Composites of Consolidated Sales
Analysis of Operations and Financial Position

Parent Company(Billions of yen)(Billions of yen)

500

Ships

450

255.3

400
350

Rolling Stock

300

472.5

250
200

Consumer Products

150
100

485.4

50
0

84.0

94

95

96

97

98

(Billions of yen)

300

Aerospace

250
200
150
100
50
0

94

95

96

97

98

(Billions of yen)

600

Machinery, Environment &Power Plants

500
400

Plant Engineering & Steel
Structures

300
200
100
0

94

95

96

97

98

95

96

97

98

(Billions of yen)

100
90
80
70
60
50
40
30
20
10
0

18

94

JapanOverseas
TRANSPORTATION EQUIPMENT

Kawaju Kobe Support Co., Ltd.
Kawaju Marine Engineering Co., Ltd.
KHI JPS Co., Ltd.
Kawasaki Sanyo Co., Ltd.
Kawasaki Industrial Co., Ltd.
K-GES Co., Ltd.
Kawasaki Motors Corporation Japan
Union Precision Die Co., Ltd.
Ishihara Dockyard Co., Ltd.

Kawasaki Rail Car, Inc.
Kawasaki Motors Corp., U.S.A.
Kawasaki Motors (UK) Ltd.
Kawasaki Motoren GmbH
Kawasaki Motors Pty. Ltd.
Green River Insurance Company
P.T. Kawasaki Motor Indonesia
Kawasaki Motors Netherlands N.V.
Kawasaki Motors Manufacturing Corp., U.S.A.
Canadian Kawasaki Motors Inc.
Kawasaki Motors Finance Corporation
Kawasaki Engines Europe N.V.
Kawasaki Motors (Phils.) Corporation
AEROSPACE

Kawaju Gifu Engineering Co., Ltd.
Kawasaki Helicopter System Ltd.
Kawaju Gifu Manufacturing Co., Ltd.
Kawasaki Akashi Engineering Co., Ltd.

INDUSTRIAL EQUIPMENT
Kawasaki Gasturbine Technologies Co., Ltd.
Kawasaki Prime Mover Engineering Co., Ltd.
Kawasaki Gas Turbine Research Center
Kawasaki Thermal Engineering Co., Ltd.
Osaka Power Engineering Co., Ltd.
Kawasaki Engineering Co., Ltd.
Kawasaki Environmental Plant Engineering Co., Ltd.
Kawaju Yachiyo Engineering Ltd.
Kawasaki Plant Assistance & Service Co., Ltd.
Kawasaki Construction Co., Ltd.
Kawasaki Inspection Service Co., Ltd.
Kawaju Harima Tech Inc.

Kawasaki Hydraulic Co., Ltd.
Nichijo Manufacturing Co., Ltd.
Kawasaki Construction Machinery, Tohoku Ltd.
Kawasaki Construction Machinery, Nishi-Nihon Ltd.
Kawasaki Construction Machinery, Kanto Ltd.
Kawasaki Construction Machinery, Chubu Ltd.
Kawasaki Construction Machinery, Kinki Ltd.
Kawasaki Construction Machinery, Kyushu Ltd.
Kawasaki Safety Service Industries, Ltd.
Kawasaki Hydromechanics Corporation
Kawasaki Metal Industries, Ltd.

Kawasaki Precision Machinery (UK) Ltd.
Kawasaki Construction Machinery Corp. of America
Kawasaki Robotics (U.S.A.), Inc.

OTHER
Kawaju Shoji Co., Ltd.
Kawaju Real Estate Co., Ltd.
Kawasaki Kosan Co., Ltd.
Kawasaki Foods Co., Ltd.
Kawaju Techno Service Corporation
Uji Kanko Co., Ltd.
Kawaju Tomakomai Kanko Kaihatsu Co., Ltd.

Kawasaki Heavy Industries (Europe) B.V.
Kawasaki Heavy Industries (H.K.) Ltd.
Kawasaki Heavy Industries (U.S.A.), Inc.

19

Financial Review

Despite an adverse business climate, consolidated net sales forfiscal 1998, ended March 31, 1998, amounted to ¥1,297.2 billion($9,820 million), a 6.0% increase over fiscal 1997. Net income
decreased 17.8%, to ¥18.6 billion ($140 million), as aconsequence of a rise in selling, general and administrative(SGA) expenses.
The total cash dividend was ¥6.00 per share.
KHI has not reported the consolidated figures for orders
received during fiscal 1998. For reference, the figures appear in
the Supplementary Information on Non-Consolidated Operations
on pages 22 and 23.

NET SALESNet sales rose for a fifth consecutive year, with three of KHI’s
four business segments posting increases.
Sales in the Aerospace segment amounted to ¥261.5 billion($1,980 million), up 30.1%. Sales to the Japan Defense Agency
were higher, due mainly to the delivery of prototypes of theOH-1 light observation helicopter. Sales of components for the
B777 and B767 also increased, boosted by strong demand for
civil aircraft worldwide and a weaker yen. Operating income forthe segment increased 31.5%, to ¥20.5 billion ($155 million).
Sales of the Transportation Equipment segment were ¥477.8
billion ($3,617 million), an increase of 15.8%. An improved

product mix led to higher sales of ships. Sales of consumer
products also increased as a result of strong performances by
the North American and European subsidiaries. The profitabilityof rolling stock operations fell, primarily due to contractual
problems for large-scale contracts with U.S. customers.
Consequently, operating income declined 30.4%, to ¥10.9 billion($82 million).
In the Industrial Equipment segment, there were fewer largescale projects compared to fiscal 1997, and sales decreased
8.0%, to ¥539.0 billion ($4,080 million). Operating income
decreased 39.2%, to ¥17.6 billion ($133 million).
Sales of the Other segment increased 7.0%, to ¥127.3 billion($964 million). Operating income rose 1.1%, to ¥2.0 billion($15 million).

GEOGRAPHICAL BREAKDOWN
Beginning fiscal 1998, KHI is disclosing overseas sales andoperating profits by region. The figures for Japan include
exports.
Japan sales increased 5.2%, to ¥1,230.8 billion ($9,317
million). Operating income decreased 21.3%, to ¥47.2 billion($358 million), due to a decline in profit on rolling stock.
Net sales for the four overseas regions, comprised of North
America, Europe, Asia, and Other Areas, rose substantially to

NET SALESNET INCOME

NET INCOME PER SHAREWORKING CAPITAL(Billions of yen)(Billions of yen)

(Yen)

(Billions of yen)

1,400

25

1,200
20

18

180

16

160

14

140

12

120

10

100

8

80

6

60

4

40

2

20

1,000
15

800
600

10

400
5
200
0

20

0
94 95 96 97 98

0
94 95 96 97 98

0
94 95 96 97 98

94 95 96 97 98

CASH FLOWS¥208.8 billion ($1,581 million) over fiscal 1997, due to large
increases in North America and Asia. Operating income
increased to ¥4.7 billion ($36 million), with strong resultsfor Europe and Asia more than offsetting a decline forNorth America.

Net cash provided by operating activities increased 169.0%, to¥43.7 billion ($330 million). Net cash used for investing activities
increased 10.0%, to ¥43.8 billion ($332 million). Net cash used
for financing activities amounted to ¥19.2 billion ($146 million).

COST OF SALES AND EXPENSES

FINANCIAL CONDITION

Cost of sales rose 7.0%, to ¥1,114.7 billion ($8,438 million). SGA
expenses increased 9.2%, to ¥131.4 billion ($995 million), withthe ratio of SGA expenses to net sales rising 0.3 percentage
points, to 10.1%.

Total assets declined 6%, to ¥1,222.9 billion ($9,257 million) as aresult of decreases in cash on hand and in banks and ininventories, which offset increases in receivables and property,
plant and equipment. Total liabilities fell 8.5%, due to decreases
in advances to customers and borrowings.
Shareholders’ equity rose 6.0%, to ¥209.0 billion ($1,582
million. Shareholders’ equity ratio increased 2.0 percentage
points, to 17.1%.

NET INCOME
Operating income declined 17.9%, to ¥51.1 billion ($387 million),with the ratio of operating income to net sales dropping 1.2
percentage points, to 3.9%. Consequently, income before income
taxes, minority interests and other items decreased 18.9%, to¥40.5 billion ($306 million).
Net income declined 17.8%, to ¥18.6 billion ($140 million).
The ratio of net income to net sales declined 0.4 percentage
points, to 1.4%.

OTHER FINANCIAL INDICATORS
Return on equity declined 3.4 percentage points, to 9.1%,
and return on assets fell 0.3 of a percentage point, to 1.5%.
Working capital climbed 7.5%, to ¥162.1 billion ($1,227 million).
Accordingly, the current ratio increased from 1.18 to 1.22. Total
asset turnover was 1.03 times, compared with 0.96 times forfiscal 1997.

TOTAL ASSETSTOTAL SHAREHOLDERS’
EQUITYTOTAL SHAREHOLDERS’
EQUITY PER SHARERETURN ON EQUITY(Billions of yen)(Billions of yen)

(Yen)

(%)

1,400

250

1,200

160

14

140

12

200
120

1,000

100

150

800

10
8

80
600

6

100

60

400

4

40
50

200
0

2

20
0
94 95 96 97 98

0
94 95 96 97 98

94 95 96 97 98

0

94 95 96 97 98

21

Supplementary Information on Non-Consolidated
Results
SHIPS(Billions of yen)

94
Sales

Major Orders• 4 VLCCs (Very Large Crude-oil Carriers)• 2 LPG carriers• 1 submarine• 1 deep-submergence rescue vehicle• 1 patrol vessel(Billions of yen)95

81.3 115.8

96

97

98

69.5 100.6 154.5

Exports

48.9

72.4

Orders124.3

83.8 119.3

60.0

49.0

160
140
120
100
80
60
40
20
0

59.4

56.3 120.9

Order
Backlog 241.6 201.9 269.1 243.5 213.7

94

95

Sales

96

97

98

Exports(Billions of yen)

300
250
200
150

Major Components of Sales• Container ship
• Bulk carrier• LNG carrier• LPG carrier• Submarine• Patrol vessel

100
50
0

94

95

OrdersROLLING STOCK

96

97

98

Order Backlog(Billions of yen)

70
60
50

(Billions of yen)

94

95

96

97

98

Sales

57.5

49.7

57.3

68.0

57.1

Exports

5.7

2.5

0.3

1.3

6.7

Orders

52.7

53.1

72.0

62.0

77.0

Order
Backlog

51.6

55.0

71.6

67.2

87.5

40
30
20
10
0

94

95

Sales

97

98

Exports(Billions of yen)

90
80
70
60
50
40
30
20
10
0

94

95

OrdersAEROSPACE

96

96

97

300

200
150
100

95

96

97

98

Sales

220.2 210.1 194.9 219.4 277.6

Exports

24.9

Orders200.7 231.9 223.3 238.5 248.5

24.5

25.2

45.1

50
0

64.6

Order
Backlog 307.3 324.5 359.7 385.8 358.2

94

95

Sales

97

98

Exports

94

95

Orders22

96(Billions of yen)

