Report of Earnings and Financial Statements for theThree Months Ended June 30, 2013 (Consolidated)(Prepared pursuant to Japanese GAAP)
July 30, 2013
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

Listed on:
Stock code:
URL:
Representative:
Contact:
Tel:

1st sections of the TSE, and NSE
7012
http://www.khi.co.jp/
Shigeru Murayama, President
Ryoji Mori, Senior Manager, Accounting Department+81 3-3435-2130

Scheduled dates:
Submission of quarterly securities filing:
Commencement of dividend payments:

August 8, 2013-

Supplementary materials to quarterly earnings:
Quarterly earnings presentation:

Available
Conducted (for institutional investors and analysts)

1. Consolidated Financial Results for the Three Months ended June 30, 2013
(April 1 – June 30, 2013)(Amounts in millions of yen rounded down to the nearest million yen)

(1) Operating Results(Percentage figures represent changes versus the year-ago period)
Net sales
million yen%
Three Months Ended
282,509(0.3)
June 30, 2013
Three Months Ended
283,530(2.7)
June 30, 2012
Note: Comprehensive income June 30, 2013:
June 30, 2012:
Earnings per shareyen
Three Months Ended
June 30, 2013
Three Months Ended
June 30, 2012

Operating income

Recurring profit

Net income

million yen%

million yen%

million yen%

16,752

148.4

9,400

(19.8)

4,496(25.4)

6,741(45.5)

11,727(20.0)

6,030(36.9)

16,570 million yen 86.4%
8,886 million yen (19.4%)
Earnings per share– diluted
yen

2.68

-

3.60

-

(2) Financial Condition
Total assets

Net assets

million yen

million yen%

June 30, 2013

1,525,071

325,761

20.5

March 31, 2013

1,466,290

349,88123.0

Note: Shareholders’ equity:

June 30, 2013: 313,998 million yen
March 31, 2013: 338,240 million yen

1Equity ratio

2. Dividends

Record date or term

End of firstquarteryen

End of second
quarteryen

Dividend per share
End of third End of financial
quarter
year
yen
yen

Year ended
0.00
March 31, 2013
Year ending
March 31, 2014
Year ending March
0.00
31, 2014 (forecast)
Note: Revisions to the most recently announced dividend forecast: None

Full year
yen

5.00

5.00

5.00

5.00

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2014
(April 1, 2013 – March 31, 2014)
Net sales
million yen%(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen%
million yen%
million yen%yen

For six months
endingSeptember 30,
2013

610,000

6.0

24,000130.9

18,000(10.7)

11,500

(7.4)

6.87

Full year

1,380,000

7.0

60,00042.6

53,00034.7

34,000

10.1

20.33

Note: Revision to the most recently announced earnings forecast: Yes

4. Other Information
1) Changes affecting the status of material subsidiaries (scope of consolidation): None
*This refers to additions and removals of material subsidiaries to and from the consolidated groupduring the period. For further details, see “Changes affecting the status of material subsidiaries(scope of consolidation)” on page 10 in the Accompanying Materials.
2) Accounting procedures specific to preparation of quarterly consolidated financial statements: Yes*For further details, see “Accounting procedures specific to preparation of quarterly consolidated
financial statements” on page 10 in the Accompanying Materials.
3) Changes in accounting policies, changes in accounting estimates, and correction of errors(1) Changes in accounting policies in accord with revisions to accounting standards: None
(2) Changes in accounting policies other than (1): Yes(3) Changes in accounting estimates: Yes(4) Correction of errors: None
* The above changes correspond to Article 10-5 in the "Ordinance on Terminology, Forms andPreparation Methods of Quarterly Consolidated Financial Statements." For further details, see“Changes in accounting policies, changes in accounting estimates, and correction of errors” onpage 10 in the Accompanying Materials.
4) Number of shares issued and outstanding (common stock)(1) Number of shares issued as of period-end (including treasury stock)June 30, 2013:
1,671,892,659 shares
March 31, 2013:
1,671,892,659 shares2(2) Number of shares held in treasury as of period-end
June 30, 2013:
107,551 shares
March 31, 2013:
100,116 shares(3) Average number of shares during respective periods
Three months ended June 30, 2013:
1,671,787,906 shares
Three months ended June 30, 2012:
1,671,813,479 shares

