Financial Section

Operating and Financial Review

Operating Results
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 themeasurement for the consolidated operating results.

Summary
Millions of yen
Years ended March 31:

Total revenues

2014

2013

Percentchange¥9,616,202¥9,041,071

6%

EBIT

580,153

358,015

62%

Income before income taxes

568,182

344,53765%

Net income

364,030

237,72153%

Net income attributable to
Hitachi, Ltd. stockholders

264,975

175,326

51%

Analysis of Statement of Operations
Total revenues increased 6% to ¥9,616.2 billion compared with theyear ended March 31, 2013. This was due primarily to higher revenues
in the Information & Telecommunication Systems segment mainly
resulting from increased revenues from services business, and in theSocial 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, DigitalMedia & 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 theintegration 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 comparedwith the year ended March 31, 2013, due primarily to higher revenues
in Asia, North America and Europe.
Cost of sales increased 5% to ¥7,083.3 billion compared withthe year ended March 31, 2013. The ratio of 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.

32

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 factthat Hitachi Automotive Systems, Ltd. has agreed with the UnitedStates 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 withinvestigations 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 the year 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 because of changes in market
conditions. The Electronic Systems & Equipment segment recognizedimpairment losses of ¥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 recognized impairment 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 determined on the basis of fairvalue 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 theHigh Functional Materials & Components segment.
Interest income increased ¥0.9 billion to ¥14.1 billion, as comparedwith the year ended March 31, 2013.
Dividend income increased ¥1.7 billion to ¥8.1 billion, as comparedwith 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 wasdue 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 ofa gain associated with the transfer of the thermal power generation
systems business.

Hitachi, Ltd. | Annual Report 2014

Interest charges decreased ¥0.6 billion to ¥26.1 billion, as comparedwith the year ended March 31, 2013.
Loss on sale of stock of an affiliated company was posted in theamount of ¥5.9 billion in the year ended March 31, 2014.
Other deductions increased ¥5.2 billion to ¥7.7 billion, as comparedwith 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 tothe fact that Renesas Electronics Corporation, which had reported
losses in the year ended March 31, 2013, ceased to be our equitymethod 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 withthe 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 theyear ended March 31, 2013.
Net income increased ¥126.3 billion to ¥364.0 billion, as comparedwith the year ended March 31, 2013.
Net income attributable to noncontrolling interests increased ¥36.6
billion to ¥99.0 billion, as compared with 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 comparedwith 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 ofsegment 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 restated in 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 withthe year ended March 31, 2013. This increase was due primarily toincreased 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 withthe year ended March 31, 2013. This decrease was due primarily toincreased restructuring charges, partially offset by the increase in profits
from the services business due mainly to higher revenues.

(Power Systems)
Revenues were ¥777.3 billion, a decrease of 14% compared withthe year ended March 31, 2013. This decrease was due primarily tothe effect of the transfer of the thermal power generation systems
business and a significant decline in revenues from preventive maintenance services for nuclear power generation systems.
Segment profit increased 409% to ¥152.9 billion, as comparedwith 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 inoperating income owing to lower revenues.
(Social Infrastructure & Industrial Systems)
Revenues were ¥1,446.6 billion, an increase of 10% compared with theyear ended March 31, 2013. The increase was due primarily to higher
sales of elevators and escalators in China and other markets, andhigher revenues from the railway systems business for overseas markets.
Segment profit decreased 7% to ¥59.1 billion, as compared withthe year ended March 31, 2013. This decrease was due primarily tothe decrease in operating income owing to lower earnings from overseas projects in social infrastructure systems business, partially offset
by the higher profits from elevators and escalators and in the railway
systems business resulting from increased revenues.
(Electronic Systems & Equipment)
Revenues were ¥1,116.7 billion, an increase of 10% compared withthe year ended March 31, 2013. This increase was due primarily toincreased sales of semiconductor manufacturing equipments andmedical analysis systems at Hitachi High-Technologies Corporationand 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 withthe year ended March 31, 2013. This increase was due primarily tothe increase in operating income resulting from higher revenues andthe effect of business restructuring.
(Construction Machinery)
Revenues were ¥767.3 billion, an increase of 1% compared with theyear ended March 31, 2013. This increase was due primarily to higher
sales of hydraulic excavators in Japan and China, partially offset bylower sales of mining machinery in North America, Asia and Oceania.
Segment profit increased 9% to ¥63.3 billion, as compared withthe year ended March 31, 2013. This increase was due primarily tothe increase in operating income resulting from the effect of foreignexchange rate fluctuations and progress with cost-cutting programs,
partially offset by the absence of large gains on the sale of subsidiaryshares due to business restructuring that were recorded in the year
ended March 31, 2013.

