The Items Published on the Internet Website
Concerning the Notice of the 199th Ordinary
General Meeting of Shareholders–1–Company Share Options

1. Share Options Held by Company Officers at the End of the Fiscal Yearunder Review
Not applicable.
2. Share Options Delivered to Employees, Etc. during the Fiscal Year under
Review
Not applicable.
3. Other Important Issues concerning Share Options, Etc.
Not applicable.

System to ensure that Directors’ execution of duties complies withlaws and regulations and the Articles of Incorporation, other systems
to ensure proper execution of business and overview of operation
status of such systems
At the Board of Directors Meeting, the Company makes a resolution regarding thebasic policies on the establishment of internal control systems pursuant to the Companies
Act, confirms the status of established internal control systems and its operation at theend of every fiscal period, and reports it to the Board of Directors Meeting. The detailsof resolutions regarding the basic policies as of the end of the fiscal year under review
and an overview of the operation status of internal control systems for the fiscal year
under review are as follows.
I. Basic policy for developing internal control systems
In an effort to embody KHI’s management philosophy, which is indicated in theGroup Mission (missions and roles which must be carried out) “Kawasaki, working as
one for the good of the planet” (Enriching lifestyles and helping safeguard theenvironment: Global Kawasaki), “Kawasaki Value,” “The Kawasaki Group Management
Principles” and “The Kawasaki Group Action Guidelines,” the KHI Group develops andmaintains internal control systems to ensure formation of proper organizational
structures, development of company rules and regulations, dissemination of
information and proper execution of operations. KHI strives to improve its internal
controls by constantly reviewing them, and in doing so improves the efficiency andlawfulness of company systems which contribute to the Group’s sound and sustained
growth.
More specifically, a resolution was made at the Board of Directors Meeting with respect
to the Company’s efforts to establish the following internal control systems and to
streamline, maintain, and improve them based on this basic policy.
1. Necessary systems to ensure proper execution of business of theCompany(1) Systems to ensure that execution of duties by the Company’s Directors
and employees are compliant with laws and regulations and the
Articles of Incorporation(i) We establish ethical standards to serve as the basis for decisions when
Directors and Executive Officers and employees take an action as the “The
Kawasaki Group Code of Conduct” (hereinafter, the “Code of Conduct”) andensure that they are thoroughly familiar with the Code of Conduct.
(ii) In order to achieve objectives such as effective and efficient business
operations, reliable financial reporting, compliance with laws and regulations
and safeguarding of assets, and secure the appropriateness of business
operations, we establish a system to promote internal control, with President
as the chief internal control officer and General Managers of each division as
the managers in charge of internal control, and manage the internal control–2–systems in a unified way based on the roles and responsibilities given to
Directors, Executive Officers and employees, respectively.
(iii) We establish the Corporate Compliance Committee, and deliberate and makedecisions on policies and measures to thoroughly ensure compliance with theCode of Conduct, laws and regulations and the KHI Group’s regulations, andalso monitor the compliance status thereof. In addition, we establish adepartment which promotes compliance at the Head Office and each businessdivision, and continue to implement education and training activities oncompliance with the Code of Conduct, laws and regulations and the KHI
Group’s regulations to constantly improve understanding and awareness ofcompliance.
(iv) We work to strengthen compliance systems by establishing and enhancing thewhistle-blowing system to report information regarding compliance breaches.
(v) Executive Officers who are delegated to execute business operations within an
appropriate scope are appointed at Board of Directors meetings. Meanwhile
by appointing outside directors, independent officers stipulated in theRegulations of the Tokyo Stock Exchange, who are not likely to have any
conflicts of interest with any general shareholder, the Company enhances thesupervisory and monitoring functions of the Board of Directors for overallmanagement, ensures the objectivity and neutrality of the managementmonitoring function by the Audit and Supervisory Committee, and enhances
the monitoring function.
(vi) The Internal Audit Department carries out KHI’s business audits andevaluation/assessment of internal controls over financial reporting to ensure
the proper execution of duties and the reliability of financial reporting.
(2) Systems for storage and management of information related to
execution of duties by the Company’s Directors+(i) Information pertaining to execution of duties by Directors (meeting minutes,
decision making records and appurtenant materials, account books, accountslips and other information) shall be appropriately stored and managed inaccordance with applicable internal regulations. The information shall be madeaccessible at any time to Directors, Executive Officers and employees
nominated thereby.
(ii) Confidential information and personal information shall be appropriately
stored and managed in accordance with internal regulations and enforcement
thereof shall be ensured through such measures as business audits.
(3) Regulations for management of risk of loss of the Company and othersystems(i) To address diverse risks appropriately, we manage risks individually and in an
integrated manner by establishing an internal committee in charge and adepartment in charge according to the type of risk, and putting in place andoperating a management approach, management system, etc. as well asbuilding a system to monitor effectiveness and efficiency of each management
system in a centralized manner. In addition, we establish a system to reportimportant matters to the Board of Directors.
(ii) As a measure to be taken when a risk becomes evident, we set forth codes ofconduct in the event of emergencies, and also appoint persons in charge ofcrisis management at each place of business to establish the system, which isdesigned to minimize losses.
(iii) When a material risk becomes evident, reports are immediately given to
President, who is the chief executive of risk management, in accordance withthe reporting route specified in advance.

–3–

(iv) In particular, in anticipation of the occurrence of disasters, including largescale
earthquakes and pandemic diseases, we predetermine important operations
to which priority should be given to ensure the continuation or recovery of theoperations in order to minimize the impact on KHI’s business. We also
formulate a business continuity plan to shorten the length of time until
recovery.
(4) Systems to ensure efficient execution of duties by the Company’s
Directors(i) Based on the role and objectives of the corporate group consisting of theCompany and its subsidiaries (hereinafter, the “KHI Group”) as articulated in
the Kawasaki Group Mission Statement, we share final goals for the future bysetting forth a long-term vision for the whole group.
(ii) To attain the goals set forth in the long-term vision, business operation
execution divisions incorporate the goals into specific business plans based on
management policy determined by the Board of Directors, and eachorganization, Executive Officer and employee set their own objective andimplement it to achieve the plans. In addition, the Board of Directors regularly
receives reports regarding the progress of the business plans and supervises
the status of business execution.
(iii) We appoint Executive Officers based on a resolution passed at the Board of
Directors, and clarify the business execution system by determining thedivision of duties of each organization in accordance with internal regulations.
In addition, we improve the efficiency of the execution of duties by the
Directors by stipulating the authority for decision-making in internal
regulations and delegating authority to the Executive Officers to an
appropriate extent.
(iv) Upon exercise of authority delegated to President in internal regulations, weensure appropriateness and efficiency of executing business operations bymaking discussions at the Management Committee, which acts as an advisoryorgan for President, due to its significance and others. Furthermore, we haveestablished the Executive Officers Committee as a place for ensuring
familiarity and exchange of opinions, etc. of management policies and plansfor Executive Officers to build a common understanding in business
management of the KHI Group.
(v) According to the in-house company system, each business division makes
decisions on its own under delegated authority and responsibility, andexecutes flexible business operations to adapt to changes in the environment.
We have also established the Company Management Committee in each
Company, and it is led by the Company President who assumes the ultimate
responsibility for execution of duties of company’s business operations.
2. Necessary systems to ensure proper execution of business of KHI GroupWe ensure proper execution of business of the KHI Group through efforts toestablish the following systems according to business contents, size, region andsignificance of each subsidiary.
(1) Systems to ensure that execution of duties by Directors and employees
of KHI Group is compliant with laws and regulations the Articles ofIncorporation(i) The Company governs internal controls of Group Companies from theperspective of the parent company and establishes a system to ensure theappropriateness of business operations. It does so by achieving objectives
regarding matters such as the effectiveness and efficiency of business
operations, reliability of financial reporting, compliance with laws andregulations and safeguarding of assets as a whole group.
–4–

(ii) The Corporate Compliance Committee deliberates and makes decisions on
policies and measures on the Code of Conduct and compliance for the entire
KHI Group. In addition, concerned departments of the Head Office thatmanage subsidiaries and business divisions work in collaboration to monitor
the operation status in subsidiaries.
(iii) The Company implements controls as shareholders of Group Companies
through the execution of voting rights at the General Meeting of Shareholders,and also carries out management supervision and monitoring over theoperation thereof by dispatching part-time Directors or part-time Audit &Supervisory Board Members who are not engaged in the execution of business
operations of Group Companies, or both (hereinafter, “Part-Time Officer”), toGroup Companies, on an as-needed basis. In addition, we secure appropriate
Group business management systems by establishing a department which
presides over subsidiaries’ operation.
(iv) The Internal Audit Department ensures the appropriateness of operations andreliability of financial reports through business audits and assessment ofinternal controls over financial reporting at Group Companies.
(2) Systems with regard to reporting to the Company on execution ofduties by directors of Group Companies(i) The Company receives reports regarding the status of execution of duties bydirectors of Group Companies through a Part-Time Officer who is dispatched
thereto.
(ii) Group Companies regularly report on the status of business operation as amanagement report and have discussions in advance with the relevant
department of the Company with regard to important matters subject todecision-making on corporate management in accordance with applicableinternal regulations.
(3) Regulations for management of risk of loss of Group Companies andother systems(i) The Company promotes group-wide risk management, striving to prevent or
minimize risk or losses caused by such risk.
(ii) As a measure to be taken when a risk becomes evident at Group Companies,
the Company instructs Group Companies to formulate crisis handlingmeasures and policies to establish the crisis management system.
(iii) When a material risk becomes evident, reports are immediately given to theCompany, in accordance with the reporting route specified in advance.
(4) Systems to ensure efficient execution of duties by directors of Group
Companies(i) With respect to the management at each Company of the KHI Group, while
respecting the autonomy thereof, the Company establishes a system in which
execution of duties is ensured in a fair and efficient manner by sharing thebasic philosophy and vision indicated in the “Kawasaki Group Mission
Statement,” long-term vision, business plan, and so forth, and clarifying
group-wide final goals.
(ii) The Company instructs Group Companies to develop Approval Standards toensure efficient execution of business.

