Report of Earnings and Financial Statements
for the Fiscal Year Ended March 31, 2016 (Consolidated)(Prepared pursuant to Japanese GAAP)
April 27, 2016
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

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

1st sections of the TSE, and NSE
7012
http://www.khi.co.jp/
Shigeru Murayama, President
Hajime Asano, Senior Manager, Accounting Department+81 3-3435-2130

Scheduled dates:
Ordinary general meeting of shareholders
Commencement date of dividend payments
Submission of financial statements:

June 24, 2016
June 27, 2016
June 24, 2016

Supplementary materials to financial results
Earnings presentation:

Available
Conducted (for institutional investors and analysts)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2016
(April 1, 2015 – March 31, 2016)(Amounts in million yen rounded down to the nearest million yen)

(1) Operating Results

Years ended March 31(Million yen ) (Percentage figures indicate change compared with the previous fiscal year )Net income attributable
Net sales
Operating income
Recurring profit
to owners of parent
%
%
%
%
2016
1,541,096
3.6
95,996
10.0
93,22910.6
46,043(10.8)
2015
1,486,123
7.2
87,25920.6
84,28839.0
51,63933.7
Note: Comprehensive income Fiscal year ended March 31, 2016: ¥ 20,230 million (76.9%)
Fiscal year ended March 31, 2015: ¥ 87,760 million 27.7%
Years ended March 31
Earnings per share
Return on equity Return on assets– diluted
Yen
Yen
%
%
2016
27.56
10.6
5.6
2015
30.89
12.9
5.2
For reference: Equity in income of non consolidated subsidiaries and affiliates
Fiscal year ended March 31, 2016: ¥ 2,876 million
Fiscal year ended March 31, 2015: ¥ 6,208 million
Earnings per share(2) Financial Condition
March 31

Total assets

Operating income
to net sales
%
6.2
5.8

(Million yen)
Net assets

Equity ratio

Net assets per share

%

Yen

2016

1,620,458

445,62526.6

258.212015

1,662,283

447,95725.9

258.58For reference: Shareholders’ equity

March 31, 2016:
March 31, 2015:1¥ 431,368 million¥ 431,996 million

(3) Cash Flow Position

Years ended March 31
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities(Million yen)
Cash and cash equivalents
at end of year2016

86,059(74,185)(23,400)

37,832

2015

127,651(67,397)(57,133)

47,721

2. Dividends

Years ended/ending March 31

1Q

2Q

3Q

Year-end

Yen

Yen

Yen

Yen

Total
dividends
paid
Full year(annual)Yen
million yen

2015

-

3.00

-

7.00

10.00

16,709

32.3

4.2

2016

-

5.00

-

7.00

12.00

20,047

43.5

4.6

2017
(forecast)

-

4.00

-

6.00

10.00

Dividend per share

Recorddate orterm

Payout ratio(consolidated)

Dividends /Net assets(consolidated)

%

%

34.0

3. Forecast of Consolidated Earnings for the Fiscal Year Ending March 31, 2017
(April 1, 2016 – March 31, 2017)

For six months
endingSeptember 30,
2016
Full year(Million yen)(Percentage figures indicate change compared with the previous fiscal year)
Net income
Earnings
Net sales
Operating income
Recurring profit
attributable to owners per shareof parent
%
%
%
%
Yen

700,000(1.1)

22,000(47.9)

22,000(45.3)

14,500(46.0)

8.67

1,570,000

1.8

70,000(27.0)

69,000(25.9)

49,0006.4

29.33*Notes(1) Changes affecting the status of material subsidiaries (scope of consolidation): None
(2) Changes in accounting policies, changes in accounting estimates, and correction of errors(ⅰ) Changes in accounting policies in accord with revisions to accounting standards: Yes(ⅱ) Changes in accounting policies other than (ⅰ): None(ⅲ) Changes in accounting estimates: None(ⅳ) Correction of errors: None
*For further details, see “5. Consolidated Financial Statements (5) Notes on financial statements(Changes in accounting policy)” on page 22 in the Accompanying Materials.
(3) Number of shares issued and outstanding (common stock)(ⅰ) Number of shares issued as of period-end (including treasury stock)
March 31, 2016:
1,670,805,320 shares
March 31, 2015:
1,670,805,320 shares(ⅱ) Number of shares held in treasury as of period-end
March 31, 2016:
228,992 shares
March 31, 2015:
191,653 shares(ⅲ) Average number of shares during respective periods
March 31, 2016:
1,670,591,977 shares
March 31, 2015:
1,671,637,196 shares

2For reference: Overview of Non-Consolidated Financial Results(1) Operating Results
Years ended March 31(Million yen ) (Percentage figures indicate change compared with the previous fiscal year)

Net sales
2016
2015

1,161,065
1,098,013

Operating income
%
5.7
8.5

Earnings per share
2016
2015

Yen
18.43
21.81

56,81946,409

%
22.4
28.5

Recurring profit
%
23.4
54.6

68,51755,51330,796
36,465%(15.5)
13.6

Earnings per share– diluted
Yen-(2) Financial Condition
March 31

Total assets

Net income(Million yen)
Net assets

Equity ratio

Net assets per share

%

Yen

2016

1,300,792

306,89923.5

183.702015

1,301,125

294,05222.5

176.01

Note: Shareholders’ equity

March 31, 2016: ¥306,899 million
March 31, 2015: ¥294,052 million* Review Status
This report is exempt from the review of accounts conducted pursuant to Japan’s Financial Instruments
and Exchange Act. As of this report’s publication, the review of the financial results had not been
completed.
*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain earnings forecast and other forward-looking statements based on information
available to the company at the time of disclosure and the company makes no assurances as to the actual
results and/or other outcomes, which may differ from those expressed or implied herein due to various
factors. For assumptions underlying earnings forecasts and other information regarding the use of suchforecasts, refer to “(iii) Consolidated Earnings Outlook” on page 5 in section “(1) Consolidated Operating
Results” of “1. Qualitative Information and Financial Statements” in the Accompanying Materials.
How to Obtain Supplementary Briefing Material on Financial Results and Details of the Financial
Results Briefing
The Company plans to conduct a briefing for institutional investors and analysts on Wednesday April 27,
2016, and to post the briefing material on financial results to be used for the briefing on TDnet and theCompany’s website simultaneously with the announcement of financial results.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial position

8(3) Dividend policy and dividends for the fiscal years 2015 and 201610(4) Business and other risks

10

2. Status of Group10

3. Management Strategy

10(1) Basic management strategy

10(2) Target management metrics

11(3) Medium- to long-term management strategy

11

4. Basic rationale for selecting accounting standards

14

5. Consolidated Financial Statements

15(1) Consolidated balance sheets

15(2) Consolidated statements of income and comprehensive income

17

Consolidated statements of income

17

Consolidated statements of comprehensive income18(3) Consolidated statement of changes in net assets

19(4) Consolidated statements of cash flows

21(5) Notes on financial statements

22

Notes on the going-concern assumption

22

Changes in accounting policy

22

Related to consolidated statements of income

22

Related to corporate combinations, etc.

