These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, the originals
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translations.

(Securities Code 7012)
June 4, 2009
Dear Shareholders
Tadaharu Ohashi
President
Kawasaki Heavy Industries, Ltd.
1-1 Higashikawasaki-cho 3chome,
Chuo-ku, Kobe
(Registered Office)
1-3 Higashikawasaki-cho 1chome,
Chuo-ku, Kobe

NOTICE OF
THE 186TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 186th Ordinary General Meeting of Shareholders of Kawasaki Heavy
Industries, Ltd. (“the Company”). The meeting will be held for the purposes as described below.
If you are unable to attend on the day of the meeting we kindly ask you to review the “Reference
Documents for the General Meeting of Shareholders” (described hereinafter), and exercise your voting
right in writing or electronically (via the Internet, etc.) by 5:00 p.m. on June 24, 2009.
Exercise of Voting Rights in Writing
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form, andreturn it so that it is delivered by the abovementioned exercise date.
Exercise of Voting Rights via the Internet
Please exercise your voting right by logging on to the Internet website (http://www.web54.net) and entering
the voting right exercise code and password stated on the enclosed Voting Rights Exercise Form, and follow
the online instructions to submit your vote.
1. Date and Time:Thursday, June 25, 2009 at 10:00 a.m. (Door opens at 9 a.m.)

2. Place:

Kokusai Hall at The Kobe International House, located at
1-6, Gokoudori 8-chome, Chuo-ku, Kobe

1

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
186th Fiscal Year (April 1, 2008 - March 31, 2009) and results of audits by
the Accounting Auditor and the Board of Corporate Auditors of theConsolidated Financial Statements
2. Non-Consolidated Financial Statements for the Company’s 186th Fiscal Year
(April 1, 2008 - March 31, 2009)
Proposal No. 1: Appropriation of Retained Earnings
Proposal No. 2: Proposed Amendments to the Articles of Incorporation
Proposal No. 3: Election of Ten Directors
Proposal No. 4: Election of Three Corporate Auditors(Please refer to the “Reference Documents for the General Meeting of Shareholders” hereinafter
for information on each of the proposals.)
4. Other decisions regarding the General Meeting of Shareholders:
Where voting rights have been exercised twice in writing or electronically, the latter vote received shallbe deemed valid, however when votes are received on the same day, the voting right exercised
electronically shall be deemed valid.
Shareholders who intend to diversely exercise voting rights are requested to give written notification tothat effect, and the reason(s) thereof, no later than three (3) days prior to the day of the General Meeting of
Shareholders.
Notes:
1. When attending the meeting, please submit the enclosed Voting Right Exercise Form at the Company’shead office reception desk on the day of the meeting. Please note that persons other than shareholders who
are able to exercise voting rights, including representatives and their companions who are not shareholders,
are not permitted to enter the venue.
2. Any updates to the Appendix and the Reference Materials for the General Meeting of Shareholders, will be
posted on the Company’s website at the following URL: http://www.khi.co.jp.

Information Concerning Characters Used in Shareholders’ Names and Addresses
Due to the conversion to an electronic system for stock transfers, characters in shareholders’ names andaddresses may contain some kanji characters which are not designated in Japan Securities Depositary Center,
Inc.’s (JASDEC) transfer system, and in such cases some or all of the characters may be converted tocharacters or katakana syllabary designated by JASDEC, and recorded in the shareholders register.
For this reason we would like to inform you that in the notices we send to shareholders there may be cases
where names and/or addresses contain characters which are replaced with characters designated by JASDEC.
If shareholders wish to make any enquiries regarding the characters registered for their names and/or
addresses they should contact the securities firm etc. where their account is held (in the case of special
accounts, Chuo Mitsui Trust Bank which is the regulatory agency for special accounts).

2

(Appendix)

Business Report(April 1, 2008 - March 31, 2009)

1. Overview of the Company Group(1)

Business Progress and Results(i) General Conditions
The Japanese economy suffered a rapid downturn in the consolidated fiscal year under review, due
to such factors as the sharp appreciation of the yen against the dollar, euro and other currencies in 3Q, afall in consumer spending and reduced capital expenditure, slowing exports and deterioration of theemployment situation. Subsequently, there have been signs of a bottoming out around the end of the
fiscal year, however the economy still remains weak.
The global economy, including developing countries, is also clearly in the midst of a global
economic downturn and slowdown.
In the face of such an operating environment, our Group orders received overall were ¥1,540.5
billion, a decline of 4% over the previous fiscal year, despite an increase in orders received for Gas
Turbines & Machinery and Rolling Stock & Construction Machinery.
Net sales were ¥1,338.5 billion, a decline of 10% over the previous fiscal year, due to decreased
sales of Consumer Products & Machinery, etc.
Profits were impacted by exchange rates moving in support of a strong yen predominantly in thesecond half of the year, and continued high cost of raw materials, resulting in operating income of ¥28.7
billion, a decline of 62% over the previous fiscal year, and recurring profit of ¥38.7 billion, a decline of
39% over the previous fiscal year.
Current net income was ¥11.7 billion, a decline of 66% over the previous fiscal year, due to an
extraordinary loss of ¥15.6 billion from a loss on contribution of securities to the pension trust, etc.
(ii) Operating conditions by business division
The Shipbuilding segment orders received were ¥71.5 billion attributable to orders for one LPG
carrier, and five Bulk carriers; however the result was a significant decline on the previous fiscal year inwhich numerous orders were received for bulk carriers.
Net sales were ¥126.4 billion, a decline on the previous year due to a decrease in sales of large
carriers.
Operating income/loss declined by ¥4.2 billion on the previous year, resulting in a loss of ¥1 billion;
this was due to the effects of declined net sales, soaring costs of materials and the appreciation of the
yen against the dollar.
The Rolling Stock & Construction Machinery segment received orders from JR Group
companies for Shinkansen trains, commuter trains, locomotives, etc., and overseas orders included
subway cars for New York. Orders received were ¥264.6 billion, a significant increase over theprevious year, due to a large increase in domestic orders received for various rolling stock.
Although sales of construction machinery fell, increased sales of rolling stock for overseas markets
resulted in net sales of ¥186.4 billion, an increase over the previous fiscal year.
Operating income increased ¥4.1 billion over the previous fiscal year to ¥11.3 billion, led by anincrease in net sales.
Orders received for the Aerospace segment improved over the previous fiscal year to ¥239.1 billion,
due to orders obtained from The Boeing Company for component parts for the B777 aircraft, and fromJapan's Ministry of Defense (MOD) for P-1 maritime patrol aircraft.
Net sales decreased over the previous fiscal year to ¥200.4 billion due to a decline in sales to MOD,and for B777 aircraft to The Boeing Company; the exchange rate which supported a strong yen/weakdollar was another negative factor.
Operating income/loss declined by ¥15 billion from the previous fiscal year to post a loss of ¥4.1
billion, due to a decrease in net sales combined with increased costs for such items as inventory
valuation losses.
The Gas Turbines & Machinery segment received orders of ¥355.5 billion, a significant increaseover the previous fiscal year. The increase was due to new orders for components for TRENT XWB,
3

and an increase in orders for diesel power generating units and propulsion systems for ships.
Net sales increased over the previous fiscal year to ¥195.1 billion, due to growth in sales of suchitems as marine diesel engines.
Operating income declined ¥2.3 billion from the previous fiscal year to ¥11 billion, led by the
impact of the strong yen as well as losses posted for such items as inventory valuation losses, despite
increased net sales.
The Plant & Infrastructure Engineering segment received orders to the value of ¥83.6 billion,
which was a significant drop from the previous fiscal year, despite having received orders for various
plants and LNG tanks.
Net sales declined significantly from the previous fiscal year to ¥105.1 billion. Despite increased
sales for overseas nonferrous metals smelting plants, lower sales of municipal refuse incineration plants
and others led the decline.
Operating income decreased ¥1.8 billion over the previous fiscal year to ¥8.9 billion, accompanied
by decreased net sales.
Although the Consumer Products & Machinery segment’s sales of motorcycles for the Asianmarket increased, sales of motorcycles to Europe and the U.S. declined, and sales of industrial robots
used in the automotive industry and semiconductor-related industries also declined.
Net sales declined significantly from the previous fiscal year to ¥336.4 billion due to such factors as
the ongoing appreciation of the yen against the U.S. dollar and Euro.
Operating income/loss declined by ¥29.8 billion from the previous fiscal year to post a loss of ¥10.1
billion, due to decreased net sales, particularly from sluggish sales of large-sized motorcycles.
The Hydraulic Machinery segment’s orders received, predominantly for the construction
machinery industry, declined from the previous fiscal year to ¥84.1 billion.
Net sales were higher than the previous fiscal year at ¥84.9 billion, owing to the high level of sales
for the construction machinery industry in the first six months of the fiscal year.
Operating income declined by ¥700 million from the previous fiscal year to ¥8.3 billion.
In the Other business segment net sales were lower than the previous fiscal year at ¥103.5 billion.
Operating income increased by ¥1.9 billion from the previous fiscal year to ¥4.2 billion.
Unit: 100 million yen(Orders Received, Net Sales and Operating Income/Loss by Segment)
Orders Received
Segment
Shipbuilding segments

Net Sales

Year-on-Year
ChangeAmountOperating Income/Loss

Year-on-Year
ChangeAmountYear-on-Year
ChangeAmount715(1,798)

1,264

(149)

(10)

(42)

Rolling Stock & Construction
Machinery segments

2,646

813

1,864

147

113

41

Aerospace segments

2,391

366

2,004

(369)

(41)

(150)

Gas Turbines & Machinery
segments

3,555

1,280

1,951

96

110

(23)

836

(223)

1,051

(373)

89

(18)

3,364

(975)

3,364

(975)

(101)

(298)

Plant & Infrastructure
Engineering segments
Consumer Products & Machinery
segments
Hydraulic Machinery segments
Other
Eliminations and corporate
Total

841

(81)

849

8

83

(7)

1,055

(83)

1,035

(10)

42

19

-

-

-

-

0

(1)

15,405(701)

13,385(1,625)

287

(481)

(Notes) 1. Net sales recorded are for sales to external customers.
2. The net sales figure for Consumer Products & Machinery is also used as the figure for orders received.

4

(2)

Capital Investments, etc.
In the consolidated fiscal year under review, a total of ¥82.4 billion was spent on capital investments,
predominantly for facilities to handle new machine types and new products, and facilities for
streamlining production.
Main capital investments completed and/or acquired during the current consolidated fiscal year, andmain capital investments under construction as at the end of the current consolidated fiscal year are
listed below.
(i) Main capital investments completed and/or acquired during the consolidated fiscal year underreview・ Facilities for streamlining ship production(Shipbuilding segment)
・ Aircraft production facilities(Aerospace segment)
・ Marine machinery production facilities(Gas Turbines & Machinery segment)
・ Facilities for streamlining motorcycle production(Consumer Products & Machinery segment)
・ Hydraulic machinery plant(Hydraulic Machinery segment)(ii) Main capital investments under construction as at the end of the consolidated fiscal year underreview・ Rolling stock production management systems(Rolling Stock & Construction machinery segment)
・ Aircraft production facilities, production management systems(Aerospace segment)
・ Facilities for development of new motorcycle models, production streamlining facilities(Consumer Products & Machinery segment)(3)

FinancingFunds of ¥73.5 billion from long-term loans and other funds from various sources were raised in thecurrent consolidated fiscal year. The funds were allocated to such items as redemption of bonds,
long-term loan repayments, capital funds and working capital.

(4)

Assignment of businesses, absorption-type splits and incorporation-type corporate splits
Not applicable.
On April 1, 2009 we carried out a corporate split by succeeding our Construction and Machinery
business to KCM Corporation, which is a wholly-owned subsidiary of our company.

(5)

Transfer of business from other companies
On July 1, 2008 Kawasaki Plant Systems, Ltd., a wholly-owned subsidiary of our company,
acquired the Cement Plant business from IHI Corporation.

(6)

Succession of rights and obligations pertaining to the business of another juridical person, etc.
due to absorption-type merger or absorption-type company split
Not applicable.

(7)

Acquisition or disposal of another company’s stocks or other holdings, or share options, etc.
On April 1, 2008 we acquired all of the shares in EarthTechnica Co. Ltd., a joint-venture company
with Kobe Steel, Ltd., making it into a wholly-owned subsidiary.
Also, on April 17, 2008 stocks of Kawasaki Setsubi Kogyo Co. Ltd., were partially disposed of, andthe company was precluded as an equity method affiliate.

