2008

Semiannual Report
For the six months ended September 30, 2008

Consolidated Financial Highlights
Kawasaki Heavy Industries, Ltd. and Consolidated Subsidiaries
For the six months ended September 30, 2008 and 2007

Thousands of
U.S. dollars

Millions of yen
2008

For the period:
Net sales ......................................................................................................................................... ¥0,652,924
Operating income ...........................................................................................................................
24,353
Net income .....................................................................................................................................
12,336
Research and development expenses...............................................................................................
17,600Depreciation and amortization ........................................................................................................
20,025
Net cash provided by operating activities .........................................................................................
8,547
Per share (in yen and U.S. dollars):
Net income ..................................................................................................................................... ¥Cash dividends ................................................................................................................................

07.39
—

2007

2008

¥0,699,540
39,05019,87816,40017,64224,010$06,300,531
235,000
119,039
169,835
193,236
82,476

¥

$

11.91
—

0.07
—

At end of the period:
Total assets ..................................................................................................................................... ¥1,360,771
Total net assets ...............................................................................................................................
313,593¥1,322,779
317,627$13,131,053
3,026,083

Orders received and outstanding:
Orders received during the period ................................................................................................... ¥0,717,266
Order backlog at end of the period ................................................................................................. 1,609,684¥0,724,836
1,492,433$06,921,413
15,532,992

Number of employees..................................................................................................................

31,96830,382

Notes: 1. This semiannual report has been prepared in conformity with generally accepted accounting principles and practices in Japan.
2. All dollar figures herein refer to U.S. currency. Yen amounts have been translated, for convenience only, at ¥103.63 to $1.00, the approximate rate ofexchange at September 30, 2008.

Net Sales
Apr. 2008—Mar. 2009

652.9

Apr. 2007—Mar. 2008

699.5

801.6

537.7

Apr. 2004—Mar. 2005
0500
First half

Second half

5.2

Apr. 2005—Mar. 2006

703.9
1,000

11.4

Apr. 2006—Mar. 2007

728.9

3.4

Apr. 2004—Mar. 2005
1,500

2,000

15.2

19.9

Apr. 2007—Mar. 2008

792.7

593.6

Apr. 2005—Mar. 2006

(Billions of yen)

12.3

Apr. 2008—Mar. 2009

645.9

Apr. 2006—Mar. 2007

Net Income(Billions of yen)

0

18.4
11.3

8.1
10
First half

20

30
Second half40

An Interview with Tadaharu Ohashi, President of KHI

As concerns rise about the impact of the global financial
crisis on the real economy, we asked Tadaharu Ohashi,
president of Kawasaki Heavy Industries, Inc., for his viewsof KHI’s performance and prospects going forward.

Tadaharu Ohashi
President

What will be the impact of the global financial crisisand the deterioration in the world economy on the
management of KHI’s business activities?

Could you please describe in somewhat more detailwhat might be some of the effects of the downturn
on KHI?

It is still not transparent how much the financial
crisis will impact the world economy as a whole.
However, since overseas sales account for morethan half of KHI’s sales, if the trend toward deterioration in the world economy continues for a prolonged period, this will have an adverse effect on
our performance. Fortunately, however, the KHI
Group’s businesses supply products that are usefuland necessary for society. Therefore, I believe that
if we continue our steady efforts to strengthen
our position and capabilities for technology andmanufacturing, we will be able to overcome
the difficulties we are now confronting.

