Report of Earnings and Financial Statements for theNine Months Ended December 31, 2010 (Consolidated)(Prepared pursuant to Japanese GAAP)
January 31, 2011
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

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

1st sections of the TSE, OSE, and NSE
7012
http://www.khi.co.jp/
Satoshi Hasegawa, President
Hideyuki Matsubara, Senior Manager, Accounting Department+81 3-3435-2130

Scheduled dates:
Submission of quarterly securities filing:
Commencement of dividend payments:

February 10, 2011-

Supplementary materials to quarterly earnings:
Quarterly earnings presentation:

Available
Not conducted

1. Consolidated Financial Results for the Nine Months ended December 31, 2010
(April 1 – December 31, 2010)(Amounts in millions of yen rounded down to the nearest million yen)

(1) Operating Results(Percentage figures represent changes versus the year-ago period)
Net sales
Nine months ended
December 31, 2010
Nine months ended
December 31, 2009

Operating income%

million yen

870,540

9.0

38,750-45,215-28,159-798,060(16.4)(14,046)-(5,501)-(10,323)-yen
Nine months ended
December 31, 2010
Nine months ended
December 31, 2009

million yen

Net income

million yen

Earnings per share%

Recurring profit%

million yen%

Earnings per share– diluted
yen

16.87

16.60

(6.18)-(2) Financial Condition

Total assets

Net assets

million yen

million yen

Ratio ofshareholders’ equity
to total assets%

December 31, 2010

1,399,980

299,26420.7

174.29March 31, 2010

1,352,439

283,053

20.4

166.13

Note: Shareholders’ equity:

December 31, 2010: 291,138 million yen
March 31, 2010: 277,081 million yen

1

Net assets per shareyen2. Dividends

Record date or term

End of firstquarteryen

End of second
quarteryen

Dividend per share
End of third End of financial
quarter
year
yen
yen

Full year
yenYear ended
0.00
3.00
March 31, 2010
Year ending
0.00
March 31, 2011
Year ending March
3.00
31, 2011 (forecast)
Note: Revision of dividend forecast during the nine months ended December 31, 2010: None

3.00

3.00

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2011
(April 1, 2010 – March 31, 2011)
Net sales

Full year

million yen%

1,280,000

9.0(Percentage figures represent changes versus the year-ago period)
Earnings per
Operating income
Recurring profit
Net income
sharemillion yen%
million yen%
million yen%
yen
40,000-46,000221.8

29,000-Note: Revision of earnings forecast during the nine months ended December 31, 2010: Yes

4. Other Information
For further details, see “Other Information” on page 10 in the Accompanying Materials.
1) Changes in material subsidiaries during the period: None
*This refers to additions and removals of material subsidiaries to and from the consolidated groupduring the period.
2) Use of simplified accounting methods and specific accounting methods: Yes*This refers to the use of simplified accounting methods and accounting methods specific to the
preparation of quarterly consolidated financial statements.
3) Changes in accounting principles, procedures, and methods of disclosure(1) Changes in accord with revisions to accounting standards: Yes(2) Changes other than the above: None
*This refers to changes in accounting principles, procedures, and methods of disclosure used in the
preparation of quarterly consolidated financial statements.
4) Number of shares issued and outstanding (common stock)(1) Number of shares issued as of period-end (including treasury stock)
December 31, 2010:
1,670,547,571 shares
March 31, 2010:
1,669,629,122 shares(2) Number of shares held in treasury as of period-end
December 31, 2010:
122,618 shares
March 31, 2010:
1,780,388 shares(3) Average number of shares during respective periods
Nine months ended December 31, 2010:
1,668,992,016 shares

2

17.36

Nine months ended December 31, 2009:

1,668,191,279 shares

Quarterly review status
This report is exempt from the quarterly review of accounts conducted in accord with Japan’s Financial
Instruments and Exchange Act. As of this report’s publication, the quarterly review of the quarterly
financial results had not been completed.
*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain various forward-looking statements and other forecasts regarding performanceand other matters. Such statements are based on information available at the time of preparation. Actual
results may differ from those expressed or implied by forward-looking statements due to a range offactors. For assumptions underlying earnings forecasts and other information regarding the use of suchforecasts, refer to “Consolidated Earnings Outlook” on page 8 in the Accompanying Materials.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial position

8(3) Consolidated earnings outlook

8

2. Other Information

10(1) Overview of changes in material subsidiaries

10(2) Overview of simplified accounting methods and specific accounting methods

10(3) Overview of changes in accounting principles, procedures, and methods of disclosure

11

3. Consolidated Financial Statements

13(1) Consolidated balance sheets

13(2) Consolidated statements of income for the Nine Months Ended December 31, 201015(3) Consolidated cash flow statements

16(4) Notes on the going-concern assumption

17(5) Segment information

17(6) Notes on significant changes in the amount of shareholders’ equity

21

4. Supplementary Information

22(1) Orders and sales

22(2) Net sales by geographic area

23(3) Supplementary information on earnings forecasts for the fiscal year ending March 31,