Quarterly review status
This report is exempt from the quarterly review of accounts conducted in accord with Japan’s Financial
Instruments and Exchange Act. As of this report’s publication, the quarterly review of the quarterly
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 their preparation, anddo not mean that the Company promises to achieve these figures. Actual results may differ from thoseexpressed or implied by forward-looking statements due to a range of factors. For assumptions underlying
earnings forecasts and other information regarding the use of such forecasts, refer to “Consolidated
earnings outlook” on page 9 in the Accompanying Materials.
How to Obtain Supplementary Briefing Material on Quarterly Financial Results and Details of theQuarterly Financial Results Briefing
The Company plans to conduct a briefing for institutional investors and analysts on Thursday August 1,
2013, and to post the briefing material on quarterly financial results to be used for the briefing on TDnetand the Company’s website simultaneously with the announcement of financial results.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial position

8(3) Consolidated earnings outlook

9

2. Summary Information (Notes)

10(1) Changes affecting the status of material subsidiaries (scope of consolidation)

10(2) Accounting procedures specific to preparation of quarterly consolidated financial statements

10(3) Changes in accounting policies, changes in accounting estimates, and correction of errors

10

3. Consolidated Financial Statements

14(1) Consolidated balance sheets

14(2) Consolidated statements of income and comprehensive income

16(Consolidated statements of income for the three months ended June 30, 2013)16(Consolidated statements of comprehensive income for the three months ended June 30, 2013)16(3) Notes on financial statements

17(Notes on the going-concern assumption)

17(Notes on significant changes in the amount of shareholders’ equity)

17(Segment information and others)

17

4. Supplementary Information

20(1) Consolidated cash flow statements (condensed)

20(2) Orders and sales (consolidated)

20(3) Net sales by geographic area (consolidated)

214

1. Qualitative Information and Financial Statements(1) Consolidated operating results
In the first quarter of the fiscal year ending March 31, 2014, global economic growth remained
generally subdued. Although there were signs of recovery, including improvement in the US labormarket and energy-related demand stemming from the US shale gas revolution, the European
economy remained beset by concerns about the debt crises in some countries. Meanwhile,developments in emerging market economies, most notably China, also required close monitoring.

The Japanese economy grew at a moderate pace, driven largely by increased public investment
fueled by a timely fiscal action coupled with improvement in the export environment in the wake ofyen depreciation. Going forward, policy effects from the government's growth strategy is expected toeffectuate growth in private capital investment and household incomes, leading to a stable economic
growth.

Amid such an economic environment, the Group achieved growth in overall orders received in thefirst quarter despite a decrease in orders in several segments, including Plant & Infrastructure.
First-quarter order growth was spearheaded by the Rolling Stock and Aerospace segments.
First-quarter sales were roughly unchanged year on year on the whole. The Precision Machinery
segment's sales declined amid China's economic slowdown. The Gas Turbine & Machinery segment
likewise experienced a sales decline. However, these sales declines were negated by sales growth in
the Motorcycle & Engine, Aerospace, and other segments. Overall operating income increased
sharply even though there were declines in several segments, including Precision Machinery and Gas
Turbines & Machinery. These declines were outweighed by operating income growth or reduced
operating losses in the Aerospace, Ship & Offshore Structure, and Motorcycle & Engine segments,
among others.

The Group’s first-quarter consolidated orders received increased ¥11.5 billion year on year to¥283.1 billion. Consolidated net sales totaled ¥282.5 billion, a ¥1.0 billion year-on-year decrease.
Consolidated operating income was up ¥10.0 billion year on year to ¥16.7 billion, but consolidated
recurring profit declined ¥2.3 billion year on year to ¥9.4 billion, largely as a result of deteriorationof gain and loss on foreign exchange. Consolidated net income also decreased, down ¥1.5 billion
year on year to ¥4.4 billion.

5

First-quarter consolidated operating performance is summarized by segment below.

