Report of Earnings and Financial Statements for the Three Months Ended June 30, 2009
July 31, 2009
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:
Minoru Akioka, Senior Manager, Accounting DepartmentTel:+81 3-3435-2130
Scheduled dates:
Submission of quarterly securities filing:
August 7, 2009
Commencement date of dividend payments-

1. Consolidated Financial Results for the Three Months Ended June 30, 2009
(April 1, 2009 to June 30, 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
Three months ended
June 30, 2009
Three months ended
June 30, 2008

Operating income
million yen%

256,757(15.1)(5,374)-(1,499)-(1,719)-302,531

-

8,246

-

14,824

-

8,101

-

yen
Three months ended
June 30, 2009
Three months ended
June 30, 2008

million yen

Net income

million yen

Earnings per share%

Recurring profit%

million yen%

Earnings per share– diluted
yen(1.03)

-

4.85

4.74

(2) Financial Condition

Total assets

Net assets

million yen

million yen

Ratio ofshareholders’ equity
to total assets%

June 30, 2009

1,370,845

292,333

20.9

172.40March 31, 2009

1,399,770

295,24520.7

174.10Note: Shareholders’ equity: June 30, 2009:
March 31, 2009:

287,613 million yen
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
March 31, 2010
Year ending March
0.00
3.00
31, 2010 (forecast)
Note: Revision of dividend forecast during the three months ended June 30, 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(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen%
million yen%
million yen%
yenmillion yen%
For six months
ending570,000 (12.7)(12,000)(8,000)
September 30,
2009
Full year
1,240,000(7.3)
5,000 (82.5)
10,000 (74.1)
Note: Revision of earnings forecast during the three months ended June 30, 2009: None

(6,000)-(3.60)

6,000(48.8)

3.60

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 accordance with revisions to accounting standards: Yes(2) Changes other than (1) above: None
Note: For details, see “4. Other information” on page 7 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):June 30, 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:
June 30, 2009:
1,410,665 shares
March 31, 2009:
1,394,288 shares(3) Average number of outstanding shares (for the three months):Three months ended June 30, 2009: 1,668,223,431 shares
Three months ended June 30, 2008: 1,668,298,012 shares2

*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain various forward-looking statements and other forecasts regarding performanceand other matters. Such statements are based on information available at the time of preparation. Actual
results may differ from those expressed or implied by forward-looking statements due to a range offactors. For the assumptions underlying the earnings forecasts presented and other information
regarding the use of such forecasts, refer to “3. Consolidated Earnings Outlook” on page 6 in the“Qualitative Information and Financial Statements” section.

3

Qualitative Information and Financial Statements
1. Consolidated Operating Results
In the three months to June 30, 2009 (first quarter of the fiscal year ending March 31, 2010), the Japanese
economy emerged from the crisis conditions of the preceding half-year but remained under pressure froma capital spending slump, export slowdown, deteriorating employment environment, and downturn inconsumer spending. The global economy, particularly Europe and the Americas, likewise continue tolanguish, although some emerging economies showed signs of recovery.
This adverse operating environment weighed heavily on KHI Group businesses, all of which
experienced declines in order bookings in the first quarter. Although the Shipbuilding and Rolling Stocksegments managed to achieve sales growth, overall sales declined. Profits declined across all businesssegments under the weight of yen appreciation and downturns in European and American markets.
Relative to the year-earlier quarter, the Group's consolidated order bookings declined ¥197.6 billion to¥191.7 billion while consolidated net sales decreased ¥45.7 billion to ¥256.7 billion. The Group
consequently incurred a consolidated operating loss of ¥5.3 billion, recurring loss of ¥1.4 billion, and net
loss of ¥1.7 billion. These losses respectively represent decreases of ¥13.6 billion, ¥16.3 billion, and ¥9.8
billion from the year-earlier quarter's operating, recurring, and net incomes.
Consolidated operating performance in the three months to June 30, 2009, is summarized by segment
below.
Effective from the first quarter of the current fiscal year, the Construction Machinery business,previously part of the Rolling Stock segment (formerly the Rolling Stock & Construction Machinery
segment), is included in the Other segment, as disclosed below on page 14 under the heading“Information by industry segment” (subsection (5), 1) in part 5, “Consolidated Financial Statements”).

