Report of Earnings and Financial Statements for theNine Months Ended December 31, 2013 (Consolidated)(Prepared pursuant to Japanese GAAP)
January 30, 2014
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:

February 12, 2014-

Supplementary materials to quarterly earnings:
Quarterly earnings presentation:

Available
Conducted (for institutional investors and analysts)

1. Consolidated Financial Results for the Nine Months ended December 31, 2013
(April 1 – December 31, 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

Operating income

Recurring profit

million yen% million yen% million yen
Nine Months Ended
920,852
3.9
46,079101.0
38,729December 31, 2013
Nine Months Ended
885,896(2.2)
22,920 (51.5)
31,446
December 31, 2012
Note: Comprehensive income December 31, 2013: 43,075 million yen 175.4%
December 31, 2012: 15,640 million yen (43.1%)
Earnings per shareyen
Nine Months Ended
December 31, 2013
Nine Months Ended
December 31, 2012%

million yen

23.1

23,29220.4(45.8)

19,343(42.5)

Earnings per share– diluted
yen

13.93

-

11.57

-

(2) Financial Condition
Total assets

Net assets

million yen

million yen%

December 31, 2013

1,673,392

352,243

20.2

March 31, 2013

1,466,290

349,88123.0

Note: Shareholders’ equity:

December 31, 2013:
March 31, 2013:

338,687 million yen
338,240 million yen

1

Net income

Equity 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
0.00
March 31, 2014
Year ending March
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

Full year

million yen%

1,400,000

8.6(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen% million yen% million yen%
yen
63,00049.7

53,00034.7

34,00010.1

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

4. Notes
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 9 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 9 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 9 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)
December 31, 2013:
1,671,892,659 shares
March 31, 2013:
1,671,892,659 shares(2) Number of shares held in treasury as of period-end
December 31, 2013:
136,450 shares
March 31, 2013:
100,116 shares

2

20.33

(3) Average number of shares during respective periods
Nine months ended December 31, 2013:
1,671,776,326 shares
Nine months ended December 31, 2012:
1,671,806,157 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 preparation, and do
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 Presentation Material on Quarterly Financial Results and Details of theQuarterly Financial Results Presentation
The Company plans to conduct a briefing for institutional investors and analysts by conference call on
Thursday January 30, 2014, and to post the briefing material on quarterly financial results to be used forthe briefing on TDnet and 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)

9(1) Changes affecting the status of material subsidiaries (scope of consolidation)

9(2) Accounting procedures specific to preparation of quarterly consolidated financial statements

9(3) Changes in accounting policies, changes in accounting estimates, and correction of errors

9

3. Consolidated Financial Statements

13(1) Consolidated balance sheets

13(2) Consolidated statements of income and comprehensive income

15(Consolidated statements of income for the nine months ended December 31, 2013)15(Consolidated statements of comprehensive income for the nine months ended December 31, 2013)15(3) Notes on financial statements

16(Notes on the going-concern assumption)

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

16(Segment information and others)

16

4. Supplementary Information

18(1) Consolidated cash flow statements (condensed)

18(2) Orders and sales (consolidated)

19(3) Net sales by geographic area (consolidated)

20(4) Supplementary information on earnings forecasts for the fiscal year ending March 31, 201420

