences and insights in such areas as public administration in the cases ofMessrs. Harufumi Mochizuki and Philip Yeo, based on rich experiences and insights as top
executive of major global companies in the cases of Ms. Cynthia Carroll and Messrs. Nobuo
Katsumata, Sadayuki Sakakibara and George Buckley, and based on rich experiences andinsights in the area of global corporate management and accounting in the case of Mr. Hiroaki
Yoshihara.
(c) Supervising by the outside Directors
Outside Directors, comprising of majority of Directors, supervise execution of duties of
Executive Officers from an independent perspective. As described in the item “5) Internal audit
and audit by the Audit Committee” above, the Audit Committee, of which majority members areoutside Directors, receives reports and explanations about results of internal audits, accounting
audit and internal control audit, and verifies the matters reported or explained. In addition, theAudit Committee reports the results of its verification to the Board of Directors.
(d) Relationship between outside Directors and the Company
Each of outside Directors has no relationship with the Company regarding his or her
independency as described in “(a) Qualification for the outside Directors and criteria for the
independency.” In addition, there is no particular conflict of interest between each of outside
Directors and the Company.
The Company considers that all outside Directors are independent, and therefore has notified
all seven outside Directors as independent directors to each of the Company’s listing stock
exchanges in Japan.
The Company maintains a limited liability agreement (hereinafter referred to as“Agreement”) stipulated in Article 427, Paragraph 1 of the Companies Act with Mr. Nobuo
Katsumata, Ms. Cynthia Carroll, and Messrs. Sadayuki Sakakibara, George Buckley, Harufumi
Mochizuki, Philip Yeo and Hiroaki Yoshihara. The general intent of the Agreement is to limit theliability of outside Directors to the aggregate amount of the sums stipulated in each item under
Article 425, Paragraph 1 of the Companies Act.
In addition, the number of shares of the Company owned by each outside Director isdescribed in “5. Directors and Senior Management.”-68-7) Status of accounting audit
Certified public accountants (CPAs) who executed accounting audit of the Company are as follows.
In addition, other CPAs and staff belonging to Ernst & Young ShinNihon LLC assisted execution of
accounting audit works as instructed by the three CPAs.
CPA having executed
accounting audit works

Audit corporation
to which CPA belongs

Koichi Tsuji

Ernst & Young ShinNihon LLC

Takashi Ouchida

Ernst & Young ShinNihon LLC

Takahiro Saga

Ernst & Young ShinNihon LLC

8) Compensation to Directors and Executive Officers(a) Policy on the determination of Compensation of Directors and Executive Officers[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the policy on the determination of
the amount of compensation, etc. of each Director and Executive Officer pursuant toapplicable provisions of the Companies Act concerning companies with the Committee
System.
[Summary of Policy](i) Matters relating to both Directors and Executive Officers
Compensation will be commensurate with the ability required of, and the
responsibilities to be borne by, the Company’s Directors and Executive Officers, taking
into consideration compensation packages at other companies.
(ii) Matters relating to Directors
Compensation for Directors will consist of a monthly salary and a year-end
allowance.
- Monthly salary will be decided by making adjustments to basic salary thatreflect full-time or part-time status, committee membership and position,
travel from place of residence, etc.
- Year-end allowance will be a pre-determined amount equivalent to about
twenty percent of the Director’s annual income based on monthly salary,although this amount may be reduced depending on Company performance.
A Director concurrently serving as an Executive Officer will not be paidcompensation as a Director.
(iii) Matters relating to Executive Officers
Compensation for Executive Officers will consist of a monthly salary and aperformance-linked component.
- Monthly salary will be decided by adjusting a basic amount set in accordancewith the relevant position to reflect the results of an assessment.
- The performance-linked component will be set within a range equivalent toabout thirty percent of the Executive Officer’s annual income, adjusted basedon Company and individual performance.
(iv) Miscellaneous
It was decided at the Compensation Committee meetings held on December 18,
2007 and March 26, 2008 that the compensation structure for Directors and Executive
Officers will be re-examined starting with the compensation for fiscal 2008 and that theretirement allowance will be abolished. The payment of retirement allowance toDirectors and Executive Officers due to the abolition of the retirement allowancesystem will be in an amount determined by the Compensation Committee at the time of
the retirement of a relevant Director or Executive Officer.

-69-

(b) Amount of compensation
Total amount of each type(Millions of yen)
Year-end
allowance andperformanceMonthly salarylinkedcomponent

Category

Total amount ofcompensation, etc.
(Millions of yen)

Directors(excluding outside
Directors)

161

142

18

5

Outside Directors

215

201

13

9

Executive Officers

1,989

1,275

714

31

2,366

1,619

746

45

Total

Number of
persons(Notes) 1. The number of Directors indicated excludes one Director who concurrently serves as an
Executive Officer.
2. The amount of compensation to outside Directors includes the monthly salary for one
outside Director, who retired due to expiration of his term of office at the close of the144th Ordinary General Meeting of Shareholders held on June 21, 2013.
In addition, Directors or Executive Officers whose compensation from the Company and its
subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:
Name

Company

Total amount of
Category compensation, etc.
(Millions of yen)

Total amount of each type(Millions of yen)
PerformanceMonthly salarylinked component

Executive
Hiroaki
Hitachi, Ltd.
173
122
51
Nakanishi (The Company) Officer(Note)(Note) Although concurrently serving as Director, Mr. Hiroaki Nakanishi does not receive compensation
as Director.

-70-9) Information on shareholdings(a) Equity securities held for purposes other than pure investment
Number of stock names:
401 stock names
Total amount recorded in the balance sheet: ¥353,957 million(b) Stock name, number of shares, amount recorded in the balance sheet, and purpose of holding
regarding equity securities held for purposes other than pure investment(Fiscal year ended March 31, 2013)
Specified investment securities
Balance sheet
amount(Millions of yen)

Stock name

Number ofshares(shares)

Western Digital Corporation

25,000,000

Purpose of holding

and enhancing business
118,244 Maintaining
relationship

JX Holdings, Inc.

4,888,149

The Japan Steel Works, LTD.

5,050,000

Maintaining and enhancing business
transactions
Maintaining and enhancing business
6,098
transactions
and enhancing business
6,013 Maintaining
relationshipand enhancing business
3,393 Maintaining
relationship
Maintaining and enhancing business
3,238
transactions
Maintaining and enhancing business
2,952
transactions
Maintaining and enhancing business
2,943
transactions
Maintaining and enhancing business
2,546
transactions
and enhancing business
2,530 Maintaining
transactions

Central Japan Railway
Company

900,000

East Japan Railway Company

790,000

Yungtay Engineering Co., Ltd.

31,817,168

Silver Spring Networks, Inc.

2,082,265

Electric Power Development
Co., Ltd.

1,307,580

ShinMaywa Industries, Ltd.

4,000,337

Shin-Etsu Chemical Co., Ltd.

471,000

8,928

NIPPON TELEGRAPH AND
TELEPHONECORPORATIONThe Chugoku Electric Power
Co., Inc.

612,000

and enhancing business
2,512 Maintaining
transactions

1,812,622

and enhancing business
2,274 Maintaining
transactions

The Chiba Bank, Ltd.

3,269,000

and enhancing business
2,206 Maintaining
transactions

JOYO BANK, Ltd.

2,956,000

and enhancing business
1,557 Maintaining
transactions

12,100and enhancing business
1,530 Maintaining
transactions

The Dai-ichi Life Insurance
Company, Limited
Oclaro, Inc.

11,900,000

Chubu Electric Power Co.,Inc.

1,200,254

Received as consideration for theof Oclaro, Inc. and
1,410 reorganization
Opnext, Inc. which was an affiliate of
the Company
and enhancing business
1,383 Maintaining
transactions

5,260

and enhancing business
1,301 Maintaining
transactions

Kintetsu Corporation

2,842,913

and enhancing business
1,239 Maintaining
transactions

Sapporo Holdings Limited

2,988,000

and enhancing business
1,180 Maintaining
transactions

WOWOW INC.

-71-

Stock name

Balance sheet
amount(Millions of yen)

Number ofshares(shares)

Purpose of holding

NIPPON EXPRESS CO.,LTD.

2,541,000

and enhancing business
1,166 Maintaining
transactions

IBJ Leasing Company,
Limited360,000

and enhancing business
1,040 Maintaining
transactions

NKSJ Holdings, Inc.

500,000

and enhancing business
982 Maintaining
transactionsWest Japan Railway Company

215,000

and enhancing business
970 Maintaining
transactions

TOHO GAS CO., LTD.

1,524,471

and enhancing business
934 Maintaining
transactions

Showa Denko K.K.

6,593,332

Hitachi Zosen Corporation

5,900,000

Tokyo Gas Co., Ltd.

1,638,000

Keio Corporation

1,032,873

NOF Corporation

1,700,000

and enhancing business
929 Maintaining
transactions
and enhancing business
908 Maintaining
transactions
and enhancing business
841 Maintaining
transactions
and enhancing business
835 Maintaining
transactions
and enhancing business
782 Maintaining
transactions(Note)

Since the number of stock of which balance sheet amount exceeds 1% of the amount of theCompany’s common stock on the balance sheet is less than 30, the top 30 stocks in balance
sheet amount are listed.

(Fiscal year ended March 31, 2014)
Specified investment securities
Stock name

Number ofshares(shares)

Western Digital Corporation

12,500,000

Renesas Electronics
Corporation
Central Japan Railway
Company
Yungtay Engineering Co., Ltd.

Balance sheet
amount(Millions of yen)

Purpose of holding

and enhancing business
118,126 Maintaining
relationship

900,000

Received in relation to theetc. of Renesas
100,520 reorganization,
Technology Corp. which was anaffiliate of the Company
and enhancing business
10,854 Maintaining
transactions

31,817,168

and enhancing business
9,371 Maintaining
relationship

127,725,748

East Japan Railway Company

812,400

Received in relation to theof Hitachi Displays,
7,714 reorganization
Ltd. which was a subsidiary of theCompany
and enhancing business
6,179 Maintaining
transactions

Electric Power Development
Co., Ltd.

1,307,580

and enhancing business
3,811 Maintaining
transactions

Japan Display Inc.

10,700,000

Oclaro, Inc.

11,900,000

ShinMaywa Industries, Ltd.

4,000,337-72-

Received as consideration for theof Oclaro, Inc. and
3,796 reorganization
Opnext, Inc. which was an affiliate of
the Company
Maintaining
3,768 transactions and enhancing businessStock name

Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Purpose of holding

NIPPON TELEGRAPH AND
TELEPHONECORPORATION

612,000

and enhancing business
3,438 Maintaining
transactions

Shin-Etsu Chemical Co., Ltd.

521,000

and enhancing business
3,072 Maintaining
transactions

The Chugoku Electric Power
Co., Inc.

1,812,622

and enhancing business
2,608 Maintaining
transactions

JX Holdings, Inc.

4,888,149and enhancing business
2,429 Maintaining
transactions

The Japan Steel Works, LTD.

5,050,000

and enhancing business
2,338 Maintaining
transactions

The Chiba Bank, Ltd.

3,269,000

and enhancing business
2,079 Maintaining
transactions

The Dai-ichi Life Insurance
Company, Limited

1,210,000

and enhancing business
1,815 Maintaining
transactions

JOYO BANK, Ltd.

2,956,000

and enhancing business
1,522 Maintaining
transactions

Chubu Electric Power Co., Inc.

1,200,254

and enhancing business
1,458 Maintaining
transactions

NKSJ Holdings, Inc.

500,000

NGK INSULATORS, LTD.

607,000

and enhancing business
1,326 Maintaining
transactions
and enhancing business
1,305 Maintaining
transactions

NIPPON EXPRESS CO., LTD.

2,541,000

and enhancing business
1,283 Maintaining
transactions

NOF Corporation

1,700,000

and enhancing business
1,269 Maintaining
transactions

Sapporo Holdings Limited

2,988,000

and enhancing business
1,213 Maintaining
transactions

Tokyo Tatemono Co., Ltd.

1,286,712

and enhancing business
1,138 Maintaining
transactions

Tohoku Electric Power Co.,Inc.

1,010,000

and enhancing business
1,074 Maintaining
transactions

Ono Pharmaceutical Co., Ltd.

120,000

and enhancing business
1,072 Maintaining
transactions

Kintetsu Corporation

2,842,913

and enhancing business
1,043 Maintaining
transactions

Toyo Machinery & Metal Co.,Ltd.
Kyushu Electric Power Co.
Inc.

1,810,331

1,037 Maintaining business relationshipand enhancing business
996 Maintaining
transactions
and enhancing businessShowa Denko K.K.
6,593,332
962 Maintaining
transactions(Note) Since the number of stock of which balance sheet amount exceeds 1% of the amount of theCompany’s common stock on the balance sheet is less than 30, the top 30 stocks in balance
sheet amount are listed.
790,000(c) Equity securities held for pure investment
None.

-73-

(2) Audit Fees
1) Fees to Certified Public Accountants
Fiscal year ended March 31, 2013
Category

Fiscal year ended March 31, 2014

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company

564

104

629

25

Consolidated
subsidiaries

1,458

138

1,653

28

Total

2,022

242

2,282

53

2) Other fees
Audit fees paid by the Company and its consolidated subsidiaries to the Company’s accounting
auditor, Ernst & Young ShinNihon LLC Group (including Ernst & Young and its group firms which
belong to the same network as Ernst & Young ShinNihon LLC), were ¥2,928 million for the fiscal
year ended March 31, 2013, and ¥3,456 million for the fiscal year ended March 31, 2014,
respectively. These fees are mainly paid for audit services to its overseas consolidated subsidiaries.
3) Descriptions of non-audit services to the Company
Non-audit services to the Company in the fiscal year ended March 31, 2013 and the fiscal year
ended March 31, 2014 were various advisory services and various consulting services, respectively.
4) Policy on determination of audit fees
For determining the amount of audit fees, the Company conducts hearing of the audit plan andverify efficiency of audit services, including the number of days, hours for auditing, the number ofsubjects to be audited and the scope of audit, etc., and appropriateness of the estimate. The Company
also discusses with the accounting auditor taking into consideration the formation of auditors andaudit fees for the preceding fiscal year. In addition, the Audit Committee receives the audit plans of
the accounting auditors and the results of discussion between the auditors and Executive Officers of
the Company and approves the amount of the fees in advance of the Company’s decision.
V. Financial Information
Refer to the consolidated financial statements incorporated in this Annual Securities Report.

-74-VI. Stock-Related Administration for the Company
Fiscal year

From April 1 to March 31

Ordinary General
Meeting of
Shareholders

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

Record date

End of every fiscal year

Record date for
distribution of surplus End of March and end of September
Number of shares
1,000 sharesconstituting one unit
Purchase and sale ofshares less than one unit
(Special account)Handling office
Nippon Building 4th Floor, 6-2, Otemachi 2-chome, Chiyoda-ku, Tokyo
Main Office, Tokyo Securities Transfer Agent Co., Ltd.
(Special account)
Transfer agent
Tokyo Securities Transfer Agent Co., Ltd.
Forward office-

Purchasing andselling fee

Free of charge

The Company’s method of public notice is through electronic public notice.
if the Company cannot use the above-mentioned method of public notice
Method of public notice However,
due to an accident or other inevitable reasons, Nihon Keizai Shimbun will be
adopted as its medium.
Special benefit for
None
Shareholders(Notes) 1. Under the Company’s articles of incorporation, distribution of surplus through dividend payment,
if any, will be made to shareholders of record as of March 31 and September 30 of each year. In
addition, the Company may make further distributions of surplus to shareholders of record as ofanother record date.
2. The Company’s articles of incorporation provide that a holder of shares representing less than
one unit does not have any other rights of a shareholder in respect of those shares, other thanthose specified in the articles of incorporation. This includes:(1)
Rights under each item of Article 189, Paragraph 2 of the Companies Act;
(2)
Rights to be allotted rights to subscribe for free for new shares and stock acquisition rights
when such rights are granted to shareholders; or(3)
Rights stipulated in the Company’s Articles of Incorporation-75-VII. Reference Information on the Company
1. Information on a Parent Company, etc. of the Company
The Company has no parent company.
2. Other Reference Information
The Company filed the following documents during the period from the commencing date of the
fiscal year ended March 31, 2014 to the filing date of the Annual Securities Report.
(1)

Annual Securities Report and documents attached, and Confirmation
Letter(The 144th business term (from April 1, 2012 to March 31, 2013))

Filed with the Director of the
Kanto Local Finance Bureau
on June 21, 2013

(2)

Internal Control Report

Filed with the Director of the
Kanto Local Finance Bureau
on June 21, 2013(3)

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

Filed with the Director of the
Kanto Local Finance Bureau
on June 24, 2013

(4)

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

Filed with the Director of the
Kanto Local Finance Bureau
on June 28, 2013

(5)

Shelf Registration Statement (Debentures) and Documents Attached

Filed with the Director of the
Kanto Local Finance Bureau
on June 28, 2013

(6)

Amendment to Extraordinary Report(Amendment to Extraordinary Report (4) above)

Filed with the Director of the
Kanto Local Finance Bureau
on August 6, 2013(7)

Amendment to Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report (The 140th business term(from April 1, 2008 to March 31, 2009)))

Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2013(8)

Amendment to Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report (The 141st business term(from April 1, 2009 to March 31, 2010)))

Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2013(9)

Amendment to Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report (The 142nd business term(from April 1, 2010 to March 31, 2011)))

Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2013(10)

Amendment to Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report (The 143rd business term(from April 1, 2011 to March 31, 2012)))Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2013(11)

Amendment to Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report (1) above)

Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2013(12)

Quarterly Report and Confirmation Letter(The First Quarter of the 145th business term (from April 1, 2013 toJune 30, 2013))

Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2013(13)

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

Filed with the Director of the
Kanto Local Finance Bureau
on September 19, 2013(14)

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

Filed with the Director of the
Kanto Local Finance Bureau
on October 29, 2013(15)

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

Filed with the Director of the
Kanto Local Finance Bureau
on November 7, 2013

-76-

(16)

Quarterly Report and Confirmation Letter(The Second Quarter of the 145th business term (from July 1, 2013
to September 30, 2013))

Filed with the Director of the
Kanto Local Finance Bureau
on November 12, 2013(17)

Shelf Registration Supplements and Documents Attached

Filed with the Director of the
Kanto Local Finance Bureau
on December 6, 2013(18)

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

Filed with the Director of the
Kanto Local Finance Bureau
on January 8, 2014(19)

Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 6-2 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on January 30, 2014(20)

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

Filed with the Director of the
Kanto Local Finance Bureau
on February 4, 2014(21)

Amendment to Extraordinary Report(Amendment to Extraordinary Report (19) above)

Filed with the Director of the
Kanto Local Finance Bureau
on February 6, 2014(22)

Quarterly Report and Confirmation Letter(The Third Quarter of the 145th business term (from October 1, 2013
to December 31, 2013))

Filed with the Director of the
Kanto Local Finance Bureau
on February 12, 2014(23)

Amendment to Quarterly Report and Confirmation Letter(Amendment to Quarterly Report (22) above)

Filed with the Director of the
Kanto Local Finance Bureau
on February 25, 2014

(24)

Report for Share Repurchase

Filed with the Director of the
Kanto Local Finance Bureau
on March 12, 2014 andApril 11, 2014(25)

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

Filed with the Director of the
Kanto Local Finance Bureau
on May 12, 2014(26)

Amended Shelf Registration Statement(Amended Shelf Registration Statement concerning the Shelf
Registration Statement (5) above)

Filed with the Director of the
Kanto Local Finance Bureau
on August 1, 2013
August 6, 2013
August 9, 2013
September 19, 2013
October 29, 2013
November 7, 2013
November 12, 2013
January 8, 2014
January 30, 2014
February 4, 2014
February 6, 2014
February 12, 2014
February 25, 2014 andMay 12, 2014-77-

Part II

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

-78-

Consolidated Financial Statements
Page
NumberConsolidated Financial Statements of Hitachi, Ltd. and Subsidiaries:
Consolidated Balance Sheets as of March 31, 2014 and 2013

F-2

Consolidated Statements of Operations andConsolidated Statements of Comprehensive Income for the years ended
March 31, 2014, 2013 and 2012

F-4

Consolidated Statements of Equity for the years ended
March 31, 2014, 2013 and 2012

F-5

Consolidated Statements of Cash Flows for the years ended
March 31, 2014, 2013 and 2012

F-7

Notes to Consolidated Financial Statements

F-9

Reports of Independent Registered Public Accounting Firm

F-1

F-112

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2014 and 2013

Millions of yen
March 31,
March 31,
2014
2013

AssetsCurrent assets:
Cash and cash equivalents (note 7)
Short-term investments (note 3)
Trade receivables:
Notes (notes 4, 7, 18 and 30)
Accounts (notes 4, 7 and 30)
Investments in leases (notes 6, 7 and 30)
Current portion of financial assets transferred
to consolidated securitization entities (notes 6, 7 and 30)
Inventories (note 5)
Prepaid expenses and other current assets (note 9)
Total current assets
Investments and advances,including affiliated companies (note 3)
Property, plant and equipment (note 6):Land
Buildings
Machinery and equipment
Construction in progress
Less accumulated depreciation
Net property, plant and equipment
Intangible assets (note 8):
Goodwill
Other intangible assets
Total intangible assets
Financial assets transferred
to consolidated securitization entities (notes 6, 7 and 30)
Other assets (notes 6, 7, 9, 11 and 30)
Total assets

See accompanying notes to consolidated financial statements.