400
350
300
250
200
150
100
50
0

Major Orders• T-4 intermediate jet trainers• CH-47J large transport
helicopters• OH-1 light observation
helicopters• Anti-tank missiles• Helicopter engines• Gas turbine engines fornaval vessels• Component parts for the
Boeing 767 and 777
passenger airplanes• BK117 helicopters• Space equipment• Component parts for V2500,
RB211/TRENT and PW4000
turbo-fan engines• Small- and medium-sized gas
turbine generator sets
• Gas turbines forcogeneration systems

98

250

94

Major Components of Sales• 478 cars for JR Group,
including 122 electricpassenger cars for
Shinkansen bullet trains• 140 cars for other domestic
railways• 74 bi-level passenger
coaches for the UnitedStatesOrder Backlog(Billions of yen)(Billions of yen)

Major Orders• 400 subway cars for New
York City• 66 subway cars for
Singapore• 271 cars for JR Group,
including electric passenger
cars for Shinkansen bullet
trains, commuter andsuburban trains• 150 cars for other domestic
railways, including subway
cars for Sapporo City

96

97

98

Order Backlog

Major Components of Sales• XOH-1 new light observation
helicopters, prototypes of
OH-1• Component parts for the
Boeing 767 and 777
passenger airplanes• Component parts for V2500,
RB211/TRENT and PW4000
turbo-fan engines

MACHINERY,ENVIRONMENT &POWER PLANTS(Billions of yen)

250
200
150
100

(Billions of yen)

98

50

Sales

204.6 141.0 200.1 192.4 163.4

0Exports

55.8

Orders132.8 178.3 165.4 164.1 171.7

94

95

25.4

96

13.5

97

34.3

Order
Backlog 286.6 323.6 288.9 262.6 269.7

94

95

Sales

14.6

97

98

Exports(Billions of yen)

350
300
250
200
150
100
50
0

94

95

Orders

PLANT ENGINEERING& STEEL STRUCTURES

96

96

97

98

Order Backlog(Billions of yen)

250
200
150
100

(Billions of yen)

98

50

Sales

163.6 183.2 183.3 211.2 188.1

0Exports

39.1

Orders186.2 163.5 205.7 182.1 132.2

94

95

42.9

96

41.7

97

56.3

Order
Backlog 315.1 294.1 319.7 293.0 238.9

94

95

Sales

56.0

98

350
300
250
200
150
100
50
94

95

Orders

96

97

96

250
200

98

Sales

228.4 225.9 243.9 251.4 259.5

Exports

136.4 137.4 152.3 159.7 177.3

Orders227.6 229.3 243.2 255.5 257.4

Order
Backlog

32.1

Major Components of Sales• Cement plant for Indonesia• Iron carbide plant for theUnited States• Section mill and steel
processing line for Taiwan• Stiffening girders of the
Akashi Kaikyo Bridge• Flue gas desulfurization
plant for a domestic electric
power company• Container cranes• Shield machines and tunnel
boring machines• Industrial robots

Weak domestic sales performance for motorcycles, construction
machinery and hydraulic equipment installed on it was offset byexports of motorcycles to North America and Europe as well as
exports of all-terrain vehicles (ATVs) and construction
machinery to the United States.

300

97

Major Orders• Coal handling systems fordomestic and Australiancompanies• Baggage handling systems
for China and Taiwan• Shield machines and tunnel
boring machines• Industrial robots• Parking system• Bridges

98

150

95

Major Components of Sales• Municipal waste
incineration plants andbulky waste recycling
facilities• Ash handing equipment fora domestic electric powercompany• Aero-derived gas-turbine
engines for naval vessels• Marine diesel engines

Order Backlog(Billions of yen)(Billions of yen)

94

97

Exports(Billions of yen)

0

CONSUMERPRODUCTS &MACHINERY

96

Major Orders• Combined cycle power
plants for domestic andKorean steel companies• Municipal waste
incineration plants andbulky waste recycling
facilities• Power generation facilities
for an oil chemical company• Marine turbines and diesel
engines• Ash handling equipment fora domestic electric powercompany• Natural gas compression
modules for India andMalaysia

100
50
0

94

95

Sales

96

97

98

Exports(Billions of yen)

300

35.5

34.6

38.8

36.4

250
200
150
100
50
0

94

95

Orders96

9798

Order Backlog

23

Consolidated Balance Sheets
Kawasaki Heavy Industries, Ltd. and consolidated subsidiaries
As of March 31, 1998 and 1997

Thousands of
U.S. dollars (Note 1)

Millions of yen

ASSETS
Current assets:
Cash on hand and in banks (Note 6)
Marketable securities (Notes 4 and 6)
Receivables (Notes 6 and 10):
Trade
Other
Allowance for doubtful receivables

1998¥

76,26548,834$ 577,328
369,675

410,644
9,918(2,959)417,603351,236
14,493
908,431392,537
10,174(3,794)
398,917440,970
11,691
998,134

3,108,584
75,080(22,400)
3,161,264
2,658,864
109,712
6,876,843

38,604
3,940
14,293(2,289)54,54840,6504,297
13,679(2,247)56,379292,233
29,826108,199(17,328)
412,930

46,524229,287
420,536
7,837
704,184(461,749)
242,435

44,819219,420394,373
6,911
665,523(432,327)
233,196352,188
1,735,708
3,183,467
59,326
5,330,689(3,495,451)
1,835,238

5,699

5,429

43,142

11,793¥ 1,222,906

10,030¥ 1,303,168

89,273$9,257,426

Investments and long-term loans (Note 10):Investments in securities (Note 4)Long-term loans
Other
Allowance for doubtful receivables
Total investments and long-term loans

Accumulated depreciation
Net property, plant and equipment
Intangible and other assets
Foreign currency translation adjustments
Total assets

The accompanying notes to the consolidated financial statements are an integral part of these statements.

24

¥

1998

96,61749,939Inventories (Notes 5 and 6)
Other current assets (Note 10)
Total current assets

Property, plant and equipment (Note 6):Land
Buildings
Machinery and equipment
Construction in progress

1997

Thousands of
U.S. dollars (Note 1)

Millions of yen

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities (Note 10):
Short-term borrowings and current portionof long-term debt (Note 6)
Trade payables
Advances from customers
Accrued income taxes (Note 9)
Accrued expenses
Other current liabilities
Total current liabilities

1997

1998

¥ 239,252
327,176
97,703
19,904
41,721
20,591
746,347¥ 250,080
364,641
145,768
24,334
41,461
21,091
847,375$1,811,143
2,476,730
739,614150,674
315,829
155,874
5,649,864

198,135
52,182
11,466
261,783

197,130
50,514
6,411
254,055

1,499,886
395,019
86,798
1,981,703

Minority interests

5,736

4,577

43,422

Shareholders’ equity (Note 7):
Common stock of ¥50 par value :Authorized—3,360,000,000 shares
Issued—1,390,595,964 shares in 1998
(1,389,123,205 shares in 1997)
Capital surplus
Legal reserve

81,427
24,682
14,71081,08824,345
13,713

616,404
186,843
111,355

88,221
209,040¥1,222,906

78,015
197,161¥1,303,168

667,835
1,582,437$9,257,426

Long-term liabilities:
Long-term debt, less current portion (Note 6)
Retirement and severance benefits
Other
Total long-term liabilities

1998

Contingent liabilities (Note 11)

Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity

25Consolidated Statements of Income
Kawasaki Heavy Industries, Ltd. and consolidated subsidiaries
For the three years ended March 31, 1998, 1997 and 1996

Thousands of
U.S. dollars (Note 1)

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Other, net (Note 8)
Income before income taxes, minority
interests and other1998¥1,297,212
1,114,693
182,519
131,440
51,0791997¥1,224,259
1,041,697
182,562
120,351
62,2111996¥ 1,086,244
928,126
158,118
111,362
46,7561998$ 9,819,924
8,438,251
1,381,673
995,004
386,669

5,122(11,907)(3,815)

5,424(12,578)(5,148)

5,156(13,694)(553)

38,774(90,136)(28,880)

40,47949,90937,665306,427(22,618)(27,128)(21,777)(171,219)

(541)

(529)

(48)

(4,095)

1,236

320

343

9,356

279
16,462$ 140,469

Income taxes (Note 9)
Minority interests in net income of
consolidated subsidiaries
Equity in income of unconsolidated
subsidiaries and affiliates
Foreign currency translation adjustments
Net income¥

18,556¥

22,572¥Yen

Per share amounts (Note 2 (u)):
Net income
Net income—diluted
Cash dividends

¥13.3
12.0
6.0

The accompanying notes to the consolidated financial statements are an integral part of these statements.

26

¥16.4
14.8
7.0

U.S. dollars (Note 1)¥ 12.2
11.3
5.5

$0.10
0.09
0.05

Consolidated Statements of Shareholders’ Equity
Kawasaki Heavy Industries, Ltd. and consolidated subsidiaries
For the three years ended March 31, 1998, 1997 and 1996

Thousands

Millions of yen

Number ofshares ofcommon stock

Commonstock

CapitalsurplusLegalreserve

Retainedearnings

Balance at March 31, 1995
Net income for the year
Adjustment for changes of interests in an affiliate
accounted for by the equity method
Cash dividends
Transfer to legal reserve
Bonuses to directors and statutory auditors
Foreign currency translation adjustments

1,350,038-¥ 71,108-¥ 14,375-¥ 12,190-¥ 55,318
16,462

-

-

-

687
-

174
(6,750)
(687)
(204)
312

Balance at March 31, 1996
Net income for the year
Adjustment for changes of interests inconsolidated subsidiaries and in affiliates
accounted for by the equity method
Increase in retained earnings arising froma newly consolidated subsidiary
Cash dividends
Transfer to legal reserve
Bonuses to directors and statutory auditors
Issue of new shares
Conversion of convertible bonds

1,350,038-

71,108-14,375-

12,877-64,62522,572

-

-

-

-

22

30,000
9,085

7,890
2,090

7,890
2,080

836
-

57
(8,211)
(836)
(214)
-

Balance at March 31, 1997
Net income for the year
Adjustment for changes of interests inconsolidated subsidiaries
Increase in retained earnings arising fromnewly consolidated subsidiaries
Decrease in retained earnings arising fromaffiliates newly accounted for by the equity method
Cash dividends
Transfer to legal reserve
Bonuses to directors and statutory auditors
Conversion of convertible bonds

1,389,123-

81,088-24,345-

13,713-78,015
18,556

-

-

-

-

23

-

-

-

-

2,727

1,473

339

337

997
-

(83)
(9,728)
(997)
(292)
-

Balance at March 31, 1998

1,390,596¥ 81,427¥ 24,682¥ 14,710¥ 88,221

Thousands of U.S. dollars (Note 1)

Balance at March 31, 1997
Net income for the year
Adjustment for changes of interests inconsolidated subsidiaries
Increase in retained earnings arising fromnewly consolidated subsidiaries
Decrease in retained earnings arising fromaffiliates newly accounted for by the equity method
Cash dividends
Transfer to legal reserve
Bonuses to directors and statutory auditors
Conversion of convertible bonds$ 613,838-$ 184,292-$ 103,808-$ 590,575
140,469

