Report of Earnings and Financial Statements for the Year Ended March 31, 2011
April 28, 2011
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

Listed on:
1st sections of TSE, OSE, NSE
Stock code:
7012
URL:
http://www.khi.co.jp/
Representative:
Satoshi Hasegawa, President
Contact:
Hideyuki Matsubara, Senior Manager, Accounting DepartmentTel:+81 3-3435-2130
Scheduled dates:
Ordinary General Meeting of shareholders
June 28, 2011
Commencement date of dividend payments
June 29, 2011
Submission of financial statements:
June 28, 2011
Supplementary materials to financial results
Available
Earnings presentation
Conducted

1. Consolidated Financial Results for the Year Ended March 31, 2011
(April 1, 2010 to March 31, 2011)(Amounts rounded down to the nearest million yen)

(1) Operating Results(Percentage figures represent changes versus the year-ago period)
Net sales

Operating income

million yen%
million yen%
Year ended
1,226,949
4.5
42,628March 31, 2011
Year ended
1,173,473(12.3)(1,316) (104.5)
March 31, 2010
Note: Comprehensive income March 31, 2011: 18,252 million yen
March 31, 2010: (5,464) million yen
Earnings per share

Recurring profit
million yen

Net income%

million yen%

49,136243.7

25,965-

14,293(63.0)(10,860)(192.6)

Earnings per share
Return on equity– diluted
yen%%Operating income
to net sales
%

3.6

3.4

1.0

(0.1)

Return on assets

yenYear ended
15.55
15.32
9.1
March 31, 2011
Year ended(6.51)(3.8)
March 31, 2010
For reference: Equity in income of non-consolidated subsidiaries and affiliates:
Year ended March 31, 2011: 9,205 million yen
Year ended March 31, 2010: 6,522 million yen(2) Financial Condition
Total assets

Net assets

million yen

million yen

Ratio ofshareholders’ equity
to total assets%

March 31, 2011

1,354,278

297,43321.3

173.03

March 31, 2010

1,352,439

283,053

20.4

166.13

Note:

Shareholders’ equity: March 31, 2011:
March 31, 2010:

289,056 million yen
277,081 million yen

1

Net assets per shareyen(3) Cash Flow Position
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at end ofyear

million yen

million yen

million yen

million yen

81,929(52,942)(18,862)

44,62930,178(63,277)

35,911

34,137

Dividend per share
End of
End of
End ofsecondthird
financialquarterquarter
year
yen
yen
yen

Total
dividends
paid
Full year(annual)yenmillion yen

Year ended
March 31, 2011
Year ended
March 31, 2010

2. Dividends
End offirstquarteryen

Record date or term

Year ended
March 31, 2010
Year ended
March 31, 2011
Year ending March
31, 2012 (forecast)

Payout ratio(consolidated)

Dividends /Net assets(consolidated)

%

%

-

0.00

-

3.00

3.00

5,003

-

1.7

-

0.00

-

3.00

3.00

5,011

19.3

1.7

-

0.00

-

4.00

4.00

20.8

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2012
(April 1, 2011 to March 31, 2012)
Net sales
For six months
endingSeptember 30,
2011
Full year(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen%
million yen%
million yen%
yenmillion yen%

650,000

13.6

20,000(4.3)

21,000(1.1)

12,000

(2.7)

7.18

1,360,000

10.8

50,00017.2

52,0005.8

32,000

23.2

19.15

4. Other Information
1) Changes affecting the status of material subsidiaries (scope of consolidation): None
2) Changes in accounting principles, procedures, and methods of presentation applicable to the
preparation of consolidated financial statements:(1) Changes in accordance with revisions to accounting standards: Yes(2) Changes other than (1) above: None
Note: For details, see “Changes in basis of preparation of financial statements” on page 22 in the“Consolidated Financial Statements” section.
3) Number of shares issued (common stock)(1) Number of shares issued at end of period (treasury stock included):
March 31, 2011:
1,670,646,460 shares
March 31, 2010:
1,669,629,122 shares(2) Number of shares held in treasury at end of period:
March 31, 2011:
100,288 shares
March 31, 2010:
1,780,388 shares(3) Average number of shares during respective periods
March 31, 2011:
1,669,359,273 shares
March 31, 2010:
1,668,119,883 shares

2For reference:
Overview of Non-Consolidated Financial Results(1) Operating Results(Percentage figures represent changes versus the year-ago period)
Net sales
million yen
Year ended March 31,
2011
Year ended March 31,
2010

Operating income%

million yen%

Recurring profit
million yen%

Net income
million yen%

817,455

26.9

1,731

(109.1)

32,837280.6

33,341-

644,133(16.5)(18,995)

-

8,627

230.0

(5,417)-yen

Earnings per share– diluted
yen

19.97

19.66

(3.24)-

Total assets

Net assets

million yen

million yen

Ratio ofshareholders’ equity
to total assets%

March 31, 2011

1,116,076

246,88822.1

147.78March 31, 2010

976,460

220,72022.6

132.33

Earnings per share
Year ended March 31,
2011
Year ended March 31,
2010(2) Financial Condition

Note:

Shareholders’ equity: March 31, 2011:
March 31, 2010:

Net assets per shareyen

246,888 million yen
220,720 million yen* Review status
This report is exempt from the review of accounts conducted in accord with Japan’s Financial
Instruments and Exchange Act. As of this report’s publication, the review of the financial results had
not been completed.
* Appropriate use of financial forecasts and other important matters
Forward-Looking Statements
These materials contain various forward-looking statements and other forecasts regarding performanceand other matters. Such statements are based on information available at the time of preparation. Actual
results may differ from those expressed or implied by forward-looking statements due to a range offactors. For the assumptions underlying the earnings forecasts presented and other information
regarding the use of such forecasts, refer to “Consolidated Earnings Outlook” in “Qualitative
Information and Financial Statements,” beginning on page 8.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial position

9(3) Dividend policy and dividends for the fiscal years through March 31, 2011 and 201210(4) Business and other risks

10

2. Status of Group10

3. Management Strategy

12(1) Basic management strategy

12(2) Target management metrics

12(3) Medium- to long-term management strategy

12(4) Management priorities

13

4. Consolidated Financial Statements

15(1) Consolidated balance sheets

15(2) Consolidated statements of income and comprehensive income17(3) Consolidated statement of changes in shareholders’ equity

19(4) Consolidated cash flow statements

21(5) Notes on the going-concern assumption

22(6) Basis of preparation of financial statements

22(7) Changes in basis of preparation of financial statements

22(8) Change in the presentation of accounts

23(9) Additional information

23(10) Notes on financial statements

23

5. Non-Consolidated Financial Statements

36(1) Non-consolidated balance sheets

36(2) Non-consolidated statements of income38(3) Non-consolidated statement of changes in shareholders’ equity(4) Events or circumstances that raise material doubt regarding the going-concern
assumption
6. Others

39
40
41

(1) Corporate officer changes

41(2) Consolidated orders and sales

41(3) Non-consolidated orders and sales(4) Supplementary information on earnings forecasts for the fiscal year ending March 31,
2012

42

4

44

1. Qualitative Information and Financial Statements(1) Consolidated operating results
In the fiscal year ended March 31, 2011, the KHI Group was beset by an adverse businessenvironment marked by continued domestic economic sluggishness, yen appreciation, and sharply
rising material prices. Moreover, the Japanese economic outlook has recently become even murkier
in the aftermath of the catastrophic earthquake that struck eastern Japan on March 11.
The global economy generally remained in a moderate recovery trend despite a minor slowdown
in emerging market economies’ robust growth rates. The US economic outlook, however, remained
uncertain. In Europe, concerns about certain countries’ financial systems have yet to be dispelled,
posing a worrisome risk to the global economy.
Amid such an economic environment, most of the Group’s businesses achieved year-on-year
earnings growth. Orders received grew across all business segments except two: Gas Turbine &Machinery and Plant & Infrastructure. Overall orders received also were up from the previous fiscal
year, bolstered by large orders booked by the Rolling Stock and Aerospace segments. Overall sales
likewise increased from the previous fiscal year despite sales declines in certain segments. The
Precision Machinery, Motorcycle & Engine, Gas Turbine & Machinery, and Aerospace segments allachieved sales growth. Earnings similarly declined in a few segments but improved substantiallyoverall, largely by virtue of improved operating performance in the Motorcycle & Engine andPrecision Machinery segments.
The Group’s consolidated orders received totaled ¥1,270.6 billion, a ¥269.3 billion increase fromthe previous fiscal year. Consolidated net sales were up ¥53.4 billion to ¥1,226.9 billion.
Consolidated operating income totaled ¥42.6 billion, a ¥43.9 billion improvement from the previous
fiscal year. Consolidated recurring profit grew ¥34.8 billion year on year to ¥49.1 billion.
Consolidated net income was ¥25.9 billion, a ¥36.8 billion improvement from the previous fiscal
year.
Consolidated operating performance in the fiscal year ended March 31, 2011, is summarized bysegment below.

Segment Information
Effective from the first quarter of the fiscal year ended March 31, 2011, the Group adopted the
Accounting Standards Board of Japan’s Revised Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information (ASBJ Statement No. 17, March 27, 2009) andassociated Guidance on the Accounting Standard for Disclosures about Segments of an Enterpriseand Related Information (ASBJ Guidance No. 20, March 21, 2008). The Group also renamed its
Consumer Products & Machinery segment the Motorcycle & Engine segment and its Hydraulic5Machinery segment the Precision Machinery segment in conjunction with new industry
segmentation for internal reporting adopted in April 2010. Also effective from April 2010, thecrushing machine business was shifted from the Rolling Stock segment to the Plant & Infrastructure
segment, and the industrial robot business was shifted from the Consumer Products & Machinery
segment to the Precision Machinery segment. Additionally, the Group renamed its Shipbuilding
segment the Ship & Offshore Structure segment in conjunction with its October 2010 reorganization.
To reflect this change, year-earlier figures for net sales, operating income/loss, and orders received
in the table below have been restated based on the newly adopted accounting standard and guidance
and resegmentation of operations.

Segment net sales, operating income, and orders received (billions of yen)
Fiscal year ended March 31,

Net
sales

2011
Operatingincome

Net
sales

2010
OperatingincomeShip & Offshore
118.4
(1.0)
151.8
Structure
Rolling Stock
131.1
8.1
150.0
Aerospace
196.8
3.0
188.8
Gas Turbine &
202.6
9.5
191.3
Machinery
Plant &
89.0
8.2
107.5
Infrastructure
Motorcycle &
234.4
(4.9)
203.0
EnginePrecision
140.3
22.3
82.7
Machinery
Other
114.0
2.5
97.8
Adjustments
—
(5.3)
—
Total
1,226.9
42.6
1,173.4
Note: Net sales include only sales to external customers.