Shipbuilding
With no newbuilding orders received in the first quarter, consolidated order bookings decreased ¥18.7
billion year on year to ¥1.8 billion.
Consolidated net sales increased ¥20.3 billion year on year to ¥39.4 billion, boosted by a spate of salesof large vessels.
Profitability was eroded by yen appreciation and material cost inflation, resulting in a consolidated
operating loss of ¥600 million, a decrease of ¥600 million from the year-earlier quarter's operating
income.

Rolling Stock
Consolidated order bookings included orders from Singapore for subway cars but declined to ¥28 billion,
down ¥70.1 billion from the year-earlier quarter, which was marked by an influx of large orders.
Consolidated net sales grew ¥4.7 billion year on year to ¥40.8 billion, bolstered by growth in overseas

4

sales of rolling stock.
Despite the sales growth, consolidated operating income decreased ¥700 million year on year to ¥1.6
billion as a result of yen appreciation.
The year-on-year change figures for the Rolling Stock segment are adjusted to reflect the impact of theresegmentation involving the Construction Machinery business.

Aerospace
Consolidated order bookings decreased ¥16.0 billion year on year to ¥11.4 billion as a result of decreasedorders for component parts for the Boeing 777 and other aircraft.
Consolidated net sales decreased ¥12.8 billion year on year to ¥26.6 billion, largely due to declines insales to Japan's Ministry of Defense and sales of Boeing 777 component parts.
The decline in sales coupled with yen appreciation resulted in a ¥2.1 billion consolidated operating loss,a ¥2.3 billion decrease from the year-earlier quarter's operating income.

Gas Turbines & Machinery
Consolidated order bookings declined ¥6.8 billion year on year to ¥52.3 billion, largely as a result of adecline in orders for marine diesel engines and an absence of orders for diesel generators.
Consolidated net sales were flat year on year at ¥44.7 billion, buoyed by a sustained high level of salesof certain products, including components for aircraft engines, marine diesel engines, and gas turbine
generator systems.
Although sales held firm, consolidated operating income decreased ¥1.3 billion year on year to ¥900
million, largely as a result of yen appreciation.

Plant & Infrastructure Engineering
Despite a diverse influx of plant orders, consolidated order bookings fell to ¥13.2 billion, down ¥15.4
billion from the year-earlier quarter, when the segment booked a large order for LNG storage tanks.
Consolidated net sales decreased ¥7.0 billion year on year to ¥13.1 billion, largely reflecting a falloff inoverseas sales of large plant installations.
The sales decline resulted in a consolidated operating loss of ¥600 million, ¥2.3 billion below the
year-earlier quarter's operating income.

Consumer Products & Machinery
Consolidated net sales fell ¥33.7 billion year on year to ¥60.2 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 against the US dollar and euro, led to a
consolidated operating loss of ¥5.6 billion, ¥3.8 billion worse than the year-earlier quarter's operating
loss.

5

Hydraulic Machinery
Consolidated order bookings fell ¥17.9 billion year on year to ¥10.9 billion, mainly as a result of
diminished demand from construction machinery makers.
Consolidated net sales were down ¥8.6 billion year on year to ¥14.3 billion, largely due to decreased
sales to construction machinery makers.
Operating income decreased in tandem with sales, down ¥1.4 billion year on year to ¥1.1 billion.

Other Operations
Consolidated net sales declined ¥8.2 billion year on year to ¥17.2 billion. Operating income decreased¥800 million year on year to the breakeven level.
The year-on-year change figures for the Other segment are adjusted to reflect the impact of theresegmentation involving the Construction Machinery business.