Segment Information
Segment net sales, operating income, and orders received (billions of yen)Three months ended June 30

Orders received
Three months ended

2012

2013
June 30

Net

OperatingNet

Operatingsales

incomesales

income2012
Segment

2013

Ship & Offshore Structure

22.7

(0.6)

21.0

3.3

30.3

27.1

Rolling Stock

28.8

0.1

30.5

1.9

25.3

35.0

Aerospace

49.6

0.8

55.6

7.5

34.4

41.5

Gas Turbine & Machinery

45.3

2.6

36.4

0.8

32.5

35.6

Plant & Infrastructure

19.8

0.1

16.7

(0.6)

37.1

16.6

Motorcycle & Engine

53.4

(0.3)

67.4

2.4

53.4

67.4

Precision Machinery

36.1

3.9

25.1

1.5

28.6

29.8

Other

27.6

0.5

29.4

0.3

29.6

29.6

-

(0.7)

-

(0.7)

-

-

283.5

6.7

282.5

16.7

271.5

283.1

Adjustments
Total

Notes: 1. Net sales include only sales to external customers.
2. A change in the accounting treatment of aircraft engine components reduced the Gas Turbine & Machinery
segment's first-quarter sales and orders received by ¥7.3 billion and ¥7.1 billion, respectively, relative towhat they would have been in the absence of the change. The change had no effect on income.

Ship & Offshore Structure
Consolidated orders received declined ¥3.1 billion year on year to ¥27.1 billion as the segment
booked two newbuild (e.g., LNG carrier) orders, down from three in the year-earlier quarter.
Consolidated net sales decreased ¥1.6 billion year on year to ¥21.0 billion as growth in newbuild
sales of LPG carriers was overshadowed by a decline in newbuild sales of other vessels, mostnotably handymax bulk carriers.
Despite the sales decline, the segment earned consolidated operating income of ¥3.3 billion, a ¥4.0
billion improvement from the year-earlier quarter, largely by virtue of yen depreciation and reversalof reserves for losses on construction contracts in response to the yen's depreciation.
Rolling Stock
Consolidated orders received grew ¥9.6 billion to ¥35.0 billion, largely as a result of subway carorders from the Washington Metropolitan Area Transit Authority and Sapporo City Transportation
Bureau.
6

Consolidated net sales increased ¥1.7 billion year on year to ¥30.5 billion as overseas sales tocustomers in Singapore, North America and elsewhere offset a decline in domestic sales.
Consolidated operating income increased ¥1.7 billion year on year to ¥1.9 billion, lifted by anincrease in high-margin sales and yen depreciation.
Aerospace
Consolidated orders grew ¥7.1 billion year on year to ¥41.5 billion. The increase was attributableto growth in orders for components for the Boeing 777 and 787.
Consolidated net sales increased ¥6.0 billion year on year to ¥55.6 billion, largely as a result ofgrowth in Boeing 777 and 787 component sales coupled with steady sales to Japan’s Ministry of
Defense.
Consolidated operating income showed a sharp ¥6.6 billion increase year on year to ¥7.5 billion.
Factors behind the increase, in addition to sales growth, included yen depreciation and reversal ofreserves for losses on construction contracts in response to the yen’s depreciation.
Gas Turbine & Machinery
Despite a change in accounting treatment of aircraft engine component orders, consolidated orders
received increased ¥3.1 billion year on year to ¥35.6 billion, bolstered by growth in orders forhydropower systems.
Consolidated net sales decreased ¥8.9 billion year on year to ¥36.4 billion, due largely to a decline
in sales of diesel engines for ships coupled with the change in accounting treatment of aircraft engine
component sales.
Consolidated operating income declined ¥1.8 billion year on year to ¥0.8 billion in response to thesales decline and deterioration in profit margins, among other factors.
Plant & Infrastructure
Consolidated orders received totaled ¥16.6 billion, a ¥20.5 billion decrease from the year-earlier
quarter, when the segment booked large overseas orders.
Consolidated net sales declined ¥3.1 billion year on year to ¥16.7 billion while sales of LNG
storage tanks remained buoyant. The decline was chiefly due to decreases in conveyance equipment
sales and large overseas contracts.
The sales decline, coupled with deterioration in profit margins, resulted in a consolidated
operating loss of ¥0.6 billion, an ¥0.8 billion downturn from the year-earlier quarter's net income.

