(Translation)

Annual Securities Report(The 150th Business Term)
From April 1, 2018 to March 31, 2019

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Hitachi, Ltd.

[Cover][Document Filed]Annual Securities Report (“Yukashoken Hokokusho”)[Applicable Law]

Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 19, 2019

[Fiscal Year]

The 150th Business Term (from April 1, 2018 to March 31, 2019)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name ofToshiaki Higashihara, President & CEO

Representative][Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Masachika Sawada, Manager, Legal Division[Contact Address]

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Masachika Sawada, Manager, Legal Division[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)

This is an English translation of the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau
via Electronic Disclosure for Investors’ NETwork (“EDINET”) pursuant to the Financial Instruments and Exchange Act ofJapan.
Certain information in “Part I. Information on the Company - II. Business Overview - 2. Risk Factors - Risks Related to
Our American Depositary Shares” is only included in this English translation of the Annual Securities Report for ADSs
holders and not included in the original report.
Certain information in “Part I. Information on the Company - V. Financial Information” in this document incorporates
financial statements prepared in conformity with the International Financial Report Standards (“IFRS”) as issued by theInternational Accounting Standards Board and independent auditor’s report instead of the English translation of the Annual
Securities Report.
The translation of the Internal Control Report, the Independent Auditors’ Report and the Confirmation Letter for theoriginal Annual Securities Report are included at the end of this document.
This English translation of the Annual Securities Report reflected the amendment that was reported in the Amendment Report of
the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau via EDINET on August 7, 2019.
In this document, the terms “we,” “us,” “our” and “Hitachi” refer to Hitachi, Ltd. and consolidated subsidiaries or, as thecontext may require, Hitachi, Ltd. on a non-consolidated basis and the term “the Company” refers to Hitachi, Ltd. on a nonconsolidated basis.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we
have truncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures
presented in columns or otherwise may not equal the total of the individual items. We have rounded all percentages to thenearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be.
References in this document to the “Financial Instruments and Exchange Act” are to the Financial Instruments andExchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments andExchange Act of Japan.
References in this document to the “Companies Act” are to the Companies Act of Japan and other laws and regulations
amending and/or supplementing the Companies Act of Japan.

Contents
Part I Information on the Company ……………………………………………………………………………
1
I. Overview of the Company ………………………………………………………………………………
1
1. Key Financial Data …………………………………………………………………………………
1
2. History ………………………………………………………………………………………………
3
3. Description of Business ……………………………………………………………………………
5
4. Information on Affiliates …………………………………………………………………………
7
5. Employees ………………………………………………………………………………………… 17
II. Business Overview ……………………………………………………………………………………… 18
1. Management Policy, Economic Environment and Challenges Hitachi Group Faces…………… 18
2. Risk Factors …..…………………………………………………………………………………… 19
3. Management's Discussion and Analysis of Consolidated Financial Condition, Results ofOperations and Cash Flows ………………………………………………………………………… 28
4. Material Agreements, etc ………………………………………………………………………… 37
5. Research and Development ……………………………………………………………………… 39
III. Property, Plants and Equipment ……………………………………………………………………… 41
1. Summary of Capital Investment, etc. ……………………………………………………………… 41
2. Major Property, Plants and Equipment …………………………………………………………… 42
3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc. ………………… 46
IV. Information on the Company ………………………………………………………………………… 47
1. Information on the Company’s Stock, etc. ………………………………………………………… 47(1) Total number of shares, etc. …………………………………………………………………… 47(2) Information on the stock acquisition rights, etc. ………………………………………………… 48(3) Information on moving strike convertible bonds, etc. …………………………………………… 50(4) Changes in the total number of issued shares and the amount of common stock and other …… 50(5) Shareholders composition ……………………………………………………………………… 50(6) Major shareholders ……………………………………………………………………………… 51(7) Information on voting rights …………………………………………………………………… 53
2. Information on Acquisition, etc. of Treasury Stock ……………………………………………… 54
3. Dividend Policy …………………………………………………………………………………… 55
4. Corporate Governance, etc. ………………………………………………………………………… 56(1) Corporate Governance ……………………………………………………………………............ 56(2) Directors and Senior Management..……………………………………………………………… 60(3) Audit .......................................…………………………………………………………………… 72(4) Compensation to Directors and Executive Officers……………………………………………… 75(5) Information on shareholdings .…………………………………………………………………… 81
V. Financial Information …………………………………………………………………………………… 86
VI. Stock-Related Administration for the Company ……………………………………………………… 87
VII. Reference Information on the Company ……………………………………………………………… 88
Part II Information on Guarantors, etc. for the Company ……………………………………………………… 89[Consolidated Financial Statements] …………………………………………………………………………… F-1
Consolidated Financial Statements. ……………………………………………………………………… F-2
Reports of Independent Registered Public Accounting Firm ……………………………………………… F-72
[Internal Control Report (Translation)] ………………………………………………………………………… A-1[Independent Auditors’ Report (Translation)] ………………………………………………………………… A-3[Confirmation Letter (Translation)] …………………………………………………………………………… A-6

Part I Information on the Company
I. Overview of the Company
1. Key Financial Data
(1) Consolidated financial data, etc.