33

Financial Section(High Functional Materials & Components)
Revenues were ¥1,363.2 billion, an increase of 2% compared withthe year ended March 31, 2013. This increase was due primarily tothe higher sales of automotive- and electronics-related products,
partially offset by lower demand for HDD-related products and theeffect of the withdrawal from unprofitable businesses.
Segment profit increased 90% to ¥96.5 billion, as compared withthe year ended March 31, 2013. This increase was due primarily tothe increase in operating income resulting from higher revenues, theeffect of cost-cutting programs and business restructuring for thewires and cables business, and the absence of write-offs 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 theyear ended March 31, 2013. This increase was due primarily to higher
demand for automobile in overseas markets and the last-minutedemand ahead of the scheduled consumption tax rate increase in Japan.
Segment profit decreased 86% to ¥4.9 billion compared with theyear ended March 31, 2013. This decrease 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 andassociated improvement in capacity utilization.
(Digital Media & Consumer Products)
Revenues were ¥890.8 billion, an increase of 9% compared with theyear ended March 31, 2013. This increase was due primarily to thelast-minute demand ahead of the scheduled consumption tax rateincrease in Japan and higher sales of air-conditioning equipments
both in Japan and overseas.
Segment loss worsened ¥2.0 billion to ¥2.9 billion, as comparedwith the year ended March 31, 2013. This was due primarily to theincrease in restructuring charges, partially offset by increased operating
income resulting from higher revenues.

34(Others (Logistics and Other services))
Revenues were ¥1,233.6 billion, an increase of 11% compared withthe year ended March 31, 2013. This increase was due primarily toincreased revenues at Hitachi Transport System, Ltd. resulting frombusiness expansion 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 withthe year ended March 31, 2013. This increase was due primarily tothe increase in operating income resulting from higher revenues andthe 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 theyear ended March 31, 2013. This decrease was due primarily to theabsence of recording revenues related to a large cancellation in theyear ended March 31, 2013, partially offset by higher revenues fromthe overseas business.
Segment profit increased 18% to ¥34.6 billion, as compared withthe year ended March 31, 2013. This increase was due primarily tothe increase in operating income resulting from higher earnings fromthe overseas business and higher earnings as a result of the decreasein credit costs in Japan, as well as decreased restructuring charges.

Revenues by Geographic Area
Millions of yen
Percentchange

2014

2013

Japan

¥5,303,474¥5,355,119–1%

Outside Japan

4,312,728

3,685,952

17%Years ended March 31:

Asia

2,063,567

1,711,141

21%

North America

910,274804,057

13%

Europe812,120

636,840

28%

Other Areas

526,767

533,914

–1%

Total

¥9,616,202¥9,041,071

6%(Japan)
Revenues in Japan were ¥5,303.4 billion, a decrease of 1% comparedwith 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 in revenues in the High Functional
Materials & Components segment owing to the withdrawal from
unprofitable businesses, partially offset by the increases in revenues in
the Information & Telecommunications Systems, Electronic Systems &Equipment, Construction Machinery and Digital Media & Consumer
Products segments, etc.

Hitachi, Ltd. | Annual Report 2014

(Asia)
Revenues in Asia were ¥2,063.5 billion, an increase of 21% comparedwith the year ended March 31, 2013. This increase was due to theincreases in revenues in all segments, including the Information &Telecommunication Systems segment, which reported higher sales ofATMs in China, the Social Infrastructure & Industrial Systems segment,
which reported higher sales of elevators and escalators mainly resulting
from the effects of foreign exchange rates fluctuations, and the DigitalMedia & Consumer Products segment, which reported higher revenues
resulting from higher sales of air-conditioning equipments and theeffects of the foreign 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 wasdue primarily to the increase in revenues in the Information &Telecommunication Systems segment, resulting from the effects of theforeign exchange rates fluctuations, the Electronic 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.
(Europe)
Revenues in Europe were ¥812.1 billion, an increase of 28% comparedwith the year ended March 31, 2013. This increase was due to theincreases in revenues in all segments, including the Information &Telecommunication Systems segment, which reported increased
revenues resulting from the effects of the foreign exchange rates fluctuations, the Social Infrastructure & Industrial Systems segment, which
reported increased revenues from the railway systems business andthe 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 segmentowing to the effects 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, thisdecrease was partially offset by the increased revenues in the Others(Logistics and Other services) segment due to the consolidation of a
Turkish company by Hitachi Transport System, Ltd.