7Motorcycle & Engine
Consolidated net sales rose ¥14.0 billion year on year to ¥67.4 billion, boosted by motorcycle
sales growth in the US and emerging-market economies, particularly Thailand and Indonesia.
Consolidated operating income totaled ¥2.4 billion, a ¥2.8 billion year-on-year improvement
largely attributable to sales growth and improved profitability.
Precision Machinery
Consolidated orders received grew ¥1.2 billion year on year to ¥29.8 billion. The increase waslargely a net result of growth in robot orders from overseas automobile manufacturers coupled with
reduced demand for hydraulic equipment for construction machinery in emerging market economies,
most notably China.
Consolidated net sales decreased ¥10.9 billion year on year to ¥25.1 billion, largely due to thedecrease in emerging-market, particularly Chinese, demand for hydraulic equipment for construction
machinery.
Consolidated operating income was down ¥2.4 billion year on year to ¥1.5 billion, largely inresponse to the sales decline.
Other Operations
Consolidated net sales increased ¥1.8 billion yen year on year to ¥29.4 billion. Consolidated
operating income decreased ¥0.2 billion year on year to ¥0.3 billion.

(2) Consolidated financial position
At June 30, 2013, consolidated assets totaled ¥1,525.0 billion, a ¥58.7 billion increase of fromMarch 31, 2013. The increase was chiefly attributable to inventory growth stemming from progress
toward completion of construction jobs and capital investments that added to property, plant andequipment. Consolidated liabilities at June 30, 2013, were ¥1,199.3 billion, a ¥82.9 billion increaseof from March 31, 2013. The increase was largely attributable to increases in commercial paperand other short-term borrowings and recognition of previously unrecognized retirement andseverance benefit liabilities, partially offset by a reduction in notes and accounts payable-trade.
Interest-bearing debt ended the first quarter at ¥521.1 billion, a ¥36.5 billion increase from March 31,
2013. Consolidated net assets at June 30, 2013, totaled ¥325.7 billion, a ¥24.1 billion decrease fromMarch 31, 2013. The decrease was largely attributable to dividend payments and recognition of thepreviously unrecognized retirement and severance benefit liabilities, partially offset by first-quarter
net income.

8

(3) Consolidated earnings outlook
The Company has raised its consolidated operating income forecast for the first half of the fiscal
year ending March 31, 2014, to ¥24.0 billion, a ¥4.0 billion increase from its initial forecast
announced on April 25, 2013. It did so in response to its first-quarter results and first-quarterexchange rate movements that exceeded its initial assumptions. However, the exchange rate
movements' effect on recurring profit is muted by currency hedging. The Company accordingly
raised its first-half recurring profit forecast by only ¥1.0 billion to ¥18.0 billion. On the net profit
line, the Company raised its initial first-half forecast by ¥0.5 billion to ¥11.5 billion. The Company
has left its full-year earnings forecasts unchanged in light of global economic uncertainties.
The Company’s earnings forecasts assume exchange rates of ¥95 to the US dollar and ¥120 to the
euro.

9

2. Summary Information (Notes)(1) Changes affecting the status of material subsidiaries (scope of consolidation)
Not applicable(2) Accounting procedures specific to preparation of quarterly consolidated financial statements
The Company calculates tax expense by rationally estimating its effective tax rate after
application of deferred-tax accounting to pretax net income for the fiscal year, which includes
the first quarter under review, and multiplying quarterly pretax net income by said estimatedeffective tax rate. If unable to use the estimated effective tax rate, the Company calculates tax
expense by multiplying the statutory effective tax rate by quarterly pretax net income adjusted
to reflect material differences other than temporary differences.
Income taxes are reported inclusive of income tax adjustments.
(3) Changes in accounting policies, changes in accounting estimates, and correction oferrorsChanges in depreciation method and depreciable lives
The Company and its domestic consolidated subsidiaries have previously used the decliningbalance method to depreciate their property, plant and equipment (except for buildings (excluding
fixtures) acquired on or after April 1, 1998, which have been depreciated by the straight line method).
Effective from the first quarter of the fiscal year ending March 31, 2014, they have switched to using
the straight line method for all property, plant and equipment.
In accord with Kawasaki Business Vision 2020, the Company and its consolidated subsidiaries
actively conduct overseas operations ranging from production to sales while treating their domestic
plants as development and production hubs where advanced technological capabilities areconcentrated. Given this configuration, overseas capital investment is expected to become even more
important than before.
As a result of the change in the depreciation method in response to such a change in the capital
investment environment, Group production facilities are expected to operate stably. The economic
benefits of capital investments will accordingly accrue evenly over time. The Company therefore
decided that switching to the straight line method of depreciation would more accurately reflect thestate of its operations from the standpoint of appropriately reporting quarterly and annual income
and losses.
Additionally, the Company and its domestic consolidated subsidiaries have previously depreciatedtheir machinery and tools based mainly on depreciable lives prescribed in the Corporation Tax Act.
In conjunction with the change in depreciation method, they have revised their machinery and tools'
depreciable lives effective from the first quarter of the fiscal year ending March 31, 2014. They did
so based on a comprehensive reassessment of the machinery and tools' physical and economic lives,10