-

-

-

174

-

-

-

20,643

2,566

2,551

7,547
-

(628)
(73,641)(7,547)(2,210)-

Balance at March 31, 1998

$616,404$186,843$111,355$ 667,835

The accompanying notes to the consolidated financial statements are an integral part of these statements

27

Consolidated Statements of Cash Flows
Kawasaki Heavy Industries, Ltd. and consolidated subsidiaries
For the three years ended March 31, 1998, 1997 and 1996

Thousands of
U.S. dollars (Note 1)

Millions of yen

1998
Cash flows from operating activities:
Net income¥18,556
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
32,416
Provision for retirement and severance benefits
1,667(Gain) loss on disposal of property, plant and equipment
993
Provision for allowance for doubtful receivables
352
Minority interests in net income of consolidated subsidiaries
541
Equity in undistributed earnings of unconsolidated subsidiaries and affiliates(838)
Gain on sale of marketable securities and investments in securities(799)
Changes in assets and liabilities :Decrease (increase) in
Receivables(18,951)
Inventories
88,306
Other current assets
3,342
Increase (decrease) inPayables(37,464)
Advances received(48,065)
Accrued income taxes(4,379)Other liabilities
6,602
Other, net
1,378
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Decrease (increase) in marketable securities
Increase in intangible and other investments
Proceeds from sales and redemption of investments in securities
Additions to investments in securities
Payments received on long-term loans receivable
Additions to long-term loans receivable
Payments received on loans to unconsolidated subsidiaries and affiliates
Additions to loans to unconsolidated subsidiaries and affiliates
Other
Net cash used for investing activities

1997

1996

1998

¥ 22,572¥ 16,462$ 140,469

31,245
1,866(1,064)
507
529
(390)
(442)

30,823
2,012
(619)
907
48
(176)
(505)

245,390
12,619
7,517
2,665
4,095
(6,344)(6,048)(48,209)
1,805(2,438)(32,402)(7,792)(488)(143,460)
668,478
25,29919,999(21,745)
6,049
3,608
2,335

46,672(17,430)
11,309(4,816)2,825(283,603)(363,853)(33,149)
49,977
10,43243,657

16,227

46,830330,484(42,928)
325
835
(406)
1,088
(3,266)
788
(357)
142
(47)
23

(35,130)
3,644(3,125)(230)
485(5,734)
673
(463)
188
(210)
65

(39,319)
2,445(1,342)(1,637)1,154(7,013)
1,092
(494)
216
(170)
660

(324,966)
2,460
6,321
(3,073)
8,236(24,724)
5,965(2,702)
1,075
(356)
174

(43,803)(39,837)(44,408)(331,590)

Cash flows from financing activities:
Proceeds from long-term debt
Proceeds from issuance of common stock
Repayment of long-term debt
Cash dividends paid
Cash dividends paid to minority interests
Increase (decrease) in short-term borrowings
Net cash provided by (used for) financing activities
Effect of exchange rate changes
Net increase (decrease) in cash on hand and in banks
Cash on hand and in banks at beginning of year
Cash on hand and in banks at end of year

37,796(36,287)(9,694)(522)(10,528)(19,235)(971)(20,352)
96,617¥76,265

43,902
15,780(28,182)(8,207)(138)(5,821)
17,3342,759(3,517)100,134¥ 96,617

35,793(63,921)(6,760)(42)
42,447
7,517(1,337)
8,602
91,532¥100,134

286,117(274,693)(73,384)(3,952)(79,697)(145,609)(7,350)(154,065)
731,393$ 577,328

Supplemental information on cash flows:
Cash paid during the year for:
Interest
Income taxes
Convertible bonds converted into common stock¥12,617
27,048676¥ 12,224
21,1294,170¥ 13,889
10,468-$ 95,511
204,754
5,117

The accompanying notes to the consolidated financial statements are an integral part of these statements.

28

Notes to the Consolidated Financial Statements

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of
Kawasaki Heavy Industries, Ltd. (the “Company”) andconsolidated subsidiaries (together the “Companies”) have been
prepared from the consolidated financial statements filed with
the Minister of Finance as required by the Securities andExchange Law of Japan and are in conformity with generally
accepted accounting principles in Japan. Relevant notes havebeen added, and certain reclassifications of accounts as
disclosed in the consolidated financial statements in Japan havebeen made, so as to present them in a form which is morefamiliar to readers outside Japan. Although the accompanying
consolidated statements of cash flows and shareholders’ equity

for the three years ended March 31, 1998 are not required inJapan, they are presented herein for the readers’ convenience.
The Company prepares the original consolidated financial
statements in Japanese yen. The dollar amounts included in the
consolidated financial statements and these notes represent thearithmetical results of translating Japanese yen to dollars on thebasis of ¥132.10=$1, the rate prevailing as of March 31, 1998.
These translations are solely for the convenience of the readers,and should not be construed as representations that theJapanese yen amounts have been, could have been or could be
converted, realized or settled in dollars at that or any other rate.

2. Significant accounting policies(a) Consolidation
The consolidated financial statements include the accounts of
the Company and 62 (51 in 1997 and 1996) majority-owned
subsidiaries.
For the years ended March 31, 1998, 1997 and 1996,
respectively, 59, 72 and 70 subsidiaries are excluded from theconsolidation. The amounts of total assets, net sales, net income
and retained earnings of these excluded subsidiaries, in theaggregate, would not have had a material effect on the
consolidated financial statements.
(b) Application of the equity method of accounting
For the year ended March 31, 1998, 12 (3 unconsolidated
subsidiaries and 15 affiliates in 1997 and 1996) affiliates (20percent to 50 percent owned) are accounted for by the equity
method.
For the years ended March 31, 1998, 1997 and 1996,
investments in 59, 69 and 67 unconsolidated subsidiaries and 23,
22 and 20 affiliates, respectively, are stated at cost without
applying the equity method of accounting. If the equity method
had been applied for these investments, the amounts of net
income and retained earnings of these excluded subsidiaries
and affiliates would not have had a material effect on the
consolidated financial statements.
(c) Consolidated subsidiaries’ fiscal year-ends
Fiscal year-ends of 17 (19 in 1997 and 1996) consolidated
subsidiaries end on December 31. The Company consolidates
such subsidiaries’ financial statements as of each subsidiary’s

latest year-end. Unusual significant transactions for the period
between each subsidiary’s year-end and the Company’s year-end
are adjusted on consolidation.
(d) Elimination of inter-company transactions and accounts
All significant inter-company transactions and accounts andunrealized inter-company profits are eliminated on
consolidation, and the portion thereof attributable to minority
interests is credited to minority interests.
When the excess of equity in net assets over the cost of aninvestment is considered significant, it is amortized to incomeby the straight-line method over five years. Otherwise, it iscredited directly to retained earnings in the year of acquisitionor the year newly included in consolidation.
(e) Translation of foreign currency statements
The financial statements of the overseas consolidated
subsidiaries are translated into yen as stated below, in
accordance with a regulation issued by the Financial Accounting
Deliberation Council.
(1) Assets and liabilities are translated at the fiscal year-end
exchange rates.
(2) Share capital accounts and retained earnings are translated
at historical rates.
(3) Revenue and expense accounts are translated at average
rates prevailing during the fiscal year.
Differences arising from the application of the process statedabove are shown as foreign currency translation adjustments inthe accompanying consolidated balance sheet.

29

(f) Appropriations of retained earnings(1) Appropriations of retained earnings are recorded in thefiscal year when the proposed appropriations are approved.
(2) Legal reserve in the consolidated financial statements
includes only that of the Company. The legal reserves of
consolidated subsidiaries are included in consolidated
retained earnings.
(g) Revenue recognition
Sales are principally recognized at the time of completion of thecontracts. However, the percentage-of-completion method isapplied to long-term contracts exceeding ¥5,000 million. (seeNote 3)(h) Cash on hand and in banks
Cash on hand and in banks includes time deposits maturing
within one year.
(i) Allowance for doubtful receivables
Possible losses from notes and accounts receivable, loans andother receivables are provided for based on relevant income tax
laws and the Companies’ estimates of losses on collection.
(j) Inventories
Inventories are stated at cost, as determined principally by the
specific identification cost method, the first-in, first-out methodor the moving-average method.
(k) Marketable securities
Marketable securities are stated principally at cost, as
determined by the moving-average method. When significant
impairment of value has been deemed permanent, cost has been
appropriately reduced.

(o) Research and development expenses
Research and development expenses are charged to income as
incurred.
(p) Bond issue expenses
Bond issue expenses are charged to income as incurred.
(q) Foreign currency translation
Foreign currency accounts of the Company and its domestic
subsidiaries are translated into yen as stated below, in
accordance with a regulation issued by the Financial Accounting
Deliberation Council.
(1) Foreign currencies and short-term monetary accounts aretranslated at the rates of exchange prevailing at the balance
sheet date. The resulting translation gain or loss is includedin the determination of net income for the year.
(2) Long-term monetary accounts and non-monetary accounts
are translated at historical exchange rates prevailing at thetime of transactions.
(3) Monetary accounts which are hedged by forward exchange
contracts are translated into yen at the contracted rates of
exchange.
Notes denominated in foreign currencies and hedged bylong-term forward exchange contracts are translated at thecontracted exchange rates. The exchange gain on thetransaction is deferred and amortized to income over the period
from the date of the contract to the date of settlement.
If long-term monetary items were translated at exchange
rates in effect at March 31, 1998, net translation losses of ¥916
million ($6,934 thousand) would have been recorded.

(m) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciationis computed principally by the declining-balance method overestimated useful lives.

(r) Income taxes
Income taxes are principally provided for based on taxable
income for the period, determined in accordance withapplicable tax laws. The tax effect resulting from the eliminationof inter-company profit is not reflected in the consolidated
financial statements.
In accordance with accounting principles generally acceptedin Japan, no provision is made for deferred taxes arising fromtiming differences for financial and tax reporting purposes.
Enterprise tax, which is based on income, has been included
in selling, general and administrative expenses in the original
consolidated financial statements described in Note 1, but has
been reclassified to income taxes in the accompanying
consolidated financial statements.

(n) Intangible assets
Amortization of intangible assets is computed by the straightline method.

(s) Retirement and severance benefits
Employees who terminate their services with the Company andits domestic consolidated subsidiaries are generally entitled to(l) Investments in securities
Investments in securities are stated at cost, as determined by
the moving-average method, except for those accounted for by
the equity method as explained in Note 2 (b). When significant
impairment of value has been deemed permanent, cost has been
appropriately reduced.

30

lump-sum payments, the amounts of which are determined byreference to their current basic rates of pay and length ofservice. In accordance with Japanese income tax law, theCompany and its domestic consolidated subsidiaries provide for40 percent of the amount which would be required to be paid if
all eligible employees voluntarily terminated their services atthe balance sheet date.
Employees of the Company’s overseas consolidated
subsidiaries are generally covered by various pension plans,
accounted for in accordance with generally accepted accounting
principles in the country of incorporation.
In addition, the Company and some of its domestic
consolidated subsidiaries provide for retirement and severance
benefits for directors and statutory auditors principally at 50
percent of the amount required if they retired at the balance
sheet date.

