Sumitomo Heavy Industries, Ltd.
CONSOLIDATED REPORT FY 2006, 1H
For the Six-Month Period to September 30, 2006

Note: All financial information has been prepared in accordance with generally accepted accounting principles inJapan. This document has been translated from the Japanese original as a guide for non-Japanese investors and contains
forward-looking statements that are based on managements’ estimates, assumptions and projections at the time of
publication. A number of factors could cause actual results to differ materially from expectations. Amounts shown in thisfinancial statement have been rounded down to the nearest million yen.

Consolidated Results FY 2006 1H

November 10, 2006

CONSOLIDATED FINANCIAL RESULTS
For the First Half Ended September 30, 2006
Sumitomo Heavy Industries, Ltd.
Listed Exchanges
Stock CodeHead Office
President
URL
Inquiries

Tokyo Stock Exchange, Osaka Securities Exchange
6302
Tokyo
Yoshio Hinoh
www.shi.co.jp
Hideo Oshima
General Manager, Corporate Communications Dept.
+81-3-5488-8219
November 9, 2006

Telephone
Date of the Board of Directors meeting
concerning consolidated interim accounts
U.S. GAAP accounting principles

Not adopted

1. FY 2006 1st Half Consolidated Results (April 1, 2006 to September 30, 2006)(1) Business Results(Units: millions of yen)

Net Sales
Operating Income
Ordinary Income
Net Income
Net Income per Share (yen)Fully Diluted Net Income per Share*Notes:First Half

Previous First Half

Previous Full Term

April 1, 2006
to September 30, 2006

April 1, 2005
to September 30, 2005

April 1, 2005
to March 31, 2006

% change273,395
11.2
26,77344.8
27,69949.6
16,703
33.3
27.79
--

% change
245,857
3.3
18,494(13.0)
18,520(17.2)
12,527
15.5
20.83
--

551,339
47,50547,58529,74249.45--(1) Gain from investments in subsidiaries and affiliated companies accounted for by equity method:
September 2006:
2,286 million yen
September 2005:
1,714 million yen
March 2006:
4,303 million yen(2) Average number of outstanding shares for the term (consolidated):
As of September 2006:
601,086,311 shares
As of September 2005:
601,535,553 shares
As of March 2006:
601,406,863 shares(3) Changes to accounting procedures: No(4) Percentages for net sales, operating income, ordinary income and interim net income represent yearon-year changes.

Consolidated Results1Consolidated Results FY 2006 1H(2) Financial Position(Units: millions of yen)
End of First Half

End of Previous
First Half

End of Previous
Full YearAs of Sept. 30, 2006

As of Sept. 30, 2005

As of March 31, 2006

Total Assets

562,794562,609579,233

Stockholders’ Equity

183,077

148,252

167,740

31.9

26.4

29.0

298.79246.50279.02Equity Ratio (%)
Stockholders’ Equity per Share (yen)*Notes: Number of shares outstanding at the end of the period (consolidated):
As of September 30, 2006:
As of September 30, 2005:
As of March 31, 2006:

601,016,147 shares
601,419,314 shares
601,185,726 shares(3) Cash Flows(Units: millions of yen)First Half
April 1, 2006
to September 30, 2006

Previous First Half
April 1, 2005
to September 30, 2005

Previous Full Year
April 1, 2005 to
March 31, 2006

Cash Flows from Operating Activities

23,43025,638Cash Flows from Investing Activities(2,519)(2,010)50,023(7,024)

Cash Flows from Financing Activities
Cash and Cash Equivalents at PeriodEnd(32,067)(25,944)(48,812)33,643

46,98843,644(4) Scope of Consolidation and Application of equity method:
Number of consolidated subsidiaries:
Number of non-consolidated subsidiaries accounted for by the equity method:
Number of affiliates accounted for by the equity method:(5) Changes in the scope of consolidation and Application of equity method:
Consolidated subsidiaries:(New) 5Equity method:(New) --

912
7

(Removed) 2(Removed) --2. FY 2007 Consolidated Forecasts (April 1, 2006 to March 31, 2007)(Units: millions of yen)
Full Year
April 1, 2006 to March 31, 2007

Net Sales

595,000

Ordinary Income

60,000Net Income

33,000*Notes: (1) Projected net income per share for FY2006 (ending March 31, 2007): .................................. 54.91 yen(2) Please consult page 9 of 3. Outlook for Fiscal Year in III. Business Results and Financial Position section forfurther information concerning the projections.

Consolidated Results2

Consolidated Results FY 2006 1H

I. State of the Group

Sumiju Environmental
Engineering, Inc.

4

Nihon Spindle Mfg.Co.,Ltd.

5

Izumi Food Machinery
Co. Ltd.

5

Lightwell Co., Ltd.

6

Industrial Machinery

Mass-Produced Machinery

3

Sumitomo Machinery Corporation of America

8

Sumitomo (SHI) Cyclo Drive Germany, GmbH

9

Sumitomo (SHI) Cyclo Drive Asia Pacific Pte. Ltd.

10

Sumitomo (SHI) Cyclo Drive China, Ltd.

11

Sumitomo Heavy Industries PTC Sales Co., LTD.

11
7
12
12
13

14

SHI Plastics Machinery, Ltd.
SHI Plastics Machinery, Inc. of America

SEN Corporation, an SHI and Axcelis Company

Sumitomo NACCO Materials Handling Co., Ltd.

Sumitomo Heavy Industries Himatex Co., Ltd.

Sumiju Kenki Crane K.K.
14

Construction Machinery

Sumitomo Heavy
Industries Marine &Engineering Co., Ltd.

3

7

Sumitomo Heavy Industries (Parent Company)

Sumitomo Heavy
Industries Techno-Fort
Co., Ltd.

2

Ship, Steel Structure & Other specialized Equipment

Shin Nippon MachineryCo., Ltd.

Seisa Gear Ltd.
1

Environmental Protection Facilities, Plants & Others

Sumitomo Heavy
Industries Engineering &Services Co., Ltd.

Hitachi Sumitomo Heavy Industries
Construction Crane Co., Ltd.
12
Link-Belt Construction Equipment Company
Sumitomo (S.H.I.) Construction Machinery Co., Ltd.

15
14

Sumitomo (S.H.I.) Construction Machinery
Manufacturing Co., Ltd.

14

Sumitomo (S.H.I.) Construction Mach. Sales Co., Ltd.

16

Consolidated Results3Consolidated Results FY 2006 1H

Notes:
1.

represents consolidated subsidiaries andrepresents affiliates accounted forby the equity method .
2. Nihon Spindle Mfg.Co., Ltd., which is an affiliate accounted for by the equity method, is listed on the first sectionof Tokyo Stock Exchange and the fist section of Osaka Securities Exchange.
3. Relationship between Group companies:
1. Consignment of design, manufacturing, maintenance and management
2. Purchase of equipment
3. Consignment of design and manufacturing
4. Consignment of operation and maintenance
5. Purchase of equipment
6. Consignment of software development
7. Supply of parts to North America regional base
8. Supply of parts to Europe regional base
9. Supply of parts to South-east Asia regional base
10. Supply of parts to China regional base
11. Product sales agent
12. Supply of equipment
13. Purchase of raw materials
14. Lease of fixed assets
15. Consignment of manufacturing
16. Sale of products

Consolidated Results4Consolidated Results FY 2006 1H

II. Management Policies
1. Basic Management Policies
The Group believes that securing long term customer trust through continuously "creating value for consumer" isinterconnected with the Group's efforts to maintain sustained development and increase business worth, andreflects the desires of stockholders, employees, and the local community.
In order to realize high, stable growth on a global level, the Group intends to be an "organized, knowledge-creatingcompany" that provides first class quality products to customers. Then, the Group will strengthen marketing,research and development, and production, and focus even more closely on the product itself.