24

2011

4

1. Qualitative Information and Financial Statements(1) Consolidated operating results
In the nine months to December 31, 2010 (first three quarters of the fiscal year ending March 31,2011), Japan’s economic recovery stalled. The KHI Group continued to face an adverse businessenvironment, largely due to progressive yen appreciation.
The global economy is generally in a moderate recovery trend, although emerging market
economies’ previously strong growth has been slowing somewhat. The US economic outlook,however, remains uncertain. Lingering anxieties about certain European countries’ financial
systems are another risk that warrants concern.
Amid such an economic environment, operating performance improved across all of theGroup’s businesses in the fiscal third quarter. Orders received grew in all business segments
except the Gas Turbine & Machinery segment. Overall orders received also increased, bolsteredby large orders booked by the Rolling Stock and Aerospace segments. Overall sales also grew
despite reduced sales in the Ship & Offshore Structure, Rolling Stock, and Plant &Infrastructure segments. In terms of profitability, all businesses increased their profits or
reduced their losses by virtue of sales growth and/or cost cutting despite the impact of yen
appreciation.
In the first three quarters of the fiscal year, the Group’s consolidated orders received grew
¥224.1 billion year on year to ¥874.0 billion. Consolidated net sales increased ¥72.4 billion year
on year to ¥870.5 billion over the same timeframe. The Group earned operating income of ¥38.7
billion, recurring profit of ¥45.2 billion, and net income of ¥28.1 billion in the first three fiscal
quarters. These earnings respectively represent improvements of ¥52.7 billion, ¥50.7 billion,and ¥38.4 billion from the year-earlier period’s operating, recurring, and net losses.
Consolidated segment information for the first three quarters of the fiscal year is summarized
below.
Segment Information
Effective from the first quarter of the current fiscal year, the Group adopted the AccountingStandards Board of Japan’s Revised Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No. 17, March 27, 2009) and associatedGuidance on the Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information (ASBJ Guidance No. 20, March 21, 2008). The Group also renamed its
Consumer Products & Machinery segment the Motorcycle & Engine segment and its Hydraulic
Machinery segment the Precision Machinery segment in conjunction with new industry
segmentation for internal reporting adopted in April 2010. Also effective from April 2010, the5crushing machine business was shifted from the Rolling Stock segment to the Plant &Infrastructure segment and the industrial robot business was shifted from the Consumer
Products & Machinery segment to the Precision Machinery segment. Additionally, the Grouprenamed its Shipbuilding segment the Ship & Offshore Structure segment in conjunction with
its October 2010 reorganization.
To reflect this change, year-earlier figures for net sales, operating income/loss, and orders
received in the table below have been restated based on the newly adopted accounting standard
and guidance and resegmentation of operations.
Segment net sales, operating income, and orders received (billions of yen)
Nine months ended December 31,

Orders received
Nine months ended

2010
Segment
Ship & Offshore

December 31,

2009

Net

OperatingNet

Operatingsales

incomesales

income

2010

2009

93.2

4.9

111.7

0.8

67.2

10.4

Rolling Stock

95.5

5.9

110.5

5.2

124.1

55.5

Aerospace

135.0

2.0

119.3

0.3

123.7

79.9

149.6

9.6

128.8

3.9

113.6

138.5

56.4

4.6

59.0

0.7

105.4

98.7

159.2

(2.6)

144.0

(21.1)

159.2

144.0

99.0

14.6

55.4

0.7

106.7

54.8

82.2

1.6

69.0

(0.9)

73.8

67.6

—

(2.3)

—

(3.8)

—

—

870.5

38.7

798.0

(14.0)

874.0

649.9

Structure

Gas Turbine &Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision
Machinery
Other
Adjustments
Total

Note: Net sales include only sales to external customers.

