Report of Earnings and Financial Statements for theNine Months Ended December 31, 2009
January 29, 2010
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

Listed on:
1st sections of TSE, OSE, NSE
Stock code:
7012
URL:
http://www.khi.co.jp/
Representative:
Satoshi Hasegawa, President
Contact:
Hideyuki Matsubara, Senior Manager, Accounting DepartmentTel:+81 3-3435-2130
Scheduled dates:
Submission of quarterly securities filing:
February 10, 2010
Commencement date of dividend payments-

1. Consolidated Financial Results for the Nine Months Ended December 31, 2009
(April 1, 2009 to December 31, 2009)(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
Nine months ended
December 31, 2009
Nine months ended
December 31, 2008

Operating income%

million yen

798,060(16.4)(14,046)-(5,501)-(10,323)-

954,962-

14,706-

21,578

-

7,460

-

yen
Nine months ended
December 31, 2009
Nine months ended
December 31, 2008

million yen

Net income

million yen

Earnings per share%

Recurring profit%

million yen%

Earnings per share– diluted
yen(6.18)

-

4.47

4.41

(2) Financial Condition

Total assets

Net assets

million yen

million yen

Ratio ofshareholders’ equity
to total assets%

December 31, 2009

1,422,898

283,640

19.5

166.63

March 31, 2009

1,399,770

295,24520.7

174.10Note: Shareholders’ equity: December 31, 2009: 277,942 million yen
March 31, 2009:
290,440 million yen

1

Net assets per shareyen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

Full year
yenYear ended
0.00
3.00
March 31, 2009
Year ending
0.00
March 31, 2010
Year ending March
3.00
31, 2010 (forecast)
Note: Revision of dividend forecast during the nine months ended December 31, 2009: None

3.00

3.00

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2010
(April 1, 2009 to March 31, 2010)
Net sales

Full year

million yen%

1,180,000(11.8)(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen%
million yen%
million yen
%
yen
5,000

(82.5)

10,000(74.1)

3,000(74.4)

Note: Revision of earnings forecast during the nine months ended December 31, 2009: Yes

4. Other Information
1) Changes affecting the status of material subsidiaries (scope of consolidation): None
2) Use of simplified accounting methods and/or accounting methods specific to the preparation ofquarterly consolidated financial statements: Yes
Note: For details, see “4. Other Information” on page 7 in the “Qualitative Information and Financial
Statements” section.
3) Changes in accounting principles, procedures, and methods of presentation used in the preparation ofquarterly consolidated financial statements:(1) Changes in accord with revisions to accounting standards: Yes(2) Changes other than (1) above: None
Note: For details, see “4. Other Information” on page 8 in the “Qualitative Information and Financial
Statements” section.
4) Number of shares issued (common stock)(1) Number of shares issued at end of period (treasury stock included):
December 31, 2009:
1,669,629,122 shares
March 31, 2009:
1,669,629,122 shares(2) Number of shares held in treasury at end of period:
December 31, 2009:
1,610,758 shares
March 31, 2009:
1,394,288 shares(3) Average number of outstanding shares:
Nine months ended December 31, 2009: 1,668,191,279 shares
Nine months ended December 31, 2008: 1,668,279,917 shares

2

1.79

*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
1. The Company has revised the consolidated earnings forecasts issued on November 2, 2009. For
details, see “3. Consolidated Earnings Outlook” on page 7 in the “Qualitative Information and
Financial Statements” section.
2. These materials contain various forward-looking statements and other forecasts regarding
performance and other matters. Such statements are based on information available at the time of
preparation. Actual results may differ from those expressed or implied by forward-looking
statements due to a range of factors. For the assumptions underlying the earnings forecasts presented
and other information regarding the use of such forecasts, refer to “3. Consolidated Earnings
Outlook” on page 7 in the “Qualitative Information and Financial Statements” section.

3

Qualitative Information and Financial Statements
1. Consolidated Operating Results
In the nine months ended December 31, 2009 (first three quarters of fiscal 2010, ending March 31, 2010),
some Japanese economic indicators began to show signs of bottoming out, but overall the economy
continued to languish as the slump in both capital spending and exports continued amid persistent yen
appreciation against the dollar, a deteriorating employment environment, a downturn in consumer
spending, and mounting concern about deflation.
The global economy, particularly Europe and the Americas, likewise continued to languish, althoughsome emerging economies showed signs of recovery.
This adverse operating environment continued to weigh heavily on KHI Group businesses. Orderbookings declined throughout the first three fiscal quarters in all but the Plant & Infrastructure
Engineering segment. Although the Shipbuilding segment managed to achieve sales growth, overall sales
declined. Profits declined across all business segments, with the exception of the Aerospace andShipbuilding segments, under the weight of yen appreciation and downturns in European and American
markets.
Relative to the first three quarters of fiscal 2009, the Group’s consolidated order bookings declined¥437.3 billion to ¥649.9 billion, while consolidated net sales decreased ¥156.9 billion to ¥798.0 billion.
The Group consequently incurred a consolidated operating loss of ¥14.0 billion, recurring loss of ¥5.5
billion, and a net loss of ¥10.3 billion. These losses respectively represent decreases of ¥28.7 billion,¥27.0 billion, and ¥17.7 billion from operating, recurring, and net incomes for the first three quarters offiscal 2009.
Consolidated operating performance in the first three quarters of fiscal 2010, is summarized bysegment below.
Effective from the first quarter of fiscal 2010, the Construction Machinery business, previously part of
the Rolling Stock segment (formerly the Rolling Stock & Construction Machinery segment), is includedin the Other segment, as disclosed below under the heading “Information by industry segment” on page
12 (subsection (5) 1) of “5. Consolidated Financial Statements”).