Orders received
Fiscal year ended
March 31,
2011

2010

1.5

78.9

16.1

8.7
3.7

187.1
206.7

66.2
171.3

8.9

187.5

226.2

7.9

119.9

135.6

(27.0)

234.4

203.0

3.4

148.9

84.9

(1.0)
(7.5)
(1.3)

106.8
—
1,270.6

97.5—
100.12

Ship & Offshore Structure
Consolidated orders received totaled ¥78.9 billion, a ¥62.8 billion increase from the previous fiscal
year, when only one newbuild order was received. The increase was attributable to an influx ofnewbuild orders for 11 bulk carriers and one submarine.
Consolidated net sales totaled ¥118.4 billion, a decrease of ¥33.4 billion from the previous fiscal
year, when revenues from large newbuild sales were recognized.
The segment incurred an operating loss of ¥1.0 billion, ¥2.5 billion below the previous fiscal
year’s operating income, largely due to provisioning of additional reserves against losses on
construction contracts.

6Rolling Stock
Consolidated orders received totaled ¥187.1 billion, up ¥120.8 billion from the previous fiscal year.
The increase was largely attributable to subway car orders from the Washington Metropolitan Area
Transit Authority.
Consolidated net sales decreased ¥18.9 billion year on year to ¥131.1 billion, largely reflecting adecline in overseas railway car sales.
The decrease in overseas railway car sales weighed on profits, with consolidated operating income
down ¥500 million to ¥8.1 billion.

Aerospace
Consolidated orders received totaled ¥206.7 billion, a ¥35.3 billion year-on-year increase derived
largely from growth in orders for component parts for the Boeing 777 and 787.
Consolidated net sales totaled ¥196.8 billion, up ¥7.9 billion from the previous fiscal year, largely
by virtue of growth in sales to Japan’s Ministry of Defense and sales of Boeing 787 component parts.
Despite the sales growth, consolidated operating income fell ¥700 million year on year to ¥3.0
billion, largely due to yen appreciation.

Gas Turbine & Machinery
Consolidated orders received totaled ¥187.5 billion, a ¥38.6 billion decrease from the previous fiscal
year, when the segment’s order book was swelled by large orders for aircraft engine components andgas compressors.
Consolidated net sales increased ¥11.3 billion year on year to ¥202.6 billion, boosted by growth insales of gas compressor and diesel generators.
Consolidated operating income was up ¥600 million year on year to ¥9.5 billion, largely as a resultof sales growth.

Plant & Infrastructure
Consolidated orders received totaled ¥119.9 billion, down ¥15.6 billion from the previous fiscal year,
when the segment booked overseas orders for large plant installations.
Consolidated net sales decreased ¥18.5 billion year on year to ¥89.0 billion, although the segment
booked a diverse mix of domestic and overseas sales of various plant installations.
Despite the sales decline, consolidated operating income increased ¥300 million year on year to¥8.2 billion, largely due to improved profitability stemming from brisk progress in fulfilling existingorders.

7

Motorcycle & Engine
Consolidated net sales grew ¥31.3 billion year on year to ¥234.4 billion, largely reflecting sales
growth in emerging markets.
Consolidated operating loss was reduced to ¥4.9 billion, a dramatic ¥22.0 billion improvementfrom the previous fiscal year despite the strong yen’s adverse impact. The improvement was
attributable to fixed-cost cutting and an increase in contribution margin ratio in addition to sales
growth.
Precision Machinery
Consolidated orders received totaled ¥148.9 billion, a ¥64.0 billion increase from the previous fiscal
year. Order growth was driven predominantly by demand for hydraulic equipment from construction
machinery makers.
Consolidated net sales rose ¥57.6 billion year on year to ¥140.3 billion, buoyed by growth inhydraulic equipment sales to construction machinery makers and sales of clean robots forsemiconductor production facilities.
Consolidated operating income was up ¥18.9 billion year on year to ¥22.3 billion as profitability
improved by virtue of sales growth coupled with increased capacity utilization.

Other Operations
Consolidated net sales totaled ¥114.0 billion, a ¥16.1 billion increase from the previous fiscal year.
Consolidated operating income totaled ¥2.5 billion, a ¥3.6 billion improvement from the previous
fiscal year.

Consolidated Earnings Outlook
The global economic outlook remains uncertain, clouded by deceleration of economic recovery indeveloped countries, Europe’s fiscal crisis, and heightened tensions in the Middle East. Nonetheless,the global economy as a whole will likely remain in a gradual recovery driven by emerging market
economies, particularly Asian ones. The Japanese economy faces likely ripple effects from supply
chain disruptions and destabilization of power supplies stemming from the March 11 earthquake, in
addition to concerns about exchange rate movements and raw material cost inflation.
Faced with such a highly uncertain business environment, the Company will steadily andvigorously push ahead with specific initiatives to rebuild its earnings foundation and re-embark on asustained growth trajectory toward realization of Kawasaki Business Vision 2020.
For the fiscal year ending March 31, 2012, the Company forecasts consolidated net sales of ¥1,360
billion, a ¥140 billion increase from the fiscal year just ended. The Company plans to derive the bulk

8

of this sales growth from the Plant & Infrastructure, Motorcycle & Engine, and Precision Machinery
segments.
In terms of earnings, the Company forecasts consolidated operating income of ¥50 billion,
ordinary income of ¥52 billion, and net income of ¥32 billion. The Company plans to achieve these
forecasts by continuing to pursue ongoing initiatives to improve earnings across all operations
through such means as reducing fixed and overhead costs and boosting productivity.
The Company’s earnings forecasts assume exchange rates of ¥83 to the US dollar and ¥115 to theeuro.

(2) Consolidated financial position

Financial Condition
At March 31, 2011, consolidated assets totaled ¥1,354.2 billion, essentially unchanged from March
31, 2010. Of this total, current assets accounted for ¥951.7 billion, a 2.1% increase from March 31,
2010. The increase was mainly attributable to growth in deferred tax assets, growth in tradereceivables in conjunction with sales activities, and inventory growth reflecting progress toward
completion of construction jobs. Fixed assets totaled ¥402.5 billion at March 31, 2011, a 4.3%
decrease from a year earlier. The decrease was largely attributable to fixed-asset impairment losses
and valuation losses on investment securities holdings.
Consolidated liabilities at March 31, 2011, totaled ¥1,056.8 billion, down 1.1% from March 31,
2010, largely as a result of advances from customers being recognized as revenues. Interest-bearing
debt at March 31, 2011, totaled ¥429.1 billion, roughly unchanged from a year earlier.
Consolidated net assets at March 31, 2011, totaled ¥297.4 billion, a 5.0% increase from March 31,
2010. The increase was largely attributable to net income partially offset by dividend payments.

Cash Flows
Operating activities provided net cash of ¥81.9 billion, a ¥51.7 billion increase from the previous
fiscal year. Major sources of operating cash flow included depreciation expense of ¥50.2 billion, a¥15.3 billion increase in reserves against losses on construction contracts, asset impairment losses of¥9.9 billion, and a ¥25.1 billion increase in trade payables. Major uses of operating cash flow
included a ¥17.7 billion increase in inventories, ¥15.5 billion decrease in advances from customers,and ¥13.2 billion in tax payments.
Investing activities used net cash of ¥52.9 billion, ¥10.3 billion less than in the previous fiscal year,
mainly to acquire property, plant and equipment.
Financing activities used net cash of ¥18.8 billion, a ¥54.7 billion increase from the previous fiscal
year, mainly for repayment of borrowings.
9Cash Flow RatiosYear ended March 31:
2007
2008
2009
2010
2011
Ratio of shareholders’ equity to
21.3
22.7
20.7
20.4
21.3
total assets (%)
Market-value equity ratio (%)
60.9
26.8
23.3
31.8
45.1
Debt-to-cash-flow ratio (%)
663.3
364.8
—
1,421.2
523.7
Interest-coverage ratio (times)
7.1
9.4
—
5.5
17.2
Notes:
1. Ratios are calculated as follows.
Ratio of shareholders’ equity to total assets: Shareholders’ equity / Total assets
Market-value equity ratio: Market capitalization / Total assets
Debt-to-cash-flow ratio: Interest-bearing debt / Cash flow from operating activities
Interest-coverage ratio: Cash flow from operating activities / Interest paid
2. All ratios are calculated using consolidated-basis financial data.
3. Market capitalization is calculated by multiplying the closing price of the company’s stock by
the number of shares issued and outstanding (excluding treasury stock) at the end of the fiscal
year.
4. The figure for cash flow from operating activities is taken from cash flow from operating
activities on the consolidated statement of cash flows.
5. Interest-bearing debt is all interest-bearing debt listed under liabilities on the consolidatedbalance sheet. Interest paid is the figure for “Cash paid for interest” on the consolidated
statement of cash flows.
6. The debt-to-cash-flow ratio and interest coverage ratio are omitted for the fiscal year ended
March 31, 2009, because that fiscal year’s operating cash flow was negative.
(3) Dividend policy and dividends for the fiscal years through March 31, 2011 and 2012
The Company’s basic policy is to pay shareholders stable dividends commensurate with earnings on
an ongoing basis while internally retaining sufficient funds to strengthen and expand its earnings
power and operating foundation in pursuit of future growth. After comprehensively considering its
earnings performance, the sufficiency of its retained earnings, and other relevant factors in light ofsaid policy, the Company intends to pay a dividend of ¥3 per share for the fiscal year ended March
31, 2011.
For the fiscal year ending March 31, 2012, the Company plans to pay a dividend of ¥4 per share.
(4) Business and other risks
No risks other than those disclosed under the heading “Business and Other Risks” in the Company’s
most recent full-year statutory financial report (filed June 25, 2010) have surfaced since said filing.
Updated risk disclosures are therefore omitted here.
2. Status of GroupA “Chart of Operations (Nature of Operations)” is presented on the following page. There have been
no material changes in the “Status of Affiliated Companies” in the Company’s most recent full-year
statutory financial report (filed June 25, 2010). Updated disclosure of said status is therefore omitted

here.

10

Chart of Operations (Nature of Operations)
Sales &
Manufacturing
Ship &
Offshore
Structure

Rolling stock

Manufacturing

Sales

incidental business

Nantong COSCO KHI ShipEngineering Co.,Ltd.