(t) Finance leases
For the Company and its domestic consolidated subsidiaries,
finance leases which do not transfer ownership and do not havebargain purchase provisions are accounted for in the samemanner as operating leases in accordance with generally
accepted accounting principles in Japan.
(u) Per share amounts of net income and cash dividends
The computations of per share amounts of net income shown inthe consolidated statements of income are based upon theweighted average number of issued shares outstanding during
each period. Diluted income per share, required to be disclosed
commencing with the year ended March 31, 1996, is computed
based on the assumption that all dilutive convertible bonds wereconverted at the beginning of the year.
Per share amounts of cash dividends for each period represent
dividends declared as applicable to the respective year.

3. Change in accounting policy
Effective April 1, 1997, the method of accounting for revenue
from long-term construction contracts was changed from thecompleted-contract method to the percentage-of-completion
method. The percentage-of-completion method is applied tolong-term contracts exceeding ¥5,000 million.
Under the previous completed-contract method, sales ofmaterials and equipment for plant construction projects,
contract prices of which exceeded ¥10,000 million, wererecognized at the time of shipment.

The application of the percentage-of-completion method tothese long-term contracts improves the quality of financial
disclosure and more fairly presents the results of current period
operations. As a result of this change, net sales, operating income
and income before income taxes, minority interests and otherincreased ¥79,590 million ($602,498 thousand), ¥15,203 million($115,087 thousand) and ¥15,203 million ($115,087 thousand),
respectively, compared with the amounts which would have beenrecognized if the former method had been applied consistently.

4. Market value information for securities - the Company only
Market values, book values and unrealized gains of quoted securities as of March 31, 1998 and 1997 are as follows:
Millions of yen

Market values:
Marketable securities
Investments in securities:
Subsidiaries and affiliates
Other
Book values (unconsolidated basis):Marketable securities
Investments in securities:
Subsidiaries and affiliates
Other
Unrealized gains (unconsolidated basis)Thousands of
U.S. dollars

1998

1997

1998

¥ 81,360¥ 99,919$ 615,897

14,802201
96,363

19,167308
119,394

112,051
1,522
729,470

47,511

48,174

359,659

6,517
104
54,132¥ 42,231

6,517
104
54,795¥ 64,599

49,334
787
409,780$ 319,690

31

5. Inventories
Inventories as of March 31, 1998 and 1997 are comprised as follows:
Millions of yen

Finished products
Work in process
Raw materials and supplies
Total

1998
¥ 34,788
275,272
41,176¥351,236

1997¥ 23,952
380,835
36,183¥ 440,970

Thousands of
U.S. dollars

1998$ 263,346
2,083,815
311,703$2,658,864

6. Short-term borrowings and long-term debt
Short-term borrowings and long-term debt as of March 31, 1998 and 1997 are comprised as follows:
Millions of yen

Short-term borrowings:
Short-term debt, principally bank loans and commercial paper
Current portion of long-term debt
Total short-term debt
Long-term debt :Loans from banks and other financial institutions, partly securedby mortgage or other collateral, due from 1998 to 2032, bearing interest
ranging from 1.05 percent to 8.125 percent and from 0.83 percent
to 8.00 percent as of March 31, 1998 and 1997, respectively
6.00 percent notes due 1997
6.15 percent notes due 1999
2.10 percent notes due 1999
2.50 percent notes due 2000
2.55 percent notes due 2001
2.00 percent notes due 2003
2.775 percent notes due 2008
0.50 percent convertible bonds due 1998
0.80 percent convertible bonds due 2001
0.90 percent convertible bonds due 2003
1.10 percent convertible bonds due 2006
0.65 percent convertible bonds due 2003
0.75 percent convertible bonds due 2005
0.90 percent convertible bonds due 2008
1.00 percent convertible bonds due 2011
Less portion due within one year
Total long-term debt

Thousands of
U.S. dollars

1998

1997

1998

¥ 204,814
34,438¥ 239,252¥ 215,342
34,738¥ 250,080$ 1,550,447
260,696$ 1,811,143¥ 76,304
15,00010,00010,00010,00010,00010,00017,9608,573
9,105
17,118
9,974
9,642
9,812

¥ 78,078
15,00015,00010,00010,00010,00017,9608,820
9,116
17,89410,00010,00010,000$ 577,622
113,550
75,70075,70075,70075,70075,700135,958
64,89868,925
129,584
75,50472,99074,277

9,085
232,573(34,438)¥ 198,135

10,000231,868(34,738)¥ 197,130

68,774
1,760,582(260,696)$ 1,499,886

The convertible bonds due 1998 through 2011 as of March 31, 1998 were convertible into 179,339,824 shares of common stock at
the option of the holders at a price of ¥459 ($3.47) or ¥598 ($4.53) per share. The conversion prices are subject to adjustments under
specified conditions.

32

As of March 31, 1998 and 1997, the following assets were pledged as collateral for short-term borrowing and long-term debt:
Thousands of
U.S. dollars

Millions of yen

1998
¥
157
20,526
3,773
12,439¥ 36,895

1997
¥ 157
1
14,541
19,999
11,691¥ 46,389

1998$ 1,188
155,382
28,562
94,164$279,296

Years ending March 31

Millions of yen

Thousands of
U.S. dollars

1999
2000
2001
2002
2003 and thereafter
Total¥ 34,438
38,53328,406
21,558109,638¥ 232,573$ 260,696
291,696
215,034
163,194
829,962$1,760,582

Time deposits
Marketable securities
Trade receivables
Inventories
Property, plant and equipment (at net book value)
Total
The aggregate annual maturities of long-term debt as of March 31, 1998, are as follows:

7. Shareholders’ equity(a) Capital surplus
The Commercial Code of Japan provides that the entire issue
price of new shares must be credited to common stock,
provided that, by resolution of the Board of Directors, up to onehalf of such issue price may be credited to capital surplus solong as the common stock is equal to at least the aggregate parvalue of the shares issued.
(b) Legal reserve
The Commercial Code of Japan provides that an amount equal
to at least 10 percent of cash dividends and directors’ andstatutory auditors’ bonuses for each period be appropriated asa legal reserve until such reserve equals 25 percent of common
stock. The legal reserve may be used to reduce a deficit or may
be transferred to common stock, but is not available for
distribution as dividends.
(c) Restrictions on dividends
Under the terms of indentures for certain notes and convertible
bonds due through 2006, cumulative cash dividends payments
by the Company are not to exceed an amount equivalent toaccumulated net income of the Company earned during theyears such securities are outstanding plus ¥10,000 million (forcertain indentures ¥10,100 million).

8. Other income (expenses): other, net
Other income (expenses): other, net in the consolidated statements of income is comprised as follows:
Thousands of
U.S. dollars

Millions of yen

Gain (loss) on disposal of property, plant and equipment
Gain on sales of marketable securities and investments in securities of:Unconsolidated subsidiaries and affiliates
OthersForeign exchange gain (loss), net
Other, net
Total

1998
¥ (993)1997¥ 1,064

1996
¥ 619

1998
$ (7,517)

799(1,654)(1,967)¥(3,815)442(1,971)(4,683)¥ (5,148)

283
222
319
(1,996)¥ (553)

6,048(12,521)(14,890)$(28,880)

33

9. Income taxes
Income taxes in Japan applicable to the Company and its
domestic consolidated subsidiaries consist of corporation tax(national tax) and enterprise tax and inhabitants taxes (local
taxes) which, in the aggregate, result in a normal statutory tax
rate of approximately 50 percent, for the three years in the
period ended March 31, 1998.
The actual effective income tax rate on income differs fromthe normal statutory rate principally due to (1) non-recognitionof deferred taxes on timing differences between financial and tax
reporting, (2) certain expenses which are not deductible for tax
purposes, (3) the non-taxable portion of dividend income fromdomestic companies, (4) certain gains from the sale of land
which is not taxable until replacement land is sold and (5) carryforward of tax losses to the succeeding five years as an offset
against taxable income in those years.

10. Account balances with unconsolidated subsidiaries and affiliates
Account balances with unconsolidated subsidiaries and affiliates as of March 31, 1998 and 1997 are as follows:
Millions of yen

Receivables:
Trade
Other
Other current assets
Investments in securities and other investments
Long-term loans receivable
Trade payables
Short-term borrowing
Current liabilities other than above

Thousands of
U.S. dollars

1998

1997

1998

¥11,1372,276
38
24,35494
14,293179
2,343¥13,0132,748
88
26,695
106
23,0642,421$ 84,307
17,229288
184,360
712
108,198
1,355
17,737

11. Contingent liabilities
Contingent liabilities as of March 31, 1998 and 1997 are as follows:
Millions of yen

As a drawer of trade notes
As an endorser of trade notes
As a guarantor of indebtedness of employees, unconsolidated subsidiaries
and affiliates, and others¥

Thousands of
U.S. dollars

1998
307
24

1997
¥ 699
29

$

1998
2,324
182

47,05835,716356,230

12. Finance leases
Finance lease information, as required to be disclosed in Japan, for the respective years is as follows:(a) As lessee
The present value of future minimum lease payments under non-capitalized finance leases as of March 31, 1998 is as follows:
Current portion
Non-current portion
Total

34

Millions of yen

Thousands of
U.S. dollars¥ 2,540
4,880¥ 7,420$ 19,228
36,942$ 56,170

Lease payments on non-capitalized finance leases for the years ended March 31, 1998 and 1997 are as follows:
Thousands of
U.S. dollars

Millions of yen

Lease payments

1998¥3,4191997¥4,992

1998$25,882(b) As lessor
The present value of future minimum lease payments to be received under finance leases as of March 31, 1998 is as follows:
Millions of yen

Thousands of
U.S. dollars

¥ 249
656
¥ 905

$ 1,885
4,966$ 6,851

Current portion
Non-current portion
Total
Lease payments received on finance leases for the years ended March 31, 1998 and 1997 are as follows:

Millions of yen

Lease payments received

1998
¥ 334

1997
¥ 401

Thousands of
U.S. dollars

1998$2,528

13. Operating leases
Operating lease information, as required to be disclosed commencing with the year ended March 31, 1998, is as follows:
The present value of future minimum lease payments under operating leases as of March 31, 1998 is as follows:
Current portion
Non-current portion
Total

Millions of yen

Thousands of
U.S. dollars

¥ 306
965
¥ 1,271$ 2,316
7,305$ 9,621

14. Derivative transactions - the Company only
Since the Company operates internationally and has asubstantial volume of export and import transactions, it enters
into foreign currency exchange and option transactions in orderto manage risk of fluctuations in exchange rates in relation toforeign currency denominated assets and liabilities.
The Company also enters into interest swap and option
transactions to hedge against future fluctuations in interest
rates on borrowings, primarily to fix or cap interest rates onvariable rate debt.
The Company’s purpose for purchasing derivatives is tohedge against risks of fluctuations in currency exchange rates
and interest rates rather to than be exposed to such risks
through dealing or speculation. In order to minimize credit risk,
the Company uses only highly-rated international financial
institutions as counterparty to derivative transactions.
The Company has established policies that restrict the useof derivative instruments, including limits as to the purpose,nature, type and amount, and that require reporting and review
in order to control the use of derivatives and manage risk.