F-2

558,2179,172

527,632
10,444

143,675
2,654,260
262,953

110,316
2,311,460
270,899

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

23,365
1,437,399
498,623
5,190,138

1,220,800

781,984

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

518,313
1,942,634
5,207,010
115,340
7,783,297
5,503,333
2,279,964

339,148
422,333
761,481

290,387
415,009705,396

185,818
802,839
11,016,899

131,379
720,369
9,809,230

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
March 31, 2014 and 2013

Liabilities and Equity
Current liabilities:
Short-term debt (note 10)
Current portion of long-term debt (notes 6 and 10)
Current portion of non-recourse borrowingsof consolidated securitization entities (note 7)
Trade payables:
Notes
Accounts
Accrued expenses (notes 11 and 18)
Income taxes (note 9)
Advances received
Other current liabilities (note 9)
Total current liabilities
Long-term debt (notes 6 and 10)
Non-recourse borrowings of consolidated
securitization entities (note 7)
Retirement and severance benefits (note 11)
Other liabilities (note 9)
Total liabilities

March 31,
2014

Millions of yen
March 31,2013

647,269
464,234

673,850
260,185

49,89526,39918,926
1,331,288
937,401
72,839298,483
470,430
4,290,765

15,462
1,219,402
924,591
56,278359,795
428,179
3,964,141

1,512,720

1,306,747

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

102,898
913,211
342,946
6,629,943

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

458,790622,946
1,370,723(368,334)(1,565)2,082,560
1,096,727
3,179,287

11,016,899

9,809,230

Commitments and contingencies (note 18)
Equity:Common stock
4,833,463,387 shares issued as ofMarch 31, 2014 and 2013 (notes 10 and 12)
Capital surplus (notes 10, 12 and 13)
Retained earnings (note 14)
Accumulated other comprehensive loss (note 16)
Treasury stock, at cost (note 15)
Total Hitachi, Ltd. stockholders’ equity
Noncontrolling interests (note 13)
Total equity
Total liabilities and equity

See accompanying notes to consolidated financial statements.

F-3

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Statements of Operations andConsolidated Statements of Comprehensive Income
Years ended March 31, 2014, 2013 and 2012

Consolidated Statements of Operations
2014
Revenues:
Product sales
Financial and other services
Total revenues
Cost of sales:
Product sales
Financial and other services
Total cost of sales
Selling, general and administrative expenses

Millions of yen
2013
2012

8,330,966
1,285,236
9,616,202

7,829,413
1,211,658
9,041,071

8,528,292
1,137,591
9,665,883(6,154,904)(928,459)(7,083,363)(2,000,028)(5,859,912) (6,447,009)(884,079)(831,962)(6,743,991) (7,278,971)(1,875,052) (1,974,632)

Expenses related to competition law and others (note 19)
Impairment losses for long-lived assets (note 20)
Restructuring charges (note 21)
Interest income
Dividend income
Other income (note 22)
Interest charges
Loss on sale of stock of an affiliated company
Other deductions (note 22)
Equity in net earning (loss) of affiliated companies
Income before income taxes(76,858)(33,796)(28,284)
14,136
8,154
183,110(26,107)(5,915)(7,755)
8,686
568,182(23,209)(30,498)
13,2296,415
26,220(26,707)(2,494)(40,447)
344,537(31,841)(23,097)
12,653
5,551
228,906(28,141)(3,010)(15,571)557,730

Income taxes (note 9)
Net income(204,152)
364,030(106,816)
237,721(144,922)
412,808

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

99,055
264,975

62,395
175,326

65,629347,179

54.86
54.85

37.28
36.29

Yen
76.81
71.86

2014

Millions of yen
2013
2012

Net income attributable to Hitachi, Ltd. stockholders per share (note 23):
Basic
DilutedConsolidated Statements of Comprehensive Income

Net income

364,030

237,721412,808

Other comprehensive income (loss) arising during the year (note 16)
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Total other comprehensive income (loss) arising during the year
Comprehensive income
Less comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Hitachi, Ltd. stockholders

159,638
129,499
127,312(11,301)
405,148
769,178
143,791
625,387

181,814(12,040)
41,386(28,201)
182,959
420,680
117,490
303,190

23,462(44,149)
2,962(2,502)(20,227)
392,581
49,446343,135

See accompanying notes to consolidated financial statements.
F-4

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Statements of Equity
Years ended March 31, 2014, 2013 and 2012

Millions of yen
2014

Balance at beginning of year
Change in equity
Conversion of convertible bonds
Equity transactions and other
Net income
Other comprehensive income,net of reclassification adjustments
Dividends to
Hitachi, Ltd. stockholders
Dividends tononcontrolling interests
Acquisition of treasury stock
Sales of treasury stock
Total change in equity
Balance at end of year

Commonstock(notes 10
and 12)458,790

Capitalsurplus(notes 10, 12
and 13)622,946

Retainedearnings(note 14)1,370,723

Accumulated
othercomprehensive
loss (note 16)(368,334)

Treasurystock,
at cost(note 15)
(1,565)

Total
Hitachi, Ltd.
stockholders’equity2,082,560

Noncontrollinginterests(note 13)
1,096,727

Total
equity3,179,287-(5,907)-(1,343)-(7,250)(13,081)(20,331)--264,975--

264,975

99,055364,030---

360,412-360,41244,736405,148--(48,304)--(48,304)-(48,304)

458,790429(5,478)617,468

216,671
1,587,394

359,069(9,265)(4,431)2,850(1,581)(3,146)(4,431)
3,279
568,681
2,651,241(26,214)
104,496
1,201,223(26,214)(4,431)
3,279
673,177
3,852,464

Millions of yen
2013

Balance at beginning of year
Change in equity
Conversion of convertible bonds
Equity transactions and other
Net income
Other comprehensive income,net of reclassification adjustments
Dividends to
Hitachi, Ltd. stockholders
Dividends tononcontrolling interests
Acquisition of treasury stock
Sales of treasury stock
Total change in equity
Balance at end of year

Commonstock(notes 10
and 12)427,775

Capitalsurplus(notes 10, 12
and 13)600,243

Retainedearnings(note 14)
1,242,110

Accumulated
othercomprehensive
loss (note 16)(496,896)

Treasurystock,
at cost(note 15)
(1,450)

Total
Hitachi, Ltd.
stockholders’equity1,771,782

Noncontrollinginterests(note 13)
1,002,213

Total
equity2,773,995

31,015-31,015(8,307)-698-

62,030(7,609)1,186

62,030(6,423)--

175,326--

175,326

62,395

237,721---

127,864-

127,864

55,095

182,959--(46,713)--(46,713)-(46,713)31,015
458,790(5)
22,703622,946

128,6131,370,723

128,562(368,334)

(162)
47
(115)
(1,565)(162)
42
310,778
2,082,560(24,162)
94,514
1,096,727(24,162)(162)
42
405,292
3,179,287

See accompanying notes to consolidated financial statements.

F-5

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Statements of Equity
Years ended March 31, 2014, 2013 and 2012

Millions of yen
2012

Balance at beginning of year
Change in equity
Conversion of convertible bonds
Equity transactions and otherCommonstock(notes 10
and 12)
409,129

Capitalsurplus(notes 10, 12
and 13)603,133

Retainedearnings(note 14)922,036

Accumulated
othercomprehensive
loss (note 16)(493,062)

Treasurystock,
at cost(note 15)
(1,371)

Total
Hitachi, Ltd.
stockholders’equity1,439,865

Noncontrollinginterests(note 13)1,001,524

Total
equity2,441,389

18,646-

18,646(21,527)

-

210

-

37,292(21,317)(26,464)

37,292(47,781)--

347,179--

347,179

65,629412,808---(4,044)-(4,044)(16,183)(20,227)

Net income
Other comprehensive loss,
net of reclassification adjustments
Dividends to
Hitachi, Ltd. stockholders
Dividends tononcontrolling interests
Acquisition of treasury stock
Sales of treasury stock
Total change in equity--(27,105)--(27,105)-(27,105)

18,646(9)(2,890)320,074(3,834)

(126)
47
(79)

(126)
38
331,917(22,293)689(22,293)(126)
38332,606

Balance at end of year

427,775

600,243

1,242,110(496,896)(1,450)1,771,782

1,002,213

2,773,995

See accompanying notes to consolidated financial statements.

F-6

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended March 31, 2014, 2013 and 20122014
Cash flows from operating activities (note 25):
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation
Amortization
Impairment losses for long-lived assets
Deferred income taxes
Equity in net (earning) loss of affiliated companies
Gain on sale of investments in securities and other
Impairment of investments in securities
Gain associated with the thermal power generation systems business (note 31)(Gain) loss on disposal of rental assets and other property(Increase) decrease in receivables(Increase) decrease in inventories(Increase) decrease in prepaid expenses and other current assets
Increase (decrease) in payables
Increase (decrease) in accrued expenses and retirement and severance
benefits
Increase (decrease) in accrued income taxes
Increase (decrease) in other 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 (note 25):
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-7

Millions of yen
2013
2012

364,030

237,721412,808

329,833
125,552
33,79659,868(8,686)(45,412)74(131,738)
223(308,492)(70,700)(90,692)
54,327300,664
117,355
23,2092,394
40,447(24,047)
4,762
3,119
71,777
7,860(3,442)(187,651)

360,358
119,308
31,841
21,50915,571(228,115)
15,096(18,627)(259,211)(162,594)
987
119,177

51,94633,46046,125

8,177(25,697)(22,215)(18,430)
7,103(13,812)

1,021(5,129)439,406

12,051
17,024
583,508

27,012
17,174447,155(385,000)(118,870)(436,499)
33,10931,306
314,921(381,731)(105,842)(335,640)
28,556
20,944285,407(337,502)(106,042)(269,350)
47,697
17,447
244,446(87,542)(171,721)(151,413)

122,801
34,411(491,363)

80,60225,968(553,457)

331,00728,126(195,584)

HITACHI, LTD.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
Years ended March 31, 2014, 2013 and 20122014
Cash flows from financing activities (note 25):
Increase (decrease) 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 noncontrollinginterest holders
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

See accompanying notes to consolidated financial statements.

F-8

Millions of yen
2013
2012

(203,885)
704,457(365,566)
5,886(48,194)(25,535)(4,431)
16

74,630352,840(509,356)
2,523(46,564)(25,827)(162)
25

70,105
388,991(544,841)
736(27,018)(22,206)(126)
38(28,901)(28,191)(39,230)(879)
32,968102(465)(180,445)

6,188
(475)
(167,838)

49,57430,585
527,632
558,21758,449(91,945)619,577
527,632(18,966)
64,767554,810619,577

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(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, digital media and consumer products 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 thecountries of their domicile.
The consolidated financial statements presented herein have been prepared to reflect the adjustments 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 and assumptions relating to the reporting ofassets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial
statements. Actual results could differ from those estimates.
(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 Accounting Standards
Codification (ASC) 810, “Consolidation.” This guidance addresses how a business enterprise should
evaluate whether it has a controlling financial interest in an entity through means other than voting rights
and accordingly should consolidate the entity. The consolidated financial statements include accounts ofcertain subsidiaries whose closing dates differ from March 31 by 93 days or less to either comply withlocal 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 their closing dates to March 31. Intercompany accounts and significant
intercompany transactions have been eliminated in consolidation.
Investments in corporate joint ventures and affiliated companies, where the Company has the ability 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 havesignificant influence are accounted for under the cost method.
(c) Cash Equivalents
The Company considers all highly liquid investments with insignificant risk of changes in value whichhave original maturities of three months or less when purchased to be cash equivalents.

F-9(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(d) Allowance for Doubtful Receivables
Allowance for doubtful receivables, including both trade receivables as well as investments in leases, isthe Company’s and subsidiaries’ best estimate of the amount of our incurred losses (that is those amounts
with regards to which collection is not probable based on current information). Assessing the ultimate
realization of these receivables, based on historical experience and analyses, including the current
creditworthiness of each customer, requires a considerable amount of judgment. Each company in ourconsolidated group considers factors which are relevant to its business and circumstances, including
business practices that are unique to the respective country or region in which it operates within thecontext of our group policy. Such factors which have been present on a historical basis and havecontributed to losses at our subsidiaries in the past include: historical credit loss experience; existence of
overdue payments; extended payment terms; negative evaluation by third-party credit rating agencies;
excessive debt; and evaluation of deteriorating financial position and operating results. Account balances
are generally written off against the allowance only after all means of collection have been exhausted andthe potential for recovery is considered remote. Write-offs generally occur only when a debtor entersbankruptcy or liquidation because at that time collection efforts will have been exhausted. This policy
results in potentially long collection cycles.
(e) Foreign Currency Translation
Foreign currency financial statements have been translated in accordance with ASC 830, “Foreign
Currency Matters.” Under this guidance, the assets and liabilities of the Company’s subsidiaries locatedoutside Japan are translated into Japanese yen at the rates of exchange in effect at the balance sheet date.
Income and expense items are translated at the average exchange rates prevailing during the year. Gains
and losses resulting from foreign currency transactions are included in other income (deductions), andthose resulting from translation of financial statements are excluded from the consolidated statements ofoperations and included in accumulated other comprehensive loss.
(f) Investments in Securities and Affiliated Companies
Equity securities that do not have readily determinable fair values, except for equity-method investments,
are accounted for under the cost method. The Company classifies investments in equity securities thathave readily determinable fair values and all investments in debt securities in three categories:
held-to-maturity securities, trading securities and available-for-sale securities.
Held-to-maturity securities are debt securities that the Company has the positive intent and ability to holdto maturity. Trading securities are debt and equity securities that are bought and held principally for the
purpose of selling them in the near term. Available-for-sale securities are debt and equity securities notclassified as either held-to-maturity securities or trading securities.
Held-to-maturity securities are reported at amortized cost. Trading securities are reported at fair value,with unrealized gains and losses included in earnings. Available-for-sale securities are reported at fairvalue, with unrealized gains and losses excluded from earnings and reported in accumulated othercomprehensive loss.
On a periodic basis, but no less frequently than at the end of each quarter period, the Company evaluatesavailable-for-sale securities, held-to-maturity securities and cost-method investments for possible
impairment. If the fair value of any available-for-sale security, held-to-maturity security or cost-method
F-10(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

investment is less than the cost basis or the amortized cost basis, the Company assesses whether the
impairment is temporary or other-than-temporary. Fair value is determined based on quoted market prices,
projected discounted cash flows or other valuation techniques as appropriate. For certain cost-method
investments for which it is not practicable to estimate the fair value, if an event or change in circumstances
has occurred that may have a significant adverse effect on the fair value of the investment, the Company
estimates the fair value of such investments.
Factors considered in determining whether an impairment of an equity security classified asavailable-for-sale or a cost-method investment is temporary or other-than-temporary include: the length oftime and extent to which the fair value of the investment has been less than cost, the financial conditionand near-term prospects of the issuer, and the intent and ability to retain the investment in the issuer for aperiod of time sufficient to allow for any anticipated recovery in fair value. A decline in fair value of anequity security classified as an available-for-sale security or cost-method investment below its cost basisthat is deemed to be other-than-temporary results in a write-down of the cost basis to fair value as a new
cost basis and the amount of the write-down is included in earnings. The new cost basis of the investment
is not adjusted for subsequent recoveries in fair value.
Factors considered in assessing whether an impairment of a debt security classified as either
available-for-sale or held-to-maturity is temporary or other-than-temporary include: whether there is intent
to sell the impaired debt security, it is more likely than not that the impaired debt security will be required
to be sold before recovery, or the holder is not expected to recover the entire amortized cost basis of the
security for any other reason. If the best estimate of the present value of cash flows expected to becollected is less than the amortized cost basis of the security, such a difference represents the credit loss
component of the impairment. If an other-than-temporary impairment has occurred, the amount of theother-than-temporary impairment recognized in earnings depends on whether the Company intends to sell
the security or it is more likely than not that the Company will be required to sell the security before
recovery of its amortized cost basis less any current-period credit loss. If the Company does not intend tosell the security and it is not more likely than not that the Company will be required to sell the security
before recovery of its amortized cost basis less any current-period loss, the component of theother-than-temporary impairment related to the credit loss is recognized in earnings and the component of
the other-than-temporary impairment related to other factors is recognized in accumulated othercomprehensive loss. The previous amortized cost basis less the other-than-temporary impairment
recognized in earnings becomes the new amortized cost basis of the investment. That new amortized costbasis is not adjusted for subsequent recoveries in fair value. However, the new amortized cost basis isadjusted for accretion and amortization as if the debt security had been purchased on the date of theother-than temporary impairment at an amortized cost basis equal to the previous amortized cost basis lessthe other-than-temporary impairment recognized in earnings.
On a periodic basis, but no less frequently than at the end of each quarter period, the Company evaluates
the carrying amount of its ownership interests in equity-method investees for possible impairment. Factors
considered in assessing whether an indication of other-than-temporary impairment exists include theachievement of business plan objectives and milestones including cash flow projections and the results ofplanned financing activities, the financial condition and prospects of each investee company, the fair valueof the ownership interest relative to the carrying amount of the investment, the period of time during
which the fair value of the ownership interest has been below the carrying amount of the investment andother relevant factors. Impairment to be recognized is measured based on the amount by which the
F-11(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

carrying amount of the investment exceeds the fair value of the investment. Fair value is determined basedon quoted market prices, projected discounted cash flows or other valuation techniques as appropriate.
The cost of a security sold or the amount reclassified out of accumulated other comprehensive loss into
earnings is determined by the average cost method.
(g) Securitizations
The Company and certain subsidiaries have a number of securitization programs. Under those programs,
certain financial assets such as lease receivables, trade receivables and others are sold to Special Purpose
Entities (SPEs) which are mainly funded through the issuance of asset-backed securities to investors.
When a transfer of financial assets is eligible to be accounted for as a sale under ASC 860, “Transfers andServicing,” the transferred financial assets are derecognized. The Company and its subsidiaries recognize
a gain or loss for the difference between the fair value of assets obtained and liabilities incurred in the saleand the carrying amount of the transferred financial assets when the transaction is consummated. Initially
recorded at fair value in the period of securitizations, the amount of retained interests that cancontractually be prepaid or otherwise settled in such a way that the holder would not recover all of its
recorded interests is subsequently remeasured at fair value as of the balance sheet date in the same manner
as available-for-sale securities.
Fair values are based on the present value of estimated future cash flows which take into consideration
various factors such as expected credit loss and others.
(h) Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the specific identification
method for job order or project inventories and generally by the average cost method for raw materials andother inventories.
(i) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Property, plant and equipment are principally depreciatedusing the straight-line method, mainly over the following estimated useful lives:
Buildings
Buildings and building equipment
Structures
Machinery and equipment
Machinery
VehiclesTools, furniture and fixtures

2 to 50 years
2 to 60 years
2 to 20 years
2 to 10 years
2 to 20 years

Effective April 1, 2012, the Company and its domestic subsidiaries changed their depreciation method fromthe declining-balance method to the straight-line method.
Based on the 2012 Mid-term Management Plan which covered a three year period ended March 31, 2013,
the Company and its domestic subsidiaries made revisions to their business portfolio to move away fromhigh volatility businesses, strengthen and focus on the Social Innovation businesses which aim to produce
stable operating results over a long period of time. In developing their global business strategies, theCompany and its domestic subsidiaries are accelerating construction of their global production systems to
F-12(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

capture the expanding demand for the Social Innovation businesses. Accordingly, domestic property, plantand equipment will be operated consistently and utilization of the domestic property, plant and equipment
will be also more consistent than before.
The Company and its domestic subsidiaries believe that the new method is preferable as it better reflects thepattern of consumption of the benefits derived from those assets and makes a better cost allocation to match
revenues generated by those assets during their estimated useful lives. In accordance with the “Change in
Accounting Estimate” provisions of ASC 250, “Accounting Changes and Error Corrections,” the change indepreciation method is accounted for on a prospective basis from the beginning of the period of change andresults for prior periods have not been restated.
The effect of the change was to increase income before income taxes by ¥13,114 million and net income
attributable to Hitachi, Ltd. stockholders by ¥10,431 million, or ¥2.22 per share (basic) and ¥2.16 per share(diluted) for the year ended March 31, 2013.
The effect on segment information is stated in note 32.
(j) Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually. The
Company performs its annual impairment test mainly during the fourth quarter after the annual forecastingprocess is completed. Furthermore, goodwill is reviewed for impairment whenever events or changes incircumstances indicate that the carrying value may not be recoverable. The impairment test consists of two
steps. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The
Company has certain operating segments and, in identifying the reporting unit for the purpose of testing
goodwill for impairment, considers disaggregating those operating segments into economically dissimilar
components based on specific facts and circumstances, especially the level at which performance of theoperating segments are reviewed, how many businesses are included in the operating segments, and theeconomic similarity of those businesses. In assigning goodwill to reporting units, the Company considers
which reporting units are expected to benefit from the synergies of the combination in a manner similar to
how the amount of goodwill is recognized in a business combination. The Company determines the fairvalue of its reporting units mainly using an income approach (i.e., present value technique). When
determining such fair value, the Company may, however, also use the fair value of that unit based on acomparison of comparable publicly traded companies or based on that unit’s stand-alone market
capitalization. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value ofthe reporting unit, then the Company performs the second step of the impairment test in order to determine
the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill
exceeds its implied fair value, the Company records an impairment loss equal to the difference.
Intangible assets with finite useful lives are amortized over their respective estimated useful lives on either
a straight-line basis or the method that reflects the pattern in which the economic benefits of the intangible
assets are consumed or otherwise used up. The principal estimated useful lives are as follows:
Software
Software for internal use
PatentsOther