(8)

Issues to be Addressed
KHI Group on the whole has been on target until fiscal 2007 in achieving the profit goals aimed atrealizing the vision set out in the “Global K” medium-term business plan through growth and expansionof our businesses. However, the effects on the actual economy of the financial market turmoil and thecredit crunch caused by the U.S. subprime loan crisis are intensifying, and making the businessenvironment in which KHI Group operates even harsher; particularly as the Japanese economy isexpected to have the worst negative growth among developed countries. Even in the midst of suchconditions, KHI Group will continue to uphold sound operations as a manufacturer.
To that end, while adhering to the policies of the "Global K” medium-term business plan, we
understand that it is important to conduct business operations which vigilantly uphold the philosophy of“quality followed by quantity”, and “risk management”, since it is likely that business risk will further
5increase for the foreseeable future. While keeping an eye on changes in the market environment, we
will rigorously assess risk for markets in which there are concerns of subsiding demand, and bethoroughly selective with respect to orders received and our investments. We will also make concerted
efforts to lower profit breakeven points, improve cashflows and reduce our balance sheet. Meanwhile
we will continue to allocate resources, as planned, to growth areas such as energy and environment
businesses and R&D, which is crucial for the formation of the Group’s technical foundations for the
future. We will also continue to make strategic investments in key markets, while giving due
consideration to the selection of investments, and such factors as the quantity and speed of resources
allocated.
We are striving to improve profitability by implementing the following measures for each of ourbusinesses.
(i) Rolling Stock: While we are continuing to receive high levels of orders for projects in North
America and in other areas, we are strengthening our business operating systems in the threemajor markets of Japan, North America, and Asia(ii) Aerospace: Undertaking major projects, including readying systems for mass production of thenext maritime patrol aircraft, completing the development of the next transport aircraft, andreadying systems for mass production of Boeing 787.
(iii) Gas Turbines & Machinery: Increase competitiveness by improving overall productivity bypromoting development of new models of jet engines for commercial aircraft, strengthening theenergy and environment business areas through promoting development of new products andmodels, including industrial gas turbines and high-efficiency gas engines(iv) Consumer Products & Machinery: Amid the tough conditions resulting from the global
economic downturn, strengthen development and production systems at the global level toimprove profitability and product competitiveness of motorcycles, the highest priority businessin the segment, for industrialized markets.
(v) Plant & Infrastructure Engineering: Accelerate the development of the energy andenvironmental engineering businesses as cited in our “Global K” mid-term business plan, with
our subsidiary Kawasaki Plant Systems, Ltd., as the central figure.
(vi) Shipbuilding: Enhance optimal production systems at Kawasaki Shipbuilding Group, including
its operations in China, with a future view to improving profitability by securing new orders(vii) Hydraulic Machinery: Strive to lower the breakeven point while investing management
resources flexibly and strengthening global operating bases in the five regions of Japan, theUnited States, Europe, China and South Korea.
(viii)Industrial Robots: Strengthen development capabilities, cultivate new customer markets(ix) Construction Machinery: Improve development and sales power through the business alliancewith Hitachi Machinery Co., Ltd. and TCM Corporation.
Needless to say, compliance is a fundamental premise in carrying out business activities such as
those above. KHI Group strives to ensure that employees are made thoroughly aware of the provisionsof the various laws and regulations which apply to them, by implementing such measures asestablishing internal regulations concerning corporate ethics, carrying out staff training for each positionlevel, distribution of compliance guidebooks, and setting up compliance committees in eachorganization. Headquarters and the division responsible for each business division take the lead in
striving to systematically ensure thorough compliance, and also work towards creating a corporate
culture which always positions information disclosure and transparency as being of the highest priority.
KHI Group aims to increase profitability across all businesses in this way, and along with enhancing
corporate value through thorough compliance, it aims to establish the Kawasaki brand as one that can betrusted.

6(9)Trends in Assets and Income(i) Company Group Assets and Income
Unit: 100 million yen
Item

The 183rd fiscal
year

The 184th fiscal
year

The 185th fiscal
year

The 186th fiscal year
(under review)

Orders received

13,51615,926

16,107

15,405Net sales

13,224

14,38615,01013,385

Income before income taxes
and extraordinary items

308

490

639

387

Net income

164

297

351

117

Net income per share (yen)¥11.2¥18.94¥21.08¥7.02

Total assets

12,84013,57913,787

13,997

Net assets

2,375

2,953

3,190

2,952

(ii) Company Assets and Income
Unit: 100 million yen
Item

The 183rd fiscal
year

The 184th fiscal
year

The 185th fiscal
year

The 186th fiscal year
(under review)

Orders received

8,768

9,595

8,913

10,545Net sales

8,459

9,196

8,899

7,714

Income before income taxes
and extraordinary items

233

338

317

26

Net income

136

213

208

(61)

Net income per share (yen)¥9.27¥13.56¥12.49(¥3.66)

Total assets

9,170

9,382

9,229

9,779

Net assets

2,005

2,431

2,553

2,307

(10) Major Parent Companies and Subsidiaries(i) Parent Companies
Not applicable.
(ii) Major Subsidiaries

Company name

Kawasaki Trading Co., Ltd.

CapitalThe
Company’s
percentage ofequityparticipation

Main business

70%

Sale of various industrial machinery, petroleum,steel, air conditioning equipment, etc.

¥ 600 million

Kawasaki Shipbuilding Corporation¥ 10,000 million

100%

Design, manufacture, sale and repair ofcommercial and naval vessels and marine
application equipment, other transportationequipment and their facilities and parts

Kawasaki Precision Machinery Ltd.

¥ 3,000 million

100%

Design, manufacture, sales, after-sales service,
and maintenance of hydraulic machinery andequipment, electric-powered devices, andcontrol systems

100%

Design, manufacture, installation andmaintenance of various types of plants, 3D-CAD
pipe design, and design and manufacture ofcontrol software

Kawasaki Plant Systems, Ltd.

¥ 8,500 million

7Company name

Kawasaki Machine Systems, Ltd.

NIPPI Corporation

CapitalThe
Company’s
percentage ofequityparticipation

Main business

100%

Sale and repair of construction machinery,general purpose gas turbines, industrial robots,
and other industrial machinery

100%

Manufacture, maintenance, and modification of
aircrafts; manufacture of rocket components,
aerospace equipment, targeting systems,
nondestructive testing systems, and industrial
fans¥ 1,444 million(Note 4)

¥ 6,048 million

EarthTechnica Co., Ltd.

¥ 1,200 million

100%

Design, execution and supervision ofengineering , construction, installation ofmachinery and appliances; design, manufacture,and sale of crushers, grinders, sorters, and otherequipment

Kawasaki Thermal Engineering Co.,Ltd.

¥ 1,460 million

83％

Manufacture, sales, installation and after-sales
service for boilers, air-conditioning equipment
and absorption-style heat pumps, etc.

Kawasaki Motors Corporation Japan¥ 100 million

100％

Sole distributor of motorcycles and jet skis inJapan

Kawasaki Life Corporation¥ 400 million

100％Real estate sales and rental, building
management, insurance agency business,leasing, and provision of loans

Canadian Kawasaki Motors Inc.

C$ 2 million

100％

Sales of motorcycles, 4-wheel buggies, jet skis,
general purpose gasoline engines in Canada

Kawasaki Motors Corp., U.S.A.

U.S.$ 65 million

100％

Sales of motorcycles, 4-wheel buggies, jet skis,
general purpose gasoline engines in America

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

U.S.$ 70 million

100％

Manufacture of motorcycles, 4-wheel buggies,
jet skis, general purpose gasoline engines,
rolling stock, and industrial robots in America

Kawasaki Rail Car, Inc.

U.S.$60 million

Note 1

Manufacture and after-sales service for rollingstock and related products, various engineering
services£5 million

Note 2

Manufacture and sale of hydraulic pumps andmotors, and other hydraulic products€34 million

100%

Sole distributorship of motorcycles, 4-wheel
buggies, jet skis, general purpose gasoline
engines in Europe

Kawasaki Motors Enterprise(Thailand) Co., Ltd.

1,900 million baht

100%

Manufacture and sale of motorcycles inThailandKawasaki Motors (Phils.) Corporation

101 million peso

50%

Manufacture and sale of motorcycles in thePhilippines

P.T. Kawasaki Motor Indonesia

U.S.$ 40 million

83%

Manufacture and sale of motorcycles inIndonesia

Kawasaki Precision
Machinery (U.K.) Ltd.
Kawasaki Motors Europe N.V.

(Notes) 1. Kawasaki Rail Car, Inc. is a wholly-owned subsidiary of Kawasaki Motors Manufacturing Corp., U.S.A.
2. Kawasaki Precision Machinery (U.K.) Ltd. is a wholly-owned subsidiary of Kawasaki Precision MachineryLtd.
3. In the current consolidated fiscal year the following changes were made in relation to companies classified as
major subsidiaries: two companies - EarthTechnica Co., Ltd. and P.T. Kawasaki Motor Indonesia - wereadded; and two companies - Kawasaki Construction Machinery Corp. of America and Kawasaki Robotics(U.S.A.), Inc. - were precluded.
4. As of April 1, 2009, common stock of Kawasaki Machine Systems, Ltd. changed from ¥1,444 million to¥1,093 million.

8

(iii) Progress of Business Combinations
There are 97 consolidated subsidiaries, including 19 companies which are cited in (ii) above as
major subsidiaries, and there are 12 companies which are accounted for using the equity method.
(iv) Results of Business Combinations
As stated above in “Business Progress and Results”, for the current consolidated fiscal year net sales
declined ¥162.5 billion (10%) compared to the previous fiscal year, to ¥1,338.5 billion, andconsolidated current net income was ¥11.7 billion.

(11) Company Groups’ Main Business and Number of Employees
Segment

Main Business

Number of Employees

Shipbuilding segments

Manufacture and sale of ships, etc.

2,786

Rolling Stock & Construction
Machinery segments

Manufacture and sale of rolling stock, engineering andconstruction machinery, snow removal machinery, etc.

4,022

Aerospace segments

Manufacture and sale of aircraft, etc.

5,260

Gas Turbines & Machinery segments

Manufacture and sale of jet engines, general purpose gas
turbines, prime movers, etc.

3,299

Plant & Infrastructure Engineering
segments

Manufacture and sale of industrial machinery, boilers,
infrastructure equipment, steel structures, etc.

2,569

Consumer Products & Machinery
segments

Manufacture and sale of motorcycles, four-wheel buggies(ATVs), multi-purpose four-wheel vehicles, personal
watercraft (“jet skis”), general purpose gasoline engines,
industrial robots, etc.

10,170

Hydraulic Machinery segments

Manufacture and sale of hydraulic machinery, etc.

1,130

Other

Administration of commercial and welfare facilities, etc.

2,307

Company-wide common areas(Head office Administration Department, Research &Development Department, etc.)

723

Total

32,266(Japan24,311
Overseas 7,955)-(Note) This company has 10,901 employees (average age; 42.3 years; average years of service: 18.7 years)(12) Company Groups’ Principal Offices and Plants(i) The Company
Name and location

Principal
officesHead office

Kobe Head Office, Tokyo Head Office

Branches

Sapporo Office , Nagoya Office, Osaka Office, Fukuoka Office 4 Offices

Offices

Sendai Sales Office, Hiroshima Sales Office, Okinawa Sales Office(Naha)

Overseas offices

Beijing (China), Taipei (Taiwan), Dehli (India), Moscow (Russia) 4 places

Plants, etc.

2 Head Offices
3 Sales Ofices

Gifu Works (Kakamigahara), Nagoya Works 1 (Yatomi, Aichi), Nagoya Works 2 (Ama-gun,
Aichi), Kobe Works, Hyogo Works (Kobe), Seishin Works (Kobe), Akashi Works (Akashi),
Kakogawa Works (Kakogawa), Banshu Works (Kako-gun, Hyogo), Harima Works(Kako-gun, Hyogo), Technical Institute (Akashi) 11 Works (including a Technical Institute)

9

(ii) Material Subsidiariesi) Domestic
Company nameLocation of principal offices

Location of plants

Kobe, Koto-ku, Tokyo

-

Kobe

Kobe, Sakaide

Kawasaki Trading Co., Ltd.
Kawasaki Shipbuilding Corporation
Kawasaki Precision Machinery Ltd.

Kobe

Kobe

Kobe, Koto-ku, Tokyo

-

Osaka

-

Yokohama

Yokohama, Yamato

Chiyoda-ku, Tokyo

YachiyoKusatsu, Osaka, Koto-ku, Tokyo

Kusatsu

Kawasaki Motors Corporation Japan

Akashi-

Kawasaki Life Corporation

Kobe

-

Kawasaki Plant Systems, Ltd.
Kawasaki Machine Systems, Ltd.
NIPPI Corporation
EarthTechnica Co., Ltd.
Kawasaki Thermal Engineering Co., Ltd.

ii) Overseas
Company nameLocation

Canadian Kawasaki Motors Inc.

CanadaKawasaki Motors Corp., U.S.A.

U.S.

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

U.S.

Kawasaki Rail Car, Inc.

U.S.

Kawasaki Precision Machinery (UK) Ltd.

UK

Kawasaki Motors Europe N.V.

Netherlands

Kawasaki Motors Enterprise (Thailand) Co., Ltd.

ThailandKawasaki Motors (Phils.) Corporation

Philippines

P.T. Kawasaki Motor Indonesia

Indonesia(13) Principal lenders(Unit: 100 million yen)
Balance of Loans

Lenders

Long term

Short term

Total

Mizuho Corporate Bank, Ltd.