Liquidity and Capital Resources
Our management considers maintaining an appropriate level ofliquidity and securing adequate funds for current and future business
operations to be important financial objectives. Through efficientmanagement of working capital and selective investment in new plants
and equipment, we are working to optimize the efficiency of capitalutilization throughout our business operations. We endeavor to improve
our group cash management by centralizing such management among
us and our overseas financial subsidiaries. Our internal sources offunds 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 internationalcommercial banks in response to our capital requirements. Our management’s policy is to finance capital expenditures primarily by internallygenerated funds and to a lesser extent by funds raised through theissuance of debt and equity securities in domestic and foreign capital
markets. In order to flexibly access funding, we maintain our shelfregistration 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) andmeeting demand for funds for growth of the Social Innovation Business.
We maintain commitment line agreements with a number ofdomestic 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, as well as another commitment line agreement with a contract term of three years and twomonths ending in July 2016. These committed credit arrangements
are, in general, subject to financial and other covenants and conditions
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 sufficient for our financing needs. We seek
to improve our credit ratings in order to ensure financial flexibility for
liquidity and capital management, and to continue to maintain accessto sufficient funding resources through the capital markets.

35

Financial Section

Cash Flows
Millions of yen
2014

2013

Net cash provided by operating activities¥439,406¥583,508

Net cash used in investing activities(491,363)(553,457)

Net cash provided by (used in)financing activities

32,968(180,445)

Effect of exchange rate changes on cash
and cash equivalents

49,57458,449Net increase (decrease) in cash andcash equivalents

30,585(91,945)

Years ended March 31:

Cash and cash equivalents at beginning of year

527,632

619,577

Cash and cash equivalents at end of year

¥558,217¥527,632(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 andnet gain on securities. In the year ended March 31, 2014, tradereceivables increased by ¥308.4 billion due primarily to the increase inrevenues, whereas in the year ended March 31, 2013, a decrease intrade receivables of ¥71.7 billion was recorded. Inventories increasedby ¥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 the decrease 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 theforegoing, 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 wasrecorded as investments related to property, plant and equipment,
where the collection of investments in leases, the proceeds from disposal of property, plant and equipment and the proceeds from disposal of tangible assets and software to be leased were subtracted
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 to36¥87.5 billion, due mainly to the absence of stock acquisitions related
to the acquisition of Horizon Nuclear Power Limited in the year ended
March 31, 2013. Proceeds from sale of investments in securities andshares 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 of shares ofWestern 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, 2014was ¥203.8 billion, whereas net increase of ¥74.6 billion was recordedin 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 from the proceeds from long-term
debt, an increase of ¥495.4 billion from the year ended March 31,
2013. As a result 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 theyear ended March 31, 2013.
As a result of the above items, as of March 31, 2014, cash andcash equivalents amounted to ¥558.2 billion, net increase of ¥30.5
billion from March 31, 2013. Free cash flows, the sum of cash flows
from operating 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 from March 31, 2013. This increase wasdue primarily to an increase in accounts receivables mainly resulting
from increased revenues, an increase in the value of foreign currencydenominated assets resulting from the translation due to the depreciation of yen, an increase in the value of marketable securities in linewith higher stock market prices, and the effects of the consolidationof NBL Co., Ltd. at Hitachi Capital Corporation for strengthening thefinancial services business. Total cash and cash equivalents and shortterm investments as of March 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

Hitachi, Ltd. | Annual Report 2014

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 straight bonds, theprocurement of new long-term debt by the Company, and the effectsof the consolidation of NBL Co., Ltd. at Hitachi Capital Corporation.
As of March 31, 2014, short-term debt, consisting mainly of borrowings
from banks and commercial paper, amounted to ¥647.2 billion,a decrease of ¥26.5 billion from March 31, 2013, due primarily to therepayment of commercial paper by the Company. As of March 31,
2014, long-term debt (excluding current portion), consisting mainly ofdebentures, debentures with stock acquisition rights, medium-term
notes and loans principally from banks and insurance companies,
amounted to ¥1,512.7 billion, an increase of ¥205.9 billion fromMarch 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 increase of ¥568.6 billion fromMarch 31, 2013, due primarily to posting of net income attributable
to Hitachi, Ltd. stockholders and a decrease in the accumulated othercomprehensive 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 from March 31, 2013.
The ratio of interest-bearing debt to total equity (the sum of total
Hitachi, Ltd. stockholders’ equity and noncontrolling interests)
decreased to 0.73, compared with 0.75 as of March 31, 2013.

