Report of Earnings and Financial Statements
for the Fiscal Year Ended March 31, 2012 (Consolidated)(Prepared pursuant to Japanese GAAP)
April 26, 2012
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

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

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

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

June 27, 2012
June 28, 2012
June 27, 2012

Supplementary materials to financial results
Earnings presentation:

Available
Conducted (for institutional investors and analysts)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2012
(April 1, 2011 – March 31, 2012)(Amounts in millions of yen rounded down to the nearest million yen)

(1) Operating Results
Years ended March 31(Millions of yen ) (Percentage figures indicate change compared with the previous fiscal year )Net sales

Operating income

Recurring profit

Net income

%
%
%
2012
1,303,778
6.2
57,484
34.8
63,62729.4
23,3232011
1,226,949
4.5
42,62849,136243.7
25,965
Note: Comprehensive income Fiscal year ended March 31, 2012: ¥ 24,569 million 34.6%
Fiscal year ended March 31, 2011: ¥ 18,252 million (434.0%)%(10.1)-

Years ended March 31
Earnings per share
Return on equity Return on assets– diluted
Yen
Yen
%
%
2012
13.95
13.85
7.8
4.6
2011
15.55
15.32
9.1
3.6
For reference: Equity in income of non consolidated subsidiaries and affiliates
Fiscal year ended March 31, 2012: ¥ 8,567 million
Fiscal year ended March 31, 2011: ¥ 9,205 million
Earnings per share

Operating income
to net sales
%
4.4
3.4

(2) Financial Condition
March 31

(Millions of yen )Total assets

Net assets

Equity ratio

Net assets per share

%

Yen

2012

1,362,139

315,92222.4

183.062011

1,354,278

297,43321.3

173.03For reference: Shareholders’ equity

March 31, 2012:
March 31, 2011:1¥ 306,054 million¥ 289,056 million

(3) Cash Flow Position
Years ended March 31
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities(Millions of yen)
Cash and cash equivalents
at end of year2012

84,737(65,959)(26,831)

33,245

2011

81,929(52,942)(18,862)

44,6292. Dividends
Years ended/ending March 31
Dividend per share

Recorddate orterm

Total
dividends
paid
Full year(annual)Yen
million yen

Payout ratio(consolidated)

Dividends /Net assets(consolidated)

%

%

1Q

2Q

3Q

Year-end

Yen

Yen

Yen

Yen

2011

-

0.00

-

3.00

3.00

5,011

19.3

1.7

2012

-

0.00

-

5.00

5.00

8,359

35.8

2.7

2013
(forecast)

-

0.00

-

5.00

5.00

24.5

3. Forecast of Consolidated Earnings for the Fiscal Year Ending March 31, 2013
(April 1, 2012 – March 31, 2013)(Millions of yen)(Percentage figures indicate change compared with the previous fiscal year)
Earnings
Net sales
Operating income
Recurring profit
Net income
per share
%
%
%
%
Yen
For six months
endingSeptember 30,
2012
Full year

620,000

5.9

20,000(24.8)

24,000(11.8)

14,000(21.4)

8.37

1,380,000

5.8

52,000(9.5)

56,000(11.9)

34,000

45.7

20.33

*Other Information(1) Changes affecting the status of material subsidiaries (scope of consolidation): None
*This refers to additions and removals of material subsidiaries to and from the consolidated groupduring the period. For further details, see “Changes in basis of preparation of financial
statements” on page 21 in the Accompanying Materials.
(2) Changes in accounting policies, changes in accounting estimates, and correction of errors(ⅰ) Changes in accounting policies in accord with revisions to accounting standards: None(ⅱ) Changes in accounting policies other than (ⅰ): None(ⅲ) Changes in accounting estimates: None(ⅳ) Correction of errors: None
(3) Number of shares issued and outstanding (common stock)(ⅰ) Number of shares issued as of period-end (including treasury stock)
March 31, 2012:
1,671,892,659 shares
March 31, 2011:
1,670,646,460 shares(ⅱ) Number of shares held in treasury as of period-end
March 31, 2012:
77,126 shares
March 31, 2011:
100,288 shares(ⅲ) Average number of shares during respective periods
March 31, 2012:
1,671,465,052 shares
March 31, 2011:
1,669,359,273 shares

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

Net sales
2012
2011

million yen
1,003,390
817,455

Operating income
%
22.7
26.9

Earnings per share
2012
2011

Yen
6.87
19.97

million yen
25,072
1,731%-

Recurring profit
million yen
38,02932,837

%
15.8
280.6

Net income
million yen
11,49133,341%(65.5)-

Earnings per share– diluted
Yen
6.83
19.66

(2) Financial Condition
March 31

(Millions of yen)
Total assets

Net assets

Equity ratio

Net assets per share

%

Yen

2012

1,144,618

255,03922.2

152.552011

1,116,076

246,88822.1

147.78

Note: Shareholders’ equity

March 31, 2012: ¥ 255,039 million
March 31, 2011: ¥ 246,888 million* Review Status
This report is exempt from the review of accounts conducted pursuant to Japan’s Financial Instruments
and Exchange Act. As of this report’s publication, the review of the financial results had not been
completed.
*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain various forward-looking statements and other forecasts regarding performanceand other matters. Such statements are based on information available at the time of preparation. Actual
results may differ from those expressed or implied by forward-looking statements due to a range offactors. For assumptions underlying earnings forecasts and other information regarding the use of suchforecasts, refer to “1. Qualitative Information and Financial Statements (1) Consolidated operating
results (iii) Consolidated earnings outlook” on page 8 in the Accompanying Materials.
How to Obtain Supplementary Briefing Material on Financial Results and Details of the Financial
Results Briefing
The Company plans to conduct a briefing for institutional investors and analysts on Thursday April 26,
2012, and to post the briefing material on financial results to be used for the briefing on TDnet and theCompany’s website simultaneously with the announcement of financial results.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial position

8(3) Dividend policy and dividends for the fiscal years through March 31, 2012 and 20139(4) Business and other risks

10

2. Status of Group10

3. Management Strategy

10(1) Basic management strategy

10(2) Target management metrics

10(3) Medium- to long-term management strategy

11(4) Management priorities

11

4. Consolidated Financial Statements

14(1) Consolidated balance sheets

14(2) Consolidated statements of income and comprehensive income

16

Consolidated statements of income

16

Consolidated statements of comprehensive income17(3) Consolidated statement of changes in net assets

18(4) Consolidated statements of cash flows

20(5) Notes on the going-concern assumption

21(6) Basis of preparation of financial statements

21(7) Changes in basis of preparation of financial statements

21(8) Notes on financial statements21

5. Others

30(1) Corporate officer changes

30(2) Consolidated orders and sales(3) Supplementary information on earnings forecasts for the fiscal year ending March 31, 2013