2 to 10 years
2 to 10 years
2 to 10 years
2 to 30 years

F-13(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(k) Capitalized Software Costs
Costs incurred for computer software developed or obtained for internal use are capitalized and amortizedon a straight-line basis over their estimated useful lives in accordance with ASC 350, “Intangibles –Goodwill and Other.” In addition, the Company and its subsidiaries develop certain computer software to
be sold where related costs are capitalized after establishment of technological feasibility in accordancewith ASC 985, “Software.” The annual amortization of such capitalized costs is the greater of the amountcomputed using the ratio of each software’s current year gross revenues to the total of current andanticipated future gross revenues or the straight-line method over the remaining estimated economic life ofeach software product.
(l) Impairment of Long-Lived Assets
The Company reviews the carrying value of long-lived assets or a related group of assets to be held andused, including intangible assets with finite useful lives, for impairment whenever events or circumstances
occur that indicate that the carrying value of the assets may not be recoverable. The assets are considered
to be impaired when estimated undiscounted cash flows expected to result from the use of the assets andtheir eventual disposition are less than their carrying values. The impairment losses are measured as theamount by which the carrying value of the asset or asset group exceeds the fair value. In determining thefair value, the Company uses available quoted market prices and present value techniques, if appropriate,based on the estimated future cash flows expected to result from the use of the assets and their eventual
disposition.
(m) Retirement and Severance Benefits
The Company accounts for retirement and severance benefits in accordance with ASC 715,
“Compensation – Retirement Benefits.” Actuarial gains and losses and prior service benefit and cost
included in accumulated other comprehensive loss are amortized using the straight-line method over the
average remaining service period of active employees.
(n) Environmental Liabilities
The cost for environmental remediation liabilities is accrued when it is probable that the Company will
incur environmental assessments or cleanup costs and the amounts can be reasonably estimated. The costfor liabilities is estimated based on the circumstances, the available information and current law, and theliabilities are not discounted to their present values.
(o) Derivative Financial Instruments
The Company accounts for derivative financial instruments in accordance with ASC 815, “Derivatives
and Hedging.” This guidance requires that all derivative financial instruments, such as forward exchange
and interest rate swap contracts, be recognized in the financial statements as either assets or liabilities andmeasured at fair value regardless of the purpose or intent for holding them.
The Company designates and accounts for hedging derivatives as follows:• “Fair value” hedge: a hedge of the fair value of a recognized asset or liability or of an unrecognizedfirm commitment. The changes in fair value of the recognized assets or liabilities or unrecognized firm
commitments and the related derivatives are both recorded in earnings if the hedge is considered highly
effective.
F-14(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements• “Cash flow” hedge: a hedge of a forecasted transaction or of the variability of cash flows to be received
or paid related to a recognized asset or liability. The changes in the fair value of the derivatives
designated as cash flow hedges are recorded as other comprehensive income (loss) if the hedge isconsidered highly effective. This treatment is continued until earnings are affected by the variability incash flows or the unrecognized firm commitment of the designated hedged item, at which point changes
in fair value of the derivative are recognized in income (loss).
• “Foreign currency” hedge: a hedge of foreign-currency fair value or cash flow. The changes in fairvalue of the recognized assets or liabilities or unrecognized firm commitments and the derivatives arerecorded as either earnings or other comprehensive income (loss) if the hedge is considered highly
effective. Recognition as earnings or other comprehensive income (loss) is dependent on the treatmentof foreign currency hedges as either fair value or cash flow hedges.
The Company follows the documentation requirements as prescribed by the guidance, which includes risk
management objective and strategy for undertaking various hedge transactions. In addition, a formal
assessment is made at the hedge’s inception and periodically on an ongoing basis, as to whether thederivative used in hedging activities is highly effective in offsetting changes in fair values or cash flows ofhedged items. Hedge accounting is discontinued for ineffective hedges, if any. Subsequent changes in thefair value of derivatives related to discontinued hedges are recognized in earnings immediately.
The Company classifies cash flows from derivatives as cash flows from operating activities in the
consolidated statements of cash flows.
(p) Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the sales price is fixed or determinable, and collectibility isreasonably assured.
The Company offers multiple solutions to meet its customers’ needs. Those solutions may involve thedelivery or performance of multiple elements, such as products, services, or rights to use assets, andperformance may occur at different points in time or over different periods of time. When one element isdelivered prior to the other in an arrangement, revenue is deferred until the delivery of the last element,
unless transactions are such that the delivered item has value to the customer on a standalone basis, delivery
or performance of the undelivered item is considered probable and substantially in the control of theCompany if the arrangement includes a general right of return relative to the delivered item. If bothconditions described above are met, each element in an arrangement is considered a separate unit ofaccounting, and the arrangement consideration is allocated to the separate units of accounting based on therelative selling price method. Under the relative selling price method, vender specific objective evidence(VSOE) is used if it exists. However, when VSOE does not exist, third-party evidence (TPE) is used. Ifneither VSOE nor TPE exists for all elements in a multiple element arrangement, the arrangement
consideration is allocated to the separate units of accounting based on the best estimate of selling price. The
Company determines the best estimate of selling price for multiple elements by considering various factors
including, but not limited to, overall market conditions, including geographic or regional specific market
factors, competitor prices for similar items, profit objective and pricing practices.

F-15(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

In multiple element arrangements that include software that is more than incidental to the products orservices as a whole and does not function together to deliver the tangible product’s essential functionality,
the Company allocates revenue for each element based on its relative fair value, as evidenced by VSOE.
When VSOE of the delivered elements are unable to be established, the Company uses the residual method.
Product Sales:
Revenue from sales of products is recognized when title and risk of loss have been transferred to thecustomer depending upon the terms of the contract or arrangement with the customer. The Company’s
policy is not to accept product returns unless the products are defective. The conditions of delivery aregoverned by the terms of the contract or customer arrangement and those not meeting the predetermined
specification are not recorded as revenue. When the final payment is subject to customer acceptance, aportion of revenue for the amount of the final payment is deferred until an enforceable claim has become
effective. Product warranties are offered on the Company’s and certain subsidiaries’ products and awarranty accrual is established when sales are recognized based on estimated future costs of repair andreplacement principally using historical experience of warranty claims. Revenue from separately priced
extended warranty and product maintenance contracts is deferred and recognized in income on astraight-line basis over the contract period except in those circumstances in which sufficient historicalevidence indicates that the costs of performing services under the contract are incurred on other than astraight-line basis.
Price protection is provided to retailers of the Company’s consumer products business and others tocompensate the customer retailers for a decline in the product’s value due mainly to competition. Priceprotection granted to the customers is classified as a reduction of revenue in the consolidated statements ofoperations. In addition, it is the Company’s policy to accrue reasonably and reliably estimated priceadjustments at the later of the date at which the related sales are recognized, or the date at which priceprotection is offered. The estimate is made based primarily upon historical experience or agreement on theadjustment rate and the number of units that are subject to such adjustment (e.g., units in distribution
channels).
Product revenues which are recognized upon delivery, installation or acceptance by the customer include
information technology system products, construction equipment, disk drives, televisions, air conditioners,
high functional materials, cable products, automotive equipment, semiconductor manufacturing equipment,
test and measurement equipment, railway vehicles, medical electronic devices, industrial machinery andequipment, elevators and escalators.
Revenue from sales of tangible products under long-term construction type arrangements, in connection
with the construction of nuclear, thermal and hydroelectric power plants, are recognized under thepercentage-of-completion method. The operating cycles of these types of businesses are generally greaterthan one year. Under the percentage-of-completion method, revenue is recognized as a percentage of
estimated total revenue that incurred costs to date bear to estimated total costs after giving effect toestimates of costs to complete based upon the most recent information. Any anticipated losses on fixedprice contracts are charged to operations when such losses can be estimated. Provisions are made forcontingencies in the period in which they become known pursuant to specific contract terms and conditions
and are estimable. When reasonably dependable estimates of contract revenues and costs and the extent ofprogress toward completion do not exist, the completed-contract method of accounting is applied. A
contract is complete when either acceptance by the customer is given or compliance with performance
F-16(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

specifications is achieved, whichever is appropriate under the relevant contractual terms.
The Company recognizes software revenue in accordance with the provisions of ASC 985, “Software.”
Revenue from software consists primarily of software licensing, customized software development and postcontract customer support. Revenues from software license arrangements are recognized upon delivery of
the software if evidence of the arrangement exists, pricing is fixed or determinable and collectibility isreasonably assured. Revenue from a software arrangement that requires significant production, modificationor customization of software is recognized using the percentage-of-completion method provided thatreasonably dependable estimates related to contract revenue, cost and the extent of progress toward
completion exist. Otherwise, the completed-contract method is applied. Customization of software isconsidered substantially completed when an acceptance by the customer occurs. Revenue from postcontract customer support is amortized over the period of the post contract customer support. Consulting
and training services revenues are recognized when the services are rendered.
Service Revenues:
Service revenues from maintenance and distribution services are recognized upon completion of service
delivery. Revenue from time-based service contracts is recognized as services are rendered. Revenue fromlong-term fixed price service contracts such as support or maintenance contracts is recognized ratably overthe contractual period. If historical data shows that the accrual of service cost is not fixed and the service isrendered in proportion to the accrual of the cost for the service, revenue is recognized based on the patternof the cost accrual. Finance lease income is recognized at level rates of return over the term of the leases.
Operating lease income is recognized on a straight-line basis over the term of the lease.
(q) Shipping and Handling Costs
Shipping and handling costs are expensed as incurred and included in selling, general and administrative
expenses.
(r) Advertising
Advertising costs are expensed as incurred.
(s) Research and Development Costs
Research and development costs are expensed as incurred. Costs incurred in connection with thedevelopment of software products for sale or lease to others are accounted for in accordance with ASC
985, “Software.” Development costs incurred in the research and development of new software products
and enhancements to existing products are expensed as incurred until technological feasibility has been
established.
(t) Income Taxes
Deferred income taxes are accounted for under the asset and liability method in accordance with ASC 740,
“Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets andliabilities and their respective tax bases and operating losses and tax credit carryforwards. Under thismethod, deferred tax assets and liabilities are measured using enacted tax rates expected to apply totaxable income in the years in which those temporary differences are expected to be recovered or settled.
Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized inincome in the period that includes the enactment date. Valuation allowances are established to reduce
F-17(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

deferred tax assets to their net realizable value if it is more likely than not that some portion or all of thedeferred tax assets will not be realized.
Tax positions that are more likely than not to be sustained upon examination by tax authorities arerecognized in the financial statements in accordance with the provisions of ASC 740. Tax positions thatmeet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit thatis greater than 50 percent likely of being realized upon ultimate settlement with tax authorities. Interest
accrued related to unrecognized tax benefits and penalties are included in income taxes in the consolidated
statements of operations.
(u) Consumption Tax
Consumption tax collected and remitted to taxing authorities is excluded from revenues, cost of sales andexpenses in the consolidated statements of operations.
(v) Net Income Attributable to Hitachi, Ltd. Stockholders Per Share
Net income attributable to Hitachi, Ltd. stockholders per share is computed in accordance with ASC 260,
“Earnings Per Share.” This guidance requires a dual presentation of basic and diluted net income
attributable to Hitachi, Ltd. stockholders per share amounts on the face of the statements of operations.
Under this guidance, basic net income attributable to Hitachi, Ltd. stockholders per share is computed based
upon the weighted average number of shares of common stock outstanding during each year. Diluted net
income attributable to Hitachi, Ltd. stockholders per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the Company.
(w) Guarantees
The Company recognizes, at the inception of the guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee in accordance with ASC 460, “Guarantees.”(x) Subsequent Events
The Company has evaluated up to June 20, 2014, the date on which its consolidated financial statements
were available to be issued in accordance with the provisions of ASC 855, "Subsequent Events."

F-18(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(3)

Investments in Securities and Affiliated Companies
Short-term investments as of March 31, 2014 and 2013 are as follows:
Millions of yen
March 31,
March 31,2014
2013
Investments in securities:
Available-for-sale securities
Government debt securities
Corporate debt securities
Other securities
Held-to-maturity securities

5,701
3,300
171
9,172

6,502
3,725
197
20
10,444

Investments and advances, including affiliated companies as of March 31, 2014 and 2013 are as follows:
Millions of yen
March 31,
March 31,2014
2013
Investments in securities:
Available-for-sale securities
Equity securities
Government debt securities
Corporate debt securities
Other securities
Held-to-maturity securities
Cost-method investments
Investments in affiliated companies
Advances and other405,214
1,555
5,839
11,247359
44,461
608,687
143,438
1,220,800

F-19

280,491956
15,0669,618
356
53,990259,967
161,540
781,984(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 March 31, 2014 and 2013.

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

Investments and advances:
Equity securities
Government debt securities
Corporate debt securities
Other securities

Grosslosses

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

Amortized
cost basis
Short-term investments:
Government debt securities
Corporate debt securities
Other securities

Gross
gains

Millions of yen
March 31, 2014
Aggregate
fair value

Gross
gains

Millions of yen
March 31, 2013
Aggregate
fair valueGrosslosses

6,501
3,387
196
10,084

1
344
1
346

6
6

6,502
3,725
197
10,424

155,625931
12,997
9,285
178,838
188,922

125,775
25
2,093
333
128,226
128,572

909
24
933
939

280,491956
15,066
9,618
306,131316,555

F-20(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 March 31, 2014 and 2013.
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

Millions of yen
March 31, 2013
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
Corporate debt securities

-

-

994

6

4,904
39
4,943
4,943

601
11
612
612

1,219
987
2,206
3,200

308
13
321
327

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-21(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 years ended March 31, 2014,2013 and 2012.
2014
5,078
96,32249,28226

Purchases
Proceeds from the sale
Gross realized gains on the sale
Gross realized losses on the sale

Millions of yen
2013
2012
7,915
24,641
14,763
5,288
7,985
2,224
48
280

The contractual maturities of debt securities and other securities classified as investments and advancesin the consolidated balance sheet as of March 31, 2014 are as follows:
Millions of yen
Held-tomaturity
Due within five years
Due after five years through ten years
Due after ten years

359
359

Availablefor-sale
5,530
1,990
11,121
18,641

Total
5,889
1,990
11,121
19,000

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 March 31, 2014 and 2013 were ¥44,412 million and ¥53,953 million, respectively, mainly because
it was not practicable to estimate the fair value of the investments due to lack of a market price anddifficulty 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 effect on their fair value.

F-22(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The aggregate fair values of investments in affiliated companies, for which quoted market prices wereavailable, as of March 31, 2014 and 2013, were ¥30,615 million and ¥33,562 million, respectively. The
aggregate carrying amounts of such investments as of March 31, 2014 and 2013 were ¥32,410 millionand ¥28,088 million, respectively.
As of March 31, 2014 and 2013, cumulative recognition of other-than-temporary declines in values ofinvestments in certain affiliated companies resulted in the difference of ¥99 million and ¥1,694 million,
respectively, between the carrying amount of the investment and the amount of underlying equity in net
assets. In addition, as of March 31, 2014 and 2013, the carrying value of the investments in affiliatedcompanies exceeded the Company's equity in the underlying net assets of such affiliated companies by¥218,619 million and ¥101,831 million, respectively. The excess is attributed first to certain fair value
adjustments on a net-of-tax basis at the time of the initial and subsequent investments in thosecompanies with the remaining portion considered as equity-method goodwill.
For the year ended March 31, 2014, there were no affiliated companies accounted for by the equity
method which were material to be disclosed separately. Summarized combined financial information
relating to affiliated companies accounted for by the equity method as of and for the year ended March
31, 2014 is as follows:
Millions of yen
March 31, 2014
2,121,163
1,195,837
3,317,000
1,520,759
596,352
2,117,111

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

Millions of yen
2014
1,993,840
396,006

Revenues
Gross profit
Net income attributable to affiliatedcompanies

44,230

F-23(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Summarized financial information relating to Renesas Electronics Corporation (Renesas) and otheraffiliated companies accounted for by the equity method as of March 31, 2013 and for the years ended
March 31, 2013 and 2012 is as follows:

RenesasCurrent assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

323,805
335,114
658,919
235,237
388,425
623,662

Renesas
Revenues
Gross profit
Net income (loss) attributable toaffiliated companies

F-24

1,176,256
650,360
1,826,616
969,485
390,518
1,360,003

Others1,500,061
985,474
2,485,535
1,204,722
778,943
1,983,665

Millions of yen
2013
Total

785,764
252,053

1,475,475
233,162

2,261,239
485,215(156,004)

19,198(136,806 )Renesas
Revenues
Gross profit
Net loss attributable to affiliatedcompanies

OthersMillions of yen
March 31, 2013
Total

OthersMillions of yen
2012
Total

883,112283,362

1,178,032
179,774

2,061,144
463,136(64,413)(8,791 )(73,204 )(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The balances and transactions with affiliated companies accounted for by the equity method are as
follows:

Trade receivables
Accounts receivable-other (a)Short-term loans receivable
Long-term loans receivable
Trade payables
Accounts payable-other (b)March 31,
2014

Millions of yen
March 31,2013

111,370
25,79821,23513,00235,76916,002

100,495
8,428
5,100
26,764
21,252151(a) Accounts receivable-other is included in Prepaid expenses and other current assets.
(b) Accounts payable-other is included in Other current liabilities.

Revenues
Purchases

F-25

2014

2013

Millions of yen
2012

260,045
102,383

296,967
99,308338,814
128,675(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(4)

Allowances for doubtful receivables
Allowances for doubtful receivables as of March 31, 2014 and 2013 are as follows:

Allowances for doubtful receivables(5)

Millions of yen
March 31,2013
31,134Inventories
Inventories as of March 31, 2014 and 2013 are summarized as follows:

Finished goods
Work in process
Raw materials(6)

March 31,2014
31,270March 31,2014
564,700
596,523
245,832
1,407,055

Millions of yen
March 31,2013
584,435
601,305
251,659
1,437,399

LeasesThe Company and certain subsidiaries are lessors of certain assets such as manufacturing machinery andequipment under financing and operating lease arrangements with terms ranging mainly from 3 to 6 years,
some of which are transacted with affiliated companies.
The amount of leased assets at cost under operating leases and accumulated depreciation as of March 31,
2014 amounted to ¥1,867,293 million and ¥1,538,190 million, respectively. The leased assets are
depreciated using the straight-line method over their estimated useful lives.

F-26(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following table shows the future minimum lease receivables of financing and non-cancelable operatingleases as of March 31, 2014 and the future minimum lease receivables of financing leases as of March 31,
2013:
Millions of yen
March 31, 2014
Financing OperatingleasesLeasesYears ending March 31
2015335,178
48,607
2016
221,002
29,731
2017
155,126
18,242
2018
98,7248,311
2019
51,496
3,166
Thereafter
118,731
1,708
Total minimum payments to be received
980,257
109,765
Unguaranteed residual values
37,848Amount representing executory costs(77,288)
Unearned income(64,138)
Allowance for doubtful receivables(13,475)
863,204
Net investment in financing leases
Less current portion of net investment in financing leases, included ininvestments in leases and current portion of financial assets transferred
to consolidated securitization entities
300,032
Long-term net investment in financing leases, included in other assets andfinancial assets transferred to consolidated securitization entities
563,172

F-27(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Millions of yen
March 31, 2013
FinancingleasesTotal minimum payments to be received
Unguaranteed residual values
Amount representing executory costs
Unearned income
Allowance for doubtful receivables
Net investment in financing leases
Less current portion of net investment in financing leases, included ininvestments in leases and current portion of financial assets transferred
to consolidated securitization entities
Long-term net investment in financing leases, included in other assets andfinancial assets transferred to consolidated securitization entities

787,571
33,148(74,989)(47,276)(9,946)
688,508
276,375
412,133

The Company and certain subsidiaries lease certain buildings, manufacturing machinery and equipmentused in their operations. The amount of leased assets at cost under capital leases as of March 31, 2014
and 2013 amounted to ¥35,727 million and ¥26,669 million, respectively, and accumulated depreciation
as of March 31, 2014 and 2013 amounted to ¥13,284 million and ¥12,226 million, respectively.
Amortization of assets under capital leases is included in depreciation expense.
The following table shows the future minimum lease payments of capital and non-cancelable operatingleases as of March 31, 2014:
Millions of yen
CapitalOperatingleasesleasesYears ending March 31
2015
11,95637,8192016
10,05327,5672017
8,632
22,5882018
7,125
17,6882019
5,610
12,904
Thereafter
9,007
50,050Total minimum lease payments
52,383
168,616
Amount representing executory costs(579)
Amount representing interest(6,871)
Present value of net minimum lease payments
44,933
Less current portion of capital lease obligations
9,911
Long-term capital lease obligations
35,022

F-28(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(7) 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 third-party Special Purpose Entities (SPEs) to execute securitization transactions fundedwith commercial paper and other borrowings. These securitization transactions are similar to those usedby 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 their involvementwith SPEs related to the securitization activities are financing of an entity, providing limited credit
enhancements, servicing the assets and receiving fees for services provided.
A portion of these lease, trade and mortgage loans receivable is transferred to SPEs sponsored byfinancial institutions, which operate those SPEs as a part of their businesses. Accordingly, the amount ofassets transferred by the Company and its subsidiaries is considerably small compared to the total assetsof 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, investors have recourse with a scopethat is considerably limited.
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 recordedon the consolidated balance sheets for the Company and certain subsidiaries; however, the blended
performance of the pools of transferred assets reflects the eligibility screening requirements that theCompany and certain subsidiaries apply to determine which receivables are selected for transfer.
Therefore, the blended performance may differ from receivables recorded on the consolidated balance
sheets.