taking into account various factors including product life spans and the risk of production process
obsolescence.
As a result of these changes, first-quarter consolidated operating income, recurring profit, andincome before income taxes and minority interests were ¥2,981 million higher than they would havebeen in the absence of the changes.
The impact of these changes on individual segments is disclosed below under "(3) Matters related
to reportable segment changes" on page 18.

Adoption of new accounting standard for retirement benefits
Effective from the first quarter of the fiscal year ending March 31, 2014, the Company adopted
the Accounting Standards Board of Japan's new Accounting Standard for Retirement Benefits (ASBJ
Statement No. 26, May 17, 2012) and its accompanying implementation guidelines, “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012), both ofwhich take effect from the start of the first fiscal year beginning on or after April 1, 2013. The
Company has switched to recognizing the excess of retirement benefit obligations over pension
assets as retirement and severance benefit liabilities and booked previously unrecognized actuarial
losses and unrecognized prior service costs as retirement and severance benefit liabilities.
Additionally, the Company revised its method of calculating retirement benefit obligations andservice costs and changed its method of attributing projected retirement and severance benefit
obligations to accounting periods from a straight line basis to a benefit formula basis.
When recognizing a retirement benefit liability in the amount of the excess of retirement benefit
obligations over pension assets as of the start of the first quarter of the fiscal year ending March 31,
2014, the Company debited accumulated other comprehensive income's cumulative adjustment for
retirement benefits to reflect recognition of the liability in accord with the transitional measuresprovided in Paragraph 37 of the Accounting Standard for Retirement Benefits. The Company also
debited its capital surplus account as of beginning of the first quarter of the fiscal year ending March
31, 2014, to reflect the effect of the change in its method of calculating retirement benefit obligations
and service costs.
These debits reduced accumulated other comprehensive income and capital surplus as of the
beginning of the first quarter of the fiscal year ending March 31, 2014, by ¥20,389 million and¥11,125 million, respectively. The effect on income is minimal.

Treatment of FIA
When the Company's main partners sell jet engines to airlines, the airlines demand a type of
discount called fleet introductory assistance (FIA). The Company is charged a share of this FIA inproportion to its involvement in projects. The Company has previously included these FIA charges in11

cost of sales. Effective from the first quarter of the fiscal year ending March 31, 2014, the Company
has switched to reporting FIA charges as a deduction from sales.
After reassessing its FIA transactions in light of the Japanese Institute of Certified Public
Accountants' Accounting Practice Committee Research Report No. 13, "Research Report on
Revenue Recognition in Japan (Interim Report)," issued in July 2009, the Company decided that thisrevised treatment results in a more appropriate presentation of its operating performance.
The Company deducted FIA charges from sales in the first quarter of the fiscal year ending March
31, 2014, and because the impact of this accounting policy change on the consolidated financial
statements as a whole is minimal, the Company did not apply the change retrospectively.
The change reduced both first-quarter sales and cost of sales by ¥7,321 million, relative to what
they would have been in the absence of the change, but it had no effect on operating income,recurring profit, or income before income taxes and minority interests.
The impact of the change on segment results is disclosed below under "(3) Matters related toreportable segment changes" on page 18.