30

4

31

1. Qualitative Information and Financial Statements(1) Consolidated operating results(i) Overview of consolidated operating results
In the fiscal year ended March 31, 2012, the Japanese economy was initially forecast to remainstagnant owing to such factors as disruption of supply chains after the Great East Japan Earthquake,the historically high yen and adverse impacts from flooding in Thailand. However, signs of recovery
gradually emerged toward the end of the fiscal year. As reconstruction demand following theearthquake moves into full swing and increasing attention becomes focused on Japan’s future energy
policy, the KHI Group role in society as an infrastructure manufactures continues to grow.
In the global economy, while the employment situation in the US showed a gradual improvement,a number of concerns persist such as the lingering sovereign debt problem in Europe. Amid thissituation, China has maintained high economic growth albeit at a slower pace, and infrastructure
demand in emerging economies, including Asia and Brazil, remains firm, leading the overall global
economy toward a moderate growth track. In particular, rapid growth in emerging economies has
drawn attention to a number of pressing issues relating to energy, water and waste disposal. Hence,business fields in which the KHI Group is able to contribute are expanding on a global scale.
In such an operating environment, the Group achieved growth in overall sales and earnings
despite declines in certain of its businesses. Orders received grew as a whole driven by large orders
booked by the Aerospace, Gas Turbine & Machinery and Precision Machinery segments, thereby
making up for decline in orders booked by the Rolling Stock, Ship & Offshore Structure and Plant &Infrastructure segments. Overall sales increased compared with the previous fiscal year, driven bysales growth in the Precision Machinery, Plant & Infrastructure and Aerospace segments, despitesales decline in the Gas Turbine & Machinery and Ship & Offshore segments. Earnings declined in
the Rolling Stock and Gas Turbine & Machinery segments but increased as a whole, largely
attributable to improved operating performance in the Plant & Infrastructure and Ship & Offshore
segments.
The Group’s orders received totaled ¥1,311.8 billion, a ¥ 41.2 billion increase compared with theprevious fiscal year. Net sales increased 76.8 billion, to ¥1,303.7 billion. Operating income totaled¥57.4 billion, a ¥14.8 billion improvement compared with the previous fiscal year. Although
recurring profit grew ¥14.4 billion to ¥63.6 billion, net income declined ¥2.6 billion, to ¥23.3 billion
owing to a reversal of deferred tax assets following changes to Japan’s tax system.

5

(ii) Segment information
Segment net sales, operating income, and orders received(billions of yen)

Fiscal year ended March 31
2012

Orders received

2011

Fiscal year ended March 31

Net

OperatingNet

Operatingsales

incomesales

income2012
Segment

2011

Ship & Offshore Structure

113.5

3.9

118.4

(1.0)

39.9

78.9

Rolling Stock

132.6

5.1

131.1

8.1

66.0

187.1

Aerospace

206.5

7.8

196.8

3.0

327.2

206.7

Gas Turbine & Machinery

194.6

7.7

202.6

9.5

227.2

187.5

Plant & Infrastructure

122.8

14.1

89.0

8.2

119.2

119.9

Motorcycle & Engine

235.2

(2.9)

234.4

(4.9)

235.2

234.4

Precision Machinery

175.0

26.6

140.3

22.3

174.5

148.9

Other

123.2

3.8

114.0

2.5

122.2

106.8

-

(8.8)

-

(5.3)

-

-

1,303.7

57.4

1,226.9

42.6

1,311.8

1,270.6

Adjustments
Total

Note: Net sales include only sales to external customers.

Ship & Offshore Structure
Orders received totaled ¥39.9 billion, a ¥39.0 billion decrease compared with the previous fiscal
year, despite the receipt of newbuild orders for eight bulk carriers and others.
Net sales totaled ¥113.5 billion, down ¥4.8 billion compared with the previous fiscal year, which
was bolstered by large newbuild sales.
Operating income increased ¥4.9 billion , to ¥3.9 billion, mainly owing to a decline in provision
for losses on construction contracts.
Rolling Stock
Orders received totaled ¥66.0 billion, down ¥121.0 billion compared with the previous fiscal year.
This decrease was mainly due to booking of a large order in the previous fiscal year and delay in the
project which was originally scheduled to be booked in the fiscal year under review.
Net sales totaled ¥132.6 billion, almost unchanged compared with the previous fiscal year, since adrop in domestic railway car sales was offset by an increase in overseas railway car sales.
Operating income was down ¥3.0 billion , to ¥5.1 billion, primarily owing to the impact of yen
appreciation and provisioning of additional reserves against losses on construction contracts.
Aerospace
Orders received totaled ¥327.2 billion, up ¥120.5 billion compared with the previous fiscal year,
largely by virtue of growth in orders from Japan Ministry of Defense.
Net sales totaled ¥206.5 billion, an increase of ¥9.7 billion compared with the previous fiscal year,
thanks to growth in sales of component parts for Boeing 777 and 787.
Operating income increased ¥4.7 billion , to ¥7.8 billion, reflecting sales growth and cost
reduction.

6

Gas Turbine & Machinery
Orders received totaled ¥227.2 billion, up ¥39.6 billion compared with the previous fiscal year. This
increase was largely attributable to larger orders for component parts of commercial aircraft jetengines and orders for construction of a gas engine power plant.
Net sales totaled ¥194.6 billion, down ¥8.0 billion compared with the previous fiscal year. The
decrease was mainly due to a drop in sales of marine diesel engines and gas compressors.
Operating income decreased ¥1.7 billion compared with the previous fiscal year to ¥7.7 billion
reflecting a drop in sales.
Plant & Infrastructure
Orders received totaled ¥119.2 billion, largely unchanged compared with the previous fiscal year, asa result of receiving an order for a refuse incineration plant in the domestic market.
Net sales totaled ¥122.8 billion, up ¥33.7 billion compared with the previous fiscal year, mainly
due to higher sales from plant installations overseas.
Operating income was up ¥5.8 billion ,to ¥14.1 billion , reflecting sales growth.
Motorcycle & Engine
Net sales totaled ¥235.2 billion, largely unchanged compared with the previous fiscal year, mainly
owing to sales growth of motorcycles for emerging markets despite a drop in sales of motorcycles todeveloped countries due to strong yen adverse impact.
Operating loss was reduced to ¥2.9 billion, a ¥2.0 billion improvement compared with theprevious fiscal year despite the negative impact from the Thai floods and strong yen. The
improvement was mainly attributable to sales growth of motorcycles for emerging markets andfixed-cost cutting.
Precision Machinery
Orders received totaled ¥174.5 billion, a ¥25.6 billion increase compared with the previous fiscal
year. Order growth was driven mainly by demand for hydraulic components from construction
machinery makers.
Net sales rose ¥34.7 billion, to ¥175.0 billion, buoyed by growth in hydraulic components sales toconstruction machinery makers and sales of paint robots.
Operating income was up ¥4.3 billion ,to ¥26.6 billion, by virtue of sales growth.
Other Operations
Net sales totaled ¥123.2 billion, a ¥9.1 billion increase compared with the previous fiscal year.
Operating income totaled ¥3.8 billion, a ¥1.2 billion improvement compared with the previous
fiscal year.