37

Financial Section

Consolidated Balance Sheets
Hitachi, Ltd. and Subsidiaries
March 31, 2014 and 2013

Millions of yen

Assets2014

2013

558,217¥ 527,632

9,172

10,444Current assets:
Cash and cash equivalents
Short-term investments¥

Trade receivables:
Notes

143,675

110,316

2,654,260

2,311,460

2,797,935

2,421,776

Investments in leases

262,953

270,899

Current portion of financial assets transferred to consolidated securitization entities

52,212

23,365

1,407,055

1,437,399

Accounts
Net trade receivables

Inventories
Prepaid expenses and other current assets

616,326

498,623

5,703,870

5,190,138

1,220,800

781,984

492,383

518,313

Buildings

1,900,779

1,942,634

Machinery and equipment

4,901,505

5,207,010

Total current assets
Investments and advances, including affiliated companies
Property, plant and equipment:
Land

Construction in progress

94,972

115,340

7,389,639

7,783,297

5,047,548

5,503,333

2,342,091

2,279,964

Goodwill

339,148

290,387

Other intangible assets

422,333

415,009761,481705,396

185,818

131,379

Less accumulated depreciation
Net property, plant and equipment
Intangible assets:

Total intangible assets
Financial assets transferred to consolidated securitization entities
Other assets
Total assets

38

802,839

720,369¥11,016,899¥9,809,230

Hitachi, Ltd. | Annual Report 2014

Millions of yen

2014

2013

647,269¥ 673,850

Current portion of long-term debt

464,234

260,185

Current portion of non-recourse borrowings of consolidated securitization entities

49,89526,39918,926

15,462

1,331,288

1,219,402

937,401

924,591

Liabilities and Equity
Current liabilities:
Short-term debt¥

Trade payables:
Notes
Accounts
Accrued expenses
Income taxes

72,83956,278Advances received

298,483

359,795

Other current liabilities
Total current liabilities
Long-term debt

470,430

428,179

4,290,765

3,964,141

1,512,720

1,306,747

Non-recourse borrowings of consolidated securitization entities

148,931102,898

Retirement and severance benefits

749,913913,211

Other liabilities

462,106

342,946

7,164,435

6,629,943

458,790458,790

Total liabilities
Commitments and contingencies
Equity:Common stock
4,833,463,387 shares issued as of March 31, 2014 and 2013
Capital surplus

617,468

622,946

Retained earnings

1,587,394

1,370,723(9,265)(368,334)

Accumulated other comprehensive loss
Treasury stock, at cost

(3,146)(1,565)

Total Hitachi, Ltd. stockholders’ equity

2,651,241

2,082,560

Noncontrolling interests

1,201,223

1,096,727

Total equity

3,852,464

3,179,287¥11,016,899¥9,809,230

Total liabilities and equity

39

Financial Section

Consolidated Statements of Operations
Hitachi, Ltd. and Subsidiaries
Years ended March 31, 2014, 2013 and 2012

Millions of yen

2014

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)(884,079)(6,743,991)(1,875,052)(6,447,009)(831,962)(7,278,971)(1,974,632)

Expenses related to competition law and others
Impairment losses for long-lived assets
Restructuring charges
Interest income
Dividend income
Other income
Interest charges
Loss on sale of stock of an affiliated company
Other deductions
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
Net income(204,152)
364,030(106,816)
237,721(144,922)
412,808

99,055¥ 264,975

62,395¥ 175,326

65,629¥ 347,179

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

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

Yen

Net income attributable to Hitachi, Ltd. stockholders per share:
Basic
Diluted¥54.8654.85¥37.2836.29¥76.81
71.86

Consolidated Statements of Comprehensive Income
Hitachi, Ltd. and Subsidiaries
Years ended March 31, 2014, 2013 and 2012

Millions of yen

Net income
Other comprehensive income (loss) arising during the year
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
40