–5–3. Necessary matters for the Company’s Audit and Supervisory Committee
to execute duties(1) Policies regarding employees who assist in the Company’s Audit andSupervisory Committee’s duties
We allocate the required employee according to the Audit and Supervisory
Committee’s requests.
(2) Policies regarding independence of employees who assist in the dutiesof the Company’s Audit and Supervisory Committee Members from theCompany’s Directors (excluding Directors serving as the Audit andSupervisory Committee Members, hereinafter, the “Audit andSupervisory Committee Member”) and matters regarding ensuring
efficiency in directions given to employees who assist in the duties of
the Company’s Audit and Supervisory Committee.
The employee who assists in the duties of the Audit and Supervisory
Committee shall follow the Audit and Supervisory Committee’s directions andorders. For personnel transfer, personnel performance evaluation anddisciplinary punishment, prior consent of the Audit and Supervisory Committee
is required.
(3) Systems for the Company’s Directors (excluding the Audit andSupervisory Committee Members) and employees to report to theCompany’s Audit and Supervisory Committee and systems for Directors,
Audit & Supervisory Board Members and employees of Group
Companies and those who receive reports from the said Directors,
Audit & Supervisory Board Members and employees of Group
Companies to give reports to the Company’s Audit and Supervisory
Committee.
(i) The Company’s Audit and Supervisory Committee Members attend meetingsof the Board of Directors, the Management Committee, the Executive Officers
Committee, the Sustainability Committee and companywide meetings, suchas the Corporate Compliance Committee. At these meetings, the Company’s
Directors (excluding the Audit and Supervisory Committee Members),
Executive Officers and employees shall provide the Company’s Audit andSupervisory Committee with reports concerning important matters aboutgroup management and business operations, including matters regarding
compliance, risk management and internal controls, and the status ofexecution of duties.
(ii) The Company’s Directors, Executive Officers and employees shall immediately
report to the Company’s Audit and Supervisory Committee when discoveringthat there is a risk of the KHI Group suffering significant damage.
(iii) Directors, Audit & Supervisory Board Members and employees of Group
Companies shall immediately report to the relevant department of theCompany when discovering that there is a risk of the KHI Group sufferingsignificant damage. Upon receiving reports, the said department shall report
the details to the Company’s Audit and Supervisory Committee.
(iv) The Company’s Executive Officers and employees shall, in accordance withapplicable internal regulations, report to the Company’s Audit and Supervisory
Committee regarding the execution of business operations of the KHI Groupby circulation of internal memos.
(v) The Company’s Auditing Department and Accounting Auditors from time totime report to, and exchange information with the Company’s Audit andSupervisory Committee regarding the status of audits on the KHI Group.

–6–(4) System to ensure that those who give reports described in thepreceding Item (3) will not be treated disadvantageously for reason of
having made such report
The Company stipulates a provision regarding the prohibition of unfair andunfavorable treatment of those who give reports described in the preceding Item(3). The Company also instructs Group Companies to stipulate a provision of thesame contents in their company regulations.
(5) Policies on prepaid expenses for the execution of the duties of theCompany’s Audit and Supervisory Committee Members (limited to the
execution of the duties of the Company’s Audit and Supervisory
Committee), or expenses for procedures for repayment and theexecution of other relevant duties, or on debt processing
When Audit and Supervisory Committee Members request the Company tomake prepayment on execution of duties (limited to the execution of the dutiesof the Company’s Audit and Supervisory Committee) pursuant to the Companies
Act, the Company shall promptly proceed with payment of appropriate expenses
and debt settlement, except where the expense or debt whose payment isrequested is deemed unnecessary to execute their duties.
(6) Other systems to ensure the effective conduct of audits by theCompany’s Audit and Supervisory Committee(i) Directors (excluding the Audit and Supervisory Committee Members) and
Audit and Supervisory Committee Members regularly exchange informationand opinions to ensure mutual understanding, and Audit and Supervisory
Committee Members also attend important meetings such as Board of
Directors meeting and Management Committee meeting, and directly express
their opinion regarding execution of duties by Directors (excluding the Audit
and Supervisory Committee Members) and Executive Officers.
(ii) The Company’s Directors and Group Companies’ Directors promotecollaboration between the Company’s Audit and Supervisory Committee, theCompany’s Internal Audit Department and Group Companies’ Audit &Supervisory Board Members, and cooperate to establish systems which enable
greater effectiveness in the conduct of audits.
(iii) The Company and Group Companies obtain the consent of the Audit andSupervisory Committee or the Audit & Supervisory Board Members or approvalof the Audit and Supervisory Committee or the Audit & Supervisory Board of
the relevant company with regard to proposals for the election of the Audit
and Supervisory Committee Members or Audit & Supervisory Board Members
and their remuneration, and so forth, of the relevant company, in accordancewith laws and regulations and the Articles of Incorporation.
(iv) Of Audit and Supervisory Committee Members appointed by the Company,
one or more shall have substantial knowledge about finance and accounting.
4. System regarding expulsion of anti-social forces
Our Group resolutely rejects any unreasonable demands from anti-social forces,
and specifies in the “Code of Conduct” that it shall not have any relations with antisocial forces and shall ensure that all Directors, Executive Officers and employees
are thoroughly aware of the matters contained in it.
Furthermore, with respect to internal systems, we have established adepartment in the headquarters which is responsible for overseeing handling of
expulsion of anti-social forces, established close cooperation with external
specialized organizations such as the police force, and in collaboration with theconcerned departments, we systematically handle unreasonable requests fromanti-social forces.
–7–II. Overview of the operation status of internal control systems
1. Efforts on internal control systems in general(i) We have specified the “Code of Conduct” as ethical standards to serve as thebasis for decisions when the KHI Group’s Officers and employees take an action,and ensure thorough dissemination of the Code of Conduct by implementing
initiatives such as distributing the booklet to employees, posting the Code of
Conduct on the intranet and providing various training programs.
(ii) The Internal Audit Department carries out evaluation/assessment of internal
controls over business audits and financial reporting for the KHI Group to
ensure effectiveness and efficiency of business operations and reliability offinancial reporting. We conduct the audits for overseas subsidiaries for the fiscal
year under review remotely due to overseas travel restrictions related to spreadof COVID-19.
2. Efforts on compliance(i) We establish the Corporate Compliance Committee, which is responsible fordeliberating and making decisions on policies and measures to promotecompliance at a group-wide level and monitoring the compliance status thereof.
The said committee also plays the leading role in the establishment of related
internal regulations, preparation and distribution of the “Compliance Guidebook”(hereinafter, the “Guidebook”), provision of various training programs, andoperation of the whistle-blowing system. In addition, we establish theCompliance Committee, which performs compliance activities for each businessdivision, and implement appropriate measures for each business environment.
(ii) We specify that we shall have no relations with anti-social forces in the Code of
Conduct, and ensure that all employees shall be aware of the matters by
distributing the Guidebook containing specific examples of prohibited acts, andpromoting awareness in the workplace.
3. Efforts on risk management(i) We build a risk management system on a companywide level based on the Risk
Management Regulations. We also prepare a manual to explain the proceduresof specific risk management practices and exhaustively grasp the assumed risks
on a scale common to the Group to prevent and minimize risk or losses causedby such risk. Furthermore, since FY2021, we have started risk monitoring inorder to visualize risk measures of the Company, identify risk measures on
which the Company should focus, and appropriately report and deliberate risks
for which concerns over becoming evident are growing, and will make it apractice from now on.
(ii) When a risk becomes evident, we establish the system, which is designed tominimize losses, by setting forth codes of conduct in the event of emergencies
in advance and appointing persons in charge of crisis management at eachplace of business. Also, reports are immediately given to President, who is thechief executive of risk management, in accordance with the reporting routespecified in advance.
(iii)In anticipation of the occurrence of large-scale disasters and pandemic diseases,
we proactively formulate a business continuity plan for each business division,and conduct annual assessment and review thereof. We also establish and builda system to minimize losses in case we suffer damage in disasters.
During the fiscal period under review, we reviewed estimates of damage by
disasters in major areas in Japan, performed disaster prevention drills and BCP
drills, and conducted safety confirmation drills for all the employees. In
response to the spread of COVID-19 infection, we are taking appropriate–8–infection prevention measures based on the action guidelines and business
continuity plans in the event of emergencies.
4. Efforts to ensure efficient execution of duties of Directors(i) We execute management policies and business plans resolved at the Audit &Supervisory Board by following the Systems for Execution of Business
Operations with President as the head of the systems and regularly report suchprogress to the Audit & Supervisory Board. During the fiscal period under review,
to attain the goals set forth in the Group Vision 2030, all the Executive Officers
expressed their commitments as well as determined the ideal way to be in eachbusiness area and the short-term business plan. We are striving to attain andachieve such goals.
(ii) We enhance efficiency of execution of duties in Directors’ and each businessand function area by delegating a part of the authority to make a decision about
execution of significant duties from the Audit & Supervisory Board to President
and his/her subordinates, and by specifying division of roles and approvalauthority in the internal regulations and operating them appropriately. We also
give various types of guidance to Group Companies to enhance efficiency of
execution of duties.
5. Efforts on management of Group Companies(i) We exert group-wide efforts to work on compliance and risk management. We
will establish and operate the systems according to business contents, size,
region and significance of each Group Company.
(ii) We carry out management supervision and monitoring over the operation ofGroup Companies by dispatching Part-Time Officers to Group Companies toattend Board of Directors meetings thereof. We regularly receive reports on thestatus of business operation from Group Companies and the responsible
department of the Company and the relevant Group Companies havediscussions in advance with regard to important matters subject to decision
making on corporate management of the Group Companies in accordance withapplicable internal regulations.
6. Efforts on ensuring appropriateness of audits performed by theCompany’s Audit and Supervisory Committee(i) We set up Office of Audit & Supervisory Committee and assign two employees
who are dedicated to assist in the duties of Audit and Supervisory Committee.
For personnel transfer, personnel performance evaluation and disciplinary
punishment of these employees, we obtain prior consent of the Audit andSupervisory Committee. Ensuring the independence of the Internal Audit
Department, for personnel transfer, personnel performance evaluation anddisciplinary punishment of the head of the department, we obtain prior consent
of the Audit and Supervisory Committee.
(ii) Audit and Supervisory Committee Members attend the Company’s important
meetings. Directors (excluding the Audit and Supervisory Committee Members),
Executive Officers and employees provide the Company’s Audit and Supervisory
Committee with reports concerning important matters about corporate
management and business operations as well as the status of execution ofduties through the said meetings, and report to the Company’s Audit andSupervisory Committee regarding the execution of business operations by
circulation of internal memos.
(iii) We establish regulations that prohibit unfair and unfavorable treatment of those
who cooperate with Audit and Supervisory Committee to perform audits andgive reports to Audit and Supervisory Committee pursuant to the “Basic Policy
for the Establishment of Internal Control System.” In addition, Group–9–