Shipbuilding
With a significant decline in new shipbuilding orders received, consolidated order bookings decreased¥53.6 billion year on year to ¥10.4 billion.
Consolidated net sales increased ¥15.9 billion year on year to ¥111.7 billion, boosted by a spate of salesof large vessels.
Operating income increased ¥3.3 billion year on year to ¥700 million on increased sales and improved
margins reflecting a decline in materials costs and other factors.

4

Rolling Stock
Consolidated order bookings included orders from Singapore for subway cars but declined to ¥63.0
billion, down ¥123.4 billion from the first three quarters of fiscal 2009, which were marked by an influxof large orders.
Consolidated net sales fell ¥9.4 billion year on year to ¥122.3 billion due mainly to the resegmentationof the Construction Machinery business, despite growth in sales of rolling stock to the JR Group andoverseas sales of rolling stock.
Consolidated operating income decreased ¥3.0 billion year on year to ¥4.6 billion due to lower margins
on export deals as a result of yen appreciation.
The above year-on-year changes reflect the impact of the resegmentation involving the Construction
Machinery business. Retroactively adjusted to reflect the resegmentation, the Rolling Stock segment had
consolidated order bookings of ¥163.2 billion, consolidated net sales of ¥105.7 billion, and operating
income of ¥7.4 billion in the first three quarters of fiscal 2009.

Aerospace
Consolidated order bookings decreased ¥7.7 billion year on year to ¥79.9 billion as a result of decreasedorders for component parts for the Boeing 777 and other aircraft.
Consolidated net sales were down ¥7.1 billion year on year to ¥119.3 billion, largely due to decreased
sales to Japan’s Ministry of Defense.
Despite the decline in sales, the segment reduced its operating loss by ¥3.7 billion year on year to an
operating loss of ¥600 million, due in part to adjustments to expense recognition timing resulting fromchanges to the Boeing 787’s development schedule.

Gas Turbines & Machinery
Consolidated order bookings decreased ¥140.7 billion year on year to ¥138.5 billion as a result of
decreased orders for aircraft engine components, marine diesel engines, marine propulsion systems, andother items.
Consolidated net sales declined ¥9.9 billion year on year to ¥128.8 billion, due to reduced sales ofaircraft engine components and marine diesel engines.
Consolidated operating income decreased ¥3.9 billion year on year to ¥2.7 billion, largely as a result of
yen appreciation and the sales decline.

Plant & Infrastructure Engineering
Consolidated order bookings increased ¥29.6 billion year on year to ¥91.2 billion due to an influx ofoverseas orders for fertilizer plants, shield machines, and other items.
Consolidated net sales decreased ¥18.9 billion year on year to ¥47.1 billion, largely reflecting a falloff

5in overseas sales of large plant installations.
The segment incurred a consolidated operating loss of ¥100 million, down ¥5.4 billion year on year
from year-earlier operating income, largely as a result of the sales decline.

Consumer Products & Machinery
Consolidated net sales fell ¥95.4 billion year on year to ¥152.3 billion amid a decline in European andNorth American motorcycle sales coupled with a falloff in industrial robots sales.
The sales decline, compounded by yen appreciation, led to a consolidated operating loss of ¥25.6
billion, ¥17.9 billion worse than the year-earlier period, despite progress made in boosting contribution
margins and cutting fixed costs and expenses.

Hydraulic Machinery
Consolidated order bookings fell ¥25.0 billion year on year to ¥46.5 billion, mainly as a result of
diminished demand from construction machinery makers.
Consolidated net sales were down ¥21.0 billion year on year to ¥47.1 billion, largely due to decreased
sales to construction machinery makers.
Operating income decreased in tandem with sales, down ¥2.6 billion year on year to ¥4.3 billion.

