Report of Earnings and Financial Statements for the
Six Months Ended September 30, 2010 (Consolidated)(Prepared pursuant to Japanese GAAP)
November 2, 2010
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

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

1st sections of the TSE, OSE, and NSE
7012
http://www.khi.co.jp/
Satoshi Hasegawa, President
Hideyuki Matsubara, Senior Manager, Accounting Department+81 3-3435-2130

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

November 10, 2010-

Supplementary materials to quarterly earnings:
Quarterly earnings presentation:

Available
Conducted

1. Consolidated Financial Results for the Six Months ended September 30, 2010
(April 1 – September 30, 2010)(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
Six Months Ended
September 30, 2010
Six Months Ended
September 30, 2009

Operating income%

million yen

571,708

10.7

20,904-

21,249-12,334-

516,053(21.0)(6,167)-(1,223)-(6,294)-yen
Six Months Ended
September 30, 2010
Six Months Ended
September 30, 2009

million yen

Net income

million yen

Earnings per share%

Recurring profit%

million yen%

Earnings per share– diluted
yen

7.39

7.27

(3.77)-(2) Financial Condition

Total assets

Net assets

million yen

million yen

Ratio ofshareholders’ equity
to total assets%

September 30, 2010

1,318,935

287,02421.1

167.31March 31, 2010

1,352,439

283,053

20.4

166.13

Note: Shareholders’ equity:

September 30, 2010: 279,497 million yen
March 31, 2010: 277,081 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, 2010
Year ending
0.00
March 31, 2011
Year ending March
3.00
31, 2011 (forecast)
Note: Revision of dividend forecast during the Six Months ended September 30, 2010: None

3.00

3.00

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2011
(April 1, 2010 – March 31, 2011)
Net sales

Full year

million yen%

1,280,000

9.0(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen%
million yen%
million yen%
yen
32,000-32,000123.8

20,000-Note: Revision of earnings forecast during the Six Months ended September 30, 2010: None

4. Other Information
For further details, see “Other Information” on page 10 in the Accompanying Materials.
1) Changes in material subsidiaries during the period: None
*This refers to additions and removals of material subsidiaries to and from the consolidated groupduring the period.
2) Use of simplified accounting methods and specific accounting methods: Yes*This refers to the use of simplified accounting methods and accounting methods specific to the
preparation of quarterly consolidated financial statements.
3) Changes in accounting principles, procedures, and methods of disclosure(1) Changes in accord with revisions to accounting standards: Yes(2) Changes other than the above: None
*This refers to changes in accounting principles, procedures, and methods of disclosure used in the
preparation of quarterly consolidated financial statements.
4) Number of shares issued and outstanding (common stock)(1) Number of shares issued as of period-end (including treasury stock)
September 30, 2010:
1,670,547,571 shares
March 31, 2010:
1,669,629,122 shares(2) Number of shares held in treasury as of period-end
September 30, 2010:
100,218 shares
March 31, 2010:
1,780,388 shares(3) Average number of shares during respective periods
Six Months ended September 30, 2010:
1,668,269,268 shares

2

11.97

Six Months ended September 30, 2009:

1,668,216,376 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. Actual
results may differ from those expressed or implied by forward-looking statements due to a range offactors. For assumptions underlying earnings forecasts and other information regarding the use of suchforecasts, refer to “Consolidated Earnings Outlook” on page 8 in the Accompanying Materials.

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

8

2. Other Information

10(1) Overview of changes in material subsidiaries

10(2) Overview of simplified accounting methods and specific accounting methods

10(3) Overview of changes in accounting principles, procedures, and methods of disclosure

11

3. Consolidated Financial Statements

13(1) Consolidated balance sheets

13(2) Consolidated statements of income for the Six Months Ended September 30, 201015(3) Consolidated cash flow statements

16(4) Notes on the going-concern assumption

17(5) Segment information

17(6) Notes on significant changes in the amount of shareholders’ equity

21

4. Supplementary Information

22(1) Orders and sales

22(2) Net sales by geographic area

23(3) Supplementary information on earnings forecasts for the fiscal year ending March 31,