Ship & Offshore Structure
Consolidated orders received totaled ¥67.2 billion, a ¥56.7 billion increase from the year-earlier
period, when only one newbuild order was received. The increase was attributable to receipt of
newbuild orders for one submarine and 10 bulk carriers.
Consolidated net sales totaled ¥93.2 billion, a decrease of ¥18.5 billion from the year-earlier
6period, when revenues from large newbuild sales were recognized.
Despite an increase in reserves against losses on construction contracts, consolidated
operating income increased ¥4.1 billion year on year to ¥4.9 billion, largely as a result of
improved margins.
Rolling Stock
Consolidated orders received increased ¥68.6 billion year on year to ¥124.1 billion, largely byvirtue of subway car orders from the Washington Metropolitan Area Transit Authority.
Consolidated net sales were down ¥14.9 billion year on year to ¥95.5 billion, largely as aresult of a decline in overseas railway car sales.
Consolidated operating income increased ¥600 million year on year to ¥5.9 billion as thedecline in sales was offset by improved margins.
Aerospace
Consolidated orders received were up ¥43.7 billion year on year to ¥123.7 billion, largely as aresult of growth in orders for component parts for the Boeing 777 and 787.
Consolidated net sales grew ¥15.6 billion year on year to ¥135.0 billion. The increase waslargely attributable to growth in sales to Japan’s Ministry of Defense and sales of Boeing 787
component parts.
Consolidated operating income increased ¥1.6 billion year on year to ¥2.0 billion, largely byvirtue of sales growth.
Gas Turbine & Machinery
Consolidated orders received totaled ¥113.6 billion, a ¥24.9 billion decrease from theyear-earlier period, when large orders for aircraft engine components and gas compression
modules were received.
Consolidated net sales grew ¥20.7 billion year on year to ¥149.6 billion, largely reflecting
growth in gas compression module sales and sales to Japan’s Ministry of Defense.
Consolidated operating income increased ¥5.6 billion year on year to ¥9.6 billion, largely as aresult of sales growth and increased profits on aircraft engine components.
Plant & Infrastructure
Consolidated orders received increased ¥6.7 billion year on year to ¥105.4 billion amid aninflux of domestic and overseas orders for a variety of plant facilities.
Despite a diverse mix of domestic and overseas sales of plant installations, consolidated net
sales fell ¥2.5 billion year on year to ¥56.4 billion.
Consolidated operating income grew ¥3.9 billion year on year to ¥4.6 billion as earnings
7improved amid brisk progress in fulfilling existing orders.
Motorcycle & Engine
Consolidated net sales grew ¥15.1 billion year on year to ¥159.2 billion, buoyed by sales growthin emerging markets.
Consolidated operating loss shrank to ¥2.6 billion, an ¥18.4 billion year-on-year improvement
despite the impact of yen appreciation. In addition to sales growth, the improvement was also
partly attributable to fixed-cost cutting and contribution margin ratio increases stemming fromemergency profitability improvement measures.
Precision Machinery
Consolidated orders received increased ¥51.8 billion year on year to ¥106.7 billion, mainly due
to growth in hydraulic equipment orders from the construction machinery industry.
Consolidated net sales grew ¥43.5 billion year on year to ¥99.0 billion, driven largely by
growth in hydraulic equipment sales to the construction machinery industry and sales of clean
robots for semiconductor production facilities.
Consolidated operating income grew ¥13.9 billion year on year to ¥14.6 billion as
profitability improved in the wake of sales growth and increased capacity utilization.
Other Operations
Consolidated net sales increased ¥13.2 billion year on year to ¥82.2 billion.
Consolidated operating income totaled ¥1.6 billion, a ¥2.6 billion improvement from theyear-earlier period’s operating loss.
(2) Consolidated financial position
At December 31, 2010, consolidated assets totaled ¥1,399.9 billion, an increase of ¥47.5 billion
from March 31, 2010. The increase was largely attributable to growth in trade receivables in
conjunction with sales activity and growth in inventories in conjunction with progress toward
completion of construction works. Consolidated liabilities increased from March 31, 2010, by¥31.3 billion to ¥1,100.7 billion at December 31 despite a reduction in notes and accounts
payable. Interest-bearing debt as of December 31 was ¥525 billion, a ¥96.1 billion increase fromMarch 31, 2010. Consolidated net assets increased ¥16.2 billion from March 31, 2010, to¥299.2 billion at December 31, largely as a result of quarterly net income offset by distributionof dividends.
(3) Consolidated earnings outlook
Although domestic and overseas economies remain in a recovery trend, the recovery is sluggish.
8

Domestic economic conditions remain challenging amid a falloff in consumption and capitalspending in response to economic uncertainty, and loss of international competitiveness due topersistent yen strength. Despite this adverse environment, the Company continues to vigorously
push ahead with rebuilding its earnings foundation to re-embark on a sustained growthtrajectory.
The Company has left its existing consolidated sales forecast unchanged at ¥1,280 billion inlight of its solid sales to date.
The Company has raised its consolidated operating income forecast to ¥40 billion, ¥8 billion
above its initial forecast. It did so to reflect the steady progress of company-wide measures toimprove profitability through such means as reducing fixed costs and boosting productivity,
most notably in the Precision Machinery segment, which is expanding its earnings foundation
through aggressive business expansion. Additionally, the Company has raised its recurring profit
forecast by ¥14 billion to ¥46 billion and its net income forecast by ¥9 billion to ¥29 billion toreflect growth in income from equity-method affiliates and a decrease in interest expense, in
addition to operating income growth.
The Company’s earnings forecasts assume exchange rates of ¥83 to the US dollar and ¥110 tothe euro.

92. Other Information(1) Overview of changes in material subsidiaries
Not applicable(2) Overview of simplified accounting methods and specific accounting methods used
Simplified accounting methods(i) Bad debt estimation method for general claims
The Company estimates the value of uncollectible general claims based on the preceding
fiscal year’s actual credit loss rate, unless the credit loss rate is deemed to havesubstantially changed relative to the historical rate calculated at the end of the preceding
fiscal year.
(ii) Inventory valuation method
The Company estimates quarter-end inventories by a rational method based on thepreceding fiscal year’s physical inventory count, without conducting a physical inventory
count.
The Company writes down inventory from book value to estimated net realizable value
only when its utility has clearly diminished. In the case of inventory expected to bedisposed of and slow-moving inventory with a turnover period that extends beyond theCompany’s operating cycle, the Company writes the inventory down to its estimatedliquidation value. Such inventories are carried at their written-down book value, unlesstheir value was deemed to have substantially changed during the nine months ended
December 31, 2010.
(iii) Fixed-asset depreciation method
For fixed asset depreciated by the declining-balance method, the Company calculates
quarterly depreciation expense by prorating annual depreciation expense. For certain
consolidated subsidiaries, quarterly depreciation expense is calculated by prorating annual
depreciation expense based on a budget that factors in expected acquisitions, sales, anddisposals of fixed assets during the fiscal year.
(iv) Income taxes, and deferred-tax asset and liability calculation method
To assess deferred assets’ collectability, the Company uses tax planning and earnings
forecasts used in the preceding fiscal year if it deems that the operating environment andstatus of temporary differences have not changed substantially since the preceding fiscal
year-end.
10