Other Operations
Consolidated net sales declined ¥10.8 billion year on year to ¥69.0 billion.
The Other segment booked a consolidated operating loss of ¥200 million, down ¥2.8 billion fromoperating income for the year-earlier period, largely due to the Construction Machinery business’s
resegmentation.
The above year-on-year changes reflect the impact of the resegmentation involving the Construction
Machinery business. Retroactively adjusted to reflect the resegmentation, the Other segment had
consolidated net sales of ¥105.9 billion and operating income of ¥2.9 billion in the nine months to
December 31, 2008.

2. Consolidated Financial Position
At December 31, 2009, consolidated assets totaled ¥1,422.8 billion, an increase of ¥23.1 billion fromMarch 31, 2009. The increase was attributable to growth in work-in-process stemming from progress
toward completion of existing contracts and an increase in property, plant and equipment due to capital
investment. The increase was partly offset by a reduction in trade receivables resulting from the collectionof receivables and reduced sales.
Consolidated liabilities totaled ¥1,139.2 billion at December 31, 2009, an increase of ¥34.7 billion fromMarch 31, 2009. The increase was attributable to a rise in borrowings and other items, partly offset by a6

reduction in trade payables.
Consolidated net assets were ¥283.6 billion at December 31, 2009, a decrease of ¥11.6 billion fromMarch 31, 2009, largely due to the net loss for the first three fiscal quarters and payment of dividends.

3. Consolidated Earnings Outlook
Signs of economic recovery have appeared in some emerging economies but have yet to spark aconcerted recovery in Japan, Europe, and the Americas. The Company continues to face an uncertain
outlook, particularly in mass-production businesses, but will forge ahead with the rebuilding of its
earnings base with a view to returning to a sustained-growth trajectory.
The Company now forecasts consolidated net sales of ¥1,180 billion for the full fiscal year, down ¥20
billion relative to the previous forecast, due to lower sales in the Consumer Products & Machinery
segment in Europe and the Americas.
Although the Company expects the decline in net sales to impact on profits, it will continue actively
expanding its businesses in Asia and other emerging economies and follow through with efforts toimprove profitability throughout its operations by cutting fixed costs and expenses and increasing
productivity. Profit forecasts for the full fiscal year ending March 31, 2010, have accordingly been left
unchanged.

4. Other Information
1) Changes affecting the status of material subsidiaries (scope of consolidation) during the period
Not applicable2) Use of simplified accounting and/or accounting procedures specific to preparation of quarterly
consolidated financial statements
Simplified accounting(1) Bad debt estimation method for general claims
The Company estimates the value of uncollectible general claims based on the preceding fiscal
year's actual credit loss rate, unless the credit loss rate is deemed to have substantially changed
relative to the historical rate calculated at the end of the preceding fiscal year.
(2) Inventory valuation method
The Company estimates quarter-end inventories by a rational method based on the preceding fiscal
year's physical inventory count, without conducting a physical inventory count.
The Company writes down inventory from book value to estimated net realizable value only when
its utility has clearly diminished. In the case of inventory expected to be disposed of andslow-moving inventory with a turnover period that extends beyond the Company’s operating cycle,
the Company writes the inventory down to its estimated liquidation value. Such inventories arecarried at their written-down book value, unless their value was deemed to have substantiallychanged during the first three quarters of the fiscal year under review.
(3) Fixed-asset depreciation method
For fixed asset depreciated by the declining-balance method, the Company calculates quarterly
depreciation expense by prorating annual depreciation expense. For certain consolidated subsidiaries,

7

quarterly depreciation expense is calculated by prorating annual depreciation expense based on abudget that factors in expected acquisitions, sales, and disposals of fixed assets during the fiscal year.
(4) Deferred-tax asset and liability calculation method
To assess deferred assets' collectability, the Company uses tax planning and earnings forecasts usedin the preceding fiscal year if it deems that the operating environment and status of temporary
differences have not changed substantially since the preceding fiscal year-end.
If the operating environment or status of temporary differences is deemed to have changed
substantially since the preceding fiscal year-end, the Company uses said tax planning and earnings
forecasts adjusted to reflect the changes' impact.
(5) Elimination of unrealized gains/losses on inventories
For some products, the Company calculates unrealized gains/losses on inventories using thegain/loss rate used in the preceding fiscal year or quarter or a gain/loss rate based on rational
budgeting, unless business conditions are deemed to have changed substantially from the preceding
fiscal year or quarter.
Accounting procedures specific to preparation of quarterly consolidated financial statements
The Company calculates tax expense by rationally estimating its effective tax rate after applicationof deferred-tax accounting to pretax net income for the fiscal year that includes the second quarter
under review and multiplying quarterly pretax net income by said estimated effective tax rate. If
unable to use the estimated effective tax rate, the Company calculates tax expense by multiplying thestatutory 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 principles, procedures, or presentation methods applicable to preparation ofquarterly consolidated financial statements
Changes related to accounting standards
Change in accounting standard for construction revenue and cost
The Company previously used the percentage-of-completion method for accounting revenues
associated mainly with construction contracts with a contract amount of three billion yen or more
and a construction period of over one year, and other construction works were accounted for with thecompleted-contract method. Effective the first quarter of the fiscal year ending March 31, 2010,
however, in conjunction with adoption of the Accounting Standard for Construction Contracts(ASBJ Statement No.15, December 27, 2007) and its accompanying Guidance on AccountingStandard for Construction Contracts (ASBJ Guidance No.18, December 27, 2007), thepercentage-of-completion method was applied to construction contracts that were started during thefirst quarter ended June 30, 2009, for which certain elements were determinable with certainty as ofDecember 31, 2009. The percentage of completion is estimated with the proportion-of-cost method,under which the percentage of construction completed during the period is calculated as the ratio of
the construction cost incurred during that period relative to the total construction cost. The
completed-contract method was applied to other works.
Due to this change, net sales for the first three quarters of fiscal 2010 was 23,763 million yen
higher, and operating loss, recurring loss, loss before income taxes and minority interests were each
1,301 million yen lower.
The change's impact by segment is detailed below under “Segment Information” in the“Consolidated Financial Statements” section.