23

Additional information

24

Segment information and others

26

Per share data

30

Material subsequent events31

6. Others

32(1) Consolidated orders and sales(2) Supplementary information on earnings forecasts for the fiscal year ending March 31, 2017

4

32
33

1. Qualitative Information and Financial Statements(1) Consolidated operating results(i) Overview of consolidated operating results
In fiscal 2015 (the year ended March 31, 2016), the global economy lacked vigor on the whole, as
despite continued modest economic growth centered on developed countries, future prospects are
becoming increasingly uncertain as a result of factors including the impact of the normalization of
US monetary policy, the trend in crude oil prices, and concerns about economic slowdowns in China
and other emerging countries and resource-rich countries. Going forward, modest economic growthis expected, but risks possessing the potential to drag down the global economy must continue to bewatched.
The Japanese economy is now at a standstill due the impacts of factors such as the deterioration of
the overseas demand environment and sluggish personal consumption. Going forward, the economy
is expected to grow modestly on the whole, led by steady improvements in both the income andemployment environments, but there are concerns about a decline in corporate earnings, particularly
those of exporters, due to the rapid appreciation of the yen since the start of the year, and worries
about a deterioration in business sentiment in conjunction with this.
Amid such an operating environment, the Group’s orders received in fiscal 2015 declined overall
versus the previous fiscal year, as despite an increase in orders received in segments such as
Aerospace and Gas Turbine & Machinery, there were decreases in segments such as Ship & Offshore
Structure and Plant & Infrastructure, along with other factors. Net sales during fiscal 2015 increased,
centered on the Aerospace and Rolling Stock segments. Profits increased in segments such as
Aerospace and Gas Turbine & Machinery, and there was an increase in operating income andrecurring profit. On the other hand, there was a decline in net income attributable to owners of parent
due to the recognition of losses on overseas business as extraordinary losses.
The Group’s consolidated orders received decreased by ¥19.2 billion year on year to ¥1,693.6
billion. Consolidated net sales totaled ¥1,541.0 billion, a ¥54.9 billion year-on-year increase, andconsolidated operating income increased by ¥8.7 billion year on year to ¥95.9 billion. Consolidated
recurring profit increased by ¥8.9 billion year on year to ¥93.2 billion. Consolidated net income
attributable to owners of parent decreased by ¥5.5billion year on year to ¥46.0 billion.

5

Consolidated operating performance in the fiscal year ended March 31, 2016, is summarized bysegment below.
(ii) Segment information
Segment net sales, operating income, and orders received(billion yen)

Fiscal year ended March 31

2015(A)

2016(B)

Orders received

Change (B – A)

Fiscal year ended March 31

Net

OperatingNet

OperatingNet

Operating

2015

2016

Changesales

incomesales

incomesales

income(A)(B)(B – A)

Ship & Offshore
Structure

90.3

2.6

94.8

(7.9)

4.5

(10.6)

179.2

98.3

(80.8)

Rolling Stock

121.5

6.0

146.6

9.2

25.1

3.2

131.4

132.1

0.7

Aerospace

325.0

36.3

351.8

45.6

26.7

9.3

357.0

464.2

107.2

218.7

11.2

236.4

16.9

17.6

5.6

235.7

288.9

53.1

121.1

6.5

135.6

8.5

14.5

1.9

203.4

138.7

(64.6)

329.2

14.9

333.5

15.7

4.3

0.8

329.2

333.5

4.3

Machinery

135.7

10.9

133.1

8.5

(2.6)

(2.3)

136.2

133.1

(3.0)

Other

144.2

3.9

108.8

2.8

(35.4)

(1.0)

140.5

104.4

(36.1)

-

(5.4)

-

(3.7)

-

1.7

-

-

-

1,486.1

87.2

1,541.0

95.9

54.9

8.7

1,712.9

1,693.6(19.2)

Gas Turbine &Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision

Adjustments
Total

Note: 1. Net sales include only sales to external customers.
2. The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

Ship & Offshore Structure
Consolidated orders received declined ¥80.8 billion year on year to ¥98.3 billion, as in theprevious fiscal year orders for a submarine and deep submergence rescue vehicle were received fromJapan’s Ministry of Defense.
Consolidated net sales increased ¥4.5 billion year on year to ¥94.8 billion due to an increase in theamount of shipbuilding of LPG carriers and other factors.
Operating income deteriorated ¥10.6 billion year on year due to provision for losses on
construction contracts and other factors, resulting in an operating loss of ¥7.9 billion.
Rolling Stock
Consolidated orders received totaled ¥132.1 billion, which was on par with the previous fiscal
year, due to there being no significant changes in either the domestic or overseas markets.
Consolidated net sales increased ¥25.1 billion to ¥146.6 billion, as increase in overseas sales,
including sales to customers in Singapore and Taiwan.
6

Consolidated operating income increased ¥3.2 billion year on year to ¥9.2 billion, attributable tothe increase in sales and other factors.
Aerospace
Consolidated orders received totaled ¥464.2 billion, a ¥107.2 billion year-on-year increase, due tothe order to Japan’s Ministry of Defense increase and other facilities.
Consolidated net sales increased ¥26.7 billion year on year to ¥351.8 billion, due to the increase insales to Japan’s Ministry of Defense and the continued high level of sales of component parts for theCommercial Airplane Company, coupled with the impact of the depreciation of the yen and otherfactors.
Consolidated operating income increased ¥9.3 billion year on year to ¥45.6 billion, due to factors
including the increase in sales.
Gas Turbine & Machinery
Consolidated orders received grew ¥53.1 billion year on year to ¥288.9 billion, attributable to theincrease in orders for aircraft engine components, Gas engines and other products.
Consolidated net sales grew ¥17.6 billion to ¥236.4 billion, due to an increase in sales of aircraft
engine components, and other products.
Consolidated operating income increased ¥5.6 billion year on year to ¥16.9 billion in response to
the increase in sales, among other factors.
Plant & Infrastructure
Consolidated orders received totaled ¥138.7 billion, a ¥64.6 billion decrease in comparison to last
fiscal year, taking large orders of plants for overseas.
Consolidated net sales grew ¥14.5 billion year on year to ¥135.6 billion, due to the increase insales of large plants for overseas customers and other factors.
Consolidated operating income increased ¥1.9 billion year on year to ¥8.5 billion, attributable tothe increase in sales and other factors.
Motorcycle & Engine
Consolidated net sales totaled ¥333.5 billion, a ¥4.3 billion year-on-year increase, as the decline inmotorcycle sales to Indonesia and other emerging countries was offset by the increase in vehicle
sales and motorcycle sales to developed countries.
Consolidated operating income increased ¥0.8 billion year on year to ¥15.7 billion, due to factors
including the increase in sales.
Precision Machinery
Consolidated orders received decreased by ¥3.0 billion year on year to ¥133.1 billion as a result of
the decline in orders for hydraulic components, among other factors.
Consolidated net sales decreased ¥2.6 billion year on year to ¥133.1 billion as a result of thedecline in orders for hydraulic components, among other factors.
Consolidated operating income declined ¥2.3 billion year on year to ¥8.5 billion, attributable tothe decrease in sales and profit ratio of hydraulic components, and other factors.
Other Operations
Consolidated net sales declined ¥35.4 billion year on year to ¥108.8 billion due to the sale of theconstruction machinery business and other factors.
7