4

1. Qualitative Information and Financial Statements(1) Consolidated operating results
The global economy is expected to grow at a generally moderate pace, with growth in developed
economies, primarily the U.S., expected to underpin stable growth in emerging market economies.
While the U.S. is expected to grow steadily in the wake of energy demand growth driven by the
shale gas revolution, the impact on emerging market economies of the tapering of the U.S. monetaryeasing policy continues to bear close monitoring, as does political risk in emerging market
economies.
The Japanese economy has continued to grow moderately overall. Private capital investment has
been picking up in response to economic stimulus policies, including increased public investment
funded by fiscal mobilization, and expectations revolving around the 2020 Tokyo Olympics.
Additionally, the upcoming increase of consumption tax is expected to induce a consumer demand
surge beforehand. Japan's economic recovery is expected to continue, but the consumption tax
increase and weakness in emerging market economies are risk factors.
Amid such an economic environment, the Group's orders received increased across all segments,
most notably Aerospace and Rolling Stock, in the third quarters of the fiscal year ending March 31,
2014. Overall sales likewise increased, as sales growth in segments such as Aerospace andMotorcycle & Engine offset sales declines in other segments, including Plant & Infrastructure andShip & Offshore Structure. Operating income increased substantially in the wake of profit growth orrenewed profitability in the Aerospace, Rolling Stock, Motorcycle & Engine, and other segments.
For the nine months ended December 31, 2013, the Group’s consolidated orders received
increased by ¥151.3 billion year on year to ¥953.7 billion. Consolidated net sales totaled ¥920.8
billion, a ¥34.9 billion year-on-year increase, and consolidated operating income increased by ¥23.1
billion year on year to ¥46.0 billion. As a result of operating income growth, consolidated recurring
profit increased by ¥7.2 billion year on year to ¥38.7 billion even as foreign exchange gains andlosses netted to a loss versus a net gain in the year-earlier period. Consolidated net income increasedby ¥3.9 billion year on year to ¥23.2 billion.

5

Consolidated operating performance for the nine months ended December 31, 2013, issummarized by segment below.
Segment Information

Segment net sales, operating income, and orders received (billions of yen)
Nine months ended December 31,

Orders received
Nine months ended

2012

2013
December 31,

Segment

Net

OperatingNet

Operatingsales

incomesales

income2012

2013

Ship & Offshore Structure

68.6

4.4

58.6

0.0

42.9

54.6

Rolling Stock

94.1

(0.5)

97.9

6.2

93.1

108.2

Aerospace

165.8

9.3

187.1

20.9

138.3

162.0

Gas Turbine & Machinery

144.6

4.6

125.3

6.8

131.6

140.9

Plant & Infrastructure

71.1

3.7

58.4

0.8

69.4

83.5

Motorcycle & Engine

158.8

(2.0)

213.0

4.0

158.8

213.0

Precision Machinery

93.8

4.8

84.9

7.1

78.4

92.4

Other

88.7

1.5

95.3

2.3

89.5

98.8

-

(2.9)

-

(2.5)

-

-

885.8

22.9

920.8

46.0

802.4

953.7

Adjustments
Total

Note: 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 sales and orders received for the nine months ended December 31, 2013, by ¥26.9 billion and¥39.8 billion, respectively, relative to what they would have been in the absence of the change. The change
had no effect on income.

Ship & Offshore Structure
Consolidated orders received increased by ¥11.7 billion year on year to ¥54.6 billion, including
five newbuild orders, mostly for LNG and LPG carriers.
Consolidated net sales decreased by ¥9.9 billion year on year to ¥58.6 billion as the growth inconstruction of liquefied gas carriers was outweighed by a lower construction of bulk carriers.
Consolidated operating income decreased by ¥4.4 billion year on year to a breakeven level,
largely as a result of a lower in ship repair and other revenues and accrual of a provision for losses
on construction contracts.

Rolling Stock
Consolidated orders received grew ¥15.1 billion to ¥108.2 billion, largely due to orders forcommuter car by the Long Island Rail Road and Metro-North Railroad and orders for subway car by
the Washington Metropolitan Area Transit Authority and Sapporo City Transportation Bureau.

6Consolidated net sales increased by ¥3.7 billion year on year to ¥97.9 billion as overseas sales tocustomers in Singapore, North America and elsewhere offset a decline in domestic sales.
Consolidated operating income totaled ¥6.2 billion, a ¥6.8 billion year-on-year improvement
stemming from growth in high-margin sales and yen depreciation.