Companies are also proceeding with establishment of structures and systems
according to region, size, function and others of each Group Company, including
development of regulations.
(iv) The Auditing Department and Accounting Auditor regularly hold liaison
meetings or discussions with Audit and Supervisory Committee to exchange
information and opinions with him/her so as to ensure close communication.
(v) We establish regulations regarding requests for prepaid expenses incurred forthe execution of the duties of Audit and Supervisory Committee Members, andso forth.
Reference[Corporate Governance Structure]
The Company is a company with an Audit & Supervisory Committee, and has establishedthe Nomination Advisory Committee and the Compensation Advisory Committee as
voluntary advisory bodies to the Board of Directors, and the Management Committee
and the Executive Officers Committee as business execution bodies.
The Kawasaki Group’s Governance Structure (As of March 31, 2022)

Business Execution Framework
The Company has adopted an executive officer system in order to facilitate response to
rapid changes in the business environment. A great deal of authority over businessexecution decisions is delegated to the executive Directors and executive officers, who
are appointed by the Board of Directors, thereby realizing more agile decision making.
The Company’s main deliberative bodies and their contents are as follows.
Board of Directors
13 times/year
The Board of Directors comprises 13 Directors (of whom, five serve as Audit andSupervisory Committee Members), with the chairman serving as the presiding officer by
resolution of the Board. Six Directors are Outside Directors (of whom, three serve as
Audit and Supervisory Committee Members) and independent of business execution. By
avoiding having Directors serve concurrently as officers responsible for specificbusinesses (the internal company presidents), the Company seeks to enhance the– 10 –

separation of management oversight and business execution and thereby further
reinforce the Board of Director’s oversight functions.
Audit and Supervisory Committee
17 times/year
The Audit and Supervisory Committee comprises five Directors, including three Outside
Directors. To secure effective oversight, the two Internal Directors have been appointed
as full-time Audit and Supervisory Committee Members. Furthermore, to ensure thereliability of financial reporting, the Company appoints Audit and Supervisory Committee
Members who have considerable knowledge of finance and accounting.
Nomination Advisory Committee
12 times/year
The Nomination Advisory Committee, has been established as an advisory body to theBoard of Directors in an effort to reinforce the transparency and objectivity of its
deliberations. The majority of the members of the committee consist of Outside Directors,
as are the presiding chairman of each. The Nomination Advisory Committee deliberates
on policies and standards for the appointment and dismissal of officers, as well as theappropriateness of proposed officer appointments and dismissals, and reports to oradvises the Board of Directors.
Compensation Advisory Committee
12 times/year
The Compensation Advisory Committee has been established as an advisory body to theBoard of Directors in an effort to reinforce the transparency and objectivity of its
deliberations. The majority of the members of the committee consist of Outside Directors,
as are the presiding chairman of each. The Compensation Advisory Committee
deliberates on policies and systems related to remuneration of officers and theappropriateness of individual remuneration, and reports to or advises the Board of
Directors.
●
Management Committee
The Company maintains the Management Committee, comprising mainly of executive
Directors and internal company presidents, as an advisory body to the President for
overall group management. The Management Committee discusses important mattersrelating with the execution of business operations. From the perspective of auditing
execution of operations, Directors serving as full-time Audit and Supervisory Committee
Members also attend a meeting of the committee.
●
Sustainability Committee
The Sustainability Committee has been established for the purpose of promoting social,environmental, and the Group sustainability. The committee is chaired by the President
and consists of Directors (excluding Audit and Supervisory Committee Members andOutside Directors), internal company presidents, officers in charge of sustainability, andgeneral managers of the Head Office. The Sustainability Committee deliberates anddecides on various measures to promote sustainability and monitors the status ofachievement and compliance. From the perspective of auditing execution of operations,
Directors serving as Audit and Supervisory Committee Members and from the perspectiveof reflecting a broad range of outside knowledge and opinions in the committee’s
decision-making, Outside Directors also attend a meeting of the committee.

– 11 –

Consolidated Statement of Changes in Net Assets(From April 1, 2021 to March 31, 2022)(Unit: Millions of yen)
Shareholders’ equity

Balance at the beginning of
the period

Share capital

Capital surplus

104,484

54,542

Cumulative effects ofchanges in accounting
policies
Restated balance

Retained earnings Treasury shares

306,576(136)(39,639)
104,484

54,542

266,937

Total
shareholders’equity465,467(39,639)(136)

425,827

Changes of items during
the period
1,916

Issuance of new shares

1,916

Cash dividends(3,357)(3,357)

Profit attributable toowners of parent

21,80121,801

Purchase of treasury
shares
Disposal of treasury
shares2

Transfer of loss on
disposal of treasury
shares0Change in ownershipinterest of parent due totransactions with noncontrolling interests

(994)

(994)

1

3



(0)

(935)

(935)

Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end of theperiod983

18,444(992)

18,435

104,484

55,526285,381(1,129)444,262– 12 –

Accumulated other comprehensive income

Balance at the beginning of
the period

Valuationdifferenceonavailablefor-salesecurities

Deferred
gains orlosses onhedges

1,955

(179)

Total
Foreign
Remeasureaccumulated Non-controlling Total net
currency
ments ofinterests
assetsothertranslation
definedcomprehensive
adjustment benefit plansincome
(931)

(979)

(134)

17,442

Cumulative effects ofchanges in accounting
policies
Restated balance

482,775(39,639)
1,955

(179)

(931)

(979)

(134)

17,442

443,135

Changes of items during
the period
Issuance of new shares

1,916

Cash dividends(3,357)

Profit attributable toowners of parent

21,801

Purchase of treasury
shares(994)

Disposal of treasury
shares3

Transfer of loss on
disposal of treasury
shares

Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes of items
other than shareholders’equity

(935)

(530)

(11)

24,516

11,07835,052

1,899

36,951

Total changes of items
during the period

(530)

(11)

24,516

11,07835,052

1,899

55,386

Balance at the end of theperiod

1,424

(191)

23,585

10,09834,917

19,342498,522– 13 –

Notes to the Consolidated Financial Statements*The amounts presented are rounded down to the nearest unit.
(Notes to the basis for preparation of consolidated financial statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries and names of
101 in total
principal consolidated subsidiaries(Domestic) Kawasaki Motors, Ltd., Kawasaki Trading Co., Ltd., Kawasaki Railcar
Manufacturing Co., Ltd., Kawasaki Machine Systems, Ltd., Kawasaki
Motors Corporation Japan, NIPPI Corporation(Overseas) Kawasaki Motors Corp., U.S.A., Kawasaki Motors Manufacturing Corp.,
U.S.A., Kawasaki Motors Enterprise (Thailand) Co., Ltd., Kawasaki
Motors Europe N.V., Kawasaki Precision Machinery (Suzhou) Ltd.,
Kawasaki Rail Car, Inc., Kawasaki Robotics (USA), Inc., Kawasaki
Motors (Shanghai), Ltd., Flutek, Ltd.
Three subsidiaries have been included in the scope of consolidation, due toestablishment of two companies of them and additional share acquisition of the otherone company to make it a consolidated subsidiary.
One consolidated subsidiary was excluded from the scope of consolidation due to theabsorption-type merger with other consolidated subsidiary.
(2) Names of principal non-consolidated subsidiaries, etc.
Green Park Chiba Shin-Minato and other companies(Reason for exclusion from scope of consolidation)
The non-consolidated subsidiaries were excluded from the scope of consolidation
because they are small in size, and its accounts, such as total assets, net sales, net
income and retained earnings have no significant effects on the Company’s
consolidated financial statements.
2. Application of the equity method(1) Number of affiliates which are subject to application
20 in totalof the equity method
Name of principal company
Nantong COSCO KHI Ship Engineering Co.,
Ltd.
Three affiliates which are subject to application of the equity method have been
included in the scope of application of the equity method due to establishment.
Two affiliates which are no longer subject to application of the equity method
are excluded from the scope of application of the equity method due to sharetransfer of one company of them, and additional share acquisition of the otherone company to make it a consolidated subsidiary.
(2) Non-consolidated subsidiaries not subject to application of the equity method(Green Park Chiba Shin-Minato and other companies) and affiliates(Commercial Airplane Co., Ltd. and other companies) are excluded from thescope of application of the equity method, because they only have minimal
effects on the Company’s consolidated financial statements with respect toprofit (for the Company’s equity interest) and retained earnings (for theCompany’s equity interest), and they have no significance as a whole.