7

(iii) Consolidated earnings outlook
The global economy is expected to show a gradual recovery as a whole, but the pace will likely
remain slow for the time being due to a sluggish improvement in the employment situation in the
United States and adverse impact from the financial crisis in Europe. The economic outlook remains
uncertain, as even newly industrialized countries such as China have started to show signs of being
badly affected by the adverse economic performance of developed countries. Foreign exchange ratechanges and hikes in the cost of raw materials are also concerns for the Company, and its operating
environment continues to be challenging.
Faced with such a highly uncertain operating environment, the Company will steadily andvigorously push ahead with specific initiatives to rebuild its earnings structure and return to asustained growth path, as the current fiscal year marks the final year of the “Medium-Term Business
Plan 2010” (FY2010-FY2012).
For the fiscal year ending March 31, 2013, the Company forecasts consolidated net sales of¥1,380 billion, an ¥80 billion increase compared with the fiscal year just ended. The Company plans
to derive the bulk of this sales growth from the Aerospace, Precision Machinery and Motorcycle &Engine segments, and such growth is expected to offset the anticipated sales drop at the Ship &Offshore Structure segment.
In terms of earnings, the Company forecasts consolidated operating income of ¥52 billion,
recurring profit of ¥56 billion, and net income of ¥34 billion. The Company plans to achieve these
forecasts by continuing to pursue ongoing initiatives to improve earnings across all operations
through such means as reducing fixed and overhead costs and boosting productivity.
The Company’s earnings forecasts assume exchange rates of ¥80 to the US dollar and ¥105 to the euro.

(2) Consolidated financial position(i) Financial condition(A) Assets
At March 31, 2012, consolidated assets totaled ¥1,362.1 billion, essentially unchanged fromMarch 31, 2011. Of this total, current assets accounted for ¥967.1 billion, a 1.6% increase fromMarch 31, 2011. This increase was mainly attributable to growth in trade receivables in
conjunction with sales activities and inventory growth reflecting progress toward completion of
construction jobs. Fixed assets totaled ¥394.9 billion on March 31, 2012, a 1.8% decrease from ayear earlier. This decrease was largely attributable to loss on impairment of fixed assets andreversal of deferred tax assets.
(B) Liabilities
Consolidated liabilities on March 31, 2012 totaled ¥1,046.2 billion, down 1.0% compared with
March 31, 2011, largely as a result of a 5.1% decrease in interest-bearing debt to ¥407.1 billion.
(C) Net assets
Consolidated net assets at March 31, 2012 totaled ¥315.9 billion, a 6.2% increase compared with
March 31, 2011. This increase was mainly attributable to net income partially offset by dividend
payments.
8

(ii) Cash flows(A) Cash flow from operating activities
Operating activities provided net cash of ¥84.7 billion, a ¥2.8 billion increase compared with theprevious fiscal year. Major sources of operating cash flow included depreciation and amortizationof ¥48.9 billion, loss on impairment of fixed assets of ¥14.9 billion, and ¥18.9 billion increase ofadvances from customers. Major uses of operating cash flow included an ¥18.7 billion increase ininventories and ¥18.2 billion in tax payments.
(B) Cash flow from investing activities
Investing activities used net cash of ¥65.9 billion, ¥13.0 billion more than in the previous fiscal
year, mainly to acquire property, plant and equipment.
(C) Cash flow from financing activities
Financing activities used net cash of ¥26.8 billion, a ¥7.9 billion increase compared with theprevious fiscal year, mainly to repay borrowings.
(iii) Cash flow ratios
Fiscal year ended March 31:
2008
2009
2010
2011
2012
Equity ratio (%)
22.7
20.7
20.4
21.3
22.4
Market-value equity ratio (%)
26.8
23.3
31.8
45.1
31.0
Debt-to-cash-flow ratio (%)
364.8
1,421.2
523.7
480.5
Interest-coverage ratio (times)
9.4
5.5
17.2
19.0
Notes:
1. Ratios are calculated as follows.
Ratio of shareholders’ equity to total assets: Shareholders’ equity / Total assets
Market-value equity ratio: Market capitalization / Total assets
Debt-to-cash-flow ratio: Interest-bearing debt / Cash flow from operating activities
Interest-coverage ratio: Cash flow from operating activities / Interest paid
2. All ratios are calculated using consolidated-basis financial data.
3. Market capitalization is calculated by multiplying the closing price of the company’s stock by
the number of shares issued and outstanding (excluding treasury stock) at the end of the fiscal
year.
4. The figure for cash flow from operating activities is taken from cash flow from operating
activities on the consolidated statement of cash flows.
5. Interest-bearing debt is all interest-bearing debt listed under liabilities on the consolidatedbalance sheet. Interest paid is the figure for “Cash paid for interest” on the consolidated
statement of cash flows.
6. The debt-to-cash-flow ratio and interest coverage ratio are omitted for the fiscal year ended
March 31, 2009, because that fiscal year’s operating cash flow was negative.

(3) Dividend policy and dividends for the fiscal years 2012 and 2013
The Company’s basic policy is to pay shareholders stable dividends commensurate with earnings on
an ongoing basis while internally retaining sufficient funds to strengthen and expand its earnings
power and operating foundation in pursuit of future growth. After comprehensively considering its
earnings performance, the sufficiency of its retained earnings, and other relevant factors in light ofsaid policy, the Company intends to pay a dividend of ¥5 per share for the fiscal year ended March
31, 2012.
For the fiscal year ending March 31, 2013, the Company plans to pay a dividend of ¥5 per share.
9(4) Business and other risks
No risks other than those disclosed under the heading “Business and Other Risks” in the Company’s
most recent full-year statutory financial report (filed June 28, 2011) have surfaced since said filing.
Updated risk disclosures are therefore omitted here.

2. Status of Group
There have been no material changes in the “Chart of Operations (Nature of Operations)” and the“Status of Affiliated Companies” in the Company’s most recent full-year statutory financial report(filed June 28, 2011). Updated disclosure of them is therefore omitted here.

3. Management Strategy(1) Basic management strategy
The Group has amassed a broad range of technologies related to air, marine, and land transportsystems, energy, environmental engineering, and industrial machinery. In accord with its Group
Mission Statement, “Kawasaki, working as one for the good of the planet,” the Group has embraced
a mission of creating new value conducive to formation of an affluent, beautiful society in harmony
with the global environment through utilization of its broad array of sophisticated technologicalcapabilities.
In addition to providing products and services, the Group is committed to fulfilling its societal
responsibilities as a corporate citizen in all of its operations in accord with its Group Management
Principles. The Group aims to meet the expectations of its shareholders and other stakeholders bydeveloping human resources globally and continuously enhancing its earnings power and corporate
value.
The Group’s basic policy is to meet shareholders expectations by paying dividends commensuratewith earnings on an ongoing basis while internally retaining sufficient funds to strengthen andexpand its earnings power and operating foundation in pursuit of future growth.

(2) Target management metrics
In the aim of generating profits sufficient to meet investors’ expectations, the Group has adopted
ROIC (return on invested capital: earnings before interest and taxes ÷ invested capital), a measure ofcapital efficiency, as its target metric of operating performance. While seeking to maximize ROIC,
the Group will also endeavor to strengthen its financial condition through earnings growth andimprovement in invested-capital efficiency.