Aerospace
Consolidated orders grew by ¥23.6 billion year on year to ¥162.0 billion. The increase wasattributable to the growth in orders for components for Boeing 787.
Consolidated net sales increased by ¥21.2 billion year on year to ¥187.1 billion, largely due to thegrowth in sales of component parts for Boeing777 and 787 coupled with the growth in sales toJapan’s Ministry of Defense.
Consolidated operating income showed a sharp increase of ¥11.5 billion increase year on year to¥20.9 billion, largely by virtue of sales growth and yen depreciation.

Gas Turbine & Machinery
Consolidated orders received grew by ¥9.3 billion year on year to ¥140.9 billion despite a changein accounting treatment that detracted from order bookings. The growth was largely attributable tothe increase of orders for gas engines and hydropower systems. Additionally, orders for aircraft
engine components increased when adjusted to exclude the reduction in orders attributable to thechange in accounting treatment.
Consolidated net sales decreased by ¥19.2 billion year on year to ¥125.3 billion, but when
adjusted to factor out a ¥26.9 billion reduction in net sales attributable to the change in accounting
treatment of aircraft engine components, consolidated net sales was up by ¥7.6 billion year on year.
Major year-on-year changes in sales included a decline of sales for marine diesel engines and growthin sales of aircraft engine components and gas engines.
Consolidated operating income increased by ¥2.2 billion year on year to ¥6.8 billion, largely byvirtue of the growth in sales adjusted to factor out the sales reduction attributable to the change inaccounting treatment of aircraft engine components.

Plant & Infrastructure
Consolidated orders received increased by ¥14.0 billion year on year to ¥83.5 billion, bolstered byorders received on LNG tanks for CPC Corporation, Taiwan's Taichung LNG Terminal Expansion
Project.
Consolidated net sales decreased by ¥12.6 billion year on year to ¥58.4 billion despite an increasein environmental infrastructure contracts. The sales decline was chiefly attributable to a lower sales
for conveyance equipment and large overseas contracts.
Consolidated operating income declined by ¥2.8 billion year on year to ¥0.8 billion, largely due to7the sales decline coupled with shrinkage in profit margins.

Motorcycle & Engine
Consolidated net sales rose by ¥54.1 billion year on year to ¥213.0 billion, boosted by motorcycle
sales growth in the US and emerging-market economies, particularly Thailand and Indonesia.
Consolidated operating income totaled ¥4.0 billion, a ¥6.0 billion year-on-year improvement waslargely attributable to sales growth and improved profitability.

Precision Machinery
Consolidated orders received increased by ¥13.9 billion year on year to ¥92.4 billion, largely byvirtue of the growth in industrial robot orders from the automotive industry and orders for cleaning
robots for semiconductor manufacturing equipment.
Consolidated net sales declined by ¥8.9 billion year on year to ¥84.9 billion, as growth in robot
sales to the auto industry and sales of cleaning robots for semiconductor manufacturing equipment
were insufficient to offset declines in sales of other products, particularly hydraulic equipment.
Consolidated operating income increased by ¥2.3 billion year on year to ¥7.1 billion, largely as aresult of yen depreciation and growth in sales of industrial robots to the automotive industry andcleaning robots for semiconductor manufacturing equipment.

Other Operations
Consolidated net sales increased by ¥6.5 billion year on year to ¥95.3 billion.
Consolidated operating income increased by ¥0.8 billion year on year to ¥2.3 billion.

(2) Consolidated financial position
At December 31, 2013, consolidated assets totaled ¥1,673.3 billion, a ¥207.1 billion increase offrom March 31, 2013. The increase was chiefly attributable to inventory growth stemming fromprogress toward completion of construction jobs and capital investments that added to property, plantand equipment. Consolidated liabilities at December 31, 2013, were ¥1,321.1 billion, a ¥204.7
billion increase from March 31, 2013. The increase was largely attributable to increases incommercial paper and other short-term borrowings and recognition of previously unrecognizedretirement and severance benefit liabilities, partially offset by a reduction in notes and accounts
payable-trade. Interest-bearing debt ended the third quarter at ¥650.8 billion, a ¥166.2 billion
increase from March 31, 2013. Consolidated net assets at December 31, 2013, totaled ¥352.2 billion,a ¥2.3 billion increase from March 31, 2013. The increase was largely attributable to quarterly net
income, partially offset by dividend payments and recognition of the previously unrecognizedretirement and severance benefit liabilities.