Kawajyu Kobe Support Co., Ltd.

Kawasaki Rail Car, Inc.

Kawasaki Rolling Stock
Component Co., Ltd.

Kawasaki Motors
Manufacturing Corp., U.S.A.

Kawasaki Rolling Stock
Technology Co., Ltd.

NIPPI Corporation

KGM Co.,Ltd

Aerospace
Kawaju Gifu Engineering Co.,Ltd.

Gas Turbine& Machinery

Kawasaki Thermal Engineering Co., Ltd.

Kawasaki
Heavy
Industries,
Ltd.

Kawasaki Machine Systems, Ltd.
EarthTechnica Co., Ltd.

Plant &
Infrastructure

Kawasaki Engineering Co., Ltd.
KEE Environmental
Construction Co,.Ltd.

Kawasaki Motors
Manufacturing Corp., U.S.A.

Kawasaki Motors Corporation Japan
Kawasaki Motors Corp., U.S.A.

Motorcycle& Engine

Kawasaki Motors Europe N.V.
Kawasaki Motors Enterprise(Thailand) Co., Ltd.
Flutek, Ltd.

Precision
Machinery

Kawasaki Precision Machinery (UK) Ltd.
Kawasaki Machine Systems, Ltd.
Kawasaki Robotics (USA) Inc.

KCM Corporation
KCMA Corporation
KCMJ Corporation

Other
Operations(Intermediate of Order)
Kawasaki Heavy Industries(U.S.A.) Inc.

(Trading)
Kawasaki Trading Co.,Ltd.

(Trading and Others)
Kawasaki Life Corporation

Kawasaki Heavy Industries(U.K.) Ltd.

Notes: 1. The above chart includes only major consolidated subsidiaries (in solid boxes) and major equity-method affiliates(in dotted boxes).
2. Kawasaki Thermal Engineering Co., Ltd., is listed on JASDAQ Standard, an Osaka Securities Exchange market.
3. In October 2010, the Company merged Kawasaki Shipbuilding Corporation, Kawasaki Precision Machinery Ltd.,and Kawasaki Plant Systems, Ltd. into itself.
4. Kawasaki Machine Systems, Ltd.(Industrial robot business) and Kawasaki Robotics (USA) Inc. were shiftedfrom the Motorcycle & Engine segment to the Precision Machinery segment

3. Management Strategy(1) Basic management strategy
The Group has amassed a broad range of technologies related to air, marine, and land transportsystems, energy, environmental engineering, and industrial machinery. In accord with its Group
Mission Statement, “Kawasaki, working as one for the good of the planet,” the Group has embraced
a mission of creating new value conducive to formation of an affluent, beautiful society in harmony
with the global environment through utilization of its broad array of sophisticated technologicalcapabilities.
In addition to providing products and services, the Group is committed to fulfilling its societal
responsibilities as a corporate citizen in all of its operations in accord with its Group Management
Principles. The Group aims to meet the expectations of its shareholders and other stakeholders bydeveloping human resources globally and continuously enhancing its earnings power and corporate
value.
The Group’s basic policy is to meet shareholders expectations by paying dividends commensuratewith earnings on an ongoing basis while internally retaining sufficient funds to strengthen andexpand its earnings power and operating foundation in pursuit of future growth.

(2) Target management metrics
In the aim of generating profits sufficient to meet investors’ expectations, the Group has adopted
ROIC (return on invested capital: earnings before interest and taxes ÷ invested capital), a measure ofcapital efficiency, as its target metric of operating performance. While seeking to maximize ROIC,
the Group will also endeavor to strengthen its financial condition through earnings growth andimprovement in invested-capital efficiency.

(3) Medium- to long-term management strategy
In April 2010, the Company adopted a new three-year business plan, “Medium-Term Business Plan
2010” (FY2010-FY2012). The plan sets forth a detailed roadmap for re-embarking on a growthtrajectory based on core policies of rebuilding the Group’s earnings foundation and returning to asustained growth path. At the same time, the Group has formulated Kawasaki Business Vision 2020,
which clarifies its businesses’ longer-term direction and strategies, in the aim of achieving sustained
growth into the future. Based on Kawasaki Business Vision 2020, the Group has incorporated
specific initiatives for developing new businesses and new products into its “Medium-Term Business
Plan 2010” (FY2010-FY2012).

12

(4) Management priorities
In order for the Group to achieve sustained growth into the future, it has become important to secure
a level of performance in FY2011 (the interim year of “Medium-Term Business Plan 2010”(FY2010-FY2012)) that exceeds that of FY2010 and ensure achievement of the objectives of theplan for FY2012. Although the impact of the strong Yen on the Motorcycle & Engine segment waslarger than expected in FY2010, we succeeded in achieving a level of performance that exceeded theinitial target, due to securing profitability as a result of large-scale projects and growth of thehydraulic machinery business for China. We will continue to work on the thorough reimplementationof “employing prudent risk management” and “emphasizing quality over quantity”, satisfy demand
from emerging countries and enhance measures to respond to exchange fluctuations to reinforce ourrevenue base.
To strengthen our financial and business position, we will focus on enhancing financial strength,
improving the efficiency of capital use and cutting fixed expenses. Moreover, taking the opportunityof the consolidation of four Group companies on October 1, 2010, we will strengthen system
proposals as well as system orders on a group-wide basis by sharing and using intellectual properties
such as technology and human resources accumulated in each business division across the entire
Group.
The earthquake of March 11, 2011 caused unprecedented damage in Japan. Based on experienceof the recovery from the Great Hanshin-Awaji Earthquake, the Group will cooperate fully withrestoration and recovery from the damage of the earthquake by actively providing our technologies
and products in the area of energy and environment.
The initiatives to be undertaken by each business segment are as follows.

(i) Ship & Offshore Structures: Maintain competitiveness of the business in China, and reform thestructure of the domestic segments as the engineering and leading technology development center(ii) Rolling Stock: Enhance competitiveness in domestic and overseas markets through low-costrolling stock, reinforce our project management to handle overseas projects in the North Americaand Asian markets, overseas high-speed rolling stock, and overseas system projects, etc.
(iii) Aerospace: Move ahead with major projects, including moving into the mass production of thenext maritime patrol aircraft, next transport aircraft, and component parts for the Boeing 787(iv) Gas Turbine & Machinery: Promote development of new models of jet engines for commercial
aircraft, strengthen the energy and environment business areas through promoting development of
new products and models, including industrial gas turbines and high-efficiency gas engines, andincrease competitiveness by improving productivity(v) Plant & Infrastructure: Bolster research and development in order to expand in the fields ofenergy and the environment, and accelerate efforts to commercialize new products and new
business concepts

13

(vi) Motorcycle & Engine: Enhance cost competitiveness through optimal production and optimal
procurement on a global basis, expand sales channels and develop new markets in emerging
countries we already enter (Southeast Asia and Brazil, etc.) and develop leading technologies to
respond to environmental requirements(vii) Precision Machinery: Accurately respond to strong demand for hydraulic equipment for
construction machinery in China and emerging markets and strengthen system-handlingcapabilities for industrial robots(viii) Others: Improve development and sales capabilities with respect to the construction machinery
division by deepening our alliance with Hitachi Construction Machinery Co., Ltd. and enhance
profitability by lowering break-even points

Needless to say, compliance is a fundamental premise in carrying out business activities such as
those above. The Group strives to ensure that employees are made thoroughly aware of theprovisions of the various laws and regulations which apply to them, by implementing such measures
as establishing internal regulations concerning corporate ethics, carrying out staff training for eachposition level, distribution of compliance guidebooks, and setting up CSR committees in eachorganization. Furthermore, we have continued to take thoroughgoing organizational complianceinitiatives by setting up a department which presides over internal controls, compliance, and CSR
promotion, and creating units in charge of compliance within each business unit, while also striving
to create a corporate culture that places the highest priority at all times on information disclosure andtransparency.
The Group aims to increase profitability across all businesses in this way, and along withenhancing corporate value through thorough compliance, it aims to establish the Kawasaki brand as
one that can be highly trusted.

14

4. Consolidated Financial Statements(1) Consolidated balance sheets
Millions of yen
As of
As of
March 31, 2010
March 31, 2011
AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Deferred tax assets
Other current assets
Allowance for doubtful receivables

34,745400,264
56,807
281,023
80,392
25,20455,663(2,424)
931,678

47,233401,753
50,528285,977
88,81735,88744,351(2,829)951,719

116,123
79,86864,282282
9,744
14,106284,407

113,186
74,156
64,107283
12,651
11,394
275,780

Total current assets
Fixed assets
Net property, plant and equipment
Buildings and structures
Machinery and equipment
Land
Leased assets
Construction in progress
Other
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investments in securities
Long-term loans
Deferred tax assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

866
19,852
20,718626
18,622
19,24928,448515
51,50336,438(1,270)115,635
420,761
1,352,439

24,641458
47,19336,221(986)
107,529
402,558
1,354,278

Liabilities
Current liabilities
Trade payables
Short-term debt
Lease obligations, current
Income taxes payable
Deferred tax liabilities
Accrued bonuses
Provision for product warranties
Provision for losses on construction contracts
Provision for restructuring charges
Provision for losses on damages suit
Provision for environmental measures
Advances from customers
Current portion of bonds
Commercial paper
Asset retirement obligations
Other
Total current liabilities

302,739
125,614
708
4,833
859
14,202
6,640
17,991
6,326
5,165
778
99,532477
32,00075,053692,923

319,271
143,972
242
5,988
765
15,692
7,288
33,0681,077
499
80,81530,483
10
64,550703,726

15

Long-term liabilities
Bonds payable
Long-term debt
Lease obligations
Deferred tax liabilities
Provision for loss on damages suit
Provision for environmental measures
Employees’ retirement and severance benefits
Asset retirement obligations
Other
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains (losses) on securities
Deferred loss on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total net assets and liabilities

16

60,513
209,360
236
2,526
6,706
3,713
89,2404,166
376,463
1,069,386

50,000203,801
645
3,990
5,868
3,333
80,556440
4,480
353,117
1,056,844

104,328
54,275
137,689(552)
295,741

104,340
54,251
158,615(30)
317,176

5,305
(162)
(23,803)(18,659)
5,972
283,053
1,352,439

3,876
(990)
(31,006)(28,119)
8,376
297,433
1,354,278

(2) Consolidated Statements of Operations and Comprehensive Income
Consolidated statements of operations
Millions of yen
Year ended March
31, 2010
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
Advertising expenses
R&D expenses
Provision for doubtful receivables
Other
Total selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Gain on sale of marketable and investment securities
Equity in income of non-consolidated subsidiaries and affiliates
Foreign exchange gain, net
Other
Total non-operating income
Non-operating expenses
Interest expense
Loss on valuation of securities
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Reversal of provision for environmental measures
Reversal of allowance for doubtful accounts for subsidiaries
and affiliates
Total extraordinary income
Extraordinary losses
Loss on impairment of fixed assets
Provision for doubtful receivables for affiliates
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Restructuring charges
Provision for losses on damages suit
Provision for environmental measures
Loss on liquidation of affiliate
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Current
Deferred
Total income taxes
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income (loss)