10(3) Medium- to long-term management strategy
In April 2010, the Company adopted a new three-year business plan, “Medium-Term Business Plan
2010” (FY2010-FY2012). The plan sets forth a detailed roadmap for re-embarking on a growthtrajectory based on core policies of “rebuilding the Group’s earnings structure” and “returning to asustained growth path”. At the same time, the Group has formulated Kawasaki Business Vision 2020,
which clarifies its businesses’ longer-term direction and strategies, in the aim of achieving sustained
growth into the future. Based on Kawasaki Business Vision 2020, the Group has incorporated
specific initiatives for developing new businesses and new products into its “Medium-Term Business
Plan 2010” (FY2010-FY2012).

(4) Management priorities
In the fiscal year ended March 31, 2012, the Group’s business performance was adversely affectedby strong yen and slow operation of the Motorcycle & Engine segment due to the disruption in
supply chains after the floods in Thailand. But the Group achieved the earnings target (operating
income of ¥52 billion and ordinary income of ¥56 billion) set for the fiscal year ending in March 31,
2013, the final year of the “Medium-Term Business Plan 2010,” one year ahead of the plan. This waslargely by virtue of the Company’s relentless efforts to improve its productivity in each business areaand extensive risk management in large projects, in addition to its enhanced global production
system including the procurement of raw materials from overseas markets as well as growth in thePrecision Machinery segment on the back of steady expansion of the Chinese economy. We willcontinue to thoroughly work on “selectively focusing resources on strategic businesses,”“emphasizing quality over quantity,” and “employing prudent risk management,” satisfy demand
from emerging countries and enhance measures to respond to exchange fluctuations to reinforce ourrevenue base. At the same time, to strengthen our financial and business position, we will focus on
enhancing financial strength and cutting fixed expenses. Particularly in the Ship & Offshore
Structure segment and motorcycle operations in developed countries that are seeing sluggish markets,
the Group will re-examine its global production and marketing system from the perspective ofselection and concentration, with a view to reallocating the management resources to more important
areas.
In addition, interest in independent and diversified energy systems and renewable energy has been
growing in Japan after the Great East Japan Earthquake, as the disaster raised concerns about theability of the nation to supply enough electricity. To respond to such growing interest, the Group canuse its gas engines with the highest efficiency in the world; gas turbines that work with Dual Fuel(oil and gas) and boast an excellent track record; electricity generator using wind, solar light, microhydro sources and biomass; and rechargeable battery that contributes to smoothing the flow ofelectricity. In the future, the Group is expected to systemize and develop those products at therequest of Japanese society.
In addition to establishing the Marketing Division in April 2012, the Group also plans to locate thePlant & Infrastructure Company in the new Tokyo Head Office, scheduled to be transferred in11

December 2012, so as to take further advantage of the Company’s intellectual assets andstrengthening its system solution business in the areas of transportation equipment, energy andenvironment, and industrial equipment.
The initiatives to be undertaken by each business division are as follows.
(i)

Ship & Offshore Structures: Expand business scale and enhance competitiveness in China,
reform the structure of the domestic segments by shifting its focus to strengthening
technological development and building up the mother-factory of the Group’s production
activities, and advance to marine development(ii)

Rolling Stock: Enhance competitiveness in the domestic and overseas markets throughstandard rolling stock with high versatility, respond to demand for railroad construction andrailway car renewal in North America, and pursue new product development to respond tooverseas railroad system projects and strengthen project management capability(iii)

Aerospace: Move into mass production of the P-1 maritime patrol aircraft and C-2 transport
aircraft, promote development of the new multipurpose helicopter (UH-X), start mass
production of Boeing 787s and promote development of derivative aircraft(iv)

Gas Turbine & Machinery: Launch the energy solution business, promote development of new
products and models such as industrial gas turbines and high-efficiency gas-engines andadvance to overseas markets, and promote development of new models of jet engines forcommercial aircraft with greater production efficiency(v)

Plant & Infrastructure: Bolster research and development in order to expand in the fields ofenergy and the environment, accelerate efforts to commercialize new products and new
business concepts, and expand the infrastructure business mainly in resource-rich countries(vi)

Motorcycle & Engine: Enhance cost competitiveness through optimal production on a global
basis and expansion of procurement from overseas, expand sales channels and develop newmarkets in emerging countries we have already entered (Southeast Asia, Brazil, etc.), anddevelop leading technologies to respond to environmental requirements(vii) Precision Machinery: Bolster production system of hydraulic components for construction
machinery on a global scale and establish a differentiated production technology byimplementing a large number of robots, enhance cost competitiveness in the field of robotics,
and develop technology to expand the applicable areas(viii) Others: Improve development and sales capabilities with respect to the construction
machinery division by deepening our alliance with Hitachi Construction Machinery Co., Ltd.
and enhance profitability by lowering break-even points
Compliance is a fundamental premise in carrying out business activities such as those above. The
Group strives to ensure that employees are made thoroughly aware of relevant laws and regulations .
We do this by implementing such measures as appointing Directors independent from executivefunctions and electing outside auditors who have no conflict of interest with the Company andcorporate auditors who are highly experienced in the area of finance and accounting. In addition, we
12establish internal regulations concerning corporate ethics, carry out staff training at each level,
distribute compliance handbooks, and set up CSR committees in each organization. Furthermore, wehave continued to take thoroughgoing organizational compliance initiatives by setting up a
department which oversees internal controls, compliance, and CSR promotion, and creating units incharge of compliance within each business unit, while also striving to create a corporate culture thatplaces the highest priority at all times on information disclosure and transparency.

13

4. Consolidated Financial Statements(1) Consolidated balance sheets
March 31

Millions of yen
2011

AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Deferred tax assets
Other current assets
Allowance for doubtful receivables
Total current assets
Fixed assets
Net property, plant and equipment
Buildings and structures
Machinery and equipment
Land
Leased assets
Construction in progress
Other
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investments in securities
Long-term loans
Deferred tax assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

14

2012

47,233401,753
50,528285,977
88,81735,88744,351(2,829)951,719

34,316
404,054
53,558300,224
88,11333,00757,166(3,255)967,186

113,186
74,156
64,107283
12,651
11,394
275,780

113,632
74,52961,942323
11,782
12,540274,750626
18,622
19,249300
18,48518,786

24,641458
47,19336,221(986)
107,529
402,558
1,354,278

23,249432
37,61441,060(940)
101,416
394,953
1,362,139

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

319,271
143,972
242
5,988
765
15,692
7,288
33,0681,077
499
80,81530,483
10
64,550703,726

310,775
137,568
355
4,627
1,465
20,582
7,128
30,977
99,05010,000150
73,321
696,002

Long-term liabilities
Bonds payable
Long-term debt
Lease obligations
Deferred tax liabilities
Provision for loss on damages suit
Provision for environmental measures
Employees’ retirement and severance benefits
Asset retirement obligations
Other
Total long-term liabilities
Total liabilities