85. Consolidated Financial Statements(1) Consolidated Balance Sheets
Millions of yen
As of
As of
December 31, 2009
March 31, 2009
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

32,995392,826
61,644335,497
80,606
97,173(2,591)
998,152

31,955402,341
69,609325,578
81,253
88,169(3,111)
995,796

289,967

284,117926
19,31920,6701,106
18,466
19,573

115,728(1,195)
114,533
424,746
1,422,898

101,470(1,187)100,283
403,974
1,399,770

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

264,353
155,2443,260
8,628
20,055
11,731
116,258
185,708765,240

358,478
157,082
8,710
14,241
20,93015,049125,762
129,751
830,006

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

60,513
207,278
86,768
10,991
8,465
374,016
1,139,257

40,990140,715
79,9693,980
8,862
274,518
1,104,525

104,328
54,278
138,566(514)
296,659

104,328
54,281
154,272(467)
312,415

5,426
655(24,798)(18,716)
5,697
283,640
1,422,898

3,139
(263)
(24,850)(21,974)
4,804
295,245
1,399,770

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

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Net unrealized gains (losses) on securities
Gains (losses) on hedging items
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interests
Total net assets
Total net assets and liabilities9(2) Consolidated Statements of Income
Millions of yen
Nine months ended
December 31, 2008
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
R&D expenses
Other
Total selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Gain on sale of marketable and investment securities
Equity income of non-consolidated subsidiaries and affiliates
Foreign exchange gain, net
Other
Total non-operating income
Non-operating expenses
Interest expense
Other
Total non-operating expenses
Recurring profit (loss)
Extraordinary income
Reversal of provision for environmental measures
Gain on sale of businessTotal extraordinary income
Extraordinary losses
Provision for losses on damages suit
Provision for environmental measures
Loss on liquidation of affiliate
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Minority interests in net income of consolidated subsidiaries
Net income (loss)

10

Nine months ended
December 31, 2009

954,962
819,888
135,074

798,060
702,31295,74731,01826,46562,882
120,367
14,70630,02425,87253,898109,794(14,046)

2,360
1,200
642
6,512
2,629
3,187
16,533

2,398
538
70
4,363
6,736
3,969
18,077

4,695
4,695
9,660
21,578

4,184
5,347
9,532
(5,501)

594
594

1,212
1,212

5,165
5,165
17,007
8,389
1,158
7,460

6,983
1,085
331
8,399
(12,689)(3,078)712(10,323)

(3) Consolidated Cash Flow Statement
Millions of yen
Nine months
Nine months
ended December
ended December
31, 2008
31, 2009
Cash flow from operating activities
Income (loss) before income taxes and minority interests
Depreciation and amortization
Increase (decrease) in provisions
Interest and dividend income
Interest expense
Investment (gain) loss on equity method(Gain) loss on sale and disposal of property, plant, and equipment(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables
Increase (decrease) in advances from customers
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Net cash provided by (used for) operating activities

17,00731,472
5,052(3,560)4,965(6,512)(648)
76,647(99,794)(73,204)
19,247(17,033)(46,361)
3,690(4,955)(25,588)(73,215)(12,689)
36,986
3,653(2,937)
4,184(4,363)502
7,379(1,724)(95,025)(10,357)(12,663)(87,054)
3,190(4,258)(10,591)(98,714)(48,674)(52,085)

Cash flow from investing activities
Acquisition of property, plant and equipment and intangible assets
Proceeds from sale of property, plant and equipment and intangible
assetsAcquisition of investments in securities
Proceeds from sale of investments in securities
Acquisition of equity interest in subsidiaries resulting in change inscope of consolidation
Acquisition of affiliates’ shares(Increase) decrease in short-term loans receivable
Additions to long-term loans receivable
Proceeds from collection of long-term loans receivable
Other
Net cash used for investing activities

