November 2, 2007
(Consolidated)

KAWASAKI HEAVY INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFLASH CONSOLIDATED FINANCIAL RESULTS
For six months ended September 30, 2007 and 2006 and one year ended March 31, 2007

Operating results
Millions of yen
Six months ended
Six months ended
Sep. 30, 2006
Sep. 30, 2007
Net sales
Operating income
Net income
Earnings per share (Yen)\Financial condition

As of September 30, 2007
As of March 31, 2007
As of September 30, 2007

699,540
39,05019,87811.9

645,852
25,562
11,4147.3\$1,322,779
1,357,98011,459,577\$\$

6,060,296
338,300
172,208

Ratio of net assets
to total assets
24%
21%

－

Thousand shares
Number of sharesissued and outstanding

186.9
175.0
1.62

1,668,757
1,659,415－

Millions of yen
Six months ended
Six months ended
Sep. 30, 2006
Sep. 30, 2007

Thousands ofU.S. dollars
Six months ended
Sep. 30, 2006\$

Fiscal year forecast
One year ending March 31, 2008$

317,627
295,378
2,751,685

Cash flows

Operating activities
Investing activities
Financing activities
Cash and cash equivalents at end of year+8%+53%+74%

Millions of yen / Thousands of U.S. dollars
Total assets
Net assets

Yen / U.S. dollars
Net assets
per share
As of September 30, 2007
As of March 31, 2007
As of September 30, 2007\％
ChangeThousands ofU.S. dollars
Six months ended
Sep. 30, 2007

24,010-20,190-20,801
22,819\-10,767-26,735
24,772
24,894

Millions of yen
Net sales
Net income\1,520,000-1-\33,000

208,005-174,911-180,204
197,687

Notes : 1.

This "FLASH CONSOLIDATED FINANCIAL RESULTS" and following financial statements have been
prepared in conformity with generally accepted accounting principles and practices in Japan.

2.

All US$ amounts in these statements represent the arithmetical results of translating Japanese yen
to U.S. dollars on the basis of ￥115.43=$1, the rate prevailing as of September 30, 2007, solely for theconvenience of the readers.

-2-(Consolidated)

Condensed Consolidated Balance Sheets
As of September 30 and March 31, 2007
Thousands ofU.S. dollars
As ofSep. 30, 2007

Millions of yen
As ofAs ofMar. 31, 2007
Sep. 30, 2007

Assets :Current assets :Cash on hand and in banks
Receivables, less allowance
Inventories
Other current assets
Total current assets
Investments and long-term loans less allowance
Net property, plant and equipment
Intangible and other assets
Total assets\\

23,177
389,823444,517
61,236
918,753
103,417
258,527
42,082
1,322,779\147,888
372,216
138,683
110,133
768,920\\

39,351
442,577
427,934
52,056
961,918
96,994
253,819
45,2491,357,980$

138,463
412,501
124,445
131,097
806,506$

200,788
3,377,138
3,850,966
530,5037,959,395
895,928
2,239,686
364,568
11,459,577$

Liabilities and net assets :Current liabilities :Short-term borrowingsand current portion of long-term debt
PayablesAdvances from customers
Other current liabilities
Total current liabilities
Long-term liabilities :Long-term debt, less current portion
OthersTotal long-term liabilities
Net assets :Common stock
Capital surplus
Retained earnings
Net unrealized gains on securities
Gains/losses on hedging items
Foreign currency translation adjustments
Treasury stock
Minority interestsTotal net assets
Total liabilities and net assets\\

1,281,192
3,224,604
1,201,447
954,110
6,661,353

143,356
92,876236,232

165,754
90,342
256,096

1,241,930
804,609
2,046,539

104,265
54,252
137,454
23,148(150)(7,041)(55)
5,754
317,627
1,322,779

103,188
53,179125,799
19,342(1,608)(9,417)(55)
4,950
295,378
1,357,980

903,275
469,999
1,190,800
200,537(1,299)(60,998)(476)
49,8472,751,685
11,459,577\$

Condensed Consolidated Statements of Operations
For six months ended September 30, 2007 and 2006
Millions of yen
Six months ended
Six months ended
Sep. 30, 2006
Sep. 30, 2007
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses) :Interest and dividend income
Equity in income of unconsolidated
subsidiaries and affiliates
Interest expense
Other, net
Income before income taxes andminority interests
Income taxes
Minority interests in net income ofconsolidated subsidiaries
Net income\\699,540
582,117
117,423
78,37339,050\645,852
555,715
90,13764,57525,562％
Change+8%