50,000203,801
645
3,990
5,868
3,333
80,556440
4,480
353,117
1,056,844

60,000198,737
506
4,060
910
3,282
75,052
611
7,053
350,214
1,046,216

Total shareholders’ equity

104,340
54,251
158,615(30)
317,176

104,484
54,393
176,414(22)
335,270

Accumulated other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

3,876
(990)
(31,006)(28,119)
8,376
297,433
1,354,278

3,989
246
(33,451)(29,215)9,868
315,922
1,362,139

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock15

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

Years ended March 31
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
Advertising expenses
R&D expenses
Provision for doubtful accounts
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in income of non-consolidated subsidiaries and affiliates
Foreign exchange gain, net
Other
Total non-operating income
Non-operating expenses
Interest expense
Loss on valuation of securities
Other
Total non-operating expenses
Recurring profit
Extraordinary losses
Loss on impairment of fixed assets
Provision for doubtful accounts of affiliates
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Current
Deferred
Total income taxes
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income

16

2011

2012

1,226,949
1,037,078
189,870

1,303,778
1,088,918
214,860

39,4297,967
37,090282
62,472
147,242
42,62841,565
8,166
39,940796
66,907
157,375
57,484

1,779
527
9,205
1,491
6,327
19,330

1,672
658
8,567
206
8,041
19,146

4,677
1,577
6,567
12,822
49,136

4,282
918
7,802
13,00363,6279,923
325

14,921-291-

10,54038,595

14,921
48,706

14,341(3,503)
10,83727,758
1,792
25,965

9,932
12,89922,83125,8752,551
23,323

Consolidated statements of comprehensive income
Millions of yen

Years ended March 31
2011
Income before minority interests

2012

27,75825,875(1,437)

106

(480)

1,281

Foreign currency translation adjustments(5,420)(2,925)

Share of other comprehensive income of associates accounted forusing equity method(2,167)231

Total other comprehensive income(9,505)(1,305)Comprehensive Income attributable to:18,252

24,569Owners of the parent company

16,50522,227

Minority interests

1,746

2,341

Other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Deferred gains (losses) on hedges

17(3) Consolidated statements of changes in net assets
Millions of yen

Years ended March 31
2011

2012

Shareholders’ equity
Common stock
Balance at end of previous year
Changes during the period
Conversion of convertible bonds

104,328

104,340

11

144

Total changes during the period

11

144

104,340

104,484

54,27554,251

(24)
(0)

142
(0)

Balance at end of year
Capital surplus
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Treasury stock disposed
Total changes during the period
Balance at end of year
Retained earnings
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income
Treasury stock disposed
Increase (decrease) by change of consolidation period of subsidiaries
Other

(24)

142

54,251

54,393

137,689

158,615(16)(5,003)25,965(19)(5,011)
23,323(3)(509)-

Total changes during the period

20,926

17,798

Balance at end of year
Treasury stock
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Treasury stock purchased
Treasury stock disposed

158,615

176,414

(552)

(30)

535
(15)
1

13
(6)
1

Total changes during the period

521

7

(30)

(22)

295,741

317,176506(5,003)25,965
(15)
1
(19)

300
(5,011)
23,323
(6)
(2)
(509)
-

21,43518,093

317,176

335,270

Balance at end of year
Total shareholders’ equity
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income
Treasury stock purchased
Treasury stock disposed
Increase (decrease) by change of consolidation period of subsidiaries
Other
Total changes during the period
Balance at end of year

18Comprehensive income
Net unrealized gain (loss) on securities
5,305

3,876

(1,429)112(1,429)

112

3,876

3,989

(162)

(990)

Net changes in items other than shareholders’ equity

(828)

1,236

Total changes during the period

(828)

1,236

(990)

246

(23,803)(31,006)(7,202)(2,444)(7,202)(2,444)(31,006)(33,451)(18,659)(28,119)(9,460)(1,095)

Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Deferred gains (losses) on hedges
Balance at end of previous year
Changes during the period

Balance at end of year
Foreign currency translation adjustments
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Total comprehensive income
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Minority interests
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year

(9,460)(1,095)(28,119)(29,215)

5,972

8,376

2,404

1,491

2,404

1,491

8,376

9,868

283,053

297,433506(5,003)25,965300(5,011)
23,323(15)
1(19)(7,055)

(6)
(2)
(509)
395

Total net assets
Balance at end of previous year
Changes during the period
Conversion of convertible bonds
Cash dividend
Net income for the year (loss)
Treasury stock purchased
Treasury stock disposed
Increase (decrease) by change of consolidation period of subsidiaries
Other
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year19

14,38018,489297,433

315,922

(4) Consolidated statements of cash flows
Millions of yen

Years ended March 31
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on impairment of fixed assets
Increase (decrease) in employees’ retirement and severance benefits
Increase (decrease) in accrued bonuses
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for losses on construction contracts
Increase (decrease) in provision for restructuring charges
Increase (decrease) in provision for losses on damages suit
Increase (decrease) in provision for environmental measures
Loss on disposal of inventories(Gain) loss on sale of marketable and investment securities(Gain) loss on valuation of securities(Gain) loss on sale of property, plant, and equipment
Equity in income non-consolidated subsidiaries and affiliates
Interest and dividend income
Interest expense(Increase) decrease in trade receivables(Increase) decrease in inventories(Increase) decrease in other current assets
Increase (decrease) in trade payables
Increase (decrease) in advances from customers
Increase (decrease) in other current liabilities
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Payment of levies
Net cash provided by operating activities
Cash flows from investing activities
Decrease (increase) in time deposits with maturities over three months
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of intangible assets
Proceeds from sale of intangible assets
Acquisition of investments in securities
Proceeds from sale of investments in securities
Acquisition of investments in subsidiaries of affiliate
Decrease (increase) in short-term loans receivable
Additions to long-term loans receivable
Proceeds from collection of long-term loans receivable
Other
Net cash used for investing activities
Cash flows from financing activities
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Acquisition of treasury stock
Proceeds from stock issuance to minority shareholders
Cash dividends paid
Cash dividends paid to minority shareholders
Other
Net cash used for financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents by change of consolidation
period of subsidiaries
Cash and cash equivalents at end of period

20

2011

2012

38,59550,276
9,923(8,159)
1,489
514
794
15,349(5,249)
(837)
(658)
1,336
(0)
1,577
552
(9,205)(2,306)
4,677
14,910(17,775)
8,590
25,114(15,552)(17,156)
1,895
98,696
6,407(4,762)(13,245)(5,165)81,92948,706
48,901
14,921(5,257)
4,885
449
(750)
(2,016)(1,077)(4,957)
(545)
(70)
(591)
918
1,177
(8,567)(2,331)
4,282(942)(18,705)(2,139)(7,332)
18,9738,708
4,138
100,775
6,656(4,455)(18,238)
84,737(2,138)(47,408)616(4,886)
37
(350)
12
287
(40)
102
825
(52,942)1,446(61,126)535(4,921)16(47)
663(1,761)
(11)
(70)
89
(771)
(65,959)(53,670)
24,000(4,836)20,000(14)
1,209(5,000)(476)(72)(18,862)367
10,491
34,137(568)
19,963(29,701)
20,000(30,186)(8)(5,014)(1,070)(243)(26,831)(1,822)(9,875)44,629-(1,508)44,62933,245(5) Notes on the going-concern assumption
Not applicable(6) Basis of preparation of financial statements
Other than information disclosed under the heading “(7) Changes in basis of preparation offinancial statements” below, no material changes have been made from the information disclosed
in the Company’s most recent full-year statutory financial report (filed June 28, 2011). An
updated disclosure is therefore omitted here.