2. Basic Policies Relating to Profit Distribution
The Company's basic policy is to pay stockholder dividends according to periodic income and to continue toincrease these dividends, while replenishing internal reserves necessary for stable, long-term businessdevelopment.

3. Medium- and Long-term Management Strategies
Under “Leap to Excellence ’07,” the medium-term, three-year management plan that began from last year, thecompany is aiming for sustainable growth and development built on the three core features outlined below.
(1) The Group will strive to become an organized knowledge-creating company launching first-class productsin the market.
(2) The Group’s businesses will be vertically integrated to pursue synergy.
(3) The Key Component business will be expanded and reinforced.
"Leap to Excellence ‘07", the medium term management plan, calls for the following quantitative indicators to be
met by the end of 2007.
Operating income: More than 70 billion yen
Interest-bearing debt: Less than 100 billion yen
The plan further calls for keeping ROIC (return on invested capital), a Group management indicator, above WACC
(weighted average cost of capital), and above 10%* The Group uses the equation below to calculate ROIC after taxes.
ROIC=(Operating income + Interest earned, dividends) x 55% (= 1 – Effective tax rate)(Average stockholders’ equity at start and end of fiscal period +average interest-bearing debt at start and end of fiscal period)

4. Issues to be Addressed
FY 2006 is the midway point in the Company’s medium-term management plan, “Leap to
Excellence ’07.” We will address the following issues to ensure that our objectives are achieved.
(1) Enhancing the competitive edge of products
Believing that continual creation of first class products to maintain our global competitive edge isnecessary to achieve sustainable growth, the Company is working to step up investment indevelopment and to maintain aggressive marketing of promising products.
(2) Strengthening collaboration between businesses and expanding the components business
The Company is working to integrate our machinery business through the components business, which
is our forte, by engaging in activities to create a chain of strong products as we continue to pursue
Consolidated Results
5Consolidated Results FY 2006 1H

vertical integration. More specifically, we have been enhancing functional collaboration among various
businesses we believe will foster integration of motion control drives with the power transmission andprecision control technology in which we possess an overwhelming advantage.
(3) Sustaining strong performance for the Industrial Machinery
Favorable growth for industrial machinery is sustaining profitability for the Group as a whole. We
continue to invest in accordance with customer needs to sustain stable profitability for this business.
(4) Business restructuring
We continue to work on accelerating the reorientation of the business structure for the Environmental
Protection Facilities and Plant business and the Steel Structure and Other Specialized Equipment
Business to private demand.
(5) Strengthening alliances for overseas business
The goal of the Group is to expand our business through global business development. We areconcentrating our efforts on enhancing local sales and service networks overseas, and expanding
capacity in China, the Philippines, and Vietnam, and will continue to invest in further enhancements to
expand the scale of our business.
(6) Developing an internal control system
The Group has been involved in internal control activities for some time now, but we continue involvethe entire Group in laying a stronger foundation for our system of internal controls and compliance.

5. Items Relating the Parent Company, etc.
Not applicable as the Company has no parent company.

Consolidated Results
6

Consolidated Results FY 2006 1H

III. Business Results and Financial Position
1. Business Results
The Japanese economy continued to grow in the first half of the current fiscal year, boosted by growthin exports and capital investment coupled with strong consumer spending, despite the impact ofsustained high levels for crude oil and material prices. Although U.S. economic growth decelerated, theChinese economy continued to expand, also joined by sustained growth for promising markets such as
Southeast Asia and India. The world economy in general continued to expand as the economic
recovery for Europe progressed as well.
The goal of the Group under the “Leap to Excellence ‘07” mid-term management plan, which began theprevious year, is to achieve sustained growth. We succeeded in maintaining the steady business
management achieved for last period during the first half of the current fiscal year, exceeding business
forecasts as a result. The Company made progress in establishing overseas manufacturing plants anda global supply chain for our power transmission business with the completion of a motor manufacturing
plant in Vietnam during the first half. We also maintained an aggressive schedule of new productintroductions, including a new hydraulic shovel and laser drill, as well as new models for plastics
machinery and power transmissions.
These management policies resulted in growth in both sales and income (interim net income basis) for
the first half of the current fiscal year, for the fourth straight period. We achieved record highs for orders
received and sales, as well as operating, ordinary and interim net income.
Operating results for the first half of the current fiscal year recorded broad growth overall, sustained bya turnaround in growth for other divisions, in addition to strong growth for the Mass-produced Machinery
segment. Orders received rose 14% year-on-year to 322.4 billion yen due to an increase in orders
received for our Construction Machinery, Industrial Machinery, and Environmental Protection Facilities,
Plant and Other businesses. We were able to achieve sales growth of 11% year-on-year to 273.4 billion
yen, boosted by growth in Construction Machinery and the Ship, Steel Structure, and Other Specialized
Equipment segments. On the profit front, operating income rose 45% year-on-year to 26.8 billion yen as
profits staged a turnaround for the Ship, Steel Structure, and Other Specialized Equipment segment
and for the Construction Machinery segment. Ordinary income rose 50% to 27.7 billion yen and interim
net income rose 33% to 16.7 billion yen due to improvement in non-operating income from investment
gains on equity interests.
We have declared a dividend of 3.5 yen per share for the first half of the current fiscal year in light of theabove operating results and financial status. This represents an increase of 1.0 yen per share over the
first half of the previous year.
Results for each division are as follows.

Mass Produced Machinery Segment

The Company exceeded the results for the first half of the previous fiscal year in our powertransmission and control business for both sales and orders received, where growth was concentrated
in large machinery, particularly for overseas markets. Our plastics machinery business secured orders
received on level with the first half of the previous fiscal year despite sluggish demand for specialty
injection molding machines for disks. This was due to increased share for newly introduced products.
Steady orders received were recorded for other machinery due to strong orders received forcryocoolers and cyclotrons for PET inspection. As a result, orders received for the entire segment rose
8% year-on-year to 116.2 billion yen, sales rose 3% year-on-year to 107.4 billion yen, and operating
income recorded growth of 2% year-on-year to 14.0 billion yen.