Fiscal year
Year end(Millions of yen, unless otherwise stated)
IFRS
146th
147th
148th
149th
150th
business term business term business term business term business term
March 2015
March 2016
March 2017
March 2018
March 2019
9,774,930
10,034,305
9,162,264
9,368,614
9,480,619

Revenues
Income from continuing
518,994
517,040
469,091
638,646
516,502
operations, before income taxes
Net income attributable to217,482
172,155
231,261
362,988
222,546
Hitachi, Ltd. stockholders
Comprehensive income
attributable to Hitachi, Ltd.
337,578(127,557)
299,397382,341
171,140
stockholders
Total Hitachi, Ltd.
2,942,281
2,735,078
2,967,085
3,278,024
3,262,603
stockholders’ equity
Total equity
4,296,342
4,125,570
4,096,995
4,511,671
4,414,403
Total assets
12,433,727
12,551,005
9,663,917
10,106,603
9,626,592
Total Hitachi, Ltd.
stockholders’ equity per share
3,046.74
2,832.39
3,072.79
3,395.00
3,378.81(yen)
Earnings per share attributable
to Hitachi, Ltd. stockholders,
225.19178.27239.49375.93230.47
basic (yen)Earnings per share attributable
to Hitachi, Ltd. stockholders,
224.99178.08239.42375.60230.25diluted (yen)Total Hitachi, Ltd.
23.7
21.8
30.7
32.4
33.9
stockholders’ equity ratio (%)
Return on equity (%)
7.8
6.1
8.1
11.6
6.8
Price earnings ratio (times)
18.3
14.8
12.6
10.3
15.6
Net cash provided by operating
451,825
812,226
629,582
727,168
610,025
activities
Net cash used in investing(612,545)(730,799)(337,955)(474,328)(162,872)
activities
Net cash provided by (used in)
233,206(26,467)(209,536)(321,454)(320,426)
financing activities
Cash and cash equivalents at
701,703699,315765,242
697,964
807,593
end of year
Number of employees
336,670
335,244
303,887
307,275
295,941[Average number of part-time[48,592][45,111]
employees, etc.](Notes) 1. Our consolidated financial statements have been prepared in conformity with IFRS.
2. Revenues do not include the consumption tax, etc.
3. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. The figures for total Hitachi, Ltd. stockholders’ equity per share andearnings per share attributable to Hitachi, Ltd. stockholders, basic and diluted, are calculated on theassumption that the Company conducted this share consolidation at the beginning of the 146 businessterm.
4. Average numbers of part-time employees, etc. are not stated for the 148th, 149th and 150th businessterm since those were less than 10% of the number of employees.

-1-(2) Financial data etc. of the Company
Fiscal year
Year end
Revenues
Ordinary income (loss)(Millions of yen, unless otherwise stated)
146th
147th
148th
149th
150th
business term business term business term business term business term
March 2015 March 2016 March 2017 March 2018 March 2019
1,842,126
1,859,605
1,906,532
1,930,293
1,927,241(300)(20,944)

71,599131,294

304,069

85,262458,790

64,934
458,790

97,724
458,790

136,117458,790

174,062
458,790

4,833,463

4,833,463

4,833,463

4,833,463

966,692

1,399,885
3,749,326
1,449.58

1,378,441
3,868,633
1,427.49

1,497,428
4,070,247
1,550.49

1,536,018
4,017,373
1,589.79

1,563,456
3,934,118
1,617.32

12
[6]

12
[6]

13
[6]

15
[7]

58
[8]

88.28
37.3
6.1
46.6
68.0
31,375109.6[128.3]

67.24
35.6
4.7
39.2
89.2
37,35372.3[112.0]101.20101.17
36.8
6.8
29.8
64.2
35,63183.9[125.7]140.97140.85
38.2
9.0
27.3
53.2
34,925108.0[142.7]Highest share price (yen)

939.9

858.0

679.5

944.2

Lowest share price (yen)

660

431.0

400.0

566.3

180.26180.09
39.7
11.2
19.9
50.0
33,490103.3[132.3]
3,925.0[873.7]2,767.5[692.1]

Net income
Common stock
Number of issued shares (thousandsof shares)
Total net assets
Total assets
Net assets per share (yen)Dividends per share (yen)[Of the above, interim dividends per
share (yen) ]Net income per share, basic (yen)Net income per share, diluted (yen)Stockholders’ equity ratio (%)
Return on equity (%)
Price earnings ratio (times)
Dividend payout ratio (%)
Number of employees
Total shareholder return (%)[Comparative indicater : TOPIX] (%)(Notes) 1. Revenues do not include the consumption tax, etc.
2. Effective from the 150th business term, the Company adopted the "Partial Amendments to AccountingStandard for Tax Effect Accounting" (ASBJ Statement No.28, February 16, 2018) and the“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No.28, February 16, 2018).
The figures for total net assets, total assets, net assets per share, stockholders’ equity ratio and returnon equity for the 149th business term are restated as the standard and guidance are applied
retroactively.
3. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. The figures for net assets per share and net income per share, basic anddiluted, are calculated on the assumption that the Company conducted this share consolidation at the
beginning of the 146 business term.
4. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. ¥58 of dividends per share for the 150th business term is the sum of ¥8 ofinterim dividend per share before the share conslidation and ¥50 of the year-end dividend per shareafter the share conslidation.
5. “Net income per share, diluted” is not stated for the 146th and 147th business terms since there are no
dilutive shares.
6. Average number of part-time employees, etc. is not stated since it was less than 10% of the number of
employees.
7. The highset and lowest share prices are market prices on the first section of the Tokyo Stock Exchange.
On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. Regarding the 150th business term, the figures in the upper row are thehighest and lowest prices after the share consolidation and the figures in brackets in the lower row arethose before the share conslidation.
-2-2. History
Month/Year
1910
February, 1920
February, 1921
May, 1935
May, 1937
April, 1939
September, 1940
April, 1942
September, 1943
March, 1944
December, 1944
April, 1947
May, 1949
February, 1950
May, 1955
October, 1956
November, 1956
June, 1957
February, 1959
October, 1959
June, 1960
August, 1960
February, 1961