Treatment of specialized jigs and tools for civilian aircraft
The Company and some of its consolidated subsidiaries have reclassified jigs and tools used in the
Aerospace segment's civilian aircraft manufacturing operations from inventory (work in process) toproperty, plant and equipment as a result of a reassessment of these jigs and tools' balance sheet
classification in light of their growing size and functionality.
The Company and its applicable consolidated subsidiaries reclassified the jigs and tools as of theprevious fiscal year-end and carried the revised asset balances over as beginning balances for the
first quarter of the fiscal year ending March 31, 2014. Since the impact of the reclassification on the
consolidated financial statements as a whole is minimal, they did not apply the reclassification
retrospectively.
The reclassification reduced work in process as of the beginning of the first quarter of the fiscal
year ending March 31, 2014, by ¥26,781 million and increased property, plant and equipment andintangible assets by ¥26,555 million and ¥226 million relative to what they would have been in theabsence of the reclassification.
Previously, the specialized jigs and tools' book value was transferred from work in process to costof sales upon the sale of the aircraft components for which the jigs and tools were used. From now
on, the jigs and tools will be depreciated as fixed assets and their depreciation will be allocatedbetween cost of sales and work in process. The impact of this change on earnings is minimal.

12

Treatment of subsidies related to aircraft development
In developing aircraft and jet engines, the Company receives development-related subsidies
pursuant to the Aircraft Industry Promotion Act. The Company previously placed priority on thesubsidy transactions' legal form by recognizing the subsidies as revenue received in consideration fordevelopment deliverables, charging the revenues' corresponding development expenses to cost of
sales, and recognizing projected future obligations related to the subsidies as warranty obligations.
From the first quarter of the fiscal year ending March 31, 2014, the Company is placing morepriority on the subsidy transactions' economic substance and has revised its accounting treatment
accordingly. Specifically, the Company no longer recognizes the subsidies as revenue and, on its
balance sheet, it now recognizes projected future obligations as liabilities and capitalizes
development expenses as inventory.
After reassessing the subsidy transactions by placing priority on their substance in light of theJapanese Institute of Certified Public Accountants' Accounting Practice Committee Research Report
No. 13, "Research Report on Revenue Recognition in Japan (Interim Report)", issued in July 2009,
the Company decided that this revised treatment results in a more appropriate presentation of its
operating performance and financial condition.
At the end of the first quarter of the fiscal year ending March 31, 2014, the Company capitalized
the development expenses as inventory and recognized a liability as described above. Since theimpact of these changes on the consolidated financial statements as a whole is minimal, theCompany did not apply the changes retrospectively. The impact of the changes on earnings is
minimal.
As a result, the work in process, accounts payable-other and long-term accounts payable-otherbalance at the end of the first quarter of the fiscal year ending March 31, 2014 increased by ¥15,624
million, ¥988 million and ¥14,636 million, respectively. The impact of the changes on earnings was
minimal.

13

3. Consolidated Financial Statements(1) Consolidated balance sheets
Millions of yen
As ofThree months ended
March 31, 2013
June 30, 2013
AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Other current assets
Allowance for doubtful receivables

38,525432,649
61,446
311,107
87,551
88,319(2,785)
1,016,813

38,824400,909
64,177
326,80788,422
99,752(3,141)
1,015,752

Total current assets
Fixed assets
Net property, plant and equipment
Intangible assets
Investments and other assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

305,792
19,446

343,875
19,102

125,172(936)
124,236
449,476
1,466,290

147,283(942)
146,340
509,319
1,525,071

Liabilities
Current liabilities
Trade payables
Short-term debt
Income taxes payable
Accrued bonuses
Provision for losses on construction contracts
Other provisions
Advances from customers
Other
Total current liabilities

281,062
213,510
3,756
20,06018,7196,194
108,213131,022782,540

251,487
281,416
3,532
22,587
10,7077,207
130,272
139,662
846,874

Long-term liabilities
Bonds payable
Long-term debt
Employees’ retirement and severance benefits
Other provisions
Net defined benefit liability
Other
Total long-term liabilities
Total liabilities

70,000184,362
62,300
5,082
12,123
333,868
1,116,409

70,000142,201
4,721
106,491
29,020352,435
1,199,310

14

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

104,484
54,393
198,528(27)
357,379

104,484
54,393
183,403(29)342,252

Accumulated other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total net assets and liabilities