Consolidated Results
7

Consolidated Results FY 2006 1H

Environmental Protection Facilities, Plants, and Others Segment

Orders received for our energy plant business recorded growth in boilers for power generation due toactive conversion of the energy sources for boilers from heavy oil to coal and industrial wastes for fuel.
Orders received for our water treatment plant business declined as the business continued to undergo
a restructuring from public to private demand. As a result, orders received for the entire segment rose
35% year-on-year to 50.0 billion yen, sales remained almost level with the first half of the previous fiscal
year at 31.6 billion yen, and a 100 million yen operating loss was sustained due to rising material costs,
among other factors.
Ship, Steel Structure and Other Specialized Equipment Segment

We secured orders received for five Aframax tankers for our Ship, Steel Structure, and Other
Specialized Equipment business due to aggressive marketing for orders received during the first half ofthe previous fiscal year, but only secured orders received for two tankers for the current first half. Sales
were booked for delivery of two tankers. Our steel structure and other specialized equipment businessrecorded order growth for reactor vessels, owing to the trend toward capacity expansion for oil
refineries. As a result, orders received for the entire segment declined 24% year-on-year to 33.0 billion
yen, while sales rose 24% year-on-year to 29.3 billion. This segment went from a 1.9 billion yen
operating loss for the first half of the previous fiscal year to a 2.3 billion yen profit for the current first half.
Industrial Machinery Segment

Growth in orders received for material handing system was concentrated in large cranes as domestic
ship builders and steel manufacturers substantially increased capital spending.
Orders received for turbines and pumps rose as favorable market conditions were sustained bycapacity expansion for biomass power generation and oil refineries, and marketing capabilities wereenhanced by segment for clients, by region and by market. As a result, orders received for the entire
segment rose 40% year-on-year to 45.9 billion yen and sales rose 6% year-on-year to 28.9 billion.
Operating income rose 24% year-on-year to 3.8 billion yen.
Construction Machinery Segment

Both orders received and sales for hydraulic shovels rose as we worked to increase capacity to keep
pace with growth in demand, and worked to expand sales through alliances with corporate partners andgroups overseas. This growth was concentrated in Europe and Asia. Strong growth in both orders
received and sales for mobile cranes were recorded for North America as we expanded marketing totake advantage of strong demand generated by the introduction of new models that meet customer
needs. As a result, orders received for the entire segment rose 24% year-on-year to 77.4 billion yen,sales rose 29% year-on-year to 76.2 billion yen, and operating income recorded growth of 87% yearon-year to 6.6 billion yen.

Consolidated Results8Consolidated Results FY 2006 1H

2. Financial Position
Total assets decreased by 16.4 billion yen over the end of last period to 562.8 billion yen, due to steadyprogress in collection of accounts receivable, among other factors. Progress in asset reduction led to a
30.5 billion yen reduction in interest-bearing debt to 95.0 billion yen, which, in turn, led to a 4.8 point
reduction in the debt-equity ratio over the end of last period to 16.9%. Stockholders' equity after
exclusion of minority interests from net assets was 179.6 billion yen, owing to strong operating results
for the first half. The ratio of stockholders' equity to total assets was 31.9%.
Cash inflow from operating activities declined by 2.2 billion yen year-on-year to 23.4 billion yen due tothe smaller reduction in accounts receivable. Cash outflow from investment activities rose by 500
million yen to 2.5 billion yen due to an increase in capital expenditures which exceeded the 5.9 billion
yen in income from business spin-offs. Repayment of loans resulted in a 32.1 billion yen decline infunds due to financing activities. The above factors resulted in a 10.0 billion yen decline in cash andequivalents on hand for the current first half, compared with the end of the previous fiscal year, to 33.6
billion yen.

Cash Flow Indicators
2004

2005

2006

InterimFull Year

InterimFull Year

Interim

Stockholders’ equity ratio

22.3

24.1

26.4

29.0

31.9

Stockholders’ equity ratio at market value

35.1

44.6

86.1

117.4

105.6

Years to debt redemption

3.5

3.7

2.8

2.5

2.0

Interest coverage ratio

16.1

15.0

18.9

21.0

26.7

(Notes)
1. Indicators calculated using the following formulae.
Stockholders’ equity ratio: Stockholders’ equity/Total assets
Stockholders’ equity ratio at market value: Market capitalization/Total assets
Years to debt redemption: Interest-bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payments
2. All are calculated based on consolidated financial figures.
3. Interest-bearing debt indicates all liabilities posted in the balance sheets on which the Company pays
interest.

Consolidated Results
9Consolidated Results FY 2006 1H

3. Outlook for the Full Fiscal Year
While deceleration of the heretofore expanding U.S. economy and lack of clarity on materials prices are
sources of concern for the external environment going forward, management will continue to work toachieve goals set under "Leap to Excellence '07," our medium-term management plan. Our operating
results forecast for the current fiscal year is as follows. We expect to achieve our numerical goals forthe medium-term management plan one year ahead of schedule.
(Units: billions of yen)
Consolidated

AmountNon-consolidated

AmountNet sales

595.0

Net sales

267.0

Operating income

60.0

Operating income

20.0

Ordinary income

60.0

Ordinary income

21.0

Net income

33.0

Net income

12.0*Expectations and outlooks for future performance are rational judgments made based on the information currently
available.
Therefore, actual results may vary from written expectations and outlooks due to changes in various factors.
Please see Business Risks section for detailed information about those factors.

Consolidated Results
10Consolidated Results FY 2006 1H

IV. Business Risks
The Group's operating results and financial position could be influenced by any of items enumerated below.
Items from the text that concern the future are based on the Group's judgments made at the end of the current
interim consolidated accounting period.

(1) Economic conditions
Demand for the capital goods, which comprise the majority of the Group's net sales, is influenced by economic
conditions of the areas within Japan and overseas where the Group conducts its sales.
Therefore, recessions in Japan, Asia, North America, Europe, and other major markets, and the subsequent
reduction in demand for the Group's products, may affect the Group's performance and financial position.

(2) Exchange rate fluctuation
The Group's business activities include production and sales of its products in many countries around the world.
Transactions, including sales, expenses, assets, and liabilities, that are carried out in the local currency of eachcountry are converted to yen in order to prepare consolidated financial statements.
Values of these items in the local currency may not change, however it is possible that the value after conversion to
yen will be affected by the exchange rate at the time of conversion.
Moreover, as of September 30, 2006, dollar denominated back orders received, centered on the shipbuilding
business, were about 1.2 billion dollars.
To minimize the affects of fluctuations in the exchange rate on results, risk hedges such as forward exchange
contracts are used, but it is difficult to remove risk entirely in this way.
As a result, the Group's performance results may be influenced by fluctuations in the exchange rate.

(3) Rise in raw materials prices
Increases in prices of raw materials such as iron, copper, and petroleum that accompanied worldwide businessrecovery have become pronounced, and the Company is concerned about the subsequent rise in the costs of raw
materials necessary for its products.

In addition to this, some suppliers of components and materials are reaching the limits of their capacity,
making it difficult to secure the requisite volume. While the Group is working to reduce costs,
incorporate material price hikes in pricing quotes to pass the added cost through to the sales price, andreassess production plans, it is possible that cost increases and procurement difficulties will have an
impact on operating results.

(4) Overseas business development
The Group works to develop global businesses, particularly in the Mass-Produced Machinery segment and theConstruction Machinery segment, and focuses on markets in North America, Asia, and Europe. In order to increase
overseas demand, it must enhance overseas sales networks, services and production facilities.
However, depending on the country, there are times when political changes and unforeseeable changes in laws
and regulations may influence the market for a particular product. Especially in China, where the market canoverheat due to sudden economic growth, financial regulation may be imposed as part of the application of
investment control measures.
As a result, it is possible that the results of the Group's overseas business activities may be affected.
Consolidated Results
11Consolidated Results FY 2006 1H(5) Product quality
All of the Group's products are manufactured according to an exacting quality standard. None the less, not every
product produced by the Group can be free of defects, and there is no guarantee that situations will not arise inwhich the Group will have to bear the burden of guarantee construction.
In addition, the Group carries product liability compensation insurance, but there is no guarantee that this insurance
will cover all compensation amounts.
If the sums involved in guarantee construction and product liability compensation obligations borne by the Group asa result of problems with product quality are large, then they could have an adverse influence on the Group's
performance results and financial position.