August, 1961
August, 1962
February, 1963
April, 1963
February, 1966
February, 1968
February, 1969
April, 1969
August, 1969
December, 1969
May, 1970
September, 1970
April, 1971
June, 1971
February, 1973
June, 1974
November, 1974
June, 1982
April, 1985
February, 1989
February, 1991
August, 1991

HistoryFounded as a repair shop at Hitachi copper mine of Kuhara Mining Company
Incorporated as Hitachi, Ltd. with the Hitachi and Kameido Works
Acquired the Kasado shipyard from Nippon Kisen Co., Ltd. and established Kasado
Works
Equity participation in Kyousei Reiki Kogyo K.K. (later changed its name to Hitachi
Plant Engineering & Construction Co., Ltd.)
Merged Kokusan Industries, Ltd. and established 7 factories, including Totsuka Works
Established Taga Works, spun off Hitachi Research Laboratory from Hitachi Works
Established Mito Works
Established Central Research Laboratory
Merged Riken Vacuum Industry and established Mobara Works
Spun off Shimizu Works from Kameari Works
Spun off Tochigi Works from Taga Works
Established Hinode Shokai Co., Ltd. (currently Hitachi High-Technologies Corporation)
Established Higashi-Nippon Senikikai KK (later changed its name to Hitachi Medical
Corporation)
Established Nitto Transport KK. (currently Hitachi Transport System, Ltd.)
Established Hitachi Sales Corporation
Spun off Hitachi Metals Industries, Ltd. (currently Hitachi Metals, Ltd.) and Hitachi
Cable, Ltd.
Established Hitachi Kiden Kogyo, Ltd.
Spun off Kokubu Works from Hitachi Works
Established Yokohama Works
Established Hitachi New York, Ltd. (currently Hitachi America, Ltd.)
Equity participation in Nippon Business Consultant Co., Ltd. (later changed its name to
Hitachi Information Systems, Ltd.)
Established Hitachi Geppan Corp. (later changed its name to Hitachi Credit Corporation)
Spun off Naka Works from Taga Works;
Equity participation in Maxell Electric Industrial Co., Ltd. (currently Maxell Holdings,
Ltd.)
Established Katsuta Works
Established Kanagawa Works
Spun off Narashino Works from Kameido Works
Spun off Hitachi Chemical Company, Ltd.
Established Mechanical Engineering Research Laboratory
Spun off Sawa Works from Taga Works, spun off Tokai Works from Yokohama Works,
and spun off Odawara Works from Kanagawa Works
Established Software Works
Established Ome Works
Established Omika Works
Spun off Hitachi Construction Machinery Co., Ltd.
Established Takasaki Works
Established Hitachi Software Engineering Co., Ltd.
Acquired Asahi Works from Hitachi Denshi, Ltd.
Established Production Engineering Research Laboratory
Established Systems Development Laboratory
Established Tsuchiura Works
Relocated Kameido Works and renamed to Nakajo Works
Established Hitachi Europe Ltd.
Established Advanced Research Laboratory
Established Hitachi Asia Pte. Ltd. (currently Hitachi Asia Ltd.)
Integrated Sawa Works into Automotive Products Division
Integrated Katsuta Works into Materials Process Technology Division; integrated Totsuka
Works into Information & Telecommunication Division; integrated Naka Works into
Instruments Division-3-

Month/Year
February, 1992
August, 1992
February, 1993
August, 1993
August, 1994
October, 1994
February, 1995