17

Year ended March
31, 2011

1,173,473
1,023,609
149,863

1,226,949
1,037,078
189,870

39,5707,741
38,05765,811
151,180(1,316)39,4297,967
37,090282
62,472
147,242
42,628

3,065
549
1,739
6,522
10,955
6,743
29,575

1,779
527
0
9,205
1,491
6,326
19,3305,399
8,566
13,965
14,293

4,677
1,577
6,567
12,822
49,136

1,077

-

460

-

1,537

-

3,132
-

9,923
325

-

291

7,648
6,983
1,489
399
19,651(3,821)

10,54038,5958,805(2,822)
5,983
1,055(10,860)

14,341(3,503)
10,83727,758
1,792
25,965

Consolidated statements of comprehensive income
Millions of yen
Year ended March
31, 2010
Income before minority interests
Other comprehensive income
Net unrealized gains (losses) on securities
Differed loss on hedges
Foreign currency translation adjustment
Share of other comprehensive income of associates
Total other comprehensive income
Comprehensive Income
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

18

Year ended March
31, 2011-

27,758-(1,437)(480)(5,420)(2,167)(9,505)
18,252
16,505
1,746-

(3) Consolidated statement of changes in shareholders’ equity
Millions of yen
Year ended March
Year ended March
31, 2010
31, 2011
Shareholders’ equity
Common stock
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Total changes during the period
Balance at end of year
Capital surplus
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Treasury stock disposed
Total changes during the period
Balance at end of year
Retained earnings
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income for the year (loss)
Other
Total changes during the period
Balance at end of year
Treasury stock
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Treasury stock purchased
Treasury stock disposed
Total changes during the period
Balance at end of year
Total shareholders’ equity
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income for the year (loss)
Treasury stock purchased
Treasury stock disposed
Other
Total changes during the period
Balance at end of year
Total comprehensive income for the year
Net unrealized gain (loss) on securities
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Gains (losses) on hedging items
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity

19

104,328

104,328

104,32811
11
104,340

54,281

54,275(6)(6)
54,275

(24)
(0)
(24)
54,251

154,272

137,689(5,004)(10,860)(718)(16,583)
137,689(16)(5,003)25,965(19)
20,926
158,615

(467)

(552)

(107)
23
(84)
(552)

535
(15)
1
521
(30)

312,415

295,741(5,004)(10,860)
(107)
17
(718)
(16,674)
295,741506(5,003)25,965(15)
1(19)
21,435317,176

3,139

5,305

2,166
2,166
5,305

(1,429)(1,429)
3,876

(263)

(162)

101

(828)

Total changes during the period
Balance at end of year
Foreign currency translation adjustments
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Total comprehensive income for the year
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Minority interests
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Total net assets
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income for the year (loss)
Treasury stock purchased
Treasury stock disposed
Other
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year

20

101
(162)

(828)
(990)

(24,850)(23,803)

1,047
1,047
(23,803)(7,202)(7,202)(31,006)(21,974)(18,659)

3,314
3,314
(18,659)(9,460)(9,460)(28,119)

4,804

5,972

1,167
1,167
5,972

2,404
2,404
8,376

295,245

283,053(5,004)(10,860)
(107)
17
(718)
4,482
(12,192)
283,053506(5,003)25,965(15)
1(19)(7,055)
14,380297,433

(4) Consolidated cash flow statement
Millions of yen
Year ended March Year ended March
31, 2010
31, 2011
Cash flow from operating activities
Income (loss) before income taxes and minority interests
Depreciation and amortization
Loss on impairment of fixed assets
Increase (decrease) in employees’ retirement and severance benefits
Increase (decrease) in accrued bonuses
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for losses on construction contracts
Increase (decrease) in provision for restructuring charges
Increase (decrease) in provision for losses on damages suit
Increase (decrease) in provision for environmental measures
Loss on disposal of inventories(Gain) loss on sale of marketable and investment securities(Gain) loss on valuation of securities(Gain) loss on sale of property, plant, and equipment
Equity in income non-consolidated subsidiaries and affiliates
Interest and dividend income
Interest expense(Increase) decrease in trade receivables(Increase) decrease in inventories(Increase) decrease in other current assets
Increase (decrease) in trade payables
Increase (decrease) in advances from customers
Increase (decrease) in other current liabilities
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Payment of levies
Net cash provided by operating activities(3,821)
51,423
3,132
9,317
(38)
(615)
(1,013)(2,916)
6,326
4,461
510
1,992
(1,739)32
784(6,522)(3,615)
5,399(3,792)
56,241(2,966)(56,396)(27,179)
12,165(404)
40,764
7,698(5,408)(12,876)
30,17838,59550,276
9,923(8,159)
1,489
514
794
15,349(5,249)
(837)
(658)
1,336
(0)
1,577
552
(9,205)(2,306)
4,677
14,910(17,775)
8,590
25,114(15,552)(17,156)
1,895
98,696
6,407(4,762)(13,245)(5,165)81,929Cash flow from investing activities
Decrease (Increase) in time deposits with maturities over three months
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of intangible assets
Proceeds from sale of intangible assets
Acquisition of investments in securities
Proceeds from sale of investments in securities
Acquisition of investments in subsidiaries of affiliate
Decrease (Increase) in short-term loans receivable
Additions to long-term loans receivable
Proceeds from collection of long-term loans receivable
Other
Net cash used for investing activities

21(61,198)
993(4,764)
48
(123)
1,913
(1,331)
518
(65)
115
594
(63,277)(2,138)(47,408)616(4,886)
37
(350)
12
287
(40)
102
825
(52,942)

Cash flow from financing activities
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Acquisition of treasury stock
Proceeds from stock issuance to minority shareholders
Cash dividends paid
Cash dividends paid to minority shareholders
Other
Net cash used for financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents due to changes
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(21,463)
74,793(11,518)
20,000(20,000)(90)
230(5,004)(741)(293)
35,911(88)
2,723
31,41334,137(53,670)
24,000(4,836)20,000(14)
1,209(5,000)(476)(72)(18,862)367
10,491
34,13744,62921

(5) Notes on the going-concern assumption
Not applicable(6) Basis of preparation of financial statements
Other than information disclosed under the heading “(7) Changes in Basis of Preparation of Financial
Statements” below, no material changes have been made from the information disclosed in the
Company’s most recent full-year statutory financial report (filed June 25, 2010). An updated
disclosure is therefore omitted here.
(7) Changes in basis of preparation of financial statements
1. Change in the scope of consolidation(1) Change in the scope of consolidation
Five companies were added as consolidated subsidiaries because they were newly established by theCompany.
Six companies ceased to be consolidated subsidiaries. Kawasaki Shipbuilding Corporation,
Kawasaki Precision Machinery Ltd., and Kawasaki Plant Systems, Ltd. merged with the Company
and were dissolved. One other company merged with another consolidated subsidiary and was
dissolved. Another two companies were liquidated.
(2) Number of consolidated subsidiaries after change
96 companies
2. Change in application of the equity method(1) Non-consolidated subsidiaries which are accounted for under the equity method :None(2) Associated companies which are accounted for under the equity method
1) Change in associated companies which are accounted for under the equity method
None2) Number of associated companies accounted for under the equity method after change
14 companies
3. Changes in accounting standards(1) Adoption of accounting standards related to asset retirement obligations
Effective the first quarter of the fiscal year ended March 31, 2011, the Company adopted the
Accounting Standard for Asset Retirement Obligations (Statement No. 18, March 31, 2008) and its
associated Guidance on Accounting Standard for Asset Retirement Obligations (Guidance No. 21,
March 31, 2008).
Due to adoption of the standard and guidance, operating income decreased by 16 million yen,recurring profit decreased by 21 million yen, and income before income taxes decreased by 313
million yen.
(2) Adoption of accounting standards related to equity method accounting
Effective the first quarter of the fiscal year ended March 31, 2011, the Company adopted the
Accounting Standard for Equity Method of Accounting for Investments (ASBJ 11 Statement No. 16,
March 10, 2008) and the Practical Solution on Unification of Accounting Policies Applied to
Associates Accounted for Using the Equity Method (PITF No. 24, March 10, 2008) and made someadjustments required for preparation of consolidated financial statements. The resulting effect on
profit and loss is minor.

22

(3) Adoption of the Accounting Standard for Business Combinations
Effective the first quarter of the fiscal year ended March 31, 2011, the Company adopted the
Accounting Standard for Business Combinations (ASBJ Statement No. 21, December 26, 2008), the
Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, December 26,2008), the Amendments to Accounting Standard for Research and Development Costs (ASBJ
Statement No. 23, December 26, 2008), the Revised Accounting Standard for Business Divestitures(ASBJ Statement No. 7, December 26, 2008), the Revised Accounting Standard for Equity Method of
Accounting for Investments (ASBJ Statement No. 16, December 26, 2008), and the Revised Guidanceon Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No. 10, December 26, 2008).
(8) Change in the presentation of accounts
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Consolidated Statements of Income
1. “Loss on valuation of securities” under non-operating expenses ceased to be included in “other” andwas presented separately because it increased to more than ten-hundredths of non-operating expenses.
Loss on valuation of securities in the fiscal year ended March 31, 2010, was 32 million yen andincluded in “other” under non-operating expenses.
2. Due to adoption of the Cabinet Office Ordinance on Partial Revision of the Regulations Concerning the
Terminology, Forms and Preparation Methods of Financial Statements and Others (Cabinet Office
Ordinance No. 5, March 24, 2009) based on the Accounting Standard for Consolidated Financial
Statements (ASBJ Statement No. 22, December 26, 2008), the Company used the account title “Income
before minority interests” for the fiscal year ended March 31, 2011.
(9) Additional information
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Effective the fiscal year ended March 31, 2011, the Company adopted the Accounting Standard for
Presentation of Comprehensive Income (ASBJ Statement No. 25, June 30, 2010). The figures for“accumulated other comprehensive income” and “total accumulated other comprehensive income” for the
fiscal year ended March 31, 2010 were stated with figures for “valuation and translation adjustments” and“total valuation and translation adjustments.”(10) Notes on financial statements
Consolidated balance sheets
Year ended March 31, 2011 (As of March 31, 2011)
Information is omitted here as its disclosure in this report is not of material importance.
Consolidated Statements of Income
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
1. Loss on impairment of fixed assets(1) Outline asset groups in which loss on impairment of fixed assets was recognizedPurposeLocation

Type

Assets held for business

Akashi-city, Hyogo

Assets held for business

Chuo-ku, Kobe

Buildings and structures,
Machinery and equipment, etc.
Buildings and structures,
Machinery and equipment, etc.