2014

2013

2012

¥364,030¥237,721¥412,808

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
49,446¥343,135

Hitachi, Ltd. | Annual Report 2014

Consolidated Statements of Equity
Hitachi, Ltd. and Subsidiaries
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 to noncontrolling interests
Acquisition of treasury stock
Sales of treasury stock
Total change in equity
Balance at end of year

Commonstock

CapitalsurplusRetainedearnings

Accumulated
othercomprehensive
loss

Treasurystock,
at cost

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity¥458,790¥622,946¥1,370,723¥(368,334)¥(1,565)¥2,082,560¥1,096,727¥3,179,287

–
–
–

–
(5,907)–––
264,975–(1,343)–––––(7,250)264,975–(13,081)
99,055–(20,331)364,030

–
–
–
–
–
–
¥458,790

–
–
–
–
429
(5,478)¥617,468–(48,304)–––
216,671¥1,587,394

360,412––––359,069¥ (9,265)–––(4,431)2,850(1,581)¥(3,146)

360,412(48,304)–(4,431)
3,279
568,681¥2,651,241

44,736–(26,214)––
104,496¥1,201,223

405,148(48,304)(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 to noncontrolling interests
Acquisition of treasury stock
Sales of treasury stock
Total change in equity
Balance at end of year

Commonstock

CapitalsurplusRetainedearnings

Accumulated
othercomprehensive
loss

Treasurystock,
at cost

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity¥427,775¥600,243¥1,242,110¥(496,896)¥(1,450)¥1,771,782¥1,002,213¥2,773,995

31,015––31,015(8,307)–––
175,326

–
698
–

–
–
–

62,030(7,609)175,326–
1,186
62,39562,030(6,423)
237,721–––––31,015¥458,790

–
–
–
–
(5)
22,703¥622,946–(46,713)–––
128,613¥1,370,723

127,864––––
128,562¥(368,334)

–
–
–
(162)
47
(115)
¥(1,565)

127,864(46,713)–(162)
42
310,778¥2,082,560

55,095–(24,162)––
94,514¥1,096,727

182,959(46,713)(24,162)(162)
42
405,292¥3,179,287

Millions of yen

2012

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

Commonstock

CapitalsurplusRetainedearnings

Accumulated
othercomprehensive
loss¥409,129¥603,133¥ 922,036¥(493,062)¥(1,371)¥1,439,865¥1,001,524¥2,441,389

18,646––

18,646(21,527)–––
347,179

–
210
–

–
–
–

37,292(21,317)347,179–(26,464)
65,62937,292(47,781)
412,808–––––
18,646¥427,775

–
–
–
–
(9)
(2,890)¥600,243–(27,105)–––
320,074¥1,242,110(4,044)––––(3,834)¥(496,896)

–
–
–
(126)
47
(79)
¥(1,450)(4,044)(27,105)–(126)38
331,917¥1,771,782(16,183)–(22,293)––689¥1,002,213(20,227)(27,105)(22,293)(126)
38332,606¥2,773,995

Treasurystock,
at cost

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

41

Financial Section

Consolidated Statements of Cash Flows
Hitachi, Ltd. and Subsidiaries
Years ended March 31, 2014, 2013 and 2012

Millions of yen

2014

2013

2012

¥ 364,030¥ 237,721¥ 412,808

Depreciation

329,833

300,664

360,358

Amortization

125,552

117,355

119,308

Impairment losses for long-lived assets

33,79623,20931,841

Deferred income taxes

59,8682,394

21,509Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:

Equity in net (earning) loss of affiliated companies(8,686)40,447

15,571Gain on sale of investments in securities and other(45,412)(24,047)(228,115)

74

4,762

15,096(131,738)––

Impairment of investments in securities
Gain associated with the thermal power generation systems business(Gain) loss on disposal of rental assets and other property

223

3,119

(18,627)(Increase) decrease in receivables(308,492)

71,777(259,211)(Increase) decrease in inventories(70,700)

7,860(162,594)(Increase) decrease in prepaid expenses and other current assets(90,692)(3,442)

987

Increase (decrease) in payables

54,327(187,651)

119,177

Increase (decrease) in accrued expenses and retirement andseverance benefits

51,946

8,177(18,430)

Increase (decrease) in accrued income taxes

33,460(25,697)

7,103

Increase (decrease) in other liabilities

46,125(22,215)(13,812)Net change in lease receivables related to the Company’s
and its subsidiaries’ products

1,021

12,05127,012

Other(5,129)17,024

17,174439,406

583,508

447,155

Capital expenditures(385,000)(381,731)(337,502)