Operating income declined ¥1.0 billion year on year to ¥2.8 billion, due to the sale of theconstruction machinery business and other factors.
(iii) Consolidated earnings outlook
The future outlook for the Group’s operating environment is uncertain, as despite expectations formodest economic growth in developed countries centered on the US, there are concerns about the
impact of economic slowdowns in emerging countries, the decline in crude oil prices, US monetary
policy developments, and other factors.
Amid this business environment, for the fiscal year ending March 31, 2017, we are expecting
consolidated net sales of ¥1,570.0 billion, a ¥29.0 billion year-on-year increase, due to expected
increases mainly in the Ship & Offshore Structure, Gas Turbine & Machinery, and Plant &Infrastructure segments. In terms of profit, we are forecasting consolidated operating income of¥70.0 billion, recurring profit of ¥69.0 billion, and net income attributable to owners of parent of¥49.0 billion. Furthermore, we are expecting ROIC* of 8.3% and ROE of 11.0%. These forecasts are
based on the expectation for the yen to be stronger than it was during the previous fiscal year, thedecline in profitability of the component parts for commercial aircraft in the Aerospace segment, andother factors, despite continuing measures to improve profits such as cutting fixed costs and various
expenses, as well as improving productivity.
Consolidated orders received are expected to decline ¥193.7 billion year on year to ¥1,500.0
billion, due to a decrease in the Aerospace segment where a large order was received in the previous
fiscal year, and other factors.
Assumed exchange rates of ¥110/US$ and ¥125/Euro were used for the above consolidated
operating results forecasts.
*ROIC = EBIT (income before interest and taxes + interest paid) ÷ invested capital (borrowings +shareholders’ equity)

Note regarding consolidated earnings outlook
The above earnings outlook is based on information available at the time of preparation, andincludes risks and uncertainties. We therefore discourage making investment decisions depending
solely on this outlook. Actual earnings may differ materially from this outlook, due to a variety ofimportant factors stemming from changes the external environment and/or the Company’s internal
environment. Important factors that impact actual operating performance include, but are not limited
to, the economic situation surrounding the Company’s scope of business, foreign exchange rates, inparticular the yen/dollar exchange rate, tax codes and other regulatory system-related issues.

(2) Consolidated financial position(i) Financial condition(A) Assets
At March 31, 2016, consolidated assets totaled ¥1,620.4 billion, a 2.5% decline from March 31,
82015. Of this total, current assets accounted for ¥1,017.9 billion, a 5.1% year-on-year decrease,chiefly attributable to a decline in trade receivables. Fixed assets totaled ¥602.5 billion at March 31,
2016, a 2.2% increase from March 31, 2015, mainly as a result of an increase in holdings of property,
plant and equipment due to capital investment.
(B) Liabilities
Consolidated liabilities declined 3.3% year on year to ¥1,174.8 billion at March 31, 2016, mainly
attributable to a decrease in short-term debt and other factors.
(C) Net assets
Consolidated net assets at March 31, 2016, totaled ¥445.6 billion, roughly the same level as March
31, 2015. Dividend payments, a decline in foreign currency translation adjustments due to the yen’s
appreciation, and other factors detracted from consolidated net assets, but this was mostly offset by
an increase in due to the posting of net income attributable to owners of parent.
(ii) Cash flows(A) Cash flows from operating activities
Operating activities provided net cash of ¥86.0 billion, a ¥41.5 billion decrease from the previous
fiscal year. Major sources of operating cash flow included income before income taxes of ¥74.8
billion and depreciation and amortization of ¥49.0 billion. Major uses of operating cash flow
included expenditure of ¥25.1 billion due to the cash paid for income taxes and expenditure of ¥19.7
due to an increase in inventories.
(B) Cash flows from investing activities
Investing activities used net cash of ¥74.1 billion, ¥6.7 billion more than in the previous fiscal year,
mainly to acquire property, plant and equipment and intangible assets.
(C) Cash flows from financing activities
Financing activities used net cash of ¥23.4 billion, ¥33.7 billion less than the previous fiscal year.
The cash outflow was mainly due to the cash dividends paid.

(iii) Cash flow ratios
Fiscal year ended March 31:
2012
2013
2014
2015
2016
Equity ratio (%)
22.4
23.0
23.3
25.9
26.6
Market-value equity ratio (%)
31.0
33.6
40.8
61.0
33.5
Debt-to-cash-flow ratio (%)
480.5
1,724.6
293.0
324.6
462.9
Interest-coverage ratio (times)
19.0
6.7
36.0
31.8
22.5
Notes:
1. Ratios are calculated as follows.
Ratio of shareholders’ equity to total assets: Shareholders’ equity / Total assets
Market-value equity ratio: Market capitalization / Total assets
Debt-to-cash-flow ratio: Interest-bearing debt / Cash flow from operating activities
Interest-coverage ratio: Cash flow from operating activities / Interest paid
2. All ratios are calculated using consolidated-basis financial data.
3. Market capitalization is calculated by multiplying the closing price of the company’s stock by
the number of shares issued and outstanding (excluding treasury stock) at the end of the fiscal

9year.
4. The figure for cash flow from operating activities is taken from cash flow from operating
activities on the consolidated statement of cash flows.
5. Interest-bearing debt is all interest-bearing debt listed under liabilities on the consolidatedbalance sheet. Interest paid is the figure for “Cash paid for interest” on the consolidated
statement of cash flows.

(3) Dividend policy and dividends for the fiscal years 2015 and 2016
As a basic management policy, the Company aims to increase corporate value, in other words toconsistently generate profit exceeding the cost of invested capital throughout the future. In line withthis policy, the Company believes that one priority for management is to engage in cutting-edge
research and development as well as innovative capital investment required to achieve future growth,and thereby return profits to shareholders by enhancing shareholder value over the long term.
In order to maintain a good balance between enhancing shareholder value and returning profits toshareholders through dividends, the Company has set a medium-to long-term consolidated payout
ratio standard of 30% corresponded to consolidated net income attributable to owners of parent, inlight of both the outlook for future earnings and a comprehensive examination of its financial
condition, including free cash flow, the D/E ratio (debt-to-equity ratio) and other factors.
The Company has a basic policy of distributing surplus retained earnings as dividends twice a year,
once after the fiscal second quarter and once after the fiscal year-end. Interim dividends areauthorized by the Board of Directors; year-end dividends are authorized at general meetings ofshareholders.
In fiscal 2015, the Company intends to pay a dividend of ¥12 per share (¥5 interim dividend, ¥7
year-end dividend).
In fiscal 2016, the Company intends to pay a dividend of ¥10 per share (¥4 interim dividend, ¥6
year-end dividend).