In addition to foreign currency exchange contracts that areused to translate foreign currency denominated items in thebalance sheet at March 31, 1998, the Company had outstanding
foreign currency exchange contracts to sell, primarily U.S.
dollars, of ¥12,241 million of which ¥9,766 million mature within
one year, and to buy, primarily German marks, of ¥3,866 millionof which ¥3,085 million mature within one year. As comparedwith market exchange rates at March 31, 1998, net unrealized
losses on these currency exchange contracts totaled ¥613
million ($4,640 thousand).
Foreign currency option contracts outstanding at March 31,
1998 consisted of sell call options for U.S. dollars of ¥1,797 million
and buy put options for U.S. dollars of ¥1,797 million. As
compared with current market exchange rates at March 31, 1998,
net unrealized losses on these foreign currency options, including
option premiums, totaled ¥209 million ($1,582 thousand).
Outstanding positions for interest rate swap contracts at March
31, 1998 consisted of swaps to receive a fixed rate and pay avariable rate on principal of ¥3,000 million ($22,710 thousand) and35

were ¥1,352 million ($10,235 thousand).
The principal amounts of option and swap contracts are not theappropriate basis for evaluating market and credit risk.

to pay a fixed rate and receive a variable rate on principal of¥55,000 million ($416,351 thousand). As compared with current
market interest rates at March 31, 1998, net unrealized losses onthese interest rate swap contracts, including option premiums,

15. Segment information
Industry segments of the Company and its consolidated
subsidiaries are classified into Transportation equipment,
Aerospace, Industrial equipment and Other.
The Transportation equipment segment manufactures andsells ships, rolling stock and consumer products such as
motorcycles. Operations within the Aerospace segment include
the production and sale of airplanes, helicopters and airplane
engines. Products manufactured and sold by the Industrial
equipment segment include boilers, prime movers, gas turbines,
hydraulic, crushing, construction and factory automation

machines, chemical and steel making plants, steel bridges andhospital respiration equipment. Operations in the Other
segment involve trade, mediation of overseas sales and orders
and other activities.
For the purpose of industry segment classification, gas
turbine generator systems, hydraulic and construction
machinery, which are under the Aerospace and the Consumer
Products & Machinery groups, respectively, in the Company’sorganizational structure are included in the Industrial
equipment segment.

(a) Information by industry segment
Millions of yen

1998
External
sales

Transportation equipment
AerospaceIndustrial equipment
Other
Total
Eliminations and corporate
Consolidated total¥ 472,525
255,328
485,353
84,006
1,297,212¥1,297,212

Intersegment
sales

Total
sales

Operatingexpenses

OperatingincomeTotal
assets¥5,318 ¥ 477,843 ¥ 466,977 ¥10,866 ¥ 362,189
6,173
261,501
240,962
20,539218,618
53,608538,961
521,358
17,603444,083
43,341
127,347
125,346
2,001
196,322
108,440
1,405,652 1,354,643
51,009 1,221,212(108,440)(108,440)(108,510)
70
1,694
¥
- ¥1,297,212 ¥1,246,133 ¥51,079 ¥ 1,222,906

Depreciation
Capitaland amortization expenditures¥12,347
4,695
10,592
4,810
32,444(28)¥ 32,416¥ 13,613
3,823
9,787
7,830
35,053(23)¥ 35,030

Millions of yen

1997
External
sales

Transportation equipment
AerospaceIndustrial equipment
Other
Total
Eliminations and corporate
Consolidated total

36¥ 407,977
194,973
541,030
80,2791,224,259¥ 1,224,259

Intersegment
sales

¥

Total
sales

Operatingexpenses

Operatingincome4,599 ¥ 412,576 ¥ 396,967 ¥ 15,609
5,951
200,924
185,308
15,61644,694
585,724556,760
28,96438,745
119,024
117,045
1,979
93,9891,318,248
1,256,080
62,168(93,989)(93,989)(94,032)43¥- ¥1,224,259 ¥1,162,048 ¥ 62,211

Total
assets¥ 360,894
246,440
476,867
184,143
1,268,344
34,824¥1,303,168

Depreciation
Capitaland amortization expenditures¥ 12,088
4,775
9,984
4,429
31,276(31)¥ 31,245¥ 15,093
3,784
13,2884,836
37,001(9)¥ 36,992

Millions of yen

1996
External
sales

Transportation equipment
AerospaceIndustrial equipment
Other
Total
Eliminations and corporate
Consolidated total¥ 336,934
171,900
498,649
78,761
1,086,244¥1,086,244

Intersegment
sales

Total
sales

¥ 5,226 ¥ 342,160
4,235
176,135
46,249544,898
36,062
114,823
91,772
1,178,016(91,772)(91,772)¥- ¥1,086,244

Operatingexpenses

OperatingincomeTotal
assets¥ 345,016 ¥ (2,856) ¥ 309,675
168,557
7,578
228,170
505,354
39,544
483,171
112,280
2,543
182,121
1,131,207
46,8091,203,137(91,719)(53)
49,234¥1,039,488 ¥ 46,756 ¥1,252,371

Depreciation
Capitaland amortization expenditures¥11,914
5,202
9,429
4,313
30,858(35)¥30,823¥16,930
3,656
12,980
4,533
38,099(63)¥38,036

Thousands of U.S. dollars

1998
External
sales

Transportation equipment
AerospaceIndustrial equipment
Other
Total
Eliminations and corporate
Consolidated total$3,577,025
1,932,839
3,674,133
635,927
9,819,924$9,819,924

Intersegment
sales

Total
sales

Operatingexpenses

OperatingincomeTotal
assets$ 40,257 $ 3,617,282 $ 3,535,026 $ 82,256 $2,741,779
46,7301,979,569
1,824,088 155,481
1,654,943
405,814
4,079,947
3,946,692 133,255 3,361,718
328,092
964,019
948,872
15,147
1,486,162
820,893 10,640,817 10,254,678 386,139 9,244,602(820,893)(820,893)(821,423)
530
12,824$- $ 9,819,924 $ 9,433,255 $386,669 $9,257,426

Depreciation
Capitaland amortization expenditures$ 93,467 $103,051
35,541
28,94080,182
74,08836,412
59,273245,602265,352(212)(174)$245,390 $265,178

The effects of the accounting change for long-term contracts, as explained in Note 3, for the year ended March 31, 1998 are included
above in the following amounts:

Transportation equipment
Industrial equipment
Total

External
sales

Millions of yen
Total
sales

Operatingincome¥54,037
25,553¥79,590¥ 54,037
25,553¥79,590¥10,087
5,116¥15,203

Thousands of U.S. dollars
External
Total
Operating
sales
sales
income$409,061 $409,061
193,437 193,437$602,498 $602,498$ 76,359
38,728$115,08737

(b) Information by geographic area
Segment information by geographic area, as required to be disclosed in Japan, for the respective years is as follows:
Millions of yen

1998
External
sales

Japan
North America
EuropeAsia
Other Areas
Total
Eliminations and corporate
Consolidated total¥1,105,123
127,61336,922
23,056
4,498
1,297,212¥1,297,212

Intersegment
sales

Total
sales

Operatingexpenses

OperatingincomeTotal
assets¥ 125,662 ¥1,230,785 ¥ 1,183,543 ¥47,242 ¥1,096,854
9,830
137,443
136,519924
120,853
6,194
43,116
41,8101,306
20,830682
23,73821,398
2,340
5,987
4,498
4,353
145
1,669
142,368
1,439,580
1,387,623
51,957 1,246,193(142,368)(142,368)(141,490)(878)(23,287)¥- ¥1,297,212 ¥ 1,246,133 ¥51,079 ¥1,222,906
Millions of yen

1997

Japan
Overseas Areas
Total
Eliminations and corporate
Consolidated total

External
sales

Intersegment
sales

Total
sales

Operatingexpenses¥ 1,059,821
164,438
1,224,259¥ 1,224,259¥ 110,163
11,351
121,514(121,514)¥-¥1,169,984
175,789
1,345,773(121,514)¥1,224,259

OperatingincomeTotal
assets¥1,109,940 ¥60,044 ¥1,157,328
171,455
4,334
131,054
1,281,395
64,3781,288,382(119,347)(2,167)
14,786¥1,162,048 ¥62,211 ¥1,303,168

Millions of yen

1996
External
sales

Japan
Overseas Areas
Total
Eliminations and corporate
Consolidated total¥ 957,733
128,511
1,086,244¥ 1,086,244

Intersegment
sales

Total
sales

Operatingexpenses

OperatingincomeTotal
assets¥ 103,150 ¥ 1,060,883 ¥1,015,209 ¥ 45,674 ¥1,109,815
9,860
138,371
136,354
2,017
113,715
113,010
1,199,254
1,151,563
47,691
1,223,530(113,010)(113,010)(112,075)(935)
28,841¥- ¥1,086,244 ¥1,039,488 ¥ 46,756 ¥1,252,371
Thousands of U.S. dollars

1998
External
sales

Japan
North America
EuropeAsia
Other Areas
Total
Eliminations and corporate
Consolidated total

38

Intersegment
sales

Total
sales

Operatingexpenses

OperatingincomeTotal
assets$8,365,806 $ 951,264 $ 9,317,070 $ 8,959,447 $357,623 $ 8,303,210
966,034
74,413
1,040,447
1,033,452
6,995
914,860
279,500
46,889326,389
316,503
9,886
157,683
174,534
5,163
179,697
161,983
17,71445,322
34,05034,05032,953
1,097
12,6349,819,924 1,077,729 10,897,653 10,504,338 393,315 9,433,709- (1,077,729) (1,077,729) (1,071,083)(6,646)(176,283)$9,819,924 $- $ 9,819,924 $ 9,433,255 $386,669 $ 9,257,426

The effects of the accounting change for long-term contracts, as explained in Note 3, for the year ended March 31, 1998 are
included above in the following amounts:

Japan
Total

External
sales

Millions of yen
Total
sales

Operatingincome¥ 79,590¥ 79,590¥ 79,590¥ 79,590¥ 15,203¥ 15,203(c) Corporate assets
Included in eliminations and corporate in (a) and (b) above
under total assets are corporate assets of ¥59,245 million($448,486 thousand), ¥77,896 million and ¥89,556 million atMarch 31, 1998, 1997 and 1996, respectively, which are mainlycomprised of cash and time deposits of the Company.