Purchase of intangible assets(118,870)(105,842)(106,042)

Purchase of tangible assets and software to be leased(436,499)(335,640)(269,350)

33,10928,556

47,697

Net cash provided by operating activities
Cash flows from investing activities:

Proceeds from disposal of property, plant and equipment
Proceeds from disposal of tangible assets and software to be leased

31,306

20,944

17,447

Collection of investments in leases

314,921285,407244,446

Purchase of investments in securities and shares of newly
consolidated subsidiaries(87,542)(171,721)(151,413)

Proceeds from sale of investments in securities and shares of
consolidated subsidiaries resulting in deconsolidation

122,801

80,602331,007

Other
Net cash used in investing activities

42

34,411

25,96828,126¥(491,363)¥(553,457)¥(195,584)

Hitachi, Ltd. | Annual Report 2014

Millions of yen

2014

2013

2012

¥(203,885)¥ 74,630¥ 70,105

Cash flows from financing activities:
Increase (decrease) in short-term debt, net
Proceeds from long-term debt

704,457

352,840

388,991

Payments on long-term debt

(365,566)(509,356)(544,841)

5,886

2,523

736

Dividends paid to Hitachi, Ltd. stockholders(48,194)(46,564)(27,018)

Dividends paid to noncontrolling interests(25,535)(25,827)(22,206)

Acquisition of common stock for treasury(4,431)

(162)

(126)

16

25

38

(28,901)(28,191)(39,230)

–

102

6,188

Proceeds from sale of common stock by subsidiaries

Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from noncontrollinginterest holders
Proceeds from sale of shares of consolidated subsidiaries
to noncontrolling interest holders
Other

(879)

(465)

(475)

Net cash provided by (used in) financing activities

32,968(180,445)(167,838)

Effect of exchange rate changes on cash and cash equivalents

49,57458,449(18,966)

Net increase (decrease) in cash and cash equivalents

30,585(91,945)

64,767

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

527,632

619,577554,810¥ 558,217¥ 527,632¥ 619,577

43

Financial Section

Consolidated Balance Sheetsby Manufacturing, Services & Others and Financial Services
Hitachi, Ltd. and Subsidiaries
March 31, 2014 and 2013
Billions of yen

As of March 31, 2014

As of March 31, 2013

Total*

Manufacturing,Services &OthersFinancial
Services

Total*

558.2¥ 500.7¥ 141.7¥ 527.6

2,797.9

2,007.2642.3

2,421.7

262.9

84.4

203.0

270.8

52.2

52.2

5.1

18.1

23.3

1,405.9

0.0

1,407.0

1,437.4

0.0

1,437.3

597.5

76.0

625.4

499.7

50.7

509.0
5,190.1

Manufacturing,Services &OthersFinancial
Services

Cash and cash equivalents¥ 519.0¥ 156.7

Trade receivables

2,152.4

878.2

70.8

207.5

–

AssetsCurrent assets:

Investments in leases
Current portion of financial assets transferred
to consolidated securitization entities
Inventories
Others¥Total current assets

4,745.9

1,370.8

5,703.8

4,534.7

1,056.0

Investments and advances

1,175.8102.2

1,220.8

720.6

112.3

781.9

Property, plant and equipment

2,100.9242.3

2,342.0

2,074.7

206.3

2,279.9

Financial assets transferred to consolidated
securitization entities

–

185.8

185.8

–

131.3

131.3

1,045.1544.7

1,564.3

994.2

454.8

1,425.7¥9,067.9¥2,446.1¥11,016.8¥8,324.4¥1,960.9¥9,809.2¥ 686.7¥ 598.8¥ 1,111.5¥ 690.9¥ 407.9¥ 934.0

–

49.8

49.8

5.1

21.2

26.3

Trade payables

1,278.3

276.3

1,350.2

1,181.6

256.2

1,234.8

Others1,658.6

154.9

1,779.1

1,659.8

142.1

1,768.8

3,623.7

1,080.0

4,290.7

3,537.6

827.5

3,964.1

731.5

849.4

1,512.7

672.7

692.8

1,306.7

–

148.9

148.9

–

102.8

102.8

Other assets
Total assets

Liabilities and Equity
Current liabilities:
Short-term debt and current portion of
long-term debt
Current portion of non-recourse borrowings ofconsolidated securitization entities