(4) Business and other risks
No risks other than those disclosed under the heading “Business and Other Risks” in the Company’s
most recent full-year statutory financial report (filed June 25, 2015) have surfaced since said filing.
Updated risk disclosures are therefore omitted here.

2. Status of Group
There have been no material changes in the “Chart of Operations (Nature of Operations)” and the“Status of Affiliated Companies” in the Company’s most recent quarterly report (filed February 12,2016). Updated disclosure of them is therefore omitted here.

3. Management Strategy(1) Basic management strategy
10The Kawasaki Group Mission Statement states the Group’s mission as “Kawasaki, working as one
for the good of the planet.” In March 2016, the Group established its vision of “aiming to be a
corporate group that creates new value through cutting-edge technologies and opens the way to new
possibilities for our customers and society, in the four main business areas of Land and Sea
Transport Systems, Air Transport Systems, Energy & Environmental Engineering, andROBO/MECH (formerly “Industrial Equipment”).
Based on the three guiding principles of “selection and concentration,” “quality over quantity,”and “risk management,” the Group has a basic management strategy of promoting “Kawasaki-ROIC
management.” This entails consistently generating profits exceeding the cost of invested capital andcarrying out cutting-edge research and development as well as innovative capital investment, inorder to increase corporate value throughout the future. By promoting this Kawasaki-ROIC
management, the Group will work to establish a business portfolio with an emphasis on profitability,
stability, and growth.
(2) Target management metrics
As target management indicators, the Company has adopted Earnings (operating income,recurring profit, net income attributable to owners of parent), and Return on Invested Capital [ROIC= EBIT (earnings before interest and taxes) / Invested Capital (debt obligations + shareholders’equity)] i.e. an indicator for measuring capital efficiency.
The Company’s group-wide businesses are segmented and subdivided into Business Units(hereinafter referred to as “BU’s”), and ROIC management has been applied to each and every BU.
Those BU’s not clearing the ROIC hurdle rate (minimum required level) are required to set the
timeline for clearing the hurdle rate and to identify the issues associated thereto, and in so doing,
practical actions are to be taken. On the other hand, those BU’s already clearing the ROIC hurdle
rate are encouraged to achieve the ROIC level for the top market leader of the peer, and, while
taking initiatives to enhance Economic Value Added (EVA), thereby to improve the enterprise valueof the entire group.
As a consequence of improving these management indicators, the Company also pursues toimprove Return on Equity (ROE = net income attributable to owners of parent / shareholders’equity).
(3) Medium- to long-term management strategy
Although the business environment surrounding the Group is challenging due to factors including
growing uncertainty about the prospects for the global economy and the shift to a stronger yen, theGroup has established a new medium-term business plan for fiscal 2016 through fiscal 2018(“MTBP2016”) aimed at achieving the Group’s goals (vision and numerical targets 10 years fromnow).
Under MTBP2016, the basic plan will be to deepen ROIC management, and aim to increase
corporate value throughout the future by enhancing core competencies (the source of the Group’s
profitability and competitive advantages). In addition to proactively investing in growth fields (airtransport, robots, energy), emphasis will be placed on boosting synergistic effects by bringing
11

together technologies and differentiating technologies with an eye towards future new products andbusinesses, as well as engaging in new service businesses and other initiatives utilizing IT.
1. Enhance corporate value by deepening of ROIC management
While considering the “what” and the “how” for increasing corporate value, and in light of thespecific business profile of each segment, the Group will establish target indicators closely alignedwith daily operations so as to be easy for employees to understand, and advance ROIC managementwith the participation of all employees in order to achieve these target indicators. Also, the target
indicators selected will be utilized in risk management, and to further increase corporate value.
2. Focus on cash flows
In order to increase corporate value, the Group aims to bolster profitability and generate free
cash flow while steadily developing and carrying out capital investment with an eye to future growth.
The Group has made securing operating cash flow a particular priority, and plans to undertake
specific measures aimed at increasing operating capital efficiency, such as improving terms forpayments received and making the supply chain more efficient to reduce assets.
3. Strengthen risk management
The Group will continue to ascertain the impacts of factors including short-term foreignexchange rate fluctuations and economic developments in a timely manner, and apply this to ensure
effective risk management. Meanwhile, over the medium- to long-term horizon, in addition toenhancing shareholders’ equity, among other measures the Group is working to review prices andproduction bases, and on developing high value-added products capable of withstanding changes inthe external environment. Furthermore, the Group will continue to enhance risk management ofprojects in progress by monitoring the balance sheets and cash flows of key projects, among othermeasures.
4. Enhance the corporate governance framework and focus on engagement
Based on the spirit of both the Corporate Governance Code as well as the Stewardship Code, theGroup will endeavor to increase corporate value by continuously considering a corporate governanceframework appropriate for the Group and engaging in quality dialogue with the capital markets.
5. Develop human capital and value diversity
The Group focuses on retaining, developing, and utilizing personnel possessing advanced
knowledge and experience, creating a global workforce, and passing along skills and capabilities toour younger personnel, among other goals. In addition, the Group is endeavoring to create working
environments that value diversity, such as enhancing work-life balance, which includes promoting
active roles for women and offering childcare support, as well as establishing accommodating
workplaces for persons with disabilities and ensuring opportunities for persons with disabilities towork by establishing special subsidiaries.
12Areas of focus in individual business segments are discussed below.
① Ship & Offshore Structure
Maximize earnings through integrated operations of the Sakaide, NACKS, and DACKS
shipyards; at Kobe shipyard execute stable operations centered on submarines; contract the offshore
work vessel business② Rolling Stock
Enhance competitiveness by developing cutting-edge technologies, new rolling stock, and othertechnologies and products that meet customers’ needs; further boost system integration capabilities
by strengthening personnel development; expand recurring-revenue businesses, such as maintenanceand retrofitting; build an optimal global business execution platform, including overseas production,
overseas procurement, and utilization of partnerships③ Aerospace
Establish a mass production system for C-2 transport and P-1 fixed-wing patrol aircraft,including repair services and parts supply, and apply to derivative aircraft; increase production of
Boeing 787 component parts and apply to derivative aircraft, and develop and launch mass
production for 777X
④ Gas Turbine & Machinery
Develop an energy solutions business based on high-efficiency industrial gas turbines and gas
engines; promote overseas business development; develop new models of jet engines for civilian
aircraft and handle increased production⑤ Plant & Infrastructure
Enhance competitiveness by making existing products more sophisticated and rapidlycommercialize new products and technologies; expand overseas businesses centered on emerging
markets and resource-producing countries by strengthening overseas partnerships; further bolster
engineering capabilities by cultivating human resources; steadily complete large projects⑥ Motorcycle & Engine
Continue to introduce attractive, strong models that possess the Kawasaki appeal; realize a strong
brand rooted in customer value; further boost presence in advanced countries where economies areon a recovery track; enhance the strength of the brand and cultivate new markets in emerging
markets; thoroughly promote the efficiency of management on a consolidated basis⑦ Precision Machinery
Maintain and increase high market share for hydraulic components for excavators; grow sales ofmachinery besides excavators in construction machinery and agricultural machinery markets;
enhance system proposal capabilities and upgrade and expand overseas production framework in the13industrial robot field; engage in ongoing initiatives targeting new fields for the future, such as
medical robots
Notes:
These materials contain earnings forecast and other forward-looking statements based on information
available to the company at the time of disclosure and the company makes no assurances as to the actual
results and/or other outcomes.