24

2011

4

1. Qualitative Information and Financial Statements(1) Consolidated operating results
In the six months to September 30, 2010 (first half of the fiscal year ending March 31, 2011),
the Japanese economy remained in a recovery trend despite the emergence of headwinds in theform of rapid yen appreciation and a global economic slowdown. Such headwinds resulted in acontinued adverse business environment for the KHI Group.
Overseas, certain emerging market economies exhibited strong growth. The US economic
outlook, however, remained uncertain. In Europe, renewed credit concerns in certain countries
posed a worrisome risk to the global economic outlook.
Amid such an economic environment, most of the Group’s businesses achieved growth in thefiscal second quarter. Overall orders received were up substantially from the year-earlier quarter,
bolstered by large orders for rolling stock. Orders received grew across all business segments
except Gas Turbine & Machinery, which faced a high year-over-year comparison base. Overallsales also grew year on year as major growth in Precision Machinery sales offset sales declines
in other segments, most notably Rolling Stock. By virtue of sales growth and fixed-cost cutting,profits improved substantially from the year-earlier quarter despite the adverse impact of yen
appreciation.
In the fiscal first half, the Group’s consolidated orders received grew ¥210.4 billion year on
year to ¥613.4 billion. Consolidated net sales increased ¥55.6 billion year on year to ¥571.7
billion. The Group earned first-half operating income of ¥20.9 billion, recurring profit of ¥21.2
billion, and net income of ¥12.3 billion, which respectively represent improvements of ¥27.0
billion, ¥22.4 billion, and ¥18.6 billion from the year-earlier period’s operating, recurring, andnet losses.
Segment information for the fiscal first half is summarized below.
Segment Information
Effective from the first quarter of the current fiscal year, the Group adopted the AccountingStandards Board of Japan’s Revised Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No.17, March 27, 2009) and its associatedGuidance on the Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information (ASBJ Guidance No.20, March 21, 2009). The Group also renamed its
Consumer Products & Machinery segment the Motorcycle & Engine segment and its Hydraulic
Machinery segment the Precision Machinery segment in conjunction with new industry
segmentation for internal reporting adopted in April 2010. Also effective from April 2010, thecrushing machine business was shifted from the Rolling Stock segment to the Plant &5

Infrastructure segment and the industrial robot business was shifted from the Consumer
Products & Machinery segment to the Precision Machinery segment. Additionally, in
conjunction with its October 2010 organizational restructuring, the Group renamed its
Shipbuilding segment the Ship & Offshore Structure segment.
To reflect this change, the previous fiscal year’s first-half figures for net sales, operating
income/loss, and orders received in the table below have been restated based on the newly
adopted accounting standard and guidance and resegmentation of operations.
Segment net sales, operating income, and orders received (billions of yen)Six months ended September 30,

Orders received
Six months ended

2010
Segment
Ship & Offshore

Sept. 30,

2009

Net

OperatingNet

Operatingsales

incomesales

income

2010

2009

61.2

2.0

65.2

1.4

36.4

2.7

Rolling Stock

63.0

3.4

72.5

3.7

117.7

39.5

Aerospace

83.0

(1.1)

73.3

3.3

87.9

46.5

99.2

6.1

83.4

1.4

65.3

99.8

38.8

3.5

43.3

1.7

77.3

37.5

113.2

(1.1)

100.9

(13.3)

113.2

100.9

60.9

8.6

34.2

(0.6)

68.0

32.8

51.9

0.9

42.8

(0.9)

47.2

42.9

—

(1.5)

—

(2.9)

—

—

571.7

20.9

516.0

(6.1)

613.4

403.0

Structure

Gas Turbine &Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision
Machinery
Other
Adjustments
Total

Note: Net sales include only sales to external customers.
Ship & Offshore Structure
Consolidated orders received increased totaled ¥36.4 billion, a ¥33.7 billion increase from theyear-earlier first half, when no newbuild orders were received. The increase was attributable toreceipt of one newbuild submarine order.
Consolidated net sales totaled ¥61.2 billion, a decrease of ¥4.0 billion from the year-earlier
first half, when revenues were boosted by large newbuild sales.