137

515

653

Sumitomo Mitsui Banking Corporation

98

319

417

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

20

216

236

Development Bank of Japan Inc.

165

9

174

The Sumitomo Trust and Banking Co., Ltd.

85

69

154

10

(14) Important issues concerning the current situation of other corporate groups
Important law suits cases etc
The Japan Fair Trade Commission issued on June 27, 2006 a cease and desist order against our company on
the grounds that there was illegal conduct (bid rigging) in violation of the Antimonopoly Act in relation to theconstruction of waste incineration facilities ordered by municipal governments etc. We have, however, lodged
an appeal with the Tokyo High Court to seek for the cancellation of the decision. In that appeal, the Tokyo
High Court ruled against our company (i.e. not agreeing to cancel the decision). We therefore appealed to
the Supreme Court on October 9, 2008. Although the Japan Fair Trading Commission issued a surcharge
payment order on March 23, 2007 for the amount of ¥5,165 million against our company, we have appealed
the decision to the Japan Fair Trading Commission and demanded a trial. The matter is currently under
dispute.
Meanwhile, in relation to this matter, law suits have been filed against our company alone or together withother companies as follows, in order to seek damages from us on the grounds that we caused damages against
the ordering parties due to the bid rigging.
Municipalities, etc.

Status of the law suits

Atami City
(Civil lawsuits)

The Supreme Court ruled in favor of our company on April 13, 2009 (i.e. declined the appeal of thecitizens seeking for damages of ¥1,357 million against the seven companies including our company),
which confirmed our company’s winning of the suit.

Fukuoka City
(Civil lawsuits)

Fukuoka High Court ruled against our company (i.e. ordered a payment of ¥2,088 million against fivecompanies including our company) on November 30, 2007. We have appealed to the Supreme Court
on December 12, 2007, however, on April 23, 2009, the appeal was declined, which confirms ourcompany lost the suit.

Kobe City(Civil lawsuits)

Osaka High Court ruled against our company (i.e. ordered a payment of ¥1,637 million against ourcompany) on October 30, 2007. We have appealed to the Supreme Court on November 9, 2007,
however, on April 23, 2009, the appeal was declined, which confirms our company lost the suit.

Amagasaki City
(Civil lawsuits)

Osaka High Court ruled in favor of our company on November 30, 2007 (i.e. declined the demand by
the citizens for the payment of ¥848 million against the six companies including our company). The
citizen group appealed to the Supreme Court. The Supreme Court has reversed the High Court
decision and remanded the case back to Osaka High Court on April 28, 2009.

Kohoku Greater Area
Administrative Affairs
CentreOtsu District Court ruled against our company (i.e. ordered the payment of ¥409 million against fivecompanies including our company) on September 25, 2008. We appealed to Osaka High Court on
October 10, 2008.

Ichinomiya City

An action for damages of ¥1,650 million has been brought against five companies including ourcompany at Nagoya District Court on March 30, 2007. The case is currently under dispute.

11

2. Status of Shares (as of March 31, 2009)(1)

Total number of shares authorized to be issued

3,360,000,000 shares(2)

Total number of shares outstanding

1,669,629,122 shares(including 1,394,288 shares of treasury stock)(3)

Number of shareholders

171,908 persons(4)

Shareholders who own one tenth or more of total shares outstanding (excluding treasury stock)
Not applicable; however major shareholders are listed below.
Shareholders’ investment in the company

Shareholder name

Number of shares held

Shareholding ratio

thousand shares％

Japan Trustee Services Bank, Ltd. (Trust Account 4G)

97,554

5.8

Mizuho Bank, Ltd.

57,443

3.4

Japan Trustee Services Bank, Ltd. (Trust Account)

56,503

3.3

JFE Steel Corporation

56,174

3.3

The Master Trust Bank of Japan, Ltd. (Trust Account)

54,552

3.2

Nippon Life Insurance Company

54,016

3.2

Tokio Marine & Nichido Fire Insurance Co., Ltd.

46,397

2.7

Kawasaki Heavy Industries, Ltd. Employees Shareholder Association

31,728

1.9

Kawasaki Heavy Industries, Ltd. Kyoueikai

30,788

1.8

NIPPONKOA Insurance CO., LTD.

27,521

1.6

12

3. Company Share Options(1)

Share options held by company officers at the end of the fiscal year under review
Not applicable.

(2)

Share options delivered to employees, etc. during the fiscal year under review
Not applicable.

(3)

Other important matters concerning share options, etc.
Share options currently issued
TypeEuro Yen convertible bonds due 2010 with stock acquisition rights

Number of share options

477

Type and number of underlying shares

Common stock: 2,620,879 shares

Share option issue priceFree of cost

Balance of bonds with stock acquisition rights¥ 477,000 thousand(Note) The number of underlying shares is the balance of bonds with stock acquisition rights divided by the conversion
price of ¥182.
Type

Euro Yen convertible bonds due 2011 with stock acquisition rights

Number of share options

3,475

Type and number of underlying shares

Common stock: 15,089,014 shares

Share option issue priceFree of cost

Balance of bonds with stock acquisition rights¥ 3,475,000 thousand(Note) The number of underlying shares is the balance of bonds with stock acquisition rights divided by the conversion
price of ¥230.3.

In addition to the above, we have also issued convertible bonds pursuant to the previous provisionsof the Commercial Code.
Type

No. 9 unsecured convertible bond

Balance of convertible bonds¥ 7,038,000 thousand

Type of shares issued upon conversion

Common stock

Number of shares issued upon conversion

11,769,230 shares

Conversion price¥ 598(Note) The number of shares issued upon conversion is the balance of convertible bonds divided by the conversion
price.

13

4. Company Officers(1)

Directors and Corporate Auditors
Position

Name

Areas of Responsibility within the Company, representation of othercorporations, etc., and other material concurrent positions
Chairman, The New Industry Research Organization (NIRO)
Chairman, The Shipbuilders' Association of Japan (SAJ)

Chairman

Masamoto Tazaki*

President

Tadaharu Ohashi

Chairman, Japan Aircraft Development Corporation*

Senior Executive Vice
President

Akira Matsuzaki

Assistant to the President, Corporate Technology Division General
Manager, Technology Division Head*

Senior Vice President

Chikashi Motoyama

President, Aerospace Company*

Senior Vice President

Masashi Segawa

President, Rolling Stock Company*

Senior Vice President

Shinichi Tamba

President, Consumer Products & Machinery Company
Senior Manager, Corporate Planning Department; in charge of
Subsidiaries & Affiliates Control Department, Legal Department,
Personnel & Labor Administration Department, and Harima Work Office*Senior Vice Presidents

Shuji Mihara*

Senior Vice President

Satoshi Hasegawa

President, Gas Turbine & Machinery Company○*

Senior Vice President

Mitsutoshi Takao

General Manager, Finance & Accounting Department

Corporate Auditor

Akira Tanoue(Standing)Corporate Auditor

Nobuyuki Okazaki(Standing)Corporate Auditor

Hiroshi Kawamoto

Corporate Auditor

Kenzo Doi○

Attorney(Notes) 1. * means a Representative Director.
2. Corporate Auditors Hiroshi Kawamoto and Kenzo Doi are both Outside Corporate Auditors.
3. ○ means new Directors and Corporate Auditors appointed at the 185th ordinary general meeting ofshareholders held on June 25, 2008.
4. Masatoshi Terasaki and Jiro Noguchi, both Directors, and Tadao Ueda, Corporate Auditor, have resigned
during the relevant business year with the conclusion of the 185th ordinary general meeting ofshareholders.
5. As of April 1, 2009, the positions of Directors have changed: Akira Matsuzaki, formerly Senior Executive
Vice President (Representative Director) and Shinichi Tamba, formerly, Senior Vice President(Representative Director) have become Directors; and each of Satoshi Hasegawa, Masashi Segawa andShuji Mihara, respectively formerly Senior Vice President (Representative Director) has been appointed as
Senior Executive Vice President (Representative Director).
6. Nobuyuki Okazaki, Corporate Auditor, who has many years of experience with administration andaccounting operations at our company and its subsidiaries, has substantial knowledge about finance andaccounting matters.

14

7. Executive Officers as of April 1, 2009 are as follows.
Position

Name

Areas of Responsibility within the Company

President

Tadaharu Ohashi

Senior Executive Vice President

Shuji Mihara

Assistant to the President, in charge of the head officeadministrative departments and the Consumer Products &Machinery Company

Senior Executive Vice President

Satoshi Hasegawa

Assistant to the President

Senior Executive Vice President

Masashi Segawa

Assistant to the President, General Manager, Corporate
Technology Division, in charge of technology and businessdevelopment, Industrial Facilities and Tunneling Equipment
Division and Robot Division.

Senior Vice President

Chikashi Motoyama

President, Aerospace Company

Senior Vice resident

Mitsutoshi Takao

General Manager, Planning & Control Division

Managing Executive Officer

Nobumitsu Kambayashi

General Manager, Corporate Business Development Division

Managing Executive Officer

Kyohei Matsuoka

President, Rolling Stock Company

Managing Executive Officer

Shigeru Murayama

Vice President, Aerospace Company

Managing Executive Officer

Yuichi Asano

President, Gas Turbine & Machinery Company

Managing Executive Officer

Hiroshi Takata

President, Consumer Products & Machinery Company

Executive Officer

Akira Hattori

In charge of President special matters (Kawasaki Rail Car,
Inc. and the rolling stock business in North America)

Executive Officer

Toru Yamaguchi

Deputy General Manager, Corporate Business Development
Division. (In charge of special matters.)

Executive Officer

Sosuke Kinouchi

General Manager, Quality Assurance Division, Consumer
Products & Machinery Company

Executive Officer

Seiji Yamashita

General Manager, CSR Division

Executive Officer

Takeshi Sugawara

Deputy General Manager, Corporate Technology Division (incharge of manufacturing improvement)

Executive Officer

Sumihiro Ueda

Deputy General Manager, Corporate Technology Division andGeneral Manager, System Technology Development Center

Executive Officer

Wataru Kanamori

In charge of President special matters (Kawasaki Machine
Systems, Ltd.)

Executive Officer

Takeshi Watanabe

Overall administration of the P-X and C-X projects,
Aerospace Company

Executive Officer

Yasuo Murata

General Manager, General Administration Division andSenior Manager, General Administration Department

Executive Officer

Minoru Makimura

Deputy General Manager, Corporate Technology Division andGeneral Manager, Technical InstituteExecutive Officer

Tamaki Miyatake

General Manager, Planning Division, Consumer Product &Machinery Company

Executive Officer

Shuichi Yamanaka

General Manager, Planning & Control Division, Rolling Stock
Company

Executive Officer

Masahiko Hirohata

General Manager, Planning & Control Division, Gas Turbine& Machinery Company and Senior Manager, Planning
Department

Executive Officer

Shinsuke Tanaka

Deputy General Manager, Corporate Business Development
Division (in charge of external affairs)

Executive Officer

Yutaka Shimomura

Overall administration of the P-X and C-X projects,
Aerospace Company

15

Position

Name

Areas of Responsibility within the Company

Executive Officer

Masatoshi Yamaguchi

General Manager, Robot Division

Executive Officer

Naomi Sera

General Manager, Engineering Division, Aerospace Company

Executive Officer

Joji Iki

General Manager, Machinery Division, Gas Turbine &Machinery Company

Executive Officer

Yoshizumi Hashimoto

General Manager, Personnel & Labor Administration Division

Executive Officer

Yukio Hayano

General Manager, Planning & Control Division, Aerospace
Company

Executive Officer

Masahiro Ibi

General Manager, Gas Turbine Division, Gas Turbine &Machinery Company

Executive Officer

Takafumi Shibahara

Deputy General Manager, Corporate Planning Division (incharge of Procurement Planning and Administration
Department) and Senior Manager, Subsidiaries & Affiliate
Control Department

Executive Officer

Yoshinori KanehanaVice President, Rolling Stock Company

16

(2)

Compensation to Directors and Corporate Auditors
Directors

11 persons

Corporate Auditors

5 persons¥ 574,889 thousand¥ 75,120 thousand (of which ¥ 13,920 thousand to two Outside Corporate Auditors)(Notes) 1. The maximum amount of remuneration for the Directors is ¥60 million per month (as resolved at the 178thordinary general meeting of shareholders held on June 28, 2001). The maximum amount of remuneration
for the Corporate Auditors is ¥8 million (which was resolved at the 170th ordinary general meeting ofshareholders held on June 29, 1993).
2. Apart from the above, it was resolved at the 182nd ordinary general meeting of shareholders held on June
28, 2005 that, with the abolition of the retirement benefits for Directors, adjustment payments of ¥355,350
thousand be made to seven Directors and ¥ 8,280 thousand be made to two Corporate Auditors. In
accordance with that resolution, the retirement benefits are being paid to a Director and an Corporate
Auditor.
As of the end of the current business year, the total amount of expected future payments for the retirement
benefits will be as follows:¥ 245,100 thousand for four Directors; and¥ 1,980 thousand for an Corporate Auditor (of which, ¥ 1,980 thousand to one Outside Corporate
Auditor).