(6) Effects of impairment accounting
On March 31, 2002, the Company revaluated its land used for business purposes in accordance with Japan's Law
Concerning Land Revaluation (Law No. 34, dated March 31, 1998) and Law Amending the Law Concerning Land
Revaluation (Law No. 19, dated March 31, 2001) on the basis.
The difference between the book value of land at the end of the last accounting period and its value after therevaluation was 21.7 billion yen, a decrease of 21%. If the value of the land further depreciates in the future, there
is a possibility it will register as a depreciation of fixed assets.
When the decrease is registered, it may be reflected in the Group's performance results.

(7) Environmental protection
The Group, in accordance with its Group Environmental Policy, devotes itself to the reduction of environmental
impact, such as by avoiding environmental risks and minimizing waste.
Although the group has an exhaustive system in place to prevent environmental pollution, there is always thepossibility that environmental pollution could occur due to unexpected circumstances.
If environmental pollution were to occur, the large costs involved might affect the Group's performance results.

(8) Disasters
In order to prevent or reduce to the smallest extent possible damages arising from disasters such as fire,
earthquake, typhoon, and storms and flooding, the Group carries out inspections and training and has installed acommunications system.
Nonetheless, physical damages and injuries resulting from disasters may impact the Group's activities.
Moreover, there is no insurance that can provide complete coverage of damages from disasters.

Consolidated Results
12Consolidated Results FY 2006 1H

V. Consolidated Income Statements(Units: millions of yen)PreviousFirst HalfFirst Half

ChangeApril 1, 2006 to
September 30, 2006
Amount%April 1, 2005 to
September 30, 2005
Amount%Net sales

273,395

Cost of sales

211,311

77.3

193,564

Gross income

62,08422.7

52,292

Selling, general &administrative
expenses

35,310Operating income

26,773

Amount245,857

18,494

Amount%27,538551,33978.7

17,747434,904

78.9

21.3

9,791

116,435

21.1

1,511

68,9308,280

47,50533,7999.8

Previous
Fiscal Year
April 1, 2005 to
March 31, 2006

7.5

8.6

Non-operating income
Interest income

76

33

43

220

Dividend income

322

296

26

367

2,286

1,714

572

4,303

17

407

(390)

383

1,195

1,369

(175)

2,923

3,897

3,820

77

8,195

Interest expense

852

1,293

(441)

2,384

Other-net
Total Non-operating
expensesNon-operating
income/loss

2,119

2,500

(381)

5,730

2,971

3,793

(822)

8,114

926

27

899

81

Ordinary income

27,6999,179

47,585Equity in earningsof unconsolidated
subsidiaries andaffiliatedcompanies
Collection ofallowance for
doubtful accounts
Other-net
Total Non-operating
incomeNon-operating expenses

10.1

18,5207.5

Consolidated Results
13

8.6

Consolidated Results FY 2006 1H(Units: millions of yen)PreviousFirst HalfFirst Half

ChangeApril 1, 2006 to
September 30, 2006
Amount%April 1, 2005 to
September 30, 2005
Amount%AmountPrevious
Fiscal Year
April 1, 2005 to
March 31, 2006
Amount%Extraordinary gains
Gain of business
transfer

294

--

294

--

Gain on sale ofsecurities - net

--

661

(661)

906

Extraordinary gains

294

661

(367)

906

1,270

--

1,270

--

672

--

672

705

--

257

(257)

257

--

229

(229)

229

--

77

(77)

7

--

--

--

686

--

--

--

471

--

--

--

70

Extraordinary losses

1,942

563

1,379

2,425

Income before incometaxes

26,051

7,433

46,066

Corporate income tax
current

11,037

6,404

4,634

15,735

Corporate income tax
deferred(2,038)(490)(1,548)135

Minority interests

(349)

(178)

(171)

(454)

Interim net income

16,703

4,176

29,742Extraordinary losses
Loss on business
transfer
Loss on breach of
antitrust law
Provision for
retirement benefits todirectors, corporate
auditors and executive
officers
Impairment losses
Loss on valuation ofaffiliated companies
Loss on sales ofproperty, plant andequipment
Loss on valuation of
investment securities
Loss from liquidationof subsidiaries

9.5

6.1

18,61912,527

7.6

5.1

Consolidated Results
14

8.4

5.4

Consolidated Results FY 2006 1H

VI. Consolidated Statements of Changes to Stockholders' Equity(Millions of Yen)

Stockholders’ Equity
CommonCapitalstock

surplus

Balance as of March 31, 2006

30,872

Earned surplus

16,808

Total stockholders’

Treasury stock

68,848equity(544)

115,983

Fluctuations in the interim period
Dividends(1,503)

Interim net income

16,703(1,503)
16,703Acquisition of treasury stock
Disposal of treasury stock

(187)

(187)

3

7

4

Difference from transfer of revaluation
reserve for land

1,726

1,726

634

634

7

(7)

--

12

17,553(184)

17,381

16,80886,401(728)

133,364

Increase from change in scope of
consolidation
Correction of capital allotment after
merger of parent company andconsolidated subsidiaries
Fluctuations other than stockholders’equity in the interim period (net)Total fluctuation in the interim period
Balance as of September 30, 2006

30,872

Appraisal and Translation Differences
Difference

Unrealized
holding

Gain/ loss

gains onon deferred

other

hedge

securities
Balance as of March 31, 2006

10,269Total

from transfer

Foreignofexchange

revaluationtranslation

reserve foradjustments

land
42,142--(654)

appraisal

Minority

Total net

andinterests

assetstranslationdifferences
51,757

3,752

171,492

Fluctuations in the interim period
Dividends(1,503)

Interim net income

16,703Acquisition of treasury stock(187)

Disposal of treasury stock

7

Difference from transfer ofrevaluation reserve for land

1,726

Increase from change in scopeof consolidation

634

Correction of capital allotment
after merger of parent
company and consolidated
subsidiaries--

Fluctuations other than stockhokders’ equity in the interim
period (net)(1,511)(2,201)(1,726)(106)(5,545)(250)(5,796)(1,511)(2,201)(1,726)(106)(5,545)(250)

11,585

8,758(2,201)40,415(761)

46,2123,501

183,077

Total fluctuation in the interim
periodBalance as of September 30,
2006

Consolidated Results
15

Consolidated Results FY 2006 1H

VII. Consolidated Statements of Surplus
Term(Units: millions of yen)Previous
Fiscal Year
April 1, 2005 to
March 31, 2006

PreviousFirst Half
April 1, 2005 to
September 30, 2005

Item
Capital Surplus
Capital surplus at the beginning of term

16,803

16,80315

1

516,804

16,808Retained earnings at the beginning of term

42,67742,677

Increase in retained earnings

12,78930,419Interim net income

12,52729,742

Increase owing to merger

117

278

Increase from transfer of revaluation reserve
for land

145

399

2,701

4,248

1,805

3,308

42

42

839

839

12

12

--

43

4

4

52,76568,848

Increase in capital surplus
Gain on disposition of treasury stock
Capital surplus at the end of term
Retained earnings

Decrease in retained earnings
Dividends
Bonuses for directors
Return of retirement allowance of overseas
subsidiaries in U.K.
Decrease due to increase in numbers ofconsolidated subsidiaries
Decrease due to decrease in numbers ofconsolidated subsidiaries and companies
accounted for by the equity method
Other
Retained earnings at the end of term

Consolidated Results
16Consolidated Results FY 2006 1H

VIII. Consolidated Balance Sheet for the First Half of FY 2006
(Units: millions of yen)
End of Previous
Consolidated
Fiscal YearEnd of First Half
As of
September 30, 2006