6Despite an increase in provision for losses on construction contracts, consolidated operating
income increased ¥500 million year on year to ¥2.0 billion, largely as a result of improved
margins.
Rolling Stock
Consolidated orders received rose ¥78.1 billion year on year to ¥117.7 billion, largely by virtueof subway car orders from the Washington Metropolitan Area Transit Authority.
Consolidated net sales fell ¥9.5 billion year on year to ¥63.0 billion in the wake of a decline
in overseas railway car sales.
As a result of the sales decline coupled with the strong yen’s impact, consolidated operating
income declined ¥300 million year on year to ¥3.4 billion.
Aerospace
Consolidated orders received grew ¥41.4 billion year on year to ¥87.9 billion, bolstered by
growth in orders for component parts for the Boeing 777 and 787.
Consolidated net sales increased ¥9.7 billion year on year to ¥83.0 billion, largely as a resultof growth in sales to Japan’s Ministry of Defense and sales of the Boeing 787 component parts.
The Aerospace segment incurred a consolidated operating loss of ¥1.1 billion, ¥4.4 billion
below its year-earlier operating income. The deterioration in profitability was largely
attributable to revision of the provision for losses on construction contracts and margin erosion
due to yen appreciation.
Gas Turbine & Machinery
Consolidated orders received totaled ¥65.3 billion, a ¥34.5 billion decrease from the year-earlier
period, when the segment booked large orders for aircraft engine components and gas
compression modules.
Consolidated net sales grew ¥15.8 billion year on year to ¥99.2 billion, largely as a result ofgrowth in gas compression module sales and sales to Japan’s Ministry of Defense.
Consolidated operating income increased ¥4.7 billion year on year to ¥6.1 billion, largely byvirtue of sales growth and increased profits on aircraft engine components.
Plant & Infrastructure
Consolidated orders received increased ¥39.8 billion year on year to ¥77.3 billion, lifted by an
influx of domestic and overseas orders for a variety of plant facilities.
Consolidated net sales totaled ¥38.8 billion, a ¥4.4 billion decrease from the year-earlier
period, when the segment booked overseas sales of major plant installations.
7

Consolidated operating income rose ¥1.8 billion year on year to ¥3.5 billion as earnings
improved amid brisk progress in fulfilling existing orders.
Motorcycle & Engine
Consolidated net sales grew ¥12.2 billion year on year to ¥113.2 billion, largely reflecting sales
growth in emerging markets.
Consolidated operating loss shrank to ¥1.1 billion, a ¥12.1 billion improvement from theyear-earlier period despite the impact of yen appreciation. The improvement was attributable tosales growth, fixed-cost cutting, and contribution margin ratio improvements stemming fromemergency profitability improvement measures.
Precision Machinery
Consolidated orders received rose ¥35.2 billion to ¥68.0 billion, mainly due to growth inhydraulic equipment orders from the construction machinery industry.
Consolidated net sales grew ¥26.6 billion year on year to ¥60.9 billion, driven largely by
growth in hydraulic equipment sales to the construction machinery industry and sales of clean
robots for semiconductor production facilities.
Consolidated operating income totaled ¥8.6 billion, a ¥9.2 billion improvement from theyear-earlier period’s operating loss. The improvement was largely attributable to sales growthand increased capacity utilization.
Other Operations
Consolidated net sales grew ¥9.1 billion year on year to ¥51.9 billion. Consolidated operating
income totaled ¥900 million, a ¥1.8 billion improvement from the year-earlier period.
(2) Consolidated financial position
At September 30, 2010, consolidated assets totaled ¥1,318.9 billion, a decrease of ¥33.5 billion
from March 31, 2010. The decrease was attributable to reduction in trade receivables throughcollection. Consolidated liabilities totaled ¥1,031.9 billion at September 30, a decrease of ¥37.4
billion from March 31, 2010. The decrease was largely attributable to reduction in trade
payables. Interest-bearing debt as of September 30 was essentially unchanged from six months
earlier at ¥429.3 billion. Consolidated net assets increased ¥3.9 billion from March 31, 2010, to¥287.0 billion at September 30, largely as a result of first-half net income offset by distributionof dividends.
(3) Consolidated earnings outlook
Although domestic and overseas economies remain in a recovery trend, the recovery is at risk of8

pausing as economic stimulus fades. Additionally, with domestic capital investment andconsumer spending dampened by the yen’s precipitous appreciation, the economic environment
is likely to remain adverse. Nonetheless, the Company will vigorously proceed with rebuilding
its earnings foundation to re-embark on a sustained growth trajectory.
The Company has left its existing consolidated sales forecast unchanged at ¥1,280 billion.
Although the Company projects sales declines in the Motorcycle & Engine segment, which has
been hard-hit by yen appreciation, and the Plant & Infrastructure segment, where sales are underpressure from continued curtailment of capital investment, it expects the Precision Machinery
segment’s sales to grow by virtue of robust demand for hydraulic equipment for construction
machinery destined for emerging market economies.
The Company will continue to implement various measures to improve earnings across all of
its businesses, including cutting fixed costs, improving productivity, and conducting operations
in emerging market economies with promising economic growth prospects. However, in light ofrecent yen appreciation’s impact on earnings and the murky outlook for developed economies,
the Company has left its existing consolidated operating income, recurring profit, and net
income forecasts unchanged at ¥32 billion, ¥32 billion, and ¥20 billion, respectively.
The Company’s earnings forecasts assume exchange rates of ¥83 to the US dollar and ¥115 to
the euro.