4. Basic rationale for selecting accounting standards
In light of the fact that the difference in accounting standards continues to narrow, the Group plans
to continue to use Japanese accounting standards in the near term. The Group has been studying thepossible adoption of IFRS, and will continue to consider the situation surrounding the Group both inJapan and overseas, and will address this issue as appropriate from the perspective of increasing
corporate value.

145. Consolidated Financial Statements(1) Consolidated balance sheets
March 31

Million yen

AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful receivables

Total current assets
Fixed assets
Net property, plant and equipment
Buildings and structures,
Machinery and equipment,
Land
Leased assets,
Construction in progress
Other,
Total property, plant and equipment
Intangible assets
Investments and other assets
Investments in securities
Long-term loans
Net defined benefit assets
Deferred tax assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

15

2015

2016

51,645421,890
59,487321,326
117,837
33,292
70,576(2,995)
1,073,062

42,157
381,339
57,092324,915
110,956
27,27576,743(2,578)1,017,903

161,840
121,21064,7082,108
18,35652,330420,554
16,409166,345
128,814
64,237
2,192
17,77257,195436,557
15,475

15,488363
317
41,611
95,299(823)
152,257
589,220
1,662,283

13,781337
74
43,842
102,387(9,902)
150,521602,554
1,620,458

Liabilities
Current liabilities
Trade payables
Electronically recorded obligations-operating
Short-term debt
Current portion of bonds
Lease obligations, current
Income taxes payable
Deferred tax liabilities
Accrued bonuses
Provision for product warranties
Provision for losses on construction contracts
Advances from customers
Other
Total current liabilities

253,90785,453
122,338
20,000276
17,094442
26,440
11,4805,873
171,607
109,707824,623

233,979
87,798105,891
10,000156
10,889979
25,13812,642
7,926
170,454
101,854
767,711Long-term liabilities
Bonds payable
Long-term debt
Lease obligations
Deferred tax liabilities
Provision for environmental measures
Net defined benefit liability
Asset retirement obligations
Other
Total long-term liabilities
Total liabilities

110,000
159,749
2,011
8,199
2,535
79,272464
27,468389,7021,214,326

120,000
160,809
1,566
8,439
1,693
90,789650
23,170407,120
1,174,832

Total shareholders’ equity

104,484
54,393
253,605(67)412,416

104,484
54,394
279,627(86)
438,419

Accumulated other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

3,704(1,985)25,179(7,318)19,57915,961
447,957
1,662,283

2,705
692
8,990
(19,439)(7,051)
14,257445,625
1,620,458

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock16

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Million yen

Years ended March 31
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
Advertising expenses
R&D expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in income of non-consolidated subsidiaries and affiliates
Gain on sale of fixed assets
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on transfer of businessTotal extraordinary income
Extraordinary losses
Loss on overseas businessTotal extraordinary losses
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

17

2015

2016

1,486,123
1,216,680
269,443

1,541,096
1,253,691
287,405

50,587
10,481
41,606
79,508
182,184
87,25952,683
12,06743,611
83,045
191,408
95,996

796
395
6,208
704
5,148
13,253

748
415
2,876
3,155
2,345
5,569
15,111

3,761
5,097
7,365
16,22384,288

3,637
6,532
7,708
17,87893,229-(*1)901
901

84,288(*2)19,298
19,29874,832

23,563
6,779
30,34353,9452,306
51,63920,1537,000
27,15347,6781,635
46,043

Consolidated statements of comprehensive income
Million yen

Years ended March 31
2015
Net income

2016

53,94547,678

783(910)

Deferred gains (losses) on hedges

1,860

2,649

Foreign currency translation adjustments

12,384(11,763)

Remeasurements of defined benefit plans

10,952(12,154)

Share of other comprehensive income of associates accounted forusing equity method

7,834(5,269)Total other comprehensive income

33,815(27,448)

Comprehensive Income attributable to:87,76020,230Owners of the parent company

84,462

19,412

Non-controlling interests

3,298

817

Other comprehensive income
Net unrealized gains (losses) on securities18

(3) Consolidated statements of changes in net assets
Million yen

Years ended March 31

2015

2016

Shareholders’ equity
Common stock
Balance at end of previous year
Balance at end of year

104,484
104,484

104,484
104,484

Capital surplus
Balance at end of previous year
Treasury stock disposed
Treasury stock retired

54,3930(0)54,3930-0054,39354,394217,449

253,605(15,045)
51,639(659)
221(20,047)
46,04325

36,15626,021

253,605

279,627

(43)

(67)

(684)
0
660

(21)
1
-

(23)

(19)

(67)

(86)

376,284

412,416(15,045)
51,639(684)
0
221(20,047)
46,043(21)
2
25

36,13226,002

412,416

438,419

2,652

3,704

1,051

(999)

1,051

(999)

3,704

2,705

(3,803)(1,985)

Total changes during the period
Balance at end of year
Retained earnings
Balance at end of previous year
Changes during the period
Cash dividend
Net income attributable to owners of parent
Treasury stock retired
Increase (decrease) by change of consolidation period of subsidiaries
Total changes during the period
Balance at end of year
Treasury stock
Balance at end of previous year
Changes during the period
Treasury stock purchased
Treasury stock disposed
Treasury stock retired
Total changes during the period
Balance at end of year
Total shareholders’ equity
Balance at end of previous year
Changes during the period
Cash dividend
Net income attributable to owners of parent
Treasury stock purchased
Treasury stock disposed
Treasury stock retired
Increase (decrease) by change of consolidation period of subsidiaries
Total changes during the period
Balance at end of year
Comprehensive income
Net unrealized gain (loss) on securities
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Deferred gains (losses) on hedges
Balance at end of previous year
Changes during the period

19

Net changes in items other than shareholders’ equity

1,818

2,678

Total changes during the period

1,818

2,678

(1,985)

692

6,416

25,179Net changes in items other than shareholders’ equity

18,762(16,188)

Total changes during the period

18,762(16,188)

25,1798,990(18,509)(7,318)

11,190(12,121)

11,190(12,121)

Balance at end of year

(7,318)(19,439)

Total comprehensive income
Balance at end of previous year

(13,243)

19,57932,822(26,630)

32,822(26,630)

19,579(7,051)

13,645

15,961

2,316(1,704)

Balance at end of year
Foreign currency translation adjustments
Balance at end of previous year
Changes during the period

Balance at end of year
Remeasurements of defined benefit plans
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period

Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Non-controlling interests
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity

2,316(1,704)

Balance at end of year

Total changes during the period

15,961

14,257

Total net assets
Balance at end of previous year

376,686

447,957(15,045)
51,639(20,047)
46,043

Treasury stock disposed
Treasury stock retired
Increase (decrease) by change of consolidation period of subsidiaries