– 14 –

3. Significant accounting policies(1) Standards and methods for evaluation of significant assets(i) Securities
a. Bonds held to maturity
Amortized cost method (straight-line method) is principally applied.
b. Available-for-sale securities
Securities other than shares, etc. with no market priceMarket value method (with all valuation differences charged to net assets
and the cost of sale computed mainly by the moving-average method) is
applied.
Shares, etc. with no market price
The cost method based on the moving-average method is principally applied.
(ii) Inventories
Stated at cost principally using the specific identification method, the movingaverage method and the first-in first-out method (balance sheet amounts are
determined based on the method of lowering the book value in accordance withthe deterioration of profitability).
(iii) Derivatives
Stated at market value.
(2) Depreciation and amortization method for significant depreciable assets(i) Property, plant and equipment (excluding leased assets)
The straight-line method is principally applied.
(ii) Intangible assets (excluding leased assets)
The straight-line method is applied.
Software for internal use is amortized by the straight-line method over theinternally estimated useful lives (within 5 years).
(iii) Leased assets
The leased assets involved in finance lease transactions that involve transfer ofownership
The same method as that applied to property, plant and equipment is applied.
Finance lease transactions not involving the transfer of ownership
The straight-line method is used with the useful life equal to the lease termand zero residual value.
(3) Accounting standards for significant provisions(i) Allowance for doubtful accounts
In order to provide for losses due to doubtful accounts from bad debts
including trade receivables and loan receivables, allowance for doubtfulreceivables is provided based on the historical default rate of normal receivables
and with reference to the collectability of receivables from companies in financial
difficulty.
(ii) Provision for bonuses
To cover bonus payments to employees, provision for bonuses is provided in
the amount for the consolidated fiscal year based on the estimated amount of
payment.

– 15 –

(iii) Provision for construction warranties
A provision is recorded for expenditures for warranties concerning
construction contracts based on past experience or on estimations of individual
cases.
(iv) Provision for loss on construction contracts
A provision for an estimated amount of losses is recorded for the next fiscal
year and thereafter concerning construction works which are anticipated to incur
significant losses and which allow reasonable estimation of the loss incurred at
the end of the fiscal year under review among those construction works thathave not been delivered as of the end of the fiscal year under review.
(v) Provision for the in service issues of commercial aircraft jet engines
A provision for the amount expected to be covered by the Company withregard to costs associated with significant in-service issues arising in the RollsRoyce Trent 1000 engine program for Boeing 787, in which the Company has
participated as a risk and revenue sharing partner (RRSP).
(4) Method of accounting treatment for retirement benefits(i) Allocation of expected retirement benefit payments
In calculation of retirement benefit obligations, the benefit formula basis isused to allocate expected retirement benefit payments to the period as of theend of the fiscal year under review.
(ii) Method of accounting treatment for actuarial differences and prior service cost
The prior service cost is amortized using the straight-line method over certain
years (mainly 10 years) within the average remaining service period of theemployees when the costs incurred in each year.
Actuarial differences are amortized from the fiscal year following the fiscal year
in which the differences are recognized using the straight-line method over the
average remaining years of service of the employees (mainly 10 years).
(iii) Method of accounting treatment for unrecognized actuarial gains and losses,
and unrecognized past service costs
Unrecognized actuarial gains and losses, and unrecognized past service cost,
net of applicable taxes, are recorded in “Remeasurements of defined retirement
benefits” of “Accumulated other comprehensive income” in “Net assets.”(iv) Simplified accounting method used by small companies
Certain consolidated subsidiaries apply a simplified accounting method inwhich the calculation of liabilities for retirement benefits and retirement benefit
expenses is carried out by using a method in which the retirement benefit
obligations are deemed to be the amount of retirement benefits to be paid incases where all eligible employees retired at the fiscal year-end date.
(5) Standards for the recognition of significant revenues and expenses
The Group recognizes revenue upon the transfer of promised goods or services
to customers in an amount that reflects the consideration that it expects to receivein exchange for those goods or services, based on the following five-step approach.
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:

Identify a contract with a customer
Identify performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in thecontract
Recognize revenue at the time of satisfying the performanceobligations (or as the performance obligations are satisfied)– 16 –

The Group’s requirements of revenue recognition are as follows.
(i) Performance obligations satisfied at a point in time
Revenue from sale of goods is derived from the sale etc. of products, andperformance obligations are held to deliver the goods based on the contract withthe customer. For sale of goods, revenue is recognized at the delivery date or
the receiving inspection date of goods when requirements for transfer of control
are satisfied. This is based on the judgment that the customer obtains control
over the promised asset and the performance obligation is satisfied at the timeof delivery or receiving inspection of the goods. Revenue from sale of goods, etc.
is measured in an amount calculated by deducting discounts and rebates fromconsideration promised in the contract.
(ii) Performance obligations satisfied over a period of time
Revenue from construction contracts and provision of services is derived fromthe manufacture of products, and the maintenance, etc. of products that is
involved with this. The performance obligations are held to provide the goods orservices based on the contract with the customer. For construction contracts andprovision of services, since control over goods or services is transferred over a
period of time, revenue is recognized by measuring progress reasonably towards
complete satisfaction of performance obligations. Measurement of progress
takes into account the nature of goods or services promised to be transferred tothe customer, using the input method based on the proportion of cumulative
incurred cost to estimated total costs of the entire transaction at the present
time, etc., or the output method based on the proportion of the period thatelapsed to the entire contract period or the proportion of services that were
provided up to the present time to the entire services to be provided. If progresscannot be reasonably estimated but incurred cost is expected to be recovered,revenue is recognized to the extent of incurred cost.
Consideration for these performance obligations is usually received within one
year from the time of satisfying performance obligations. Consideration does notinclude any significant financial components.
Although the Group provide product warranties meeting specifications set forthin the contract, these product warranties do not provide any separate service.
Therefore. the product warranties are not distinguished as an independent
performance obligation.
For transaction contracts including changes in consideration such as rebates andsubsequent discounts, the transaction price is determined by estimating thevariable price to the extent that it is highly probable that a significant reversal ofrevenue will not occur when the uncertainty is resolved.
(6) Standards for the translation of major assets or liabilities denominated in foreign
currencies
Receivables and payables denominated in foreign currencies are translated into
yen at the foreign exchange spot rate on the date of the balance sheet, anddifferences arising from the translation are calculated as gains or losses. The
Company translates assets and liabilities of foreign consolidated subsidiaries into
yen at the foreign exchange spot rate on the date of the balance sheet of each of
those subsidiaries. Revenues and expenses are translated using the average foreignexchange rate during the period. Translation adjustments are included in “Foreign
currency translation adjustment” and “Non-controlling interests” in “Net assets.”– 17 –

(7) Method of significant hedge accounting(i) Method of hedge accounting
Deferred hedge accounting is applied.
(ii) Hedging instruments and hedged items
Hedging instrument
Hedged items
Receivables and payables (including
Forward exchange contracts, currency
forecast transactions) denominated in
options
foreign currency
Interest rate swaps, currency swaps
Borrowings(iii) Hedging policy
Hedging is conducted as a measure against the risk of foreign currency variationand interest rate variation based on company rules of respective subsidiaries.
(iv) Method of assessing hedging effectivenessHedging effectiveness is evaluated based on fluctuation amounts of hedged
items and hedging instruments by comparing the cumulative changes of market
fluctuations between the hedged item with the hedging instrument during theperiod between the start of the transaction to the point at which effectiveness is
assessed.
(8) Method and period for amortization of goodwill
Goodwill equivalent is equally amortized over the estimated effective period of
the investment. However, goodwill is amortized in lump-sum in the fiscal year whenincurred if the amount is minimal.
(9) Other significant matters for preparing the consolidated financial statements(i) Application of the consolidated taxation system
The consolidated taxation system is applied.
(ii) Application of tax effect accounting for the transition from the consolidated
taxation system to the group tax sharing system
The Company will transition from the consolidated taxation system to thegroup tax sharing system starting from the next fiscal year. However, regarding
the items related to the transition to the Group Tax Sharing System newly
established in the “Act for Partial Amendment of the Income Tax Act” (Act No. 8,2020) and the review of the non-consolidated taxation system in line with thetransition, the Company and some domestic consolidated subsidiaries have notapplied the provisions of paragraph 44 of the “Implementation Guidance on Tax
Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018), pursuant toparagraph 3 of the “Treatment of Tax Effect Accounting for the Transition fromthe Consolidated Taxation System to the Group Tax Sharing System” (PITF No.
39, March 31, 2020). The amounts of deferred tax assets and deferred tax
liabilities are recorded in accordance with the tax act prior to the amendment.
The Company plans to apply the “Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System” (PITF No. 42, August 12, 2021),
which provides for accounting treatment and disclosure of corporate and local
income taxes and tax effect accounting in the case where a group tax sharing
system is applied, from the beginning of the next fiscal year.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, Etc.)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) and relevant ASBJ regulations effective from the
beginning of the fiscal year under review, and recognizes revenue at the amount expected– 18 –