(3)

Outside Officers(i) Concurrent Outside Officer position at another company
Not applicable.
(ii) Concurrent positions held as Outside Officer at other companies
Corporate Auditor, Kenzo Doi, concurrently holds a position outside the company as a Corporate
Auditor at World Co., Ltd. Our company does not have any dealings or other special relationship withsaid company.
(iii) Relationships between the company or specific related business operators and Executive
Directors and employees, etc.
Not applicable.
(iv) Main activities during the business year
Attendance and comments at Board of Directors meetings and Board of Corporate Auditors
meetings
Hiroshi Kawamoto, Corporate Auditor, attended all of the 13 Board of Directors meetings, and allof the 17 Board of Corporate Auditors meetings held during the business year, and mainly madecomments based on his management experience in the company.
Kenzo Doi, Corporate Auditor, attended all of the 13 Board of Directors meetings, and all of the 17
Board of Corporate Auditors meetings held during the business year, and mainly made comments basedon his expert standpoint as an attorney.
(v) Overview of provisions in contracts for limitation of liability
The company has concluded contracts for limitation of liability with Corporate Auditors Hiroshi
Kawamoto and Kenzo Doi, pursuant to the provisions of Article 427 Paragraph 1 of the Companies Act.
The liability under said contract shall limited to either an amount of ¥ 10 million, or an amountspecified by law, whichever is higher.

17

5. Accounting Auditors(1)

Accounting Auditor’s Name
KPMG AZSA & Co.

(2)

Accounting Auditors’ Compensation, etc., for the fiscal year under review(i) Accounting Auditors’ Compensation, etc., for the fiscal year under review¥ 142,667 thousand(ii) Cash and Other Profits Payable by the Company or its Subsidiaries to Accounting
Auditors¥ 221,726 thousand(Note) Under the audit agreement between the Company and its Accounting Auditors, compensation for audits
pursuant to the Corporation Law and audits pursuant to Financial Instruments and Exchange Law are notseparated, and otherwise cannot be separated. Consequently, the above amounts reflect totalcompensation.

(3)

Details of Non-audit Services
Not applicable.

(4)

Policy Regarding Determination of Termination or Nonrenewal of Appointment of
Accounting Auditors
Where the Accounting Auditor violates or contravenes laws such as the Companies Act andCertified Public Accountant Law, and where it is determined acts have been committed which goagainst public order and morality, the Board of Corporate Auditors shall consider whether to terminate
or not renew the Accounting Auditors based on those facts, and make a decision in accordance with theBoard of Corporate Auditors Regulations. Where the Board of Corporate Auditors determines that it isappropriate to terminate or not renew the appointment of Accounting Auditors, it will request the Boardof Directors to terminate the Accounting Auditors’ appointment, or put forward a proposal at theGeneral Meeting of Shareholders to not renew the appointment of the Accounting Auditors, and theBoard of Directors shall discuss the matter.

18

6. System to ensure that Directors’ execution of duties complies with laws and the
Articles of Incorporation and other systems to ensure proper execution of business
A resolution was made with respect to the company’s internal control systems, pursuant to the Companies
Act, at the Board of Directors Meeting of May 24, 2006 regarding confirmation of the basic policies andstatus of established internal control systems, and henceforth whenever there are organizational changes orchanges to internal regulations, resolutions are made again at Board of Directors Meetings.
Basic Policy
KHI Group's mission is to contribute to the development of society, and has articulated the below group
missions (missions and roles which must be carried out) in the “Kawasaki Group Mission Statement”.
Group Mission“Enriching lifestyles and helping safeguard the natural environment: Global Kawasaki.”In order to realize this Group Mission it is crucial that we enhance our value offering for stakeholders andwin the trust of customers, capital markets and society by living up to their expectations by acting out our
mission statement. With this in mind, KHI Group will continue to maintain the internal control systems
established to date and also strive to create company systems which are even more efficient and lawful by
improving them through ongoing revision.
Development of Internal Controls
On March 1, 2008 we revised and established new internal regulations concerning internal controls basedon the establishment of “Internal Control Management Regulations” to ensure our internal controls are more
systematic and robust. As a result, as at the time of this resolution we have established the following internal
control systems, however going forward we will review them as necessary, taking into account such factors aschanges in the company’s operating environment.
(1)

Systems for storage and management of information related to Directors’ execution of duties• We have established, in accordance with laws, systems for storage of records regarding businessdecisions and operations, and other information is also stored and managed in accordance with ourDocument Management Policy.
• Confidential information contained in meeting materials and personal information are handledappropriately according to their respective internal regulations, and we ensure enforcement thereofthrough such measures as inspections and business audits, which are carried out according to methods
stipulated in the regulations.

(2)

Systems for management of risk of loss
• Key management policies and other matters discussed at Board of Directors Meetings are madecompulsory by regulations.
• Rules for approval of important matters are articulated in the Approval Regulations.
• The basic principles concerning identification, evaluation and handling of risk are articulated in the
Risk Management Regulations.
• We have systemized implementation of appropriate risk management for major projects throughregulations concerning risk management of major projects.
• We have set down risk management regulations and articulated codes of conduct in event ofemergencies, and have also established risk management systems.
• We strive to prevent occurrence of compliance risks through ongoing education and training forvarious types of compliance, predominantly by the CSR Department and Legal Department.
• We have established KHI Corporate Ethics Regulations for management of compliance risk andensure enforcement of corporate ethics regulations through the activities of CSR committees.
• We ensure the appropriateness of business operations through the conduct of business audits by theInternal Audit Department (Audit Department).

(3)

Systems to ensure efficient execution of Directors’ duties• We assign Directors’ duties to ensure efficiency of business operations.
• We appoint Executive Officers pursuant to resolutions of the Board of Directors meeting, and strive
for efficient execution of duties in each business segment.
• We have established management meetings and the Corporate Planning Department as a consultative
19

and support organ for the President.
• We formulate management plans and conduct regular follow-up to ensure company-wide efficiencyof business operations.
• We hold Group business operations meetings to ensure employees throughout the KHI Group arefamiliar with management strategies and plans, and share a unified purpose.
• We have implemented a company system and operations as a pseudo-company system to ensureagility of our business operations.
• We implement budgetary controls over manufacturing costs, capital investments and indirect
expenses, etc. to ensure efficient allocation of business resources.
(4)

Systems to ensure that Directors’ and employees’ execution of duties are compliant with laws andthe Articles of Incorporation• We have appointed a Director who is independent of execution of business operations to enhancesupervisory and monitoring functions of the Board of Directors for overall management.
• We apply the measures for compliance risk management described in (2) above.
• Directors, in addition to being obliged themselves to comply with the fundamental principles ofcorporate ethics, they are also obliged to make all employees comply with laws and regulations; andKHI’s Corporate Ethics Regulations contains provisions to that effect.
• We ensure employees, in executing their duties, are compliant with laws and the company’s Articles
of Incorporation through the application of Executive Directors Regulations and Rules of
Employment.
• We continuously strive to improve understanding and awareness of compliance by ongoing educationand training activities for various types of legal compliance. With respect to compliance with theAnti-monopoly Law in particular, we have established the Board of Directors Management Bylaws
and Anti-Monopoly Law Compliance Regulations in relation to compliance with the Anti-monopoly
Law, and we carry out education and training to ensure Directors and employees comply with thoselaws and regulations.
• Through the CSR Department we implement compliance systems, carry out compliance educationand training, and have a compliance reporting and consultation system (whistleblower system), andensure enforcement through monitoring of each of those systems.
• To cut off relations with anti-social forces we have established a department responsible foroverseeing handling of such matters and have also established close cooperation with external
specialized organizations such as the police force.

(5)

Systems to ensure proper business execution within the company group which is composed of thecompany, its parent company and subsidiaries• We implement controls as shareholders of subsidiaries and affiliates through the execution of voting
rights at the General Meeting of Shareholders• We implement controls over important decisions, etc. concerning the operation of subsidiaries andaffiliates through the Subsidiaries and Affiliates Regulations and Approval Regulations.
• We carry out management supervision and monitoring by dispatching part-time Directors andpart-time Corporate Auditors. To ensure the enforcement thereof we have established internal
regulations for part-time officers of subsidiaries and affiliates, and also carry out education andtraining for part-time officers.
• The company’s full-time Corporate Auditor works in collaboration with the Full-time Corporate
Auditors at subsidiaries and affiliates.

(6)

Systems for employees in cases where the Corporate Auditor requests appointment of employees
to assist with the Corporate Auditor’s duties• We allocate the required staff (to the Corporate Auditor) according to the Corporate Auditors’requests.

(7)

Systems to ensure employees who assist with the Corporate Auditors duties are independent from
Directors.
• The Corporate Auditor’s consent is required when hiring staff (to the Corporate Auditor) to assist
with the Corporate Auditor’s duties.

(8)

Systems for Directors and employees to report to the Board of Corporate Auditors and othersystems for reports to the Board of Corporate Auditors.
20• In addition to attending Board of Directors meetings, Corporate Auditors also attend company-wide
meetings, including management meetings and CSR committees.
• Corporate Auditors regularly exchange opinions with Directors.
• Directors and Corporate Auditors decide through mutual discussion which matters Directors shouldreport to Corporate Auditors.
(9)

Other systems to ensure the effective conduct of audits by the Board of Corporate Auditors• Accounting Auditors and the Internal Audit Department closely collaborate with Corporate Auditors.
• Matters concerning the election of Corporate Auditors and their remuneration etc. are determined inaccordance with laws and the Articles of Incorporation, with the consent of Corporate Auditors.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(Note) Amounts in this Business Report are rounded down to the nearest unit.

21Consolidated Balance Sheet(As of March 31, 2009)(Unit: million yen)
Description

Amount(Assets)
Current assets

Description

Amount(Liabilities)
995,796

Current liabilities

830,006

Cash on hand and in banks

31,955Trade payables

358,478

Trade receivables

402,341

Short-term borrowings

157,082

Merchandise and finished products

69,609

Income taxes payable

8,710

Work in process

325,578

Deferred tax liabilities

931

Raw materials and supplies

81,253

Accrued bonuses

14,241

Deferred tax assets

33,232

Provision for product warranties

7,638

Other current assets

54,937

Provision for losses on construction contracts

20,930Allowance for doubtful receivables(3,111)

Provision for losses on damages suit

7,410

Fixed assets

Other current liabilities

403,974

254,582

Net property, plant and equipment

284,117

Advances from customers

125,762

Buildings and structures

105,817

Current portion of bonds

20,000Machinery and equipment

76,944

Other

108,819Land

64,287Long-term liabilities

274,518

690

Bonds payable

40,990Construction in progress

19,572Long-term debt

140,715

Other

16,805

Deferred tax liabilities

2,938

Intangible assets

19,573

Provision for environmental measures

3,980

Investments and other assets

100,283

Employees’ retirement and severance benefits

79,969Investments in securities

24,865

Other

5,924

Leased assets

Long-term loans

559

Deferred tax assets

42,773(Net assets)

Other investments and other assets

33,272

Shareholders’ equity

312,415

Allowance for doubtful receivables(1,187)

Common stock

104,328

Capital surplus

54,281Retained earnings

154,272

Total liabilities

Treasury stock(467)

Valuation and translation adjustments(21,974)

Net unrealized gains on securities

3,139

Gains/losses on hedging items(263)

Foreign currency translation adjustments

Total assets

1,104,525(24,850)

Minority interests

4,804

Total net assets

295,245

1,399,770

Total liabilities and net assets

22

1,399,770

Consolidated Statement of Income(April 1, 2008 - March 31, 2009)(Unit: million yen)
Description

AmountNet sales

1,338,597

Cost of sales

1,146,944

Gross profit

191,652

Selling, general and administrative expenses

162,939

Operating income

28,713Non-operating income

27,838Interest income

3,141

Dividend income

1,210

Gain on sales of marcketable and investment securities

620

Equity in income of non-consolidated subsidiaries andaffiliates

8,709

Foreign exchange gains, net

10,373

Other, net

3,784

Non-operating expenses

17,832

Interest expense

6,658

Loss on valuation of securities

1,875

Other, net

9,298

Recurring profit

38,718Extraordinary income

594

Gain on sale of business

594

Extraordinary losses

15,688Provision for losses on damages suit

5,165

Loss on contribution of securities to the pension trust

4,492

Provision for environmental measures

1,812

Loss on impairment of fixed assets

1,399

Other

2,818

Income before income taxes and minority interests

23,625

Income taxes-current

16,783

Income taxes-deferred(6,021)

Minority interests in net income of consolidated subsidiaries

1,135

Net income

11,72723

Consolidated Statement of Changes in Net Assets(April 1, 2008 - March 31, 2009)(Unit: million yen)
Shareholders’ equity
Common stock
Balance at March 31, 2008

Capital surplus Retained earnings

104,328

54,290Treasury stock

151,401

(459)