The market environment is clearly becoming morechallenging. However, if we examine where westand now, our Shipbuilding and Rolling Stock &Construction Machinery segments and certain otherbusinesses have sufficient orders for some time into
the future. In addition, in our Aerospace segment
and jet engine manufacturing business, we are proceeding with preparations for volume production of
new aircraft. Of course, our motorcycle, industrial
robot, and certain other businesses are susceptible
to the effects of the weakening of the world economy, and the markets for their products are shrinking. Nevertheless, looking at the Group as a whole,1we have a sufficient backlog of orders as well as
new projects, and we must make sure this work is
carried out smoothly.
What is the outlook for KHI’s performance for thefull fiscal year ending March 31, 2009?
During the first half of the current fiscal year,
through the second quarter, we were confronted
with weak economic conditions both in Japan andoverseas, but we exceeded our target for operating
income of ¥23.0 billion. For the full fiscal year, weare concerned about the adverse effects of the
sharp appreciation of the yen and the rise in raw
material prices as well as further deterioration in
the real economy as a result of the global financial
crisis. However, our Rolling Stock & Construction
Machinery, Gas Turbines & Machinery, Plant &Infrastructure Engineering, and Hydraulic Machinery
segments are still holding firm. At the present time,
we believe that, if we make the necessary effort, it
will be possible for us to meet our management
objectives.
The yen has appreciated against both the U.S. dollar
and the euro. What is your appraisal of the effectsof these currency movements?
Since we have already concluded forward foreignexchange contracts to hedge currency risks for thisfiscal year, the impact on net income will be limited.
The effect will be greater in the next fiscal year andsubsequently, but we also purchase significant
amounts of raw materials in dollars and euros,
which will reduce our forex exposure. If the yen

2appreciates, we will take quick action to arrange forforward contracts, and, as an additional measure,
we are considering increasing dollar-denominatedcosts by enhancing overseas procurement and production. We must also consider denominating moreof our contracts in yen.
You mentioned the sharp rise in raw materials
prices; what countermeasures will you be taking todeal with this?
The first important countermeasure will be reducing
costs, but raw materials prices today have risen tosuch a high level that cost-cutting efforts alone will
not suffice. Therefore, we must consider passing
the portion of raw material price increases that wecannot absorb through cost reductions on to our
product prices. We believe that, while we feel
apologetic to our customers, we must ask our customers to bear the higher costs that we have notbeen able to absorb even by making our strongest
cost-reduction efforts. In addition, when we sign
long-term contracts, we will do our best to include
escalation clauses that will allow us to reflect higher
raw material costs in our selling prices.
How is the implementation of the KHI Group’s“Global K” medium-term business plan going? Itseems that major changes in the market environment might have a substantial impact on your plans.
We are steadily implementing the basic strategies
and priority policies of “Global K.” There are differences by business unit that depend on the market
environment and special features of the businesses

in question, but we are achieving better than anticipated results in our Rolling Stock & Construction
Machinery, Gas Turbines & Machinery, Plant &Infrastructure Engineering, and Hydraulic Machinery
segments. The remaining businesses have been
affected by weakness in their respective markets
and the rising in prices of raw materials, but wehave not made changes in our long-term strategies
and are working to steadily implement our actionplans for those businesses and strengthen theiroperating positions.
Please note that, amid the uncertain and fastchanging environment we are confronting today,
we believe it is too early to draw conclusions
regarding the final quantitative objectives of our
medium-term plan. However, as I noted a momentago, we are proceeding with the implementation ofbasic strategies and priority policies. We, therefore,
think we can reach our goal of making the leap to
become a highly profitable global corporation.

KHI’s performance through the end of thesecond quarter of the fiscal year
During the interim period through the second quarter,
uncertainty rose substantially and key trends included theappreciation of the yen against the U.S. dollar, a slump in
personal consumption, a decline in private capital investment, and a slowing of exports. In addition, in the world
economy, the financial crisis, which was triggered by eventsin the United States, began to have an impact not only on
the world’s financial and stock markets but also on the real
economy. This impact has also spread to the emerging
economies, which, thus far, have shown strong economic
performance, and uncertainties have arisen about the
future course of the global economy.
Amid these trends, performance of the KHI Groupremained firm, supported by continued robustness in the
Rolling Stock & Construction Machinery and Hydraulic
Machinery segments. However, sales and profits declined incomparison with the same interim period of the previous
year as the appreciation of the yen and the downturn in
the European and U.S. markets had an adverse impact on
KHI’s Consumer Products & Machinery segment, and the
Aerospace segment experienced a temporary lull between
major projects. As a result, net sales for the interim period
declined ¥46.6 billion, or 6.7% from the same period of
the previous fiscal year, to ¥652.9 billion, operating income
decreased ¥14.7 billion, or 37.6%, to ¥24.4 billion, and net
income declined ¥7.5 billion, or 37.9%, to ¥12.3 billion.