April, 1995
April, 1999
October, 2000
October, 2001

April, 2002

October, 2002

January, 2003
April, 2003

June, 2003
October, 2004

April, 2006

December, 2006
July, 2007
March, 2009

History
Integrated Yokohama Works and Tokai Works into AV Products Division
Changed operation unit of home appliances, computers and electronic devices businesses
from factory to business division
Integrated Semiconductor Technology Development Center, Musashi Works andTakasaki Works into Semiconductor Division
Integrated Shimizu Works into Air Conditioning Division, integrated Nakajo Works andNarashino Works into Industrial Equipment Division
Integrated Consumer Products Group and Image & Information Media Division andrenamed to Consumer Products & Information Media Systems Group
Established Hitachi (China), Ltd.
Reorganized business groups as Power & Industrial Systems Group, Consumer Products& Information Media Systems Group, Information Systems Group and Electronics
Components Group; integrated a part of R&D division and sales division into the businessgroupsMerged Hitachi Sales Corporation
Reorganized business groups into de facto companies to independently operate eachbusiness group
Merged Hitachi Credit Corporation with Hitachi Leasing Corp. and changed its name to
Hitachi Capital Corporation
Split Instruments Group and Semiconductor Manufacturing Equipment Group via
company split and reorganized as Hitachi High-Technologies Corporation;
Split Industrial Machinery Systems Division via company split and reorganized as Hitachi
Industries Co., Ltd.
Split Home Appliance Group via company split and reorganized as Hitachi Home & Life
Solutions, Inc.;
Split Industrial Equipment Group via company split and reorganized as Hitachi Industrial
Equipment Systems Co., Ltd.
Split Display Group via company split and established Hitachi Displays, Ltd.;
Split Telecommunication Equipment Division via company split and reorganized as
Hitachi Communication Technologies, Ltd.;
Turned Unisia Jecs Corporation (later changed its name to Hitachi Unisia Automotive,Ltd.) into a wholly owned subsidiary via share exchange
Acquired HDDs business from IBM Corp., and commenced operations as Hitachi Global
Storage Technologies Netherlands B.V.
Split semiconductor business, centering on system LSIs, via company split andestablished Renesas Technology Corp. (merged with NEC Electronics Corporation andchanged its name to Renesas Electronics Corporation in April 2010, and ceased to be anaffiliate of the Company due to a decrease in the Company’s ownership percentage ofvoting rights in September 2013)
Adopted committee system as the Company’s corporate governance structure
Merged TOKICO, Ltd. and Hitachi Unisia Automotive, Ltd.;
Split Mechatronics System Division, centering on ATMs, via company split andestablished Hitachi-Omron Terminal Solutions, Corp.
Split Social & industrial infrastructure business via company split and integrated with
Hitachi Plant Engineering & Construction Co., Ltd., Hitachi Kiden Kogyo, Ltd. andHitachi Industries Co., Ltd. and reorganized as Hitachi Plant Technologies, Ltd.; Merged
Hitachi Home & Life Solutions, Inc. with Hitachi Air Conditioning Systems Co., Ltd. andchanged its name to Hitachi Appliances, Inc.
Turned Clarion Co., Ltd. into a consolidated subsidiary via tender offer
Split nuclear power systems business via company split and reorganized as Hitachi-GE
Nuclear Energy, Ltd.
Turned Hitachi Koki Co., Ltd. into a consolidated subsidiary via tender offer; Turned
Hitachi Kokusai Electric Inc. into a consolidated subsidiary via tender offer-4-

Month/Year

July, 2009

October, 2009
February, 2010
April, 2010

October, 2010
October, 2011
March, 2012

April, 2013
July, 2013
February, 2014
March, 2014

April, 2015

October, 2015
April, 2016
May, 2016
October, 2016
March, 2017
June, 2018
March, 2019
April, 2019

History

Merged Hitachi Communication Technologies, Ltd.;
Split Automotive Systems Group via company split and established Hitachi Automotive
Systems, Ltd.;
Split Consumer Business Group via company split and established Hitachi Consumer
Electronics Co., Ltd.
Reorganized business groups into in-house companies with independent accounting topromote quick business operation
Turned Hitachi Information Systems, Ltd., Hitachi Software Engineering Co., Ltd. andHitachi Systems & Services, Ltd. into wholly owned subsidiaries
Turned Hitachi Plant Technologies, Ltd. and Hitachi Maxell, Ltd. (currently Maxell
Holdings, Ltd.) into wholly owned subsidiaries via share exchanges (turned Hitachi
Maxell, Ltd. into an equity-method associate of the Company via selling its shares inMarch 2014, and ceased to be an affiliate of the Company in March 2017 due to selling its
shares)Merged Hitachi Software Engineering Co., Ltd. with Hitachi Systems & Services, Ltd.
and changed its name to Hitachi Solutions, Ltd.
Merged Hitachi Electronics Services Co., Ltd. with Hitachi Information Systems, Ltd. andchanged its name to Hitachi Systems, Ltd.
Transferred HDDs business to Western Digital Corporation via share sale of Viviti
Technologies Ltd., a holding company for Hitachi Global Storage Technologies Inc., etc.
Transferred small and medium-sized displays business via share sale of Hitachi Displays,
Ltd.
Merged Hitachi Plant Technologies, Ltd.
Merged Hitachi Metals, Ltd. with Hitachi Cable, Ltd.
Split thermal power generating systems business via company split and transferred to
MITSUBISHI HITACHI POWER SYSTEMS, LTD.
Turned Hitachi Medical Corporation into a wholly owned subsidiary via share exchange(changed its name to Hitachi Healthcare Manufacturing, Ltd. following the reorganizationof Hitachi’s healthcare business in April 2016)
Reorganized Central Research Laboratory, Hitachi Research Laboratory, Yokohama
Research Laboratory, Design Division and overseas R&D facilities into Global Center forSocial Innovation, Center for Technology Innovation and Center for Exploratory
Research to establish global R&D structure from the customers’ perspective
Hitachi Appliances, Inc. transferred its air-conditioning systems business to a joint
venture established with Johnson Controls Inc.
Reorganized in-house companies into business units as a market-specific businessstructure
Turned Hitachi Transport System, Ltd. into an equity-method associate of the Company
via sale of a part of its shares
Turned Hitachi Capital Corporation into an equity-method associate of the Company via
sale of a part of its shares
Transferred power tools business via share sale of Hitachi Koki, Co., Ltd.
Sold semiconductor manufacturing equipment business of Hitachi Kokusai Electric Inc.
and also turned it into an equity-method associate of the Company.
Transferred car information systems business via share sale of Clarion, Co., Ltd.
Merged Hitachi Appliances, Inc. with Hitachi Consumer Marketing, Inc. and changed its
name to Hitachi Global Life Solutions, Inc.