(684)
0
221

(21)
2
25

Net changes in items other than shareholders’ equity

35,139(28,335)

Total changes during the period

71,271(2,332)447,957445,625

Changes during the period
Cash dividend
Net income attributable to owners of parent (loss)
Treasury stock purchased

Balance at end of year20(4) Consolidated statements of cash flows
Million yen

Years ended March 31
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in accrued bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for losses on construction contracts
Increase (decrease) in provision for environmental measures
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expense
Equity in income non-consolidated subsidiaries and affiliates(Gain) loss on sale of property, plant, and equipment(Gain) loss on sale of business
Loss on overseas business(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables(Increase) decrease in advance payments
Increase (decrease) in advances from customers(Increase) decrease in other current assets
Increase (decrease) in other current liabilities
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible
assetsAcquisition of investments in securities
Proceeds from sales of investments in securities
Acquisition of investments in subsidiaries of affiliate
Proceeds from sale of business
Decrease (increase) in short-term loans receivable, net
Additions to long-term loans receivable
Proceeds from collection of long-term loans receivable
Other
Net cash used for investing activities
Cash flows from financing activities
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Cash dividends paid
Cash dividends paid to non-controlling interests
Other
Net cash used for financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents by change of consolidation
period of subsidiaries
Cash and cash equivalents at end of period

21

2015

2016

84,28844,572
(160)
4,255
666
(7,957)(1,134)(2,521)(1,191)
3,761(6,208)
1,428
630(22,583)
28,933(11,086)
29,460
(623)
(62)
1,803
146,272
6,099(4,012)(20,707)
127,651

74,83249,004
(857)
(935)
1,590
2,228
(840)
(3,043)(1,164)
3,637(2,876)(3,155)(901)
19,298(7,657)(19,719)(5,441)(5,860)7,433(2,670)5,003
397
108,303
6,745(3,817)(25,172)
86,059(77,361)(79,463)

11,913

1,202

(486)
1,470
(1,261)(1,164)
(63)
141
(586)
(67,397)(173)
702(1,601)
5,390
(7)
(87)
92
(239)
(74,185)(16,587)
42,456(86,233)
20,000(15,675)
(986)
(107)
(57,133)
(953)
2,167
45,431

4,132
19,648(25,651)
20,000(20,000)(20,022)(1,527)
20(23,400)
1,639(9,886)47,721122(1)47,721

37,832

(5) Notes on financial statements
Notes on the going-concern assumption
Not applicable.
Changes in accounting policy(Application of Accounting Standard for Business Combinations, etc.)
Effective from the consolidated financial year under review, “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21 of September 13, 2013), “AccountingStandard for Consolidated Financial Statements” (ASBJ Statement No. 22 of September 13,2013), and “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7 ofSeptember 13, 2013), etc. have been applied. As a result, differences caused by change in the
Company’s equity in the subsidiaries with controlling interests shall now be adjusted in its
capital surplus, and acquisition-related expenses shall now be changed to be reported as
expenses incurred during the consolidated financial year in which said acquisition takes place.
Furthermore, as to business combinations taking place since the beginning of the consolidated
financial year under review and onwards, finalization and restatement of the provisional
accounting treatment of the amount of the acquisition cost allocation shall now be changed tobe reflected in the relevant quarterly consolidated financial period where the date of saidbusiness combination actually falls. Additionally, the presentation has been changed in the net
income for the period, etc. and also from minority interests to non-controlling interests. For thesake of reflecting these changes in the said presentation, restatement has been made in the
consolidated financial statements of the preceding financial year.
The implementation of Accounting Standard for Business Combinations and its related
standards is subject to the transitional treatments stipulated in the provisions of Article 58-2 (4)of Accounting Standard for Business Combinations, Article 44-5 (4) of Accounting Standard
for Consolidated Financial Statements, and of Article 57-4 (4) of Accounting Standard forBusiness Divestitures, and has been and will be under way since the beginning of the current
consolidated financial year under review and going forward.
There is no effect of these changes on the financial statements during the consolidated
financial year under review.

Related to consolidated statements of income
Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)(*1)Gain on Transfer of Business
Due to assignment of all shares of consolidated subsidiary KCM Corporation and all businesses of
KCMJ Corporation.
(*2)Losses on Overseas Business
Loss on a joint shipbuilding venture in Brazil. Please refer to Page 24 for details (Additional
information).

22

Related to corporate combinations, etc.
Business Divestment
On October 1, 2015, KHI assigned all shares of consolidated subsidiary KCM Corporation(hereafter “KCM”) (Hyogo Prefecture) to Hitachi Construction Machinery Co., Ltd. (Tokyo).
(1) Overview of Business Divestment
1. Name of company to which shares were assigned
Hitachi Construction Machinery Co., Ltd. (hereafter “HCM”)
2. Details of divested business
Manufacturing and sale of construction machines, etc.
3. Reason for business divestment
Since October 2008, KHI and HCM have had a business alliance covering wheel-loader
operations, including joint research and development of new models of wheel loaders to meet
the Tier 4 exhaust emission regulations. KCM was established in January 2009 and acquired
KHI’s wheel-loader operations by assignment in April of the same year. With HCM’s capital
investment in June 2010, KCM further accelerated joint research and development on newmodels of wheel loaders and on an efficient production system. KHI agreed to HCM’s proposal,
having judged that it would be effective to pursue synergies within the HCM Group for thefurther development of KCM under a policy of investing management resources in a focusedmanner, in order to enhance enterprise value amidst intensifying global competition in theconstruction machine industry. The businesses of KCMJ Corporation, which engages in sales
and servicing operations for KCM products within Japan, were transferred to Hitachi
Construction Machinery Japan Co., Ltd. on the same date as the execution of the transfer of
KCM shares.
4. Date of business divestment
October 1, 2015
5. Overview of transaction including legal format
Transfer of shares and transfer of related assets for which compensation received is solely inthe form of assets such as cash.

(2) Overview of Accounting Treatment
1. Amount of transferred income and loss
¥901 million

23

2. Fair book value assets and liabilities related to the transferred business and breakdown of eachCurrent assets¥19,719 million

Fixed assets¥5,727 million

Total assets¥25,447 million

Current liabilities¥16,047 million

Long-term liabilities¥3,641 million

Total liabilities¥19,689 million

3. Accounting Treatment
In the transfer of the shares, accounting treatment was implemented pursuant to “AccountingStandard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013) and“Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10, September 13, 2013).
(3) Name of reporting segment to which divested businesses belonged
Other Operations(4) Estimated operating performance of divested businesses posted in consolidated statements ofincome for the fiscal year ended March 31, 2016
Net sales
Operating income¥18,777 million¥159 million

Additional information
Posting Losses on Overseas Business (Joint Shipbuilding Venture in Brazil)
Enseada Indústria Naval S.A. (hereinafter called ‘Enseada’), joint venture of shipbuilding ,inwhich KHI holds a 30% stake, has received no payments for drill ship construction work currently inprogress for more than a year due to the impact of corruption problems in Brazil, and this has
seriously eroded Enseada’s financial position and cash flow situation. As a result, Enseada has fallen
behind in its payments to KHI for the transfer of technology and for the construction of drill ship
hull parts currently under construction at KHI Sakaide Works. Enseada has also been unable to makeprogress on the repayment of loans extended by KHI.
Despite this adverse business situation, Enseada remains a going concern, and KHI continues tocooperate with Enseada in line with the underlying joint venture agreement. However, considering
the asset value of investment in and loans to Enseada as well as the recoverability of tradereceivables, KHI has decided to implement the necessary accounting treatment based on its
revaluation under relevant accounting principles.