Total
shareholders’equity309,560

Changes of items during the period
Cash dividends(8,341)(8,341)

Net income for the year

11,727

11,727

Treasury stock purchased
Treasury stock disposed

(9)

Other

(31)

(31)

23

14

(514)

(514)

Net changes of items other thanshareholders’ equity
Total changes of items during theperiodBalance at March 31, 2009

-

(9)

2,871

(7)

2,854

104,328

54,281

154,272(467)

312,415

Valuation and translation adjustments
Net unrealized
Gains (losses) on
gains on securities hedging items

Balance at March 31, 2008

10,292

5,217

Foreign currencytranslation
adjustments

Total valuationand translation
adjustments(11,878)

3,631

Minority
interests
5,845

Total
net assets
319,037

Changes of items during the period
Cash dividends(8,341)

Net income for the year

11,727

Treasury stock purchased(31)

Treasury stock disposed

14

Other

(514)

Net changes of items other thanshareholders’ equity(7,152)(5,480)(12,972)(25,606)(1,040)(26,646)

Total changes of items during theperiod(7,152)(5,480)(12,972)(25,606)(1,040)(23,792)

3,139

(263)

(24,850)(21,974)

4,804

295,245

Balance at March 31, 200924

Notes to the Consolidated Financial Statements(Notes to the basis for preparation of consolidated financial statements)
1. Scope of consolidation
Number of consolidated subsidiaries and names of principal
97 in total
subsidiaries(Domestic) Kawasaki Shipbuilding Corporation, Kawasaki Plant Systems, Ltd., Kawasaki Trading Co.,
Ltd., Kawasaki Machine Systems, Ltd., Kawasaki Precision Machinery Ltd., NIPPICorporation, Kawasaki Thermal Engineering Co., Ltd., Kawasaki Motors Corporation
Japan, Kawasaki Life Corporation, EarthTechnica Co., Ltd.
(Overseas)
Canadian Kawasaki Motors Inc., Kawasaki Motors Corp., U.S.A., Kawasaki Motors
Manufacturing Corp., U.S.A., Kawasaki Rail Car, Inc., Kawasaki Precision Machinery(U.K.) Limited, Kawasaki Motors Europe N.V., Kawasaki Motors Enterprise (Thailand)Co., Ltd., Kawasaki Motors (Phils.) Corporation, P.T. Kawasaki Motor Indonesia
Of the seven subsidiaries that became newly consolidated, EarthTechinica Co., Ltd., which previously wasan equity-method affiliate, was included in the scope of consolidation along with its subsidiaries, Fukae
Powtech Co., Ltd., and another company, as the Company made an additional acquisition of its stock.
KHITKAN Co., Ltd., which previously was also an equity-method affiliate, was included in the scope of
consolidation as the Company made additional acquisition of its stock. In addition, the other threecompanies were included in the scope of consolidation as they were newly established.
Of the five companies that were eliminated from the list of consolidated subsidiaries, four that werepreviously consolidated subsidiaries were excluded from the scope of consolidation as they disappeared asa result of acquisition by and merger with other consolidated subsidiaries. In addition, another company
was excluded from the scope of consolidation as a result of its liquidation.
2. Application of the equity method(1) Number of non-consolidated subsidiaries and affiliates
and names of principal companies which are subject tothe equity method
Affiliates

12 in total

12, Nantong COSCO KHI ShipEngineering Co.,Ltd.
Of the six companies that were eliminated from the list of equity-method affiliates, EarthTechnica
Co., Ltd. was excluded from the scope of equity method application along with its subsidiaries, Fukae
Powtech Co., Ltd., and another company, as a result of an additional acquisition of its stock by theCompany. KHITKAN Co., Ltd. was also excluded from the scope of equity method application as aresult of an additional acquisition of its stock by the Company. The two other companies were
excluded from the scope of equity method application as the Company had sold them.
(2) Names of principal companies of non-consolidated
subsidiaries and affiliates not subject to the equity
methodAffiliates
Commercial Airplane Co., Ltd., Asahi
Aluminium Co.,Ltd.
These affiliates are excluded from application of the equity method because they do not have any
material impact on the consolidated financial statements with respect to net income and retained
earnings.

3. Significant accounting policies(1) Standards and methods for evaluation of assets(i) Marketable securities
Bonds held to maturity
Principally stated by the amortized cost method
Other marketable securities- Securities with market quotations
Stated at market based on the market price on the settlement date of the accounting period(with all valuation differences charged to net assets and the cost of sale computed mainly by
the moving average method).
25

- Securities without market quotations
Stated at cost principally using the moving average method
No trading securities are held by the Company.
(ii) Inventories
Stated at cost principally using the specific identification method, the moving-average method,
and the fist-in first-out method (a method for lowering the book value due to deterioration of
profitability)(iii) Net credit and net liability incurred by derivative transactions
Stated at market(2) Depreciation methods for fixed assets(i) Property, plant and equipment- Other than leased assets
The declining balance method is principally used for depreciation. However, the straight line
method is used for buildings acquired on or after April 1, 1998 (excluding buildings
fixtures).
- Leased assets
The leased assets involved in finance lease transactions that do not involve transfer ofownership are subject to the straight-line method, whereby the leasing period is deemed tobe the duration of useful life and the residual value as zero.
With respect to finance lease transactions not involving the transfer of ownership undertaken
prior to the first year of implementation of the revision of the lease accounting standards, theCompany continues to apply accounting treatment similar to that for ordinary operating
leasing transactions.
(ii) Intangible assets- Other than leased assets
The straight line method is used. The Company’s own software (used by the Company) is
subject to amortization based on the period of internal use (generally five years).
- Leased assets
The leased assets involved in finance lease transactions that do not involve transfer ofownership are subject to the straight-line method, whereby the leasing period is deemed tobe the duration of useful life and the residual value as zero.
With respect to finance lease transactions not involving transfer of ownership undertaken
prior to the first year of the implementation of the revision of the lease accounting standards,
the Company continues to apply an accounting treatment similar to that for ordinary
operating leasing transactions.
(3) Standards for translation of assets and liabilities denominated in foreign currencies into yen
The Company applies the revised accounting standards for transactions denominated in foreign
currencies (Opinion Concerning the Revision of Accounting Standards for Transactions Denominated in
Foreign Currencies issued by the Business Accounting Deliberation Council on October 22, 1999).
(4) Methods of accounting for provisions(i) Allowance for doubtful receivables
In order to provide losses due to doubtful receivables, an amount mainly based on the historical
write-off rate is recorded for ordinary receivables, and the necessary amount based on theestimated recoverability of individual cases is recorded for specified receivables such as
doubtful receivables.
(ii) Accrued bonuses
A provision is recorded based on estimated bonuses to employees.
(iii) Provision for product warranties
A provision is recorded for expenditures for warranties concerning construction contracts basedon past experience or on estimations of individual cases.
(iv) Provision for losses on construction contracts
A provision for an estimated amount of losses is recorded for the next fiscal year and thereafterconcerning construction works which are anticipated to incur significant losses and which allow
reasonable estimation of the loss incurred at the end of fiscal year under review among those
construction works that have not been delivered as of the end of the fiscal year.
(v) Employees’ retirement and severance benefits26

A provision is recorded for the amount deemed to have been incurred as of fiscal year-end underreview based on the estimated retiree benefits and plan assets as of this fiscal year-end(including the retirement benefit trust) in order to cover employee retirement benefits, and any
difference at the time of change in accounting standards is expensed by the amount computed ona pro rata basis for a ten year period, with the exception of certain consolidated subsidiaries.
Actuarial differences are expensed effective from the next fiscal year mainly by the straight line
method over a period of ten years, and past service liabilities are expensed effective from thisfiscal year chiefly by the straight line method for a period of ten years.
(vi) Provision for losses on damages suit
A provision is recorded for estimated amounts to cover any losses from the verdicts of any
litigation.
(vii) Provision for environmental measures
The Company provided an estimated amount to cover expenditures for environmental measure
expenses such as the disposal of PCB waste and soil improvement required under the “Law
Concerning Special Measures for Promotion of Appropriate Disposal of PCB (poly chlorinatedbiphenyl) Waste.”(5) Hedge accounting policy
The Company employs deferred hedge accounting and defers recognition of unrealized losses,
unrealized gains, and evaluation differences incurred by the marking to market of hedges such asderivative transactions as net assets until losses and gains due to the target of hedging are recognized.
(6) Standards for revenue recognition
The percentage of completion method is applied with respect to revenues from large-scale long-term
construction contracts (mainly those with construction periods in excess of one year and with contract
amounts of not less than ¥3 billion), and the completed contract method is employed for other contracts.
With regard to contracts for which the amount of revenue from delivery is not determined and/or cost of
sales is not finalized, both sales and cost of sales are estimated(7) Consumption tax and local consumption tax are subject to accounting treatment using the tax
excluded method.
(8) Evaluation method for assets and liabilities of consolidated subsidiaries
The mark-to-market method is used for the evaluation of assets and liabilities of consolidated
subsidiaries.
(9) Method for amortizing goodwill and negative goodwill
Goodwill and negative goodwill are amortized over the relevant period by the straight line method
based on an estimate of their effective duration. However, all goodwill that is monetarily insignificant isamortized at the same time in the fiscal year under review.

(Notes to changes in accounting policies)(1) Changes in the standards and method for evaluation of inventories
Inventories held for ordinary selling purposes were previously stated at cost principally using thespecific identification method, the moving-average method, and the first-in first-out method. However,in accordance with the implementation of the Financial Accounting Standards for Inventory Evaluation(Business Accounting Standards, No.9, July 5, 2006) effective from this fiscal year, the Company makes
the computation mainly by the specific identification method, the moving-average method, and thefirst-in first-out method (a method for lowering the book value due to a deterioration in profitability
with respect to the amount on the balance sheet).
This change resulted in a decrease of ¥4,074 million in gross profit, operating income, recurring
profit, and income before income taxes and minority interests respectively for this fiscal year.
(2) Application of the Practical Solutions on the Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements
Starting with this fiscal year, the Company applies the Practical Solutions on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements (Practical
Issues Task Force No. 18, May 17, 2006).
27

This change does not have any impact on net income for this fiscal year.
(3) Application of accounting standards for lease transactions
With respect to finance lease transactions not involving transfer of ownership, the Company
previously applied an accounting treatment using a method similar to that for ordinary operating lease
contracts, but the accounting treatment has been changed to the treatment for ordinary tradingtransactions in accordance with implementation from the fiscal year that started on or after April 1, 2008of the Accounting Standards for Lease Transactions (Business Accounting Standards, No. 13 [June 17,
1993; First Committee, Business Accounting Deliberation Council; revised on March 30, 2007]) and the
Guidelines for Application of Accounting Standards Concerning Lease Transactions (Guidelines forApplication of Business Accounting Standards, No. 16 [January 18, 1994; Accounting System
Committee, Japanese Institute of Certified Public Accountants; revised on March 30, 2007]). With
respect to the method of depreciation of leased assets involved in finance leasing transactions not
involving the transfer of ownership, the Company applies the straight line method in which a leasing
period is deemed to be the duration of useful life and the residual value is stated as zero.
Notwithstanding the above, the Company continues to apply an accounting treatment similar to thatfor ordinary operating lease contracts with regard to finance lease transactions not involving the transferof ownership that commenced prior to the first year of the implementation of the above standards.
This change has a negligible effect on net income for this fiscal year.

(Change in presentation methods)(1) Consolidated balance sheets
In accordance with the implementation of the Cabinet Office Ordinance for Partial
Amendment of the Regulation for Terminology, Forms and Preparation of Financial Statements(Cabinet Office Ordinance No. 50, August 7, 2008), items listed as “inventories” in the previous fiscal
year were changed to be listed separately as “merchandise and finished products,” “work in process,”and “raw materials and supplies” starting from this fiscal year.
(2) Consolidated statement of income“Loss on valuation of securities” is listed separately starting from this fiscal year as its monetaryimportance increased.

(Additional information)
The Company and the domestic consolidated subsidiaries reviewed the useful life of machinery andequipment in accordance with the revision of the tax regime for fiscal year 2008.
This resulted in a decrease of ¥1,690 million in operating income, recurring profit, and income before
income taxes and minority interests, respectively.