Thousands ofU.S. dollars
Six months ended
Sep. 30, 2007$+53%

6,060,296
5,043,030
1,017,266
678,966
338,300

2,468

1,891

21,3812,331(3,859)(8,153)855(2,912)(5,156)20,195(33,432)(70,632)

31,837(11,470)

20,240(8,577)(489)
19,878-3-\(249)
11,414+57%+74%

275,812(99,368)$(4,236)
172,208

Condensed Consolidated Statements of Cash Flows(Consolidated)

For six months ended September 30, 2007 and 2006

Cash flows from operating activities:Income before income taxes and minority interests
Adjustments to reconcile net income before income taxes and minority
interests to net cash provided by operating activities:
Depreciation and amortization
Decrease (increase) in assets
Increase (decrease) in liabilities
Other
Net cash provided by (used for) operating activities
Cash flows from investing activities:
Acquisition of tangible and intangible assets
Acquisition of investments in securities
Other
Net cash used for investing activities
Cash flows from financing activities:
Increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayment of long-term debt
OtherNet cash provided by (used for) financing activities
Effect of exchange rate changes
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents
due to changes in fiscal period of consolidated subsidiaries
Cash and cash equivalents at end of year

Millions of yen
Six months ended
Six months ended
Sep. 30, 2006
Sep. 30, 2007

Thousands ofU.S. dollars
Six months ended
Sep. 30, 2007

\31,837$275,812\

17,64233,312(30,659)(28,122)
24,010$152,837
288,590(265,607)(243,627)
208,005\(23,964)(1,111)
4,885(20,190)$(207,606)(9,625)42,320(174,911)\(5,369)3,220(10,108)(8,544)(20,801)$(46,513)27,896(87,568)(74,019)(180,204)\20,240\

14,879(34,449)
12,935(24,372)(10,767)\(15,909)(11,850)
1,024(26,735)\39,513
18,355(28,289)(4,807)
24,772413(16,568)
39,229\-4-158
22,8193,577(143,533)
339,851

118(12,612)37,506\24,894$1,369197,687

(Consolidated)

Segment information(a) Information by industry segment

External
sales
Shipbuilding
Rolling Stock& Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer products & Machinery
Other
Total
Eliminations
Consolidated total\77,480\70,244
118,247
84,28949,647
212,51287,121
699,540
699,540

External
sales
Shipbuilding
Rolling Stock,& Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer products & Machinery
Other
Total
Eliminations
Consolidated total\42,107\86,925
114,452
80,50952,114
189,928
79,817645,852
645,852

Externalsales
Shipbuilding
Rolling Stock& Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer products & Machinery
Other
Total
Eliminations
Consolidated total$671,229

608,5421,024,404
730,217430,105
1,841,047
754,752
6,060,296$ 6,060,296

Millions of yen
Six months ended September 30, 2007
Intersegment
Total
Operating
sales
sales
expenses

Operatingincome (loss)\932\2,301\591
868
6,322
6,802
2,577
18,48636,578(36,578)-\1,161
10,693
5,694
1,406
12,3205,200
38,775275
39,050\78,412\70,835
119,115
90,611
56,449215,089
105,607736,118(36,578)699,540\76,111\69,674
108,422
84,91755,043
202,769
100,407697,343(36,853)
660,490

Millions of yen
Six months ended September 30, 2006
Intersegment
Total
Operating
sales
sales
expenses\1,296

\260
614
7,941
9,068
4,318
20,22443,721(43,721)-\43,403\87,185
115,066
88,45061,182
194,246
100,041
689,573(43,721)645,852\45,456\81,040
109,968
83,62964,910183,342
95,611
663,956(43,666)
620,290

Operatingincome (loss)\(2,053)\6,145
5,098
4,821(3,728)
10,9044,430
25,617(55)
25,562Thousands of U.S. dollars
Six months ended September 30, 2007
Intersegment
Total
Operating
sales
sales
expenses

Operatingincome (loss)$$

19,934$

10,05892,63649,32812,180106,732
45,050335,918
2,382
338,300

8,074

5,120
7,520
54,76958,92722,325160,150
316,885(316,885)$--5-$

679,303

613,662
1,031,924
784,986
489,032
1,863,372
914,9026,377,181(316,885)$ 6,060,296$

659,369

603,604
939,288735,658
476,852
1,756,640
869,852
6,041,263(319,267)$ 5,721,996

(Consolidated)(b) Information by geographic area

External
sales
Japan
North America
EuropeAsia
Other Areas
Total
Eliminations\\491,024
118,166
72,01013,863
4,477
699,540
699,540

Millions of yen
Six months ended September 30, 2007
Intersegment
Total
Operating
sales
sales
expenses