3

Review of Operations

Shipbuilding
The Shipbuilding segment secured orders for one LPG carrier, five bulk carriers
and other items during the interim period, amounting in total to ¥58.4 billion;
this was ¥27.2 billion, or 31.7%, lower than for the same interim period of theprevious fiscal year, when a large number of orders for bulk carriers wereobtained.
Sales decreased ¥23.7 billion, or 30.6%, to ¥53.7 billion, mainly due to a
decline in the number of ships included in sales. Operating income was down
¥2.0 billion, or 88.8%, to ¥0.3 billion, because of the impact of the decline insales and a sharp rise in raw material prices.

LNG carrier ENERGY NAVIGATOR

Rolling Stock & Construction Machinery
Orders received during the interim period increased ¥14.5 billion, or 11.9% overthe same period of the previous fiscal year, to ¥136.1 billion, as a result of theplacement of new orders for Shinkansen trains, commuter trains, locomotives,and others by the Japan Railways companies and others.
Despite a decrease in sales of construction machinery to the North American
market, overall sales rose ¥13.4 billion, or 19.1%, to ¥83.7 billion, as sales ofrolling stock to overseas customers increased.
Operating income rose ¥5.9 billion, or 508.4%, to ¥7.1 billion, along with therise in sales of this segment.

Series 3000 commuter train for Keihan Electric
Railway Co., Ltd.

Aerospace
Orders received decreased ¥15.4 billion, or 20.8%, to ¥58.4 billion, despite
additional orders from the Boeing Company for component parts for Boeing
777 and 767 passenger aircraft.
Sales declined ¥23.0 billion, or 19.4%, to ¥95.3 billion, because of the combination of lower sales to Japan’s Ministry of Defense, the appreciation of the yen
against the U.S. dollar, and other factors.
Operating income was down ¥10.1 billion, or 94.8%, to ¥0.6 billion, owing to thedecline in sales and higher costs, including losses on revaluation of inventories.
XP-1, the next maritime patrol aircraft4Gas Turbines & Machinery
In comparison with the interim period of the previous fiscal year, orders rose
¥25.8 billion, or 27.6%, to ¥119.4 billion, reflecting increased orders from
customers in Japan and overseas for gas turbine power generators, diesel
engines for ships, and diesel generators as well as ship propulsion systems andother machinery.
Sales rose ¥7.5 billion, or 8.9%, to ¥91.8 billion, because of higher sales ofdiesel engines for ships and other products.
Operating income, however, decreased ¥0.9 billion, or 16.0%, to ¥4.8 billion, in
spite of the increase in sales because of the impact of higher raw material prices,
the reporting of losses on the revaluation of inventories, and other factors.

Offshore gas compression module shipped to
Korea National Oil Corporation (KNOC)

Plant & Infrastructure Engineering
Orders for the interim period, which included various types of industrial plants
and LNG tank storage facilities, were ¥7.5 billion, or 18.0% higher than for thesame period of the previous year, and amounted to ¥49.0 billion.
Despite an increase in sales of cement plants to overseas customers, sales overall
decreased ¥3.0 billion, or 6.0%, to ¥46.7 billion, owing to the drop in revenues
from municipal refuse incineration plants and bridges.
Operating income, however, rose ¥3.3 billion, or 233.5%, to ¥4.7 billion,
because of an improvement in margins along with the Company’s policy ofgreater selectivity in acceptance of orders and other factors.