Millionsof yen%Millionsof yenOverseassales% against
net sales¥179,235
66,806
99,413
102,599¥448,053

13.8%
5.1%
7.7%
7.9%
34.5%

Thousands of U.S. dollars
External
Total
Operating
sales
sales
income$602,498$602,498$115,087$115,087(d) Overseas sales
Overseas sales consist of the total sales of the Company and its
consolidated subsidiaries made outside of Japan. Overseas
sales information, as required to be disclosed in Japan, for therespective years is as follows:%

Millionsof yenOverseassales% against
net sales

¥ N/A
N/A
N/A
N/A
¥401,472

N/A
N/A
N/A
N/A
32.7%

1998
North America
EuropeAsia
Other Areas
Total$602,498$602,498%

Thousands of
U.S. dollars

Overseassales% against
net sales

Overseas
sales

¥ N/A
N/A
N/A
N/A
¥ 320,425

N/A
N/A
N/A
N/A
29.4%

$ 1,356,813
505,723
752,558
776,677$3,391,771

1997

1996

1998

The effects of the accounting change for long-term contracts, as explained in Note 3, for the year ended March 31, 1998 are
included above in the following amounts:

North America
Asia
Other Areas
Total

Millionsof yenThousands of
U.S. dollars¥ 7,244
4,823
10,405¥22,472$ 54,837
36,51078,766$170,113

16. Subsequent events(a) On June 26, 1998, the following appropriations of retained earnings were approved at the general meeting of shareholders of
the Company:
Millionsof yenTransfer to legal reserve
Cash dividends (¥3 per share)
Directors’ and statutory auditors’ bonuses

¥

440
4,172
170

Thousands of
U.S. dollars$ 3,331
31,582
1,287(b) On June 22, 1998, the Company offered ¥30,000 million notes in Japan due July 8, 2004 and 2008 in accordance with a resolution
made by the Board of Directors on May 21, 1998.

39

Report of Independent Public Accountants

To the Shareholders and the Board of Directors of Kawasaki Heavy Industries, Ltd.:We have audited the accompanying consolidated balance sheets of Kawasaki Heavy Industries, Ltd. (a Japanese
corporation) and subsidiaries as of March 31, 1998 and 1997, and the related consolidated statements of income,shareholders’ equity and cash flows for each of the three years in the period ended March 31, 1998, expressed inJapanese yen. Our audits were made in accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other auditing procedures as we considered necessary inthe circumstances.
In our opinion, the consolidated financial statements referred to above present fairly the consolidated financial
position of Kawasaki Heavy Industries, Ltd. and subsidiaries as of March 31, 1998 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years in the period ended March 31, 1998 inconformity with accounting principles generally accepted in Japan which, except for the change in the method of
accounting for revenue referred to in Note 3, effective April 1, 1997, were applied on consistent basis.
Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements have beentranslated from Japanese yen on the basis set forth in Note 1.

Asahi & Co.
(Member Firm of Andersen Worldwide SC)
Kobe, Japan
June 26, 1998

40

Six-Year Summary
Kawasaki Heavy Industries, Ltd. and consolidated subsidiaries
Years ended March 31

Millions of yen

Operating results:
Net sales
Cost of sales
Gross profit
Selling, general and administrative
expenses
Operating income
Net Income
Financial position at year-end:
Working capital
Net property, plant and equipment
Total assets
Long-term debt, less current portion
Total shareholders’ equity
Per share amounts (yen):
Net income
Cash dividends
Shareholders’ equity
Other data:
Number of shares issued (millions)
Number of employees

1998

1997

1996

1995

1994

1993

¥1,297,212
1,114,693
182,519¥ 1,224,259
1,041,697
182,562¥1,086,244
928,126
158,118¥ 1,070,444
912,432
158,012¥1,070,257
919,092
151,165¥1,090,521
935,162
155,359

131,440
51,07918,556

120,351
62,211
22,572

111,362
46,756
16,462

110,41347,59910,216

109,800
41,365
17,122

108,049
47,31014,381¥ 162,084
242,435
1,222,906
198,135
209,040¥ 150,759
233,196
1,303,168
197,130
197,161¥ 127,644
231,615
1,252,371
204,801
162,984¥ 106,458
227,173
1,191,664
184,535
152,991

68,998227,213
1,239,137
155,904
148,253¥ 111,006
208,590
1,192,430
187,166
131,611¥ 13.36.0
150.3¥ 16.47.0
141.9¥ 12.25.5
120.7¥ 12.85.0
110.2¥ 10.8
5.0
98.6

¥

7.6
5.0
113.3

¥

1,391

1,389

1,350

1,350

1,345

1,335

26,102

24,211

24,401

24,26623,91322,222

41

Board of Directors

42

Kenjiro Ogata

Shuzo Susei

Ryozo Tsutsui

Yasuhiko Ono

Executive Vice President

Executive Vice President

Executive Vice President

Executive Vice President

Junji Hayashi

Hiroshi Ohba

Toshio Kamei

Vice Chairman

Chairman and CEO

PresidentChairman and CEO

Managing Directors

Hiroshi Ohba*

Sotaro Yamada

Vice Chairman

Hiroshi Miyamichi

Junji Hayashi*

Deputy Senior General Manager of Corporate
Marketing & Business Development Group
Senior Manager of Osaka OfficeDirectors

Yoshiteru Sakai
Deputy Senior General Manager of Ship & Rolling
Stock Group

Takashi Fujiura
General Manager of Rolling Stock Division

President

Toshio Kamei*
Executive Vice Presidents

Ryozo Tsutsui*

Hiromichi Takawa

Toshiaki Tatsuki

Deputy Senior General Manager of Machinery,
Environment & Power Plant Group
General Manager of Energy Project, Power Plant
Sales Division

General Manager of Environmental Control Plant
Sales Division

Senior General Manager of Aerospace Group

Hisashi Shida
Shuzo Susei*
Senior General Manager of Technology Group

Deputy Senior General Manager of Machinery,
Environment & Power Plant Group
General Manager of Prime Mover Division

Kenjiro Ogata*Misao Yurikusa

Overall Administration of Machinery,
Environment & Power Plant Group
Senior General Manager of Corporate Marketing& Business Development Group

Deputy Senior General Manager of AerospaceGroup

Yasuhiko Ono*
Senior General Manager of Ship & Rolling StockGroup

Tadashi Uno*

Haruo Shigeta

Kazuo NishinoOverall Administration of Personnel Department,
Labor Department, Purchasing Department andProperty Administration Department

Deputy Senior General Manager of Corporate
Marketing & Business Development Group

Senior General Manager of Machinery,
Environment & Power Plant Group

Masaru Ohira
Senior Manager of Corporate Planning Office

General Manager of Power Plant Engineering
DivisionTakashi Sugoh
Shigetomo Matsui

Overall Administration of Secretariat Office,Public Relations Department, Legal Department
and General Administration Department
Deputy Senior General Manager of Corporate
Marketing & Business Development Group

Deputy General Manager of Ship Division

Kosaku Kuwata
Kenzo Shiomi

Minoru Higuchi*

Minoru Sakasai

Deputy Senior General Manager of Plant
Engineering & Steel Structure Group
General Manager of Steel Structure Division

Senior General Manager of Plant Engineering &Steel Structure Group

Mitsuo Ozawa*

Takehiko Saeki
Deputy General Manager of Energy Project,
Power Plant Sales Division
Deputy General Manager of Industrial Plant
Engineering Division

Yoshiro Inoue
Executive Managing Directors

Toru Ohmae
Deputy Senior General Manager of Consumer
Products & Machinery Group
General Manager of Consumer Products Division

Deputy Senior General Manager of Technology
Group

General Manager of Aerospace Sales Division

Hironobu Hashiguchi
General Manager of Ship Division

Satoshi Akashi
Deputy Senior General Manager of Machinery,
Environment & Power Plant Group

Masayuki Yokoyama*

Shigeji Yamada

Overall Administration of Subsidiary Company
Control Office, Finance Department andAccounting Department

Deputy Senior General Manager of Plant
Engineering & Steel Structure Group
General Manager of Industrial Plant Engineering
Division

Shinzaburo Ani
Senior Manager of Public Relations Department

Yoshimasa Tanaka
Deputy Senior General Manager of Ship & Rolling
Stock Group
Corporate Auditors

Masamoto Tazaki*
Senior General Manager of Consumer Products &Machinery Group

Tadashi Nishimura
Deputy Senior General Manager of Consumer
Products & Machinery Group

Akio Sera
Takeshi Miyakoshi
Rokuro Kitayama

Toshiaki Ouchida
Deputy Senior General Manager of AerospaceGroup*Representative Director(As of July 1, 1998)

43

Consolidated Subsidiaries

Name

K-GES Co., Ltd.

Paid-In Capital

Equity(Millions of yen,unless otherwise noted)(% ownership by KHI,
unless otherwise noted)

100

100.00Principal Businesses

Domestic wholesale of small gasoline engines(20.00% owned by Kawasaki Motors Corporation Japan)

Ishihara Dockyard Co., Ltd.

96

97.11

Manufacture and sale of various ships for
public agency/gov’t use and rescue boats;repair of small-sized ships

Uji Kanko Co., Ltd.

240

100.00Management of a golf course

Kawasaki Helicopter System Ltd.

200

100.00Transportation of passengers or cargo byhelicopter; maintenance and repair ofhelicopters and flight training services;
research, design and construction of heliports

Osaka Power Engineering Co., Ltd.

90

100.00Design, production, installation andconstruction of boilers and refuse
incineration plants; sale of crushingmachinery

Kawasaki Prime Mover Engineering Co., Ltd.

20

100.00Installation, inspection and repair ofprime mover products; importing andsale of air compressors

Kawasaki Motors Corporation Japan560

100.00

Domestic wholesale of motorcycles and
Jet Ski® watercraft

Kawasaki Environmental Plant Engineering Co., Ltd.

30

100.00Operation and maintenance of waste
treatment facilities

Kawaju Yachiyo Engineering Ltd.

30

100.00Installation of crushing machinery andvarious pulverization testing

Kawasaki Hydraulic Co., Ltd.

70

100.00Inspection and repair of hydraulicproducts; manufacture and sale ofcommercial fishing boat machinery

Kawasaki Akashi Engineering Co., Ltd.

60

100.00Design and production of machinery andtools; overhaul of engines and turbines

Kawaju Gifu Engineering Co., Ltd.

70

100.00Design and production of parts andequipment for aircraft; technical testing andassistanceKawasaki Construction Co., Ltd.

300

100.00Installation of steel structures

Kawasaki Plant Assistance & Service Co., Ltd.

20

100.00

Procurement, packaging and transportationof parts and components for plant
construction

Kawaju Real Estate Co., Ltd.

300

100.00Administration of Company welfare
facilities; real estate sales, leasing andconstruction

Kawasaki Sanyo Co., Ltd.

90

100.00

Manufacture and repair of parts andcomponents for rolling stock

Kawaju Kobe Support Co., Ltd.

50

100.00

Repair and maintenance services for plantand office buildings; construction andprocessing of parts for shipbuilding;security services

Kawasaki Industrial Co., Ltd.

90

98.21

Construction of arcades; manufacture andinspection of high-pressure containers;
maintenance and repair of rolling stock

Kawaju Shoji Co., Ltd.