2. Consolidated Financial Position
At June 30, 2009, consolidated assets totaled ¥1,370.8 billion, a decrease of ¥28.9 billion from March 31,
2009. The decrease was attributable to reduction in trade receivables resulting from collection ofreceivables and reduced sales. The decrease in receivables outweighed growth in property, plant andequipment due to capital investment and growth in work-in-process stemming from progress toward
completion of existing contracts. Consolidated liabilities totaled ¥1,078.5 billion at June 30, a decrease of¥26.0 billion from March 31, 2009. The decrease was attributable to reduction in trade payables, partially
offset by growth in borrowings and advances from customers. Consolidated net assets decreased ¥2.9
billion from March 31, 2009, to ¥292.3 billion at June 30, largely as a result of the first quarter's net loss
and payment of dividends.

3. Consolidated Earnings Outlook
Operating results to date have been tracking roughly in line with the Company's existing earnings forecast(announced April 28, 2009) for the fiscal year ending March 31, 2010. The Company has accordingly left
its existing forecast unchanged.
The Company's earnings forecast assumes exchange rates of ¥95 to the US dollar and ¥130 to the euro.

6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 quarter 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,
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 first 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.

7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 at theend of the first quarter. 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 theratio 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 was 1,809 million yen higher, and operating loss, recurring loss, loss
before income taxes and minority interests were each 95 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
June 30, 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

20,894352,316
64,106
341,711
80,10599,508(2,834)
955,809

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

291,809284,117

1,046
18,788
19,835

1,106
18,466
19,573

104,673(1,282)
103,391
415,036
1,370,845

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

289,023
150,404
1,669
15,71918,477
12,690136,632
128,964753,582

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

40,990190,209
81,664
3,999
8,066
324,929
1,078,512

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

104,32854,316
147,377(470)
305,551

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

4,921
(976)
(21,882)(17,938)
4,719
292,333
1,370,845

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

Allowance for doubtful receivables
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
Three months ended
June 30, 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
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)
Income (loss) before income taxes and minority interests
Income taxes
Minority interests in net income of consolidated subsidiaries
Net income (loss)

10

Three months ended
June 30, 2009

302,531
254,443
48,088

256,757
225,996
30,76010,063
8,211
21,567
39,842
8,246

9,514
7,596
19,02436,135(5,374)

969
676
1,355
4,414
2,535
9,952

750
319
314
3,256
2,071
6,711

1,849
1,524
3,374
14,824
14,824
6,454
267
8,101

1,441
1,395
2,836
(1,499)(1,499)28
191(1,719)(3) Consolidated Cash Flow Statement
Millions of yen
Three months
Three months
ended June 30,
ended June 30,
2008
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 operating activities

14,8249,541
1,807(1,646)
1,849(1,355)(941)
83,284(34,443)(79,785)
25,465(2,063)
16,536
1,772(1,880)(20,013)(3,584)(1,499)
11,174(2,123)(1,069)
1,441
(314)
18
51,092(5,632)(71,111)8,370(8,509)(18,163)
1,333(1,537)(8,908)(27,276)(14,922)(23,340)

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(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)

-

(6)
(17)
17
(686)
(14,818)

73
(19)
29
163
(22,801)

Cash flow from financing activities
Increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayment of long-term debt
Redemption of bonds payable
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

18,8868(506)(4)(5,952)(329)
12,100(649)(6,952)
38,16931,217

5,132
50,000(640)(10,000)(3)(3,684)(426)(9)
40,367(1,353)(11,064)
31,413
20,348

11

1,452

300

(12)
300

(11)
1

(4) Notes on the going-concern assumption
Not applicable(5) Segment Information
1) Information by industry segment
Three months ended June 30, 2008 (April 1, 2008 – June 30, 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)