Coal ash ship loading facility for Tohoku ElectricPower Co., Inc.

Consumer Products & Machinery
As a consequence of decreased sales of motorcycles in North America and Europe,
lower revenues from industrial robots sold to the semiconductor manufacturingindustry, the appreciation of the yen against the U.S. dollar, and other circumstances, sales of this segment fell ¥34.9 billion, or 16.4%, to ¥177.6 billion.
Operating income declined ¥12.0 billion, or 97.5%, to ¥0.3 billion, as aconsequence of the decrease in sales.
Ninja ZX-10R

5

Hydraulic Machinery
Orders for the interim period rose ¥11.1 billion, or 25.1% over the same periodof the previous year, to ¥55.1 billion, mainly owing to increased sales to theconstruction machinery industry.
Sales rose ¥7.3 billion, or 18.3%, to ¥47.3 billion, as sales to the construction
machinery industry remained at a high level.
Operating income rose ¥1.1 billion, or 29.1%, to ¥5.0 billion, accompanying thegain in sales.
Hydraulic pump

Other
Orders increased ¥11.0 billion, or ¥21.1%, to ¥63.2 billion.
Sales of this segment rose ¥9.7 billion, or 20.5%, to ¥56.8 billion, and operating
income expanded ¥0.5 billion, or 40.2%, to ¥1.8 billion.

Financial Condition
Total assets at the end of the interim period amounted to ¥1,360.8 billion,¥18.0 billion lower than at the conclusion of the previous fiscal year on March
31, 2008. Although work in progress continued to increase along with a highlevel of orders received, declines were posted in notes and accounts receivable
due to the collection of customers’ outstanding obligations.
Total liabilities decreased ¥12.6 billion, to ¥1,047.2 billion. While advances from
customers and borrowings increased, these items were more than offset by
declines in notes and accounts payable as well as other factors.
Net assets posted a decline of ¥5.4 billion, to ¥313.6 billion, mainly because of adecrease in net unrealized gains on securities accompanying the drop in stock
market prices.

6

Condensed Consolidated Balance Sheets
Kawasaki Heavy Industries, Ltd. and Consolidated Subsidiaries
As of September 30 and March 31, 2008 and September 30, 2007

Thousands of
U.S. dollars

Millions of yen

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

September 30, 2008
(unaudited)

March 31, 2008

September 30, 2007
(unaudited)

September 30, 2008
(unaudited)¥0,029,898
354,549
495,400
69,793
949,640
72,164
275,726
63,241¥1,360,771¥0,039,875
433,155
439,31069,942982,282
79,675259,927
56,886¥1,378,770¥0,023,177
389,823444,517
61,236
918,753
103,417
258,527
42,082¥1,322,779

288,5073,421,297
4,780,469
673,483
9,163,756
696,3622,660,677
610,258$13,131,053¥0,156,103
380,030
145,416
119,752
801,301¥0,137,681
431,000
124,679
131,181824,541¥0,147,888
372,216
138,683
110,133
768,920$ 1,506,350
3,667,181
1,403,223
1,155,573
7,732,327

145,298
100,579
245,877

138,766
96,425
235,191

143,356
92,876236,232

1,402,084
970,559
2,372,643

104,329
54,289154,901
(469)
4,787
4,107
(14,137)
5,786
313,593¥1,360,771

104,32954,291
151,401(460)
10,292
5,217(11,878)
5,846
319,038¥1,378,770

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

1,006,745
523,873
1,494,752(4,526)46,19339,631(136,418)
55,833
3,026,083$13,131,053$

7

Condensed Consolidated Statements of Income
Kawasaki Heavy Industries, Ltd. and Consolidated Subsidiaries

For the six months ended September 30, 2008 and 2007 (unaudited)
Millions of yen
2008