600

70.00

Trading

Kawasaki Safety Service Industries, Ltd.

1,708

74.06

Manufacture, sale and installation of
hospital respiration, fire-extinguishingand medical equipment

Kawasaki Inspection Service Co., Ltd.

50

100.00Inspection and measuring

Kawaju Marine Engineering Co., Ltd.

40

100.00

Ship design; design, construction, and saleof steel rigging for large vessels

Kawaju Techno Service Corporation60

100.00Chemical analysis; environmental
measurement; materials testing

44

Name

Paid-In Capital

Equity(Millions of yen,unless otherwise noted)(% ownership by KHI,
unless otherwise noted)

1,461

83.01

Manufacture, sale and installation of general
purpose boilers and air-conditioning
equipment

Kawasaki Engineering Co., Ltd.

100

100.00Design and engineering of plant facilities;
manufacture and sale of pool and highpressure oxygen medical equipment

Kawasaki Kosan Co., Ltd.

300

100.00Insurance representation; real estateleasing, administration and maintenance;leasing and provision of loans

Kawasaki Foods Co., Ltd.

160

100.00Food supply to Company facilities;
operation of dining facilities

Kawasaki Metal Industries, Ltd.

350

100.00

Manufacture, processing and assembly ofvarious steel products

Kawasaki Hydromechanics Corporation

272

99.71

Manufacture, sale and installation of
hydraulic presses and various hydraulicequipment

KHI JPS Co., Ltd.

30

100.00Parts supply, repairs and overhaul of gas
turbines for high speed vessels such as theJetfoil and Jet Piercer

Kawasaki Construction Machinery, Kanto Ltd.

68

68.68

Sale and repair of construction machinery

Kawasaki Gas Turbine Research Center

30

100.00Research and testing of gas turbine
generator sets; sale of surplus electric power

Kawasaki Gasturbine Technologies Co., Ltd.

50

100.00Inspection and repair of cogenerationand standby systems and industrial gas
turbines

Kawasaki Construction Machinery,
Kyushu Ltd.

50

100.00

Sale and repair of construction machinery

Kawaju Gifu Manufacturing Co., Ltd.

70

100.00

Processing and assembly of parts andcomponents for aircraft and themaintenance of tools and equipment

Kawaju Harima Tech Inc.

50

100.00

Manufacture, maintenance and inspectionof machinery, equipment and watergates

Kawasaki Construction Machinery,
Nishi-Nihon Ltd.

54

100.00

Sale and repair of construction machinery

Kawaju Tomakomai Kanko Kaihatsu Co., Ltd.

300

100.00Management of a golf course

Kawasaki Construction Machinery,
Tohoku Ltd.

57

54.39

Sale and repair of construction machinery

Nichijo Manufacturing Co., Ltd.

120

50.04

Manufacture and sale of snow
removal equipment

Kawasaki Construction Machinery,
Kinki Ltd.

70

88.57

Sale and repair of construction machinery

Kawasaki Construction Machinery,
Chubu Ltd.

60

95.00

Sale and repair of construction machinery

Union Precision Die Co., Ltd.

50

100.00

Manufacture, sale and repair of
die-casting parts

US$65,900*

100.00Distribution of motorcycles, all-terrain
vehicles (ATVs), Jet Ski® watercraft
and small gasoline engines in
the United States£2,000*100.00Distribution of motorcycles, all-terrain
vehicles (ATVs) and Jet Ski® watercraftin the United Kingdom

Kawasaki Motoren GmbH

DM12,300*

100.00Distribution of motorcycles, all-terrain
vehicles (ATVs) and Jet Ski® watercraftin Germany

Kawasaki Motors Pty. Ltd.

A$2,000*

100.00Distribution of motorcycles, all-terrain
vehicles (ATVs) and Jet Ski® watercraftin Australia

Kawasaki Thermal Engineering Co., Ltd.

Kawasaki Motors Corp., U.S.A.

Kawasaki Motors (UK) Ltd.

Principal Businesses

45

Name

Paid-In Capital

Equity(Millions of yen,unless otherwise noted)(% ownership by KHI,
unless otherwise noted)£3,500*100.00

Manufacture and sale of hydraulicproducts

P.T. Kawasaki Motor Indonesia

US$10,000*

51.00

Manufacture and distribution of
motorcycles in Indonesia

Kawasaki Heavy Industries (H.K.) Ltd.

HK$2,820*

100.00

Product sales, mediation of orders andprocurement of materials in Southeast Asiaand Oceania

Kawasaki Heavy Industries (Europe) B.V.

DGL500*100.00

Product sales, mediation of orders andprocurement of materials in Europe (mainly
Benelux countries), the Middle East,
and Africa

Kawasaki Heavy Industries (U.S.A.), Inc.

US$600*100.00

Product sales, mediation of orders andprovision of various engineering support
services in North America

Kawasaki Motors (Phils.) Corporation

P101,430*

50.001

Manufacture and distribution of
motorcycles in the Philippines

Kawasaki Motors Manufacturing
Corp., U.S.A.

US$30,000*

100.00

Manufacture of motorcycles, all-terrain
vehicles (ATVs), Jet Ski® watercraft, small
gasoline engines and industrial robots

Kawasaki Construction Machinery
Corp. of America

US$8,000*

100.00

Manufacture and sale of construction
machinery in the United States

Canadian Kawasaki Motors Inc.

C$2,000*

100.00Distribution of motorcycles, all-terrain
vehicles (ATVs) and Jet Ski® watercraftin Canada

Kawasaki Engines Europe N.V.

BF2,500*

100.00(owned by Kawasaki Motors Nertherlands N.V.)

Sale of electricity generators andall-purpose gasoline engines in Europe

US$100*Insurance services in the United States

Kawasaki Precision Machinery (UK) Ltd.

Green River Insurance Company(owned by Kawasaki Motors Corp., U.S.A.)

100.00Principal Businesses(owned by Kawasaki Motors Corp., U.S.A.)

Kawasaki Motors Netherlands N.V.

DGL1,000*

100.00Wholesale of Jet Ski® watercraft in Europe;
distribution of motorcyles in the Netherlands

Kawasaki Motors Finance Corporation

US$10,000*

100.00Inventory financing for dealers of
Kawasaki Motors Corp., U.S.A.

(owned by Kawasaki Motors Corp., U.S.A.)

Kawasaki Rail Car, Inc.

Kawasaki Robotics (U.S.A.), Inc.

US$600*100.00Engineering, manufacture, sales andafter-sales service of rolling stock in the
United States

US$1,000*

100.00

Sales and after-sales service of industrial
robots in the United States(owned by Kawasaki Motors Corp., U.S.A.)*Monetary unit in thousands

46(As of March 31, 1998)

Network

Kobe Head Office
Kobe Crystal Tower
1-3, Higashikawasaki-cho 1-chome
Chuo-ku, Kobe 650-8680, Japan
Phone: 81-78-371-9530
Fax: 81-78-371-9568
Telex: 5622-355 KAWAJU J

Jakarta Office
9th Floor, Skyline Bldg.
Jl. M.H. Thamrin 9
Jakarta 10340, Indonesia
Phone: 62-21-314-0737
Fax: 62-21-314-1049
Sydney Officec/o Kawasaki Motors Pty. Ltd.
Unit Q, 10-16 South Street
Rydalmere, N.S.W. 2116, Australia
Phone: 61-2-9684-2585
Fax: 61-2-9684-4580

Tokyo Head OfficeWorld Trade Center Bldg.
4-1, Hamamatsu-cho 2-chome
Minato-ku, Tokyo 105-6116, Japan
Phone: 81-3-3435-2111
Fax: 81-3-3436-3037
Telex: 242-4371 KAWAJU JOVERSEASOVERSEAS
OfficesSeoul Office2302 Changgyo Bldg.
1 Changgyo-Dong, Chung-Gu
Seoul, Korea
Phone: 82-2-778-6637
Fax: 82-2-778-6638
Beijing Office
Room No. 2602, China World Tower
China World Trade Center
No.1, Jian Guo Men Wai Avenue
Beijing 100004
People’s Republic of China
Phone: 86-10-6505-1350
Fax: 86-10-6505-1351
Shanghai Office
Room 1307, Shanghai International
Trade Center
2200 Yan An Xi Road, Shanghai
People’s Republic of China
Phone: 86-21-6270-1968
Fax: 86-21-6270-1969
Taipei Office
15th Floor, Fu-key Bldg.
99 Jen-Ai Road, Section 2
Taipei, Taiwan
Phone: 886-2-2322-1752
Fax: 886-2-2322-5009
Bangkok Office
20th Floor, Thaniya Plaza Business Complex
No. 52, Silom Road
Bangkok 10500, Thailand
Phone: 66-2-231-2360~2
Fax: 66-2-231-2363
Manila Office
20th Floor, Metrobank Plaza Bldg.
Gil J. Puyat Avenue, Makati
Metro Manila
The Philippines
Phone: 63-2-818-2786
Fax: 63-2-818-2787
Kuala Lumpur Office
Letter Box No. 162
6th Floor, UBN Tower
10 Jalan P. Ramlee
50250 Kuala Lumpur, Malaysia
Phone: 60-3-230-5141
Fax: 60-3-230-5148

Canadian Kawawaki Motors Inc.
25 Lesmill Road, Don Mills, Toronto
Ontario M3B 2T3, Canada
Phone: 1-416-445-7775
Fax: 1-416-445-5389

Subsidiaries

Kawasaki Heavy Industries (U.S.A.), Inc.
599 Lexington Avenue, Suite 3901
New York, NY 10022, U.S.A.
Phone: 1-212-759-4950
Fax:1-212-759-6421
Houston Branch
333 Clay Street, Suite 4480
Houston, TX 77002-4103, U.S.A.
Phone: 1-713-654-8981
Fax: 1-713-654-8187
Kawasaki Rail Car, Inc.
1 Larkin Plaza
Yonkers, NY 10701, U.S.A.
Phone: 1-914-376-4700
Fax: 1-914-376-4779
Kawasaki Robotics (U.S.A.), Inc.
28059 Center Oaks Court
Wixom, MI 48393, U.S.A.
Phone: 1-248-305-7610
Fax: 1-248-305-7618
Kawasaki Motors Corp., U.S.A.
9950 Jeronimo Road
Irvine, CA 92618-2084, U.S.A.
Phone: 1-949-770-0400
Fax: 1-949-460-5600
Green River Insurance Company
7 Burlington Square, #600
Burlington, VT 05402, U.S.A.
Phone: 1-802-860-0444
Fax: 1-802-860-0440
Kawasaki Motors Finance Corporation
9950 Jeronimo Road
Irvine, CA 92618-2084, U.S.A.
Phone: 1-949-770-0400
Fax: 1-949-460-5600
Kawasaki Motors Manufacturing Corp., U.S.A.
6600 Northwest 27th Street
Lincoln, NE 68524, U.S.A.
Phone: 1-402-476-6600
Fax: 1-402-476-6672
Maryville Plant
Highway 71 South
Maryville, MO 64468, U.S.A.
Phone:1-816-582-5829
Fax: 1-816-582-5826
Kawasaki Construction Machinery Corp. of
America
2140 Barrett Park Drive, Suite 101
Kennesaw, GA 30144, U.S.A.
Phone: 1-770-499-7000
Fax: 1-770-421-6842