(Notes regarding the consolidated balance sheet)
1. The amounts presented are rounded down to the nearest unit.
2. Accumulated depreciation of property, plant and equipment
3. Guarantee liability
4. Assets pledged as collateral
Buildings and structures
Land
Securities hold for investment purpose
Other
Liabilities relating to collateral
Short-term borrowings
Long-term debt
Other

28

¥596,713 million¥36,391 million¥4,788 million¥818 million¥301 million¥13 million¥787 million¥914 million¥53 million

(Notes regarding the consolidated Statement of Income)1. The amounts presented are rounded down to the nearest unit.
2. Gain on the sale of business is attributable to the transfer of the golf course operation business of
Kawasaki Life Corporation, a consolidated subsidiary of the Company.
3. Loss on contribution of securities to the pension trust is attributable to the additional contribution of
investment securities held by the Company to the pension trust.
4. Loss on impairment of fixed assets(1) Outline of the asset group that recognized an impairment loss
Use

Place

Type

Assets used for business operations

Sodegaura, Chiba

Machinery and equipment(2) Method for classifying individual asset groups
Classification of individual asset groups is conducted principally on the basis of operating activities,
and significant leasing assets and idle assets are treated individually as a specific asset group.
(3) Developments that led to the recognition of an impairment loss
Certain assets experienced a deterioration of operating results, decline of market price, and loss ofusability. Accordingly, the Company lowered the book values of the relevant assets to recoverable
amounts.
(4) Method for computation of recoverable amount
A recoverable amount is estimated by the net sale price or the use value. The net sale price isdetermined based on the real estate appraisal or the assessed value for real estate tax, and the use
value is computed based on future cash flow.
(5) Amount of loss on impairment of fixed assets
The amount of loss on impairment of fixed assets of ¥1,399 million was recorded as an extraordinary
loss which is mainly attributable to machines and equipment.
5. Other extraordinary losses are attributable to losses resulting from the suspension of activities for theparticipation in the FIM Road Racing World Championship Grand Prix.
(Notes regarding consolidated Statement of Changes in Net Assets)
1. Total number of shares outstanding as of end of the fiscal year under review
Common stock

1,669,629,122 shares

2. Dividends
Resolution
General Meeting of
Shareholders on
June 25, 2008
Scheduled date ofresolution
General Meeting of
Shareholders on
June 25, 2009

Total dividend(million yen)

Dividend per share
(yen)

8,341

Total dividend(million yen)

5

Dividend per share
(yen)

5,004

3

Record date

Effective date

March 31, 2008

June 26, 2008

Record date

Effective date

March 31, 2009

June 26, 2009

3. Type and number of stock for share options
Common stock(Notes regarding per share information)
1. Net assets per share¥ 174.10
2. Net income per share¥ 7.0229

17,709,893 sharesNon-consolidated Balance Sheet(As of March 31, 2009)(Unit: million yen)
Description(Assets)
Current assets
Cash on hand and in banks
Notes receivable-trade
Accounts receivable-trade
Raw materials and supplies
Work in process
Advance payments
Prepaid expenses
Deferred tax assets
Short-term loans
Accounts receivable-otherAccrued income
Other current assets
Allowance for doubtful receivables
Fixed assets
Net property, plant and equipment
Buildings
Structures
Machinery and equipment
Vessels
Aircraft
VehiclesTools, Furniture and fixtures
Land
Leased assets
Construction in progress
Intangible assets
SoftwareLicense production and licensee's
execution right
Other intangible assets
Investments and other assets
Investments in securities
Stock of affiliates
Investments in capital of affiliates
Long-term loans
Deferred tax assets
Other investments and other assets
Allowance for doubtful receivables

Total assets

AmountDescription

652,956
9,607
1,595
266,188
50,006
238,757
20,318442
16,536
26,417
11,09633
12,903(947)
325,031
155,389
48,646
9,389
35,4971
137
666
10,721
34,509547
15,271
13,758
3,474
114
10,169155,883
22,482
95,491
2,873
3,643
26,712
6,395(1,713)977,988

30

Amount(Liabilities)
Current liabilities
Notes payable-trade
Accounts payable-trade
Short-term borrowings
Current portion of long-term debt
Commercial papers
Current portion of bonds
Notes payable-facilities
Current portion of lease obligations
Accounts payable-otherAccrued expenses
Income taxes payable
Advances from customers
Deposits received
Unearned revenue
Accrued bonuses

546,455
25,797214,072
118,968
8,974
30,00020,0002,080
11918,851
26,954983
48,373
1,792
18
6,756

Provision for product warranties

1,007

Provision for losses on construction
contracts
Provision for losses on damages suit
Other current liabilities
Long-term liabilities
Bonds payable
Convertible bond
Bond with stock acquisition rights
Long-term debt
Lease obligations
Long-term accounts payable-other
Employees’ retirement and severance
benefits
Provision for environmental measures
Other
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
Provision for special depreciation
Provision for advanced
depreciation of fixed assets
Provision for special account foradvanced depreciation of fixed
assetsRetained earnings brought forward
Treasury stock
Valuation and translation adjustments
Net unrealized gains on securities
Gains/losses on hedging items
Total net assets
Total liabilities and net assets

10,9857,410
3,308
200,732
30,0007,038
3,952
134,7112
374
21,2382,945
471
747,188
226,277
104,328
52,09852,05839
70,31870,318
146
6,798
384
62,988
(467)
4,522
2,872
1,649
230,799
977,988Non-consolidated Statement of Income(April 1, 2008 - March 31, 2009)(Unit: million yen)
Description

AmountNet sales

771,428

Cost of sales

718,187

Gross profit

53,241

Selling, general and administrative expenses

65,302

Operating loss

(12,061)

Non-operating income

25,534

Interest income

1,002

Dividend income

12,077

Foreign exchange gains

11,213

Other

1,241

Non-operating expenses

10,859Interest expense

3,465Interest on bonds

1,008

Loss on valuation of securities

1,777

Other

4,608

Recurring profit

2,614

Extraordinary losses

15,716

Provision for losses on damages suit

5,165

Loss on contribution of securities to the pension trust

4,492

Provision for environmental measures

1,558

Provision of allowance for doubtful receivables for affiliates

1,230

Loss on valuation of stocks of affiliates

452

Other

2,818

Loss before income taxes(13,102)

Income taxes-current

2,030

Income taxes-deferred(9,023)(6,992)Net loss(6,109)31

Non-consolidated Statement of Changes in Net Assets(April 1, 2008 - March 31, 2009)(Unit: million yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Reserve for
specialReserve forReserve foradvancedaccount for
specialdepreciation
advanceddepreciation
depreciationof fixed
assetsof fixed
assetsCapital surplus
Commonstock

Balance at March 31, 2008

Legal
capitalsurplus104,328

Other
capitalsurplus52,058

48

174

6,734

–

Retainedearnings
brought
forward77,859Treasury
stock

(459)

Total
shareholders’equity240,745

Changes of items during the period
Cash dividends(8,341)

Net loss for the year

(6,109)Treasury stock purchased
Treasury stock disposed(9)

Balance at March 31, 2009–
104,328(9)–52,058

Balance at March 31, 2008

9,237

–

33

–

128

(128)

–

(64)

64

–

384

(384)

–

384

(14,871)(7)(14,468)

62,988(467)

226,277

(28)
146

Total
Gains (losses)
valuation andon hedging
translation
items
adjustments

Total
net assets

14,620255,366

Changes of items during the period
Cash dividends(8,341)

Net loss for the year

(6,109)Treasury stock purchased(31)

Treasury stock disposed

14

Provision for special depreciation–

Reversal of provision for special
depreciation–

Provision for advanced
depreciation of fixed assets–

Reversal of provision for advanced
depreciation of fixed assets–

Provision for special account foradvanced depreciation of fixed
assets–Net changes of items other thanshareholders’ equity(6,364)(3,733)(10,098)(10,098)

Total changes of items during theperiod(6,364)(3,733)(10,098)(24,566)

Balance at March 31, 2009

2,872

1,649

4,522

230,799

32

14

5

39

5,383

(31)

23

(33)

Valuation and translation adjustments
Net
unrealized
gains onsecurities(6,109)(31)(5)

Provision for special depreciation
Reversal of provision for special
depreciation
Provision for advanced
depreciation of fixed assets
Reversal of provision for advanced
depreciation of fixed assets
Provision for special account foradvanced depreciation of fixed
assetsNet changes of items other thanshareholders’ equity
Total changes of items during theperiod(8,341)

63
6,798

384

Notes to the Non-consolidated Financial Statements(Notes to significant accounting policies)
1. Marketable securities are evaluated by the following methods:(1) Investment securities of subsidiaries and affiliates
Stated at cost using the moving-average method(2) Other marketable securities
・ Securities with market quotations
Stated at market based on the market price on the settlement date of the fiscal year
Evaluation differences are all charged to net assets, and the amount obtained by subtracting theamount of tax effect from the total amount of the evaluation difference is represented in thesection of net assets as “evaluation difference on other marketable securities.”
The cost of sales is calculated chiefly by the moving average method.
・ Securities without market quotations
Stated at cost using the moving average method
Trading securities and held-to-maturity bonds are not held by the Company.
2. Inventories are stated at cost using the specific identification method and the moving-average method (amethod for lowering the book value due to deterioration of profitability)
3. Derivatives are stated at market
4. Property, plant and equipment are subject to depreciation conducted by the following methods:(1) Other than leased assets
The Company mainly employs the declining balance method for depreciation. However, the straightline method is used for buildings acquired on April 1, 1998, or thereafter (excluding buildings
fixtures).
(2) Leased assets
The leased assets involved in finance lease transactions that do not involve transfer of ownership are
subject to the straight-line method, whereby the leasing period is deemed to be the duration of usefullife and the residual value as zero.
With respect to finance lease transactions not involving the transfer of ownership undertaken prior to
the first year of implementation of the revision of the lease accounting standards, the Company
continues to apply accounting treatment similar to that for ordinary operating leasing transactions.
5. Intangible assets are subject to amortization conducted by the following methods:(1) Other than leased assets
The straight line method is used. The Company’s own software (used by the Company) is subject toamortization based on the period of internal use (five years).
(2) Leased assets
The leased assets involved in finance lease transactions that do not involve transfer of ownership are
subject to the straight-line method, whereby the leasing period is deemed to be the duration of usefullife and the residual value as zero.
With respect to finance lease transactions not involving transfer of ownership undertaken prior to thefirst year of the implementation of the revision of the lease accounting standards, the Company
continues to apply an accounting treatment similar to that for ordinary operating leasing transactions.
6. The Company applies the revised accounting standards for transactions denominated in foreign currencies(Opinion Concerning the Revision of Accounting Standards for Transactions Denominated in Foreign
Currencies issued by the Business Accounting Deliberation Council on October 22, 1999) as standards fortranslation of assets and liabilities denominated in foreign currencies into yen.
7. Standards of accounting for provisions(1) Allowance for doubtful receivables
In order to provide losses due to doubtful receivables, an amount based on the historical write-off rate
is recorded for ordinary receivables, and the necessary amount based on the estimated recoverabilityof individual cases is recorded for specified receivables such as doubtful receivables.
(2) Accrued bonuses
The Company has recorded a provision based on the estimated amount of payments in order to cover
the bonus payouts to employees in accordance with the Company’s Rules for Bonus Payment(3) Provision for product 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 losses on construction contracts
33

A provision for an estimated amount of losses is recorded for the next fiscal year and thereafterconcerning construction works which are anticipated to incur significant losses and which allow
reasonable estimation of the loss incurred at the end of this fiscal year among those construction
works that have not been delivered as of the end of the fiscal year.
(5) Employees’ retirement and severance benefits
A provision is recorded for the amount deemed to have been incurred as of this fiscal year-end basedon the estimated retiree benefits and plan assets as of this fiscal year-end (including the retirement
benefit trust) in order to cover employee retirement benefits, and any difference at the time of changein accounting standards is expensed by the amount computed on a pro rata basis for a ten year period.
Actuarial differences are expensed by the straight line method over a period of ten years commencing
with the following fiscal year, and past service liabilities are expensed by the straight line method
over a period of ten years commencing with the current fiscal year. With regard to the employees’
retirement and severance benefits, the amount of pension assets presented after offsetting in theretirement benefit trust is ¥53,793 million (market value at the time when shares were contributed tothe trust).
(6) Provision for losses on damages suit
A provision is recorded for estimated amounts to cover any losses from the verdicts of any litigation.
(7) Provision for environmental measures
The Company provided an estimated amount to cover expenditures for environmental measure
expenses such as the disposal of PCB waste and soil improvement required under the “Law
Concerning Special Measures for Promotion of Appropriate Disposal of PCB (poly chlorinatedbiphenyl) Waste.”
8. Hedge accounting policy
The Company employs deferred hedge accounting and defers recognition of unrealized losses, unrealized
gains, and evaluation differences incurred by the marking to market of hedges such as derivativetransactions as net assets until losses and gains due to the target of hedging are recognized.
9. The percentage of completion method is applied with respect to revenues from large-scale long-term
construction contracts (mainly those with construction periods in excess of one year and with an amountof contract of not less than ¥ 3 billion), and the completed contract method is employed for other contracts.
With regard to contracts for which the amount of revenue from delivery is not determined and/or the costof sales is not finalized, both the sales and cost of sales are estimated.
10. Consumption tax and local consumption tax are subject to the accounting treatment using the tax excluded
method.
(Notes to changes in accounting policies)(1) Changes in the standards and method for evaluation of inventories
Inventories held for ordinary selling purposes were previously stated at cost using the specificidentification method and the moving-average method. However, in accordance with theimplementation of the Financial Accounting Standards for Inventory Evaluation (BusinessAccounting Standards, No.9, July 5, 2006) effective from this fiscal year, the Company makes thecomputation by the specific identification method and the moving-average method (a method forlowering the book value due to a deterioration in profitability with respect to the amount on thebalance sheet).
This resulted in a decrease of ¥ 3,400 million in gross profit and recurring profit and an increase of¥ 3,400 million in operating loss and loss before income taxes, respectively.
(2) Application of accounting standards for lease transactions
With respect to finance lease transactions not involving transfer of ownership, the Company
previously applied an accounting treatment using a method similar to that for ordinary operating lease
contracts, but the accounting treatment has been changed to the treatment for ordinary tradingtransactions in accordance with implementation from the fiscal year that started on or after April 1,2008 of the Accounting Standards for Lease Transactions (Business Accounting Standards, No. 13[June 17, 1993; First Committee, Business Accounting Deliberation Council; revised on March 30,
2007]) and the Guidelines for Application of Accounting Standards Concerning Lease Transactions(Guidelines for Application of Business Accounting Standards, No. 16 [January 18, 1994; Accounting
System Committee, Japanese Institute of Certified Public Accountants; revised on March 30, 2007]).
With respect to the method of depreciation of leased assets involved in finance leasing transactions
not involving the transfer of ownership, the Company applies the straight line method in which aleasing period is deemed to be the duration of useful life and the residual value is stated as zero.
Notwithstanding the above, the Company continues to apply an accounting treatment similar to that34