Net sales ............................................................................................................................................... ¥652,924
Cost of sales ......................................................................................................................................... 547,663
Gross profit................................................................................................................................... 105,261
Selling, general and administrative expenses .........................................................................................
80,908Operating income .........................................................................................................................
24,353
Other income (expenses):
Interest and dividend income ............................................................................................................
2,501
Equity in income of unconsolidated subsidiaries and affiliates............................................................
3,311
Interest expense ................................................................................................................................
(3,429)Other, net .........................................................................................................................................
(1,183)
Income before income taxes and minority interests .......................................................................
25,553
Income taxes.........................................................................................................................................
(12,589)
Minority interests in net income of consolidated subsidiaries .................................................................
(682)
Net income ................................................................................................................................... ¥012,336

For the three months ended September 30, 2008 (unaudited)

2007

2008

¥699,540
582,117
117,423
78,37339,050$6,300,531
5,284,792
1,015,739
780,739
235,000

2,468
2,331
(3,859)(8,153)31,837(11,470)(489)¥ 19,878

24,134
31,950(33,089)(11,416)
246,579(121,480)(6,060)$ 119,039

Millions of yen

Thousands of
U.S. dollars

2008

2008

Net sales ............................................................................................................................................... ¥350,392
Cost of sales ......................................................................................................................................... 293,220
Gross profit...................................................................................................................................
57,172
Selling, general and administrative expenses .........................................................................................
41,319Operating income .........................................................................................................................
15,853
Other income (expenses):
Interest and dividend income ............................................................................................................
855
Equity in income of unconsolidated subsidiaries and affiliates............................................................
1,956
Interest expense ................................................................................................................................
(1,579)Other, net .........................................................................................................................................
(6,357)
Income before income taxes and minority interests .......................................................................
10,728
Income taxes.........................................................................................................................................
(6,134)
Minority interests in net income of consolidated subsidiaries .................................................................
(360)
Net income ................................................................................................................................... ¥014,234

8

Thousands of
U.S. dollars$3,381,183
2,829,489
551,694
398,717
152,977
8,251
18,875(15,237)(61,344)
103,522(59,191)(3,474)$ 40,857

Condensed Consolidated Statements of Cash Flows
Kawasaki Heavy Industries, Ltd. and Consolidated Subsidiaries
For the six months ended September 30, 2008 and 2007 (unaudited)Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

¥25,553¥31,837$246,579

20,02522,602(41,356)(18,277)
8,547

17,64233,312(30,659)(28,122)
24,010193,236
218,103(399,074)(176,368)
82,476

Cash flows from investing activities:
Acquisition of tangible and intangible assets ....................................................................................
Acquisition of investments in securities ............................................................................................
Other...............................................................................................................................................
Net cash used for investing activities..........................................................................................

(30,787)(24)
1,227(29,584)(23,964)(1,111)
4,885(20,190)(297,086)(232)
11,841(285,477)

Cash flows from financing activities:
Increase (decrease) in short-term borrowings ...................................................................................
Proceeds from long-term debt .........................................................................................................
Repayment of long-term debt ..........................................................................................................
Other...............................................................................................................................................
Net cash provided by (used for) financing activities..................................................................

20,381
21,008(20,910)(8,636)
11,843(5,369)3,220(10,108)(8,544)(20,801)

196,671
202,721(201,776)(83,334)
114,282

Effect of exchange rate changes .........................................................................................................

(359)

413

(3,465)Net decrease in cash and cash equivalents.........................................................................................

(9,553)(16,568)(92,184)

Cash and cash equivalents at beginning of the period .....................................................................

38,16939,229368,320

Increase in cash and cash equivalents due to changes in fiscal periodof consolidated subsidiaries.............................................................................................................

—

158

—

Cash and cash equivalents at end of the period ................................................................................