As of March 31, 2006

AmountAmountChangeEnd of Previous
First Half
As of
September 30, 2005

ChangeAmountAssetsCash and deposits

33,812

43,917(10,106)

47,504

Notes and accountreceivable

143,714

158,893(15,180)

133,469

Inventories

102,444

92,981

9,463

100,451

Deferred income taxes

9,737

7,844

1,893

8,589

Other

14,124

14,971(847)

17,320

(823)

(794)

(29)

(1,626)

303,007317,813(14,806)

305,707

Allowance for doubtful
accounts

Current assets
Buildings and structure

40,35540,918(563)

41,588

Machinery andtransportation tools

22,283

18,881

3,402

18,627

Land

111,005

114,115(3,111)

114,898

Construction in progress

4,159

3,525

634

2,020

Other

4,461

4,041

420

3,741

Tangible assets

182,262

181,480782

180,873

Intangible assets

5,732

4,789

944

4,259

Investment securities

54,37954,972(593)

47,925

Deferred income taxes

8,080

7,400

680

9,176

Other

11,52915,082(3,553)

20,630(2,195)(2,302)

107(5,962)

71,79375,152(3,359)71,770

Fixed assets

259,787

261,421(1,634)

256,902

Total assets

562,794579,233(16,439)562,609

Allowance for doubtful
accounts
Investments and otherassetsConsolidated Results
17Consolidated Results FY 2006 1H(Units: millions of yen)
End of Previous
Consolidated
Fiscal YearEnd of First Half
As of
September 30, 2006

As of March 31, 2006

AmountAmountEnd of Previous
First Half

Change

As of
September 30, 2005
ChangeAmountLiabilities
Notes and accounts payable

136,732

Short-term bank loans

26,763

Commercial paper
Long-term debt due within one
year
Bond redemption due
within one year
Income tax payable
Advance payments
received on contracts
Allowance for guaranteed
construction
Allowance for loss onordered construction
Allowance for loss on
liquidation ofsubsidiaries
Allowance for loss on
business transfer
Other

8,000
19,055(6,046)

128,326

28,180(1,425)33,98020,000(12,000)

15,00030,529(11,474)

39,646

--

--

--

1,000

9,126

9,129

(3)

6,111

43,33931,976

11,36340,327

3,737

3,410

326

3,729

75

45

31

411

--

--

--

1,939

161

--

161

--

30,82833,493(2,666)23,448277,815

299,547(21,732)

293,918

10,00010,000--10,00031,16236,787(5,625)46,28423,0431,450

22,578
921

465
530

21,868938

32,30933,505(1,196)33,679

3,938

4,405

(467)

4,293

Long-term liabilities

101,902108,195(6,292)

117,061

Total liabilities

379,717

407,742(28,024)

410,979

Minority interests

--

3,752

--

3,379

Paid in capital--

30,872--30,872

Capital surplus--

16,808--16,804Retained earnings--

68,848--52,765

Revaluation reserve for land--

42,142--

42,396

Unrealized gains on securities
Foreign currency translation
adjustments
Treasury stock--

10,269

--

7,495

--

(654)

--

(1,758)

--

(544)

--

(321)

Total stockholders’ equity
Liabilities minority interest,and stockholders’ equity--

167,740--

148,252--

579,233--

562,609

Current liabilities
Bond
Long-term debt due after one
year
Employees’ severance andretirement benefits
Allowance reserve
Deferred income taxes onrevaluation
Other

142,778

Stockholders’ equity
Common stock:

Consolidated Results
18Consolidated Results FY 2006 1H

Net Assets
Common stock

30,872------

Capital surplus

16,819------Retained earnings

86,401

--

--

--

(728)

--

--

--

Treasury stock
Stockholders’ equity

133,364

Unrealized gains on securities

8,758

--

--

--

Profit/loss on deferred hedge(2,201)

--

--

--

Revaluation reserve for land
Foreign currency translation
adjustments
Appraisal and Translation
Differences
Minority interests

40,415

--

--

--

(761)

--

--

--

3,501

--

--

--

Total net assets

183,077

--

--

--

Liabilities and net assets

562,794

--

--

--

46,212

Consolidated Results
19Consolidated Results FY 2006 1H

IX. Consolidated Cash Flow Statements(Units: millions of yen)First Half

Previous First Half

April 1, 2006 to

April 1, 2005 toPrevious
Consolidated
Fiscal Year
April 1, 2005 to
March 31, 2006

September 30, 2006

September 30, 2005

Income before income taxes

26,051

18,61946,066

Depreciation

5,170

4,253

9,072

--

229

229

Cash flows from operating activities

Impairment losses
Amortization of goodwill

(118)

--

--

--

(341)

(573)

(156)

(28)

(89)

Amortization of consolidation adjustment
Gain on sale of property, plant and equipment
Loss on sale of property, plant and equipment

24

130

686

Loss on disposal of property, plant and equipment

202

243

836

Gain on sale of investment securities

(19)

(661)

(906)

Loss on sale of investment securities

--

1

1

Loss from write-down of investment securities

35

--

471

Loss from liquidation of subsidiaries

--

--

70

--

77

7

Loss from write-down of shares of affiliatedcompanies
Gain on business transfer

(294)

--

--

Loss on business transfer

1,270

--

--

672

--

705

480

820

1,315

(42)

309

292

(2,286)(1,714)(4,303)

Increase (decrease) in allowances

1,027

1,962

(5,227)

Interest and dividend income

(399)

(329)

(587)

852

1,293

2,384

26,62430,782

3,028(Increase) decrease in deposits received(4,040)

(556)

3,544

Increase in inventories(8,724)(10,866)(1,634)(7,958)(6,904)6,533(4,038)

168

6,528

34,331

37,48568,451

Loss on breach of antitrust law
Increase in employees’ severance and retirement
benefits
Increase in provision for retirement benefits todirectors, corporate auditors and executive
officers
Equity in earnings of unconsolidated subsidiaries
and affiliated companies

Interest expenses(Increase) decrease in notes and accounts
receivable

Increase (decrease) in notes and accounts
payableOther-net
Subtotal

484

396

679

(877)

(1,356)(2,258)(10,508)(10,886)(16,848)

23,43025,63850,023

Interest and dividend received
Interest expenses
Payments for income taxes
Net cash provided by operating activities

Consolidated Results
20Consolidated Results FY 2006 1H(Units: millions of yen)First Half

Previous First Half

April 1, 2006 to

April 1, 2005 to

September 30,

September 30,

2006

2005

Previous
Consolidated
Fiscal Year
April 1, 2006 to
March 31, 2006

Cash flows from investing activities

103

29

278

(2,939)(610)(1,295)

1,799

893

1,280

Disbursements for investment in affiliated company--(1,080)(1,080)

Proceeds from liquidation of subsidiaries

--

1,528

1,528

(8,668)(4,960)(11,497)

1,491

854

2,202

--

1,462

1,462

Payments for long-term loans receivable

(37)

(32)

(44)

Collection of long-term loans receivable

113

320

332

Proceed from business transfer

5,895

--

--

Other-net

(277)

(415)

(190)

(2,519)(2,010)(7,024)

Net decrease in short-term loans(1,216)(11,563)(18,074)

Net increase in commercial paper(12,000)

3,500

8,500

Proceeds from long-term debt

3,500

17,58017,990

Repayments for long-term debt

(20,654)(33,495)(52,540)

Payments for redemption of bonds----(1,000)

Proceeds from sale of treasury stock

7

2

8

(187)