If the operating environment or status of temporary differences is deemed to havechanged substantially since the preceding fiscal year-end, the Company uses said tax
planning and earnings forecasts adjusted to reflect the changes’ impact.
(v) Elimination of unrealized gains/losses on inventory
For some products, the Company calculates unrealized gains/losses on inventory using thegain/loss rate used in the preceding fiscal year or quarter or a gain/loss rate based onrational budgeting, unless business conditions are deemed to have changed substantiallyfrom the preceding fiscal year or quarter.

Accounting procedures specific to preparation of quarterly consolidated financial statements
The Company calculates tax expense by rationally estimating its effective tax rate after
application of deferred-tax accounting to pretax net income for the fiscal year, which
includes the third quarter under review, and multiplying quarterly pretax net income by said
estimated effective tax rate. If unable to use the estimated effective tax rate, the Company
calculates tax expense by multiplying the statutory effective tax rate by quarterly pretax net
income adjusted to reflect material differences other than temporary differences.
Income taxes are reported inclusive of income tax adjustments.

(3) Overview of changes in accounting principles, procedures, and methods of disclosure
Changes related to accounting standards(i) Adoption of the Accounting Standard for Asset Retirement Obligations and the
Guidance on Accounting Standard for Asset Retirement Obligations
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted
the Accounting Standard for Asset Retirement Obligations (Statement No. 18, March 31,2008) and its associated Guidance on Accounting Standard for Asset Retirement
Obligations (Guidance No. 21, March 31, 2008).
Due to adoption of the standard and guidance, operating income decreased by 12 million
yen and recurring profit decreased by 16 million yen and income before income taxes
decreased by 296 million yen.
(ii) Adoption of the Accounting Standard for Equity Method of Accounting for Investments
and the Practical Solution on Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted
the Accounting Standard for Equity Method of Accounting for Investments (ASBJ
11

Statement No. 16, March 10, 2008) and the Practical Solution on Unification of Accounting
Policies Applied to Associates Accounted for Using the Equity Method (PITF No. 24,
March 10, 2008) and made some adjustments required for preparation of consolidated
financial statements. The resulting effect on profit and loss is negligible.

(iii) Adoption of the Accounting Standard for Business Combinations
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted
the Accounting Standard for Business Combinations (ASBJ Statement No. 21, December
26, 2008), the Accounting Standard for Consolidated Financial Statements (ASBJ
Statement No. 22, December 26, 2008), the Amendments to Accounting Standard for
Research and Development Costs (ASBJ Statement No. 23, December 26, 2008), theRevised Accounting Standard for Business Divestitures (ASBJ Statement No. 7, December
26, 2008), the Revised Accounting Standard for Equity Method of Accounting forInvestments (ASBJ Statement No. 16, December 26, 2008), and the Revised Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No. 10, December 26, 2008).

Changes related to methods of disclosure
Due to adoption of the Cabinet Office Ordinance on Partial Revision of the Regulations
Concerning the Terminology, Forms and Preparation Methods of Financial Statements andOthers (Cabinet Office Ordinance No. 5, March 24, 2009) based on the AccountingStandard for Consolidated Financial Statements (ASBJ Statement No. 22, December 26,2008), the Company used the account title “Income before minority interests” for the ninemonths ended December 31, 2010.

12

3. Consolidated Financial Statements(1) Consolidated Balance Sheets
Millions of yen
Nine months ended
As ofDecember 31, 2010
March 31, 2010
AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Other current assets
Allowance for doubtful receivables

38,045416,467
55,397307,271
80,53885,846(2,635)980,930

34,745400,264
56,807
281,023
80,39280,868(2,424)
931,678

280,961

284,407

Total current assets
Fixed assets
Net property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

686
18,751
19,437866
19,852
20,718

119,623(971)
118,651
419,050
1,399,980

116,905(1,270)115,635
420,761
1,352,439

Liabilities
Current liabilities
Trade payables
Short-term debt
Income taxes payable
Accrued bonuses
Provision for losses on construction contracts
Other provisions
Advances from customers
Other
Total current liabilities

282,357
161,348
4,146
10,57821,646
8,949
89,018
163,666
741,712302,739
125,614
4,833
14,202
17,991
18,91099,532109,098
692,923

Long-term liabilities
Bonds payable
Long-term debt
Employees’ retirement and severance benefits
Other provisions
Other
Total long-term liabilities
Total liabilities