F-29(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Consolidated SPEs
The Company consolidated SPEs mainly because the Company has both the power to direct the activitiesof the SPEs that most significantly impact the SPEs’ economic performance and the obligation to absorb
losses or the right to receive benefits that could potentially be significant to the SPEs. The consolidated
SPEs are mainly trusts for the securitizations of lease receivables and mortgage loans receivable.
The tables below summarize the assets and liabilities of the consolidated SPEs as of March 31, 2014 and2013 by type of transferred financial assets that those SPEs hold:Millions 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

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

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

F-30(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Millions of yen
March 31, 2013

Cash and cash equivalents
Current portion of financial assets transferred toconsolidated securitization entities
Financial assets transferred to consolidated
securitization entities

Lease
receivables
3,617

Mortgageloans
receivable
2,458

Others
961

Total
7,036

5,476

10,944

6,945

23,365

3,411

127,380588

131,379

2,360
4,371
6,731

13,196
13,196

6,472
6,472

2,360
24,03926,399205

102,580

113

102,898

Current portion of non-recourse borrowings ofconsolidated securitization entities：
Loans, mainly from banks
Beneficial interests in trusts

Non-recourse borrowings ofconsolidated securitization entities:
Beneficial interests in trusts

The aggregate annual maturities of non-recourse borrowings of consolidated securitization entities after
March 31, 2015 are as follows:
Years ending March 31

Millions of yen

2016
2017
2018
2019
Thereafter

37,142
31,33222,085
9,466
48,906
148,931

The assets and liabilities of the consolidated SPEs on the table above exclude intercompany balances thatare eliminated in consolidation. Substantially, all of the assets of the consolidated SPEs can only be used
to settle obligations of those SPEs.

F-31(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 SPEsand other entities. During the years ended March 31, 2014, 2013 and 2012, proceeds from the transfer oflease receivables were ¥109,037 million, ¥118,519 million and ¥116,507 million, respectively, and net
gains recognized on those transfers were ¥3,671 million, ¥5,620 million and ¥6,853 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 years ended March 31, 2014,2013 and 2012 were ¥13,357 million, ¥18,024 million and ¥18,061 million, respectively. The
subordinated interests relating to securitizations of lease receivables are initially classified as Level 3
assets within the fair value hierarchy. The initial fair value of the subordinated interests is determinedbased on economic assumptions including weighted-average life, expected credit risks, and discountrates.
Key economic assumptions used in measuring the initial fair value of the subordinated interests resulting
from securitizations of lease receivables completed during the years ended March 31, 2014, 2013 and2012 are as follows:
2014
4.3
0.02-0.03%
0.18-0.39%

Weighted average life (in years)
Expected credit loss
Discount rate

F-32

2013
4.1
0.02-0.03%
0.31-0.49%

2012
4.1
0.02-0.03%
0.50-0.70%(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 years ended March 31, 2014 and2013 is as follows:
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
1,147,759
170
367
Assets transferred(284,555)
Assets held in portfolio
863,204
Millions of yen
March 31, 2013
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

953,372(264,864)
688,508

195

433

As of March 31, 2014 and 2013, the amounts of the maximum exposures to losses were ¥108,487 millionand ¥88,490 million, respectively. They mainly consist of the subordinated interests and the obligations
to purchase assets with a scope that is considerably limited relating to these securitizations of leasereceivables. As of March 31, 2014 and 2013, the amounts of the subordinated interests measured at fairvalue relating to these securitizations of lease receivables were ¥64,671 million and ¥53,081 million,
respectively.
Key economic assumptions used in measuring the fair value of the subordinated interests relating tosecuritizations of lease receivables as of March 31, 2014 and 2013 are as follows:
March 31, 2014
3.9
0.03%
0.18-0.30%

Weighted average life (in years)
Expected credit loss
Discount rate

F-33

March 31, 2013
2.7
0.03%
0.26-0.35%(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The sensitivities of the current fair value of the Company’s interests to an immediate 10 and 20 percent
adverse change in the assumptions as of March 31, 2014 and 2013 are as follows:
Millions of yen
March 31, 2014
March 31, 2013
Expected credit loss:
Impact on fair value of 10% adverse change
(94)
(81)
Impact on fair value of 20% adverse change
(187)
(163)
Discount rate:
Impact on fair value of 10% adverse change
(28)
(40)
Impact on fair value of 20% adverse change
(56)
(81)
Securitizations of trade receivables:
The Company and certain subsidiaries sold trade receivables mainly to unconsolidated SPEs and otherentities. During the years ended March 31, 2014, 2013 and 2012, proceeds from the transfer of tradereceivables were ¥669,535 million, ¥623,655 million and ¥593,001 million, respectively, and net losses
recognized on those transfers were ¥2,509 million, ¥1,968 million and ¥158 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 approximated the servicing income.
The amounts of the initial fair value of the subordinated interests for the years ended March 31, 2014,2013 and 2012 were ¥11,656 million, ¥21,186 million and ¥29,095 million, respectively. The
subordinated interests relating to securitizations of trade receivables are initially classified as Level 3
assets within the fair value hierarchy. The initial fair value of the subordinated interests is determinedbased on economic assumptions including weighted-average life, expected credit risks, discount rates,and prepayment rates.
Key economic assumptions used in measuring the initial fair value of the subordinated interests resulting
from securitizations of trade receivables completed during the years ended March 31, 2014 and 2013 are
as follows:
2014
4.5
0.15-0.36%
0.77-1.08%
5.04-19.44%

Weighted average life (in years)
Expected credit loss
Discount rate
Prepayment rate

F-34

2013
5.3
0.15 -0.38%
0.62 -1.48%
4.75 -18.54%

2012
5.6
0.15 -0.48%
1.40 -1.57%
4.98 -12.24%(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Quantitative information about delinquencies, net credit loss, and components of trade receivables
subject to transfer and other assets managed together as of and for the years ended March 31, 2014 and2013 is as follows:
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
1,016,943
3,092
1,279
Assets transferred(273,946)
Assets held in portfolio
742,997
Millions of yen
March 31, 2013
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

1,042,802(290,172)
752,630

1,957

2,095

As of March 31, 2014 and 2013, the amounts of the maximum exposures to losses were ¥43,549 millionand ¥62,586 million, respectively. They mainly consist of the subordinated interests and obligations topurchase assets with a scope that is considerably limited relating to these securitizations of tradereceivables. As of March 31, 2014 and 2013, the amounts of the subordinated interests relating to thesesecuritizations of trade receivables were ¥26,024 million and ¥33,325 million, respectively.
Key economic assumptions used in measuring the fair value of the subordinated interests relating tosecuritizations of trade receivables as of March 31, 2014 and 2013 are as follows:
March 31, 2014
5.2
0.15-0.36%
1.04%
6.24-18.87%

Weighted average life (in years)
Expected credit loss
Discount rate
Prepayment rate
F-35

March 31, 2013
5.8
0.15-0.36%
0.67%
6.12-17.62%(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The sensitivity of the current fair value of the Company’s interests to an immediate 10 and 20 percent
adverse change in the assumptions as of March 31, 2014 and 2013 is as follows:
Millions of yen
March 31, 2014
March 31, 2013
Expected credit loss:
Impact on fair value of 10% adverse change
(226)
(276)
Impact on fair value of 20% adverse change
(452)
(552)
Discount rate:
Impact on fair value of 10% adverse change
(26)
(22)
Impact on fair value of 20% adverse change
(53)
(44)
Prepayment rate:
Impact on fair value of 10% adverse change
(606)
(790)
Impact on fair value of 20% adverse change(1,213)(1,580)The sensitivities presented in this note are hypothetical and should be used with caution. As the figuresindicate, changes in fair value based on a 10 percent variation in assumptions generally cannot be
extrapolated because the relationship of the change in assumption to the change in fair value may not belinear. Also, in the above tables, the effect of a variation in a particular assumption of the fair value of theinterest is calculated without changing any other assumption; in reality, changes in one factor may resultin changes in another, which might magnify or counteract the sensitivities.

F-36(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(8)

Goodwill and Other Intangible Assets
Intangible assets other than goodwill acquired during the years ended March 31, 2014, 2013 and 2012amounted to ¥180,664 million, ¥147,190 million and ¥152,076 million, respectively, and related
amortization expense during the years ended March 31, 2014, 2013 and 2012 amounted to ¥125,552
million, ¥117,355 million and ¥119,308 million, respectively.
The main component of intangible assets subject to amortization was capitalized software. Amortizationof capitalized costs for software to be sold, leased or otherwise marketed is charged to cost of sales. The
amounts charged during the years ended March 31, 2014, 2013 and 2012 were ¥51,495 million, ¥43,388
million and ¥43,935 million, respectively.
Intangible assets other than goodwill as of March 31, 2014 and 2013 are as follows:

Millions of yen
March 31, 2013

March 31, 2014

Amortized intangible assets:
Software
Software for internal use
Patents
Other

Gross
carrying
amountAccumulated
amortization

Net carrying
amountGrosscarrying
amountAccumulated
amortization

Net carrying
amount752,413577,168
50,586
301,917
1,682,084

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

93,114137,480
2,730
177,883
411,207784,570
568,637
80,401
232,941
1,666,549

646,331434,299
75,190110,1171,265,937

138,239
134,338
5,211
122,824400,612

11,126-

11,126

14,397-

14,397

Indefinite-lived
intangible assets

The following table shows the estimated aggregate amortization expense of intangible assets for the next
five years.
Years ending March 31

Millions of yen

2015
2016
2017
2018
2019

98,71877,65756,49235,66322,164

F-37(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The changes in the carrying amount of goodwill by reportable segment for the years ended March 31,
2014 and 2013 are as follows:
Millions of yen
2014
Information &Telecommunication
Systems

Balance at beginning of year
Acquisition
Divestiture
Impairment loss
Translation adjustment
and other
Balance at end of year

Power
SystemsHigh
Functional
Other
Construction Materials & Reportable
Machinery Components Segments

104,050
37,051-45,759(9,026)-32,074-59,591
64-

48,913
7,592(6,129)Total
290,387
44,707(9,026)(6,129)10,512
151,613

7,776
44,509185
32,259(246)
59,409982
51,35819,209339,148

Millions of yen
2013

Balance at beginning of year
Acquisition
Translation adjustment
and other
Balance at end of year

Information &Telecommunication
SystemsHigh
Functional
Other
Construction Materials & Reportable
Machinery Components Segments

Power
Systems

79,923
13,4504,785
35,241

29,896-58,907697

41,196
6,913

Total
214,70756,301

10,677104,050

5,733
45,7592,178
32,074(13)
59,591804
48,913

19,379290,387

The Company considers goodwill that has been fully impaired to be written-off. The Company had
accumulated impairment loss of ¥2,506 million and ¥540 million related to the goodwill balances in the
Other Reportable Segments as of March 31, 2014 and 2013.
The main components of goodwill acquired during the year ended March 31, 2014 were related to theacquisition of Prizm Payment Services Private Limited and Hitachi Systems Power Servicies, Ltd. in the
Information & Telecommunication Systems segment.
The main component of goodwill acquired during the year ended March 31, 2013 was related to theacquisition of Horizon Nuclear Power Limited in the Power Systems segment.

F-38(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(9)

Income Taxes
Components of income before income taxes and income taxes attributable to continuing operations are as
follows:

Income before income taxes
Income taxes:
Current tax expense
Deferred tax expense

Income before income taxes
Income taxes:
Current tax expense
Deferred tax expense (benefit)

Income before income taxes
Income taxes:
Current tax expense
Deferred tax expense (benefit)

F-39

Domestic

Millions of yen
2014
Foreign
Total

403,834

164,348

568,182

85,90150,977
136,878

58,383
8,891
67,274

144,284
59,868204,152

Domestic

Millions of yen
2013
Foreign
Total

210,973

133,564

344,537

62,6296,673
69,302

41,793(4,279)37,514

104,4222,394
106,816

Domestic

Millions of yen
2012
Foreign
Total

448,626

109,104

557,730

77,743
22,263100,006

45,670(754)
44,916

123,41321,509144,922(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Significant components of income tax expense (benefit) attributable to continuing operations and othercomprehensive income (loss), net of reclassification adjustments, for the years ended March 31, 2014,2013 and 2012 are as follows:
Millions of yen
2014
2013
2012
Continuing operations:
Current tax expense
144,284 104,422
123,413
Deferred tax expense (exclusive of the effects ofother components listed below)
47,26031,69140,846
Adjustments of deferred tax assets and liabilities for
4,589
1,160
7,695
enacted changes in tax laws and rates in Japan(30,457)(27,032)
Change in valuation allowance
8,019
204,152 106,816
144,922
Other comprehensive income (loss),
net of reclassification adjustments:
Pension liability adjustments
27,705
4,910(10,079)
Net unrealized holding gain on available-for-salesecurities
17,277
20,2731,018(155)(1,372)
Cash flow hedges
1,977
46,95925,028(10,433)
251,111 131,844
134,489
The Company and its domestic subsidiaries are subject to a national corporate tax of 28.1% for the year
ended March 31, 2014 and 2013 and 30% for the years ended March 31, 2012, an inhabitant tax ofbetween 17.3% and 20.7% of the national corporate tax and a combined deductible business tax andspecial local corporation tax between 3.8% and 10.1%, which in the aggregate resulted in a combined
statutory income tax rate of approximately 37.9% for the years ended March 31, 2014 and 2013 and 40.6%
for the year ended March 31, 2012.
The Company and certain subsidiaries have adopted the consolidated taxation systems. Under the
consolidated taxation system in Japan, the Company and certain Japanese subsidiaries consolidated, forJapanese tax purpose, all wholly owned domestic subsidiaries.
On December 2, 2011, amendments to corporation tax law and the special taxation measures law for Great
East Japan Earthquake disaster reconstruction were enacted in Japan, resulting in the lower corporate tax
rates. Those changes became effective on April 1, 2012. As a result, the aggregated statutory income tax
rate for domestic companies were determined at approximately 37.9% for the period between April 1,2012 through March 31, 2015 and approximately 35.5% for the years beginning on or after April 1, 2015.
On March 31, 2014, amendments to corporation tax law were enacted in Japan, resulting in the lower
corporate tax rate. Those changes became effective on April 1, 2014. As a result, the aggregated statutory
income tax rate for domestic companies will be approximately 35.5% for the years beginning on or after
April 1, 2014. The effect of those changes on the Company’s deferred tax balances amounted to ¥4,589
million, ¥1,160 million and ¥7,695 million of additional expense recognized in the Consolidated
Statements of Operations for the years ended March 31, 2014, 2013 and 2012.
F-40(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Reconciliations between the combined statutory income tax rate and the effective income tax rate as apercentage of income before income taxes are as follows:

Combined statutory income tax rate
Equity in net (earning) loss of affiliated companies
Change in excess amounts over the tax basis ofinvestments in subsidiaries and affiliated companies
Tax expenses (benefits) on sale of investments
in subsidiaries and affiliated companies
Expenses not deductible for tax purposes
Enacted changes in tax laws and rates in Japan
Impairment of goodwill
Change in valuation allowance
Difference in statutory tax rates of foreign subsidiaries
Other, net
Effective income tax rate

F-41

2014

2013

2012

37.9%
(0.6)

37.9%
4.4

40.6%
1.1

8.8

(1.2)

2.1

(13.4)
4.4
0.8
0.4
1.4
(4.4)
0.6
35.9%

(1.6)
4.5
0.3
(8.8)
(4.9)
0.4%
31.0%

(14.8)
4.7
1.4
0.1
(4.8)
(5.2)
0.8%
26.0%

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The tax effects of temporary differences and carryforwards that give rise to significant portions of thedeferred tax assets and liabilities as of March 31, 2014 and 2013 are presented below:
Millions of yen
March 31,
March 31,2014
2013
Total gross deferred tax assets:
Retirement and severance benefits
Accrued expenses
Property, plant and equipment, due to differences in
depreciation
Investment in securities
Investment in affiliates
Net operating loss carryforwards
Other
Valuation allowance
Total gross deferred tax liabilities:
Deferred profit on sale of properties
Tax purpose reserves regulated by Japanese tax laws
Investment in affiliates
Intangible assets
Other
Net deferred tax asset

273,407
267,501

351,100
265,771

55,634
5,441
278,144
174,477
1,054,604(810,658)
243,946

55,002
8,235
9,906
242,808
156,293
1,089,115(851,575)
237,540(19,053)(8,953)(73,999)(31,686)(92,127)(225,818)
18,128(23,788)(6,930)(30,795)(81,472)(142,985)
94,555Components of deferred tax assets as of March 31, 2014 and 2013 are reflected in the accompanying
consolidated balance sheets under the following captions:
Millions of yen
March 31,
March 31,2014
2013
Prepaid expenses and other current assets
135,972
119,054
Other assets
98,002
103,879
Other current liabilities(13,423)(3,703)(124,675)
Other liabilities(202,423)
18,12894,555Net deferred tax asset
A valuation allowance was recorded against deferred tax assets for deductible temporary differences, net
operating loss carryforwards and tax credit carryforwards, taking into account the tax laws of various
jurisdictions in which the Company and its subsidiaries operate. The net changes in the total valuation
allowance for the years ended March 31, 2014 and 2013 were a decrease of ¥40,917 million and ¥29,453
million, respectively.

F-42(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

In assessing the realizability of deferred tax assets, management of the Company considers whether it ismore likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income in specific tax
jurisdictions during the periods in which these deductible differences become deductible. Althoughrealization is not assured, management considered the scheduled reversals of deferred tax liabilities andprojected future taxable income, including the execution of certain available tax strategies if needed, inmaking this assessment. Based on these factors, management believes it is more likely than not theCompany will realize the benefits of these deductible differences, net of the existing valuation allowance
as of March 31, 2014.
As of March 31, 2014, the Company and various subsidiaries have operating loss carryforwards of¥760,049 million which are available to offset future taxable income, if any. Operating loss
carryforwards of ¥411,303 million expire by March 31, 2019, ¥267,083 million expire by March 31,
2024, and ¥81,663 million expire in various years thereafter or do not expire.
Deferred tax liabilities have not been recognized for excess amounts over the tax basis of investments inforeign subsidiaries that are considered to be reinvested indefinitely, because such differences will notreverse in the foreseeable future and those undistributed earnings, if remitted, generally would not resultin material additional Japanese income taxes because of non-taxable dividends from foreign subsidiaries.
Determination of such liabilities is not practicable.

F-43(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(10) Short-term and Long-term Debt
The components of short-term debt as of March 31, 2014 and 2013 are summarized as follows:
Millions of yen
March 31, March 31,
2014
2013
Borrowings, mainly from banks
Commercial paper
Borrowings from affiliates

394,405
237,530
15,334647,269

387,549
273,491
12,810673,850

The weighted average interest rates on short-term debt outstanding as of March 31, 2014 and 2013 were0.3% and 0.2%, respectively.
The components of long-term debt as of March 31, 2014 and 2013 are summarized as follows:
Millions of yen
March 31,
March 31,2014
2013
Unsecured notes and debentures:Due 2013, interest 0.72% debentureDue 2015, interest 1.56% debentureDue 2018, interest 0.29% debentureDue 2023, interest 0.81% debentureDue 2028, interest 1.37% debentureDue 2014–2024, interest 0.29–3.75%, issued bysubsidiaries
Unsecured convertible debentures:Due 2019, zero coupon, issued by a subsidiary
Loans, principally from banks and insurance companies:
Secured by various assets and mortgages on property,
plant and equipment, maturing 2014–2020,
interest 2.75–12.00%
Unsecured, maturing 2014–2028, interest 0.25–12.50%
Capital lease obligations
Less current portion

F-44

49,997
10,00030,00020,00080,00049,994-526,481399,307

4,495

4,495

30,792
1,260,256
44,933
1,976,954
464,234
1,512,720

16,638987,097
29,401
1,566,932
260,185
1,306,747(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The aggregate annual maturities of long-term debt after March 31, 2015 are as follows:
Millions of yen

Years ending March 31
2016
2017
2018
2019
Thereafter

313,324
385,564
275,012
182,768
356,052
1,512,720

As is customary in Japan, both short-term and long-term bank loans are made under general agreements thatprovide that securities and guarantees for present and future indebtedness will be given upon request of thebank, and that the bank shall have the right, as the obligations become due, or in the event of their default,
to offset cash deposits against such obligations.
Generally, the mortgage debenture trust agreements and certain secured and unsecured loan agreements
provide, among other things, that the lenders or trustees shall have the right to have any distribution of
earnings, including the payment of dividends and the issuance of additional capital stock, submitted tothem for prior approval and also grant them the right to request additional securities or mortgages onproperty, plant and equipment.