¥28,616¥22,819$276,136

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 in assets ........................................................................................................................
Decrease in liabilities ....................................................................................................................
Other...........................................................................................................................................
Net cash provided by operating activities ..................................................................................

9

Segment Information
Kawasaki Heavy Industries, Ltd. and Consolidated Subsidiaries
For the six months ended September 30, 2008 and 2007 (unaudited)(a) Information by industry segment
Millions of yen
2008

Shipbuilding ..........................................................................................
Rolling Stock & Construction Machinery ................................................
Aerospace .............................................................................................
Gas Turbines & Machinery .....................................................................
Plant & Infrastructure Engineering .........................................................
Consumer Products & Machinery ...........................................................
Hydraulic Machinery ..............................................................................
Other ....................................................................................................
Total..............................................................................................
Eliminations ...........................................................................................
Consolidated total .........................................................................

External
sales

Intersegment
sales¥ 53,735
83,67995,291
91,79046,692
177,622
47,29756,818652,924—¥652,924

¥

906
730
810
8,485
5,170
3,661
4,356
19,48843,606(43,606)¥ 000—

Total
sales

Operatingexpenses

Operatingincome¥ 54,641
84,40996,101
100,275
51,862
181,283
51,65376,306
696,530(43,606)¥652,924¥ 54,383
77,34595,541
95,49047,169180,981
46,60874,488672,005(43,434)¥628,571

¥

Total
sales

Operatingexpenses

Operatingincome¥ 78,412
70,835
119,115
90,611
56,449215,089
44,231
65,168739,910(40,370)¥699,540¥ 76,111
69,674
108,422
84,91755,043
202,769
40,324
63,868701,128(40,638)¥660,490¥ 2,301
1,161
10,693
5,694
1,407
12,3203,908
1,297
38,781
269¥39,050

258
7,064
560
4,785
4,693
302
5,045
1,818
24,525(172)¥24,353

Millions of yen
2007

Shipbuilding ..........................................................................................
Rolling Stock & Construction Machinery ................................................
Aerospace .............................................................................................
Gas Turbines & Machinery .....................................................................
Plant & Infrastructure Engineering .........................................................
Consumer Products & Machinery ...........................................................
Hydraulic Machinery ..............................................................................
Other ....................................................................................................
Total..............................................................................................
Eliminations ...........................................................................................
Consolidated total .........................................................................

External
sales

Intersegment
sales¥ 77,480
70,244
118,247
84,28949,647
212,51239,977
47,144
699,540—¥699,540

¥

932
591
868
6,322
6,802
2,577
4,254
18,02440,370(40,370)¥ 000—

Thousands of U.S. dollars
2008
External
sales

Shipbuilding .......................................................................................... $ 518,527
Rolling Stock & Construction Machinery ................................................
807,479
Aerospace .............................................................................................
919,531
Gas Turbines & Machinery .....................................................................
885,747
Plant & Infrastructure Engineering .........................................................
450,565
Consumer Products & Machinery ........................................................... 1,714,002
Hydraulic Machinery ..............................................................................
456,403
Other ....................................................................................................
548,277
Total.............................................................................................. 6,300,531
Eliminations ...........................................................................................
—
Consolidated total ......................................................................... $6,300,531

10Intersegment
sales

$

8,743
7,044
7,816
81,87849,88935,32842,034
188,053
420,785(420,785)$ 0,000—

Total
sales

Operatingexpenses

Operatingincome$ 527,270
814,523
927,347
967,625
500,454
1,749,330
498,437
736,330
6,721,316(420,785)$6,300,531$ 524,780
746,357
921,943
921,451
455,167
1,746,415
449,755
718,7896,484,657(419,126)$6,065,531$ 2,490
68,166
5,404
46,17445,287
2,915
48,682
17,541
236,659(1,659)$235,000

(b) Information by geographic area
Millions of yen
2008Japan ....................................................................................................
North America .......................................................................................
Europe ..................................................................................................
Asia .......................................................................................................
Other areas ...........................................................................................
Total..............................................................................................
Eliminations ...........................................................................................
Consolidated total .........................................................................