(7) Changes in basis of preparation of financial statements
1. Change in the scope of consolidation(1) Change in the scope of consolidation
Four companies were added as consolidated subsidiaries because they were newly established by
the Company.
Three companies merged with another consolidated subsidiaries and were dissolved.
(2) Number of consolidated subsidiaries after change
97 companies
2. Change in application of the equity method(1) Non-consolidated subsidiaries which are accounted for under the equity method:None(2) Associated companies which are accounted for under the equity method(i) Change in associated companies which are accounted for under the equity methodNone(ii) Number of associated companies accounted for under the equity method after change
14 companies(8) Notes on financial statements
Consolidated balance sheets
Fiscal year ended March 31, 2012 (As of March 31, 2012)
Information is omitted here as its disclosure in this report is not of material importance.
Consolidated Statements of Income
Fiscal year ended March 31, 2011 (April 1, 2011 – March 31, 2012)
1. Loss on impairment of fixed assets(1) Outline asset groups in which loss on impairment of fixed assets was recognizedPurposeLocationType
Buildings and structures,
Assets held for businessSakaide-city, Kagawa
Machinery and equipment, etc.
Buildings and structures
Assets held for business
Minato-ku and Koto-ku, Tokyo
Buildings and structures, etc.
Idle assets
Kakamigahara-city, Gifu
Idle assets

Akashi-city, Hyogo

Buildings and structures, etc.

Idle assets

Taketa-city, Oita

Land, etc.

21(2) Method for asset grouping
Asset grouping is based on line of business, and principle assets held for lease and idle assets aretreated as independent asset groups.
(3) Reason for recognition of loss on impairment of fixed assets
The book values of some assets were written down to recoverable amounts due to deteriorating
business income, market price declines, or diminished expectation of future use.
(4) Calculation of recoverable amount
Recoverable amounts are measured by net sales price or utility value. Net sales price isprincipally calculated based on assessment by a real estate appraiser or on fixed assets’tax-assessment values. Utility value is calculated based on expected future cash flows.
(5) Loss on impairment of fixed assets
A write-down of 14,921 million yen was recorded as loss on impairment of fixed assets inextraordinary losses. Amounts by asset type are listed below.
Buildings and structures

7,091 million yen

Machinery and equipment, etc.

4,315 million yen

Land2,587 million yen

Other926 million yen
14,921 million yen

Other than the notes on consolidated statements of income stated above, information is omitted
here as its disclosure in this report is not of material importance.
Information Omitted
Notes on the consolidated statements of comprehensive income, consolidated statements of changes
in shareholders’ equity, the consolidated cash flow statements, lease transactions, related-party
transactions, tax-effect accounting, financial instruments, securities, derivative transactions,retirement benefits, stock-based compensation, business combination, asset retirement obligations,investment and rental property, and special purpose companies are omitted here, as their disclosurein this report is not of material importance.
Segment information and others
1. Segment information
Fiscal year ended March 31, 2011 (April 1, 2010 – March 31, 2011)(1) Overview of reportable segments
The Company’s reportable segments are components of the company about which separate
financial information is available. These segments are subject to periodic reviews by theCompany’s board of directors to decide how to allocate resources and assess performance. The
Company’s operations are divided into internal companies based on product categories. Certain
authority is delegated to each of the internal companies, based on which they conduct businesses
in Japan and overseas. The Company’s operations are therefore segmented based on each internal
22

company’s product categories. The Company’s eight reportable segments are the Ship & Offshore
Structure segment, the Rolling Stock segment, the Aerospace segment, the Gas Turbine &Machinery segment, the Plant & Infrastructure segment, the Motorcycle & Engine segment, thePrecision Machinery segment, and the Other segment.
In conjunction with its October 2010 organizational restructuring, the Group renamed its
Shipbuilding segment the Ship & Offshore Structure segment.
Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbines &Machinery

Major products
Construction and sale of ships and other vessels, etc.

Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

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

(2) Calculation methods for sales, income (loss), assets, liabilities and other items by reportable segment
Accounting methods applied for calculation of sales, income (loss), assets, liabilities, and otheritems by industry segment largely correspond to information presented under “(6) Basis ofpreparation of financial statements”. Segment income is based on operating income. Intersegment
sales or transfers are based on market prices.
(3) Sales, income (loss), assets, liabilities, and other items by reportable segment(Millions of yen)
Sales
Intersegment
External sales
sales ortransfer
Ship & Offshore
Structure

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

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Loss onimpairmentof fixed
assetsInvestment inIncrease inequityproperty, plant
methodand equipment
affiliates
and intangibles

118,416

1,894

120,311(1,013)

115,800

4,264-

13,1253,183

131,104
196,876

2,079
1,810

133,183
198,687

8,173
3,030

151,212288,495

3,634
9,402

-

123
-

2,416
7,121

202,692

20,782

223,475

9,545

211,369

6,550

67

61

5,659

89,012

12,017101,0298,281

95,115

1,554

141

8,603

2,033

234,479

1,211

235,690(4,961)

216,559

15,294

9,520

946

11,340140,328

13,277

153,605

22,31899,612

4,872

-

-

9,822

114,038

34,340148,378

2,576

159,616

2,474

193

2,305

8,013

1,226,949-

87,412(87,412)1,314,362(87,412)47,950(5,322)

1,337,780
16,49748,047
2,228

9,923
-

25,166-49,591
5,743

1,226,949-

1,226,949

42,6281,354,278

50,276

9,923

25,16655,33423

(4) Reconciliation and main components of difference between total for reportable segments andamounts on the consolidated financial statements(Millions of yen)
Sales
Total for reportable segments
Intersegment transactions
Net sales reported on the consolidated
financial statements

1,314,362(87,412)1,226,949(Millions of yen)
IncomeTotal for reportable segments
Intersegment transactions
Corporate expenses*
Operating income (loss) on consolidated
financial statements

47,950(3)(5,318)42,628*Note: Corporate expenses mainly comprise general and administrative expenses not attributed toreportable segments.
(Millions of yen)
AssetsTotal for reportable segments
Corporate assets shared by all segments*
Intersegment transactions etc.
Total assets on consolidated financial
statements

1,337,780
141,028(124,531)
1,354,278*Note: Corporate assets shared by all segments mainly comprise fixed assets not attributed to reportablesegments.
(Millions of yen)Amounts reported on the
consolidated financial
statements

Total for reportablesegments

Adjustments*

Depreciation/amortization

48,0472,228

50,276

Increase in property, plantand equipment andintangibles

49,591

5,743

55,334

Other items*Note: Adjustments are mainly due to fixed assets not attributed to reportable segments

Fiscal year ended March 31, 2012 (April 1, 2011 – March 31, 2012)(1) Overview of reportable segments
The Company’s reportable segments are components of the company about which separate
financial information is available. These segments are subject to periodic reviews by theCompany’s board of directors to decide how to allocate resources and assess performance. The
Company’s operations are divided into internal companies based on product categories. Certain
authority is delegated to each of the internal companies, based on which they conduct businesses
in Japan and overseas. The Company’s operations are therefore segmented based on each internal
company’s product categories. The Company’s eight reportable segments are the Ship & Offshore
Structure segment, the Rolling Stock segment, the Aerospace segment, the Gas Turbine &Machinery segment, the Plant & Infrastructure segment, the Motorcycle & Engine segment, thePrecision Machinery segment, and the Other segment.
24

Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbines &Machinery

Major products
Construction and sale of ships and other vessels, etc.

Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

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

(2) Calculation methods for sales, income (loss), assets, liabilities and other items by reportable segment
Accounting methods applied for calculation of sales, income (loss), assets, liabilities, and otheritems by industry segment largely correspond to information presented under “(6) Basis ofpreparation of financial statements”. Segment income is based on operating income. Intersegment
sales or transfers are based on market prices.
(3) Sales, income (loss), assets, liabilities, and other items by reportable segment(Millions of yen)
Sales
Intersegment
External sales
sales ortransfer
Ship & Offshore
Structure

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

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Loss onimpairmentof fixed
assetsInvestment inIncrease inequityproperty, plant
methodand equipment
affiliates
and intangibles

113,532

1,636

115,168

3,964

102,102

3,819

13,554

15,2782,297

132,684
206,580

2,104
1,845

134,789
208,426

5,154
7,815

157,487295,668

3,693
9,633

33

92
-

2,266
10,208

194,655

20,438215,093

7,775

223,649

6,680

-

576

7,310

122,800

13,150135,950

14,118109,395

1,703

64

10,171

3,277

235,243

1,033

236,276(2,959)222,515

11,151-967

11,770175,077

14,245

189,322

26,622

110,578

6,647

-

-

16,221

123,205

35,280158,485

3,836

183,392

2,536

1,268

2,409

3,381

1,303,778-

89,734(89,734)

1,393,513(89,734)

66,327(8,843)

1,404,790(42,650)

45,865
3,035

14,921-

29,496-56,7337,185

1,303,778-

1,303,778

57,484

1,362,139

48,901

14,921

29,496

63,91925

(4) Reconciliation and main components of difference between total for reportable segments andamounts on the consolidated financial statements(Millions of yen)
Sales
Total for reportable segments
Intersegment transactions
Net sales reported on the consolidated
financial statements

1,393,513(89,734)
1,303,778(Millions of yen)
IncomeTotal for reportable segments
Intersegment transactions
Corporate expenses*
Operating income (loss) on consolidated
financial statements

66,327(131)(8,711)
57,484*Note: Corporate expenses mainly comprise general and administrative expenses not attributed toreportable segments.
(Millions of yen)
AssetsTotal for reportable segments
Corporate assets shared by all segments*
Intersegment transactions etc.
Total assets on consolidated financial
statements

1,404,790
112,985(155,636)
1,362,139*Note: Corporate assets shared by all segments mainly comprise fixed assets not attributed to reportablesegments.

Other items

Total for reportablesegments(Millions of yen)Amounts reported on
the consolidated
financial statements

Adjustments*

Depreciation/amortization

45,865

3,035

48,901

Increase in property, plantand equipment andintangibles

56,733

7,185

63,919*Note: Adjustments are mainly due to fixed assets not attributed to reportable segments

2. Related information
Fiscal year ended March 31, 2011 (April 1, 2010 – March 31, 2011)(1) Information by product and service
Information by product and service is omitted here as segmentation is equivalent to that used forreportable segments.
(2) Information by geographic area(a) Net salesJapan
558,126

USA
236,572

Europe87,162

Asia
224,685

26

Other areas
120,402(Millions of yen)Total
1,226,949

(b) Property, plant and equipment
Japan
241,132

North America
20,611

Europe2,304

Asia
10,945

Other areas
785(Millions of yen)Total
275,780(3) Information by major clients
Clients

Net sales

Ministry of Defense

182,633(Millions of yen)
Related segments
Ship & Offshore Structure, Aerospace, Gas Turbines &Machinery

Fiscal year ended March 31, 2012 (April 1, 2011 – March 31, 2012)(1) Information by product and service
Information by product and service is omitted here as segmentation is equivalent to that used forreportable segments.
(2) Information by geographic area(a) Net salesJapan
567,044USA
237,941

Europe123,317

Asia
239,627

Other areas
135,847(Millions of yen)Total
1,303,778

Europe2,104

Asia
13,610

Other areas
852(Millions of yen)Total
274,750(b) Property, plant and equipment
Japan
238,733

North America
19,450(3) Information by major clients
Clients
Ministry of Defense

Net sales
179,786(Millions of yen)
Related segments
Ship & Offshore Structure, Aerospace, Gas Turbines &Machinery

3. Impairment loss on fixed assets by reportable segment
Fiscal year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Information is omitted here as it is equivalent to that stated in “1. Segment information”.
Fiscal year ended March 31, 2012 (April 1, 2011 – March 31, 2012)
Information is omitted here as it is equivalent to that stated in “1. Segment information”.
4. Amortization amount for and unamortized balance of goodwill
Fiscal year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Information is omitted here as it is not of material importance.
Fiscal year ended March 31, 2012 (April 1, 2011 – March 31, 2012)
Information is omitted here as it is not of material importance.

27

5. Gain on negative goodwill by reportable segment
Fiscal year ended March 31, 2011 (April 1, 2010 – March 31, 2011)
Information is omitted here as it is not of material importance.
Fiscal year ended March 31, 2012 (April 1, 2011 – March 31, 2012)
Information is omitted here as it is not of material importance.

Per share data
Years ended March 31

(Yen)
2011

2012

Net assets per share

173.03

Net assets per share

183.06

Earnings per share - basic

15.55

Earnings per share - basic

13.95

Earnings per share - diluted

15.32

Earnings per share - diluted

13.85

Notes:
1. Net assets per share were calculated based on the following:
March312011
297,433

Total net assets(Millions of yen)
2012
315,922Amounts excluded from total net assets
Of which: minority interest

8,376(8,376)

9,868(9,868)

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

289,056

306,054

1,670,546

1,671,815

2. Net income/loss per share and net income per share (diluted) were calculated based on the following:
Years ended March 31(Millions of yen)
2012

2011
Earnings per share - basic
Net income
Earnings not attributable to common shareholders
Net income allocated to the common shares
Average number of common shares outstanding (thousands of shares)
Earnings per share (diluted)

25,96525,965
1,669,359

23,32323,323
1,671,465

Net income adjustment

44

22

Of which: interest expense etc. (after-tax equivalent)

(44)

(22)

28,052(11,769)(16,283)

13,022(5,852)(7,170)

Increase in common shares(Thousands of shares)
Of which: exercise of convertible bonds(Thousands of shares)
Of which: Zero-coupon convertible bond (Thousands of shares)
Summary of non-diluting residual securities not included in thecomputation of diluted earnings per share