23(2) Method for asset grouping
Asset grouping is based on line of business, and principle assets held for lease and idle assets aretreated as independent asset groups.
(3) Reason for recognition of loss on impairment of fixed assets
The book values of some assets were written down to recoverable amounts due to deteriorating
business income, market price declines, or diminished expectation of future use.
(4) Calculation of recoverable amount
Recoverable amounts are measured by net sales price or utility value. Net sales price is principally
calculated based on assessment by a real estate appraiser or on fixed assets’ tax-assessment values.
Utility value is calculated based on expected future cash flows with a 4.0% discount rate.
(5) Loss on impairment of fixed assets
A write-down of 9,923 million yen was recorded as loss on impairment of fixed assets inextraordinary losses. Amounts by asset type are listed below.
Buildings and structures
3,731 million yen
Machinery and equipment, etc.

2,300 million yen

Other3,891 million yen
9,923 million yen

Other than the notes on consolidated statements of income stated above, information is omitted here as its
disclosure in this report is not of material importance.
Consolidated Statements of Comprehensive Income
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)*1. Comprehensive income for the fiscal year ended March 31, 2010
Millions of yen
Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests
Total(7,545)2,081(5,464)*2. Other comprehensive income for the fiscal year ended March 31, 2010
Millions of yen
Net unrealized gains (losses) on securities
Gain (losses) on hedge items
Foreign currency translation adjustments
Share of other comprehensive income of associatedcompanies accounted for under the equity method
Total

2,215
833
859
431
4,340

Information Omitted
Notes on the consolidated statements of changes in shareholders’ equity, the consolidated cash flow
statements, lease transactions, related-party transactions, tax-effect accounting, financial instruments,
securities, derivative transactions, retirement benefits, stock-based compensation, asset retirement
obligations, investment and rental property, and special purpose companies are omitted here, as theirdisclosure in this report is not of material importance.

24Segment information
1) Information by industry segment
Year ended March 31, 2010 (April 1, 2009 – March 31, 2010)
Millions of yen
Assets, depreciation/amortization, andcapital expenditures

Sales and operating income (loss)
External sales

Shipbuilding
151,893
Rolling Stock
167,156
Aerospace
188,892
Gas Turbines &191,379
Machinery
Plant &
Infrastructure
Engineering
90,495
Consumer
Products &Machinery
216,990
Hydraulic
Machinery
68,809Other Operations
97,855
Total
1,173,473
Eliminations/
corporation
Consolidated
total
1,173,473

Intersegment
sales or
Total sales
transfers

Operatingexpenses

Operatingincome(loss)

AssetsDepreciation/amortization

Capitalexpenditures

1,564
2,413
2,005

153,458
169,570
190,897

151,967
161,810
189,147

1,490
7,759
1,749

128,948
172,420304,371

4,350
3,668
8,192

6,693
5,264
9,142

22,765

214,144

207,450

6,694

215,874

6,222

10,278

11,076

101,571

95,294

6,277

104,851

975

1,111

3,973

220,964

252,614(31,649)

236,306

19,283

17,105

7,319
32,55083,66976,129130,406
1,257,142

69,167130,825
1,258,277

6,961
(419)
(1,134)57,901
154,652
1,375,326

3,883
3,064
49,6392,282
5,551
57,429(83,669)(83,669)(83,487)(181)(22,886)

1,783

1,843

-

1,173,473

1,174,789(1,316)

1,352,439

51,42359,272

Notes: 1. Method of segmentation
Business segmentation is based on the categorization used by management.
2. Major products by industry segment
Industry segment
Ships and vessels
Shipbuilding

Major products

Rolling Stock

Rolling stock, snow plows, crushers
Aerospace
Aircrafts
Gas Turbines &Jet engines, general-purpose gas turbine generators, prime movers
Machinery
Plant & Infrastructure Industrial equipment, boilers, environmental equipment, steel
Engineering
structures
Consumer Products & Motorcycles, personal watercraft, all-terrain vehicles (ATV),
Machinery
utility vehicles, general-purpose gasoline engines, industrial
robotsHydraulic Machinery Industrial hydraulic products
Other Operations
Construction machinery, commercial activities, sales/order agency
and intermediary activities, management of welfare facilities
3. The figure for “Eliminations/corporation” under “Assets” includes working funds (cash on
hand and in banks) of the Company, fixed assets shared by all the segments, deferred tax
assets, and long-term investment funds (investment in securities), together totaling 114,487
million yen.
4. The figure for “Eliminations/corporation” under “Depreciation/amortization” includes
depreciation expenses for fixed assets shared by all the segments, and the figure for“Eliminations/corporation” under “Capital expenditure” includes expenses related to fixed
assets shared by all the segments.

25

5. Change in method of segmentation
In October 2008, the Company, Hitachi Construction Machinery Co., Ltd., and TCM
Corporation reached an agreement on forming an alliance with respect to their wheel loader
businesses. The alliance is to involve (i) joint research and development and (ii) a spin-off ofthe Company's wheel loader operation into a newly created subsidiary of the Company, andHitachi’s investment in that subsidiary.
In accordance with the agreement, the construction machinery business was spun-off in
April 2009 and succeeded by the Company's subsidiary, KCM Corporation. As a result, saidbusiness’s relationship with the Rolling Stock & Construction Machinery segment was
weakened and effective the fiscal year ended March 31, 2010, it was therefore shifted fromthe Rolling Stock & Construction Machinery segment to the Other Operations segment.
Due to this change, compared with what they would have been under the previous method,
net sales for the fiscal year ended March 31, 2010, in the Rolling Stock segment was 20,625
million yen lower (including 22,207 million yen of external sales) and in the Other
Operations segment, 21,622 million yen higher (including 22,207 million yen of externalsales). By the same comparison, operating income in the Rolling Stock segment was 3,321
million yen higher, while operating loss in the Other Operations segment was 3,322 million
yen higher.
6. Change in accounting standard for construction revenue and cost
As stated under the heading “Changes in accounting standard” in the “Changes in basis ofpreparation of financial statements” section, the Company previously used thepercentage-of-completion method for accounting of revenues associated mainly withconstruction contracts with a contract amount of 3 billion yen or more and a construction
period of over one year, and other construction works were accounted for with thecompleted-contract method. Effective the fiscal year ended March 31, 2010, however, inconjunction with adoption of the Accounting Standard for Construction Contracts (ASBJ
Statement No.15, December 27, 2007) and its associated Guidance on Accounting Standard
for Construction Contracts (ASBJ Guidance No.18, December 27, 2007), thepercentage-of-completion method was applied to construction contracts that were started
during the fiscal year ended March 31, 2010, for which certain elements were determinablewith certainty as of March 31, 2010. The percentage of completion is estimated mainly withthe proportion-of-cost method, under which the percentage of construction completed during
the period is calculated as the ratio of the construction cost incurred during that period
relative to the total construction cost. The completed-contract method was applied to otherworks.
Due to this change, net sales for the fiscal year ended March 31, 2010, in the Shipbuilding
segment was 15,609 million yen higher; in the Rolling Stock segment, 702 million yen
higher; in the Aerospace segment, 5,663 million yen higher; in the Gas Turbines &Machinery segment, 7,247 million yen higher; and in the Plant & Infrastructure Engineering
segment, 2,991 million yen higher. Also due to the change, operating income in the
Shipbuilding segment was 1,374 million yen higher; in the Rolling Stock segment, 65 million
yen higher; in the Aerospace segment, 494 million yen higher; in the Gas Turbines &Machinery segment, 649 million yen higher; and in the Plant & Infrastructure Engineering
segment, 504 million yen higher.

262) Information by geographic area
Year ended March 31, 2010 (April 1, 2009 – March 31, 2010)
Millions of yen
External sales
Japan
North America
EuropeAsia
Other areas
Total
Eliminations/corporate
Consolidated total

917,366
135,306
66,86542,90911,025
1,173,473
1,173,473

Intersegment
sales ortransfers
154,199
16,764
1,792
37,842
190
210,788(210,788)-

Total sales

Operatingexpenses

Operatingincome (loss)

Assets

1,071,566
152,070
68,65780,751
11,215
1,384,261(210,788)
1,173,473

1,072,557
160,241
67,80974,676
10,287
1,385,571(210,781)
1,174,789(990)(8,170)
848
6,075
927
(1,310)(6)(1,316)

1,130,537
159,335
47,042
39,3286,870
1,383,113(30,674)
1,352,439

Notes: 1. Classification method of geographic segment: by geographic proximity
2. Major countries or regions in each segment other than Japan:
North America
EuropeAsia
Other areas

The U.S.A. and Canada
The Netherlands, the United Kingdom,
and Germany
Thailand, Indonesia, the Philippines, and Korea
Australia and Brazil

3. The figure for “Eliminations/corporation” under “Assets” includes working funds (cash on
hand and in banks) of the Company, fixed assets shared by all the segments, deferred tax
assets, and long-term investment funds (investment in securities), together totaling 114,487
million yen.
4. Change in accounting standard for construction revenue and cost
As stated under the heading “Changes in accounting standard” in the “Changes in basis ofpreparation of financial statements” section, the Company previously used thepercentage-of-completion method for accounting of revenues associated mainly withconstruction contracts with a contract amount of 3 billion yen or more and a construction
period of over one year, and other construction works were accounted for with thecompleted-contract method. Effective the fiscal year ended March 31, 2010, however, inconjunction with adoption of the Accounting Standard for Construction Contracts (ASBJ
Statement No.15, December 27, 2007) and its associated Guidance on Accounting Standard
for Construction Contracts (ASBJ Guidance No.18, December 27, 2007), thepercentage-of-completion method was applied to construction contracts that were started
during the fiscal year ended March 31, 2010, for which certain elements were determinablewith certainty as of March 31, 2010. The percentage of completion is estimated mainly withthe proportion-of-cost method, under which the percentage of construction completed during
the period is calculated as the ratio of the construction cost incurred during that period
relative to the total construction cost. The completed-contract method was applied to otherworks.
Due to this change, net sales for the fiscal year ended March 31, 2010, in Japan was 32,214
million yen higher, while operating loss in Japan was 3,088 million yen lower.