for ordinary operating lease contracts with regard to finance lease transactions not involving thetransfer of ownership that commenced prior to the first year of the implementation of the above
standards.
This change has a negligible effect on net income for this fiscal year.
(Change in presentation methods)
Non-consolidated statement of income
Starting with this fiscal year, “loss on valuation of securities” is listed separately as its monetary importancehas increased, and “gain on sale of securities” (¥ 11 million in this fiscal year) is presented by including it in
the “other” item of “non-operating income”, as its monetary importance has decreased.
(Additional information)
Change in useful life of property, plant and equipment
The Company reviewed the useful life of machinery and equipment in accordance with the revision of the
tax regime for fiscal year 2008.
This resulted in a decrease of ¥ 1,192 million in recurring profit and an increase of ¥ 1,192 million in
operating loss and loss before income taxes, respectively.
(Notes to Non-Consolidated Balance Sheet)
1. The amounts presented are rounded down to the nearest unit.
2. Accumulated depreciation of property, plant and equipment
3. Monetary receivables from and payables to affiliates
Short-term monetary assets
Long-term monetary assets
Short-tem monetary liabilities
4. Asset pledged as collateral and liability relating to collateral(1) Assets pledged as collateral
Land
Buildings
Total(2) Liability relating to collateralLong-term debt (due for repayment within one year)
Long-term debt
5.
Guarantee liability for bank borrowings by affiliatesand employees¥ 368,083 million¥ 147,500 million¥ 3,371 million¥ 108,200 million¥ 532 million¥ 117 million¥ 649 million¥ 782 million¥ 231 million¥ 58,205 million(Notes to the Non-consolidated Statement of Income)1. The amounts presented are rounded down to the nearest unit.
2. Transactions with affiliates
Net sales¥ 354,894 million
Purchases¥ 163,198 million
Transactions other than operating transactions¥ 24,026 million
3. Loss on contribution of securities to the pension trust is attributable to the additional contribution of
investment securities held by the Company to the pension trust.
4. Allowance for doubtful accounts of affiliates is related to loans to Kawasaki Gas Turbine Research Center,
Ltd.
5. Evaluation loss on stock of affiliates is related to the shares of Kawasaki Metal Industries, Ltd.
6. Other extraordinary losses are attributable to losses resulting from the suspension of activities for theparticipation in the FIM Road Racing World Championship Grand Prix.
(Notes to Non-consolidated Statement of Changes in Net Assets)
Number of treasury stock at the end of fiscal year under review
Common stock

1,394,288 shares(Notes to Tax Effect Accounting)Among other factors, the main contributing factor to deferred tax assets is the disallowance of various
provisions such as the employees’ retirement and severance benefits and the accrued bonuses, and the main
contributing factor to the deferred tax liabilities incurred is evaluation differences in other securities.
35

(Notes to Leased Fixed Assets)
Other than the fixed assets recorded on the balance sheet, certain manufacturing facilities are used underfinance lease contracts not involving the transfer of the ownership of the leased property.
(Notes for transactions with interested parties)
Unit: million yen
Attributes

Company name

Percentage ofvoting rights
held

Relationshipwith interested
party

Content oftransaction

Amount oftransaction

Subsidiary

Kawasaki
Shipbuilding
Corporation

100% directly
heldDirectors
concurrently
servingLoanguarantees

15,232

Balance at
fiscalyear-end

Item

-

-

Nantong COSCO
Directors
KHI Ship
50% indirectly
Loan
Affiliateconcurrently
10,366
held
guarantees
Engineering
serving
Co.,Ltd.
(Notes) Terms and conditions of trade and policy on deciding terms and conditions of trade
The Company provides loan guarantees for bank borrowings on request from financial institutions, thereby receiving aguarantee fee, which is a certain percentage of the amount of guarantee.

(Notes to per Share Information)
1. Net assets per share
2. Net loss per share¥ 138.34¥ 3.6636

Board of Corporate Auditors’ audit report (duplicated copy)

Audit Report(English Translation)
Regarding the performance of duties by the Directors for the 186th fiscal year from April 1, 2008 to
March 31, 2009, the Board of Corporate Auditors hereby submits its audit report, which has been prepared
upon careful consideration based on the audit report prepared by each Corporate Auditor.
1. Summary of Auditing Methods by the Corporate Auditors and Board of Corporate Auditors
The Board of Corporate Auditors established auditing policies, allocation of duties, and other relevant
matters, and received reports from each Corporate Auditor regarding his audits and results thereof, as well as
received reports from the Directors, other relevant personnel, and the Accounting Auditor regarding
performance of their duties, and sought explanations as necessary.
Each Corporate Auditor complied with the auditing standards of the Corporate Auditors established by
the Board of Corporate Auditors, followed the auditing policies, allocation of duties, and other relevant
matters, communicated with the Directors, internal control development division, Auditing Department(internal audit dept.) and other employees, and any other relevant personnel, and made efforts to prepare theenvironment for information collection and audit, as well as participated in meetings of the Board of
Directors and other important meetings, received reports from the Directors, Executive Officers, employees,
and other relevant personnel regarding performance of their duties, sought explanations as necessary,
examined important authorized documents and associated information, and studied the operations andfinancial positions at the head office and principal business offices. In addition, we audited the system forensuring that the performance of duties by the Directors conforms to the related laws and regulations andArticles of Incorporation, and the system prepared based on the contents of the resolutions of the Board of
Directors and such resolutions regarding preparation of the system stipulated in Article 100, Paragraphs 1
and 3, of the Ordinance for Enforcement of the Companies Act (internal control system), which system isnecessary for ensuring that a joint stock corporation’s business is proper. Furthermore, with respect tointernal controls on financial reporting under the Financial Instruments and Exchange Act, we received
reports from the Directors as well as KPMG AZSA & Co. regarding the assessment of the internal controls
concerned and the status of auditing thereof, and sought explanations as necessary. With respect tosubsidiaries, we communicated and exchanged information with Directors, Corporate Auditors, and otherrelevant personnel of the subsidiaries, and received business reports from subsidiaries as necessary. Based on
the above methods, we examined the business report and supporting schedules related to the relevant fiscal
year.
Furthermore, we audited whether the Accounting Auditor maintained their independence andimplemented appropriate audits, as well as received reports from the Accounting Auditor regarding theperformance of their duties and sought explanations as necessary. In addition, we received notice from the
Accounting Auditor that “the system for ensuring that duties are performed properly” (matters set forth ineach item of Article 131 of the Ordinance for Corporate Accounting) has been prepared in accordance with
the Product Quality Management Standards Regarding Audits (issued by the Business Accounting
Deliberation Council (BACD) on October 28, 2005) and other relevant standards, and sought explanations asnecessary. Based on the above methods, we examined the non-consolidated financial statements(non-consolidated balance sheet, non-consolidated statement of income, non-consolidated statement ofchanges in net assets, and non-consolidated notes) and the supplementary schedules, as well as consolidated
financial statements (consolidated balance sheet, consolidated statement of income, consolidated statementof changes in net assets, and consolidated notes) related to the relevant fiscal year.

372. Results of Audit(1) Results of Audit of Business Report and Other Relevant Documents(i) In our opinion, the business report and the supplementary schedules are in accordance with therelated laws and regulations and Articles of Incorporation, and fairly represent the Company’s
condition.
(ii) We have found no evidence of wrongful action or material violation of related laws and regulations,nor of any violation with respect to the Articles of Incorporation, related to performance of duties
by the Directors.
(iii) In our opinion, the contents of the resolutions of the Board of Directors related to the internal
controls system are fair and reasonable. In addition, we have found no matters on which to remark
regarding the performance of duties by the Directors related to such internal controls system.
In addition, with respect to internal controls over financial reporting, at the time of preparation ofthis audit report, we received report from the Directors that states that the said controls wereeffective, and also received report from KPMG AZSA & Co., that states that there was no material
defect in the said controls.
(2)

Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules
In our opinion, the methods and results employed and rendered by KPMG AZSA & Co., are fairand reasonable.

(3)

Results of Audit of Consolidated Financial Statements
In our opinion, the methods and results employed and rendered by KPMG AZSA & Co., are fairand reasonable.

May 22, 2009
Board of Corporate Auditors, Kawasaki Heavy Industries, Ltd.
Full-Time Corporate Auditor
Full-Time Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

38

Akira Tanoue
Nobuyuki Okazaki
Hiroshi Kawamoto
Kenzo Doi

Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal No. 1: Appropriation of Retained Earnings
The Company’s basic policy is to pay stable cash dividends to its shareholders, giving due attention toincreased retained earnings to strengthen and expand its business foundations for future growth.
Taking into consideration the level of profits and various other factors, including retained earnings, theannual cash dividend will amount to ¥3 per ordinary share for a total of ¥5,004,704,502.
In addition, the Company’s year-end dividend distribution is June 26, 2009.

Proposal No. 2 Proposed Amendments to the Articles of Incorporation
1. Reasons for the amendments(1) In accordance with the enforcement of the Act for Partial Revision of the Act on Book-Entry
Transfer of Corporate Bonds for Streamlining the Settlement of Transactions in Stocks (Law No. 88
of 2004) and the abolition of the Act on Custody and Transfer of Share Certificates (Act No. 30 of
1984), the Company proposes to amend the Articles of Incorporation for the following reasons:(i) As share certificates have been abolished, the Company proposes to delete the provisions
concerning the issuance of share certificates (Art.8 and Art.10, Paragraph 2 of the existing
Articles of Incorporation) and the provisions concerning the type of share certificates(Art.9 of the existing Articles of Incorporation) and to make necessary changes bytransferring the provision concerning the registration of loss of share certificates (Art.14,
Paragraph 3 of the existing Articles of Incorporation) to the Supplementary Provisions (tobe established).
(ii) The Company proposes to delete the provisions relating to the Beneficiary Shareholders
and the List of Beneficiary Shareholders (Art.11, Paragraph 1 and Art.14, Paragraph 3 ofthe existing Articles of Incorporations) as the Beneficiary Shareholder concept has been
terminated.
(iii) The Company proposes to make necessary amendments, including changing the number ofarticles, in accordance with the above.
(2) The Company proposes to make necessary amendments and the President or Chairman of theCompany shall act as chairman of the Annual General Meeting of Shareholders in accordance withthe resolution of the Board of Directors (Art.19 of the existing Articles of Incorporation).
2. Contents of proposed amendments
The contents of the proposed amendments are as follows:
The provision of Art.8 of the Articles of Incorporation of the Company is deemed to have beenabolished as a result of Art.6, Paragraph 1 of the Supplementary Provisions of the Act for Partial
Revision of the Act on Book-Entry Transfer of Corporate Bonds for Streamlining the Settlement ofTransactions in Stocks. Accordingly, the Articles of Incorporation were amended as of January 5,
2009, when the Act was enforced, and the provisions after amendment are presented as the existing
Articles of Incorporation.

39

(Underline indicate amendment)
Current Articles of Incorporation
Art.8:

Proposed provisions after amendment(Deleted)(Deleted)(Class of Share Certificate)
The class of share certificates issued by theArt.9:
Corporation shall be governed by the regulations
the handling of shares to be promulgated by the
Board of Directors.

(Deleted)(The Number of Shares Constituting One Unit of Stock(tangen-kabu) and Non-issuance of Share Certificate of Share
Certificates of the Number of Odd-Lot Shares)
Art.10:The number of shares constituting one unit ofstock of the Corporation is one thousand.
(ii) Notwithstanding the provisions of Art.8, theCorporation shall not issue any share certificatesfor “Odd-Lot Shares” which is defined in Art.189,
Paragraph 1, of the Companies Act. However, thisprovision may not apply where otherwise
provided in the regulations regarding the handlingof shares.