8(3) Consolidated earnings outlook
For the fiscal year ending March 31, 2014, the Company has raised its consolidated net sales
forecast to ¥1,400 billion, ¥20 billion above its previous (October 29, 2013) forecast, in response to
the yen weakening yen beyond previously assumed exchange rate levels. The Company has raised
its consolidated operating income forecast by ¥3 billion to ¥63 billion in light of the likelihood of
improvement in the Aerospace and Motorcycle & Engine segments' earnings and deterioration in
Ship & Offshore Structure's earnings under the revised exchange rate assumptions. However, theCompany has left its previously announced consolidated recurring profit and net income forecasts
unchanged because the revised exchange rate outlook's impact on recurring profit and net income islimited by currency hedging and other factors.

The Company's earnings forecasts assume exchange rates of ¥100 to the US dollar and ¥135
to the euro.
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 applicationof deferred-tax accounting to pretax net income for the fiscal year, which includes the Third quarter
under review, and multiplying quarterly pretax net income by the 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 policies, changes in accounting estimates, and correction of errors
Changes in accounting policies
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 and9service 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 incost 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 sales and cost of sales for the nine months ended December 31, 2013, by¥26,986 million, relative to what they would have been in the absence of the change, but it had noeffect 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 17.

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
10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.

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 third 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-other11

balance at the end of the third quarter of the fiscal year ending March 31, 2014 increased by ¥14,930
million, ¥988 million and ¥13,942 million, respectively. The impact of the changes on earnings was
minimal.

Changes in accounting policies which are difficult to distinguish from changes in accounting
estimates and changes in accounting estimates.
Changes 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,
taking into account various factors including product life spans and the risk of production process
obsolescence.
As a result of these changes, consolidated operating income, recurring profit, and income before
income taxes and minority interests for the nine months ended December 31, 2013, were ¥9,723
million higher than they would have been 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 17.

123. Consolidated Financial Statements(1) Consolidated balance sheets
Millions of yen
As ofNine months ended
March 31, 2013
December 31, 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

32,975475,491
71,870356,881
98,792
101,770(3,230)1,134,551

305,792
19,446

368,093
17,983

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

153,447(682)
152,764
538,841
1,673,392

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

269,644
254,098
8,399
9,750
12,391
9,488
132,555
233,547
929,875

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

110,000
145,261
4,195
101,992
29,824391,273
1,321,149

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

104,484
54,393202,200(41)
361,038

4,524

5,890

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

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains on securities, net of tax

13Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

14(5,998)(17,665)(19,139)
11,641
349,881
1,466,290(8,350)54(19,944)(22,350)
13,556352,243
1,673,392

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Millions of yen
Nine months ended
December 31, 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
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 loss, net
Other
Total non-operating expenses
Recurring profit
Extraordinary losses
Provision for environmental measures
Loss on impairment of fixed assets
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income (loss)

Nine months ended
December 31, 2013

885,896
748,339
137,557

920,852
750,864
169,987

31,33327,258260
55,784
114,637
22,92033,91027,37873
62,546
123,908
46,079

1,335
592
7,082
1,724
4,141
14,877

688
387
4,039
2,635
7,750

3,130
3,220
6,351
31,446

3,011
9,154
2,934
15,10038,729

1,395
212
1,608
29,837
8,694
21,1431,800
19,34338,72913,65725,072
1,779
23,292

Consolidated statements of comprehensive income
Millions of yen
Nine months ended
December 31, 2012
Income before minority interests
Other comprehensive income
Net unrealized gains (losses) on securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income
Comprehensive Income attributable to:
Owners of the parent company
Minority interests

15

Nine months ended
December 31, 2013

21,14325,072(585)(6,226)
2,476
-

1,368
(2,361)
10,921449(1,167)