50,000207,280
83,2769,411
9,035
359,004
1,100,716

60,513
209,360
89,24010,4196,929
376,463
1,069,386

104,328
54,242160,872(36)
319,406

104,328
54,275
137,689(552)
295,741

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

13

Valuation and translation adjustments
Net unrealized gains (losses) on securities
Gains (losses) on hedging items
Foreign currency translation adjustment
Total valuation and translation adjustments
Minority interests
Total net assets
Total net assets and liabilities

14

4,119
(1,600)(30,785)(28,267)
8,125
299,264
1,399,980

5,305
(162)
(23,803)(18,659)
5,972
283,053
1,352,439

(2) Consolidated Statements of Income
Millions of yen
Nine Months ended
December 31, 2009
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
Provision for doubtful receivables
R&D expenses
Other
Total selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Gain on sales of investment securities
Equity in income of non-consolidated subsidiaries and affiliates
Foreign exchange gain, net
Other
Total non-operating income
Non-operating expenses
Interest expense
Other
Total non-operating expenses
Recurring profit (loss)
Extraordinary income
Reversal of provision for environmental measures
Total extraordinary income
Extraordinary losses
Provision for doubtful accounts of affiliates
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Provision for losses on damages suit
Provision for environmental measures
Loss on liquidation of affiliate
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income (loss)

15

Nine Months ended
December 31, 2010

798,060
702,31295,747

870,540
727,702
142,837

30,02425,87253,898109,794(14,046)

29,123
148
24,16050,654
104,086
38,750

2,398
538
70
4,363
6,736
3,969
18,077

1,388
513
1
7,076
560
3,390
12,930

4,184
5,347
9,532
(5,501)

3,590
2,874
6,465
45,215

1,212
1,212

-

-

293

-

280

6,983
1,085
331
8,399
(12,689)(3,078)712(10,323)573
44,642
15,02929,612
1,453
28,159(3) Consolidated Cash Flow Statement
Millions of yen
Nine Months
Nine Months
ended December
ended December
31, 2009
31, 2010
Cash flow from operating activities
Income (loss) before income taxes and minority interests
Depreciation and amortization
Increase (decrease) in provisions
Interest and dividend income
Interest expense
Investment (gain) loss on equity method(Gain) loss on sale and disposal of property, plant, and equipment(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables
Increase (decrease) in advances from customers
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Net cash provided by operating activities(12,689)
36,986
3,653(2,937)
4,184(4,363)502
7,379(1,724)(95,025)(10,357)(12,663)(87,054)
3,190(4,258)(10,591)(98,714)44,642
36,348(15,662)(1,901)
3,590(7,076)355(6,521)(35,651)(10,885)(6,853)(18,941)(18,557)
1,857(3,850)(12,994)(33,545)(52,085)(40,731)

Cash flow from investing activities
Acquisition of property, plant and equipment and intangible assets
Proceeds from sale of property, plant and equipment and intangible
assetsAcquisition of investments in securities
Proceeds from sale of investments in securities
Acquisition of investments in subsidiaries of affiliate(Increase) decrease in short-term loans receivable
Additions to long-term loans receivable
Proceeds from collection of long-term loans receivable
Other
Net cash used for investing activities

635

678

(110)
89
(1,331)
(337)
(61)
88
469
(52,643)

(35)
1
(15)
(41)
85
(1,446)(41,504)

Cash flow from financing activities
Increase (decrease) in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Acquisition of treasury stock
Proceeds from stock issuance to minority shareholders
Cash dividends paid
Cash dividends paid to minority interests
Other
Net cash provided by financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

91,45970,580(5,082)20,000(20,000)(49)
230(4,996)(438)(34)
151,667884
1,193
31,41332,60744,29422,080(4,038)20,000(11)
1,209(4,995)(429)(59)
78,049(1,315)
1,682
34,13735,82016

(4) Notes on the going-concern assumption
Not applicable(5) Segment information
1) Information by industry segment
Nine months ended December 31, 2009 (April 1, 2009 – December 31, 2009)
Millions of yen
External sales
Shipbuilding

Intersegment

111,725

sales

Total sales

1,116

Operatingincome (loss)

112,841

779

Rolling Stock

122,339

1,814

124,153

4,654

Aerospace

119,368

1,512

120,881(617)

Gas Turbines & Machinery

128,858

16,100144,958

2,797

Plant & Infrastructure Engineering

47,195

6,667

53,862(158)

Consumer Products & Machinery

152,380

1,894

154,275(25,653)

Hydraulic Machinery

47,187

5,336

52,523

4,339

Other

69,006

22,84691,852

(208)

Total

798,060

57,288855,348(14,067)

Eliminations/corporation-(57,288)(57,288)20

798,060-

798,060(14,046)

Consolidated total

Notes: 1. Method of segmentation
Business segmentation is based on the categorization used by management.
2. Major products by industry segment
Industry segment

Major products

Shipbuilding

Ships and vessels

Rolling Stock

Rolling stock, snow plows, crushers

Aerospace

Aircraft

Gas Turbines &Machinery
Plant & Infrastructure
Engineering

Jet engines, general-purpose gas turbine generators, prime movers
Industrial equipment, boilers, environmental equipment, steel structures