External
sales

Intersegment
sales

Total
sales

Operatingexpenses

Operatingincome (loss)¥465,767
106,348
56,11919,857
4,833
652,924—¥652,924¥119,156
12,944
2,539
19,299123
154,061(154,061)¥ 000—¥584,923
119,292
58,65839,156
4,956
806,985(154,061)¥652,924¥567,873
120,52957,55837,2394,651
787,850(159,279)¥628,571¥17,050(1,237)
1,100
1,917
305
19,135
5,218¥24,353

Millions of yen
2007Japan ....................................................................................................
North America .......................................................................................
Europe ..................................................................................................
Asia .......................................................................................................
Other areas ...........................................................................................
Total..............................................................................................
Eliminations ...........................................................................................
Consolidated total .........................................................................

External
sales

Intersegment
sales

Total
sales

Operatingexpenses

Operatingincome (loss)¥491,024
118,166
72,01013,863
4,477
699,540—¥699,540¥143,302
12,691
2,334
11,683
118
170,128(170,128)¥ 000—¥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¥38,886(3,547)
2,931
822
102
39,194(144)¥39,050

Thousands of U.S. dollars
2008
External
sales

Japan .................................................................................................... $4,494,519
North America ....................................................................................... 1,026,228
Europe ..................................................................................................
541,532
Asia .......................................................................................................
191,614
Other areas ...........................................................................................
46,638
Total.............................................................................................. 6,300,531
Eliminations ...........................................................................................
—
Consolidated total ......................................................................... $6,300,531

Intersegment
sales

Total
sales

Operatingexpenses

Operatingincome (loss)$1,149,821
126,906
24,501
186,230
1,187
1,486,645(1,486,645)$ 0000—$5,644,340
1,151,134
566,033
377,844
47,825
7,787,176(1,486,645)$6,300,531$5,479,813
1,163,071
555,418
359,346
44,8807,602,528(1,536,977)$6,065,531$164,527(11,937)
10,615
18,498
2,945
184,648
50,352$235,00011

(c) Overseas sales
Millions of yen

12

Thousands of
U.S. dollars

Overseas
sales

% of
net sales

Overseassales¥162,065
81,69464,742
77,624¥386,125

23.1%
11.6%
9.3%
11.1%
55.1%

$1,431,873
659,828
714,870
690,872$3,497,443

Millions of yen

Overseas
sales

% of
net sales¥148,385
68,37874,082
71,595¥362,440

22.8%
10.4%
11.3%
11.0%
55.5%

2008

North America ...............................................................................
Europe ..........................................................................................
Asia ...............................................................................................
Other areas....................................................................................
Total......................................................................................

%

%

2007

2008

Net Sales, Orders and Order Backlog by Industry Segment
For the six months ended September 30, 2008 and 2007 (unaudited)Thousands of
U.S. dollars

Millions of yen
2008

2007

2008

Net sales:
Shipbuilding........................................................................................................................................ ¥ 53,735
Rolling Stock & Construction Machinery..............................................................................................
83,679Aerospace...........................................................................................................................................
95,291
Gas Turbines & Machinery ..................................................................................................................
91,790
Plant & Infrastructure Engineering .......................................................................................................
46,692
Consumer Products & Machinery ........................................................................................................ 177,622
Hydraulic Machinery ...........................................................................................................................
47,297
Other ..................................................................................................................................................
56,818
Total ............................................................................................................................................... ¥652,924¥ 77,480
70,244
118,247
84,28949,647
212,51239,977
47,144¥699,540$ 518,527
807,479
919,531885,747
450,565
1,714,002
456,403548,277$6,300,531