7,625(5,503)
15,64013,746
1,893

18,00343,07540,4362,639

(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. Nine months ended December 31, 2012 (April 1, 2012 – December 31, 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)

68,62994,181
165,848
144,667
71,132
158,855
93,83088,750885,896885,896

1,446
2,467
1,656
12,227
11,460512
9,381
23,536
62,688(62,688)-

70,07596,649167,504
156,894
82,592
159,368
103,212112,287
948,584(62,688)885,896

4,417
(585)
9,346
4,655
3,712
(2,018)4,851
1,500
25,879(2,959)22,920Millions of yen
Amount809(3,768)

IncomeIntersegment transactions
Corporate expenses*

Total(2,959)*Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the quarterly consolidated
statements of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
Not applicable162. Nine months ended December 31, 2013 (April 1, 2013 – December 31, 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)

58,63597,956
187,125
125,368
58,494
213,030
84,906
95,335920,852
920,852

1,168
3,734
1,468
12,112
10,776499
8,717
23,85062,328(62,328)-

59,803
101,690
188,593
137,481
69,270213,530
93,623
119,186
983,181(62,328)
920,852

12
6,287
20,935
6,892
859
4,038
7,190
2,398
48,614(2,535)46,079Millions of yen
AmountIncomeIntersegment transactions
Corporate expenses*(37)(2,498)
Total(2,535)* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the quarterly 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
Treatment of FIA
As disclosed above under "2. (3) Changes in accounting policies, changes in accounting estimates,
and correction of errors” on page 9, 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 sales for the nine months ended
December 31, 2013, by ¥26,986 million relative to what they would have been in the absence of thechange, but it had no impact on segment income.

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 9, the Company and its domestic consolidated subsidiaries have17

previously 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, segment income for the nine months ended December 31, 2013,
increased by ¥458 million in the Ship & Offshore Structure segment, ¥455 million in the Rolling
Stock segment, ¥2,655 million in the Aerospace segment, ¥1,361 million in the Gas Turbine &Machinery segment, ¥622 million in the Plant & Infrastructure segment, ¥1,273 million in theMotorcycle & Engine segment, ¥1,844 million in the Precision Machinery segment, and ¥1,051
million in the Other segment, all relative to what they would have been in the absence of thechanges.

4. Supplementary information(1) Consolidated cash flow statements (condensed)
Millions of yen
Nine months ended
December 31, 2012
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash and cash equivalents at end of period(104,274)(66,116)
168,493
29,58718

Nine months ended
December 31, 2013(82,941)(62,728)
141,841
31,126

(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 9 and "3. (3) Segment information" on page 16, 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 orders received andsales for the nine months ended December 31, 2013, by ¥39,808 million and ¥26,986 million,
respectively, relative to what they would have been in the absence of the change. Additionally, theCompany reduced its order backlog as of the previous fiscal year-end by ¥258,306 million as an FIA
adjustment.
Orders received
Nine months ended
December 31, 2012

Nine months ended
December 31, 2013

Year ended March 31,
2013

million yen% of total
million yen% of total
million yen% of total
Ship & Offshore Structure
42,982
5.3
54,683
5.7
105,733
7.7
Rolling Stock93,14911.6
108,259
11.3
124,441
9.0
Aerospace
138,359
17.2
162,052
16.9
283,485
20.6
Gas Turbine & Machinery
131,67016.4
140,99014.7
255,553
18.6
Plant & Infrastructure
69,481
8.6
83,573
8.7
113,600
8.2
Motorcycle & Engine
158,855
19.7
213,03022.3
251,858
18.3
Precision Machinery
78,403
9.7
92,401
9.6
109,725
8.0
Other89,53011.1
98,80710.3
125,188
9.1
Total
802,433
100.0
953,798
100.0
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

Nine months ended
December 31, 2012
million yen% of total
68,6297.7
94,181
10.6
165,84818.7
144,667
16.3
71,1328.0
158,855
17.9
93,83010.5
88,75010.0
885,896100.0