Consumer Products &Motorcycles, personal watercraft, all-terrain vehicles (ATV), utility

Machinery

vehicles, general-purpose gasoline engines, industrial robots

Hydraulic Machinery
Other

Industrial hydraulic products
Construction machinery, commercial activities, sales/order agency andintermediary activities, administration of welfare facilities

3. Change in method of segmentation
In October 2008, the Company, Hitachi Construction Machinery Co., Ltd., and TCM Corporation
reached an agreement on forming an alliance with respect to their wheel loader businesses. The allianceis to involve (i) joint research and development and (ii) a spin-off of the Company’s wheel loader
operation into a newly created subsidiary of the Company, and Hitachi’s investment in that subsidiary.

17

In accord with the agreement, the construction machinery business was spun-off in April 2009 andsucceeded by the Company’s subsidiary, KCM Corporation. As a result, said business’s relationship with
the Rolling Stock & Construction Machinery segment was weakened, and effective the first quarter ofthe fiscal year ending March 31, 2010, it was therefore shifted from the Rolling Stock & Construction
Machinery segment to the Other segment.
Due to this change, compared with what they would have been under the previous method, net sales
for nine months ended December 31, 2009, in the Rolling Stock segment was 13,546 million yen lower(including 14,823 million yen of external sales) and in the Other segment, 14,430 million yen higher(including 14,823 million yen of external sales). By the same comparison, operating income in the
Rolling Stock segment was 2,006 million yen higher, while operating loss in the Other segment was
2,009 million yen higher.
4. Change in accounting standard for construction revenue and cost
The Company previously used the percentage-of-completion method for accounting of revenues
associated mainly with construction contracts with a contract amount of three billion yen or more and aconstruction period of over one year, and other construction works were accounted for with thecompleted-contract method. Effective the first quarter of the fiscal year ending March 31, 2010, however,in conjunction with adoption of the Accounting Standard for Construction Contracts (ASBJ Statement
No.15, December 27, 2007) and its accompanying Guidance on Accounting Standard for Construction
Contracts (ASBJ Guidance No.18, December 27, 2007), the percentage-of-completion method wasapplied to construction contracts that were started during the first quarter ended June 30, 2009, for which
certain elements were determinable with certainty at the end of the second quarter. The percentage ofcompletion is estimated with the proportion-of-cost method, under which the percentage of construction
completed during the period is calculated as the ratio of the construction cost incurred during that period
relative to the total construction cost. The completed-contract method was applied to other works.
Due to this change, net sales for nine months ended December 31, 2009, in the Shipbuilding segment
was 18,007 million yen higher; in the Aerospace segment was 768 million yen higher; in the Gas
Turbines & Machinery segment, 4,184 million yen higher; and in the Plant & Infrastructure Engineering
segment, 802 million yen higher. Also due to the change, operating income in Shipbuilding segment was
555 million yen higher; in the Aerospace segment was 56 million yen higher; in the Gas Turbines &Machinery segment was 468 million yen higher; and in the Plant & Infrastructure Engineering segment
was 221 million yen higher.

2) Information by geographic area
Nine Months ended December 31, 2009 (April 1, 2009 – December 31, 2009)
Millions of yen
External sales

Intersegment
sales

Total sales

Operatingincome (loss)Japan

617,451

108,674

726,126(13,302)

North America

96,91011,592

108,503(4,850)Europe46,085

1,325

47,411476

Asia

30,81630,05660,873

4,674

Other areas
Total
Eliminations/corporate
Consolidated total

6,795

133

6,928

494

798,060

151,782

949,842(12,508)-(151,782)(151,782)(1,538)798,060-

798,060(14,046)

Notes: 1. Classification method of geographic segment: by geographic proximity18

2. Major countries or regions in each segment other than Japan:
North America
EuropeThe U.S.A. and Canada
The Netherlands, the United Kingdom,
and Germany

Asia

Thailand, Indonesia, the Philippines, and Korea

Other areas

Australia and Brazil

3. Change in accounting standard for construction revenue and cost
The Company previously used the percentage-of-completion method for accounting of revenues
associated mainly with construction contracts with a contract amount of three billion yen or more and aconstruction period of over one year, and other construction works were accounted for with thecompleted-contract method. Effective the first quarter of the fiscal year ending March 31, 2010, however,in conjunction with adoption of the Accounting Standard for Construction Contracts (ASBJ Statement
No.15, December 27, 2007) and its accompanying Guidance on Accounting Standard for Construction
Contracts (ASBJ Guidance No.18, December 27, 2007), the percentage-of-completion method wasapplied to construction contracts initiated during the first quarter ended June 30, 2009, for which certain
elements were determinable with certainty at the end of the second quarter. The percentage ofcompletion is estimated with the proportion-of-cost method, under which the percentage of construction
completed during the period is calculated as the ratio of the construction cost incurred during that period
relative to the total construction cost. The completed-contract method was applied to other works.
Due to this change, net sales for the nine months ended December 31, 2009 in Japan was 23,763
million yen higher, while operating loss in Japan was 1,301 million yen lower.