273) Overseas sales
Year ended March 31, 2010 (April 1, 2009 – March 31, 2010)
Overseas sales
North America
EuropeAsia
Other areas
Total

Consolidated net sales

226,859
93,035
141,577
100,124
561,595

1,173,473

Millions of yen
Ratio of overseas sales
to consolidated sales
(%)
19.3
7.9
12.0
8.5
47.8

Notes: 1. “Overseas sales” includes sales by the Company and its consolidated subsidiaries to thecountries and regions other than Japan.
2. Classification method of geographic segment: by geographic proximity
3. Major countries or regions in each segment:
North America
EuropeAsia
Other areas

The U.S.A. and Canada
The United Kingdom, Germany, France, and theNetherlands
China, Taiwan, Korea, the Philippines, and Indonesia
Panama, Brazil and Australia

284) Segment Information
1. Overview of reportable segments
The Company’s reportable segments are components of the company about which separate financial
information is available. These segments are subject to periodic reviews by the Company’s board of
directors to decide how to allocate resources and assess performance. The Company’s operations are
divided into internal companies based on product categories. Certain authority is delegated to each of theinternal companies, based on which they conduct businesses in Japan and overseas. The Company’s
operations are therefore segmented based on each internal company’s product categories. The Company’s
eight reportable segments are the Ship & Offshore Structure segment, the Rolling Stock segment, theAerospace segment, the Gas Turbine & Machinery segment, the Plant & Infrastructure segment, theMotorcycle & Engine segment, the Precision Machinery segment, and the Other segment.
In conjunction with its October 2010 organizational restructuring, the Group renamed its Shipbuilding
segment the Ship & Offshore Structure segment.
Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbines &Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

Major products
Construction and sale of ships and other vessels, etc.
Production and sale of rolling stock, snow plows, etc.
Production and sale of aircraft, etc.
Production and sale of jet engines, general-purpose gas turbine
generators, prime movers, etc.
Production and sale of industrial equipment, boilers, environmental
equipment, steel structures, crushers, etc.
Production and sale of motorcycles, personal watercraft, all-terrain
vehicles (ATV), utility vehicles, general-purpose gasoline engines, etc.
Production and sale of industrial hydraulic products, industrial robots, etc.
Production and sale of construction machinery, commercial activities,
sales/order agency and intermediary activities, administration of welfare
facilities, etc.

2. Calculation methods for sales, income (loss), assets, liabilities and other items by reportablesegment
Accounting methods applied for calculation of sales, income (loss), assets, liabilities, and other items byindustry segment largely correspond to information presented under “(6) Basis of Preparation of Financial
Statements”. Segment income is based on operating income. Intersegment sales or transfers are based onmarket prices.

29

3. Sales, income (loss), assets, liabilities, and other items by reportable segment
Year ended March 31, 2010 (April 1, 2009 – March 31, 2010)
Millions of yen
Other items

Sales
Intersegment
External sales
sales ortransfer
Ship &
Offshore
151,893
Structure
Rolling Stock
150,071
Aerospace
188,892
Gas Turbines
191,379& Machinery
Plant &
107,580
Infrastructure
Motorcycle
203,084& Engine
Precision
82,715
Machinery
Other
97,855
Operations
Total
1,173,473
Adjustments
Consolidated
1,173,473
total

Total

Segment
income(loss)

Segment
assetsInvestment in
Depreciation/
equityamortization
methodaffiliates

Increase inproperty,plant andequipment
andintangibles

1,564

153,458

1,550

128,948

4,350

13,133

6,693

1,755
2,005

151,826
190,897

8,726
3,766

161,648304,371

3,165
8,192

77
-

4,843
9,142

22,765

214,1448,941

215,874

6,222

190

10,278

11,122

118,702

7,944

115,408

1,478

7,719

1,533

1,550

204,634(27,005)

219,150

18,483998

16,335

10,26092,976

3,415

75,066

4,683

-

3,052

32,550130,406(1,080)154,652

3,064

2,207

5,551

83,574(83,574)

1,257,047(83,574)

6,259(7,575)

1,375,120(22,680)

49,6391,783

24,327-57,4291,843-

1,173,473(1,316)

1,352,439

51,42324,32759,272

Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Millions of yen
Other items

Sales

Ship &
Offshore
118,416Structure
Rolling Stock 131,104
Aerospace
196,876
Gas Turbines
202,692& Machinery
Plant &
89,012
Infrastructure
Motorcycle &234,479
EnginePrecision
140,328
Machinery
Other
114,038
Operations
Total
1,226,949
Adjustments
Consolidated
1,226,949
total

Increase in
Investment in property,
Depreciation/ Impairment
equityplant andmethodequipment
amortization
loss
affiliates
andintangibles

Total

Segment
income(loss)

Segment
assets

1,894

120,311(1,013)

115,800

4,264-

13,125

3,183

2,079
1,810

133,183
198,687

8,173
3,030

151,212288,495

3,634
9,402

-

123
-

2,416
7,121

20,782

223,475

9,545

211,369

6,550

67

61

5,659

12,017101,0298,281

95,115

1,554

141

8,603

2,033

1,211

235,690(4,961)

216,559

15,294

9,520

946

11,34013,277

153,605

22,31899,612

4,872

-

-

9,822

34,340148,378

2,576

159,616

2,474

193

2,305

8,013

87,412(87,412)1,314,362(87,412)47,950(5,322)

1,337,780
16,49748,047
2,228

9,923
-

25,166-49,591
5,743-

1,226,949

42,6281,354,278

50,276

9,923

25,16655,334

Intersegment
External sales
sales ortransfers

30

4. Reconciliation and main components of difference between total for reportable segments andamounts on the consolidated financial statements
Net sales
Total for reportable segments
Intersegment transactions
Net sales reported on the consolidated financial
statements

IncomeTotal for reportable segments
Intersegment transactions
Corporate expenses*
Operating income (loss) on consolidated
financial statements

Year ended March 31,
2010
1,257,047(83,574)

Millions of yen
Year ended March 31,
2011
1,314,362(87,412)1,173,473

1,226,949

Year ended March 31,
2010
6,259
9
(7,585)

Millions of yen
Year ended March 31,
2011
47,950(3)(5,318)(1,316)

42,628*Note: Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
Millions of yen
Assets

As of March 31, 2010

As of March 31, 2011

1,375,120
114,487(137,168)

1,337,780
141,028(124,531)

1,352,439

1,354,278

Total for reportable segments
Corporate assets shared by all segments*
Intersegment transactions etc.
Total assets on consolidated financial
statements*Note: Corporate assets shared by all segments mainly comprise fixed assets not attributed to reportablesegments.

Other items

Total for reportablesegments
Year ended March 31,
2010
2011

Millions of yen
Amounts reported on the
Adjustments*
consolidated financial
statements
Year ended March 31, Year ended March 31,
2010
2011
2010
2011

Depreciation/amortization

49,63948,047

1,783

2,228

51,42350,276

Increase in property, plantand equipment andintangibles

57,42949,591

1,843

5,743

59,27255,334*Note: Adjustments are mainly due to fixed assets not attributed to reportable segments

Additional information
Effective the fiscal year ended March 31, 2011, the Company adopted the Revised Accounting Standard
for Disclosures about Segments of an Enterprise and Related information (ASBJ Statement No.17,
revised March 27, 2009) and its associated Guidance on the Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information (Guidance No. 20, March 21, 2008).

315) Related Information
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
1. Information by product and service
Information by product and service is omitted here as segmentation is equivalent to that used forreportable segments.
2. Information by geographic area
(1) Net salesJapan
558,126

USA
236,572

Europe87,162

Asia
224,685

Other areas
120,402

Millions of yen
Total
1,226,949

Europe2,304

Asia
10,945

Other areas
785

Millions of yen
Total
275,780(2) Property, plant and equipment
Japan
241,132

North America
20,611

3. Information by major clients
Clients
Ministry of Defense

Net sales
182,633

Millions of yen
Related segments
Ship & Offshore Structure, Aerospace, Gas Turbines &Machinery6) Impairment loss on fixed assets by reportable segment
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Information is omitted here as it is equivalent to that stated in “4) Segment information”.
7) Amortization amount for and unamortized balance of goodwill
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Information is omitted here as it is not of material importance.
8) Gain on negative goodwill by reportable segment
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Information is omitted here as it is not of material importance.

32

Business combination
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Transactions under common control
The Company merged Kawasaki Shipbuilding Corporation, Kawasaki Precision Machinery Ltd. (KPM),
and Kawasaki Plant Systems, Ltd. (K Plant) into the Company as of October 1, 2010, pursuant todecisions made at the Board Meeting of September 30, 2009.
1. Name and outline of business of constituent company, date of business combination, legal form ofbusiness combination, name of company after business combination, and outline of transactions including
purpose of transactions(1) Name and outline of business of constituent company
Company surviving in absorption-type merger
Name:
Kawasaki Heavy Industries, Ltd. (KHI)
Outline of business:
Production and sale of ships and vessels, rolling stock, construction machinery,crushers, aircrafts, jet engines, general-purpose gas turbine generators, prime
movers, various industrial plants/industrial equipment, boilers, environmental
equipment, steel structures, motorcycles, all-terrain vehicles (ATV), industrial
robots, and various industrial hydraulic productsCompany absorbed in absorption-type merger
Name:
Kawasaki Shipbuilding Corporation
Outline of business:
Design, production, sale and maintenance of ships, naval vessels, marine
equipment, other transportation equipment, and accompanying equipment and
parts
Name:
Kawasaki Precision Machinery Ltd. (KPM)
Outline of business:
Design, procurement, production, installation, maintenance , and sale ofindustrial hydraulic products, hydraulic systems, electronic control equipment
and systems, and accompanying devices, parts, and accessories
Name:
Kawasaki Plant Systems, Ltd. (K Plant)
Outline of business:
Design, production, installation, and sale of various plant machinery andequipment(2) Date of business combination
October 1, 2010
(3) Legal form of business combination
The merger was an absorption-type merger whereby the Company (KHI) is the surviving entity andthe three subsidiaries were dissolved.
(4) Name of company after business combination
Kawasaki Heavy Industries, Ltd.
(5) Outline of transactions including purpose of transactions
Guided by its mission statement adopted in 2007, the Company has been working to create newvalue for a better environment and brighter future by leveraging its advanced technological33

capability across a broad range of fields. Creating new value involves making existing products
smarter through innovation and developing brand new products in totally new fields. To do this,Kawasaki must work quickly to efficiently integrate and make the most of the entire Kawasaki
Group’s intellectual assets.
For these reasons, KHI decided to remerge Kawasaki Shipbuilding, KPM, and K Plant in order toachieve maximum efficiency in leveraging the Group’s technological assets and human resources,
while removing any restrictions caused by being subsidiaries.
In addition to the pursuit of greater competitiveness in existing businesses, the Kawasaki Business
Vision 2020, formulated in April 2011, designates the development of new products and businesses
as a key measure for accelerating sustained Group growth. The Company will use the merger todraw together technological expertise and knowhow across conventional organizational and productboundaries to develop new products in the transportation systems, energy and environment, andindustrial equipment sectors. The Company also intends to advance research and development ofcore technologies in new business fields such as CO2-free hydrogen technologies and ocean energy.
By accelerating initiatives aimed at Group-wide sharing and maximal utilization of intellectual assets
amassed by KHI Group companies, such as those related to sales expertise, technologies,
procurement, and human resources, the Company seeks to realize its Group Mission Statement,“Kawasaki, working as one for the good of the planet.”
2. Outline of accounting procedure used

The merger was accounted for as a transaction under common control based on the Accounting Standard
for Business Combinations (ASBJ Statement No.21, December 26, 2008) and its associated Revised
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No.10, revised December 26, 2008).