3. Description of Business
The Hitachi Group, which is comprised of the Company and 1,221 affiliates (803 consolidated
subsidiaries and 418 equity-method associates and joint ventures.), engages in a broad range of businessactivities, from product development and manufacturing to sales and services, in 8 segments of Information& Telecommunication Systems, Social Infrastructure & Industrial Systems, Electronic Systems &Equipment, Construction Machinery, High Functional Materials & Components, Automotive Systems,
Smart Life & Ecofriendly Systems and Others.
-5-

Major business outline for each segment and the positioning of principal affiliated companies aredescribed as follows. The Company mainly engages in manufacturing and sales of products and providing
services in the segments of Information & Telecommunication Systems, Social Infrastructure & Industrial
Systems and Electronic Systems & Equipment.
(As of March 31, 2019)
Main products and services
Information & Telecommunication
Systems
Systems Integration, Consulting,
Cloud Services, Servers, Storage,
Software, Telecommunications &Network, ATMs
Social Infrastructure & Industrial
Systems
Industrial Machinery and Plants,
Elevators, Escalators, Railway
Systems, Thermal, Nuclear andRenewable Energy Power
Generation Systems, Transmission& Distribution Systems
Electronic Systems & Equipment
Semiconductor Processing
Equipment, Test and Measurement
Equipment, Advanced Industrial
Products, Medical Electronics
Equipment
Construction Machinery
Hydraulic Excavators, Wheel
Loaders, Mining Machinery
High Functional Materials &Components
Semiconductor and Display
Related Materials, Circuit Boards
and Materials, Automotive Parts ,Energy Storage Devices, Specialty
Steel Products, Magnetic Materials
and Applications, Functional
Components and Equipment,
Wires, Cables and Related
Products
Automotive Systems
Engine Powertrain Systems,
Electric Powertrain Systems,
Integrated Vehicle Control
Systems
Smart Life & Ecofriendly Systems
Air-Conditioning Equipment,
Room Air Conditioners,
Refrigerators, Washing Machines

Positioning of principal affiliated companies
Manufacturing[Consolidated subsidiaries]
Hitachi Information & Telecommunication
Engineering, Ltd.
Hitachi-Omron Terminal Solutions, Corp.
Hitachi Computer Products (America), Inc.

[Consolidated subsidiaries]
Hitachi-GE Nuclear Energy, Ltd.
Hitachi Industrial Equipment Systems Co.,Ltd.
Hitachi Elevator (China) Co., Ltd.
[Equity-method associates]
Hitachi Kokusai Electric Inc.,MITSUBISHI HITACHI POWER
SYSTEMS, LTD.
[Consolidated subsidiaries]
Hitachi High-Technologies Corporation

Sales and services[Consolidated subsidiaries]
Hitachi Solutions, Ltd.
Hitachi Systems, Ltd.
Hitachi Consulting Corporation
Hitachi Global Digital Holdings
Corporation
Hitachi Payment Services Private Limited
Hitachi Vantara Corporation[Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Construction, Ltd.
Hitachi Plant Services Co., Ltd.
Hitachi Power Solutions Co., Ltd.
Hitachi Rail Europe Ltd.
Sullair US Purchaser, Inc.

[Consolidated subsidiaries]
Hitachi Construction Machinery Co., Ltd.
[Consolidated subsidiaries]
Hitachi Chemical Company, Ltd.
Hitachi Metals, Ltd.

[Consolidated subsidiaries]
Hitachi Automotive Systems, Ltd.
Hitachi Automotive Systems Americas, Inc.

[Consolidated subsidiaries][Consolidated subsidiaries]
Hitachi Appliances, Inc.
Hitachi Consumer Marketing, Inc.
Hitachi Consumer Products (Thailand), Ltd. [Equity-method associates]
Johnson Controls-Hitachi Air
Conditioning Holding (UK) Ltd
Others[Consolidated subsidiaries][Consolidated subsidiaries]
Optical Disk Drives, Property
Hitachi-LG Data Storage, Inc.
Hitachi Life, Ltd.
Management
Hitachi Urban Investment, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.
(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the
Hitachi Group’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the HitachiGroup’s products.
2. Hitachi Rail Europe Ltd. changed its company name to Hitachi Rail Ltd. on April 1, 2019.
3. Hitachi Appliances, Inc. merged with Hitachi Consumer Marketing, Inc. and changed its company name to Hitachi Global
Life Solutions, Inc. on April 1, 2019.
4. In addition to the table above, the major equity-method associates are Hitachi Capital Corporation and Hitachi Transport
System, Ltd.
-6-

4. Information on Affiliates(1) Consolidated subsidiaries(As of March 31, 2019)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)

Hitachi Information & Nishi-ku,
Telecommunication
Yokohama,
Engineering, Ltd.
Kanagawa

1,350

Information &Telecommunication
Systems

100.0

Hitachi-Omron
Terminal Solutions,Corp.