(943)

-

(131)
(31)
1,453
(260)
(46,885)(1,331)
(337)
(61)
88
469
(52,643)

Cash flow from financing activities
Increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Proceeds from minority interests
Acquisition of treasury stock
Cash dividends paid
Cash dividends paid to minority interests
Other
Net cash provided by financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

104,030
61,508(3,973)(17,518)(13)(8,308)(340)
135,384(1,866)
13,41638,16951,58691,45970,580(5,082)20,000(20,000)
230(49)(4,996)(438)(34)
151,667884
1,193
31,41332,607

11

2,580

635

(3,033)
1,635

(110)
89

(4) Notes on the going-concern assumption
Not applicable(5) Segment Information
1) Information by industry segment
Nine months ended December 31, 2008 (April 1, 2008 – December 31, 2008)
Millions of yen

Shipbuilding
Rolling Stock & Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer Products & Machinery
Hydraulic Machinery
Other
Total
Eliminations/corporation
Consolidated total

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

95,805
131,801
126,484
138,835
66,122
247,844
68,21679,852954,962
954,962

1,064
1,049
1,294
13,208
8,610
5,232
6,384
30,42067,265(67,265)-

96,869132,851
127,778
152,044
74,732
253,077
74,600110,272
1,022,228(67,265)954,962(2,577)
7,707(4,333)
6,740
5,328(7,752)7,000
2,682
14,796(89)
14,706

Notes: 1. Method of segmentation
Business segmentation is based on the categorization used by management.
2. Major products by industry segment
Industry segment
Shipbuilding
Rolling Stock &Construction Machinery
Aerospace
Gas Turbines &Machinery
Plant & Infrastructure
Engineering
Consumer Products &MachineryHydraulic Machinery
Other

Major products
Ships and vessels
Rolling stock, construction machinery, snowplows, crushers
Aircrafts
Jet engines, general-purpose gas turbine generators, movers
Industrial equipment, boilers, environmental equipment, steel structures
Motorcycles, personal watercraft, all-terrain vehicles (ATV), utility
vehicles, general-purpose gasoline engines, industrial robots
Industrial hydraulic products
Commercial activities, sales/order agency and intermediary activities,
management of welfare facilities

3. Change in inventory valuation standard and method
The Company previously valued ordinary held-for-sale inventories mainly at cost by the
specific identification, moving average, and FIFO methods. Effective the first quarter of the
fiscal year ending March 31, 2009, in conjunction with adoption of the Accounting Standard
for Measurement of Inventories (ASBJ Statement No. 9, as revised July 5, 2006), the Company
switched to valuing inventories mainly at cost (writing down of inventories’ carrying value toreflect impairment of the goods’ utility) by the specific identification, moving average, andFIFO methods. Due to this change, operating income for the first three quarters of fiscal 2009,
in the Rolling Stock & Construction Machinery segment was 383 million yen lower; in the
Aerospace segment, 2,881million yen lower; in the Gas Turbines & Machinery segment,
757million yen lower; in the Plant & Infrastructure Engineering segment, 26 million yen lower;
in the Consumer Products & Machinery segment, 393million yen lower; in the Hydraulic
Machinery segment, 127million yen lower, in the Other segment, 7million yen lower.

12

4. Change in useful life for property, plant and equipment
The Company and its consolidated subsidiaries in Japan have revised machinery’s useful life
pursuant to 2008 amendments to the tax code. Due to this change, operating income for the
first three quarters of fiscal 2009, in the Shipbuilding business was 399million yen lower; in
the Rolling Stock & Construction Machinery segment, 307million yen lower; in the Aerospacesegment, 180million yen lower; in the Gas Turbines & Machinery segment, 168million yen
lower; in the Plant & Infrastructure Engineering segment, 39million yen lower; in theConsumer Products & Machinery segment, 123million yen lower; and in the Other segment,
31million yen lower; while in the Hydraulic Machinery segment, it was 109million yen higher.