92. Other Information(1) Overview of changes in material subsidiaries
Not applicable(2) Overview of simplified accounting methods and specific accounting methods used
Simplified accounting methods(i) 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 havesubstantially changed relative to the historical rate calculated at the end of the preceding
fiscal year.
(ii) Inventory valuation method
The Company estimates quarter-end inventories by a rational method based on thepreceding 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 bedisposed of and slow-moving inventory with a turnover period that extends beyond theCompany’s operating cycle, the Company writes the inventory down to its estimatedliquidation value. Such inventories are carried at their written-down book value, unlesstheir value was deemed to have substantially changed during the six months ended
September 30, 2010.
(iii) 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 a budget that factors in expected acquisitions, sales, anddisposals of fixed assets during the fiscal year.
(iv) Income taxes, and deferred-tax asset and liability calculation method
To assess deferred assets’ collectability, the Company uses tax planning and earnings
forecasts used in the preceding fiscal year if it deems that the operating environment andstatus of temporary differences have not changed substantially since the preceding fiscal
year-end.
10

If the operating environment or status of temporary differences is deemed to havechanged substantially since the preceding fiscal year-end, the Company uses said tax
planning and earnings forecasts adjusted to reflect the changes’ impact.
(v) Elimination of unrealized gains/losses on inventory
For some products, the Company calculates unrealized gains/losses on inventory using thegain/loss rate used in the preceding fiscal year or quarter or a gain/loss rate based onrational budgeting, unless business conditions are deemed to have changed substantiallyfrom 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
application of deferred-tax accounting to pretax net income for the fiscal year, which
includes the second quarter under review, and multiplying quarterly pretax net income bysaid estimated effective tax rate. If unable to use the estimated effective tax rate, theCompany calculates tax expense by multiplying the statutory effective tax rate by quarterly
pretax net income adjusted to reflect material differences other than temporary differences.
Income taxes are reported inclusive of income tax adjustments.

(3) Overview of changes in accounting principles, procedures, and methods of disclosure
Changes related to accounting standards(i) Adoption of the Accounting Standard for Asset Retirement Obligations and the
Guidance on Accounting Standard for Asset Retirement Obligations
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted
the Accounting Standard for Asset Retirement Obligations (Statement No. 18, March 31,2008) and its associated Guidance on Accounting Standard for Asset Retirement
Obligations (Guidance No. 21, March 31, 2008).
Due to adoption of the standard and guidance, operating income and recurring profit eachdecreased by 10 million yen and income before income taxes decreased by 291 million yen.
(ii) Adoption of the Accounting Standard for Equity Method of Accounting for Investments
and the Practical Solution on Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted
the Accounting Standard for Equity Method of Accounting for Investments (ASBJ
Statement No. 16, March 10, 2008) and the Practical Solution on Unification of Accounting
11

Policies Applied to Associates Accounted for Using the Equity Method (PITF No. 24,
March 10, 2008) and made some adjustments required for preparation of consolidated
financial statements. The resulting effect on profit and loss is negligible.

(iii) Adoption of the Accounting Standard for Business Combinations
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted
the Accounting Standard for Business Combinations (ASBJ Statement No. 21, December
26, 2008), the Accounting Standard for Consolidated Financial Statements (ASBJ
Statement No. 22, December 26, 2008), the Amendments to Accounting Standard for
Research and Development Costs (ASBJ Statement No. 23, December 26, 2008), theRevised Accounting Standard for Business Divestitures (ASBJ Statement No. 7, December
26, 2008), the Revised Accounting Standard for Equity Method of Accounting forInvestments (ASBJ Statement No. 16, December 26, 2008), and the Revised Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No. 10, December 26, 2008).

Changes related to methods of disclosure
Due to adoption of the Cabinet Office Ordinance on Partial Revision of the Regulations
Concerning the Terminology, Forms and Preparation Methods of Financial Statements andOthers (Cabinet Office Ordinance No. 5, March 24, 2009) based on the AccountingStandard for Consolidated Financial Statements (ASBJ Statement No. 22, December 26,2008), the Company used the account title “Income before minority interests” for the six
months ended September 30, 2010.