F-45(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(11)

Retirement and Severance Benefits(a) Defined benefit plans
The Company and its subsidiaries have a number of contributory funded defined benefit pension plans
and unfunded lump-sum payment plans to provide retirement and severance benefits to substantially all
employees. The Company and certain subsidiaries adopted cash balance plans.
Under the cash balance plans, each employee has a notional account which represents pension benefits.
The balance in the notional account is based on principal credits, which are accumulated as employees
render services, and interest credits, which are determined based on the market interest rates.
Under unfunded lump-sum payment plans, employees are entitled to lump-sum payments based on theirearnings and the length of service at retirement or termination of employment for reasons other thandismissal for cause.
Net periodic benefit cost for the funded benefit pension plans and the unfunded lump-sum payment plans
for the years ended March 31, 2014, 2013 and 2012 consists of the following components:
2014
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
Curtailments gain
Settlements loss
Employees’ contributions
Net periodic benefit cost

86,236
26,678(38,514)(16,637)
89,020
1,252
372
(271)
148,136

Millions of yen
2013
2012
71,19245,384(37,020)(22,659)
96,915
(188)
307
(167)
153,764

72,21951,812(36,353)(23,759)
93,033
(250)
(53)
48
(159)
156,538

The estimated prior service cost and actuarial loss for the defined benefit pension plans that will beamortized from accumulated other comprehensive loss into net periodic benefit cost during the year
ending March 31, 2015 are as follows:
Millions of yen(13,248)
78,519Prior service benefit
Actuarial loss

F-46

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Reconciliations of beginning and ending balances of the benefit obligation and the fair value of plan
assets of the contributory funded defined benefit pension plans and the benefit obligation of unfunded
lump-sum payment plans are as follows:
Millions of yen
2013
2014
Change in benefit obligation:
Benefit obligation at beginning of year
2,341,419 2,210,342
Service cost
86,236
71,192
Interest cost
26,67845,384
Plan amendments(583)(4,029)Actuarial loss
23,981
168,805
Benefits paid
(132,233) (157,637)
Acquisitions and divestitures(96,567)
10,412
Transfer to defined contribution pension plan
(3,037)(14,878)
Settlements(3,695)307
11,521
Foreign currency exchange rate changes
15,294
Benefit obligation at end of year
2,257,493 2,341,419
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employers’ contributions
Employees’ cash contributions
Benefits paid
Acquisitions and divestitures
Transfer to defined contribution pension plan
Settlements
Foreign currency exchange rate changes
Fair value of plan assets at end of year

1,417,760 1,297,208
122,478
115,460
111,766
85,988271
167(99,062) (111,689)(56,633)
21,014(40)(2,978)
9,612
13,396
1,506,958 1,417,760

Funded status(750,535)(923,659)

Amounts recognized in the consolidated balance sheets as of March 31, 2014 and 2013 are as follows:

Other assets
Accrued expenses
Retirement and severance benefits

F-47

March 31, 2014

Millions of yen
March 31, 2013

23,006(23,628)(749,913)(750,535)

10,910(21,358)(913,211)(923,659)(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Amounts recognized in accumulated other comprehensive loss as of March 31, 2014 and 2013 consist of:Millions of yen
March 31, 2014 March 31, 2013
Prior service benefit
Actuarial loss

(62,718)
456,798
394,080(79,545)
630,693551,148

The Company and all subsidiaries use their year-end as a measurement date. Weighted-averageassumptions used to determine the year-end benefit obligations are as follows:

Discount rate
Rate of compensation increase

2014

2013

1.2%
2.4%

1.6%
2.4%

Weighted-average assumptions used to determine the net periodic pension cost for the years ended March
31, 2014, 2013 and 2012 are as follows:

Discount rate
Expected long-term return on plan assets
Rate of compensation increase

2014

2013

2012

1.6%
2.6%
2.4%

2.1%
2.9%
2.4%

2.4%
2.9%
2.6%

The expected long-term rate of return on plan assets is developed for each asset class, and is determinedprimarily on historical returns on the plan assets and other factors.
The accumulated benefit obligation was ¥2,229,026 million as of March 31, 2014 and ¥2,237,187 million
as of March 31, 2013.
Information for pension plans with accumulated benefit obligations in excess of plan assets and pension
plans with projected benefit obligations in excess of plan assets is as follows:
Millions of yen
March 31, 2014 March 31, 2013
Plans with accumulated benefit obligations in excess of plan
assets:Accumulated benefit obligations
Plan assets

1,962,733
1,212,547

2,047,228
1,206,003

Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations
Plan assets

2,013,794
1,240,253

2,234,286
1,299,716

F-48(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The objective of the Company’s investment policy is to ensure a stable return from the plans’
investments over the long term, which allows the Company’s and certain subsidiaries’ pension funds tomeet their future obligations, and the Company and certain subsidiaries attempt to maintain the pension
funds in sound condition. In order to achieve the above objective, a target rate of return is established,taking into consideration the composition of participants, level of funded status, the Company’s andcertain subsidiaries’ capacity to absorb risks and the current economic environment. Also, a target asset
allocation is established to achieve a target rate of return, based on the expected rate of return by each
asset class, the standard deviation of the rate of return and the correlation coefficient among the assets.
The investments are diversified. Under the current target asset allocation, approximately 25 percent ofplan assets are invested in equity securities and approximately 50 percent are invested in domestic andforeign government bonds and corporate bonds. The remaining 25 percent are invested in other assets,such as hedge funds, private equity funds and life insurance company general accounts. Rebalancing will
occur if markets fluctuate in excess of certain levels. The Company and certain subsidiaries periodicallyreview actual returns on assets, economic environments and their capacity to absorb risk and realign thetarget asset allocation if necessary.
The Company and certain subsidiaries prioritize the use of observable inputs in markets over the use ofunobservable inputs when measuring fair value as follows:
Level 1
Quoted prices for identical assets in active markets.
Level 2
Quoted prices for similar assets in active markets; quoted prices associated with transactions that are notdistressed for identical or similar assets in markets that are not active; or, valuations whose significant
inputs are derived from or corroborated by observable market data.
Level 3
Valuations using inputs that are not observable.

F-49(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following table presents the plan assets that are measured at fair value as of March 31, 2014 and2013.

Equity securities (a)Government and municipal debt securities (b)Corporate and other debt securities (c)Hedge funds (d)Securitization products (e)Cash and cash equivalents
Life insurance company general accounts (f)Commingled funds (g)Other

Equity securities (a)Government and municipal debt securities (b)Corporate and other debt securities (c)Hedge funds (d)Securitization products (e)Cash and cash equivalents
Life insurance company general accounts (f)Commingled funds (g)
Other

Total
37,737
212,443
70,662
42,82855,14425,453
134,664
890,593
37,434
1,506,958

Millions of yen
March 31, 2014
Fair Value Measurements
Level 1
Level 2
Level 337,219518
199,999
12,44434,87535,787
8,540
34,28855,14425,364
89
134,664
855,603
34,99021,0002,172
14,262
283,582 1,048,905
174,471

Total
39,977
202,695
64,452
41,92543,59036,808125,123825,326
37,864
1,417,760

Millions of yen
March 31, 2013
Fair Value Measurements
Level 1
Level 2
Level 333,985
5,992
185,038
17,657
27,971
36,481
4,164
37,761
43,59036,73474
125,123
787,756
37,57022,333
4,736
10,795
278,090
973,473
166,197(a) Approximately 25 percent of equity securities are invested in Japan-listed stocks as of March 31, 2014
and 2013, respectively. Approximately 75 percent of equity securities are invested in stocks listed
overseas as of March 31, 2014 and 2013, respectively. Equity securities are primarily valued atquoted market prices.
(b) Approximately 65 percent of government and municipal debt securities are invested in bonds issued
in Japan and primarily consist of Japanese government bonds as of March 31, 2014 and 2013.
Approximately 35 percent of government and municipal debt securities are invested in bonds issuedin overseas markets and primarily consist of foreign government bonds as of March 31, 2014 and2013. Government and municipal debt securities are primarily valued at prices provided by the
securities industry, the industrial associations in each country, or prices which are calculated on thebasis of market interest rates.
F-50(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(c) Approximately 15 percent and 20 percent of corporate and other debt securities are invested in bonds
issued in Japan as of March 31, 2014 and 2013, respectively. Approximately 85 percent and 80
percent of corporate and other debt securities are invested in bonds issued in overseas markets as ofMarch 31, 2014 and 2013, respectively. Corporate and other debt securities are mainly valued atprices provided by the securities industry, the industrial associations in each country, or prices which
are calculated on the basis of market interest rates. If these values are not available, corporate andother debt securities are valued at theoretical prices, taking into consideration the interest rates ofgovernment bonds of the related countries, swap interest rates and credit risks.
(d) Hedge funds are invested primarily in relative value strategy funds, event driven funds, equity
long/short funds, and macroeconomic and Commodity Trading Advisor (CTA) funds. Hedge funds
are valued using the Net Asset Value (NAV) provided by the administrator of the fund. The NAV isbased on the value of the underlying assets owned by the fund, minus its liabilities, and then divided
by the number of units outstanding.
(e) Securitization products are invested primarily in collateralized loan obligations. These investments arevalued at prices provided by financial institutions. The Company corroborates the prices, taking into
consideration primarily the market values of the underlying loans, the market values of similar debt
securities, and the future expected default rates and recovery rates of the collateralized loans.
(f) Life insurance company general accounts are valued at conversion value at the end of the period.
(g) Commingled funds represent pooled institutional investments. Approximately 35 percent ofcommingled funds are invested in listed stocks as of March 31, 2014 and 2013, respectively, 45
percent and 40 percent in government and municipal debt securities as of March 31, 2014 and 2013,10 percent in corporate and other debt securities as of March 31, 2014 and 2013, and 10 percent and15 percent in other assets as of March 31, 2014 and 2013, respectively. Commingled funds are valued
at their NAV provided by the administrators of the funds, which are based on the value of theunderlying assets owned by the funds, divided by the number of units outstanding.

F-51(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following table presents the reconciliation of the beginning and ending balances of Level 3 assets forthe year ended March 31, 2014 and 2013.
Millions of yen
2014
Actualreturn on Realized
plan assets gain or loss
Purchases, Transfers
on planBeginning still heldbalance atsales, and in and/or
at theassetsMarch 31, reporting sold during settlements, out ofthe period
2013
net
Level 3
date
Corporate and other debt
securities
Hedge funds
Securitization products
Commingled funds
Other

36,481
37,761
43,59037,57010,795
166,197

1,169
1,563
3,246
3,600
383
9,961

477
976
(1,037)
(472)
607
551

(2,340)(6,012)
9,344(5,782)(151)(4,941)

(145)
1,800
1,655

Foreigncurrency
exchange

Endingbalance at
March 31,
2014

1
219
828
1,048

35,78734,28855,14434,99014,262
174,471

Millions of yen
2013
Actualreturn on Realized
plan assets gain or loss
Purchases, Transfers
on planBeginning still heldbalance atsales, and in and/or
assetsat theMarch 31, reporting sold during settlements, out ofthe period
2012
net
Level 3
date
Corporate and other debt
securities
Hedge funds
Securitization products
Commingled funds
Other

31,22342,45937,79836,454
3,003
150,937

3,743
2,535
5,985
4,597
39
16,899

F-52

(12)
(141)
1,943
(1,147)
240
883

1,782
(7,091)(2,136)(2,559)(358)(10,362)

Endingbalance at
Foreigncurrency March 31,
2013exchange

(285)
222
6,954
6,891

30
(1)
3
917
949

(Continued)

36,481
37,761
43,59037,57010,795
166,197

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The Company and its subsidiaries expect to contribute ¥107,763 million to their defined benefit plans forthe year ending March 31, 2015.
The following benefit payments, which reflect expected future service, as appropriate, are expected to bepaid.
Millions of yen
Years ending March 31
2015
2016
2017
2018
2019
2020-2024

120,236
115,974
115,988
115,164
124,198
624,899(b) Defined contribution plans
The Company and certain subsidiaries have a number of defined contribution plans. The amounts of cost
recognized for the Company’s and certain subsidiaries’ contributions to the plans for the years ended
March 31, 2014, 2013 and 2012 were ¥24,314 million, ¥21,983 million and ¥20,188 million,
respectively.

F-53(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(12) Common Stock
The Company has authorized issuance of 10 billion shares of common stock.
The number of issued shares and the amount of common stock for the years ended March 31, 2014, 2013
and 2012 are as follows:
Issued shares

Millions of yen
AmountBalance as of March 31, 2011
Conversion of convertible bonds

4,520,144,964
117,640,353

409,129
18,646

Balance as of March 31, 2012
Conversion of convertible bonds

4,637,785,317
195,678,070

427,775
31,015

Balance as of March 31, 2013 and 2014

4,833,463,387

458,790

The conversion of convertible bonds into common stock for the years ended March 31, 2013 and 2012 wasaccounted for in accordance with the provisions of the Japanese Company Law (JCL) by crediting one-halfof the conversion price to each of the common stock accounts and the capital surplus accounts.

F-54(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(13) Capital Surplus
The changes in capital surplus include the effect of changes in the Company’s ownership interest in its
consolidated subsidiaries. The net income attributable to Hitachi, Ltd. stockholders and transfers from (to)noncontrolling interests for the years ended March 31, 2014, 2013 and 2012 are as follows:
Millions of yen
2014
2013
2012
Net income attributable to Hitachi, Ltd. stockholders
Transfers from (to) the noncontrolling interests
Increase (decrease) in capital surplus for purchase of listed
subsidiaries’ ownership interests to convert theminto wholly owned subsidiaries
Decrease in capital surplus for purchase of ownershipinterests of Hitachi Vehicle Energy, Ltd. to convert it into
a wholly owned subsidiary
Other
Net transfers from (to) noncontrolling interests
Change from net income attributable to Hitachi, Ltd.
stockholders and transfers from (to) noncontrolling interests

264,975

175,326

347,179826(2,927)(18,822)(6,068)(665)(5,907)(5,380)(8,307)(2,705)(21,527)

259,068

167,019

325,652

For the year ended March 31, 2014, the increase in capital surplus for the purchase of listed subsidiaries’
ownership interests amounting to ¥826 million is related to the purchase of the noncontrolling interests ofHitachi Medical Corporation for the purpose of converting it into a wholly owned subsidiary. As a result,
Hitachi Medical Corporation had been converted into a wholly owned subsidiary during the year ended
March 31, 2014.
For the year ended March 31, 2013, the decrease in capital surplus for the purchase of listed subsidiaries’
ownership interests amounting to ¥2,927 million is mainly related to the purchase of the noncontrollinginterests of Vantec Corporation by Hitachi Transport System, Ltd. for the purpose of converting it into awholly owned subsidiary. As a result, Vantec Corporation had been converted into a wholly owned
subsidiary during the year ended March 31, 2013.
For the year ended March 31, 2012, the decrease in capital surplus for the purchase of listed subsidiaries’
ownership interests amounting to ¥18,822 million is related to the purchase of the noncontrolling interestsof Shin-Kobe Electric Machinery Co., Ltd. by Hitachi Chemical Co., Ltd. and Hitachi Business Solution
Co., Ltd. by Hitachi Solutions, Ltd. for the purpose of converting them into wholly owned subsidiaries. As
a result, Shin-Kobe Electric Machinery Co., Ltd. and Hitachi Business Solution Co., Ltd. had been
converted into wholly owned subsidiaries during the year ended March 31, 2012. Hitachi Business
Solution Co., Ltd. was subsequently renamed Hitachi Solutions Business, Ltd. effective January 1, 2013.
The total decreases in noncontrolling interests during the years ended March 31, 2014, 2013 and 2012
resulting from these equity transactions were ¥26,432 million, ¥3,985 million and ¥21,232million,
respectively.
F-55(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(14) Legal Reserve and Retained Earnings, and Dividends
The JCL provides that earnings in an amount equal to 10 percent of appropriations of retained earnings to
be paid as dividends should be appropriated as a capital surplus or a legal reserve until the total of capitalsurplus and legal reserve equals 25 percent of stated common stock. In addition to transfer from capitalsurplus to stated common stock, either capital surplus or legal reserve may be available for dividends byresolution of the shareholders’ meeting.
Dividends during the years ended March 31, 2014, 2013 and 2012 represent dividends declared during
those years. On May 12, 2014, the Board of Directors approved a cash dividend for the second half of theyear ended March 31, 2014 of ¥5.5 per share, aggregating ¥26,559 million. No provision has been made in
the accompanying consolidated financial statements for this cash dividend.
Cash dividends per share for the years ended March 31, 2014, 2013 and 2012 were ¥10.5, ¥10.0 and ¥8.0,
respectively, based on dividends declared with respect to earnings for the periods.
(15) Treasury Stock
The JCL allows a company to acquire treasury stock upon shareholders’ approval to the extent thatsufficient distributable funds are available. If the Board of Directors’ authority is stated in the articles ofincorporation, a company is allowed to acquire treasury stock not upon shareholders’ approval but Boardof Directors’ approval. Acquisition of treasury stock is allowed under the Company’s articles ofincorporation.
Pursuant to the provisions of the JCL, shareholders may request the company to acquire their shares
representing less than a minimum trading lot as shares less than a minimum trading lot cannot be publicly
traded and such a shareholder holding less than a minimum trading lot cannot exercise a voting right andother shareholder’s rights except as provided in the JCL or the articles of incorporation. The JCL also
states that a shareholder holding shares less than a minimum trading lot may request the company to sell
its treasury stock, if any, to the shareholder up to a minimum trading lot if entitled under the articles ofincorporation. Sale of treasury stock is allowed under the Company’s articles of incorporation.

F-56(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The changes in treasury stock for the years ended March 31, 2014, 2013 and 2012 are summarized asfollows:
Millions of yen
SharesAmountBalance as of March 31, 2011
Acquisition for treasury
Sales of treasury stock

2,544,077
281,695(82,533)

1,371
126
(47)

Balance as of March 31, 2012
Acquisition for treasury
Sales of treasury stock

2,743,239
331,866(175,954)

1,450
162
(47)

Balance as of March 31, 2013
Acquisition for treasury
Sales of treasury stock

2,899,151
5,599,271(4,090,998)

1,565
4,431
(2,850)

Balance as of March 31, 2014

4,407,424

3,146

F-57

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(16) Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of related tax effects, displayed in the consolidated statementsof equity is classified as follows:
Millions of yen
2014
2013
2012
Foreign currency translation adjustments:
Balance at beginning of year
(91,314) (220,615) (252,206)
Other comprehensive income,net of reclassification adjustments
125,932
128,731
31,603570(12)
Net transfer from (to) noncontrolling interests(569)
Balance at end of year
34,049(91,314) (220,615)
Pension liability adjustments:
Balance at beginning of year
(308,724) (294,252) (256,566)
Other comprehensive income (loss),
net of reclassification adjustments
122,743(14,575)(37,895)
103
209
Net transfer from (to) noncontrolling interests(614)
Balance at end of year
(186,595) (308,724) (294,252)
Net unrealized holding gain on available-for-sale securities:
Balance at beginning of year
61,482
20,491
16,905
Other comprehensive income,net of reclassification adjustments
124,844
40,9453,574
46
12Net transfer from (to) noncontrolling interests(164)
Balance at end of year
186,162
61,482
20,491
Cash flow hedges:
Balance at beginning of year
(29,778)(2,520)(1,195)
Other comprehensive loss,
net of reclassification adjustments(13,107)(27,237)(1,326)(21)
1
Net transfer from (to) noncontrolling interests
4
Balance at end of year
(42,881)(29,778)(2,520)Total accumulated other comprehensive loss:
Balance at beginning of year
(368,334) (496,896) (493,062)
Other comprehensive income (loss),
net of reclassification adjustments
360,412
127,864(4,044)698
210
Net transfer from (to) noncontrolling interests(1,343)
Balance at end of year
(9,265) (368,334) (496,896)

F-58(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 year ended March 31, 2014 withlocation in consolidated statements of operations.
Millions of yen
2014
Reclassification adjustments
for realized net loss included
in net income
Location
Foreign currency translation adjustments:
4,023
Other income
Before-tax amount
4,023
Income before income taxes
Tax benefit (expense)
Income taxes
Net income attributable to
Net-of-tax amount
4,023
Hitachi, Ltd. stockholders
Pension liability adjustment:
Prior service benefit
Actuarial loss
Before-tax amountTax benefit (expense)(14,910)
103,301
88,391(12,990)

Net-of-tax amount

75,401(a)(a)
Income before income taxes
Income taxes
Net income attributable to
Hitachi, Ltd. stockholders

Net unrealized holding gain on
available-for-sale securities:
Before-tax amountTax benefit (expense)(50,539)(50,539)
19,045Net-of-tax amount(31,494)

Cash flow hedges:
Forward exchange contracts
Cross currency swap
agreements
Interest rate swaps
Option contracts
Before-tax amountTax benefit (expense)(471)(2,379)769(675)(2,756)779

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
Other income(1,977)

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

45,953

Net income attributable to
Hitachi, Ltd. stockholders(a) These accumulated other comprehensive income (loss) components are included in the computation of
net periodic benefit cost (see note 11).
F-59