19,091
36,10339,56344,984
20,28394,00623,00825,489302,531302,531

186
258
393
4,259
2,891
1,861
2,039
9,956
21,848(21,848)-

19,27736,362
39,95649,244
23,175
95,86825,04835,446324,379(21,848)
302,531

24
2,381
218
2,258
1,695
(1,834)
2,632
939
8,316
(69)
8,246

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. 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 to reflect impairment of the goods’ utility) by the specificidentification, moving average, and FIFO methods. Due to this change, operating income forthe first quarter of the fiscal year ending March 31, 2009, in the Rolling Stock & Construction
Machinery business was 380 million yen lower; in the Aerospace business, 440 million yen
lower; in the Gas Turbines & Machinery business, 633 million yen lower; in the Consumer
Products & Machinery business, 369 million yen lower; in the Hydraulic Machinery business,
131 million yen lower; and in the Other businesses, 5 million 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 quarter of the fiscal year ending March 31, 2009, in the Shipbuilding business was 124
million yen lower; in the Rolling Stock & Construction Machinery business, 83 million yen
lower; in the Aerospace business, 54 million yen lower; in the Gas Turbines & Machinery
business, 52 million yen lower; in the Plant & Infrastructure Engineering business, 16 million
yen lower; in the Consumer Products & Machinery business, 52 million yen lower; and in the
Other businesses, 6 million yen lower; while in the Hydraulic Machinery business, it was 20
million yen higher.

13Three months ended June 30, 2009 (April 1, 2009 – June 30, 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)

39,40340,843
26,69644,753
13,19960,256
14,327
17,277
256,757
256,757

115
158
376
4,355
641
578
1,649
7,630
15,504(15,504)-

39,51841,001
27,072
49,108
13,841
60,834
15,977
24,907272,262(15,504)
256,757

(661)
1,610
(2,152)946(611)(5,680)1,182
83(5,283)(90)(5,374)

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 2009and succeeded by the Company's subsidiary, KCM Corporation. As a result, said business’s
relationship with the Rolling Stock & Construction Machinery segment was weakened, andeffective the first quarter of the fiscal year ending March 31, 2010, it was therefore shiftedfrom the Rolling Stock & Construction Machinery segment to the Other segment.
Due to this change, compared with what they would have been under the previous method, net
sales for the first quarter of the fiscal year ending March 31, 2010, in the Rolling Stocksegment was 3,270 million yen lower (including 3,269 million yen of external sales) and in the
Other segment, 3,107 million yen higher (including 3,269 million yen of external sales). By thesame comparison, operating income in the Rolling Stock segment was 613 million yen higher
and in the Other segment, 617 million yen lower.
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 with14

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
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 at the end of the first quarter. 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 quarter of the fiscal year ending March 31, 2009, in
the Shipbuilding segment was 1,148 million yen higher; in the Gas Turbines & Machinery
segment, 657 million yen higher; and in the Plant & Infrastructure Engineering segment, 3million yen higher. Also due to the change, operating income in the Gas Turbines &Machinery segment was 84 million yen higher, while operating loss in the Shipbuilding
segment was 10 million yen lower, and in the Plant & Infrastructure Engineering segment, it
was lower by approximately 0 million yen.

152) Information by geographic area
Three months ended June 30, 2008 (April 1, 2008 – June 30, 2008)
Millions of yen

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

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

206,344
51,06734,8587,810
2,450
302,531302,53156,974
6,646
1,333
9,344
53
74,352(74,352)-

263,319
57,71436,191
17,154
2,504
376,884(74,352)
302,531

4,740
71
1,023
529
158
6,523
1,722
8,246

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. 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 to reflect impairment of the goods’ utility) by the specificidentification, moving average, and FIFO methods. Due to this change, operating income forthe first quarter of the fiscal year ending March 31, 2009, in Japan was 1,961 million 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 firstquarter of the fiscal year ending March 31, 2009, in Japan was 369 million yen lower.

16

Three months ended June 30, 2009 (April 1, 2009 – June 30, 2009)
Millions of yen

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

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

189,189
35,85021,3338,736
1,647
256,757
256,757

33,474
5,541
432
12,97538
52,462(52,462)-

222,664
41,391
21,76521,712
1,686
309,220(52,462)
256,757(7,295)(1,403)
1,023
1,786
69
(5,821)446(5,374)

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 in 4. (3), “Changes related to accounting standards,” in the “Qualitative Information
and Financial Statements” section, 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 otherconstruction works were accounted for with the completed-contract method. Effective the firstquarter 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 toconstruction contracts which were started during the first quarter ended June 30, 2009, for which
certain elements were determinable with certainty at the end of the first quarter. 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 quarter of the fiscal year ending March 31, 2010, inJapan was 1,809 million yen higher, while operating loss in Japan was 95 million yen lower.