34

Per-share Data

(Yen)
Year ended March 31, 2010
Net assets per share
Loss per share - basic

166.13
6.51

Diluted net earnings per share is not stated because weYear ended March 31, 2011
Net assets per share

173.03

Earnings per share - basic

15.55

Earnings per share - diluted

15.32

posted net loss for the period.

Notes:
1. Net assets per share were calculated based on the following:

Total net assets(millions of yen)

As of March 31,
2010
283,053

Amounts excluded from total net assets(millions of yen)

5,972

Of which: minority interest

As of March 31,
2011
297,433
8,376(millions of yen)

(5,972)(8,376)

Net assets attributable to the common shares(millions of yen)
Number of common shares used to compute net assets per share(thousands of shares)

277,081

289,056

1,667,848

1,670,546

2. Net income/loss per share and net income per share (diluted) were calculated based on the following:
Year ended March
31, 2010
Earnings per share - basic
Net income (loss)(millions of yen)
Earnings not attributable to common shareholders (millions of yen)
Net income (loss) allocated to the common shares (millions of yen)
Average number of common shares outstanding (thousands of shares)
Earnings per share (diluted)
Net income adjustment(millions of yen)

Year ended March
31, 2011(10,860)(10,860)
1,668,119

25,96525,965
1,669,359-

44

Of which: interest expense etc. (after-tax equivalent)(millions of yen)

(-)

(44)

Increase in common shares(thousands of shares)
Of which: exercise of convertible bonds(thousands of shares)
Of which: Zero-coupon convertible bond (thousands of shares)

(-)
(-)

28,052(11,769)(16,283)

9th Series Convertible
Unsecured Bonds(aggregate face value:
7,038 million yen),Euro Yen Convertible

Summary of non-diluting residual securities not included in thecomputation of diluted earnings per share

Bonds due 2010
(aggregate principal:
477 million yen),Euro Yen Convertible
Bonds due 2011
(aggregate principal:
3,475 million yen)

Material subsequent events
Year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Not applicable35-

5. Non-consolidated Financial Statements(1) Non-consolidated balance sheets
Millions of yen
As of
As of
March 31, 2010
March 31, 2011
AssetsCurrent assets
Cash on hand and in banks
Notes receivable-trade
Accounts receivable-trade
Work in process
Raw materials and supplies
Advance payments
Prepaid expenses
Deferred tax assets
Short-term loans
Accounts receivable, otherAccrued income
Derivative assets
Other
Allowance for doubtful receivables
Total current assets
Fixed assets
Net property, plant and equipment
Buildings
Structures
Docks
Machinery and equipment
Vessels
Aircraft
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Total property, plant and equipment
Intangible assets
SoftwareLicense production and licensee’s execution right
Other
Total intangible assets
Investments and other assets
Investments in securities
Shares of affiliates
Investments in capital of affiliates
Long-term loans
Long-term loans to employees
Long-term loans to affiliates
Claims in bankruptcy and rehabilitation
Deferred tax assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

36

17,495
1,372
229,499
221,869
50,57015,829371
13,76544,621
12,280
50
5,850
3,997
(399)
617,175

29,9705,460
317,841
230,601
65,076
17,949370
29,36016,042
19,410
75
2,504
3,893
(611)
737,948

53,671
10,446
39,580
0
94
498
7,886
33,698144
5,594
151,615

59,216
15,054
1,621
52,525
6
75
689
7,336
37,629155
8,821
183,132

8,716
726
5,649
15,091

9,527
598
5,514
15,63925,394
111,853
3,537
11
224
11,127318
35,7796,487(2,157)
192,577359,285
976,460

22,75087,76417,006
6
227
6,487
292
38,582
6,911(675)
179,354378,127
1,116,076

Liabilities
Current liabilities
Notes payable-trade
Accounts payable-trade
Short-term debt
Current portion of long-term debt
Lease obligations, current
Accounts payable, otherAccrued expenses
Income taxes payable
Advances from customers
Deposits received
Unearned revenue
Accrued bonuses
Provision for product warranties
Provision for losses on construction contracts
Provision for restructuring charges
Provision for losses on damages suit
Provision for environmental measures
Asset retirement obligations
Current portion of bonds payable
Current portion of convertible bonds payable
Current portion of bonds with stock acquisition rights
Commercial paper
Notes payable-facilities
Other
Total current liabilities
Long-term liabilities
Bonds payable
Convertible bondBonds with stock acquisition rights
Long-term debt
Lease obligations
Provision for losses on damages suit
Provision for environmental measures
Employees’ retirement and severance benefits
Asset retirement obligations
Long-term accounts payable
Other
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Other retained earnings
Provision for special depreciation
Provision for advanced depreciation of fixed assets
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Net unrealized gains (losses) on securities
Gains (losses) on hedging items
Total valuation and translation adjustments
Total net assets
Total net assets and liabilities

37

20,480190,559
93,5293,613
412,56924,981
462
41,297
1,620
17
6,615
744
8,717
6,326
5,165
778
477
32,0001,488
2,092
453,541

28,181
251,141
74,97229,017
9
16,782
23,757618
54,054
2,118
10
10,164
5,152
26,6181,077
499
1020,000
7,038
3,445
874
4,061
559,604

50,0007,038
3,475
205,587
1
6,706
2,461
26,131
91
706
302,198
755,740

50,000203,591
13
5,868
2,993
45,163422
27
1,503
309,582
869,187

104,328

104,340

52,05833
52,09152,067052,067715
7,044
52,13659,895(552)
215,764

942
6,959
80,316
88,217(30)
244,595

4,775
180
4,955
220,720
976,460

3,219
(925)
2,293
246,888
1,116,076

(2) Non-consolidated statements of income
Millions of yen
Year ended March
31, 2010
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
Depreciation and amortization
Allowance for doubtful receivables
R&D expenses
Unallocated expenses
Contract expenses
Other
Total selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Gain on sale of marketable and investment securities
Foreign exchange gains, net
Other
Total non-operating income
Non-operating expenses
Interest expense
Interest on bonds
Loss on valuation of securities
Loss on reduction of non-current assets
Loss on assignment of accounts receivable
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on extinguishment of tie-in shares
Reversal of provision for environmental measures
Reversal of allowance for doubtful accounts for subsidiaries
and affiliates
Total extraordinary income
Extraordinary losses
Loss on impairment of fixed assets
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Loss on investment in subsidiaries and affiliates
Provision for losses on damages suit
Restructuring charges
Provision for environmental measures
Total extraordinary losses
Income (loss) before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income (loss)

38

Year ended March
31, 2011

644,133
597,898
46,234

817,455
742,870
74,585

12,027861
32,316
5,330
3,014
11,67865,229(18,995)

14,593
1,178
245
33,755
8,556
3,324
11,19972,853
1,731

1,054
20,888
1,741
9,745
3,317
36,747859
34,374
0
2,172
3,508
40,915

3,761
805
999
934
2,623
9,125
8,627

3,355
907
1,551
3,994
9,809
32,837

1,077

8,116
-

460

-

1,537

8,116

-

9,923

-

192

7,234
6,983
6,326
1,368
21,912(11,748)

10,11630,837260(6,591)(6,330)(5,417)1,201(3,704)(2,503)33,341

(3) Non-consolidated statement of changes in shareholders’ equity
Millions of yen
Year ended March
Year ended March
31, 2010
31, 2011
Shareholders’ equity
Common stock
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Total changes during the period
Balance at end of year
Capital surplus
Capital reserve
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Total changes during the period
Balance at end of year
Other capital surplus
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Treasury stock disposed
Total changes during the period
Balance at end of year
Retained earnings
Other retained earnings
Provision for special depreciation
Balance at end of previous year
Changes during the period
Provision for special depreciation
Reversal of provision for special depreciation
Total changes during the period
Balance at end of year
Provision for advanced depreciation of fixed assets
Balance at end of previous year
Changes during the period
Provision for advanced depreciation of fixed assets
Reversal of provision for advanced depreciation of fixed assets
Total changes during the period
Balance at end of year
Provision for special account for advanced depreciation of fixed
assetsBalance at end of previous year
Changes during the period
Provision for special account for advanced depreciation of
fixed assets
Reversal of provision for special account for advanced
depreciation of fixed assets
Total changes during the period
Balance at end of year
Retained earnings brought forward
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income (loss)
Provision for special depreciation
Reversal of provision for special depreciation
Provision for advanced depreciation of fixed assets
Reversal of provision for advanced depreciation of fixed assets

39

104,328

104,328

104,32811
11
104,340

52,05852,05852,0589
952,067

39

33

(6)
(6)
33

(33)
(0)
(33)
0

146

715

672
(103)
569
715

389
(162)
226
942

6,798

7,044

411
(165)
245
7,044

66
(150)
(84)
6,959

384

-

-

-

(384)

-

(384)
-

-

62,98852,136(5,004)(5,417)
(672)
103
(411)
165

(16)
(5,003)33,341
(389)
162
(66)
150

Provision for special account for advanced depreciation of
fixed assets
Reversal of provision for special account for advanced
depreciation of fixed assets
Total changes during the period
Balance at end of year
Treasury stock
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Treasury stock purchased
Treasury stock disposed
Total changes during the period
Balance at end of year
Total shareholders’ equity
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income for the year
Treasury stock purchased
Treasury stock disposed
Total changes during the period
Balance at end of year
Valuation and translation adjustments
Net unrealized gain (loss) on securities
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Gains (losses) on hedging items
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Total valuation and translation adjustments
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Total net assets
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income for the year
Treasury stock purchased
Treasury stock disposed
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year384-

(10,852)
52,13628,17980,316

(467)

(552)

(107)
23
(84)
(552)

535
(15)
1
521
(30)

226,277

215,764(5,004)(5,417)(107)
17(10,512)215,764506(5,003)33,341(15)
128,830244,595

2,872

4,775

1,902
1,902
4,775

(1,555)(1,555)
3,219

1,649

180

(1,469)(1,469)180(1,106)(1,106)
(925)

4,522

4,955

433
433
4,955

(2,662)(2,662)
2,293

230,799

220,720(5,004)(5,417)
(107)
17
433
(10,079)
220,720506(5,003)33,341(15)
1(2,662)
26,168
246,888(4) Events or circumstances that raise material doubt regarding the going-concern assumption
Not applicable.