Orders received:
Shipbuilding........................................................................................................................................ ¥ 58,444
Rolling Stock & Construction Machinery.............................................................................................. 136,098
Aerospace...........................................................................................................................................
58,366
Gas Turbines & Machinery .................................................................................................................. 119,369
Plant & Infrastructure Engineering .......................................................................................................
49,032
Consumer Products & Machinery ........................................................................................................ 177,622
Hydraulic Machinery ...........................................................................................................................
55,098Other ..................................................................................................................................................
63,237
Total ............................................................................................................................................... ¥717,266¥ 85,631
121,60573,726
93,52741,557
212,51244,04052,238¥724,836$ 563,968
1,313,307
563,215
1,151,877
473,145
1,714,002
531,680
610,219$6,921,413

Thousands of
U.S. dollars

Millions of yen

Order backlog:
Shipbuilding ...................................................................
Rolling Stock & Construction Machinery .........................
Aerospace ......................................................................
Gas Turbines & Machinery ..............................................
Plant & Infrastructure Engineering...................................
Consumer Products & Machinery ....................................
Hydraulic Machinery .......................................................
Other..............................................................................
Total...........................................................................

As of
September 30, 2008

As ofMarch 31, 2008

As of
September 30, 2007

As of
September 30, 2008

¥0,421,518
484,027
215,310
278,576
137,506—
37,11735,630¥1,609,684¥ 414,176
431,377
248,332
245,962
135,288—
29,317
29,211¥1,533,663¥ 320,643
492,077
241,623
224,028
163,996—
25,072
24,994¥1,492,433$ 4,067,529
4,670,723
2,077,680
2,688,179
1,326,894—
358,168
343,819$15,532,992

13

Kawasaki Corporate Data
(As of September 30, 2008)
Kawasaki Heavy Industries, Ltd.
Kobe Head Office:
Kobe Crystal Tower,
1-3, Higashikawasaki-cho 1-chome,
Chuo-ku, Kobe, Hyogo 650-8680, JapanTokyo Head Office:World Trade Center Bldg.,
4-1, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo 105-6116, JapanFounded: 1878
Incorporated: 1896
Paid-in Capital: ¥104,328,628,664
Number of Shares Issued: 1,669,629,122
Number of Shareholders: 172,696
Number of Employees: 31,968

Stock Exchange Listings:
Tokyo, Osaka, Nagoya
Method of Publication of Notices:
http://www.khi.co.jp
The method of publication of notices of the Corporation shall bemade electronically. Provided, if the Corporation is unable to makean electronic publication of notice due to an accident or otherunavoidable reason, the notice shall be inserted in the Nihon Keizai
Shimbun.
Transfer Agent:
The Chuo Mitsui Trust and Banking Company, Limited
33-1, Shiba 3-chome,
Minato-ku, Tokyo 105-8574, Japan
Handling Office:
The Chuo Mitsui Trust and Banking Company, Limited
Osaka Branch Office
2-21, Kitahama 2-chome,
Chuo-ku, Osaka 541-0041, Japan
Independent Auditors:
KPMG AZSA & Co.
Kobe Crystal Tower,
1-3, Higashikawasaki-cho 1-chome,
Chuo-ku, Kobe, Hyogo 650-8680, JapanADR Facility:
KHI has a sponsored American Depository Receipt (ADR) facility.
ADRs are traded in the over-the-counter (OTC) market in the UnitedStates under CUSIP number 486 359 20 1 with each ADR
representing four ordinary shares.

This report was printed on recycled paper using the waterless printing
process, which emits no harmful chemicals, and soy-based ink, which
is made from plant material that emits only low levels of volatileorganic chemicals.
Printed in JapanADR Depository:
The Bank of New York Mellon
101 Barclay St., 22 West,
New York, NY 10286, U.S.A.
Phone: 1-866-680-6825
U.S. Toll Free: 888-269-2377(888-BNY-ADRS)
http://adrbnymellon.com
KHI Web Site at: http://www.khi.co.jp