Shinagawaku, Tokyo

8,500

Information &Telecommunication
Systems

55.0

Hitachi Solutions,Ltd.

Shinagawaku, Tokyo

20,000Information &Telecommunication
Systems

100.0

Hitachi Systems, Ltd.

Shinagawaku, Tokyo

19,162

Information &Telecommunication
Systems

100.0

-7-

Relationship
The Company
outsources design,development,
manufacturing,evaluation andvalidation of storages,
servers andtelecommunication
networks equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases ATMs andother informationequipment. The
Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.
The Company
outsources
development of
information systems
and software, etc. The
Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.
The Company
outsources
calculation,
development ofsoftware, installationand maintenance of
telecommunicationequipment andcomputers. The
Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.

(As of March 31, 2019)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)

Hitachi Computer
Products (America),
Inc.

of Information &Oklahoma, (Thousands
US dollars) Telecommunication
U.S.A.
14,000 Systems**Hitachi Consulting
Corporation

Texas,U.S.A.

**Hitachi Global
Digital Holdings
Corporationof Information &California, (Thousands
US dollars) Telecommunication
U.S.A.
1,442,641 Systems

Hitachi Payment
Services Private
LimitedChennai,
India**Hitachi Vantara
Corporationof
California, (Thousands
US dollars) Information &U.S.A.
932,018 Telecommunication
Systems[100.0]
100.0

Hitachi Building
Systems Co., Ltd.

Chiyodaku, Tokyo

Social5,105 Infrastructure &Industrial Systems

100.0(Thousands of Information &US dollars) Telecommunication

855,417 Systems(Thousands of Information &Indian rupee) Telecommunication

79,158 Systems-8-[100.0]100.0[100.0]
100.0

100.0

[58.8]
100.0

Relationship
The Company
supplies parts forcomputer peripherals.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsources consulting
services. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Holding company for
Hitachi Consulting
Corporation and
Hitachi Vantara
Corporation, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Offering the HitachiGroup's payment
services for financial
institutions in India.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Sales company for theCompany's storage, etc.
The Company's
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Design, manufacturing,sales, installation andmaintenance ofthe elevators andescalators theCompany developed.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

(As of March 31, 2019)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)

Hitachi-GE Nuclear
Energy, Ltd.

Hitachi,
IbarakiSocial5,000 Infrastructure &Industrial Systems

80.0

Hitachi Industrial
Equipment Systems
Co., Ltd.

Chiyodaku, Tokyo

Social
10,000 Infrastructure &Industrial Systems

100.0

Hitachi Industry& Control Solutions,Ltd.

Hitachi,
IbarakiSocial3,000 Infrastructure &Industrial Systems

100.0

Hitachi Plant
Construction, Ltd.

Toshimaku, Tokyo

Social3,000 Infrastructure &Industrial Systems

100.0

Hitachi Plant Services
Co., Ltd.

Toshimaku, Tokyo

Social3,000 Infrastructure &Industrial Systems

100.0

-9-

Relationship
The Company delivers
nuclear power
generation equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases industrial
equipment. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources
development of
information control
systems, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Construction of theCompany’s power andindustrial plants, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Construction of theCompany’s industrial
plants, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

(As of March 31, 2019)
Company nameLocation

Commonstock

Principal businessSocial4,000 Infrastructure &Industrial Systems

Hitachi Power
Solutions Co., Ltd.

Hitachi,
Ibaraki

Hitachi Elevator(China) Co., Ltd.

of Social
Guangzhou, (Thousands
Chinese yuan) Infrastructure &China
538,806 Industrial Systems**Hitachi Rail Europe
Ltd.

London,U.K.

**Sullair US Purchaser, Indiana,
Inc.
U.S.A.

*Hitachi HighTechnologies
Corporation***Hitachi Construction
Machinery Co., Ltd.

(Thousands Socialof Sterlingpounds) Infrastructure &878,181 Industrial Systems(Thousands of Social
US dollars) Infrastructure &517,977 Industrial Systems

Minato-ku,
Tokyo

7,938

Electronic Systems& Equipment

Taito-ku,
Tokyo

81,576

Construction
Machinery-10-

Ownership
percentage ofvoting rights(%)

Relationship

The Company
purchases power plantparts, and outsources
maintenance of power
generation equipment
and control
100.0
equipment, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Sales, installation andmaintenance, etc. of
the Hitachi Group’s
elevators andescalators in China.
[70.0]The Company’s
70.0
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Manufacturing, sales,
engineering andmaintenance of theCompany’s railsystems products. The
100.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Holding company for
Sullair LLC etc. The
Company’s Directors,[100.0]Executive Officers or
100.0
employees concurrently
hold position of
directors or officers.
The Company sells andpurchases information
51.8 equipment and powerrelated parts throughthis company.
The Company’s
Directors, Executive
Officers or employees
51.5
concurrently holdposition of directors orofficers.

(As of March 31, 2019)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)*Hitachi Chemical
Company, Ltd.

Chiyoda-ku,
TokyoHigh Functional
15,454 Materials &Components

[0.1]
51.4

*Hitachi Metals, Ltd.

Minato-ku,
TokyoHigh Functional
26,283 Materials &Components

[0.5]
53.5

Hitachi Automotive
Systems, Ltd.

Hitachinaka, Ibaraki

15,000

Hitachi Automotive
Systems Americas,
Inc.