17

2. Overseas sales
Three months ended June 30, 2008 (April 1, 2008 – June 30, 2008)
Millions of yen
Overseas sales
North America
EuropeAsia
Other areas
Total

Consolidated net sales

69,69039,45435,587
29,238173,971

Ratio of overseas sales toconsolidated sales (%)

302,531

23.0
13.0
11.7
9.6
57.5

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, the Netherlands, Italy and Spain
China, Korea and Taiwan
Brazil, Panama, and Australia

Three months ended June 30, 2009 (April 1, 2009 – June 30, 2009)
Millions of yen
Overseas sales
North America
EuropeAsia
Other areas
Total

Consolidated net sales

54,002
26,58535,692
20,445
136,725

Ratio of overseas sales toconsolidated sales (%)

256,757

21.0
10.3
13.9
7.9
53.2

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, Germany, France, Italy, and the Netherlands
China, Taiwan, Korea and the Philippines
Panama, Australia and Marshall Islands(6) Note on Significant Changes in the Amount of Shareholders’ Equity
Not applicable186. Other
Orders and sales (consolidated)
Effective the first quarter of the fiscal year ending March 31, 2010, the construction machinery
division was shifted from the Rolling Stock & Construction Machinery segment to the Other segment.
Due to this change, compared with what they would have been under the previous method, orders
received for the first quarter of the fiscal year ending March 31, 2010, in the Rolling Stock segment
was 2,254 million yen lower, and in the Other segment, 2,254 million yen higher. Also due to thechange, net sales in the Rolling Stock segment was 3,269 million yen lower, and in the Other
segment, 3,269 million yen higher. Order backlog in the Rolling Stock segment was 2,727 million yen
lower, and in the Other segment, 2,727 million yen higher.
1) Orders received
Three months ended June Three months ended June30, 2008
30, 2009

Year ended March 31,
2009

million yen% of total
million yen% of total
million yen%
Shipbuilding
20,628
5.2
1,844
0.9
71,512
4.6
Rolling Stock
98,20025.2
28,075
14.6
264,603
17.1
Aerospace
27,5177.0
11,4605.9
239,176
15.5
Gas Turbines & Machinery
59,14815.1
52,33427.2
355,517
23.0
Plant & Infrastructure Engineering
28,751
7.3
13,253
6.9
83,648
5.4
Consumer Products & Machinery
94,00624.1
60,25631.4
336,459
21.8
Hydraulic Machinery
28,921
7.4
10,988
5.7
84,142
5.4
Other32,196
8.2
13,5197.0
105,528
6.8
Total
389,371
100.0
191,733
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

Three months ended June Three months ended June
Year ended March 31,
30, 2008
30, 2009
2009% of total
million yen% of total
million yen%
million yen
19,091
6.3
39,403
15.3
126,426
9.4
36,103
11.9
40,843
15.9
186,454
13.9
39,56313.0
26,69610.3
200,424
14.9
44,98414.8
44,753
17.4
195,156
14.5
20,283
6.7
13,1995.1
105,178
7.8
94,00631.0
60,25623.4
336,459
25.1
23,008
7.6
14,327
5.5
84,9196.3
25,4898.4
17,277
6.7
103,579
7.7
302,531100.0
256,757
100.0
1,338,597
100.03) Order backlog

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

Year ended 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
100.0

19

Three months ended June Three months ended June30, 2009
30, 2008
million yen % of total
million yen%
318,550
19.4
420,16725.7
473,95328.9
485,12329.7
269,53316.4
241,84014.8
407,38424.8
267,120
16.3
112,216
6.8
143,903
8.8
25,1991.5
35,2282.1
31,144
1.9
35,9182.2
1,637,981
100.0
1,629,302
100.0