Kawasaki do Brasil Indústria e Comércio Ltda.
Avenida Paulista, 542-6 Andar
Bela Vista, 01310-000, São Paulo, S.P., Brazil
Phone: 55-11-289-2388
Fax: 55-11-289-2788
Kawasaki Heavy Industries (UK) Ltd.
3rd Floor, Bracton House
34-36 High Holborn
London WC1V 6AA, U.K.
Phone: 44-171-404-4555
Fax: 44-171-404-4556
Kawasaki Precision Machinery (UK) Ltd.
Ernesettle Lane, Ernesettle, Plymouth
Devon PL5 2SA, U.K.
Phone: 44-1752-364394
Fax: 44-1752-364816
Kawasaki Robotics (UK) Ltd.
Greengate, Middleton
Manchester M24 1SA, U.K.
Phone: 44-161-956-5400
Fax: 44-161-956-5404
Kawasaki Motors (UK) Ltd.
1 Dukes Meadow
Millboard Road, Bourne End
Buckinghamshire SL8 5XF, U.K.
Phone: 44-1628-851000
Fax: 44-1628-856799
Kawasaki Engines Europe N.V.
Industriepark, 2M 9031 Drongen, Belgium
Phone: 32-9-282-8457
Fax: 32-9-282-2911
Kawasaki Heavy Industries GmbH
5th Floor, Wehrhahn Center
Oststrasse 10, 40211 Düsseldorf, Germany
Phone: 49-211-1792340
Fax: 49-211-161844
Kawasaki Motoren GmbH
Max-Planck-Strasse 26
61381 Friedrichsdorf, Germany
Phone: 49-6172-7340
Fax: 49-6172-734160
Kawasaki Heavy Industries (Europe) B.V.
7th Floor, Riverstaete
Amsteldijk 1661079 LH Amsterdam
The Netherlands
Phone: 31-20-644869
Fax: 31-20-6425725
KHI Europe Finance B.V.
Hoekenrode 61102 BR Amsterdam
The Netherlands
Phone: 31-20-6293800
Fax: 31-20-6294661
Kawasaki Motors Netherlands N.V.
Diamantlaan 142132 WV Hoofddorp
The Netherlands
Phone: 31-23-5670500
Fax: 31-23-5670583

47

KHI (Dalian) Computer Technology Co., Ltd.
Building Foreign Specialistof the Dalian Maritime University
Ling Shui Qiao, Dalian
People’s Republic of China
Phone: 86-411-467-2507
Fax: 86-411-467-2459
Wuhan Kawasaki Marine Machinery Co., Ltd.
No. 43 Wudong Street
Qingshan, Wuhan
People’s Republic of China
Phone: 86-27-6590626
Fax: 86-27-6590627
Kawasaki Heavy Industries (H.K.) Ltd.
Room 1619, Jardine House
Connaught Road, Central, Hong Kong
Phone: 852-2522-3560
Fax: 852-2845-2905
Kawasaki Motors Enterprise (Thailand) Co., Ltd.
129 Rama 9 Road, Kwaeng
Huaykwang, Khet Huaykwang
Bangkok 10320, Thailand
Phone: 66-2-246-1510
Fax: 66-2-247-7932
KHI Design & Technical Service Inc.
Unit 7A&7B The Island Plaza, 105 Alfaro Street
Salcedo Village, Makati, Metro Manila
The Philippines
Phone: 63-2-810-9213
Fax: 63-2-816-1222
Kawasaki Motors (Phils.) Corporation
Km. 24 East Service Road, Bo. Cupang, Alabang
Muntinlupa City, Metro Manila, The Philippines
Phone: 63-2-842-3140
Fax: 63-2-842-2730
Kawasaki Heavy Industries (Singapore) Pte. Ltd.
6 Battery Road, #18-04
Singapore 049909
Phone: 65-2255133~4
Fax: 65-2249029
P.T. Kawasaki Motor Indonesia
Jl. Perintis Kemerdekaan, Kalapa Gading
Jakarta Utara 14250, Indonesia
Phone: 62-21-452-3322
Fax: 62-21-452-3566
Kawasaki Motors Pty. Ltd.
Unit Q, 10-16 South Street
Rydalmere, N.S.W. 2116, Australia
Phone: 61-2-9684-2585
Fax: 61-2-9684-4580

OVERSEAS

Joint Ventures

Robots International Limited
21, Archbishop Street
Valetta, Malta
Phone: 356-320897
Fax: 356-346041

Gifu Works
1, Kawasaki-cho, Kakamigahara
Gifu 504-8710, Japan
Phone: 81-583-82-5712
Fax: 81-583-82-2981

Nantong Ocean Ship Engineering Co., Ltd.
Ren Gang Nanshou, Nantong City, 226005
Jiangsu Province, People’s Republic of China
Phone: 86-513-351-4770
Fax: 86-513-351-4349

Nagoya Works 1
3-11, Oaza Kusunoki, Yatomi-cho
Ama-gun, Aichi 498-0066, Japan
Phone: 81-567-68-5117
Fax: 81-567-68-5090

Shanghai Cosco Kawasaki Heavy Industries Steel
Structure Co., Ltd.
5198 Hutai Road, Baoshan District
Shanghai, People’s Republic of China
Phone: 86-21-5602-8888
Fax: 86-21-5602-5198

Nagoya Works 2
7-4, Kanaoka, Tobishima-muraAma-gun, Aichi 490-1445, Japan
Phone: 81-5675-5-0800
Fax: 81-5675-5-0803

Hainan Sundiro-Kawasaki Engine Co., Ltd.
Lingui Dadao No.3
Guilinyang Economic Development Area
Qiongshan City, Hainan Province
People’s Republic of China
Phone: 86-898-5711586
Fax: 86-898-6715518
Glory Kawasaki Motors Co., Ltd.
221/1 Rama 9 Road, Huay Kwang
Bangkok 10320, Thailand
Phone: 66-2-246-1510
Fax: 66-2-246-1517
KHITKAN Co., Ltd.
119/18 Moo 4, G.K. Land Industrial Park
Pluakdaeng-Wangtaphin
Sapansi Road, Tambon Pluadaeng
Amphur Pluakdaeng, Rayong 21140, Thailand
Phone: 66-2-38-955062
Fax: 66-2-38-955067
Kawasaki Motors Holding (Malaysia) Sdn. Bhd.
Room 401, 4th Floor, Wisma
Kwong Siew, 149, Jalan Tun
H.S. Lee, Kuala Lumpur, Malaysia
Phone: 60-3-376-2197
Fax: 60-3-376-1380

DOMESTIC WORKS
Noda Works
118, Futatsuzuka, Noda
Chiba 278-8585, Japan
Phone: 81-471-24-1121
Fax: 81-471-24-7645
Yachiyo Works
1780, Kamikoya, Yachiyo
Chiba 276-0022, Japan
Phone: 81-474-83-1111
Fax: 81-474-82-3227

Kawasaki Motors N.V.
Marconiweg 54131 PD Vianen ZH
The Netherlands
Phone: 31-347-324949
Fax: 31-347-324955

Chiba Works
1, Niihama-cho, Chuo-ku
Chiba 260-0826, Japan
Phone: 81-43-263-2211
Fax: 81-43-263-5525

Tiesse Robot S.p.A.
Via Isorella 24
25010 Visano (Brescia), Italy
Phone:39-30-9958621
Fax: 39-30-9958677

Sodegaura Works
50-1, Minamisode, Sodegaura
Chiba 299-0268, Japan
Phone: 81-438-62-7127
Fax: 81-438-62-7129

48

Kobe Works
1-1, Higashikawasaki-cho 3-chome
Chuo-ku, Kobe 650-8670, Japan
Phone: 81-78-682-5001
Fax: 81-78-682-5500
Hyogo Works
1-18, Wadayama-dori 2-chome
Hyogo-ku, Kobe 652-0884, Japan
Phone: 81-78-682-3111
Fax: 81-78-671 -5784
Nishi-Kobe Works
234, Matsumoto, Hazetani-cho
Nishi-ku, Kobe 651-2239, Japan
Phone: 81-78-991-1133
Fax: 81-78-991-3186
Seishin Works
8-1, Takatsukadai 2-chome
Nishi-ku, Kobe 651-2271, Japan
Phone: 81-78-992-1911
Fax: 81-78-992-1910
Akashi Works
1-1, Kawasaki-cho, Akashi
Hyogo 673-8666, Japan
Phone: 81-78-921-1301
Fax: 81-78-913-1366
Banshu Works
2680, Oka, Inami-cho
Kako-gun, Hyogo 675-1113, Japan
Phone: 81-794-95-1211
Fax: 81-794-95-1226
Harima Works
8, Niijima, Harima-cho
Kako-gun, Hyogo 675-0155, Japan
Phone: 81-794-35-2131
Fax: 81-794-35-2132
Sakaide Works
1, Kawasaki-cho, Sakaide
Kagawa 762-8507, Japan
Phone: 81-877-46-1473
Fax: 81-877-45-0556

Kawasaki Corporate Data
(As of March 31, 1998)

Kawasaki Heavy Industries, Ltd.
Head Office:
Kobe Crystal Tower
1-3, Higashikawasaki-cho 1-chome
Chuo-ku, Kobe 650-8680, JapanFounded: 1878
Incorporated: 1896
Paid-in Capital:¥81,426,590,792
Number of Shares Outstanding:
1,390,595,964 shares
Number of Shareholders:
118,542
Number of Employees:
26,102
Stock Exchange Listings:
Tokyo, Osaka, Nagoya, Kyoto,
Hiroshima, Fukuoka, Niigata, Sapporo
Newspapers in which public notices are made:The Nihon Keizai Shimbun
The Kobe Shimbun
Transfer Agent:
The Chuo Trust & Banking Company, Limited
7-1, Kyobashi 1-chome
Chuo-ku, Tokyo 104-0031, Japan
Handling Office
The Chuo Trust & Banking Company, Limited
Osaka Branch Office
6-26, Kitahama 2-chome
Chuo-ku, Osaka 541-0041, Japan
Independent Auditors:
Asahi & Co.
Kobe Crystal Tower
1-3, Higashikawasaki-cho 1-chome
Chuo-ku, Kobe 650-8680, JapanADR Facility:
KHI has a sponsored American Depositary Receipt (ADR)
facility. ADRs are traded in the over-the-counter (OTC) market
in the United States under cusip number 486 359 20 1 witheach ADR representing four ordinary shares.
ADR Depositary:
The Bank of New York
101 Barclay St., 22 West
New York, NY 10286, U.S.A.
Phone: 1-212-815-2042
U.S. Toll Free:888-269-2377(888-BNY-ADRS)
http://www.bankofny.com/adr
KHI Home Page at:
http://www.khi.co.jp

ISSN 0287-1793
Printed in Japan