Nine months ended
December 31, 2013
million yen% of total
58,635
6.3
97,956
10.6
187,125
20.3
125,368
13.6
58,494
6.3
213,030
23.1
84,906
9.2
95,33510.3
920,852
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
100.0Year ended March 31,
2013
million yen% of total
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

Nine months ended
December 31, 2013
million yen% of total
120,876
8.2
397,18027.2
419,06428.7
266,66418.2
195,667
13.4
29,2952.0
30,2812.0
1,459,029
100.0

Nine months ended
December 31, 2012
million yen% of total
77,657
5.4
348,64424.4
359,572
25.2
411,81728.9
172,076
12.0
26,873
1.8
26,6411.8
1,423,283
100.0

Order backlog

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

19

(3) Net sales by geographic area (consolidated)
Nine months ended December 31, 2012 (April 1, 2012 – December 31, 2012)
Japan
United States
EuropeAsia
Other areas
Total

Millions of yen
49.4%
20.0%
6.8%
15.5%
8.0%
100.0%

438,227
177,244
61,025
137,881
71,517885,896

Nine months ended December 31, 2013 (April 1, 2013 – December 31, 2013)
Japan
United States
EuropeAsia
Other areas
Total

Millions of yen
44.0%
22.7%
6.7%
17.6%
8.8%
100.0%

405,697
209,367
62,130
162,530
81,125920,852(4) Supplementary information on earnings forecasts for the fiscal year ending March 31, 2014
1) Consolidated earnings outlook
Billions of yen

Net sales
Operating income
Recurring profit
Net income
Orders received
Before-tax ROIC (%)

Outlook for the year ending March 31, 2014 (fiscal 2013)
Revised forecast
Forecast issued
Change(A)
October 29, 2013 (B)(A – B)
1,400.0
1,380.0
20.0
63.0
60.0
3.0
53.0
53.0
34.0
34.0
1,450.0
1,450.0
7.4%
7.4%
-

Notes: 1. Outlook’s assumed foreign exchange rates: ¥100 = US$1, ¥135= 1 euro
2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital.

20

Fiscal 2012 (ended
March 31, 2013)(actual)1,288.8
42.0
39.3
30.8
1,369.5
6.1%

2) Outlook by reportable segment(a) Net sales and operating income (loss)
Billions of yen
Outlook for the year ending March 31, 2014 (fiscal 2013)
Revised forecast
Forecast issued
Change(A)
October 29, 2013 (B)(A – B)Net sales
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Adjustments
Total

70.0
155.0
300.0
185.0
115.0
310.0
125.0
140.0
1,400.0

Operatingincome(loss)

(2.0)
6.0
25.0
11.0
7.0
13.0
9.0
4.0
(10.0)
63.0

Net sales

70.0
155.0
300.0
185.0
115.0
290.0
125.0
140.0
1,380.0

Operatingincome(loss)

0.0
6.0
23.0
11.0
7.0
10.0
9.0
4.0
(10.0)
60.0

Net sales
20.0
20.0

Fiscal 2012 (ended
March 31, 2013)(actual)Operatingincome(loss)
(2.0)
2.0
3.0
3.0

Net sales

90.3
129.9
239.1
207.0
115.8
251.8
130.4
124.2
1,288.8

Operatingincome(loss)

4.1
2.2
14.8
7.0
9.7
2.3
8.4
1.2
(8.0)
42.0

(b) Orders received
Outlook for the year ending March 31, 2014 (fiscal 2013)
Revised outlook
Forecast issued
Change(A)
October 29, 2013 (B)(A – B)
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Total

120.0
130.0
280.0
220.0
120.0
310.0
140.0
130.0
1,450.0

120.0
160.0
260.0
220.0
130.0
290.0
140.0
130.0
1,450.021

Billions of yen
Fiscal 2012 (ended
March 31, 2013)(actual)105.7(30.0)
124.4
20.0
283.4
255.5
(10.0)
113.6
20.0
251.8
109.7
125.1
1,369.5