to be received in exchange for the promised goods or services when the control of those
goods or services is transferred to customers.
As a result of this application, a portion of the costs incurred in connection with thecommercial aircraft jet engines program in which the Company is participating, which waspreviously recorded in cost of sales, has been reduced from net sales as consideration
paid to customers. As a result, payments for the development for the commercial aircraft
jet engines program, which was previously accounted for in “Work in process,” has beentransferred to “Investments and other assets.” In addition, for after-sale services for thecommercial aircraft jet engines program, although net sales and cost of sales werepreviously recorded based on information provided by the Company’s main partner, theCompany has changed to the method to recognize revenue based on fulfillment of
performance obligations, and record the estimated amounts of variable compensation andcompensation paid to customers as costs when revenue is recognized. In addition, theCompany has changed the method of accounting for certain types of discounts theCompany pays in accordance with the ratio of participation in the commercial aircraft jetengines program from the method previously reported based on information provided by
the main partner to the method in which the amount of such discounts is estimated as
variable compensation at the time of revenue recognition.
Regarding the application of the Accounting Standard for Revenue Recognition andrelevant ASBJ regulations, in accordance with the transitional treatment provided for in
the proviso of paragraph 84 of the Accounting Standard for Revenue Recognition, thecumulative effect of the retrospective application, assuming the new accounting policy
had been applied to periods prior to the beginning of the fiscal year under review wasadded to or subtracted from the opening balance of retained earnings of the fiscal year
under review, and thus the new accounting policy was applied from such opening balance;
provided, however, that the new accounting policy was not retrospectively applied tocontracts for which nearly all the revenue amounts had been recognized in accordancewith the previous treatment in periods prior to the beginning of the fiscal year underreview, by applying the method provided for in paragraph 86 of the Accounting Standard
for Revenue Recognition. In addition, by applying the method specified in item (1) of the
supplementary provisions of paragraph 86 of the Accounting Standard for Revenue
Recognition, modifications to contracts made prior to the beginning of the fiscal year
under review were accounted for under the terms and conditions existing after reflecting
all modifications in contracts, and the cumulative effect was added to or subtracted fromthe opening balance of retained earnings of the fiscal year under review.
Furthermore, “Notes and accounts receivable - trade,” which was presented in “Current
assets” in the consolidated balance sheet for the previous fiscal year, is included in “Notes
and accounts receivable - trade, and contract assets” from the fiscal year under review,
while “Advances received,” which was presented in “Current liabilities” in the consolidatedbalance sheet for the previous fiscal year, is presented as “Contract liabilities” from thefiscal year under review, and “Provision for sales promotion expenses” in “Current
liabilities” is included in “Other” under “Current liabilities.”
As a result, compared with the figures before the application of the AccountingStandard for Revenue Recognition and relevant ASBJ regulations, in the consolidated
statement of profit and loss, net sales and cost of sales decreased by ¥102,800 millionand ¥108,128 million respectively, and accordingly operating profit, ordinary profit andprofit before income taxes increased by ¥5,327 million, respectively.
In addition, because the cumulative effect was reflected in the opening balance of net
assets of the fiscal year under review, the beginning balance of retained earnings in the
consolidated statement of changes in net assets decreased by ¥39,639 million.
(Application of Accounting Standard for Fair Value Measurement, Etc.)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, July 4, 2019) and relevant revised ASBJ regulations from the beginningof the fiscal year under review, and in accordance with the transitional treatment set forth– 19 –

in paragraph 19 of the Accounting Standard for Fair Value Measurement and paragraph44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10,
July 4, 2019), the new accounting policy set forth in the Accounting Standard for Fair
Value Measurements and relevant revised ASBJ regulations has been applied
prospectively. There is no impact on the consolidated financial statements.
In addition, the Company has determined to provide notes on matters regarding
breakdown of fair values of financial instruments by appropriate classification, etc. in“Notes to Financial Instruments.”(Changes in presentation methods)
Consolidated Statement of Income
Effective from the fiscal year under review, “Gain on sale of investment securities,”
which was included in “Other” under “Non-operating income” for the previous fiscal year,
is presented separately as a result of an increase in its quantitative materiality.
(Notes to Accounting Estimates)
Recoverability of deferred tax assets(1) The amount recorded in the consolidated financial statements
Deferred tax assets¥86,249 million(2) Information contributing to understanding of the accounting estimates(i) Methods to calculate the estimates
The recoverability of deferred tax assets is determined based on business plans,
taking into account taxable income for a certain future period and tax planning.
(ii) Assumptions used to calculate the estimates
Estimation on net sales and income, a key element for business plans, isperformed with some assumptions on factors including future economic
conditions.
(iii) Impact on the consolidated financial statements for the next fiscal year
Future accounting estimates can be affected by changes in future economic
conditions (COVID-19, Russia’s invasion of Ukraine, etc.) and other factors.
Although the Group provides reasonable estimates on the recoverability, futurechanges in those conditions on the estimates can have a material impact on theamount of deferred tax assets in the consolidated financial statements in future
periods.

– 20 –

(Notes to Consolidated Balance Sheet)
1. Accumulated depreciation of property, plant and equipment
2. Assets pledged as collateral and liabilities relating to collateral(1)
Assets pledged as collateral
Investment securities
Shares of subsidiaries and associates
Other
Total

¥941,530 million¥41 million¥536 million¥13 million¥590 million(2)

Liabilities relating to collateral
Other¥6 million
Total¥6 million
3. Guarantee obligations for bank loans of subsidiaries andassociates, etc. and employees¥26,514 million
4. In some overseas construction works for LNG tanks, the Company suffered damage(about ¥51.0 billion) due to a breach of contract because of non-fulfillment ofcontract by an overseas subcontractor. In this case, a petition for arbitration has
been filed with the ICC (The International Chamber of Commerce). We plan toresolve this case through arbitration in the future, and the expected amount ofrecovery from the arbitration has been recorded in “Other” under “Investments andother assets.”(Notes to Consolidated Statement of Profit and Loss)
1. Gain on sales of non-current assets proceeds from the sale of the land of the Company
in Yokkaichi, Japan.
2. Amount of impairment losses
Impairment losses incurred associated with the fact that profitability of the assets
related to the Sakaide Works of the Company’s Energy Solution & Marine Engineering
Company is deteriorated based on the assumption of current market conditions.
(Notes to Consolidated Statement of Changes in Net Assets)
1. Total number of shares issued as of the end of the fiscal year under review
Ordinary share 167,921,800 shares
2. Dividends(1) Dividends paid
Resolution

Total dividends(millions of yen)

Dividends per
share (yen)Record date

Effective date

Board ofDirectors
September 30,
December 3,
3,357
20.0
meeting on
2021
2021
November 9,
2021(Note)The total dividends in accordance with the resolution passed at the Board of Directors
meeting on November 9, 2021 includes ¥8 million of dividends on shares held by the trustwith Directors, etc. as beneficiaries, which was created due to the adoption of aperformance-linked stock compensation plan.

(2)

Of the dividends whose record date belongs to the fiscal year under review,
those whose effective date will fall in the next consolidated fiscal year.

Scheduled date
Total dividend
Dividend per
Record date
Effective dateof resolution(millions of yen)share (yen)Ordinary General
Meeting of
3,357
20.0
March 31, 2022
June 27, 2022
Shareholders on
June 24, 2022
(Note)The total dividends in accordance with the resolution to be passed at the Ordinary General
Meeting of Shareholders on June 24, 2022 includes ¥8 million of dividends on shares held
– 21 –

by the trust with Directors, etc. as beneficiaries, which was created due to the adoption ofa performance-linked stock compensation plan.

(Notes to Financial Instruments)
1. Matters regarding financial instruments
The Group raises necessary funds, in light of its business plans; for long-termworking capital and capital expenditure funds the Group predominantly raises funds
through bank loans and issuance of corporate bonds, for short-term working capital itraises funds through bank loans and issuance of short-term bonds (electroniccommercial paper), and so forth. Temporary surplus funds are invested in highly
secure financial assets. We use derivatives to avoid risks described hereunder and do
not engage in speculative transactions.
Operating receivables, namely, notes and accounts receivable - trade are exposed
to counterparty credit risk. The currency exchange risk of the debts and credits inforeign currencies which arise from global business operations is hedged by using
foreign exchange forward contracts, and so forth in principle against the net amountof the debts and credits in the foreign currency. Investments securities are mainly
shares of corporations which we have business dealings with, and of these investments,
those shares that are listed are exposed to the risk of market price fluctuations.
Notes and accounts payable - trade and electronically recorded obligations operating, which are operating liabilities, have maturities of one year or less. Some ofthose are denominated in foreign currencies due to the import of materials, and soforth, and although they are exposed to the risk of currency fluctuation, most arewithin the limit of the balance of accounts receivable in the same foreign currency.
Debts payable that are composed of borrowings and bonds payable are raised for the
purpose of securing working capital and capital investments, and the longest maturity
from the date of balance sheet is about 18 years. Some of those instruments havefloating interest and are denominated in foreign currencies and are therefore exposedto the risk of interest rate and currency exchange fluctuations, however we hedge
those risks as required by using derivatives transactions (interest rate swap
transactions and currency swap transactions).
Derivative transactions are transactions which include exchange forward contracts
and currency options and currency swap transactions for the purpose of hedging
exchange fluctuation risks of the debts and credits in foreign currencies, and interest
rate swap transactions and so forth for the purpose of hedging interest fluctuation
risks of debts payable. Details of hedging instruments, hedged items, hedging policies,
assessment of hedging effectiveness of hedge accounting are stated in “3. Significant
accounting policies, (7) Method of significant hedge accounting” of “Notes to the basis
for preparation of consolidated financial statements” described above.
2. Fair values of financial instruments
Carrying amounts in the consolidated balance sheet, fair values and the difference
between them as of the end of the fiscal year under review are as follows. Shares, etc.
with no market price are not included in the following table (please refer to (*) 2). In
addition, a note on cash is omitted. Notes on deposits, notes and accounts receivable- trade, notes and accounts payable - trade, electronically recorded obligations operating, short-term borrowings, and current portion of bonds payable are omitted
as these instruments are settled within short term, and the fair value approximates
the book value.

– 22 –

(Unit: Millions of yen)
Carrying amount in
the consolidated
Fair value (*1)
Difference
balance sheet (*1)
(1) Investment securities
4,112
4,112
(2) Bonds payable[180,000][177,997]
2,003(3) Long-term borrowings[194,297][193,865]431(4) Derivatives transactions[6,476][6,476](*)1
Figures which are recorded in liabilities are shown in [ ].
2Shares, etc. with no market price
Shares of subsidiaries and associates, investments in capital of subsidiaries and associates,
unlisted shares and others (carrying amount in the consolidated balance sheet is ¥83,925
million) are not included in the table above because those instruments have no market prices.