Kentucky,
U.S.A.

Hitachi Appliances,
Inc.

Minato-ku,
Tokyo

Automotive
Systems(Thousands of
US dollars) Automotive

86,278 Systems

Smart Life &20,000 Ecofriendly
Systems

-11-

100.0

[100.0]
100.0

100.0

Relationship
The Company
purchases electronicparts, molding products
and energy storage
devices and systems,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases specialty
steel products,
magnetic materials andapplications, functional
components andequipment, and wires,
cables, and related
products. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
purchases parts forrailway vehicles, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Manufacturing andsales company inNorth America for the
Hitachi Group’s
automotive systems
products.
Manufacturing andsales of the HitachiGroup's home
appliances, and sales,
system installation andmaintenance of theGroup’s refrigerating
and air-conditioning
products. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

(As of March 31, 2019)
CommonstockCompany nameLocation

Principal business

Hitachi Consumer
Marketing, Inc.

Minato-ku,
Tokyo

Hitachi Consumer
Products (Thailand),Ltd.

of Smart Life &Prachinburi, (Thousands
Thai Baht) Ecofriendly
Thailand
2,472,000 Systems

Hitachi-LG Data
Storage, Inc.

Minato-ku,
Tokyo

4,800 Others

Hitachi Life, Ltd.

Hitachi,
Ibaraki

1,000 Others

Hitachi Urban
Investment, Ltd.

Chiyoda-ku,
Tokyo

2,000 Others**Hitachi America,Ltd.

California,
U.S.A.

Smart Life &3,000 Ecofriendly
Systems(Thousands of
US dollars) Others

3,245,764-12-

Ownership
percentage ofvoting rights(%)

Relationship

Sales company for the
Hitachi Group’s home
appliances in Japan.
Manufacturing andsales company for the[80.1] Hitachi Group’s
80.1 refrigerators andwashing machines,
etc. in Thailand.
Development,
manufacturing andsales company for the
Hitachi Group’s
optical disk drives.
51.0 The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsourcesmanagement ofwelfare facilities, etc.
[21.8] The Company’s
100.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsourcesmanagement of welfare
facilities, etc. The
100.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Hitachi Group’s
regional supervising
company in Americas,
and sells the HitachiGroup’s plant-,
industrial machinery-,healthcare- anddigital media-related
100.0
products, etc., as wellas promotes R&D in
Americas. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
100.0

(As of March 31, 2019)
Company name

Hitachi Asia Ltd.

Location

Singapore

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)(Thousandsof Singapore
dollars) Others

100.0(Thousands of
US dollars) Others

100.0(Thousandsof Sterlingpounds) Others

100.0

186,231

Hitachi (China), Ltd.

Beijing,
China

Hitachi Europe Ltd.

Maidenhead,
U.K.

226,380

263,349-13-

Relationship
The Hitachi Group’s
regional supervising
company for Asia, andsells the HitachiGroup’s industrial
machinery andtrain-, healthcare- andinformation-related
products, etc. The
Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
The Hitachi Group’s
regional supervising
company for China,
and sells the HitachiGroup’s plant,
industrial machineryand digital media-,
train-, healthcare- andinformation-related
products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Hitachi Group’s
regional supervising
company for Europe,and sells the HitachiGroup’s plants,
industrial machineryand digital media- andinformation-related
products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

(As of March 31, 2019)
Company name

Hitachi India Pvt. Ltd.

Location

Commonstock

Principal businessof
New Delhi, (Thousands
Indian rupee) Others
India
344,000

Ownership
percentage ofvoting rights(%)

Relationship

The Hitachi Group’s
regional supervising
company for India,
and sells the HitachiGroup’s plants,
industrial machinery[100.0] and digital media100.0 related products, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Others- 767 companies(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. Companies with two asterisks (**) in the “Company name” column are specified subsidiaries.
3. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
4. The name of segment in which the companies classified is shown in the “Principal business” column.
5. The amounts in brackets in upper row of the “Ownership percentage of voting rights” column represent
the percentage of voting rights owned indirectly by subsidiaries, of the total ownership percentage.
6. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
Hitachi Power Europe GmbH ¥110,499 million
7. Hitachi Rail Europe Ltd. changed its company name to Hitachi Rail Ltd. on April 1, 2019.
8. Hitachi Appliances, Inc. merged with Hitachi Consumer Marketing, Inc. and changed its company
name to Hitachi Global Life Solutions, Inc. on April 1, 2019.

-14-

(2) Equity-method associates and joint ventures(As of March 31, 2019)
Company nameLocation

Commonstock

Principal business

Hitachi Kokusai
Electric Inc.

Minato-ku,
Tokyo

1,000

SocialInfrastructure &Industrial Systems

MITSUBISHIHITACHI POWER
SYSTEMS, LTD.

Nishi-ku,
Yokohama,
Kanagawa

100,000

SocialInfrastructure &Industrial Systems

Johnson ControlsHitachi Air
Conditioning
Holding (UK) Ltd

of Smart Life &Hampshire, (Thousands
US dollars) Ecofriendly
U.K.
935,107 Systems*Hitachi Capital
Corporation

Minato-ku,
Tokyo

9,983

*Hitachi Transport
System, Ltd.