4,524(5,998)(17,665)(19,139)
11,641
349,881
1,466,290

4,950(6,150)(6,907)(20,146)(28,253)
11,763
325,761
1,525,071

15

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Millions of yen
Three months ended
June 30, 2012
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
R&D expenses
Provision for doubtful accounts
Other
Total selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Equity in income of non-consolidated subsidiaries and affiliates
Foreign exchange gain, net
Other
Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
Other
Total non-operating expenses
Recurring profit (loss)
Income (loss) before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income (loss)

Three months ended
June 30, 2013

283,530
240,094
43,435282,509226,80955,699

9,970
8,190
8
18,52436,693
6,741

10,8408,076
281
19,75038,947
16,752

419
264
2,296
2,658
1,068
6,707

252
216
1,523
627
2,619

1,017
704
1,722
11,727
11,727
5,100
6,626
595
6,030

1,030
7,993
947
9,971
9,400
9,400
4,588
4,812
315
4,496

Consolidated statements of comprehensive income
Millions of yen
Three months ended
June 30, 2012
Income before minority interests
Other comprehensive income
Net unrealized gains (losses) on securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted
for using equity method
Total other comprehensive income
Comprehensive Income attributable to:
Owners of the parent company
Minority interests

16

Three months ended
June 30, 2013

6,626

4,812

(1,203)
1,653
340
-

388
(182)
6,630
245

1,469

4,675

2,260
8,886
7,944
942

11,758
16,57015,736834

(3) Notes on financial statements

Notes on the going-concern assumption
Not applicable
Notes on significant changes in the amount of shareholders’ equity
Not applicable
Segment information and others
Segment information
1. Three months ended June 30, 2012 (April 1, 2012 – June 30, 2012)(1) Sales and income (loss) by reportable segment
Millions of yen

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

22,712
28,83049,61445,387
19,84053,43036,101
27,613
283,530
283,530

290
105
708
3,756
3,079
162
2,763
7,959
18,825(18,825)-

23,00328,93550,32249,14322,92053,592
38,86435,573
302,355(18,825)
283,530

(644)
146
889
2,676
197
(347)
3,992
554
7,466
(724)
6,741

Millions of yen
IncomeAmountIntersegment transactions
72
Corporate expenses*
(797)
Total
(724)
*Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
Not applicable172. Three months ended June 30, 2013 (April 1, 2013 – June 30, 2013)(1) Sales and income (loss) by reportable segment
Millions of yen

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

21,07330,562
55,62436,452
16,712
67,49325,12429,466
282,509282,509

564
192
461
3,898
3,225
144
2,456
8,304
19,247(19,247)-

21,63830,75456,08640,35019,937
67,637
27,58037,771
301,756(19,247)
282,509

3,381
1,910
7,551
844
(606)
2,482
1,562
344
17,472(719)
16,752Millions of yen
AmountIncomeIntersegment transactions(58)
Corporate expenses*
(661)
Total
(719)
* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
Not applicable(3) Matters related to reportable segment changes
Changes in depreciation method and depreciable lives
As disclosed above under "2. (3) Changes in accounting policies, changes in accounting estimates,
and correction of errors" on page 10, the Company and its domestic consolidated subsidiaries havepreviously used the declining balance method to depreciate their property, plant and equipment(except for buildings (excluding fixtures) acquired after March 31, 1998, which have been
depreciated by the straight line method), but they have now switched to using the straight line
method for all property, plant and equipment effective from the first quarter of the fiscal year ending
March 31, 2014.
Additionally, the Company and its domestic consolidated subsidiaries have previously depreciatedtheir machinery and tools based mainly on depreciable lives prescribed in the Corporation Tax Act.
In conjunction with the change in depreciation method, they have revised their machinery and tools'
depreciable lives effective from the first quarter of the fiscal year ending March 31, 2014.
As a result of these changes, first-quarter segment income increased by ¥142 million in the Ship &Offshore Structure segment, ¥141 million in the Rolling Stock segment, ¥848 million in the18

Aerospace segment, ¥456 million in the Gas Turbine & Machinery segment, ¥334 million in theMotorcycle & Engine segment, ¥549 million in the Precision Machinery segment, and ¥309 million
in the Other segment, while the Plant & Infrastructure segment's loss was reduced by ¥197 million,
all relative to what they would have been in the absence of the changes.