3) Overseas sales
Nine months ended December 31, 2009 (April 1, 2009 – December 31, 2009)
Millions of yen
Overseas sales

Consolidated net sales

Ratio of overseas sales toconsolidated sales (%)

North America

158,250-

19.8

Europe60,582

-

7.5

Asia

118,267-

14.8

Other areas

77,658

-

9.7

Total

414,758

798,060

51.9

Notes: 1. “Overseas sales” includes sales by the Company and its consolidated subsidiaries to the countries andregions other than Japan.
2. Classification method of geographic segment: by geographic proximity
3. Major countries or regions in each segment:
North America

The U.S.A. and Canada

EuropeThe United Kingdom, France, Germany and the Netherlands

Asia

China, Taiwan, the Philippines, Indonesia and Korea

Other areas

Panama, Brazil and Australia

19

Segment Information
1. Overview of reportable segments
The Company’s reportable segments are components of the company about which separate
financial information is available. These segments are subject to periodic reviews by theCompany’s board of directors to decide how to allocate resources and assess performance. The
Company’s operations are divided into internal companies based on product categories. Certain
authority is delegated to each of the internal companies, based on which they conductbusinesses in Japan and overseas. The Company’s operations are therefore segmented based oneach internal company’s product categories. The Company’s eight reportable segments are theShip & Offshore Structure segment, the Rolling Stock segment, the Aerospace segment, the Gas
Turbine & Machinery segment, the Plant & Infrastructure segment, the Motorcycle & Engine
segment, the Precision Machinery segment, and the Other segment.
In conjunction with its October 2010 organizational restructuring, the Group renamed its
Shipbuilding segment the Ship & Offshore Structure segment.
Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbine &Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

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

2. Sales and income (loss) by reportable segment
Nine months ended December 31, 2010 (April 1, 2010 – December 31, 2010)
Millions of yen

Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes:
1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

93,222
95,588135,020
149,644
56,479159,219
99,091
82,272
870,540
870,540

1,332
1,457
1,308
15,070
9,416
865
9,060
23,632
62,144(62,144)-

94,554
97,046
136,329
164,71565,895160,085
108,151
105,905
932,684(62,144)
870,540

4,990
5,920
2,076
9,679
4,653
(2,626)
14,691
1,680
41,065(2,314)38,750Millions of yen

20IncomeAmountIntersegment sales eliminated0
Corporate expenses*(2,315)
Total(2,315)*Corporate expenses represent expenses not attributable to reportable segments such as selling,
general and administrative expenses.
2. Segment income adjustments are based on operating income reported on the quarterly consolidated
statements of income for the corresponding period.

3. Impairment loss on fixed assets and goodwill by reportable segment
Not applicable
Additional information
Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted the
Revised Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (ASBJ Statement No. 17, revised March 27, 2009) and its associated Guidance on
the Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (Guidance No. 20, March 21, 2008).
(6) Notes on significant changes in the amount of shareholders’ equity
Not applicable21

4. Supplementary information(1) Orders and sales (consolidated)
Effective from the first quarter of the fiscal year ending March 31, 2011, the Group adopted
the Revised Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information (ASBJ Statement No.17, March 27, 2009) and its associated Guidanceon the Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (ASBJ Guidance No.20, March 21, 2009). The Group also changed the name of
its Consumer Products & Machinery segment to the Motorcycle & Engine segment and thename of its Hydraulic Machinery segment to the Precision Machinery segment inconjunction with the April 2010 adoption of new industry segmentation for internalreporting. Also effective from April 2010, the crushing machine business was shifted fromthe Rolling Stock segment to the Plant & Infrastructure segment and the industrial robot
business was shifted from the Consumer Products & Machinery segment to the Precision
Machinery segment. Additionally, in conjunction with its October 2010 organizational
restructuring, the Group renamed its Shipbuilding segment the Ship & Offshore Structure
segment.
To reflect this change, orders received, net sales, and order backlog for the nine months
ended December 31, 2009 and the year ended March 31, 2010 in the table below have been
restated based on the newly adopted accounting standard and guidance and theresegmentation of operations.
Orders received
Nine months ended
December 31, 2009

Nine months ended
December 31, 2010

Year ended March 31,
2010% of total
million yen% of total
million yen% of total
million yen
Ship & Offshore Structure
10,484
1.6
67,256
7.6
16,128
1.6
Rolling Stock
55,563
8.5
124,166
14.2
66,269
6.6
Aerospace
79,95012.3
123,700
14.1
171,380
17.1
Gas Turbine & Machinery
138,58921.3
113,677
13.0
226,228
22.5
Plant & Infrastructure
98,733
15.1
105,43612.0
135,66413.5
Motorcycle & Engine
144,06922.1
159,21918.2
203,084
20.2
Precision Machinery
54,8208.4
106,71912.2
84,9488.4
Other67,688
10.4
73,893
8.4
97,584
9.7
Total
649,900
100.0
874,070100.0
1,001,290
100.0
Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