Total current liabilities
Long-term debt
Non-recourse borrowings of consolidated
securitization entities
Other noncurrent liabilities

1,156.7

59.6

1,212.0

1,204.3

56.9

1,256.1

Total liabilities

5,512.0

2,138.1

7,164.4

5,414.7

1,680.2

6,629.9

Total Hitachi, Ltd. stockholders’ equity

2,483.8

178.4

2,651.2

1,932.3

161.1

2,082.5

Noncontrolling interests

1,072.0129.5

1,201.2

977.3

119.6

1,096.7

Total equity

3,555.8307.9

3,852.4

2,909.7280.7

3,179.2

Total liabilities and equity¥9,067.9¥2,446.1¥11,016.8¥8,324.4¥1,960.9¥9,809.2

Interest-bearing debt

¥1,418.2¥1,647.1¥ 2,823.0¥1,368.8¥1,224.9¥2,370.0

D/E ratio (including noncontrolling interests) (times)

0.40

5.35

0.73

0.47

4.36

0.75

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

27.4

7.3

24.1

23.2

8.2

21.2

* Total figures exclude inter-segment transactions.

44

Hitachi, Ltd. | Annual Report 2014

Consolidated Statements of Operations
by Manufacturing, Services & Others and Financial Services
Hitachi, Ltd. and Subsidiaries
March 31, 2014 and 2013
Billions of yen

As of March 31, 2014

As of March 31, 2013

Total*

Manufacturing,Services &OthersFinancial
Service

Total*¥338.5¥9,616.2¥8,839.6¥340.2¥9,041.0

500.7

33.1

532.8

393.9

29.2

422.0

549.5

34.6

580.1

332.1

29.4

358.0

Income before income taxes

537.8

33.2

568.1

317.9

28.7

344.5

Net income attributable to Hitachi, Ltd. stockholders

253.5

14.3

264.9

164.9

12.7

175.3

Manufacturing,Services &OthersFinancial
Service¥9,416.4

Operating income
EBIT (earnings before interest and taxes)

Revenues* Total figures exclude inter-segment transactions.

Consolidated Statements of Cash Flowsby Manufacturing, Services & Others and Financial Services
Hitachi, Ltd. and Subsidiaries
March 31, 2014 and 2013
Billions of yen

As of March 31, 2014
Manufacturing,Services &OthersFinancial
Services

Cash flows from operating activities¥ 498.6

Cash flows from investing activities(393.6)

Free cash flows
Cash flows from financing activities

As of March 31, 2013

Total*1

Manufacturing,Services &OthersFinancial
Services

Total*1¥ (25.9)¥ 439.4¥ 503.4¥105.2¥ 583.5(124.1)(491.3)(478.4)(63.0)(553.4)104.9(150.0)(51.9)

25.0

42.1

30.0

(134.6)

163.7

32.9

(170.1)(44.4)(180.4)

Effect of exchange rate changes on cash andcash equivalents

48.0

1.3

49.5

56.7

1.8

58.4

Net increase (decrease) in cash and cash equivalents

18.3

15.1

30.5

(88.3)(0.3)(91.9)¥ 500.7¥141.7¥ 527.6¥ 589.0¥142.0¥ 619.5

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

519.0

156.7

558.2

500.7

141.7

527.6

Core free cash flows*2

22.4(202.5)(186.0)

19.4

46.9

45.7

*1 Total figures exclude inter-segment transactions.
*2 Operating cash flows plus collection of investments in leases less cash outflows for the purchase of property, plant and equipment, intangible assets, software, and the assets to be leased.

Note: Consolidated Financial Statements by Manufacturing, Services & Others and Financial Services represent unaudited financial information
prepared by the Company for the purpose of this supplementary information.

Role of the Financial Services Segment
Hitachi’s Manufacturing, Services & Others segments and its Financial Services segment are each clearly positioned and managed as distinct businesses with different characteristics. The Manufacturing, Services & Others segments work in coordination with the Financial Services segment toexpand the Social Innovation Business.
Increasing the financing receivables owned by Hitachi Capital Corporation, which constitutes the Financial Services segment, is the basis for
growth in the financing business and regarded as investment to generate higher returns on equity. Credit rating agencies typically permit a higher
level of interest-bearing debt and D/E ratio for financial services companies than for manufacturing and services companies. The credit ratings ofHitachi, Ltd. are assigned by credit rating agencies on the basis of key financial indicators that exclude Hitachi’s financial services business.

45