12

3. Consolidated Financial Statements(1) Consolidated Balance Sheets
Millions of yen
Six months ended
As of
September 30, 2010
March 31, 2010
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

35,201
356,320
43,535
305,50778,38579,822(2,504)896,269

34,745400,264
56,807
281,023
80,39280,868(2,424)
931,678

282,122

284,407

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

746
19,17019,916866
19,852
20,718

121,593(966)
120,627
422,666
1,318,935

116,905(1,270)115,635
420,761
1,352,439

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

279,713104,104
8,943
14,86723,736
14,23596,361
104,164
646,125

302,739
125,614
4,833
14,202
17,991
18,91099,532109,098
692,923

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

60,000220,789
85,040
10,5409,415
385,785
1,031,911

60,513
209,360
89,24010,4196,929
376,463
1,069,386

104,328
54,242145,047(30)
303,587

104,328
54,275
137,689(552)
295,741

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

13

Valuation and translation adjustments
Net unrealized gains (losses) on securities
Gains (losses) on hedging items
Foreign currency translation adjustment
Total valuation and translation adjustments
Minority interests
Total net assets
Total net assets and liabilities

14

3,612
(714)
(28,415)(24,089)
7,526
287,024
1,318,935

5,305
(162)
(23,803)(18,659)
5,972
283,053
1,352,439

(2) Consolidated Statements of Income
Millions of yen
Six months ended
September 30, 2009
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 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
Loss on valuation of securities
Other
Total non-operating expenses
Recurring profit (loss)
Extraordinary income
Reversal of provision for environmental measures
Total extraordinary income
Extraordinary losses
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Provision for doubtful accounts of affiliates
Provision for losses on damages suit
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income (loss)

15

Six months ended
September 30, 2010

516,053448,226
67,827571,708
481,156
90,551

19,975
17,21336,80573,994(6,167)

19,53316,007
34,10569,647
20,904

1,651
434
2,582
3,277
2,917
10,864

945
366
4,875
2,424
8,610

2,848
3,071
5,920
(1,223)

2,435
1,963
1,715
2,150
8,265
21,249

1,212
1,212

-

-

280

6,983
6,983
(6,994)(1,043)343(6,294)256536
20,712
7,434
13,278943
12,334

(3) Consolidated Cash Flow Statement
Millions of yen
Six months ended
Six months ended
September 30,
September 30,
2009
2010
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(Gain) loss on valuation of securities
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(6,994)23,556
1,289(2,086)
2,848(2,582)322
64,575(6,842)(80,247)
1,915(11,762)(16,008)
2,354(2,661)(8,910)(25,226)

20,712
23,348(1,629)(1,311)
2,435
1,715(4,875)58,874(15,666)(14,662)(361)(13,061)
55,5181,298(2,440)(6,207)
48,168(36,141)(25,854)

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 investments in subsidiaries of affiliate(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

381

402

(102)
10
(1,331)
160
(55)
71
537
(36,470)

(28)
0
16
(10)
50
(740)
(26,164)

Cash flow from financing activities
Increase (decrease) in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Acquisition of treasury stock
Proceeds from stock issuance to minority shareholders
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

6,921
69,500(4,418)(10,000)(6)(4,986)(426)(19)
56,564(1,629)(6,762)
31,41324,651(47,923)
15,580(3,516)20,000(5)
1,209(4,985)(418)(37)(20,096)(2,244)(336)
34,13733,80016

(4) Notes on the going-concern assumption
Not applicable(5) Segment information
1) Information by industry segment
Six months ended September 30, 2009 (April 1, 2009 – September 30, 2009)
Millions of yen
External sales
Shipbuilding

Intersegment
sales

65,261

Total sales

857

Operatingincome (loss)

66,118

1,433

Rolling Stock80,142578

80,720

3,273

Aerospace

73,322

1,097

74,4192,646

Gas Turbines & Machinery

83,4469,800

93,247

638

Plant & Infrastructure Engineering

35,745

3,990

39,736

1,098

Consumer Products & Machinery

106,252

1,179

107,432(16,609)

Hydraulic Machinery

29,006

3,620

32,626

1,991

Other

42,876

15,351

58,227

(311)

Total

516,053

36,476552,529(5,839)Eliminations/corporation-(36,476)(36,476)(328)

516,053-

516,053(6,167)

Consolidated total

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

Major products

Shipbuilding

Ships and vessels

Rolling Stock

Rolling stock, snow plows, crushers

Aerospace

Aircraft

Gas Turbines &Machinery
Plant & Infrastructure
Engineering

Jet engines, general-purpose gas turbine generators, prime movers
Industrial equipment, boilers, environmental equipment, steel structures

Consumer Products &Motorcycles, personal watercraft, all-terrain vehicles (ATV), utility

Machinery

vehicles, general-purpose gasoline engines, industrial robots

Hydraulic Machinery
Other

Industrial hydraulic products
Construction machinery, commercial activities, sales/order agency andintermediary activities, administration 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 allianceis to involve (i) joint research and development and (ii) a spin-off of the Company’s wheel loader
operation into a newly created subsidiary of the Company, and Hitachi’s investment in that subsidiary.