(127)

(352)

(1,503)(1,805)(3,308)

(14)

(36)

(36)

(32,067)(25,944)(48,812)

671

162

343

(10,485)(2,153)(5,470)43,644

49,10849,108485

3

3

Increase due to merger and acquisition

--

215

215

Net decrease from the change in consolidated companies

--

(184)

(212)

33,643

46,98843,644

Decrease in time deposits
Payments for securities
Proceeds from sale of securities

Payments for purchases of property, plant andequipment
Proceeds from sale of property, plant andequipment
Proceeds from refund of investment

Net cash used in investing activities

Cash flows from financing activities

Disbursement for acquisition of treasury stock
Cash dividends paid
Payment of dividends for minority stockholders
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase due to new consolidated company

Cash and cash equivalents at end of year

Consolidated Results
21Consolidated Results FY 2006 1H

Note: The relationship between cash and cash equivalents at the end of the interim period (end of period) and values given in thevarious sections of the Consolidated Balance Sheet for the First Half of FY 2006 is as follows:(Units: millions of yen)
September 30, 2006
September 30, 2005
March 31, 2006
Cash and cash equivalents
Time deposits exceeding 3 months
Cash and cash equivalents

33,812(168)
33,643

Consolidated Results
22

47,504(516)
46,98843,917(274)
43,644

Consolidated Results FY 2006 1H

Significant Items Forming the Basis for Preparation ofInterim Consolidated Financial Statements
1. Items concerning scope of consolidation
Number of subsidiaries: 91 companies
Names of major consolidated subsidiaries
Sumitomo (S.H.I.) Construction Machinery Co., Ltd., Shin Nippon Machinery Co., Ltd., Seisa Gear, Ltd.,
Sumitomo Heavy Industries Marine & Engineering Co., Ltd., Sumitomo Heavy Industries PTC Sales Co., Ltd.
Sumiju Environmental Engineering, Inc., Link-Belt Construction Equipment Company, Sumitomo Machinery
Corporation of America, and Sumitomo (SHI) Cyclo Drive Germany, GmbH
Non-consolidated subsidiaries (Shin Nichizo Engineering Co., Ltd. etc.) are small companies, and their combined
total assets, sales, net income (amount corresponding to equity holding) and retained earnings (amountcorresponding to equity holding) all have no important impact on first half consolidated financial statements.

2. Application of equity method
Number of non-consolidated subsidiaries accounted for by equity method: 2 companies
Number of affiliated companies accounted for by the equity method: 7 companies
Names of major companies accounted for by equity method.
SEN Corporation, an SHI and Axcelis Company, and Nihon Spindle Mfg. Co., Ltd.
Subsidiaries (Shin Nichizo Engineering Co., Ltd. etc.) and affiliated companies (Toa Koki Co., Ltd. etc.) that are
not accounted for by the equity method have been excluded from the application of the equity method because
they have minimal impact on first half consolidated net income and consolidated retained earnings, and havelittle importance in terms of overall group.

3. Changes in scope of consolidation and application of equity method
NingBo ZhuZhong Machinery Co., Ltd. and four other companies have been included in the scope of
consolidation for the first half of the current consolidated fiscal year due to their increased importance.
Synex Corporation, which merged with Sumitomo Heavy Industries Ltd., and SHI Resort
Development Ltd., which is no longer an affiliate due to the sale of the company's shares, have been
excluded from the scope of consolidation.

4. Fiscal years of consolidated subsidiaries
The consolidated overseas companies, Link-Belt Construction Equipment Company, Sumitomo Machinery
Corporation of America, Sumitomo (SHI) Cyclo Drive Germany, GmbH, etc. have a first half account settlement
date of June 30. When preparing first half consolidated financial statements, first half financial statement as ofthat date were used, and in the case of important transactions that occurred between that date and the first halfconsolidated account settlement date, necessary adjustments were made on a consolidated basis.

5. Accounting standards(1) Valuation criteria and valuation methods for major assets
1) Securities
Bonds held to maturity
Amortized cost method
Other marketable securities
With fair market value ･･･Market value method based on quoted market price on first half consolidated
account settlement date
(Appraisal differences are dealt with by means of the direct net asset influx method, with cost of securities
sold calculated with the moving average method.)
Consolidated Results
23Consolidated Results FY 2006 1H

Without fair market value ･･･Stated at cost determined by the moving average method
2) Inventories
Work in process: Principally stated at cost based on specific cost method
Finished products, semi-finished products, raw materials and supplies: Principally stated at cost based on the
total average method
As for products in Construction Machinery segment are principally stated at cost or market, whichever is lower
based on specific cost method.

(2) Derivative transactions
Market method.

(3) Methods of depreciation for major depreciable assets
1) Property, plant and equipment
The Company computes depreciation by the declining balance method. Furthermore, as for useful life andresidual value, the standard used is principally the same as the method stipulated in the income tax code.
However, the Company and some consolidated subsidiaries apply the straight-line method to buildings acquired
after April 1, 1998 (excluding equipment belonging to buildings).
2) Intangible fixed assets
Depreciation is computed by the straight-line method. Furthermore, as for useful life and residual value, thestandard used is principally the same as the method stipulated in the income tax code.
However, in the case of software used by the Company itself, the straight-line method based on the period of
possible use within the Company (5 years) is adopted.

(4) Criteria for appropriation of important allowance1) Allowance for doubtful accounts
To prepare against credit losses, the Company makes additions to this allowance on the basis of loan loss ratios
for standard loans, and on an individual basis for loans considered unlikely to be repaid in full, recording anamount equivalent to that thought to be irretrievable.
2) Allowance for guaranteed construction
In preparation for disbursements for expenses for gratuitous repair made after product delivery, allowances forguarantee construction are recorded based on historical results and the like.
3) Allowance for losses on ordered construction
As for undelivered construction orders received for which it is estimated, at the end of the consolidated interim
period, that extensive losses are likely to occur after the period, and for which a rational estimate of the amountof said losses is possible, the estimated amount of losses that are expected to occur after the first half arerecorded.
4) Allowance for loss on business transfer
The estimated amount of losses on business transfer expected to occur in the future are recorded.
5) Employees’ severance and retirement benefits
To provide for employees’ accrued retirement benefits, the Company charged to income the amount recognized
as having been incurred at the end of the first half consolidated accounting period based on the projectedamounts of the liability for accrued retirement benefit liabilities and pension assets at the end of the consolidated
accounting fiscal year.

Consolidated Results24Consolidated Results FY 2006 1H

Additionally, the Company accounts for past service liability as expenses in the consolidated accounting year inwhich they occurred. Consolidated subsidiaries account for past service liability as expenses calculated by thestraight line method, based on a fixed number of years (mainly 12 years) within the average remaining employee
service time when they occurred.
Actuarial differences are amortized on a straight-line basis over a period which falls within the average estimatedremaining years of service (12 years) of the participants commencing the year following.

(5) Important lease transaction procedures
For financial lease where ownership of leased properties is not recognized to transfer to borrower, an accounting
procedure pursuant to common methods for lease transaction is adopted.