Treatment of FIA
As disclosed above under "2. (3) Changes in accounting policies, changes in accounting estimates,
and correction of errors” on page 10, airlines demand a type of discount called fleet introductory
assistance (FIA) when they purchase jet engines from Company's main partners, and the Company ischarged a share of this FIA in proportion to its involvement in projects. The Company previously
included these FIA charges in cost of sales but has switched to reporting them as a deduction fromsales effective from the first quarter of the fiscal year ending March 31, 2014.
This change reduced the Gas Turbine & machinery segment's first-quarter sales by ¥7,321 million
relative to what they would have been in the absence of the change, but it had no impact on segment
income.

19

4. Supplementary information(1) Consolidated cash flow statements (condensed)
Millions of yen
Three months ended
June 30, 2012
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash and cash equivalents at end of period

7,995(30,618)
22,62932,490Three months ended
June 30, 2013
(1,133)(18,310)
20,12837,142(2) Orders and sales (consolidated)
As disclosed above under "2. (3) Changes in accounting policies, changes in accounting estimates,
and correction of errors" on page 10 and "3. (3) Segment information" on page 17, the Company
revised its accounting treatment of FIA effective from the first quarter of the fiscal year ending
March 31, 2014. This change reduced the Gas Turbine & Machinery segment's first-quarter orders
received and sales by ¥7,100 million and ¥7,321 million, respectively, relative to what they would
have been in the absence of the change. Additionally, the Company reduced its order backlog as ofthe previous fiscal year-end by ¥258,306 million as an FIA adjustment.
Orders received
Three months ended
June 30, 2012

Three months ended
June 30, 2013

Year ended
March 31, 2013

% of total
million yen% of total
million yen% of total
million yen
Ship & Offshore Structure
30,345
11.1
27,185
9.6
105,733
7.7
Rolling Stock
25,3509.3
35,046
12.3
124,441
9.0
Aerospace
34,434
12.6
41,567
14.6
283,485
20.6
Gas Turbine & Machinery
32,531
11.9
35,685
12.6
255,553
18.6
Plant & Infrastructure
37,186
13.6
16,662
5.8
113,600
8.2
Motorcycle & Engine
53,43019.6
67,49323.8
251,858
18.3
Precision Machinery
28,606
10.5
29,814
10.5
109,725
8.0
Other
29,673
10.9
29,68610.4
125,1889.1
Total
271,557
100.0
283,143100.0
1,369,588
100.0
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
Other
Total

Three months ended
June 30, 2012
% of total
million yen
22,712
8.0
28,83010.1
49,61417.4
45,38716.0
19,8406.9
53,43018.8
36,101
12.7
27,613
9.7
283,530
100.0

20

Three months ended
June 30, 2013
million yen% of total
21,073
7.4
30,562
10.8
55,62419.6
36,452
12.9
16,712
5.9
67,49323.8
25,1248.8
29,466
10.4
282,509
100.0

Year ended
March 31, 2013
million yen% of total
90,3437.0
129,973
10.0
239,17218.5
207,008
16.0
115,8138.9
251,858
19.5
130,455
10.1
124,256
9.6
1,288,881
100.0

Order backlog

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

Year ended
March 31, 2013
% of total
million yen
120,1128.7
359,98026.2
432,72931.5
237,41017.3
171,486
12.5
21,571
1.5
26,7961.9
1,370,086
100.0

Three months ended
June 30, 2013
million yen % of total
128,9139.2
374,85626.8
425,02630.4
241,99617.3
169,743
12.1
26,491
1.9
27,0241.9
1,394,051
100.0(3) Net sales by geographic area (consolidated)
Three months ended June 30, 2012 (April 1, 2012 – June 30, 2012)
Japan
United States
EuropeAsia
Other areas
Total

Millions of yen
47.0%
20.6%
7.6%
15.8%
8.7%
100.0%

133,51958,545
21,59544,94624,923
283,530

Three months ended June 30, 2013 (April 1, 2013 – June 30, 2013)
Japan
United States
EuropeAsia
Other areas
Total

Millions of yen
41.9%
23.5%
6.9%
18.3%
9.2%
100.0%

118,426
66,61519,74251,70026,024
282,509

21

Three months ended
June 30, 2012
million yen% of total
109,070
7.5
329,21422.7
368,469
25.4
386,96326.7
189,747
13.1
34,805
2.4
27,9361.9
1,446,207
100.0