17

In accord with the agreement, the construction machinery business was spun-off in April 2009 andsucceeded by the Company’s subsidiary, KCM Corporation. As a result, said business’s relationship with
the Rolling Stock & Construction Machinery segment was weakened, and effective the first quarter ofthe fiscal year ending March 31, 2010, it was therefore 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, net sales
for the six months ended September 30, 2009, in the Rolling Stock segment was 7,997 million yen lower(including 8,198 million yen of external sales) and in the Other segment, 7,882 million yen higher(including 8,198 million yen of external sales). By the same comparison, operating income in the Rolling
Stock segment was 1,441 million yen higher and operating loss in the Other segment, 1,441 million yen
higher.
4. Change in accounting standard for construction revenue and cost
The Company previously used the percentage-of-completion method for accounting of revenues
associated mainly with construction contracts with a contract amount of three billion yen or more and aconstruction 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 wasapplied to construction contracts that were started during the first quarter ended June 30, 2009, for which
certain elements were determinable with certainty at the end of the second quarter. The percentage ofcompletion 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 six months ended September 30, 2009, in the Shipbuilding
segment was 2,201 million yen higher; in the Gas Turbines & Machinery segment, 1,199 million yen
higher; and in the Plant & Infrastructure Engineering segment, 211 million yen higher. Also due to thechange, operating income in the Shipbuilding segment was 90 million yen higher; in the Gas Turbines &Machinery segment, 150 million yen higher; and in the Plant & Infrastructure Engineering segment, 52
million yen higher.

2) Information by geographic area
Six months ended September 30, 2009 (April 1, 2009 – September 30, 2009)
Millions of yen
External sales
Japan

Intersegment
sales

392,484

67,195

North America

66,935

Europe33,700Asia
Other areas
Total
Eliminations/corporate
Consolidated total

Total sales

Operatingincome (loss)

459,679(6,547)

8,531

75,467(2,171)887

34,588929

19,29922,84542,145

3,337

3,633

85

3,718

49

516,053

99,545615,599(4,402)-(99,545)(99,545)(1,765)516,053-

516,053(6,167)

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

18North America
EuropeThe U.S.A. and Canada
The Netherlands, the United Kingdom,
and Germany

Asia

Thailand, Indonesia, the Philippines, and Korea

Other areas

Australia and Brazil

3. Change in accounting standard for construction revenue and cost
The Company previously used the percentage-of-completion method for accounting of revenues
associated mainly with construction contracts with a contract amount of three billion yen or more and aconstruction 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 wasapplied to construction contracts initiated during the first quarter ended June 30, 2009, for which certain
elements were determinable with certainty at the end of the second quarter. The percentage ofcompletion 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 six months ended September 30, 2009, in Japan was 3,612 million
yen higher, while operating loss in Japan was 293 million yen lower.

3) Overseas sales
Six months ended September 30, 2009 (April 1, 2009 – September 30, 2009)
Millions of yen
Overseas sales

Consolidated net sales

Ratio of overseas sales toconsolidated sales (%)

North America

108,843-

21.0

Europe43,738

-

8.4

Asia

74,718-

14.4

Other areas

45,446

-

8.8

Total

272,746

516,05352.8

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

The U.S.A. and Canada

EuropeThe United Kingdom, Germany, France, Italy, and the Netherlands

Asia

China, Taiwan, the Philippines, Indonesia, and Korea

Other areas

Panama, Australia and Brazil

19

Segment Information
1. Overview of reportable segments
The Company’s reportable segments are components of the company about which separate
financial information is available. These segments are subject to periodic reviews by theCompany’s board of directors to decide how to allocate resources and assess performance. The
Company’s operations are divided into internal companies based on product categories. Certain
authority is delegated to each of the internal companies, based on which they conductbusinesses in Japan and overseas. The Company’s operations are therefore segmented based oneach internal company’s product categories. The Company’s eight reportable segments are theShip & Offshore Structure segment, the Rolling Stock segment, the Aerospace segment, the Gas
Turbine & Machinery segment, the Plant & Infrastructure segment, the Motorcycle & Engine
segment, the Precision Machinery segment, and the Other segment.
In conjunction with its October 2010 organizational restructuring, the Group renamed its
Shipbuilding segment the Ship & Offshore Structure segment.
Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbine &Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

Major products
Construction and sale of ships and other vessels, etc.
Production and sale of rolling stock, snow plows, etc.
Production and sale of aircraft, etc.
Production and sale of jet engines, general-purpose gas turbine
generators, prime movers, etc.
Production and sale of industrial equipment, boilers, environmental
equipment, steel structures, crushers, etc.
Production and sale of motorcycles, personal watercraft, all-terrain
vehicles (ATV), utility vehicles, general-purpose gasoline engines, etc.
Production and sale of industrial hydraulic products, industrial robots, etc.
Production and sale of construction machinery, commercial activities,
sales/order agency and intermediary activities, administration of welfare
facilities, etc.