Nine months ended December 31, 2009 (April 1, 2009 – December 31, 2009)
Millions of yen

Shipbuilding
Rolling Stock
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer Products & Machinery
Hydraulic Machinery
Other
Total
Eliminations/corporation
Consolidated total

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

111,725
122,339
119,368
128,858
47,195
152,380
47,18769,006
798,060
798,060

1,116
1,814
1,512
16,100
6,667
1,894
5,336
22,84657,288(57,288)-

112,841
124,153
120,881
144,958
53,862
154,275
52,52391,852855,348(57,288)
798,060

779
4,654
(617)
2,797
(158)
(25,653)
4,339
(208)
(14,067)20(14,046)

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

Ships and vessels

Major products

Rolling Stock

Rolling stock, snowplows, crushers

Aerospace
Gas Turbines &Machinery
Plant & Infrastructure
Engineering
Consumer Products &MachineryHydraulic Machinery
Other

Aircrafts
Jet engines, general-purpose gas turbine generators, movers
Industrial equipment, boilers, environmental equipment, steel structures
Motorcycles, personal watercraft, all-terrain vehicles (ATV), utility
vehicles, general-purpose gasoline engines, industrial robots
Industrial hydraulic products
Construction machinery, commercial activities, sales/order agency andintermediary activities, management of welfare facilities

3. Change in method of segmentation
In October 2008, the Company, Hitachi Construction Machinery Co., Ltd., and TCM
Corporation reached an agreement on forming an alliance with respect to their wheel loader
businesses. The alliance is to involve (i) joint research and development and (ii) a spin-off ofthe Company's wheel loader operation into a newly created subsidiary of the Company, andHitachi’s investment in that subsidiary.
In accord with the agreement, the construction machinery business was spun-off in April
2009 and succeeded by the Company's subsidiary, KCM Corporation. As a result, saidbusiness’s relationship with the Rolling Stock & Construction Machinery segment was
weakened and effective the first quarter of the fiscal year ending March 31, 2010, it wastherefore shifted from the Rolling Stock & Construction Machinery segment to the Other
segment.

13

Due to this change, compared with what they would have been under the previous method,
net sales for the first three quarters of fiscal 2010, in the Rolling Stock segment was
13,546million yen lower (including 14,823million yen of external sales) and in the Other
segment, 14,430million yen higher (including 14,823million yen of external sales). By thesame comparison, operating income in the Rolling Stock segment was 2,006million yen higher,
while operating loss in the Other segment was 2,009million yen higher.
4. Change in accounting standard for construction revenue and cost

As stated under the heading “Changes related to accounting standards” in part 4., 3) of the“Qualitative Information and Financial Statements” section, the Company previously used thepercentage-of-completion method for accounting of revenues associated mainly withconstruction contracts with a contract amount of three billion yen or more and a construction
period of over one year, and other construction works were accounted for with thecompleted-contract method. Effective the first quarter of the fiscal year ending March 31,
2010, however, in conjunction with adoption of the Accounting Standard for Construction
Contracts (ASBJ Statement No.15, December 27, 2007) and its accompanying Guidance on
Accounting Standard for Construction Contracts (ASBJ Guidance No.18, December 27,2007), the percentage-of-completion method was applied to construction contracts that werestarted during the first quarter ended June 30, 2009, for which certain elements were
determinable with certainty as of December 31, 2009. The percentage of completion isestimated with the proportion-of-cost method, under which the percentage of construction
completed during the period is calculated as the ratio of the construction cost incurred duringthat period relative to the total construction cost. The completed-contract method was applied
to other works.
Due to this change, net sales for the first three quarters of fiscal 2010, in the Shipbuilding
segment was 18,007million yen higher; in the Aerospace segment was 768million yen higher;
in the Gas Turbines & Machinery segment, 4,184million yen higher; and in the Plant &Infrastructure Engineering segment, 802million yen higher. Also due to the change, operating
income in Shipbuilding segment was 555million yen higher; in the Aerospace segment was
56million yen higher; in the Gas Turbines & Machinery segment was 468million yen higher;
and in the Plant & Infrastructure Engineering segment was 221million yen higher.

142) Information by geographic area
Nine months ended December 31, 2008 (April 1, 2008 – December 31, 2008)
Millions of yen

Japan
North America
EuropeAsia
Other areas
Total
Eliminations/corporate
Consolidated total

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

686,945
160,015
68,83032,1796,991
954,962
954,962

188,150
19,067
3,491
29,061
187
239,958(239,958)-

875,095
179,083
72,321
61,241
7,179
1,194,921(239,958)
954,962

7,993(1,187)
(16)
3,553
373
10,718954,962
14,706

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

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

3. Change in inventory valuation standard and method
The Company previously valued ordinary held-for-sale inventories mainly at cost by the
specific identification, moving average, and FIFO methods. Effective the first quarter of the
fiscal year ending March 31, 2009, in conjunction with adoption of the Accounting Standard
for Measurement of Inventories (ASBJ Statement No. 9, as revised July 5, 2006), the Company
switched to valuing inventories mainly at cost (writing down of inventories’ carrying value toreflect impairment of the goods’ utility) by the specific identification, moving average, andFIFO methods. Due to this change, operating income for the first three quarters of fiscal 2009,
in Japan was 4,577million yen lower.
4. Change in useful life for property, plant and equipment
The Company and its consolidated subsidiaries in Japan have revised machinery’s useful life
pursuant to 2008 amendments to the tax code. Due to this change, operating income for the first
three quarters of fiscal 2009, in Japan was 1,140million yen lower.