(6) Hedging activities
1) Hedge accounting methods
The Company uses deferral hedge accounting. In the case of Interest-rate swaps, if conditions for a special
application are met, the special application is adopted. In addition, as for foreign currency futures contract, if
conditions for appropriation are fulfilled, appropriation treatment is adopted.
2) Hedging measures and hedged items
Hedging measures

Hedged items

Forward foreign exchange contracts
Interest-rate swaps

Foreign currency-denominated liabilities and planned transactions
Loans3) Hedging policy
Based on the “Market Risk Management Rule” provided for by the board of directors, the Company aims at thedecrease of the risk, and therefore does not engage in any speculative transactions.
4) Method of evaluating effectiveness of hedging
The fluctuations in the total sum and the quotation for fair value hedging and the fluctuation in the total sum andquotation for cash flows hedging are compared every 6 months, and, based on the amount of the fluctuation for
each, hedge effectiveness is evaluated.
The Company does not evaluate the effectiveness of hedging interest-rate swaps by special applications.

(7) Other important items forming the basis for preparation of consolidated financial
statements
1) Method of accounting for consumption tax, etc.
The Company adopts the tax exclusion method.
2) Adoption of a consolidated tax payment system
A consolidated tax payment system has been adopted.

Consolidated Results
25Consolidated Results FY 2006 1H

6. Fund range in the statement of cash flows
Funds in the statement of cash flows (cash and cash equivalents) comprise cash in hand, deposits
withdrawable at any time, and easily cashable short -term investment with little risk and maturity datecoming within three months from the acquisition date.

Changes to Accounting Methods
Accounting Methods Pertaining to the Representation of Net Assets on the Balance Sheet
Accounting Standards for Presentation of Net Assets in the Balance Sheet (ASBJ Statement No. 5;
December 9, 2005) and Guidance on Accounting Standards for Presentation of Net Assets in the
Balance Sheet (ASBJ Implementation Guidance No. 8; December 9, 2005) have been applied from thefirst half of the current consolidated fiscal year. The amount equivalent to total Stockholders’ Equity as
heretofore recorded is 181.78 billion yen. This has had no effect on profits.

Notes to the Consolidated Balance Sheet(Units: millions of yen)First Half
April 1, 2006 to
September 30, 2006

Previous First Half
April 1, 2005 to
September 30, 2005

Previous
Consolidated
Fiscal Year
April 1, 2005 to
March 31, 2006

159,235

166,807

166,854

25

148

90

1. Total depreciation on tangible fixed
assets
2. Discount on notes receivable
3. Matured bills at end of fiscal period
Bills receivable
Bills payable
4. Pledged assets and secured
obligations
Pledged assets
Secured obligations
5. Guaranteed obligations
Guaranteed obligations(of which Group’s obligation)

784

--

--

1,503

--

--

39,24039,96039,742

4,427

6,978

5,364

5,812

6,104

5,922

5,724

5,994

5,822

15

224

--

15

224

--

Commitment to guarantee(of which Group’s obligation)

Consolidated Results
26Consolidated Results FY 2006 1H

X. Marketable Securities
Current First Half (As of September 30, 2006)
1) Other marketable securities with market value
Value on theInterim Balance
Sheets24,964

Acquisition Price
Stock(Units: millions of yen)

10,691

2) Other Marketable Securities without market value

Difference
14,273(Units: millions of yen)
Value on the Consolidated Balance Sheets①Bonds held to maturity
1) Unlisted bond

10
10

Total
②Other marketable securities
1) Unlisted stock2) Other

2,973
1,011
3,984

Total

Previous First Half (As of September 30, 2005)
1) Other marketable securities with market value
Acquisition Price
Stock(Units: millions of yen)
Value on theInterim Balance
Sheets
20,6408,0962) Other Marketable Securities without market value①Bonds held to maturity
1) Unlisted bondDifference
12,544(Units: millions of yen)
Value on the Consolidated Balance Sheets
10
10

Total
②Other marketable securities
1) Unlisted stock2) Other

4,674
1,016
5,690

Total

Consolidated Results27Consolidated Results FY 2006 1H

Previous Fiscal Year (As of March 31, 2006)
1) Other marketable securities with market value
Acquisition Price
Stock(Units: millions of yen)
Value on theInterim Balance
Sheets
25,865

8,7032) Other Marketable Securities without market value①Bonds held to maturity
1) Unlisted bondDifference
17,162(Units: millions of yen)
Value on the Consolidated Balance Sheets
10
10

Total
②Other marketable securities
1) Unlisted stock2) Other

4,266
1,011
5,277

Total

Consolidated Results28Consolidated Results FY 2006 1H

XI. Segment Information
1. Segment Information by BusinessCurrent First Half (April 1, 2006 to September 30, 2006)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

(1) Unaffiliatedcustomers

107,365

31,62429,34928,89876,159273,395--

273,395(2) Intersegment

1,144

1,383

116

150

13

2,806

(2,806)--

108,509

33,007

29,46529,04776,173

276,200(2,806)273,395

25,212

69,560249,565(2,944)

246,621

3,836

6,613

26,635(138)

26,773

F

Item
Sales

Total

Cost and
94,53833,06427,192
expenses
Operating
13,971(57)
2,273
income/loss
Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general

Previous First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

103,566

31,85324,281

27,27458,882245,857--

245,857

680

1,313

229

125

35

2,382

(2,382)--104,246

33,166

24,50927,40058,918248,239(2,382)245,857

24,29755,381

229,736(2,373)

227,363

3,102

3,537

18,502(9)18,494

F

Item
Sales
(1) Unaffiliatedcustomers(2) Intersegment
Total

Cost and
91,18233,09325,783
expenses
Operating
13,06473(1,274)income/loss
Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general

Consolidated Results
29Consolidated Results FY 2006 1H

Previous Full Year (April 1, 2005 to March 31, 2006)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

(1) Unaffiliatedcustomers

218,798

82,74067,372

56,054

126,375

551,339--551,339(2) Intersegment

2,059

2,902

421

335

56

5,774

(5,774)--

220,857

85,642

67,79456,389126,431557,113(5,774)551,339

191,519

81,36568,27350,542

117,898

509,598(5,763)503,834

29,338

4,277

(479)

5,847

8,533

47,515(10)

47,505

F

Item
Sales

Total
Cost andexpenses
Operatingincome/loss

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general
Notes:
1. Business segment depends on sales total segment
2. Main products of each business segment
Businesses
Mass-Produced Machinery

Environmental Protection Facilities,
Plants & Others
Ship, Steel Structure & Other Specialized
Equipment
Industrial Machinery
Construction Machinery

Main Products
Power Transmission & Control, Plastic Injection Molding Machines,
Laser Processing Systems, Cryogenic equipment, Precision XYStages, Ion Accelerators, Plasma Coating System for FPDs, Presition
Forgings, Control Components, Defense Equipment
Power Generation Systems, Industrial Waste Treatment Facilities,
Water and Sewage Treatment Systems, Real Estate, Software
Ships, Pressure Vessels, Bridge
Forging Machines, Material Handling Systems, Logistics System,
Automated Parking System, Turbines, Pumps
Hydraulic Excavators, Mobile Cranes, Road Machinery

3. Changes in Segment Affiliation for the First Half of the Current Consolidated Fiscal Year
Japan Electron Beam Irradiation Service Co., Ltd. and SHI Examination and Inspection, Ltd. have beentransferred to the Mass-Produced Machinery segment from the first half of the current consolidated
fiscal year due to changes in organizational management of the company. These companies have beentransferred from the Environmental Protection Facilities, Plants and Other segment and the Ship, Steel
Structures and Other Specialized Equipment segment, respectively, with which they were formerly
affiliated.
These changes have resulted in the following changes compared with the former method of accounting:Sales for Mass-produced Machinery have increased 639 million yen, operating expenses by 483 million
yen, and operating income by 156 million yen; sales for Environmental Protection Facilities, Plants andOther have decreased by 356 million yen, operating expenses by 295 million yen, and operating
income by 61 million yen; sales for Ship, Steel Structures and Other Specialized Equipment decreased
1,051 million yen, operating expenses by 806 million yen, and operating profit by 245 million yen.
Consolidated Results
30Consolidated Results FY 2006 1H