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following is a summary of reclassification adjustments by each classification of other comprehensive
income (loss) arising during the years ended March 31, 2014, 2013 and 2012 and the amounts of income tax
expense or benefit allocated to each component of other comprehensive income (loss), including
reclassification adjustments.
Millions of yen
2014
Before-tax Tax benefit Net-of-tax
amount(expense)amountOther comprehensive income arising during the year:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Reclassification adjustments for realized net loss
included in net income:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Other comprehensive income, net of reclassification
adjustments:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Less other comprehensive income, net of reclassification
adjustments attributable to noncontrolling interests:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Other comprehensive income, net of reclassification
adjustments attributable to Hitachi, Ltd. stockholders:Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges

F-60

157,84864,048
193,961(3,463)412,394(12,758)(35,943)(3,803)(52,504)

157,848
51,290
158,018(7,266)359,890

1,790
92,650(49,362)(5,785)39,293(14,441)
18,656
1,750
5,965

1,790
78,209(30,706)(4,035)45,258

159,638
156,698
144,599(9,248)451,687(27,199)(17,287)(2,053)(46,539)

159,638
129,499
127,312(11,301)
405,148
33,706
6,756
2,468
1,806
44,736125,932
122,743
124,844(13,107)360,412(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Millions of yen
2013
Before-tax Tax benefit Net-of-tax
amount(expense)amountOther comprehensive income arising during the year:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Reclassification adjustments for realized net loss
included in net income:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Other comprehensive income, net of reclassification
adjustments:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Less other comprehensive income, net of reclassification
adjustments attributable to noncontrolling interests:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Other comprehensive income, net of reclassification
adjustments attributable to Hitachi, Ltd. stockholders:Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges

F-61

177,317(83,400)
65,748(31,573)
128,092

23,707(21,773)
1,280
3,214

177,317(59,693)
43,975(30,293)
131,306

4,497
76,442(4,452)
2,975
79,462(28,789)
1,863
(883)
(27,809)

4,497
47,653(2,589)2,092
51,653

181,814(6,958)61,296(28,598)
207,554(5,082)(19,910)397(24,595)

181,814(12,040)
41,386(28,201)
182,959
53,083
2,535
441
(964)
55,095
128,731(14,575)
40,945(27,237)
127,864(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Millions of yen
2012
Before-tax Tax benefit Net-of-tax
amount(expense)amountOther comprehensive loss arising during the year:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Reclassification adjustments for realized net loss
included in net income:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Other comprehensive loss, net of reclassification
adjustments:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Less other comprehensive loss, net of reclassification
adjustments attributable to noncontrolling interests:
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges
Other comprehensive loss, net of reclassification
adjustments attributable to Hitachi, Ltd. stockholders:Foreign currency translation adjustments
Pension liability adjustments
Net unrealized holding gain on available-for-sale securities
Cash flow hedges

F-62(20,065)(129,071)(996)(3,039)(153,171)

38,520963
734
40,217(20,065)(90,551)(33)(2,305)(112,954)

43,52776,0994,980(999)
123,607(29,697)(1,985)802(30,880)

43,527
46,402
2,995(197)
92,72723,462(52,972)
3,984(4,038)(29,564)

8,823(1,022)
1,536
9,337

23,462(44,149)
2,962(2,502)(20,227)(8,141)(6,254)(612)(1,176)(16,183)
31,603(37,895)
3,574(1,326)(4,044)(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(17) Pledged Assets
As of March 31, 2014, the Company and its subsidiaries pledged a portion of their assets as collateral
primarily for bank loans as follows:
Millions of yen
Accounts receivables
Inventories
Investments and advances
Land
Buildings
Machinery and equipment

8,324
10,300
555
2,521
8,465
11,073
41,238

F-63(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(18) 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 ¥175,478 million as of March 31, 2014. This
includes credit guarantees of ¥84,461 million for collections of receivables associated with the
integration of 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 March 31, 2014, theundiscounted maximum potential future payments under such guarantees amounted to ¥259,265
million. For providing these guarantees, the subsidiaries obtain collateral appropriate for the amount of
the guarantees, and therefore, the Company considers the risk to be low. The Company accrued ¥8,827
million as an obligation to stand ready to perform over the term of the guarantees in the event thecustomer cannot make scheduled payments.
The Company and HCC provide loan commitments to affiliates and others.
The outstanding balance of loan commitments as of March 31, 2014 is as follows:
Millions of yen
Total commitment available
Less amount utilized
Balance available

110,540
20,25290,288The 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 afinancing source for business operations. The total unused lines of credit as of March 31, 2014
amounted to ¥515,193 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 March 31, 2014 amounted to¥200,000 million. The Company also maintains another commitment line agreement, whose three years andtwo months term ends in July 2016, with financing companies. The unused availability under this agreement
as of March 31, 2014 amounted to ¥200,000 million.
As of March 31, 2014, outstanding commitments for the purchase of property, plant and equipment
were approximately ¥34,414 million.

F-64(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 to transfer them by endorsement to suppliers in the settlement of accounts payable. As of
March 31, 2014 and 2013, the Company and subsidiaries were contingently liable for trade notes
discounted and endorsed in the following amounts:
Millions of yen
March 31,
March 31,2014
2013
Notes discounted
Notes endorsed

1,158
1,128
2,286

2,149
2,707
4,856

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 years ended March 31, 2014, 2013 and 2012 are summarized asfollows:
2014
Balance at beginning of year
Expense recognized upon issuance of warranties
Usage
Acquisitions and divestitures
Other, including effect of foreign currency translation
Balance at end of year

40,114
12,174(12,940)
781
1,136
41,265

Millions of yen
2013
2012
41,356
8,852(12,880)
81
2,705
40,11455,32916,281(18,792)(10,007)(1,455)41,356

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.

F-65(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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, and a subsidiary in Korea was investigated in Singapore
by the Competition Commission of Singapore, all in respect of alleged antitrust violations relating to
optical disk drives. In September 2011, the Korean subsidiary received a notice of discontinuation of
the investigation from the Competition Commission of Singapore. In November 2011, the Japanesesubsidiary paid a fine in relation to the investigation from the Antitrust Division of the U.S. Departmentof Justice. In July 2012, the Japanese subsidiary received a statement of objections from the European
Commission in respect of alleged antitrust violations. These subsidiaries accrued the reasonably
estimated amount for the loss.
In July 2011, a subsidiary and an affiliated company in Japan received a statement of objections fromthe 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. These companies accrued the amount for the fines.
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.
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 (¥149,949 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 (¥33,924
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.

F-66(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 (¥85,952 million) including
consequential losses allegedly incurred by the delay in the construction process of a power plant.
Although the Company, the subsidiary in Europe, and the consortium consisting of the Company andthe subsidiary in Europe, will vigorously defend themselves against this claim, there can be noassurance that they will not be held liable for any amounts claimed.
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.
(19)

Expenses Related to Competition Law and Others
During the year ended March 31, 2014, a subsidiary in the Automotive Systems segment agreed 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 antitrust violations occurring in connection with the sales of certain
automotive parts to certain OEM customers, and paid the fine in November 2013. In other cases, theCompany and certain subsidiaries accrued the reasonably estimated amounts for potential losses inrelation to investigation in respect of alleged antitrust violations in Europe, certain civil disputes,
including class action lawsuits, occurring in connection with investigations and alleged antitrust
violations in the U.S.A, and settlements of consequential losses involving disputes with certain
customers.

(20) Impairment Losses for Long-Lived Assets
For the year ended March 31, 2014, the majority of the impairment losses were recorded on property,
plant and equipment located in Japan and China. The Automotive Systems segment recognizedimpairment losses of ¥8,950 million, primarily due to its battery businesses for automobiles projected
lower-than-expected future income because of changing market trend. The Electronic Systems &Equipment segment recognized impairment losses of ¥6,401 million, primarily due to its medical
equipment business projected lower-than-expected future income because of severe market competition.
The High Functional Materials & Components segment recognized impairment losses of ¥5,122
million, primarily due to the deterioration of the profitability of its high-grade metal products andmaterials business because of smaller demand in the market. The Construction Machinery segment
recognized impairment losses of ¥4,425 million, primarily due to a change of manner in use of its IT
system for management purpose. The fair value estimates used to determine these losses were based
primarily on discounted future cash flows.

F-67(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the year ended March 31, 2013, the majority of the impairment losses were recorded on property,
plant and equipment located in Japan. The Information & Telecommunication Systems segment
recognized impairment losses of ¥8,428 million, primarily due to reduced cash flows generated fromcertain assets associated with customers in the financial service businesses. The High Functional
Materials & Components segment recognized impairment losses of ¥5,941 million, primarily due tostructural reforms of its wires, cables and other relevant products business, which was undertaken toaddress the deterioration of the business environment. The Social Infrastructure & Industrial Systems
segment recognized impairment losses of ¥2,206 million, primarily due to its liquid crystal display
manufacturing equipment business projected lower-than-expected future income because of a recent
decrease in demand. The fair value estimates used to determine these losses were based primarily on
discounted future cash flows.
For the year ended March 31, 2012, the majority of the impairment losses were recorded on property,
plant and equipment located in Japan. The High Functional Materials & Components segment
recognized impairment losses of ¥19,483 million, primarily due to restructuring of its semiconductor
package material businesses as a result of a recent decrease in demand of the market and integrating
manufacturing facilities for electronics and IT devices business. The Information &Telecommunication Systems segment recognized impairment losses of ¥4,596 million primarily due torestructuring of its micro devices business as a result of lower-than-expected future income. The fairvalue estimates used to determine these losses were based primarily on discounted future cash flows.

F-68(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(21) 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,
for the years ended March 31, 2014, 2013 and 2012 are as follows:
2014
Special termination benefits
Loss on fixed assets

28,174110
28,284

Millions of yen
2013
2012
30,345
153
30,49822,99998
23,097The Company and certain subsidiaries provided special termination benefits to those employees
voluntarily leaving the companies. The accrued special termination benefits were recognized at thetime voluntary termination was offered and benefits were accepted by the employees. An analysis of
the accrued special termination benefits for the years ended March 31, 2014, 2013 and 2012 is asfollows:
2014
Balance at beginning of the year
New charges
Cash payments
Divestitures
Foreign currency exchange rate changes
Balance at end of the year

15,29328,174(29,631)(1,707)42
12,171Millions of yen
2013
2012
7,487
30,345(22,601)62
15,293

3,358
22,999(12,690)(6,233)
53
7,487

The following represents the significant restructuring activities for the year ended March 31, 2014 byreportable segment:
1. The Information & Telecommunication Systems segment restructured in order to rationalize theworkforce mainly in Japan. The accrued special termination benefits expensed during the year ended
March 31, 2014 amounted to ¥11,826 million. The liabilities for special termination benefits
amounting to ¥7,103 million as of March 31, 2014 will be paid by March 31, 2015. Total
restructuring charges during the year ended March 31, 2014 consisted of special termination benefits.
2. The Digital Media & Consumer Products segment restructured due to withdrawal from the TV partsand other business. The accrued special termination benefits expensed during the year ended March
31, 2014 amounted to ¥6,640 million. The liabilities for special termination benefits amounting to¥48 million as of March 31, 2014 will be paid by March 31, 2015. Total restructuring charges during
the year ended March 31, 2014 consisted of special termination benefits.

F-69(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 year ended
March 31, 2014 amounted to ¥5,053 million. The liabilities for special termination benefits
amounting to ¥2,566 million as of March 31, 2014 will be paid by March 31, 2015. Total
restructuring charges during the year ended March 31, 2014 amounted to ¥5,136 million.
The following represents the significant restructuring activities for the year ended March 31, 2013 byreportable segment:
1. 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 year ended
March 31, 2013 amounted to ¥11,798 million. The liabilities for special termination benefits
amounting to ¥1,067 million as of March 31, 2013 were paid by March 31, 2014. Total restructuring
charges during the year ended March 31, 2013 amounted to ¥11,952 million.
2. The Others (Logistics and Other services) restructured in order to rationalize the workforce of its
semiconductor device business. The accrued special termination benefits expensed during the year
ended March 31, 2013 amounted to ¥7,049 million. The liabilities for special termination benefits
amounting to ¥6,284 million as of March 31, 2013 were paid by March 31, 2014. Total restructuring
charges during the year ended March 31, 2013 amounted to ¥7,052 million.
3. The Electronic Systems & Equipment segment restructured in order to reorganize its LCDs
manufacturing equipment business and video & wireless network businesses to reduce costs andimprove profitability. The accrued special termination benefits expensed during the year ended
March 31, 2013 amounted to ¥4,514 million. The liabilities for special termination benefits
amounting to ¥4,218 million as of March 31, 2013 were paid by March 31, 2014. Total restructuring
charges during the year ended March 31, 2013 amounted to ¥4,515 million.
4. The Information & Telecommunication Systems segment restructured in order to rationalize theworkforce of its software service business. The accrued special termination benefits expensed during
the year ended March 31, 2013 amounted to ¥2,314 million. The liabilities for special termination
benefits amounting to ¥485 million as of March 31, 2013 were paid by March 31, 2014. Total
restructuring charges during the year ended March 31, 2013 consisted of special termination benefits.
The following represents the significant restructuring activities for the year ended March 31, 2012 byreportable segment:
1. The Others (Logistics and Other services) restructured in order to rationalize the workforce of its
liquid crystal display business. The accrued special termination benefits expensed during the year
ended March 31, 2012 amounted to ¥7,410 million. The liabilities for special termination benefits
amounting to ¥353 million as of March 31, 2012 were paid by March 31, 2013. Total restructuring
charges during the year ended March 31, 2012 consisted of special termination benefits.
2. The High Functional Materials & Components segment restructured in order to reorganize its wires,
cables and other relevant products business, which has encountered severe deterioration in the
F-70(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
business environment. The accrued special termination benefits expensed during the year ended
March 31, 2012 amounted to ¥6,665 million. The liabilities for special termination benefits
amounting to ¥372 million as of March 31, 2012 were paid by March 31, 2013. Total restructuring
charges during the year ended March 31, 2012 amounted to ¥6,706 million.
3. The Electronic Systems & Equipment segment restructured in order to reorganize its LCDs
manufacturing equipment and electronic parts manufacturing system businesses to reduce costs andimprove profitability. The accrued special termination benefits expensed during the year ended
March 31, 2012 amounted to ¥4,892 million. The liabilities for special termination benefits
amounting to ¥3,958 million as of March 31, 2012 were paid by March 31, 2013. Total restructuring
charges during the year ended March 31, 2012 amounted to ¥4,912 million.
4. The Digital Media & Consumer Products segment restructured in order to reorganize its TV business,
which has encountered severe deterioration in the business environment. The accrued special
termination benefits expensed during the year ended March 31, 2012 amounted to ¥3,085 million.
The liabilities for special termination benefits amounting to ¥2,005 million as of March 31, 2012were paid by March 31, 2013. Total restructuring charges during the year ended March 31, 2012
consisted of special termination benefits.
(22) Other Income and Other Deductions
The following items are included in other income or other deductions for the years ended March 31,
2014, 2013 and 2012.
Millions of yen
2014
2013
2012
Net gain on securities
Net gain (loss) on sale and disposal of rental assets
and other property
Exchange gain (loss)

173,139

17,295

209,725(6,446)
7,293(1,819)8,465

19,181(2,360)The net gain on securities for the year ended March 31, 2014 includes a gain of ¥131,738 million
associated with the integration of the thermal power generation systems business with Mitsubishi Heavy
Industries, Ltd. Refer to note 31 for the nature and financial effect of the business integration.
The major component of net gain on securities for the year ended March 31, 2013 is related to a sale ofshares of TCM Corporation, a former subsidiary.
The net gain on securities for the year ended March 31, 2012 includes gains of ¥223,143 million on
deconsolidation of certain subsidiaries.
The net gain on sale and disposal of rental assets and other property for the year ended March 31, 2012
includes the impact of gains on insurance claims related to property, plant and equipment damaged dueto the Great East Japan Earthquake.

F-71(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(23) 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 are as follows:
Number of shares
2014
2013
2012
Weighted average number of shares on
which basic net income per share is
calculated
Effect of dilutive securities:
Unsecured convertible bonds(8th series)
Number of shares on which diluted net
income per share is calculated

Net income attributable to Hitachi, Ltd.
stockholders
Effect of dilutive securities:
Unsecured convertible bonds(8th series)
Other
Net income attributable to Hitachi, Ltd.
stockholders on which diluted net income
per share is calculated

4,829,774,208

4,702,790,707

4,520,117,309-

127,952,024

310,772,267

4,829,774,208

4,830,742,731

4,830,889,576

2014

2013

Millions of yen
2012

264,975

175,326

347,179

(84)

21
(33)

62
(74)

264,891

175,314347,167

2014

2013

Yen
2012

54.86
54.85

37.28
36.29

76.81
71.86

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

F-72(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(24) Supplementary Income and Expense Information
2014
Shipping and handling costs
Advertising expense
Maintenance and repairs
Rent
Research and development expense

142,915
35,58273,744
141,662
351,426

Millions of yen
2013
2012
135,888
31,286
72,778
137,685
341,310

147,551
30,21082,838136,219
412,514(25) Supplementary Cash Flow Information
2014
Cash paid during the year for:
Interest
Income taxes
Noncash investing and financial activities:
Capitalized lease assets
Conversion of convertible bonds
issued by the Company

Millions of yen
2013
2012

25,438110,824

26,283130,119

28,129116,310

4,918

5,598

5,783

-

62,03037,292The payments for the purchase and the proceeds from the sale of securities classified asavailable-for-sale disclosed in note 3 are included in purchase of investments in securities and shares of
newly consolidated subsidiaries and proceeds from sale of investments in securities and shares of
consolidated subsidiaries resulting in deconsolidation on the consolidated statements of cash flows.
(26) 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.

F-73(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(27) 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 45% of
their sales from overseas for the year ended March 31, 2014. These overseas sales are mainly denominatedin the U.S. dollar or Euro. As a result, the Company and its subsidiaries are exposed to market risks fromchanges 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, the Company
and its subsidiaries are exposed to market risks from changes in foreign currency exchange rates andinterest rates.
The Company and its subsidiaries are also exposed to credit-related losses in the event of non-performanceby counterparties to derivative financial instruments, but it is not expected that any counterparties will failto meet their obligations because most of the counterparties are internationally recognized financial
institutions that are rated A or higher and contracts are diversified into a number of major 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 maintain an
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 thevolume and due date of future net cash flows by currency. In accordance with the Company’s policy, acertain portion of measured net cash flows is covered using comprehensive forward exchange contracts,
which principally mature within one year. If necessary, the Company and its subsidiaries establish the risk
control policy and the risk management approach specific to each transaction by reviewing the businesscharacteristics, the structure of income and expenditure, and conditions of the contract. The Company andits subsidiaries hedge the risk exposure arising from specific transactions based on the risk control policy
and the risk management approach.