3. Matters regarding breakdown of fair values of financial instruments by appropriateclassification etc.
Fair values of financial instruments are classified into the following three levels
according to the observability and significance of inputs used to determine the fairvalue.
Fair value of Level 1:
Fair value determined based on a (unadjusted) quoted
market price in an active market for an identical asset or liability
Fair value of Level 2:
Fair value determined using directly or indirectly observable
inputs other than Level 1 inputs
Fair value of Level 3:
Fair value determined using significant unobservable inputs
If multiple inputs that have a significant effect on determination of fair value areused, the fair value is classified to the lowest priority level in determination of fairvalue from among the levels those inputs belong(1) Financial assets and financial liabilities that are recorded at fair value on the
consolidated balance sheet(Unit: Millions of yen)Classification
Investment
securities
Available-forsale securities
SharesOther
Derivative
Currency
relatedInterest rate
relatedTotal assets
Derivatives
transactions
Currency
relatedInterest rate
relatedTotal liabilities

Fair value
Level 1

Level 2

Level 3

Total

3,907






205

3,907
205



4,498



4,498









3,907

4,498

205

8,610



10,925



10,925



48



48



10,974



10,974– 23 –

(2) Financial assets and financial liabilities that are not recorded at fair value on
the consolidated balance sheet(Unit: Millions of yen)Classification
Bonds payable
Long-term
borrowings
Total liabilities

Fair value
Level 1
Level 2
177,997Level 3


Total
177,997

193,865



193,865

371,862

371,862(Note)
Explanation of valuation techniques and inputs used to determine fair value
Investment securities
The fair value of listed shares is stated at the price listed on the exchange. Because
listed shares are traded in active markets, the fair value is classified as fair value ofLevel 1.
Bonds payable
The fair value of bonds is stated at the market price. Because bonds are not traded in
active markets regardless of having market prices, the fair value is classified as fairvalue of Level 2.
Long-term borrowings
The fair value of long-term borrowings is determined by discounting the total of aprincipal and interest by the interest rate on a similar new borrowing, and is classified
as fair value of Level 2.
Derivatives transactions
The market value of forward exchange contracts and interest rate swaps is determinedby discounting future expected cash flows to the present value based on forward
exchange rate at the last day of the reporting period and on interest rate at the last
day of the reporting period, respectively. Because the market value is determinedusing observable inputs, it is classified as market value of Level 2.
(Notes to Per Share Information)
1. Net assets per share¥2,861.25
2. Profit per share¥130.26(Notes to Revenue Recognition)
1. Information on disaggregation of revenue from contracts with customers
The Group’s businesses are basically comprised of six businesses: “Aerospace
Systems,” “Rolling Stock,” “Energy Solution & Marine Engineering,” “Precision
Machinery & Robot,” “Motorcycle & Engine” and “Others.” In order to understandrevenue from contracts with customers based on that, revenue is disaggregated in a
way which further classifies part of reportable segments (“Aerospace Systems,”“Energy Solution & Marine Engineering,” and “Precision Machinery & Robot”) based on
types of products.
In transactions of “Precision Machinery & Robot,” “Motorcycle & Engine” and“Others,” because performance obligations are mainly satisfied at a point in time,revenue is recognized at the delivery date or the receiving inspection date of goods inprinciple. In transactions of “Aerospace Systems,” “Rolling Stock,” and “Energy
Solution & Marine Engineering,” in addition to transactions where performanceobligations are satisfied at a point in time, there are transactions where performanceobligations are satisfied over a certain period of time, and revenue is recognized byreasonably measuring the progress. Although the progress is principally measured
using the input method based on costs incurred in many transactions of the Group,
the output method is employed for provision of certain services (such as maintenancecontracts) in “Aerospace Systems,” “Rolling Stock,” and “Energy Solution & Marine
Engineering.”– 24 –

(1) Breakdown by product type
(Unit: Millions of yen)
Reportable segments
Aerospace
Systems
Aerospace
Aero engine
Rolling stock
Energy system &plant engineering
Ship & offshore
structure
Precision
Machinery
Robot
Motorcycle &engineOthers
Net sales toexternal customers

Rolling
Stock

EnergySolution & Precision
Machinery
MarineEngi& Robotneering

Motorcycle &EngineOthers232,025
66,186232,025
66,186
126,684

126,684
232,324

232,324

64,981

64,981
163,117

163,117

89,56089,560447,927

298,212

126,684

Total

297,306

252,678

447,927

447,927
78,07078,07078,0701,500,879(2) Breakdown by region(Unit: Millions of yen)
Reportable segments
Aerospace
Systems
Japan
U.S.
EuropeAsia
Others
Net sales toexternal customers

Rolling
Stock

EnergySolution & Precision
Machinery
MarineEngi& Robotneering

Motorcycle &EngineOthersTotal

179,41583,75630,7905
4,244

74,63634,396
17,651
234,172
1,786
7,809
27,80325,73468,00922,735
11,342
144,156
6,434

36,761
214,961
72,91082,597
40,696

71,481
309
145
5,371
761

664,476
357,945
122,998
277,586
77,872

298,212

126,684

297,306

252,678

447,927

78,0701,500,879

2. Information that provides the basis for understanding revenue
Information that provides the basis for understanding revenue is as stated in “3.
Significant accounting policies (5) Standards for the recognition of significant revenues
and expenses” in “Notes to the basis for preparation of consolidated financial
statements.”
3. Information for understanding the amount of revenue for the fiscal year under review
and the following fiscal years– 25 –

(1) Balances of contract assets and contract liabilities, etc.
(Unit: Millions of yen)
The 199th
fiscal year
(under review)
Receivables arising from contracts with customers (balance at the
beginning of the period)
Receivables arising from contracts with customers (balance at the endof the period)

323,402343,493

Contract assets (balance at the beginning of the period)

106,270

Contract assets (balance at the end of the period)

75,131

Contract liabilities (balance at the beginning of the period)

159,476Contract liabilities (balance at the end of the period)

256,189

Receivables arising from contracts with customers are included in “Notes andaccounts receivable - trade, and contract assets” on the consolidated balance
sheet.
Contract assets are rights to consideration received in exchange for the
portion of an already satisfied performance obligation that is measured based on
the progress as at the end of the reporting period, excluding receivables, mainly
in contracts where performance obligations are satisfied over a certain period oftime. Contract assets are transferred to receivables from contracts withcustomers when the rights to consideration become unconditional and only
passage of time is required.
Contract liabilities include advances received from customers, etc.
In the fiscal year under review, contract liabilities increased by ¥96,713 million,
but this was mainly due to transactions in “Aerospace Systems.” There was no
significant change in the balance of contract assets.
Of revenue recognized, the amount included in the balance of contract
liabilities as at the beginning of the period was ¥149,791 million in the fiscal year
under review. In the fiscal year under review, the amount of revenue recognizedfrom performance obligations that were satisfied in past periods was not
significant.
(2) Transaction prices allocated to remaining performance obligations
The total amount of transaction prices allocated to remaining performanceobligations and timing in which revenue is expected to be recognized are as
follows.
The Group has applied a practical expedient and omits information onremaining performance obligations with the original expected remaining periodof one year or less. There are no amounts, etc. of significant variableconsideration from contracts with customers that were not included in thetransaction price.
Aerospace
Systems
Within 1 year
Over 1 to 2 years
Over 2 to 3 years
Over 3 to 4 years
Over 4 to 5 years
Over 5 to 10 years
Over 10 years
Total

88,41665,85952,63018,045
224,951(Unit: Millions of yen)
Energy Solution &MarineTotal
Engineering

Rolling
Stock87,812
22,961
16,2749,956

137,004– 26 –

87,77649,12435,753
20,332
11,51937,797
14,651
256,955

264,005
137,944
104,658
48,334
11,51937,797
14,651
618,911(Note) Because performance obligations for “Precision Machinery & Robot (Precision
Machinery, Robot),” “Motorcycle & Engine” and “Others” are mainly satisfied at apoint in time, the information is not provided.
(Other)(Notes to Business Combinations and Business Divestitures)Transactions under common control, etc.
As of October 1, 2021, the Rolling Stock segment and the Motorcycle & Engine
segment of the Company were succeeded to by Kawasaki Railcar Manufacturing Co.,
Ltd. and Kawasaki Motors, Ltd. by means of a company split (simple absorption-type
split).
(1) Overview of transactions
1) Name of succeeded businesses and description thereof
Rolling Stock segment and Motorcycle & Engine segment
2) Date of business combinations
October 1, 2021
3) Legal format of business combinations
An absorption-type company split (simple absorption-type company split) in which
the Company will be the split company, and Kawasaki Railcar Manufacturing Co.,
Ltd. and Kawasaki Motors, Ltd. will be the successor companies.
4) Name of the companies after the combination
No change.
5) Overview of transactions including the purpose thereof[Rolling Stock segment]
Railway systems which are an environmentally-friendly means of public
transportation and an integral part of daily life, are projected to achieve stable
market growth globally. This trend is anticipated to be driven by urban
transportation initiatives to reduce congestion and improve the environment inlarge cities experiencing population concentration, as well as the need to develop
railway infrastructure in Asian countries together with their economic development.
On the other hand, COVID-19 pandemic has caused railway operations in Japanto review their investment plans in response to declining passenger numbers,
while in overseas, delays have been occurring in the construction of new railway
lines.
Based on this view of the market situation, the Company conducted theabsorption-type company split of the Rolling Stock segment in order to establish
a system that will take agile and flexible measures, including through close allianceand collaboration with industry partners to respond to demand for railway systems
overall and provide solutions to railway operators.
[Motorcycle & Engine segment]
Power sports business, including motorcycles and off-road four wheelers, andgeneral-purpose engine business have entered a once-in-a-hundred-years periodof major change, typified by CASE(*), and cooperation in the environmental
regulation handling, electrification and advanced safety technology areas
continues to advance. The core power sports business is the only B-to-C businessat the Company and it has business characteristics that require nimble and bolddecision-making.
In this kind of business environment, the Company conducted the absorption-typecompany split of the Motorcycle & Engine segment in order to achieve speedy
management by establishing an autonomous business management system, andto build a stronger brand and achieve sustainable business growth through theprovision of customer-oriented products and services, including new lifestyle
proposals.
* CASE: A coined word using the acronym for Connected, Autonomous/Automated,
Shared, and Electric– 27 –

(2) Overview of accounting treatment implemented
This transaction was accounted for as a transaction under common control inaccordance with the “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, January 16, 2019) and “Implementation Guidance on
Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10, January 16, 2019).