Segment information for the first half of the previous consolidated fiscal year and for the previous
consolidated fiscal year are as shown below, according to the segments after the change was made:Consolidated Results
31Consolidated Results FY 2006 1H

Previous First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

(1) Unaffiliatedcustomers

104,543

31,516

23,641

27,27458,882245,857--

245,857(2) Intersegment

1,049

1,314

159

125

35

2,683

(2,683)--

105,593

32,83023,80027,40058,918248,540(2,683)245,857

24,29755,381230,043(2,680)227,363

3,102

3,537

18,497(3)

18,494

F

Item
Sales

Total

Cost and
91,86532,816
25,683
expenses
Operating
13,72713(1,883)income/loss
Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general

Previous Full Year (April 1, 2005 to March 31, 2006)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

(1) Unaffiliatedcustomers

220,989

82,06265,85956,054

126,375

551,339--551,339(2) Intersegment

2,922

2,904

376

335

56

6,593

(6,593)--223,91184,966

66,23556,389126,431557,932(6,593)551,339

193,875

80,817

67,26450,542

117,898

510,396(6,561)

503,834

30,0374,149(1,029)

5,847

8,533

47,536(32)

47,505

F

Item
Sales

Total
Cost andexpenses
Operatingincome/loss

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general

Consolidated Results
32Consolidated Results FY 2006 1H

2. Segment Information by Geographical Area
Current First Half (April 1, 2006 to September 30, 2006)(Units: millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellati o n o r
generalConsolidation

Sales(1) Unaffiliatedcustomers

223,265

33,466

16,664273,395--

273,395(2) Intersegment

15,012404

6,224

21,640(21,640)

--

Total

238,277

33,87022,888295,035(21,640)

273,395

Cost and expenses

216,626

30,27921,349268,255(21,633)

246,621

Operatingincome/loss

21,650

3,591

1,539

26,780(7)

26,773

Previous First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellati o n o r
generalConsolidation

Sales(1) Unaffiliatedcustomers

207,537

25,556

12,764

245,857--

245,857(2) Intersegment

13,068416

1,260

14,744(14,744)

--

Total

220,605

25,972

14,023

260,601(14,744)245,857

Cost and expenses

205,079

24,052

13,093242,224(14,861)

227,363

Operatingincome/loss

15,5261,920

931

18,377

117

18,494

Consolidated Results
33Consolidated Results FY 2006 1H

Previous Full Year (April 1, 2005 to March 31, 2006)(Units: millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellati o n o r
generalConsolidation

Sales(1) Unaffiliatedcustomers

465,769

56,672

28,898551,339--551,339(2) Intersegment

28,053856

2,894

31,803(31,803)

--

Total

493,82257,52831,792

583,142(31,803)551,339

Cost and expenses

452,275

53,17629,984535,436(31,601)

503,834

Operatingincome/loss

41,547

4,352

1,808

47,706(202)

47,505

Notes:
1. Countries and regions classified by geographical proximity.
2. Countries and regions belonging to each classification:
North America: USA and Canada
Others: UK, Germany, Singapore and China

Consolidated Results
34Consolidated Results FY 2006 1H

3. Overseas Sales
Current First Half (April 1, 2006 to September 30, 2006)(Units: millions of yen)North
AmericaI. Overseas sales

Asia

53,44640,939Others34,292

II. Consolidated sales
III. Overseas sales ratio（％）

Total
128,677
273,395

19.5

15.0

12.5

47.1

Previous First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)North
AmericaI. Overseas sales

Asia

41,34830,669Others29,629II. Consolidated sales
III. Overseas sales ratio（％）

Total
101,646
245,857

16.8

12.5

12.1

41.3

Previous Full Year (April 1, 2005 to March 31, 2006)(Units: millions of yen)North
AmericaI. Overseas sales

Asia

94,90373,514

Others
61,889II. Consolidated sales
III. Overseas sales ratio（％）

Total
230,306
551,339

17.2

13.3

11.2

Notes:
1. Countries and regions classified by geographical proximity.
2. Countries and regions belonging to each classification:
North America: USA and Canada
Asia: Singapore and China
Others: UK and Germany
3. Sales are from the Company and subsidiaries’ countries and regions other than Japan.

Consolidated Results
35

41.8

Consolidated Results FY 2006 1H

XII. Orders Received, Sales and Balance of Orders
Received by Segment
Orders Received
Businesses

Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total(Units: millions of yen)
April 1, 2006 to
September 30,
2006
Amount%April 1, 2005 to
September 30, 2005
Amount%Y/Y
Change%Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

%

36.0

107,09737.9

8.5

219,14136.3

50,03815.5

37,082

13.1

34.9

83,605

13.9

33,026

10.3

43,205

15.4(23.6)

95,171

15.8

45,86277,35714.2
24.0

32,831
62,188

11.6
22.0

39.7
24.4

68,693
136,38511.4
22.6

322,438

100.0

282,403

100.0

14.2

602,995

100.0(Units: millions of yen)
April 1, 2006 to
September 30,
2006
Amount%April 1, 2005 to
September 30, 2005
Amount%Y/Y
Change%April 1, 2005 to
March 31, 2006
Amount%107,365

39.3

104,54342.5

2.7

220,98940.1

31,624

11.6

31,51612.8

0.3

82,062

14.9

29,34910.7

23,6419.6

24.1

65,85911.9

28,89876,15910.6
27.8

27,27458,882

11.1
24.0

6.0
29.3

56,054
126,375

10.2
22.9

273,395

100.0

245,857

100.0

11.2

551,339

100.0

Balance of Orders Received
Businesses

Amount116,155

Sales
Businesses

April 1, 2005 to
March 31, 2006

(Units: millions of yen)

As of September
30, 2006

As of March 31, 2006

Amount%Amount%75,25418.0

66,36018.0

91,81722.0

73,536

155,552

37.2

72,66822,715418,006

ChangeAmount%13.4

70,663

20.0

19.9

24.9

77,56021.9

151,907

41.2

2.4

142,159

40.2

17.4
5.4

55,704
21,518

15.1
5.8

30.5
5.6

48,621
14,813

13.7
4.2

100.0

369,025

100.0

13.3

353,815

100.0

Consolidated Results
36%

As of September 30,
2005

Consolidated Results FY 2006 1H

Changes in Segment Affiliation
Japan Electron Beam Irradiation Service Co., Ltd. and SHI Examination and Inspection Ltd. have beentransferred to the Mass-Produced Machinery segment from the first half of the current consolidated
fiscal year due to changes in organizational management of the company. These companies have beentransferred from the Environmental Protection Facilities, Plants and Other segment and the Ship, Steel
Structures and Other Specialized Equipment segment, respectively, with which they were formerly
affiliated.
We have therefore shown segmentation following these changes for the previous fiscal year and for the
first half of the previous fiscal year as well.

XIII. Important Subsequent Events
The total number of shares issued has increased by 3,100,809 shares and surplus capital on thebalance sheet has increased by 3,451 million yen due to the share exchange with Seisa Gear, Ltd.
conducted by the Company on October 1, 2006.

Consolidated Results
37