F-74(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 rate risk.
To meet this objective, the Company and its subsidiaries principally enter into interest rate swaps to manage
fluctuations in cash flows. The interest rate swaps entered into are receive-variable, pay-fixed interest rate
swaps. Under the interest rate swaps, the Company and its subsidiaries receive variable interest 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 a fixedinterest rate and lend funds at variable interest rates. Therefore, such subsidiaries are exposed to interest raterisk. Management believes it is prudent to minimize the variability caused by interest rate risk. To meet thisobjective, certain financing subsidiaries principally enter into interest rate swaps converting the fixed rate toa 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-ratelong-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 associatedwith financing transactions.
Cash flow hedge
Foreign currency exposure:
Changes in the fair value of forward exchange contracts designated and qualifying as cash flow hedges offorecasted transactions are reported in accumulated other comprehensive income (AOCI). These amounts
are reclassified into earnings in the same period as the hedged items affect earnings.
It is expected that a net loss of approximately ¥968 million recorded in AOCI relating to existing forward
exchange contracts will be reclassified into other income or other deductions during the year ending March
31, 2015.
As of March 31, 2014, the maximum length of time over which the Company and its subsidiaries are
hedging their exposure to the variability in future cash flows associated with foreign currency forecasted
transactions is approximately 83 months.
F-75(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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.
It is expected that a net gain of approximately ¥30 million recorded in AOCI related to interest rate swaps
will be reclassified into interest charges as a yield adjustment of the hedged debt obligations during the year
ending March 31, 2015.
The contract or notional amounts of derivative financial instruments held as of March 31, 2014 and 2013
are summarized as follows:

Forward exchange contracts:
To sell foreign currencies
To buy foreign currencies
Cross currency swap agreements:
To sell foreign currencies
To buy foreign currencies
Interest rate swaps
Option contracts

F-76

March 31, 2014

Millions of yen
March 31, 2013

322,061
118,019

376,711
101,951

45,611
255,963421,274
1,236

116,482
149,088
317,548846(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables, “Effective portion of derivatives designated as hedging instruments and related
hedged items” and “Ineffective portion and amount excluded from effectiveness test,” show the effects ofderivative instruments for fair value hedges on the consolidated statement of operations for the year ended
March 31, 2014:
Effective portion of derivatives designated as hedging instruments and related hedged items
Hedging instruments
Derivatives
Location
Forward exchange
Other income
contracts
Cross currency swap Other incomeagreements

Related hedged items
Millionsof yen(18,978)(1,051)

Items
Accounts receivable andaccounts payable
Long-term debt

Location
Other income

Millionsof yen22,898Other income

1,139(20,029)

24,037

Ineffective portion and amount excluded from effectiveness test
Derivatives
Forward exchange contracts
Cross currency swap agreements

Location
Other income
Other income

F-77

Millions of yen(3,916)(5,287)(9,203)(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables, “Effective portion of derivatives designated as hedging instruments and related
hedged items” and “Ineffective portion and amount excluded from effectiveness test,” show the effects ofderivative instruments for fair value hedges on the consolidated statement of operations for the year ended
March 31, 2013:
Effective portion of derivatives designated as hedging instruments and related hedged items
Hedging instruments
Derivatives
Location
Forward exchange
Other income
contracts
Cross currency swap Other incomeagreements

Related hedged items
Millionsof yen(16,007)(2,787)

Items
Accounts receivable andaccounts payable
Long-term debt

Location
Other income

Millionsof yen19,144

Other income

2,305(18,794)

21,449Ineffective portion and amount excluded from effectiveness test
Derivatives
Forward exchange contracts
Cross currency swap agreements

Location
Other income
Other income

F-78

Millions of yen(1,623)(3,431)(5,054)(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables, “Effective portion of derivatives designated as hedging instruments and related
hedged items” and “Ineffective portion and amount excluded from effectiveness test,” show the effects ofderivative instruments for fair value hedges on the consolidated statement of operations for the year ended
March 31, 2012:
Effective portion of derivatives designated as hedging instruments and related hedged items
Hedging instruments
Derivatives
Location
Forward exchange
Other deductions
contracts
Cross currency swap Interest charges
agreements

Related hedged items
Millionsof yen(302)(2,556)

Items
Accounts receivable andaccounts payable
Long-term debt

Location
Other deductions

Millionsof yen249

Interest charges

2,531(2,858)2,780

Ineffective portion and amount excluded from effectiveness test
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps

Location
Other deductions
Other deductions
Interest charges

F-79

Millions of yen
1,150
(20)
36
1,166

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables, “Gain (loss) recognized in OCI, Effective portion of derivatives designated as hedging
instruments”, “Gain (loss) reclassified from AOCI into consolidated statement of operations, Effective
portion of derivatives designated as hedging instruments” and “Gain (loss) on derivatives designated as cash
flow hedging instruments, Ineffective portion and amount excluded from effectiveness test” show theeffects of derivative instruments for cash flow hedges on the consolidated statement of operations for theyear ended March 31, 2014:
Gain (loss) recognized in OCI
Effective portion of derivatives designated as hedging instruments
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts

Millions of yen(20,130)(17,031)
2,935(1,311)(35,537)

Gain (loss) reclassified from AOCI into consolidated statement of operations
Effective portion of derivatives designated as hedging instruments
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts

Location
Other income
Other income
Interest charges
Other income

Millions of yen
1,782
3,898
(1,257)
1,311
5,734

Gain (loss) on derivatives designated as cash flow hedging instruments
Ineffective portion and amount excluded from effectiveness test
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps

Location
Other income
Other income
Interest charges

F-80

Millions of yen
4,000
(326)
36
3,710

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables, “Gain (loss) recognized in OCI, Effective portion of derivatives designated as hedging
instruments”, “Gain (loss) reclassified from AOCI into consolidated statement of operations, Effective
portion of derivatives designated as hedging instruments” and “Gain(loss) on derivatives designated as cash
flow hedging instruments, Ineffective portion and amount excluded from effectiveness test” show theeffects of derivative instruments for cash flow hedges on the consolidated statement of operations for theyear ended March 31, 2013:
Gain (loss) recognized in OCI
Effective portion of derivatives designated as hedging instruments
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts

Millions of yen(14,961)
(609)
99
(758)
(16,229)

Gain (loss) reclassified from AOCI into consolidated statement of operations
Effective portion of derivatives designated as hedging instruments
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts

Location
Other income
Other income
Interest charges
Other income

Millions of yen(1,173)(1,654)(823)
737(2,913)Gain(loss) on derivatives designated as cash flow hedging instruments
Ineffective portion and amount excluded from effectiveness test
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps

Location
Other income
Other income
Interest charges

F-81

Millions of yen(2,934)(10)
130(2,814)(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables, “Gain (loss) recognized in OCI, Effective portion of derivatives designated as hedging
instruments”, “Gain (loss) reclassified from AOCI into consolidated statement of operations, Effective
portion of derivatives designated as hedging instruments” and “Loss on derivatives designated as cash flow
hedging instruments, Ineffective portion and amount excluded from effectiveness test” show the effects ofderivative instruments for cash flow hedges on the consolidated statement of operations for the year ended
March 31, 2012:
Gain (loss) recognized in OCI
Effective portion of derivatives designated as hedging instruments
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts

Millions of yen(2,531)
105
948
819
(659)

Gain (loss) reclassified from AOCI into consolidated statement of operations
Effective portion of derivatives designated as hedging instruments
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts

Location
Other deductions
Other deductions
Interest charges
Other deductions

Millions of yen
122(9,506)(535)(878)(10,797)

Loss on derivatives designated as cash flow hedging instruments
Ineffective portion and amount excluded from effectiveness test
Derivatives
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps

Location
Other deductions
Other deductions
Interest charges

F-82

Millions of yen
(113)
(43)
(120)
(276)

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(28) Fair Value of Financial Instruments
The following methods and assumptions are used to estimate the fair values of financial instruments:
Cash and cash equivalents, Trade receivables, Short-term debt and Trade payables
The carrying amount approximates the fair value because of the short maturity of these instruments.
Investments in securities, Subordinated interests resulting from securitization and Derivatives
Refer to note 29 for the methods and assumptions used to estimate the fair values.
Financial assets transferred to consolidated securitization entities
For the portion related to transferred mortgage loans receivable, the fair value is estimated based on thepresent value of future cash flows.
Long-term loans receivable
The fair value of long-term loans receivable is estimated based on the present value of future cash flows
using the interest rate applicable to an additional loan of the same form.
Long-term debt and Non-recourse borrowings of consolidated securitization entities
The fair value of long-term debt and non-recourse borrowings of consolidated securitization entities are
estimated based on quoted market prices or the present value of future cash flows using the Company’s
and its subsidiaries’ market interest rates for the same contractual terms.

F-83(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The carrying amounts and estimated fair values of the financial instruments as of March 31, 2014 and 2013
are as follows:
Millions of yen
March 31, 2014
March 31, 2013
Carrying
Estimated
Carrying
Estimatedamounts
fair values
amounts
fair values
Investments in securities:
Short-term investments
9,172
9,172
10,444
10,444
Investments and advances
424,214424,214306,487
306,487
Financial assets transferred toconsolidated securitization entities
115,391
121,744
138,324
148,552
Subordinated interests resulting fromsecuritization:
Other current assets
17,291
17,2911,877
1,877
Investments and advances
73,40473,40482,81182,811Long-term loans receivable:
Investments and advances
52,40953,36955,57756,986
Derivatives(Effective portion in other current assets):
Forward exchange contracts
3,025
3,025
6,330
6,330
Cross currency swap agreements
53
53
1,129
1,129
Interest rate swaps
121
121
Option contracts
6
6
36
36
Derivatives(Ineffective portion in other current assets):
Forward exchange contracts
320
320
310
310
Cross currency swap agreements
6
6
114
114
Derivatives(Effective portion in other assets):
Forward exchange contracts
1,729
1,729
1,045
1,045
Cross currency swap agreements
752
752
2,899
2,899
Interest rate swaps
1,069
1,069
3
3
Derivatives(Ineffective portion in other assets):
Forward exchange contracts
1,158
1,158
16
16
Cross currency swap agreements
135
135

F-84

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Carrying
amounts
Long-term debt
Non-recourse borrowings of consolidated
securitization entities
Derivatives(Effective portion in other current liabilities):
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Option contracts
Derivatives(Ineffective portion in other current liabilities):
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Derivatives(Effective portion in other liabilities):
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps
Derivatives(Ineffective portion in other liabilities):
Forward exchange contracts
Cross currency swap agreements
Interest rate swaps

March 31, 2014
Estimated
fair values

Millions of yen
March 31, 2013
Carrying
Estimatedamounts
fair values(1,976,954)(1,990,706)(1,566,932)(1,582,719)(198,826)(201,824)(129,297)(132,451)(3,693)(2,438)(143)(2)(3,693)(2,438)(143)(2)(16,923)(5,546)(135)-(16,923)(5,546)
(135)
-

(355)
(821)
-

(355)
(821)
-

(869)
(7,292)(30)(869)(7,292)(30)(42,891)(19,464)(1,848)(42,891)(19,464)(1,848)(18,556)(6,110)(2,676)(18,556)(6,110)(2,676)

(1)
(121)
-

(1)
(121)
-

(2,660)(139)(17)(2,660)(139)(17)

It is not practicable to estimate the fair value of investments in unlisted stock because of the lack of amarket price and difficulty in estimating fair value without incurring excessive cost. The carrying amountsof these investments as of March 31, 2014 and 2013 totaled ¥44,461 million and ¥53,990 million,
respectively.
The estimated fair values of the financial assets transferred to consolidated securitization entities and thenon-recourse borrowings of consolidated securitization entities are included in Level 3 of the fair value
hierarchy and the estimated fair values of the long-term loans receivable and the long-term debts areincluded in Level 2 of the fair value hierarchy.

F-85(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(29) Fair Value
ASC 820,”Fair Value Measurement” establishes a fair value hierarchy that prioritizes the use of observable
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 with transactions thatare not distressed for identical or similar assets or liabilities in markets that are not active; 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 are includedin 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 and exchange 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 ordefault 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 are unobservableand 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 estimatedusing an income approach based on its own valuation models or a market approach such as comparison withprices of similar securities. Level 3 securities include available-for-sale securities such as subordinateddebentures 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, the significant inputs offair value are unobservable and the Company mainly uses an income or market approach to corroborate
relevant information provided by financial institutions. These derivatives are included in Level 3.

F-86(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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

F-87(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables present the assets and liabilities that are measured at fair value on a recurring basis andthe fair value hierarchy classification as of March 31, 2014 and 2013. The carrying values on the
consolidated balance sheets are recorded by the fair value of these assets and liabilities.

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

405,214
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 )-Total
Assets:Investments in securities
Equity securities
Government debt securities
Corporate debt securities
Other
Derivatives
Subordinated interests resulting
from securitization
Liabilities:
Derivatives

Millions of yen
March 31, 2014
Fair value hierarchy classification
Level 1
Level 2
Level 3

Millions of yen
March 31, 2013
Fair value hierarchy classification
Level 1
Level 2
Level 3

280,491
7,458
18,791
9,815
12,017279,727
7,132
9,246
-

764
326
5,154
569
12,017

13,637-

84,688413,260

296,105

18,83084,68898,325(60,953)-(60,953 )-F-88(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables present the changes in Level 3 instruments measured on a recurring basis for the year
ended March 31, 2014 and 2013.
Millions of yen
2014
Subordinatedinterests
Corporate
resultingdebt
fromsecurities
securitization
Total
Balance at beginning of year
13,637
84,68898,325Purchases
25,01525,015
Sales(1,937)(1,937)
Settlements(3,736)(23,699 )(27,435)
Total gains or losses (realized/unrealized)
(3)
191
188
Included in earnings (a)Included in other comprehensive income
239
4,500
4,739
Acquisitions and divestitures(3,808)(3,808)
Balance at end of year
4,392
90,69595,087
The amount of total gains or losses for the period includedin earnings attributable to the change in unrealized gains orlosses relating to assets still held at March 31, 2014(a) Level 3 gains or losses included in earnings for the year ended March 31, 2014 are reported in otherincome (deductions) for corporate debt securities and are reported in revenue for subordinatedinterests resulting from securitization.
Millions of yen
2013

Balance at beginning of year
Purchases
Sales
Settlements
Total gains or losses (realized/unrealized)
Included in earnings (a)Included in other comprehensive income
Balance at end of year
The amount of total gains or losses for the period includedin earnings attributable to the change in unrealized gains orlosses relating to assets still held at March 31, 2013

Subordinatedinterests
Corporate
resultingdebt
fromsecurities
securitization
24,264
66,31338,504(1,077)(10,710)(22,119 )Total
90,57738,504(1,077)(32,829)

1,160
13,637276
1,714
84,688276
2,874
98,325---(a) Level 3 gains or losses included in earnings for the year ended March 31, 2013 are reported in revenue.

F-89(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 be other-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 the 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 determinedusing both a market approach and an income approach, which incorporate both observable inputs, such as
quoted market prices of comparable companies, and discounted cash flow using unobservable inputs, isincluded 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 fair value 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 not recoverable andexceeds its fair value. The Company mainly uses an income approach or a market approach to calculate thefair 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, andassumptions of projected business plans.

F-90(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following tables present the assets measured at fair value on a non-recurring basis and the gains orlosses recognized for the year ended March 31, 2014 and 2013.
Millions of yen
2014
Total gains
Fair value hierarchy classification
Level 3
(losses)Level 1
Level 2
Cost-method investments
1,234(225 )
Long-lived assets (a)Information & Telecommunication
Systems segment
5,289(2,954 )Electronic Systems & Equipment
segment
9,107(6,401 )Construction Machinery segment
6,811(4,425 )High Functional Materials &Components segment
5,141(5,122 )Automotive Systems segment
4,271(8,950 )Other
491(5,944 )Total
32,344(34,021 )(a) The carrying value as of March 31, 2014 is not equal to the fair value at the time of impairment
because of depreciation expense subsequent to impairment.

Cost-method investments
Long-lived assets (a)Information & Telecommunication
Systems segment
Social Infrastructure & Industrial
Systems segment
Electronic Systems & Equipment
segment
High Functional Materials &Components segment
Automotive Systems segment
Other
Total

Millions of yen
2013
Total gains
Fair value hierarchy classification
Level 3
(losses)Level 1
Level 2
1,059
(952 )--

4,293(8,428 )

-

-

889

(2,206 )

-

-

1,416

(1,974 )

-

-

4,033
365
3,728
15,783(5,941 )(1,001 )(3,659 )(24,161 )(a) The carrying value as of March 31, 2013 is not equal to the fair value at the time of impairment
because of depreciation expense subsequent to impairment.

F-91(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following table presents the significant unobservable inputs used in the fair value measurements on a
non-recurring basis categorized within Level 3 for the year ended March 31, 2014. These inputs are shownin a form of ranges of rates in the table.
2014
Valuation
Unobservable
Range
Fair value(Millions of yen)technique
input(Weighted average)
Long-lived assets
Information &4,207 Income
Discount rate
6.0% (6.0%)
Telecommunication
approach
Systems segment
Electronic Systems &7,980 Market
Adjustment
94.5% (94.5%)
Equipment segment
approach rate (a)High Functional
5,008 Income
Discount rate
6.0% - 11.0% (8.9%)
Materials &approach
Components segment
Automotive Systems
3,914 Income
Discount rate
9.2% (9.2%)
segment
approach(a) The Company and its domestic subsidiaries measure the fair value of land based on appraised value
which includes adjustments to prices of land in comparable transactions, or published market prices
to reflect specific factors inherent in the land subject to the appraisal. These adjustments are referred
to as adjustment rates.
Level 3 non-recurring fair value measurement of long-lived assets for the year ended March 31, 2014 in theamount of ¥2,386 million consists of individually insignificant items which utilize a number of different
unobservable inputs not subject to meaningful aggregation. Therefore, such amount is not presented in thetable above.

F-92(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents the significant unobservable inputs used in the fair value measurements on a
non-recurring basis categorized within Level 3 for the year ended March 31, 2013. These inputs are shownin a form of ranges of rates in the table.
2013
Fair value(Millions of yen)
Long-lived assets
Information &Telecommunication
Systems segment
Social Infrastructure &Industrial Systems
segment
Electronic Systems &Equipment segment
High Functional
Materials &Components segment
Other

ValuationtechniqueUnobservable
input

Range
(Weighted average)

4,283 Income
approach

Discount rate

3.0% -

6.0%(5.3%)

93 Incomeapproach

Discount rate

1.8% -

6.0%(4.0%)

1,006 Market
approach
2,378 Income
approach
100 Market
approach
185 Income
approach
578 Market
approach

Adjustment
rate (a)Discount rate

68.0% - 102.0% (86.6%)

Adjustment
rate (a)Discount rate

90.0% (90.0%)

Adjustment
rate (a)

5.0%

2.0%

(5.0%)(2.0%)

48.8% - 83.0% (74.2%)(a) The Company and its domestic subsidiaries measure the fair value of land based on appraised value
which includes adjustments to prices of land in comparable transactions, or published market prices
to reflect specific factors inherent in the land subject to the appraisal. These adjustments are referred
to as adjustment rates.
Level 3 non-recurring fair value measurement of long-lived assets for the year ended March 31, 2013 in theamount of ¥6,101 million consists of individually insignificant items which utilize a number of different
unobservable inputs not subject to meaningful aggregation. Therefore, such amount is not presented in thetable above.

F-93(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(30) 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 other receivables
with a contractual maturity of one year or more are subject to disclosure as reported in this note. Trade receivablesfrom sale of products or services that have contractual maturities of one year or less 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 cost basis.
Finance leases are receivables from lease arrangements, including products manufactured by the Company andcertain of its subsidiaries, such as information technology equipment, manufacturing machinery 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 allowancefor doubtful receivables is collectively determined on the basis of past collection experience, consideration ofcurrent economic conditions and changes in our customer collection trends as well as other factors that may affectthe 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 manufacturingmachinery. Installment loans are typically secured by underlying assets. The primary locations 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 iscollectively 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 areusually arranged with collateral. The location of mortgage loans is Japan; more than fifty percent of mortgage
loans are arranged for employees of the Company and its domestic subsidiaries. The term of mortgage loans isusually less than 30 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.
Other financing receivables are the financing service receivables provided by the subsidiaries in the financial
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 iscollectively 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.
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 andinterest of a financing receivable cannot be collected or by estimating the fair value of related collateral whenapplicable and further estimating the allowance for doubtful receivables. The Company and its subsidiaries haveproprietary credit quality indicators appropriate to the unique characteristics of their operations and the nature of
F-94(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 March 31, 2014 and 2013, financing receivables include past due receivables in the amount of ¥36,990
million and ¥28,055 million, respectively. Of these amounts, financing receivables past due 90 days or more andstill accruing interest amounted to ¥13,049 million and ¥7,802 million, respectively.
The following tables present allowance for doubtful receivables and recorded investment in financing receivables
as of March 31, 2014 and 2013, and changes in the allowance for the years ended March 31, 2014 and 2013.
Millions of yen
2014
FinanceleasesInstallment
loans

Mortgage
loans

Other
financingreceivables

Total

Allowance for doubtfulreceivables
Balance, March 31, 2013
Provision
RecoveryWrite off
Acquisitions anddivestitures
Balance, March 31, 2014
Applicable to amounts;
Individually evaluated for
impairment
Applicable to amounts;
Collectively evaluated for
impairment

9,946
6,192
(4,061)
(422)

2,209
2,911
(1,102)(1,440)

153
65
(74 )
-

5,082
3,496
(3,819 )(1,381 )17,39012,664(9,056)(3,243)

1,820
13,475

73
2,651

144

165
3,543

2,058
19,813

8,450

996

52

2,519

12,017

5,025

1,655

92

1,024

7,796

876,679

310,017150,785363,718

1,701,199

21,240

1,679

197

5,944

29,060855,439

308,338

150,588

357,774

1,672,139

Financing receivables
Balance, March 31, 2014
Applicable to amounts;
Individually evaluated for
impairment
Applicable to amounts;
Collectively evaluated for
impairment

F-95(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Millions of yen
2013
FinanceleasesInstallment
loans

Mortgage
loans

Other
financingreceivables

Total

Allowance for doubtfulreceivables
Balance, March 31, 2012
Provision
RecoveryWrite off
Balance, March 31, 2013
Applicable to amounts;
Individually evaluated for
impairment
Applicable to amounts;
Collectively evaluated for
impairment

7,680
7,064
(4,237)
(561)
9,946

1,912
2,497
(383 )(1,817)
2,209

210
69
(106 )
(20 )
153

6,509
2,687
(1,979 )(2,135 )
5,082

16,311
12,317(6,705)(4,533)
17,390

6,471

568

43

2,768

9,850

3,475

1,641

110

2,314

7,540

698,454

202,850

176,383

222,274

1,299,961

22,097

725

129

8,001

30,952

676,357

202,125

176,254214,273

1,269,009

Financing receivables
Balance, March 31, 2013
Applicable to amounts;
Individually evaluated for
impairment
Applicable to amounts;
Collectively evaluated for
impairment

In addition, as of March 31, 2014 and 2013, the amounts of impaired loans relating to receivables which arose fromsales of products or services were ¥37,383 million and ¥44,558 million, respectively.