28

-

-

Material subsequent events
Fiscal year ended March 31, 2012
(April 1, 2012 – March 31, 2013)

Investment in Chinese shipbuilding company
The Company resolved to acquire a stake in Dalian COSCO Shipbuilding Industry Co., Ltd. (DACOS),
company based in Dalian, China, and completed payment for this acquisition on April 12, 2012.

a shipbuilding

1. Purpose
DACOS is a joint venture company established in the Lushun Economic Development Zone in Dalian. It was co-foundedin 2007 by COSCO Shipbuilding Industry Company (COSIC)—a wholly owned subsidiary of the COSCO Group, which
is one of the largest shipping companies in the world—and Nantong COSCO KHI Ship Engineering Co., Ltd. (NACKS),
a 50-50 joint venture operated by the Company and COSIC. DACOS is 70% owned by COSIC and 30% by NACKS.
DACOS owns a 1.8 million m2 shipyard complete with two building docks, and the ships built by DACOS have earned
high marks from ship owners both in terms of timely delivery and quality.
Through this transaction, the Company acquired a 34% stake in DACOS from COSIC, which has been searching for a
new partner with more advanced shipbuilding technology to make DACOS more competitive and further expand its
operations. After the share transfer, DACOS is 36% owned by COSIC, 34% by the Company and 30% by NACKS.
By becoming a direct investor in DACOS, the Company will aim to build a stronger cooperative relationship based on the
successes of NACKS, its first joint venture with COSIC. The Company will also work toward enhancing DACOS’capacity to develop, design and build ships, while improving its production and management system, to lay a firm
foundation for DACOS’ long-term growth.
2.

Overview of Dalian COSCO Shipbuilding Industry Co., Ltd. (DACOS)(1) Location:
No. 1 Shunda Street, Lushun Economic Development Zone, Dalian,
Liaoning, China(2) Representative:
Xu Kai (Chairman and COSIC General Manager)(3) Foundation date:July 18, 2007
(4) Operation:
Design, manufacture, sales and maintenance of ships(5) Capital:
2,620 million yuan
(6) Investment amount:
1,165 million yuan(7) Ownership after the
COSCO Shipbuilding Industry Company (COSIC) 36%
investment:
Kawasaki Heavy Industries, Ltd. 34%
Nantong COSCO KHI Ship Engineering Co., Ltd. (NACKS) 30%*NACKS is a 50-50 joint venture co-founded by COSIC and the Company.

29

5. Others(1) Corporate officer changes
Refer to the Company’s press release on January 31, 2012, titled “Directors and Executive
Officers to Change.”(2) Consolidated orders and sales
Orders received
Years ended March 31(Millions of yen)
2011（A）

2012（B）% of total

Change（B-A）% of total%

Ship & Offshore Structure
78,953
6.2
39,9093.0(39,043)(49.4)
Rolling Stock
187,122
14.7
66,0995.0(121,023)(64.6)
Aerospace
206,73016.2
327,23324.9
120,502
58.2
Gas Turbine & Machinery
187,582
14.7
227,281
17.3
39,69921.1
Plant & Infrastructure
119,987
9.4
119,284
9.0
(702)
(0.5)
Motorcycle & Engine
234,47918.4
235,243
17.9
764
0.3
Precision Machinery
148,955
11.7
174,587
13.3
25,63217.2
Other106,841
8.4
122,239
9.3
15,397
14.4
Total
1,270,652
100.0
1,311,878
100.0
41,225
3.2
Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

Net sales
Years ended March 31(Millions of yen)
2011（A）

2012（B）% of total

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

118,416
131,104
196,876
202,692
89,012
234,479
140,328
114,038
1,226,949

9.6
10.6
16.0
16.5
7.2
19.1
11.4
9.2
100.0

Change（B-A）% of total

113,532
132,684
206,580
194,655
122,800
235,243
175,077
123,205
1,303,778

8.7
10.1
15.8
14.9
9.4
18.0
13.4
9.4
100.0

%

(4,883)
1,579
9,703(8,037)33,788764
34,7489,166
76,829

(4.1)
1.2
4.9
(3.9)
37.9
0.3
24.7
8.0
6.2

Order backlog
Years ended March 31
2011（A）

2012（B）% of total

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

177,254411,560
269,470
382,269
185,41442,79026,5891,495,349

11.8
27.5
18.0
25.5
12.3
2.8
1.7
100.0

30

(Millions of yen)
Change（B-A）% of total

102,870
345,170
386,376
409,819
181,698
42,30025,8791,494,116

6.8
23.1
25.8
27.4
12.1
2.8
1.7
100.0

%

(74,383)(66,390)
116,905
27,549(3,715)(489)(709)(1,232)(41.9)(16.1)
43.3
7.2
(2.0)
(1.1)
(2.6)
(0.0)

(3) Supplementary information on earnings forecasts for the fiscal year ending March 31, 2013
1. Consolidated earnings outlook(Billions of yen)

Outlook for the fiscal year
ending March 31, 2013
(A)

Fiscal year ended
March 31, 2012 (actual)(B)

Change (A – B)

Net sales
Operating income
Recurring profit
Net income

1,380.0
52.0
56.0
34.0

1,303.7
57.4
63.6
23.3

76.3
(5.4)
(7.6)
10.7

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

1,430.0
8.2%
45.0
79.0

1,311.8
7.4%
39.9
63.9

118.2
0.8%
5.1
15.1

54.0

48.8

5.2

34,70033,267

1,433*9,200*8,497*703

of Japan included therein

Notes: 1. Outlook’s assumed foreign exchange rates: ¥80 = US$1, ¥105 = 1 euro

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

2. Outlook by reportable segment(a) Net sales and operating income (loss)(Billions of yen)

Fiscal year ended
March 31, 2012 (actual)(B)

Outlook for the fiscal year
ending March 31, 2013
(A)

Change (A – B)

Net sales

Operating
Income (loss)

Net sales

Operating
Income (loss)

Net sales

Operating
Income (loss)

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

80.0
130.0
250.0
210.0
130.0
260.0
200.0
120.0

113.5
132.6
206.5
194.6
122.8
235.2
175.0
123.2

1,380.0

3.9
5.1
7.8
7.7
14.1
(2.9)
26.6
3.8
(8.8)
57.4

(33.5)
(2.6)
43.5
15.4
7.2
24.8
25.0
(3.2)

Total

(5.0)
6.0
9.0
8.0
10.0
5.0
27.0
2.0
(10.0)
52.0

(8.9)
0.9
1.2
0.3
(4.1)
7.9
0.4
(1.8)
(1.2)
(5.4)

1,303.7

31

76.3

(b) Orders received(Billions of yen)

Outlook for the fiscal year
Fiscal year ended
March 31, 2012 (actual)ending March 31, 2013
(B)
(A)
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other
Total

110.0
150.0
220.0
230.0
130.0
260.0
210.0
120.0
1,430.0

32

39.9
66.0
327.2
227.2
119.2
235.2
174.5
122.2
1,311.8

Change (A – B)
70.1
84.0
(107.2)
2.8
10.8
24.8
35.5
(2.2)
118.2