– 28 –

Non-consolidated Statement of Changes in Net Assets(From April 1, 2021 to March 31, 2022)(Unit: Millions of yen)
Capital surplus

Balance at the beginningof the period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
the period
Issuance of new shares
Cash dividends
ProfitPurchase of treasury
shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
shares
Reversal of reserve for
special depreciation
Reversal of reserve fortax purpose reduction
entry of non-current
assetsNet changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end of theperiodSharecapitalLegalcapitalsurplus

Othercapitalsurplus104,484

52,210

Shareholders’ equity
Retained earnings
Other retained earnings
Reserve for
Retained
Reserve for tax purpose
earnings
reduction
specialbrought
entry ofdepreciation
forwardnon-current
assets

1,274

5,147

124,295

Treasuryshares(136)(39,600)
104,484

52,210



1,274

5,147

84,695287,276(39,600)

(136)

1,916

247,676
1,916(3,357)
21,269(3,357)
21,269(0)

Total
shareholders’equity

(994)

(994)

1

1

(0)



407



(190)

190



0
(407)



1,916



(407)

(190)

18,509(992)

18,834

104,484

54,126



866

4,957

103,205(1,129)266,511– 29 –

Valuation and translation adjustments
Valuation
Total valuation anddifference on
Deferred gains ortranslation
available-for-sale losses on hedges
adjustments
securities
Balance at the beginningof the period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
the period
Issuance of new shares

988

(516)

472

287,749(39,600)

988

(516)

472

248,148

1,916

Cash dividends
ProfitPurchase of treasury
shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
shares
Reversal of reserve for
special depreciation
Reversal of reserve fortax purpose reduction
entry of non-current
assetsNet changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end of theperiodTotal net assets(3,357)
21,269
(994)
1




(203)

90

(112)

(112)

(203)

90

(112)

18,722

785

(426)

359

266,870– 30 –

Notes to the Non-consolidated Financial Statements*The amounts presented are rounded down to the nearest unit.
(Significant accounting policies)
1. Standards and methods for evaluation of assets(1) Standards and methods for evaluation of securities(i) Shares of subsidiaries and associates
Cost using the moving-average method is applied.
(ii) Available-for-sale securities
Securities other than shares, etc. with no market priceMarket value method (with all valuation differences charged to net assets andthe cost of sale computed by the moving-average method) is applied.
Shares, etc. with no market price
Cost using the moving-average method is applied.
(2) Standards and methods for evaluation of inventories
Stated at cost using the specific identification method and the moving averagemethod (balance sheet amounts are determined based on the method oflowering the book value in accordance with the deterioration of profitability).
(3) Standards and methods for evaluation of derivatives
Stated at market value.
2. Method of depreciation of non-current assets(1) Property, plant and equipment (excluding leased assets)
The straight-line method is applied.
(2) Intangible assets (excluding leased assets)
The straight-line method is applied.
Software for internal use is amortized by the straight-line method over theinternally estimated useful lives (within 5 years).
(3) Leased assets
The leased assets involved in finance lease transactions that involve transfer ofownership
The same method as that applied to property, plant and equipment is applied.
Finance lease transactions not involving the transfer of ownership
The straight-line method is used with the useful life equal to the lease termand zero residual value.
3. Standards of accounting for provisions(1) Allowance for doubtful accounts
In order to provide for losses due to doubtful accounts from bad debt including
trade receivables and loan receivables, allowance for doubtful receivables isprovided based on the historical default rate of normal receivables and withreference to the collectability of receivables from companies in financial difficulty.
(2) Provision for bonuses
To prepare for the bonus payments to employees, provision for bonuses isprovided in the amount based on the estimated amount of bonus payment.
(3) Provision for construction warranties
A provision is recorded for expenditures for warranties concerning construction
contracts based on past experience or on estimations of individual cases.
(4) Provision for loss on construction contracts
A provision for an estimated amount of losses is recorded for the next fiscal year
and thereafter concerning construction works which are anticipated to incur
significant losses and which allow reasonable estimation of the loss incurred at theend of the fiscal year under review among those construction works that have notbeen delivered as of the end of the fiscal year under review.
(5) Provision for retirement benefits
Employees’ retirement and severance benefits is recorded based on theestimated amount of retirement benefit obligations and plan assets as of the end– 31 –

of the fiscal year under review (including the retirement benefit trust) in order tocover employee retirement benefits.
(i) Allocation of expected retirement benefit payments
In calculation of retirement benefit obligations, the benefit formula basis isused to allocate expected retirement benefit payments to the period as of theend of the fiscal year under review.
(ii) Method of accounting treatment for actuarial differences and prior service cost
The prior service cost is amortized using the straight-line method overcertain years (10 years) within the average remaining service period of theemployees when the costs incurred in each year.
Actuarial differences are amortized from the fiscal year following the fiscal year
in which the differences are recognized using the straight-line method over the
average remaining years of service of the employees (10 years).
(6) Provision for the in service issues of commercial aircraft jet engines
A provision for the amount expected to be covered by the Company with regard
to costs associated with significant in-service issues arising in the Rolls-Royce Trent
1000 engine program for Boeing 787, in which the Company has participated as arisk and revenue sharing partner (RRSP).
4. Standards for recognition of significant revenue and expenses
The Company recognizes revenue upon the transfer of promised goods or services
to customers in an amount that reflects the consideration that it expects to receive in
exchange for those goods or services, based on the following five-step approach.
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:

Identify a contract with a customer
Identify performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue at the time of satisfying the performance obligations (oras the performance obligations are satisfied)

The Company’s requirements of revenue recognition are as follows.
(i) Performance obligations satisfied at a point in time
Revenue from sale of goods is derived from the sale etc. of products, andperformance obligations are held to deliver the goods based on the contract
with the customer. For sale of goods, revenue is recognized at the delivery dateor the receiving inspection date of goods when requirements for transfer ofcontrol are satisfied. This is based on the judgment that the customer obtains
control over the promised asset and the performance obligation is satisfied at
the time of delivery or receiving inspection of the goods. Revenue from sale ofgoods, etc. is measured in an amount calculated by deducting discounts andrebates from consideration promised in the contract.
(ii) Performance obligations satisfied over a period of time
Revenue from construction contracts and provision of services is derived
from the manufacture of products, and the maintenance, etc. of products thatis involved with this. The performance obligations are held to provide the goods
or services based on the contract with the customer. For construction contracts
and provision of services, since control over goods or services is transferredover a period of time, revenue is recognized by measuring progress reasonably
towards complete satisfaction of performance obligations. Measurement ofprogress takes into account the nature of goods or services promised to betransferred to the customer, using the input method based on the proportion of
cumulative incurred cost to estimated total costs of the entire transaction at
the present time, etc., or the output method based on the proportion of theperiod that elapsed to the entire contract period or the proportion of services
that were provided up to the present time to the entire services to be provided.
– 32 –

If progress cannot be reasonably estimated but incurred cost is expected to be
recovered, revenue is recognized to the extent of incurred cost.
Consideration for these performance obligations is usually received within one year
from the time of satisfying performance obligations. Consideration does not include
any significant financial components.
Although the Company provide product warranties meeting specifications set forthin the contract, these product warranties do not provide any separate service.
Therefore. the product warranties are not distinguished as an independent
performance obligation.
For transaction contracts including changes in consideration such as rebates andsubsequent discounts, the transaction price is determined by estimating the variable
price to the extent that it is highly probable that a significant reversal of revenue will
not occur when the uncertainty is resolved.
5. Other important matters forming the basis for preparing the non-consolidated
financial statements(1) Accounting treatment for hedges(i) Method of hedge accounting
Deferred hedge accounting is applied.
(ii) Hedging instruments and hedged items
Hedging instrument
Hedged items
Receivables and payables (including
Forward exchange contracts, currency
forecast transactions) denominated in
options
foreign currency
Interest rate swaps, currency swaps
Borrowings(iii) Hedging policy
Hedging is conducted as a measure against the risk of foreign currency
variation and interest rate variation based on company rules.
(iv) Method of assessing hedging effectivenessHedging effectiveness is evaluated based on fluctuation amounts of hedged
items and hedging instruments by comparing the cumulative changes of market
fluctuations between the hedged item with the hedging instrument during theperiod between the start of the transaction to the point at which effectiveness is
assessed.
(2) Standards for the translation of assets or liabilities denominated in foreign
currencies
Receivables and payables denominated in foreign currencies are translated into
yen at the foreign exchange spot rate on the date of the balance sheet, anddifferences arising from the translation are calculated as gains or losses.
(3) Accounting treatment for retirement benefits
Accounting treatment for unrecognized actuarial gains or losses andunrecognized past service cost for retirement benefits are different from accounting
treatment for them in the consolidated financial statements.
(4) Application of the consolidated taxation system
The consolidated taxation system is applied.
(5) Application of tax effect accounting for the transition from the consolidated
taxation system to the group tax sharing system
The Company will transition from the consolidated taxation system to the grouptax sharing system starting from the next fiscal year. However, regarding the items
related to the transition to the Group Tax Sharing System newly established in the“Act for Partial Amendment of the Income Tax Act” (Act No. 8, 2020) and the reviewof the non-consolidated taxation system in line with the transition, the Company
has not applied the provisions of paragraph 44 of the “Implementation Guidance on
Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018), pursuant toparagraph 3 of the “Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (PITF No. 39,– 33 –