2. Sales and income (loss) by reportable segment
Six months ended September 30, 2010 (April 1, 2010 – September 30, 2010)
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)

61,25363,01883,07099,26438,867113,247
60,98851,997571,708
571,708

1,107
384
840
10,527
6,130
572
6,150
15,056
40,769(40,769)-

62,36063,402
83,910109,792
44,998113,820
67,13867,054612,477(40,769)
571,708

2,063
3,436
(1,138)
6,166
3,537(1,175)8,610
938
22,440(1,536)
20,904

Millions of yen

20IncomeAmountIntersegment sales eliminated67
Corporate expenses*(1,603)
Total(1,536)*Corporate expenses represent expenses not attributable to reportable segments such as selling,
general and administrative expenses.
2. Segment income adjustments are based on operating income reported on the quarterly consolidated
statements of income for the corresponding period.

3. Impairment loss on fixed assets and goodwill by reportable segment
Not applicable
Additional information
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted the
Revised Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (ASBJ Statement No. 17, revised March 27, 2009) and its associated Guidance on
the Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (Guidance No. 20, March 21, 2008).
(6) Notes on significant changes in the amount of shareholders’ equity
Not applicable21

4. Supplementary information(1) Orders and sales (consolidated)
Effective from the first quarter of the fiscal year ending March 31, 2011, the Group adopted
the Revised Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information (ASBJ Statement No.17, March 27, 2009) and its associated Guidanceon the Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (ASBJ Guidance No.20, March 21, 2009). The Group also changed the name of
its Consumer Products & Machinery segment to the Motorcycle & Engine segment and thename of its Hydraulic Machinery segment to the Precision Machinery segment inconjunction with the April 2010 adoption of new industry segmentation for internalreporting. Also effective from April 2010, the crushing machine business was shifted fromthe Rolling Stock segment to the Plant & Infrastructure segment and the industrial robot
business was shifted from the Consumer Products & Machinery segment to the Precision
Machinery segment. Additionally, in conjunction with its October 2010 organizational
restructuring, the Group renamed its Shipbuilding segment the Ship & Offshore Structure
segment.
To reflect this change, orders received, net sales, and order backlog for the six months
ended September 30, 2009 and the year ended March 31, 2010 in the table below have been
restated based on the newly adopted accounting standard and guidance and theresegmentation of operations.
Orders received
Six months ended
September 30, 2009

Six months ended
September 30, 2010

Year ended March 31,
2010% of total
million yen% of total
million yen% of total
million yen
Ship & Offshore Structure
2,728
0.6
36,468
5.9
16,128
1.6
Rolling Stock
39,587
9.8
117,71219.1
66,269
6.6
Aerospace
46,545
11.5
87,95614.3
171,380
17.1
Gas Turbine & Machinery
99,89724.7
65,381
10.6
226,228
22.5
Plant & Infrastructure
37,528
9.3
77,37812.6
135,66413.5
Motorcycle & Engine
100,968
25.0
113,24718.4
203,084
20.2
Precision Machinery
32,8208.1
68,042
11.0
84,9488.4
Other42,952
10.6
47,252
7.7
97,584
9.7
Total
403,029100.0
613,440100.0
1,001,290
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

Six months ended
September 30, 2009
% of total
million yen
65,261
12.6
72,53214.0
73,322
14.2
83,44616.1
43,3558.4
100,968
19.5
34,2906.6
42,8768.3
516,053100.0

22Six months ended
September 30, 2010
million yen% of total
61,253
10.7
63,01811.0
83,07014.5
99,26417.3
38,867
6.7
113,247
19.8
60,988
10.6
51,997
9.0
571,708
100.0

Year ended March 31,
2010
million yen% of total
151,89312.9
150,07112.7
188,892
16.1
191,379
16.3
107,5809.1
203,084
17.3
82,715
7.0
97,8558.3
1,173,473
100.0

Order backlog

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

Year ended March 31,
2010
million yen% of total
218,134
14.4
378,39125.1
264,78817.5
426,506
28.3
153,830
10.2
30,7722.0
34,6352.2
1,507,057
100.0

Six months ended
September 30, 2010
million yen % of total
191,779
12.7
423,38928.0
264,84617.5
365,470
24.2
192,899
12.7
41,2182.7
29,0441.9
1,508,648
100.0