15

Nine months ended December 31, 2009 (April 1, 2009 – December 31, 2009)
Millions of yen

Japan
North America
EuropeAsia
Other areas
Total
Eliminations/corporate
Consolidated total

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

617,451
96,91046,08530,816
6,795
798,060
798,060

108,674
11,592
1,325
30,056
133
151,782(151,782)-

726,126
108,50347,41160,873
6,928
949,842(151,782)
798,060(13,302)(4,850)
476
4,674
494
(12,508)(1,538)(14,046)

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

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

3. Change in accounting standard for construction revenue and cost

As stated under the heading “Changes related to accounting standards” in part 4., 3) of the“Qualitative Information and Financial Statements” section, the Company previously used thepercentage-of-completion method for accounting revenues associated mainly with construction
contracts with a contract amount of three billion yen or more and a construction period of over
one year, and other construction works were accounted for with the completed-contract method.
Effective the first quarter of the fiscal year ending March 31, 2010, however, in conjunction withadoption of the Accounting Standard for Construction Contracts (ASBJ Statement No.15,
December 27, 2007) and its accompanying Guidance on Accounting Standard for Construction
Contracts (ASBJ Guidance No.18, December 27, 2007), the percentage-of-completion method
was applied to construction contracts which were started during the first quarter ended June 30,
2009, for which certain elements were determinable with certainty as of December 31, 2009.
The percentage of completion is estimated with the proportion-of-cost method, under which thepercentage of construction completed during the period is calculated as the ratio of theconstruction cost incurred during that period relative to the total construction cost. The
completed-contract method was applied to other works.
Due to this change, net sales for the first three quarters of fiscal 2010, in Japan was
23,763million yen higher, while operating loss in Japan was 1,301million yen lower.

16

2. Overseas sales
Nine months ended December 31, 2008 (April 1, 2008 – December 31, 2008)
Millions of yen
Overseas sales
North America
EuropeAsia
Other areas
Total

Consolidated net sales

215,893
88,772
108,776
112,806
526,248

Ratio of overseas sales toconsolidated sales (%)

954,962

22.6
9.2
11.3
11.8
55.1

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

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

Nine months ended December 31, 2009 (April 1, 2009 – December 31, 2009)
Millions of yen
Overseas sales
North America
EuropeAsia
Other areas
Total

Consolidated net sales

158,250
60,582
118,267
77,658414,758

Ratio of overseas sales toconsolidated sales (%)

798,060

19.8
7.5
14.8
9.7
51.9

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

The U.S.A. and Canada
The United Kingdom, France, Germany, and the Netherlands,
China, Taiwan, the Philippines, Indonesia and Korea
Panama, Australia and Brazil(6) Note on Significant Changes in the Amount of Shareholders’ Equity
Not applicable176. Other
Orders and sales (consolidated)
Effective the first quarter of the fiscal year ending March 31, 2010, the Construction Machinery
business was reclassified from the Rolling Stock & Construction Machinery segment into the Other
segment.
Due to this change, compared with what they would have been under the previous method in thenine months ended December 31, 2009, orders received in the Rolling Stock segment were 15,619
million yen lower, and in the Other segment, higher by the same amount. Also due to the change, net
sales in the Rolling Stock segment were 14,823million yen lower, and in the Other segment, higher by
the same amount. Order backlog in the Rolling Stock segment was 4,538million yen lower, and in the
Other segment, higher by the same amount.

1) Orders received
Nine months ended
December 31, 2008

Nine months ended
December 31, 2009

Year ended March 31,
2009

million yen% of total
million yen% of total
million yen%
Shipbuilding
64,117
5.8
10,484
1.6
71,512
4.6
Rolling Stock
186,49717.1
63,065
9.7
264,603
17.1
Aerospace
87,737
8.0
79,95012.3
239,176
15.5
Gas Turbines & Machinery
279,31625.6
138,58921.3
355,517
23.0
Plant & Infrastructure Engineering
61,6295.6
91,231
14.0
83,648
5.4
Consumer Products & Machinery
247,84422.7
152,380
23.4
336,459
21.8
Hydraulic Machinery
71,5206.5
46,5097.1
84,142
5.4
Other88,6298.1
67,68810.4
105,528
6.8
Total
1,087,292
100.0
649,900
100.0
1,540,589
100.0
Note: The Consumer Products & Machinery segment’s orders received are equal to its net sales as production isbased mainly on estimated demand.