March 31, 2020). The amounts of deferred tax assets and deferred tax liabilities
are recorded in accordance with the tax act prior to the amendment.
The Company plans to apply the “Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System” (PITF No. 42, August 12, 2021),
which provides for accounting treatment and disclosure of corporate and local
income taxes and tax effect accounting in the case where a group tax sharing
system is applied, from the beginning of the next fiscal year.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, Etc.)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) and relevant ASBJ regulations effective from the
beginning of the fiscal year under review, and recognizes revenue the amount expected
to be received in exchange for the promised goods or services when the control of those
goods or services is transferred to customers.
As a result of this application, a portion of the costs incurred in connection with thecommercial aircraft jet engines program in which the Company is participating, which
was previously recorded in cost of sales, has been reduced from net sales as
consideration paid to customers. As a result, payments for the development for thecommercial aircraft jet engines program, which was previously accounted for in “Workin progress,” has been transferred to “Investments and other assets.” In addition, forafter-sale services for the commercial aircraft jet engines program, although net sales
and cost of sales were previously recorded based on information provided by theCompany’s main partner, the Company has changed to the method to recognize
revenue based on fulfillment of performance obligations, and record the estimatedamount of variable compensation and compensation paid to customers as costs whenrevenue is recognized. In addition, the Company has changed the method of accounting
for certain types of discounts the Company pays in accordance with the ratio ofparticipation in the commercial aircraft jet engines program from the method previously
reported based on information provided by the main partner to the method in which
the amount of such discounts is estimated as variable compensation at the time ofrevenue recognition.
Regarding the application of the Accounting Standard for Revenue Recognition andrelevant ASBJ regulations, in accordance with the transitional treatment provided for in
the proviso of paragraph 84 of the Accounting Standard for Revenue Recognition, thecumulative effect of the retrospective application, assuming the new accounting policy
had been applied to periods prior to the beginning of the fiscal year under review wasadded to or subtracted from the opening balance of retained earnings of the fiscal year
under review, and thus the new accounting policy was applied from such opening
balance; provided however, that the new accounting policy was not retrospectively
applied to contracts for which nearly all the revenue amounts had been recognized inaccordance with the previous treatment in periods prior to the beginning of the fiscal
year under review, by applying the method provided for in paragraph 86 of the
Accounting Standard for Revenue Recognition. In addition, by applying the method
specified in item (1) of the supplementary provisions of paragraph 86 of the AccountingStandard for Revenue Recognition, modifications to contracts made prior to thebeginning of the fiscal year under review were accounted for under the terms andconditions existing after reflecting all modifications in contracts, and the cumulative
effect was added to or subtracted from the opening balance of retained earnings of the
fiscal year under review.
Furthermore, “Accounts receivable - trade,” which was presented in “Current assets”
in the non-consolidated balance sheet for the previous fiscal year, is included in“Accounts receivable - trade” and “Contract assets” from the fiscal year under review,
while “Advances received,” which was presented in “Current liabilities,” is presented in“Contract liabilities” from the fiscal year under review. As a result, compared with thefigures before the application of the Accounting Standard for Revenue Recognition and– 34 –

relevant ASBJ regulations, in the non-consolidated statement of profit and loss, net
sales and cost of sales decreased by ¥79,515 million and ¥84,718 million, respectively,
and accordingly operating loss improved by ¥5,203 million, ordinary profit and profit
before income taxes increased by ¥5,203 million, respectively.
In addition, because the cumulative effect was reflected in opening balance of net
assets of the fiscal year under review, the beginning balance of retained earnings in the
non-consolidated statement of changes in net assets decreased by ¥39,600 million.
(Application of Accounting Standard for Fair Value Measurement, Etc.)
The Company has applied the “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019) and relevant revised ASBJ regulations from the
beginning of the fiscal year under review, and in accordance with the transitional
treatment set forth in paragraph 19 of the Accounting Standard for Fair Value
Measurement and paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019), the new accounting policy set
forth in the Accounting Standard for Fair Value Measurements and relevant revised ASBJ
regulations has been applied prospectively. There is no impact on the non-consolidated
financial statements.
(Notes to Accounting Estimates)
1. Recoverability of deferred tax assets(1) The amount recorded in the non-consolidated financial statements
Deferred tax assets ¥79,813 million(2) Information contributing to understanding of the accounting estimates
Notes are omitted as the same information is provided in “Notes to Accounting
Estimates” in the consolidated financial statements.
2. Valuation of shares of subsidiaries and associates(1) The amount recorded in the non-consolidated financial statements
Shares of subsidiaries and associates ¥86,400 million (of which, ¥7,955 million in
investment in Medicaroid Corporation)(2) Information contributing to understanding of the accounting estimates(i) Methods to calculate the estimates
The shares of subsidiaries and associates are evaluated by stating at cost
determined by the moving-average method, and if the actual price of the sharesis remarkably lower compared with the acquisition price, the Company obtains
business plans and considers the recoverability.
(ii) Assumptions used to calculate the estimates and impact on the nonconsolidated financial statements for the next fiscal year
The Company is considering the recoverability of shares of Medicaroid
Corporation based on a business plan prepared by Medicaroid Corporation.
There are uncertainties in that business plan concerning the estimates for future
market growth, sales volume, prices, related costs, etc. If it becomes difficult
to achieve the business plan due to changes in the various underlying
assumptions to the estimates regarding the future, there may be a significant
monetary impact on shares of subsidiaries and associates(Notes to Non-consolidated Balance Sheet)
1. Accumulated depreciation of property, plant and equipment
2. Monetary receivables from and payables to subsidiaries andassociates
Short-term monetary assets
Long-term monetary assets
Short-term monetary liabilities– 35 –¥558,397 million¥180,638 million¥431 million¥93,529 million

3.
4.

Guarantee obligations for bank loans of subsidiaries and¥46,559 million
associates, etc. and employees
In some overseas construction works for LNG tanks, the Company suffered damage(about ¥51.0 billion) due to a breach of contract because of non-fulfillment ofcontract by an overseas subcontractor. In this case, a petition for arbitration has
been filed with the ICC (The International Chamber of Commerce). We plan toresolve this case through arbitration in the future, and the expected amount ofrecovery from the arbitration has been recorded in “Other” under “Investments andother assets.”(Notes to Non-consolidated Statement of Profit and Loss)
1. Transactions with subsidiaries and associates
Transaction from operating transactions
Net sales¥295,336 million
Purchases¥143,411 million
Other¥3,784 million
Transaction from non-operating transactions¥33,016 million
2. Gain on sales of non-current assets proceeds from the sale of the land in Yokkaichi,
Japan.
3. Impairment losses incurred associated with the fact that profitability of the assets
related to the Sakaide Works of the Energy Solution & Marine Engineering Company
is deteriorated based on the assumption of current market conditions.
(Notes to Non-consolidated Statement of Changes in Net Assets)
Type of treasury shares and number of shares at the end of the fiscal year underreview
Ordinary share
449,527 shares(Note) Treasury shares as at the end of the fiscal year under review include 409,600
shares held by the trust with Directors, etc. as beneficiaries, which was
created due to the adoption of a performance-linked stock compensation plan.
(Notes to Tax Effect Accounting)Among other factors, the main contributing factor to deferred tax assets is loss
carryforwards and the disallowance of various provisions such as provision for retirement
benefits, and the main contributing factor to the deferred tax liabilities incurred is reserve
for tax purpose reduction entry of non-current assets.

– 36 –

(Notes to Transactions with Interested Parties)(Unit: Millions of yen)

Subsidiaries and affiliates, etc.
Name ofcompany

Subsidiary

Subsidiary

KawasakiRailcarManufacturingCo., Ltd.

KawasakiMotors, Ltd.

Ownership
Relationshipinterest ofwith related
votingparty
rights (%)(Holding)
Directly
100%(Holding)
Directly
100%

Company
sharingbusinessfunction

Company
sharingbusinessfunctionTransactions
Lending offunds (Note1)
Company split(Note 2)
Total split
assetsTotal split
liabilities
Lending offunds (Note1)
Company split(Note 2)
Total split
assetsTotal split
liabilities

Transaction
amountAccount
itemYear-endbalance

Short-termborrowings

30,151

113,581

Short-termborrowings

24,830103,882


161,996
110,614(Notes) 1. For the lending of funds, the borrowing interest rate is reasonably
determined based on market interest rates.
2. In transactions related to company splits, the Rolling Stock segment and theMotorcycle & Engine segment of the Company were succeeded to by
Kawasaki Railcar Manufacturing Co., Ltd. And Kawasaki Motors, Ltd. bymeans of a company split (simple absorption-type company split). The
amount of the divested assets and liabilities was calculated based on theproper book values at the time of the split.
(Notes to Per Share Information)
1. Net assets per share¥1,593.52
2. Profit per share¥127.08(Notes to Revenue Recognition)
Information that provides the basis for understanding revenue from contracts withcustomers is omitted as the same information is provided in the “consolidated financial
statements (Notes to Revenue Recognition).”(Other)(Notes to Business Combinations and Business Divestitures)
The information is omitted because the same information has been provided in the“consolidated financial statements (Other) (Notes to Business Combinations andBusiness Divestitures).”– 37 –