Six months ended
September 30, 2009
million yen% of total
291,77218.6
434,48927.7
254,07216.2
401,857
25.6
119,758
7.6
27,0691.7
34,9812.2
1,564,001
100.0(2) Net sales by geographic area (consolidated)
Net sales by geographic area for the six months ended September 30, 2009 and 2010, in
accordance with the Revised Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No.17, March 27, 2009) and its
associated Guidance on the Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Guidance No.20, March 21, 2009) are listed
below.
Six months ended September 30, 2009 (April 1, 2009 – September 30, 2009)Japan
The U.S.A
EuropeAsia
Other areas
Total

Millions of yen
47.1%
19.8%
8.4%
14.4%
10.0%
100%

243,307102,353
43,73874,71851,936
516,053

Six months ended September 30, 2010 (April 1, 2010 – September 30, 2010)Japan
The U.S.A
EuropeAsia
Other areas
Total

Millions of yen
44.2%
20.3%
7.4%
18.1%
9.7%
100%

253,062
116,170
42,492104,041
55,940571,70823

(3) Supplementary information on earnings forecasts for the fiscal year ending March 31,
20111) Consolidated earnings outlook

Revised forecast(A)

Forecast issued
April 27, 2010 (B)Net sales
Operating income
Recurring profit
Net income

1,280.0
32.0
32.0
20.0

1,280.0
32.0
32.0
20.0

-

Billions of yen
Fiscal 2010
(ended March 31,
2010)(actual)1,173.4(1.3)
14.2(10.8)

Orders received
Before-tax ROIC (%)
R&D expenses
Capital expenditures
Depreciation/amortization
Number of employees at end of
fiscal year
Of which, employees outside ofJapan

1,340.0
5.6%
40.5
70.0
51.0
32,7001,240.0
5.6%
40.5
66.0
54.0
32,400

100.0
4.0
(3.0)
300

1,001.2
0.2%
38.0
59.2
51.4
32,297

8,100

7,800

300

7,901

Outlook for the year ending March 31, 2011 (fiscal 2011)
Change(A – B)

Notes: 1. Outlook’s assumed foreign exchange rates: ¥83 = US$1, ¥115 = 1 euro

2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital.
3. Capital expenditures represent the total of newly recorded property, plant and equipment andnewly recorded intangible assets. Depreciation/amortization represents depreciation andamortization expenses on property, plant and equipment and intangible assets.

2) Outlook by reportable segment(a) Net sales and operating income (loss)
Billions of yen
Outlook for the year ending March 31, 2011 (fiscal 2011)
Revised forecast
Forecast issued
Change(A)
April 27, 2010 (B)(A – B)Net sales
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Adjustments
Total

120.0
145.0
215.0
210.0
100.0
250.0
130.0
110.0
1,280.0

Operatingincome(loss)
1.0
7.0
2.0
9.0
8.0
(4.0)
15.0
1.0
(7.0)
32.0

Net sales
120.0
145.0
215.0
210.0
110.0
260.0
110.0
110.0
1,280.024

Operatingincome(loss)
2.0
8.0
4.0
10.0
6.0
0.0
8.0
1.0
(7.0)
32.0

Net sales(10.0)(10.0)
20.0-

Operatingincome(loss)
(1.0)
(1.0)
(2.0)
(1.0)
2.0
(4.0)
7.0
-

Fiscal 2010 (ended
March 31, 2010)(actual)
Net sales
151.8
150.0
188.8
191.3
107.5
203.0
82.7
97.8
1,173.4

Operatingincome(loss)
1.5
8.7
3.7
8.9
7.9
(27.0)
3.4
(1.0)
(7.5)
(1.3)

(b) Orders received
Outlook for the year ending March 31, 2011 (fiscal 2011)

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

Revised outlook(A)

Forecast issued
April 27, 2010 (B)

100.0
180.0
210.0
220.0
130.0
250.0
140.0
110.0
1,340.0

90.0
130.0
200.0
220.0
120.0
260.0
110.0
110.0
1,240.0

Change(A – B)
10.0
50.0
10.0
10.0
(10.0)
30.0
100.0

Billions of yen
Fiscal 2010
(ended March 31,
2010)(actual)
16.1
66.2
171.3
226.2
135.6
203.0
84.9
97.5
1,001.2

Note: Fiscal 2010 (ended March 31, 2010) figures for net sales, operating income (loss) and orders received appear in
the tables above for reference purposes. They were recalculated based on the same segmentation and calculation
methods used for the second quarter ended September 30, 2010. Accordingly, they differ from those for net sales andoperating income (loss) reported in the “Segment Information” section.

25