(The Number of Shares Constituting One Unit of Stock(tangen-kabu) )(Rights Related to Odd-Lot Shares)
Art.11:
As to Odd-Lot Shares, the Corporation’sshareholders (including beneficiary shareholders;which hereinafter applies) cannot exercise rights
other than the following:1) to 4) (Omitted)(Rights Related to Odd-Lot Shares)
Art.9:As to Odd-Lot Shares, the Corporation’sshareholders cannot exercise rights other than thefollowing:

Art.12 to 13:

Art.10 to 11:

Art.8:The number of shares constituting one unit ofstock of the Corporation is one thousand.
(Deleted)1) to 4) (No change)(Omitted)(Changes in article numbers only)(Custodian of the Record of Shareholders)
Art.14:The Corporation shall appoint a custodian of therecord shareholders.
(ii) The custodian of the record of shareholders shallbe determined by the Board of Directors, whichshall publish the name of the Custodian of theRecord of Shareholders and the office where suchbusiness will be handled.
(iii) The register of shareholders of the Corporation(including the register of beneficiary shareholders;which hereinafter applies), the original register ofstock acquisition rights and the register of lost
share certificates, shall be made and kept at theoffice of the custodian of the record of
shareholders.
Other business concerning the register ofshareholders, the original register of stockacquisition rights and registration of lost sharecertificates shall be entrusted to the custodian of
the record of shareholders.
The Corporation shall not handle such business.

(Custodian of the Record of Shareholders)
Art.12:(No change)

Art.15 to 18:

Art.13 to 16:(Omitted)(ii) (No change)(iii) The register of shareholders of the Corporationand the original register of stock acquisition rights
shall be made and kept at the office of thecustodian of the record of shareholders.
Other business concerning the register ofshareholders and the original register of stockacquisition rights shall be entrusted to thecustodian of the record of shareholders.
The Corporation shall not handle such business.

40(Changes in article numbers only)Current Articles of Incorporation(Chairman)
The President shall be the Chairman of theArt.19:Meeting of Shareholders.

Proposed provisions after amendment(Chairman)
Art.17:
Either The President or Chairman of the Board
shall be the Chairman of the Meeting of
Shareholders pursuant to the determination by the
Board of Directors.

(ii) If the President is unable to preside over the
Meeting of Shareholders, one of theRepresentative Directors, in the order establishedin advance by the Board of Directors, shall act for
the President.

(ii) If the Chairman determined by the Board of
Directors is unable to preside over the Meeting of
Shareholders, one of the Representative Directors,
in the order established in advance by the Boardof Directors, shall act for the President.

(iii) (Omitted)(iii) (No change)

Art.20 to 52:(Omitted)(Newly Established)

Art.18 to 50:(Changes in article numbers only)

Supplementary Provisions
Art.1:
Preparing and keeping the register of lost sharecertificates of the Corporation, and other work
related to the register of lost share certificatesshall be entrusted to the Custodian of the Recordof shareholders and shall not be handled by the
Corporation.
Art.2:

Articles 1 and 2 of the Supplementary Provisions
shall be valid through January 5, 2010 and shallbe deleted upon the elapse of that date.

Furthermore, in accordance with the enforcement of the Act for Partial Revision of the Act on
Book-Entry Transfer of Corporate Bonds for Streamlining the Settlement of Transactions in Stocks,
resolution of the Annual General Meeting of Shareholders is not required to delete the provisions relating toissuance of shares. Therefore, the Articles of Incorporation were amended as follows effective January 5,
2009.
(Underline indicate amendment)
Current Articles of Incorporation(Issuance of Share Certificates)
Art.8:The Corporation shall issue certificates for theshares.

Proposed provisions after amendment
Art.8:

41(Deleted)Proposal No. 3 Election of Ten Directors
As the term of office of all nine Directors will expire at the conclusion of this Ordinary General Meetingof Shareholders, we propose to elect ten Directors.
The candidates for Director are as follows:
No.

Name
(Date of Birth)1Tadaharu Ohashi(Nov. 9, 1944)

2

Chikashi
Motoyama(May 10, 1945)

Apr. 1969
Jun. 2003
Apr. 2005
Jun. 2005

Apr. 1973
Apr. 2004
Jun. 2004
Apr. 1970
Jun. 2005

3

Masashi Segawa(Nov. 22, 1947)

Apr. 2009

Apr. 1969
Jun. 2007
Apr. 2008
4

Shuji Mihara(Jan. 27, 1946)
Apr. 2009

5

Satoshi Hasegawa(Aug. 16, 1947)

Apr. 1972
Jun. 2007
Apr. 2009
Apr. 1972
Apr. 2004
Apr. 2005

6

Mitsutoshi Takao(Apr. 1, 1950)

Jun. 2008
Apr. 2009

Abridged Personal Records, Positions and Duties[Representation in other companies](Unimportant details excluded)
Joined Kawasaki Heavy Industries, Ltd.
Senior Vice President
Senior Executive Vice President, Assistant to the President
President(current position)[Representation in other companies]
Chairman, Japan Aircraft Development Corporation
Joined Kawasaki Heavy Industries, Ltd.
Executive Officer
President, Aerospace Company
Senior Vice President
President, Aerospace Company(current position)
Joined Kawasaki Heavy Industries, Ltd.
Senior Vice President
President, Rolling Stock & Construction Machinery Company
Senior Executive Vice President, Assistant to the President, In
charge of Technology & Marketing
General Manager, Corporate Technology Division,
In charge of Industrial Facilities and Tunneling Equipment
Division and Robot Division(current position)
Joined Kawasaki Heavy Industries, Ltd.
Senior Vice President
Senior Manager, Personnel & Labor Administration Department,
In charge of Outside Activity for Kansai Region
Senior Vice President
Senior Manager, Corporate Planning Department,
In charge of Subsidiaries & Affiliates Control Department andLegal Department and Personnel & Labor Administration
Department
Senior Executive Vice President,
Assistant to the President
In charge of Management Division of the Head Office
In charge of Consumer Products & Machinery Company(current position)
Joined Kawasaki Heavy Industries, Ltd.
Senior Vice President
President, Gas Turbine & Machinery Company
Senior Executive Vice President,
Assistant to the President(current position)
Joined Kawasaki Heavy Industries, Ltd.
General Manager, Finance & Accounting Department
Executive Officer
General Manager, Finance & Accounting Department
Senior Vice President
General Manager, Finance & Accounting Department
Senior Vice President
General Manager, Corporate Planning Division(current position)

42

Shares of theCompany111,000
shares146,000
shares

96,000shares74,000shares61,000shares

47,000sharesNo.

Name(Date of Birth)
Apr. 1971
Oct. 2002
Jun. 2005

7

Nobumitsu
Kambayashi(May 28, 1948)

Apr. 2008

Apr. 1973
Apr. 2003

8

Kyohei Matsuoka(Sep. 16, 1949)

Apr. 2006
Apr. 2008
Apr. 2009
Apr. 1970
Apr. 2003

Apr. 2005

9

Yuichi Asano(Sep. 13,1947)

Nov. 2007

Apr. 2008
Apr. 2009
Apr. 1972
Apr. 2004

10

Hiroshi Takata(Jan. 5, 1950)

Apr. 2006
Apr. 2007
Apr. 2009

Abridged Personal Records, Positions and Duties[Representation in other companies](Unimportant details excluded)
Joined Kawasaki Heavy Industries, Ltd.
Director
Senior Manager, Marketing & Sales Division, Kawasaki
Shipbuilding Corporation
Senior Vice President
Senior Manager, Marketing & Sales Division
Managing Executive Officer
General Manager, Corporate Business Development Division,
Kawasaki Heavy Industries, Ltd.
Senior Vice President
Kawasaki Shipbuilding Corporation(current position)[Representation in other companies]
Senior Vice President, Kawasaki Shipbuilding Corporation
Joined Kawasaki Heavy Industries, Ltd.
General Manager, Planning & Control Division, Rolling Stock,
Construction Machinery & Crushing Plant Company
Senior Manager, Rolling Stock Control Department, Rolling
Stock, Construction Machinery & Crushing Plant Company
Executive Officer
General Manager, Planning & Control Division, Rolling Stock
Company
Managing Executive Officer
Vice President, Rolling Stock Company
Managing Executive Officer
President, Rolling Stock Company(current position)
Joined Kawasaki Heavy Industries, Ltd.
Deputy General Manager, Machinery Division, Gas Turbine &Machinery Company
Senior Manager, Manufacturing Center, Machinery Division, Gas
Turbine & Machinery Company
Executive Officer
Vice President, Gas Turbine & Machinery Company
Senior Manager, Manufacturing Center, Machinery Division, Gas
Turbine & Machinery Company
Executive Officer
Vice President, Gas Turbine & Machinery Company
General Manager, Machinery Division, Gas Turbine &Machinery Company
Senior Manager, Manufacturing Center, Machinery Division, Gas
Turbine & Machinery Company
Executive Officer
General Manager, Machinery Division, Gas Turbine &Machinery Company
Managing Executive Officer
President, Gas Turbine & Machinery Company(current position)
Joined Kawasaki Heavy Industries, Ltd.
Deputy General Manager, Research & Development Division,
Consumer Products & Machinery Company
Senior Manager, Research Department, Consumer Products &Machinery Company
Senior Manager, Quality Division, Consumer Products &Machinery Company
General Manager, Research & Development Division, Consumer
Products & Machinery Company
Managing Executive Officer
President, Consumer Products & Machinery Company(current position)(Note) There is no special conflict of interest between the Company and candidates.

43

Shares of theCompany

24,000shares

41,000shares7,000
shares

26,000sharesProposal No. 4 Election of Three Corporate Auditors
As the term of office of the Corporate Auditors, Mr. Akira Tanoue, Mr. Hiroshi Kawamoto, and Mr.
Kenzo Doi, will expire at the conclusion of this Ordinary General Meeting of Shareholders, we propose toelect three Corporate Auditors.
We have obtained the prior approval of the Board of Corporate Auditors on this proposal.
The candidates for Corporate Auditor are as follows:
No.

Name
(Date of Birth)1

Kenzo Doi
(Dec. 5, 1947)

Apr. 1975

Tatsuyoshi
Ohgushi(Jan. 3, 1952)

2

3

Michio Oka(Mar. 19, 1946)(Notes)Jun. 2005
Apr. 1974
Jun. 2003
Apr. 2008
Apr. 2009
Apr. 1969
Jun. 2000
Jun. 2002
Jun. 2002
Jun. 2002

Abridged Personal Records, Positions and Duties[Representation in other companies](Unimportant details excluded)
Admitted to Bar in Japan
Joined Kitayama Law Office (At present Kobe-Kyobashi Law
Office)Corporate Auditor, Kawasaki Heavy Industries, Ltd.
(current position)
Joined Kawasaki Heavy Industries, Ltd.
Deputy Senior Manager, Personnel & Labor Administration
Department
Senior Manager, Personnel & Labor Administration Department
Staff Officer to Corporate Auditor(current position)
Joined Kawasaki Kisen Kaisha, Ltd.
Senior Vice President
Resigned Senior Vice President
President, Kawaki Kosan Kaisha, Ltd.
President, “K” Line Accounting and Finance Co., Ltd.
(current position)[Representation in other companies]
President, Kawaki Kosan Kaisha, Ltd.
President, “K” Line Accounting and Finance Co.,Ltd.

Shares of theCompany
0shares4,000
shares0
shares

1. No material conflict of interest exists between the Company and any of the above candidates for Corporate
Auditors.
2. Contents of the provisions in Article 76, Paragraph 4 of the Companies Act Enforcement Regulations regarding
candidates for Outside Corporate Auditors(i) Mr. Kenzo Doi and Mr. Michio Oka are candidates for Outside Corporate Auditors.
(ii) Mr. Kenzo Doi has been chosen as a candidate for Outside Corporate Auditor as the Company has judgedthat he is able to perform duties as Outside Corporate Auditor appropriately in light of his substantial
experience and knowledge as a lawyer even though he has not yet been directly involved in corporate
management.
(iii) Mr. Michio Oka has been chosen as a candidate for Outside Corporate Auditor as the Company has judgedthat he is able to perform duties as Outside Corporate Auditor in light of his substantial experience as acompany manager. Furthermore, Mr. Michio Oka intends to resign as a Director of Kawaki Kosan Kaisha,Ltd. and “K” Line Accounting and Finance Co., Ltd. on June 25, 2009.
(iv) Four years pass since Mr. Kenzo Doi commenced his service as Outside Corporate Auditor of theCompany at the conclusion of this Ordinary General Meeting of Shareholders.
(v) After the proposed election, Mr. Kenzo Doi and Mr. Michio Oka intend to conclude, within the bounds ofthe law, an agreement with the Company that limits their responsibilities pursuant to the provisions ofArticle 427, Paragraph 1 of the Companies Act. The amount of limit pursuant to the contract concerned
will be the higher of ¥10,000 thousand or the amount stipulated by law.

44