F-96(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(31) Acquisitions and Divestitures
On November 23, 2012, the Company purchased all of the outstanding 54,000,000,200 shares of Horizon
Nuclear Power Limited (Horizon) from RWE npower plc and E.ON UK plc for ¥88,886 million in thePower Systems segment. Accordingly, the Company obtained control of Horizon and it became a wholly
owned subsidiary effective November 23, 2012 (the acquisition date).
Horizon operates a nuclear power development business in the U.K. The Company made the acquisition tolead a program of building new nuclear power plants in the U.K.
The following table summarizes the consideration paid for Horizon, the assets 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

Millions of yen
2,873
51,19531,945
3,931
89,944(927)(131)(1,058)(88,886)

The acquired intangible assets are related to the activities to obtain the necessary site licenses and consents
to build and subsequently operate nuclear power stations.
The results of operations of Horizon for the period from the acquisition date to March 31, 2013 were notmaterial.
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 Horizon of April 1, 2011 would not differ
materially from the amounts reported in the accompanying consolidated financial statements as of and forthe years ended March 31, 2013 and 2012.
On September 2, 2011, Hitachi Data Systems Corporation (HDS), a subsidiary of the Company in the
Information & Telecommunication Systems segment, purchased additional shares of BlueArc Corporation(BlueArc) for ¥42,923 million, resulting in a 97.8% increase of HDS ownership from 2.2% to 100%.
Accordingly, HDS obtained control of BlueArc and it became a wholly owned subsidiary effective
September 2, 2011 (the acquisition date).
BlueArc operates a network storage business. HDS made the acquisition to increase its competitiveness inthe storage solution business through creating synergy in a field of file storage.
F-97(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following table summarizes the consideration paid for BlueArc, the assets 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
Previously acquired equity interest measured atfair value
Cash paid for acquisition

Millions of yen
1,499
4,749
33,002
11,01450,264(1,400)(5,059)(6,459)(882)(42,923)(43,805)

The following table shows the acquired intangible assets subject to amortization.
Weighted averageamortization
Millions of yen
period (year)
The acquired intangible assets subject toamortization
Existing technology
Customer relationships
In-process research and development
Trade name

7,166
2,874
771
203
11,0145
5
2
2

The Company recognized a gain of ¥747 million as a result of remeasuring its equity interest in BlueArc
held before the business combination at the acquisition date fair value. The gain is included in other incomein the Company’s consolidated statement of operations for the year ended March 31, 2012.
The fair value of the equity interest held before the business combination in BlueArc, a private entity, wasestimated by applying the income approach. This fair value measurement is based on significant inputs thatare not observable in the market and thus this fair value is included in Level 3. Key inputs include business
forecasts, market trends, assumptions of projected business plans and adjustments because of the lack ofcontrol that market participants would consider when estimating the fair value of BlueArc.
The results of operations of BlueArc for the period from the acquisition date to March 31, 2012 were notmaterial.

F-98(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 BlueArc of April 1, 2010 would not differ
materially from the amounts reported in the accompanying consolidated financial statements as of and forthe years ended March 31, 2012 and 2011.
On March 9, 2011, Hitachi Transport System, Ltd. (Hitachi Transport System), a subsidiary of theCompany included in the Others category of segment information, announced its decision to purchaseshares of Vantec Corporation (Vantec), through a tender offer to make Vantec its subsidiary. The
tender offer price was ¥233,500 per share, which was determined by taking into consideration themarket price of Vantec’s common stock, Vantec’s financial condition, future earnings prospects and avaluation of Vantec stock conducted by a third party appraiser. The price included a premium of
approximately 93% over the average share price of Vantec’s common stock traded on the First Sectionof the Tokyo Stock Exchange for the three month period ended March 8, 2011. As a result, Hitachi
Transport System purchased 209,550 shares in the tender offer, for ¥48,930 million in the period fromMarch 10, 2011 through April 19, 2011, resulting in an acquisition of 90.12% of the voting rights.
Accordingly, Hitachi Transport System obtained control of Vantec and it became a consolidated
subsidiary effective April 26, 2011, the settlement date of the tender offer (the acquisition date).
Vantec operates warehousing and transportation related business. Hitachi Transport System made theacquisition to realize synergy in the system logistics and global business and improve the enterprisevalue of Hitachi Transport System and Vantec.
The following table summarizes the consideration paid for Vantec, the assets acquired and liabilities
assumed and recognized as of the acquisition date, as well as the fair value as of the acquisition date of thenoncontrolling interest in Vantec.
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
Fair value of noncontrolling interests

F-99

Millions of yen
35,551
28,09014,837
29,197
107,675(31,493)(23,630)(55,123)(48,930)(3,622)(52,552)(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The following table shows the acquired intangible assets subject to amortization.
Weighted averageamortization
Millions of yen
period (year)
The acquired intangible assets subject toamortization
Customer relationships

29,197

17

The fair value of the noncontrolling interest in Vantec, a listed entity, was determined by quoted market
price and included in Level 1.
The results of operations of Vantec for the period from the acquisition date to March 31, 2012 were notmaterial.
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 Vantec of April 1, 2010 would not differ
materially from the amounts reported in the accompanying consolidated financial statements as of and forthe years ended March 31, 2012 and 2011.
On February 1, 2014, the effective date of the Company split for the business integration of its thermal
power generation systems business with Mitsubishi Heavy Industries, Ltd. (MHI), the Company
transferred its business to the integrated company which was established by MHI and renamed
Mitsubishi Hitachi Power Systems, Ltd. (MHPS) in accordance with the absorption-type company split
agreement, which was executed on July 31, 2013 and subsequently amended on December 18, 2013.
The Company applied the provisions of deconsolidation and initial measurements of an equity method
investee to this transaction since the Company has 35% ownership interests of MHPS and subsequently
accounts for the interests using equity method. Accordingly, the Company recognized a gain of¥131,738 million, measured as the difference between the carrying amount of transferred assets andliabilities and the fair value of its shares of MHPS. The fair value of MHPS was determined using botha market approach and an income approach, which incorporate both observable inputs, such as quoted
market prices of comparable companies, and discounted cash flow using unobservable inputs, and thus
represents Level 3 measurement. The gain is included in other income in the Company’s consolidated
statement of operations for the year ended March 31, 2014.
The Company completed the sale of its LCDs business in the Others category of segment information on
March 30, 2012 by transferring all of its shares in Hitachi Displays, Ltd. (Hitachi Displays) to Japan
Display Inc. in a cash and stock transaction. The Company also completed the sale of its hard disk drives
business in the Others category of segment information on March 8, 2012 by transferring all of its shares in
Viviti Technologies, Ltd. (Viviti), a holding company of Hitachi Global Storage Technologies (subsequently
renamed HGST) to Western Digital Corporation in a cash and stock transaction. As a result, the Company
deconsolidated both Hitachi Displays and Viviti during the year ended March 31, 2012.

F-100(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(32) Segment Information
Business Segments
The operating segments of the Company are the components for which separate financial information isavailable 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, since suchaggregation helps financial statement users better understand the Company’s performance.
The reportable segments correspond to categories of activities classified primarily by markets, products andservices.
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, Digital Media & Consumer
Products, 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

F-101(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Automotive Systems:
Engine management systems, Electric powertrain systems, Drive control systems and Car information
systems
Digital Media & Consumer Products:
Air-conditioning equipment, Room air conditioner, Refrigerators, Washing machines, Optical disk drives
and Flat-panel TVs
Others (Logistics and Other services):
Logistics, Property management and others
Financial Services:
Leasing and Loan guarantees
Effective April 1, 2013, the Company changed the name of Others to Others (Logistics and Other services).
Effective April 1, 2013, the Company changed its measurement of segment profitability from operating
income to earnings before interest and taxes (EBIT). Accordingly, the amounts previously reported for theyears ended March 31, 2013 and 2012 have been restated in conformity with the new measure of segment
profit or loss.
The following tables show business segment information for the years ended March 31, 2014, 2013 and2012, and as of March 31, 2014, 2013 and 2012.

F-102(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Revenues from Outside Customers

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

2014

2013

Millions of yen
2012

1,745,519
693,340
1,259,651
987,484
765,172
1,292,489
889,789
807,458
859,850
314,7129,615,464
738
9,616,202

1,589,017
815,000
1,112,429
894,408
752,159
1,264,905
803,424
746,445756,981305,5039,040,271
800
9,041,071

1,573,961
753,023
991,839
973,383
794,841
1,353,781
808,031
787,305
1,318,413
309,972
9,664,549
1,334
9,665,883

2014

2013

Millions of yen
2012

209,382
84,051
187,015
129,285
2,139
70,802
2,330
83,395
373,799
23,8191,166,017(1,166,017)-

197,570
89,696
201,418
119,904
3,908
71,536
3,423
72,077354,041
34,791
1,148,364(1,148,364)-

190,286
79,385
213,136
128,401
3,944
83,405
3,552
71,540401,340
43,232
1,218,221(1,218,221)-

Revenues from Intersegment Transactions

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

F-103

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Total Revenues

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

F-104

2014

2013

Millions of yen
2012

1,954,901
777,391
1,446,666
1,116,769
767,311
1,363,291
892,119
890,853
1,233,649
338,531
10,781,481(1,165,279)
9,616,202

1,786,587
904,696
1,313,847
1,014,312
756,067
1,336,441
806,847
818,522
1,111,022
340,294
10,188,635(1,147,564)
9,041,071

1,764,247
832,408
1,204,975
1,101,784
798,785
1,437,186
811,583
858,845
1,719,753
353,204
10,882,770(1,216,887)
9,665,883(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Segment Profit (Loss)
2014

2013

Millions of yen
2012

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

98,551
152,984
59,16952,64663,32096,554
4,930(2,979)48,18834,699608,062(27,909)580,153

104,21230,02763,31632,43058,12150,74936,406(925)
33,54529,466437,347(79,332)
358,015

96,262(45,094)
54,38044,81562,99051,15337,997(11,853)
47,00930,009367,668
205,550
573,218

Interest income
Interest charges
Income before income taxes

14,136(26,107)568,182

13,229(26,707)344,537

12,653(28,141)
557,730

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

F-105(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Operating Income

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

2014

2013

Millions of yen
2012

110,030
16,721
56,71959,11473,932
101,784
47,3704,684
45,96333,157549,474(16,663)
532,811

104,689
29,91160,20329,382
54,62758,41835,423(5,355)40,162
29,290436,750(14,722)422,028

101,732(33,986)
49,181
49,995
63,12977,00737,049(10,947)
72,72130,222436,103(23,823)
412,280

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

F-106(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Total Assets

Information & Telecommunication Systems
Power Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Digital Media & Consumer Products
Others (Logistics and Other services)
Financial Services
Subtotal
Corporate assets and Eliminations
Total

March 31,2014

March 31,2013

Millions of yen
March 31,2012

1,538,300
1,200,702
1,349,382
989,082
1,144,725
1,369,986
624,758
477,999
1,637,894
2,446,121
12,778,949(1,762,050)
11,016,899

1,420,971
1,055,688
1,180,267
903,399
1,154,275
1,286,077
540,080
470,924
1,705,152
1,960,979
11,677,812(1,868,582)
9,809,230

1,345,392
955,809
1,091,740
903,283
1,140,332
1,285,970
516,123444,931
1,671,850
1,950,672
11,306,102(1,887,576)
9,418,526

Corporate assets consist of cash and cash equivalents and investments and advances.
Investments in Affiliated Companies

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

F-107

March 31,2014

March 31,2013

Millions of yen
March 31,2012

10,435427,195
18,185404
28,59342,444
5,506
19,058
5,915
17,704575,439
33,248608,687

9,218
96,7549,308
286
27,48035,356
6,341
13,714
7,768
20,860227,085
32,882259,967

14,406
106,720
17,793335
17,31332,3406,359
11,181
7,396
18,829232,672
77,061
309,733(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Depreciation & Amortization

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

2014

2013

Millions of yen
2012

93,351
17,992
29,35918,50039,97962,06633,393
22,58047,42186,750451,391
3,994
455,385

77,58919,671
26,86518,70738,94162,36326,36823,85544,34075,507414,206
3,813
418,019

79,37919,492
27,454
17,89842,562
69,096
31,067
25,83988,76474,972476,523
3,143
479,666

2014

2013

Millions of yen
2012

2,954
1,575
6,401
4,425
5,122
8,950
2,270
2,099
33,796

8,428
2,206
1,974
975
5,941
1,001
558
2,122
4
23,209

4,596
35
994
2,651
1,625
19,483
1,042
668
747
31,841

Impairment Losses for Long-Lived Assets

Information & Telecommunication Systems
Power Systems
Social Infrastructure & Industrial Systems
Electronic Systems & Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Digital Media & Consumer Products
Others (Logistics and Other services)
Financial Services
Total

F-108

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Equity in Net Earning (Loss) of Affiliated Companies

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

2014

2013

Millions of yen
2012

1,018
230
(653)
203
647
2,713
1,357
4,595
253
1,088
11,451(2,765)
8,686

1,135
(3,786)
2,509
89
(147)
3,138
1,163
2,604
363
2,144
9,212
(49,659)(40,447)

1,298(4,158)
3,347
28
316
679
881
1,752
76
(313)
3,906
(19,477)(15,571)

2014

2013

Millions of yen
2012

109,624
25,50242,96834,096
39,61568,846
83,37325,18374,993542,031
1,046,231(15,690)
1,030,541

106,759
28,787
42,63025,40968,93987,29558,68425,27060,037
388,966
892,776(3,049)889,727

104,673
29,22932,66529,70571,391
71,52046,11623,86898,409303,565
811,141(9,831)
801,310

Capital Investment for Long-Lived Assets

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

Capital investment represents the additions to property, plant and equipment and other intangible assets
including tangible assets and software to be leased on an accrual basis.

F-109(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Geographic Information
Revenues
The following table shows revenues which are attributed to geographic areas based on the location of thecustomers for the years ended March 31, 2014, 2013 and 2012.
Millions of yen
2013
2012
2014
Japan
Outside Japan
Asia
North America
EuropeOther Areas
Subtotal
Total

5,303,474

5,355,119

5,534,462

2,063,567
910,274
812,120526,767
4,312,728
9,616,202

1,711,141804,057
636,840
533,9143,685,952
9,041,071

2,000,989
869,014
761,125500,293
4,131,421
9,665,883

Revenues from outside customers attributed to any individual country and region other than Japan and
China are not material for the years ended March 31, 2014, 2013 and 2012. Revenues in China for the years
ended March 31, 2014, 2013 and 2012 were ¥1,073,659 million, ¥816,363 million and ¥1,073,487 million,
respectively.
Long-Lived Assets including Goodwill
The following table shows long-lived assets such as property, plant and equipment and intangible assets
including goodwill for each geographic area as of March 31, 2014, 2013 and 2012.
Millions of yen
March 31,
March 31,
March 31,
2013
2012
2014
Japan
Asia
North America
EuropeOther Areas
Subtotal
Corporate items and Eliminations
Total

1,991,792
474,568
229,539
301,465
70,4193,067,783
35,7893,103,572

2,046,367
410,486
203,015
254,798
38,2382,952,904
32,4562,985,360

2,001,531
303,430
170,793
106,524
25,442
2,607,720
27,7802,635,500

Long-lived assets in any individual country and region other than Japan are not material as of March 31,
2014, 2013 and 2012.
There are no revenues to a single major outside customer for the years ended March 31, 2014, 2013 and
2012.
F-110

(Continued)

HITACHI, LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

As discussed in note 2(i), effective April 1, 2012, the Company and its domestic subsidiaries changed theirdepreciation method. As a result of this change, compared to the previous method, segment profit for theyear ended March 31, 2013, was increased by ¥3,361 million in the Information & Telecommunication
Systems segment, ¥2,935 million in the Power Systems segment, ¥827 million in the Social Infrastructure& Industrial Systems segment, ¥546 million in the Electronic Systems & Equipment segment, ¥1,085
million in the Construction Machinery segment, ¥977 million in the High Functional Materials &Components segment, ¥1,416 million in the Automotive Systems segment, ¥141 million in the DigitalMedia & Consumer Products segment, ¥1,920 million in the Others (Logistics and Other services) and ¥40
million in the Financial Services segment, and decreased by ¥134 million in the Corporate items andEliminations.

F-111(Continued)

Report of Independent Auditors

To the Stockholders and Board of Directors ofHitachi, Ltd.:We have audited the accompanying consolidated financial statements of Hitachi, Ltd. and subsidiaries (the “Company”),
which comprise the consolidated balance sheets as of March 31, 2014 and 2013, and the related consolidated statementsof operations, comprehensive income, equity, and cash flows for each of the three years in the period ended March 31,
2014, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in conformity with
U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free of material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in the United States. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion inaccordance with attestation standards established by the American Institute of Certified Public Accountants on theeffectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Hitachi, Ltd. and subsidiaries at March 31, 2014 and 2013, and the consolidated results of theiroperations and their cash flows for each of the three years in the period ended March 31, 2014, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 20, 2014

F-112

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

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

Director, Kanto Local Finance Bureau[Filing Date]

June 20, 2014

[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 Basic Framework of Internal Control over Financial Reporting
Mr. Toshiaki Higashihara, President & COO, and Mr. Toyoaki Nakamura, Executive Vice President
and Executive Officer, are responsible for establishing and maintaining internal control over financial
reporting of Hitachi, Ltd. (the “Company”) and have established and maintained internal control overfinancial reporting in accordance with the basic framework for internal control set forth in the “On the
Revision of the Standards and Practice Standards for Management Assessment and Audit concerning
Internal Control Over Financial Reporting (Council Opinions)” published by the Business Accounting
Council.
The internal control over financial reporting is designed to achieve its objectives to the extent
reasonable through the effective function and combination of its basic elements. Therefore, there is apossibility that internal control over financial reporting may not completely prevent or detect
misstatements.
2. Matters Related to Scope of Assessment, Record Date, and Assessment Procedure
We assessed the effectiveness of our internal control over financial reporting on the record date as ofMarch 31, 2014. We made this assessment in accordance with assessment standards for internal control
over financial reporting generally accepted in Japan.
In making this assessment, we evaluated internal control which may have a material effect on theentire financial reporting on a consolidated basis (“company-level controls”) and based on the result of
this assessment, we appropriately selected business processes to be evaluated, analyzed these selectedbusiness processes, identified key controls that may have a material impact on the reliability of our
financial reporting, and assessed the design and operation of these key controls. These procedures haveallowed us to evaluate the effectiveness of our internal controls.
We determined the required scope of assessment of internal control over financial reporting for theCompany, as well as its consolidated subsidiaries and equity-method affiliates, from the perspective of themateriality that may affect the reliability of our financial reporting. The materiality that may affect thereliability of our financial reporting is determined taking into account the materiality of quantitative andqualitative impacts. We confirmed that we had reasonably determined the scope of assessment of internal
controls over business processes in light of the results of assessment of company-level controls conducted
for the Company and its consolidated subsidiaries. We did not include a part of consolidated subsidiaries
and equity-method affiliates which do not have any quantitatively or qualitatively material impact on the
consolidated financial statements in the scope of assessment of company-level controls.
Regarding the scope of assessment of internal control over business processes, we accumulated
business units in descending order of total revenues (after elimination of intercompany transactions) forthe previous fiscal year, and those business units whose combined amount of revenues reaches
approximately 80% of total revenues on a consolidated basis were selected as “significant business units.”
At the selected significant business units, we included, in the scope of assessment, those businessprocesses leading to revenues, accounts receivables and inventories and those business processes relating
to greater likelihood of material misstatements and significant account involving estimates or forecasts as
significant accounts that may have a material impact on our business objectives. Further, not only at
selected significant business units, but also at other business units, we added to the scope of assessment, asbusiness processes having greater materiality considering their impact on the financial reporting, thosebusiness processes relating to businesses or operations dealing with high-risk transactions.
3. Matters Related to Results of Assessment
As a result of the assessment above, we concluded that our internal control over financial reporting
was effective as of March 31, 2014.
4. Supplementary Matters
None.
5. Special Notes
None.

A-2

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

Independent Auditors’ Report(filed under the Financial Instruments and Exchange Act of Japan)
June 20, 2014
Mr. Toshiaki Higashihara, President & COO
Hitachi, Ltd.

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

Koichi Tsuji

Designated and Engagement Partner,
Certified Public Accountant:

Takashi Ouchida

Designated and Engagement Partner,
Certified Public Accountant:

Takahiro Saga

[Audit of Financial Statements]
Pursuant to the Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements included in the Financial Section, namely, the consolidated balance sheet asof March 31, 2014 of Hitachi, Ltd. (the “Company”) and its consolidated subsidiaries, and the related
consolidated statements of operations, comprehensive income, equity and cash flows for the fiscal year from
April 1, 2013 to March 31, 2014, including notes to the consolidated financial statements and consolidated
supplementary schedules.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements
in conformity with accounting principles generally accepted in the United States of America pursuant to theParagraph 3 of the Supplementary Provisions of the Cabinet Office Ordinance for Partial Amendment of theRegulations for Terminology, Forms and Preparation Methods of Consolidated Financial Statements (No.11 of
the Cabinet Office Ordinance in 2002), and for such internal control as management determines is necessary toenable the preparation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
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conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient an appropriate to provide a basis for our audit
opinion.

Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of the Company and its consolidated subsidiaries as of March 31, 2014, and the results of
their operations and their cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.

[Audit of Internal Control]
Pursuant to the Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited
management’s report on internal control over financial reporting of the Company and its consolidated
subsidiaries as of March 31, 2014.

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

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

Audit Opinion
In our opinion, management’s report on internal control referred to above, which represents that the internal
control over financial reporting of the consolidated financial statements of the Company and its consolidated
subsidiaries as of March 31, 2014 is effectively maintained, presents fairly, in all material respects, the resultsof the assessment of internal control over financial reporting in conformity with assessment standards forinternal control over financial reporting generally accepted in Japan.

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

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

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

Confirmation Letter[Applicable Law]

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

Director, Kanto Local Finance Bureau[Filing Date]

June 20, 2014

[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-6

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 Annual Securities Report for the 145th
fiscal year (from April 1, 2013 to March 31, 2014) were adequate under the Financial Instruments andExchange Act.
2. Special Notes
None.

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