24Accounting treatment of losses on a consolidated basis for the fiscal year ended March 31, 2016,is presented below.
1. Setting of allowance for doubtful receivables on trade receivables from Enseada and loss on
valuation of inventories (work in process) destined for Enseada¥19,298 million（extraordinary losses）
2. Losses on valuation of investments in and loans receivable from Enseada¥ 2,847 million（non-operating expenses）
Total¥22,145 million

25

Segment information and others
1. Segment information(1) Overview of reportable segments
The Company’s reportable segments are components of the company about which separate
financial information is available. These segments are subject to periodic reviews by theCompany’s board of directors to decide how to allocate resources and assess performance. The
Company’s operations are divided into internal companies based on product categories. Certain
authority is delegated to each of the internal companies, based on which they conduct businesses
in Japan and overseas. The Company’s operations are therefore segmented based on each internal
company’s product categories. The Company’s eight reportable segments are the Ship & Offshore
Structure segment, the Rolling Stock segment, the Aerospace segment, the Gas Turbine &Machinery segment, the Plant & Infrastructure segment, the Motorcycle & Engine segment, thePrecision Machinery segment, and the Other segment.
Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbines &Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

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

(2) Method for calculating sales, profit/loss, assets, liabilities, and other items for reportablesegments
The accounting methods applied to the reported business segments generally follow theaccounting policies used to prepare the consolidated financial statements. The income of reporting
segments is based on operating income. Inter-segment earnings and transfers are based on market
prices.

26

(3) Sales, income (loss), assets, liabilities, and other items by reportable segment
Fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)(Million yen)

Sales
Intersegment
External sales
sales ortransfer
Ship & Offshore
Structure

Rolling Stock
Aerospace
Gas Turbines& Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision
Machinery
Other
Operations
Total
Adjustments
Consolidated
total

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Investment inequitymethod affiliates

Increase inproperty, plantand equipment
and intangibles

90,327

3,289

93,616

2,675

171,736805

56,7493,317

121,519
325,083

3,736
2,160

125,256
327,244

6,044
36,318

169,469
363,417

2,837
10,823

144
-

3,256
34,780218,794

17,637

236,432

11,269296,359

3,913

1,436

7,053

121,11318,859139,973

6,574

124,938

1,345

17,3062,293

329,240808

330,048

14,923271,746

13,245

1,212

15,788135,782

14,423150,205

10,908134,868

5,162

7

6,175

144,261

40,952

185,213

3,986

101,982

2,222

2,861

2,169

1,486,123-

101,866(101,866)

1,587,990(101,866)

92,701(5,442)

1,634,518
27,76540,356
4,216

79,719-74,8355,260

1,486,123-

1,486,123

87,2591,662,283

44,572

79,71980,096

Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)(Million yen)

Sales
Intersegment
External sales
sales ortransfer
Ship & Offshore
Structure

Rolling Stock
Aerospace
Gas Turbines& Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision
Machinery
Other
Operations
Total
Adjustments
Consolidated
total

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Investment inequitymethod affiliates

Increase inproperty, plantand equipment
and intangibles

94,8882,791

97,679(7,926)

155,063994

52,063

2,672

146,646
351,858

1,230
1,727

147,877
353,586

9,299
45,657

171,322378,982

2,914
13,435

153
-

2,535
28,760236,445

16,634

253,079

16,962

314,548

4,332

745

7,917

135,668

14,205

149,874

8,516

120,740

1,472

17,276

1,444

333,595

1,116

334,711

15,769243,733

13,1581,332

14,513

133,175

15,518

148,694

8,542

142,959

6,034

371

8,129

108,81738,926

147,743

2,894

71,372

1,616

3,002

3,933

1,541,096-

92,150(92,150)

1,633,246(92,150)

99,716(3,719)1,598,723
21,73443,9605,044

74,944-69,906
6,404

1,541,096-

1,541,096

95,996

1,620,458

49,00474,94476,31027

(4) Reconciliation and main components of difference between total for reportable segments andamounts on the consolidated financial statements
Fiscal year ended March 31(Million yen)

Sales

2015

Total for reportable segments
Intersegment transactions
Net sales reported on the consolidated
financial statements

2016

1,587,990(101,866)

1,633,246(92,150)

1,486,123

1,541,096

Fiscal year ended March 31(Million yen)

Income2015

Total for reportable segments
Intersegment transactions
Corporate expenses*
Operating income (loss) on consolidated
financial statements

2016
92,701(1,042)(4,399)99,716(22)(3,697)87,25995,996*Note: Corporate expenses mainly comprise general and administrative expenses not attributed toreportable segments.
Fiscal year ended March 31(Million yen)

Assets2015

Total for reportable segments
Corporate assets shared by all segments*
Intersegment transactions etc.
Total assets on consolidated financial
statements

2016

1,634,518
117,990(90,225)

1,598,723
108,144(86,409)

1,662,283

1,620,458*Note: Corporate assets shared by all segments mainly comprise fixed assets not attributed to reportablesegments.
Fiscal year ended March 31
Other items

Total for reportablesegments

Adjustments*

2015

2016

2015

Depreciation/amortization

40,35643,9604,216

Increase in property, plantand equipment andintangibles

74,83569,906

5,260

2016

(Million yen)Amounts reported on
the consolidated
financial statements
2015

2016

5,044

44,57249,004

6,404

80,09676,310*Note: Adjustments are mainly due to fixed assets not attributed to reportable segments.

28

Related information
Fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)
1. Information by product and service
Information by product and service is omitted here as segmentation is equivalent to that used forreportable segments.
2. Information by geographic area(a) Net salesJapan
631,018

USA
356,806

Europe115,145

Asia
252,371

Other areas
130,782(Million yen)Total
1,486,123

Note: Net sales are classified by country or region based on the location of customers.

(b) Property, plant and equipment
Japan358,868

North America
24,048Europe3,794

Asia
32,792

3. Information by major clients
Clients

Net sales

Ministry of Defense

220,745

The Commercial Airplane Company

144,310

Other areas
1,051(Million yen)Total
420,554(Million yen)
Related segments
Ship & Offshore Structure, Aerospace, Gas
Turbines & Machinery
Aerospace

Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)
1. Information by product and service
Information by product and service is omitted here as segmentation is equivalent to that used forreportable segments.
2. Information by geographic area(a) Net salesJapan
636,565

USA
396,697

Europe144,894

Asia
241,424

Other areas
121,514(Million yen)Total
1,541,096

Note: Net sales are classified by country or region based on the location of customers.