2) Net sales

Shipbuilding
Rolling Stock
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer Products & Machinery
Hydraulic Machinery
Other
Total

Nine months ended
December 31, 2008
% of total
million yen
95,805
10.0
131,801
13.8
126,484
13.2
138,835
14.5
66,122
6.9
247,84425.9
68,216
7.1
79,852
8.3
954,962100.0

Nine months ended
December 31, 2009
million yen% of total
111,725
14.0
122,33915.3
119,368
14.9
128,858
16.1
47,195
5.9
152,380
19.0
47,187
5.9
69,006
8.6
798,060
100.0Year ended March 31,
2009
million yen%
126,4269.4
186,45413.9
200,424
14.9
195,156
14.5
105,178
7.8
336,459
25.1
84,9196.3
103,579
7.7
1,338,597
100.0

End-Fiscal 2009
(March 31, 2009)% of total
million yen
356,93721.0
478,56528.1
286,600
16.8
405,19623.8
112,162
6.6
28,5391.6
31,1601.8
1,699,162
100.0End-3Q Fiscal 2010
(December 31, 2009)
million yen % of total
252,959
16.5
413,408
27.0
242,16315.8
399,42926.1
156,257
10.2
27,861
1.8
33,5862.2
1,525,665
100.0End-3Q Fiscal 2009
(December 31, 2008)
million yen%
376,86523.0
474,205
28.9
206,01712.5
380,330
23.2
128,972
7.8
32,6201.9
37,9882.3
1,636,999
100.03) Order backlog

Shipbuilding
Rolling Stock
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer Products & Machinery
Hydraulic Machinery
Other
Total

18

Supplementary information on earnings forecasts for the fiscal year ending March 31, 2010
(1) Consolidated earnings outlook
Billions of yen
Outlook for the year ending March 31, 2010 (fiscal 2010)
Revised forecast(A)

Forecast issued
November 2, 2009
(B)

Change (A – B)

Fiscal 2009
(endedMarch 31, 2009)(actual)1,180.0
5.0
10.0
3.0

1,200.0
5.0
10.0
3.0

(20.0)-

1,338.5
28.7
38.7
11.7

Net sales
Operating income
Recurring profit
Net income

Orders received
1,060.0
1,080.0(20.0)
Before-tax ROIC (%)
1.3%
1.5%
(0.2)%
Notes: 1. The expected foreign exchange rate used for the outlook: ¥90=US$1, ¥130=1 Euro
2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital

1,540.5
4.5%(2) Outlook by industry segment
1) Net sales and operating income (loss)
Billions of yen
Outlook for the year ending March 31, 2010 (fiscal 2010)
Forecast issued
November 2, 2009
(B)

Revised forecast (A)Shipbuilding
Rolling Stock
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure
Engineering
Consumer Products &MachineryHydraulic Machinery
Other
Total

Change (A – B)

Fiscal 2009
(ended March 31, 2009)(actual)

Net sales

Operatingincome(loss)Net sales

Operatingincome(loss)Net sales

Operatingincome(loss)Net sales

Operatingincome(loss)

150.0
165.0
180.0
200.0

2.0
9.0
2.5
7.0

150.0
165.0
180.0
200.0

3.5
9.0
2.5
7.0

-

(1.5)
-

126.4
150.3
200.4
195.1

(1.0)
12.3
(4.1)
11.0

100.0

7.5

100.0

6.0

-

1.5

105.1

8.9

220.0

(28.0)

240.0(26.0)(20.0)

(2.0)

336.4

(10.1)

65.0
100.0
1,180.0

5.0
0.0
5.0

65.0
100.0
1,200.0

3.0
0.0
5.0

(20.0)

2.0
-

84.9
139.6
1,338.5

8.3
3.3
28.7

19

2) Orders received
Billions of yen
Outlook for the year ending March 31, 2010 (fiscal 2010)
Revised forecast(A)

Forecast issued
November 2, 2009
(B)

Change (A – B)

Fiscal 2009
(ended March 31,
2009 )(actual)

Shipbuilding
20.0
50.0
(30.0)
71.5
Rolling Stock
140.0
140.0
235.0
Aerospace
160.0
160.0
239.1
Gas Turbines & Machinery
220.0
220.0
355.5
Plant & Infrastructure
Engineering
130.0
90.0
40.0
83.6
Consumer Products &Machinery
220.0
240.0
(20.0)
336.4
Hydraulic Machinery
70.0
70.0
84.1
Other
100.0
110.0
(10.0)
135.0
Total
1,060.0
1,080.0(20.0)
1,540.5
Note: The construction machinery business, which was previously included in the Rolling Stock & Construction
Machinery segment, was spun-off in April 2009 to become KCM Corporation. Hitachi Construction
Machinery Co., Ltd., subsequently invested capital in, entered into business alliance with, KCM
Corporation. As a result, said business’s relationship with the Rolling Stock & Construction Machinery
segment was weakened, and effective the fiscal year ending March 31, 2010, it was therefore included in
the “Other” segment in the above segment outlook.
For reference, the construction machinery business’s sales, income (loss), and orders received for the year
ended March 31, 2009, were included in “Other” above.

20