406. Others(1) Corporate officer changes
Refer to the Company’s press release on February 21, 2011, titled “Directors and Executive
Officers to Change.”(2) Consolidated orders and sales
Effective from the first quarter of the fiscal year ending March 31, 2011, the Group adopted the
Revised Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (ASBJ Statement No.17, March 27, 2009) and its associated Guidance on the
Accounting Standard for Disclosures about Segments of an Enterprise and Related Information(ASBJ Guidance No.20, March 21, 2009). The Group also changed the name of its Consumer
Products & Machinery segment to the Motorcycle & Engine segment and the name of its
Hydraulic Machinery segment to the Precision Machinery segment in conjunction with the April
2010 adoption of new industry segmentation for internal reporting. Also effective from April
2010, the crushing machine business was shifted from the Rolling Stock segment to the Plant &Infrastructure segment and the industrial robot business was shifted from the Consumer Products& Machinery segment to the Precision Machinery segment. Additionally, in conjunction with its
October 2010 organizational restructuring, the Group renamed its Shipbuilding segment the Ship
& Offshore Structure segment.
To reflect this change, orders received, net sales, and order backlog for the year ended March
31, 2010 in the table below have been restated based on the newly adopted accounting standard
and guidance and the resegmentation of operations.
Orders received
Year ended March 31,
2010（A）

Year ended March 31,
2011（B）

Change（B-A）

million yen% of total
million yen% of total
million yen% of total
Ship & Offshore Structure
16,128
1.6
78,953
6.2
62,824
389.5
Rolling Stock
66,2696.6
187,12214.7
120,852
182.3
Aerospace
171,38017.1
206,730
16.2
35,350
20.6
Gas Turbine & Machinery
226,22822.5
187,582
14.7(38,646)(17.0)
Plant & Infrastructure
135,664
13.5
119,987
9.4(15,677)(11.5)
Motorcycle & Engine
203,084
20.2
234,479
18.4
31,394
15.4
Precision Machinery
84,9488.4
148,955
11.7
64,00675.3
Other97,5849.7
106,841
8.4
9,257
9.4
Total
1,001,290
100.0
1,270,652
100.0
269,362
26.9
Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

41

Net sales

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Total

Year ended March 31,
2010（A）% of total
million yen
151,89312.9
150,07112.7
188,892
16.1
191,379
16.3
107,5809.1
203,084
17.3
82,715
7.0
97,8558.3
1,173,473
100.0Year ended March 31,
2011（B）
million yen% of total
118,416
9.6
131,104
10.6
196,876
16.0
202,692
16.5
89,012
7.2
234,47919.1
140,32811.4
114,0389.2
1,226,949
100.0Year ended March 31,
2010（A）% of total
million yen
218,134
14.4
378,39125.1
264,78817.5
426,506
28.3
153,830
10.2
30,7722.0
34,6352.2
1,507,057
100.0Year ended March 31,
2011（B）
million yen % of total
177,25411.8
411,560
27.5
269,470
18.0
382,269
25.5
185,41412.3
42,7902.8
26,5891.7
1,495,349
100.0

Change（B-A）
million yen(33,477)(18,966)
7,984
11,313(18,568)
31,394
57,612
16,18353,476% of total(22.0)(12.6)
4.2
5.9(17.2)
15.4
69.6
16.5
4.5

Order backlog

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Total

Change（B-A）
million yen(40,880)
33,1694,682(44,236)
31,58312,018(8,046)(11,708)% of total(18.7)
8.7
1.7(10.3)
20.5
39.0(23.2)(0.7)(3) Non-consolidated orders and sales
Due to merger with Kawasaki Shipbuilding Corporation (Ship & Offshore Structure segment),
Kawasaki Precision Machinery Ltd. (Precision Machinery segment), and Kawasaki Plant
Systems, Ltd. (Plant & Infrastructure segment) as of October 1, 2010, the year-on-year rate ofthese segment does not mentioned below.
The Company changed the name of its Consumer Products & Machinery segment to theMotorcycle & Engine segment and the name of its Hydraulic Machinery segment to thePrecision Machinery segment in conjunction with the April 2010 adoption of new industry
segmentation for internal reporting. Also effective from April 2010, the industrial robot business
was shifted from the Consumer Products & Machinery segment to the Precision Machinery
segment. Additionally, in conjunction with its October 2010 organizational restructuring, theGroup renamed its Shipbuilding segment the Ship & Offshore Structure segment.
To reflect this change, orders received, net sales, and order backlog for the year ended March 31,
2010 in the table below have been restated based on the resegmentation of operations.

42Orders, net sales and order backlog by industry segment
Orders received
Year ended March 31,
2010（A）

Year ended March 31,
2011（B）

Change（B-A）% of total
million yen% of total
million yen% of total
million yen
Ship & Offshore Structure
39,994
4.9
Rolling Stock
53,6179.2
116,01914.2
62,402
116.3
Aerospace
153,07726.4
189,740
23.2
36,66223.9
Gas Turbine & Machinery
216,21637.3
173,82121.3(42,395)(19.6)
Plant & Infrastructure
12,7782.2
55,433
6.7
42,655333.8
Motorcycle & Engine
130,62022.5
150,023
18.3
19,403
14.8
Precision Machinery
12,366
2.1
91,054
11.1
78,687
636.3
Total
578,676100.0
816,086
100.0
237,409
41.0
Export orders received
318,55355.0
493,738
60.5
175,184
54.9
Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

Net sales

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Total
Net export sales

Year ended March 31,
2010（A）% of total
million yen
118,67918.4
169,21126.2
184,886
28.7
28,3684.4
130,620
20.2
12,3661.9
644,133100.0
337,390
52.3

Year ended March 31,
2011（B）
million yen% of total
54,8076.7
102,851
12.5
179,78021.9
191,690
23.4
50,7736.2
150,023
18.3
87,52910.7
817,455
100.0
454,793
55.6

Year ended March 31,
2010（A）% of total
million yen
285,19727.6
251,43824.3
452,42943.8
42,8894.1
1,031,954
100.0
507,820
49.2

Year ended March 31,
2011（B）
million yen % of total
176,594
13.0
291,98521.6
256,22618.9
394,640
29.2
182,694
13.5
47,622
3.5
1,349,764
100.0
719,171
53.2

Change（B-A）
million yen(15,827)
10,5696,803
22,404
19,40375,162
173,322
117,403% of total(13.3)
6.2
3.6
78.9
14.8
607.8
26.9
34.8

Order backlog

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Total
Export order backlog

43

Change（B-A）
million yen
6,787
4,788
(57,788)
139,804
317,810211,350% of total

2.3
1.9(12.7)
325.9
30.8
41.6

(4) Supplementary information on earnings forecasts for the fiscal year ending March 31,
20121) Consolidated earnings outlook
Billions of yen

Outlook for the year
Year ended March 31,
ending March 31, 20122011 (B)(A)(actual)Change (A – B)

Net sales
Operating income
Recurring profit
Net income

1,360.0
50.0
52.0
32.0

1,226.9
42.6
49.1
25.9

133.1
7.4
2.9
6.1

Orders received
Before-tax ROIC (%)
R&D expenses
Capital expenditures
Depreciation/amortization
Number of employees
at end of period*Number of employees outside

1,360.0
7.8%
43.0
76.0

1,270.6
6.0%
37.0
55.3

89.4
1.8%
6.0
20.7

55.0

50.3

4.7

33,20032,706494*8,200*8,195*5of Japan included therein

Notes: 1. Outlook’s assumed foreign exchange rates: ¥83 = US$1, ¥115 = 1 euro

2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital.
3. Capital expenditures represent the total of newly recorded property, plant and equipment andnewly recorded intangible assets. Depreciation/amortization represents depreciation/amortization
expenses for property, plant and equipment and intangible assets.
2) Outlook by reportable segment(a) Net sales and operating income (loss)
Billions of yen

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Engineering
Motorcycle & Engine
Precision Machinery
Other
Adjustments

Total

Outlook for the year
ending March 31,
2012 (A)Operating
Net sales
income(loss)
110.0
(4.0)
150.0
7.0
220.0
8.0
210.0
5.0

Year ended March 31,
2011 (B)(actual)Operating
Net sales
income(loss)
118.4
(1.0)
131.1
8.1
196.8
3.0
202.6
9.5

Change (A – B)

(8.4)
18.9
23.2
7.4

Operatingincome(loss)
(3.0)
(1.1)
5.0
(4.5)

Net sales

130.0

11.0

89.0

8.2

41.0

2.8

260.0
170.0
110.0

5.0
25.0
2.0
(9.0)
50.0

234.4
140.3
114.0

(4.9)
22.3
2.5
(5.3)
42.6

25.6
29.7
(4.0)

9.9
2.7
(0.5)
(3.7)
7.4

1,360.044

1,226.9

133.1

(b) Orders received
Billions of yen

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Total

Outlook for the year
ending March 31,
2012 (A)
60.0
150.0
260.0
220.0
120.0
260.0
180.0
110.0
1,360.045Year ended March 31,
2011 (B)(actual)
78.9
187.1
206.7
187.5
119.9
234.4
148.9
106.8
1,270.6

Change (A – B)
(18.9)(37.1)
53.3
32.5
0.1
25.6
31.1
3.2
89.4