Net sales

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

Nine months ended
December 31, 2009
% of total
million yen
111,725
14.0
110,51013.8
119,368
14.9
128,858
16.1
59,0247.3
144,069
18.0
55,497
6.9
69,006
8.6
798,060
100.0

22Nine months ended
December 31, 2010
million yen% of total
93,222
10.7
95,58810.9
135,020
15.5
149,64417.1
56,4796.4
159,21918.2
99,091
11.3
82,2729.4
870,540100.0Year ended March 31,
2010
million yen% of total
151,89312.9
150,07112.7
188,892
16.1
191,379
16.3
107,5809.1
203,084
17.3
82,715
7.0
97,8558.3
1,173,473
100.0

Order backlog

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

Year ended March 31,
2010
million yen% of total
218,134
14.4
378,39125.1
264,78817.5
426,506
28.3
153,830
10.2
30,7722.0
34,6352.2
1,507,057
100.0

Nine months ended
December 31, 2010
million yen % of total
190,096
13.0
388,83926.7
248,08717.0
356,95224.5
203,365
13.9
41,7922.8
25,4051.7
1,454,538
100.0

Nine months ended
December 31, 2009
million yen% of total
252,95916.5
404,28126.4
242,16315.8
399,42926.1
165,383
10.8
27,861
1.8
33,5862.2
1,525,665
100.0(2) Net sales by geographic area (consolidated)
Net sales by geographic area for the nine months ended December 31, 2009 and 2010, in
accordance with the Revised Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No.17, March 27, 2009) and its
associated Guidance on the Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Guidance No.20, March 21, 2009) are listed
below.
Nine months ended December 31, 2009 (April 1, 2009 – December 31, 2009)Japan
The U.S.A
EuropeAsia
Other areas
Total

Millions of yen
48.0%
18.8%
7.5%
14.8%
10.7%
100.0%

383,301
150,323
60,582
118,267
85,685
798,060

Nine months ended December 31, 2010 (April 1, 2010 – December 31, 2010)Japan
The U.S.A
EuropeAsia
Other areas
Total

Millions of yen
45.0%
18.8%
6.7%
19.3%
10.0%
100.0%

391,842
164,453
58,459168,258
87,526
870,54023

(3) Supplementary information on earnings forecasts for the fiscal year ending March 31,
20111) Consolidated earnings outlook
Billions of yen
Outlook for the year ending March 31, 2011 (fiscal 2011)
Forecast issued
ChangeRevised forecast
November 2, 2010
(A – B)(A)(B)
1,280.0
1,280.0
40.0
32.0
8.0
46.0
32.0
14.0
29.0
20.0
9.0
1,340.0
1,340.0
5.6%
5.6%
-

Net sales
Operating income
Recurring profit
Net income
Orders received
Before-tax ROIC (%)

Fiscal 2010
(ended March 31,
2010)(actual)1,173.4(1.3)
14.2(10.8)
1,001.2
0.2%

Notes: 1. Outlook’s assumed foreign exchange rates: ¥83 = US$1, ¥110 = 1 euro

2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital.
2) Outlook by reportable segment(a) Net sales and operating income (loss)
Billions of yen
Outlook for the year ending March 31, 2011 (fiscal 2011)
Revised forecast
Forecast issued
Change(A)
November 2, 2010 (B)(A – B)Net sales
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Adjustments
Total

120.0
145.0
215.0
210.0
100.0
240.0
140.0
110.0
1,280.0

Operatingincome(loss)
1.0
8.0
2.0
10.0
9.0
(4.0)
18.0
2.0
(6.0)
40.0

Net sales
120.0
145.0
215.0
210.0
100.0
250.0
130.0
110.0
1,280.024

Operatingincome(loss)
1.0
7.0
2.0
9.0
8.0
(4.0)
15.0
1.0
(7.0)
32.0

Net sales(10.0)
10.0-

Operatingincome(loss)
1.0
1.0
1.0
3.0
1.0
1.0
8.0

Fiscal 2010 (ended
March 31, 2010)(actual)
Net sales
151.8
150.0
188.8
191.3
107.5
203.0
82.7
97.8
1,173.4

Operatingincome(loss)
1.5
8.7
3.7
8.9
7.9
(27.0)
3.4
(1.0)
(7.5)
(1.3)

(b) Orders received

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

Outlook for the year ending March 31, 2011 (fiscal 2011)
Forecast issued
ChangeRevised outlook
November 2, 2010
(A – B)
(A)
(B)
100.0
100.0
180.0
180.0
210.0
210.0
220.0
220.0
130.0
130.0
240.0
250.0
(10.0)
150.0
140.0
10.0
110.0
110.0
1,340.0
1,340.0-

Billions of yen
Fiscal 2010
(ended March 31,
2010)(actual)
16.1
66.2
171.3
226.2
135.6
203.0
84.9
97.5
1,001.2

Note: Fiscal 2010 (ended March 31, 2010) figures for net sales, operating income (loss) and orders received appear in
the tables above for reference purposes. They were recalculated based on the same segmentation and calculation
methods used for the third quarter ended December 31, 2010. Accordingly, they differ from those for net sales andoperating income (loss) reported in the “Segment Information” section.

25