(b) Property, plant and equipment
North
America
23,566

Japan
378,380(Million yen)
Europe

Asia

3,691

30,0903. Information by major clients
Clients

Net sales

Ministry of Defense

227,333

The Commercial Airplane Company

159,683

29

Other areas
828

Total
436,557(Million yen)
Related segments
Ship & Offshore Structure, Aerospace, Gas
Turbines & Machinery
AerospaceImpairment loss on fixed assets by reportable segment
Fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)
Not applicable.
Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)
Not applicable.
Amortization amount for and unamortized balance of goodwill
Fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)
Not applicable.
Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)
Not applicable.
Gain on negative goodwill by reportable segment
Fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)
Not applicable.
Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)
Not applicable.
Per share data
Years ended March 31

2015

2016

(Yen)

Net assets per share

258.58

Net assets per share

258.21

Earnings per share - basic

30.89

Earnings per share - basic

27.56

Notes:
1. Diluted net earnings per share is not stated because there are no potential shares.
2. Net assets per share were calculated based on the following:
March31
Total net assets

2015
447,957(Million yen)2016
445,625

Amounts excluded from total net assets
Of which: Non-controlling interests

15,961(15,961)

14,257(14,257)

Net assets attributable to the common shares
Number of common shares used to compute net assets per share(Thousands of shares)

431,996

431,368

1,670,613

1,670,576

3. Net income/loss per share and net income per share (diluted) were calculated based on the following:

Years ended March 31

2015
Earnings per share - basic
Net income attributable to owners of parent

51,639Earnings not attributable to common shareholders
Net income allocated to the common shares

51,639Average number of common shares outstanding(Thousands of shares)

30

1,671,637(Million yen)
2016
46,043-46,043
1,670,591

Material subsequent events
Not applicable.

31

6. Others(1) Consolidated orders and sales
Orders received
Years ended March 31(Million yen)
2015（A）

2016（B）% of total

Change（B-A）% of total%

Ship & Offshore Structure
179,221
10.4
98,3945.8(80,826)(45.0)
Rolling Stock
131,4287.6
132,133
7.8
705
0.5
Aerospace
357,03120.8
464,286
27.4
107,254
30.0
Gas Turbine & Machinery
235,72213.7
288,90317.0
53,181
22.5
Plant & Infrastructure
203,47311.8
138,775
8.1(64,698)(31.7)
Motorcycle & Engine
329,240
19.2
333,595
19.6
4,354
1.3
Precision Machinery
136,286
7.9
133,191
7.8(3,095)(2.2)
Other140,558
8.2
104,4076.1(36,150)(25.7)
Total
1,712,963
100.0
1,693,687
100.0(19,275)(1.1)
Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

Net sales
Years ended March 31(Million yen)
2015（A）

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

90,327
121,519
325,083
218,794
121,113329,240
135,782
144,261
1,486,123% of total

6.0
8.1
21.8
14.7
8.1
22.1
9.1
9.7
100.0

2016（B）
94,888
146,646
351,858
236,445
135,668
333,595
133,175
108,817
1,541,096% of total

6.1
9.5
22.8
15.3
8.8
21.6
8.6
7.0
100.0

Change（B-A）
4,561
25,126
26,774
17,65014,5544,354(2,606)(35,444)
54,972

%

5.0
20.6
8.2
8.0
12.0
1.3
(1.9)
(24.5)
3.6

Order backlog
Years ended March 31
2015（A）
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Total

264,281405,999
488,431
336,441
255,522
26,32528,531
1,805,533% of total

14.6
22.4
27.0
18.6
14.1
1.4
1.5
100.0

32

2016（B）
259,921375,729
608,352
381,787
255,944
26,35817,863
1,925,957% of total

13.4
19.5
31.5
19.8
13.2
1.3
0.9
100.0

(Million yen)
Change（B-A）(4,359)(30,269)
119,920
45,345421
33(10,667)
120,423

%

(1.6)
(7.4)
24.5
13.4
0.1
0.1
(37.3)
6.6

(2) Supplementary information on earnings forecasts for the fiscal year ending March 31, 2017
1. Consolidated earnings outlook(Billion yen)

Outlook for the fiscal year
ending March 31, 2017
(A)

Fiscal year ended
March 31, 2016(actual)(B)

Change (A – B)

Net sales
Operating income
Recurring profit
Net income attributable toowners of parent

1,570.0
70.0
69.0

1,541.0
95.9
93.2

29.0
(25.9)(24.2)

49.0

46.0

3.0

Orders received
Before-tax ROIC (%)
R&D expenses
Capital expenditures
Depreciation/amortization
Number of employees
at end of period*Number of employees outside

1,500.0
8.3%
47.0
98.0

1,693.6
9.4%
43.6
76.3

of Japan included therein(193.6)(1.1%)
3.4
21.7

56.0

49.0

7.0

35,70034,605

1,095*9,000*8,708*(292)

Notes: 1. Outlook’s assumed foreign exchange rates: ¥110= US$1, ¥125 = 1 euro

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

2. Outlook by reportable segment(a) Net sales and operating income (loss)
Fiscal year ended
March 31, 2016 (actual)(B)

Outlook for the fiscal year
ending March 31, 2017
(A)

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

Total(Billion yen)

Change (A – B)

Net sales

Operating
Income (loss)

Net sales

Operating
Income (loss)

Net sales

Operating
Income (loss)

120.0
145.0
350.0
255.0
155.0
325.0
140.0
80.0

(1.5)
5.5
25.0
13.5
8.0
13.5
10.0
4.0
(8.0)
70.0

94.8
146.6
351.8
236.4
135.6
333.5
133.1
108.8

(7.9)
9.2
45.6
16.9
8.5
15.7
8.5
2.8
(3.7)
95.9

25.2
(1.6)
(1.8)
18.6
19.4
(8.5)
6.9
(28.8)

6.4(3.7)(20.6)
(3.4)
(0.5)
(2.2)
1.5
1.2
(4.3)
(25.9)

1,570.0

1,541.033

29.0

(b) Orders received

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

Outlook for the fiscal year
Fiscal year ended
ending March 31, 2017
March 31, 2016 (actual)
(A)
(B)

130.0
180.0
230.0
255.0
140.0
325.0
145.0
95.0
1,500.0

98.3
132.1
464.2
288.9
138.7
333.5
133.1
104.4
1,693.6(Billion yen)

Change (A – B)
31.7
47.9
(234.2)(33.9)
1.3
(8.5)
11.9
(9.4)
(193.6)(c) Before-tax ROIC

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

Outlook for the fiscal year
Fiscal year ended
ending March 31, 2017
March 31, 2016 (actual)
(A)
(B)

1.0
8.0
13.5
6.3
16.3
10.2
10.8
8.3

34

(38.4)
11.7
33.9
8.8
17.5
14.1
9.5
9.4

(%)

Change (A – B)
39.4
(3.7)
(20.4)
(2.5)
(1.2)
(3.9)
1.3
(1.1)