Operatingincome (loss)\\143,302
12,691
2,334
11,683
118
170,128(170,128)-\\\

459,768
119,598
51,0159,171
6,300
645,852
645,852

External
sales
JapanNorth America
EuropeAsia
Other Areas
Total
Eliminations
Consolidated total$$

4,253,868
1,023,703
623,841
120,099
38,785
6,060,296
6,060,296

634,326
130,857
74,34425,546
4,595
869,668(170,128)
699,540\\\

595,440
134,404
71,41324,7244,493
830,474(169,984)
660,490\

Millions of yen
Six months ended September 30, 2006
Intersegment
Total
Operating
sales
sales
expenses

External
salesJapanNorth America
EuropeAsia
Other Areas
Total
Eliminations
Consolidated total\\120,560
8,130
2,049
8,685
77
139,501(139,501)-\\

580,328
127,728
53,064
17,856
6,377
785,353(139,501)
645,852\\\

559,793
126,669
51,291
17,447
6,254
761,454(141,164)
620,290

Operatingincome (loss)\\

Thousands of U.S. dollars
Six months ended September 30, 2007
Intersegment
Total
Operating
sales
sales
expenses$$

1,241,462
109,945
20,220101,213
1,023
1,473,863(1,473,863)-$$

5,495,330
1,133,648644,061
221,31239,8087,534,159(1,473,863)
6,060,296$$

5,158,451
1,164,377
618,669
214,190
38,924
7,194,611(1,472,615)
5,721,996

38,886(3,547)
2,931
822
102
39,194(144)
39,05020,535
1,059
1,773
409
123
23,8991,663
25,562

Operatingincome (loss)$$

336,879(30,729)
25,392
7,122
884
339,548(1,248)338,300(c) Overseas sales
Millions of yen
Six months ended
Sep. 30, 2007
Overseas% againstsales
net sales
North America
EuropeAsia
Other Areas
Total\\162,065
81,69464,742
77,624
386,125

23.1%
11.6%
9.3%
11.1%
55.1%

-6-Six months ended
Sep. 30, 2006
Overseas% againstsales
net sales\\155,019
57,932
96,35460,221
369,526

24.0%
8.9%
15.0%
9.3%
57.2%

Thousands ofU.S. dollars
Six months ended
Sep. 30, 2007
Overseassales$$

1,404,011
707,736
560,877
672,477
3,345,101

(Consolidated)

Net sales, orders and order backlog by industry segment
For six months ended September 30, 2007 and 2006

Millions of yen
Six months ended
Six months ended
Sep. 30, 2007
Sep. 30, 2006
Net sales :Shipbuilding
Rolling Stock& Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer products & Machinery
OtherTotalOrders :Shipbuilding
Rolling Stock& Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer products & Machinery
OtherTotal\77,480(11%)\70,244
118,247
84,28949,647
212,51287,121
699,540\\

Thousands of
U.S. dollars%
Six months ended
ChangeSep. 30, 2007

\42,107

(7%)

+84%

(10%)
(17%)
(12%)
(7%)
(30%)
(13%)
(100%)\86,925
114,452
80,50952,114
189,928
79,817645,852

(13%)
(18%)
(13%)
(8%)
(29%)
(12%)
(100%)

85,631(12%)\69,507

121,60573,726
93,52741,557
212,51296,278724,836

(17%)
(10%)
(13%)
(6%)
(29%)
(13%)
(100%)\156,102
70,17599,31395,093
189,928
83,726
763,844$671,229-19%+3%+5%-5%+12%+9%+8%$608,5421,024,404
730,217430,105
1,841,047
754,752
6,060,296

(9%)

+23%

$

741,844

(20%)
(9%)
(13%)
(13%)
(25%)
(11%)
(100%)-22%+5%-6%-56%+12%+15%-5%$

1,053,496
638,707810,249
360,019
1,841,047
834,080
6,279,442

Millions of yen
As ofSep. 30, 2007
Order backlog :Shipbuilding
Rolling Stock& Construction Machinery
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer products & Machinery
OtherTotal\320,643(22%)\492,077
241,623
224,028
163,996
50,066
1,492,433

(33%)
(16%)
(15%)
(11%)
( - %)(3%)(100%)-7-As ofMar. 31, 2007%
Change\313,987

(21%)

+2%

\434,419
286,699
216,886
172,255
40,9091,465,155

(29%)
(20%)
(15%)
(12%)
(-%)
(3%)
(100%)

+13%
-16%
+3%
-5%-%
+22%+2%Thousands ofU.S. dollars
As ofSep. 30, 2007$

2,777,813$

4,262,991
2,093,243
1,940,813
1,420,740
433,734
12,929,334