Chuo-ku,Tokyo

16,802 Logistics services

Others- 413 companies-

General leasing,installment sales,
and other financial
services

-

-

-15-

Ownership
percentage ofvoting rights(%)

Relationship

The Company
purchases
electronic equipment
and parts, etc. The
20.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
supplies equipments
for thermal power
generation system.
The Company’s
35.0
Directors, Executive
Officers or employees
concurrently holdposition of directors
or officers.
Holding company for
air-conditioning
systems business[40.0] companies from40.0 which the HitachiGroup purchases airconditioning systems
devices.
Leases manufacturing
equipment, industrial
equipment, officeequipment, etc. to theCompany, andengages in leasing andinstallment sales of the
33.4
Company’s businessequipment, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company
outsources
transportation andstorage of products.
The Company’s
30.0
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
--

(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
3. The names of segment in which Hitachi Kokusai Electric Inc., MITSUBISHI HITACHI POWER
SYSTEMS, LTD. and Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd are classified areshown in the “Principal business” column.
4. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
Agility Trains East (Holdings) Limited¥76,263 million
Agility Trains West (Holdings) Limited¥65,407 million
GE-Hitachi Nuclear Energy Holdings LLC¥23,012 million-16-

5. Employees(1) Consolidated basis(As of March 31, 2019)
Number of employees
73,086[15,288]
79,108Social Infrastructure & Industrial
Systems[9,859]15,959
Electronic Systems & Equipment[2,231]
24,091
Construction Machinery[-]
51,895High Functional Materials &Components[-]
25,052
Automotive Systems[-]
11,279Smart Life & Ecofriendly Systems[-]
12,653
Others[3,294]2,818
Corporate (Head Office and others)[2,818]295,941
Total[33,490](Note) The number in brackets in the lower row of the “Number of Employees” column is the number of
employees of the Company included in each of the numbers in the upper row.
Name of segment
Information & Telecommunication
Systems(2) The Company
Number of employees
Average age
Average length of service
33,49042.1
19.0 years(Note) Average annual salary includes bonuses and extra wages.

(As of March 31, 2019)
Average annual salary¥8,943,244(3) Relationship with labor union
The Company’s labor union, Hitachi Workers Union, is a member of the Japanese ElectricalElectronic & Information Union.
The relationship between management and labor unions in the Hitachi Group is stable and smooth.

-17-II. Business Overview
1. Management Policy, Economic Environment and Challenges Hitachi Group Faces(1) Management Policy
Amid intensifying competition in global markets, the Hitachi Group has been expanding its
business through development of Hitachi and its related companies (subsidiaries and affiliatedcompanies). Hitachi aims to achieve further development by delivering competitive products andservices, thus creating higher value for customers. By taking full advantage of the diverse resources ofthe Hitachi Group, while at the same time reviewing and restructuring businesses, Hitachi aims tobolster its competitiveness and achieve growth in global markets. This process will be consistent with
Hitachi’s basic management policy, which is to increase shareholder value by meeting the expectationsof customers, shareholders, employees and other stakeholders.
Under the “2021 Mid-term Management Plan” newly announced in May 2019, we will work on
the realization of a sustainable society. Through our social innovation business, we will strive toimprove three areas of customers' value, namely social value (solving social issues), environmental
value (reducing greenhouse gasses, etc.) and economic value (improving business performance, etc.),
leading to an improvement in people's quality of life. Under the "2021 Mid-term Management Plan,"the Hitachi Group utilizes the following targets to measure performance in terms of meeting its strategicand operational goals:
Fiscal 2021 Target
Growth (Annual growth rate for revenues)

Over 3%

Profitability (Adjusted operating income margin) (Note)

Over 10%Ability to generate cash (Operating cash flow: cumulative for 3 years)

Over 2.5 trillion yen

Return on invested capital (ROIC)Over 10%Globalization (Overseas revenue ratio)

Over 60%(Note) Adjusted operating income is presented as revenues less cost of sales as well as selling, generaland administrative expenses. Adjusted operating income margin is the ratio calculated by
dividing adjusted operating income by revenues.
(2) Economic Environment
We conduct business operations such as manufacturing, marketing, and research and development
activities throughout the world. Therefore, the economic conditions in global markets where the HitachiGroup conducts business, in particular Japan, Asia, North America and Europe, affect its results ofoperations.
During the fiscal year ended March 31, 2019, the global economy continued to expand at amoderate pace as a whole despite some signs of a slowdown. The U.S. economy remained firm mainlyin the areas of consumer spending and capital investment on the back of improved employment
conditions. In Europe, the economy was sluggish mostly in Germany affected by a decline in exports to
China and the U.K. In China, the economy was supported by a range of government measures such as
easing the tax burden on corporations and consumer-spending stimulus programs in addition to
infrastructure investment. The Japanese economy continued its moderate recovery reflecting increases
in consumer spending and capital investment, although its exports and production were affected by theslowdown of overseas economies.
(3) Business and Financial Challenges Hitachi Group Faces
Under the “2021 Mid-term Management Plan,” we will focus on the following policies with theaim of making a leap forward.
‒ Challenge ourselves to be a global leading company: Evolve business models using Lumada
We have identified the five key sectors of Mobility, Smart Life, Industry, Energy, and IT as areasin which we propose social value, environmental value and economic value together to customers.
In order to realize further growth in these five sectors, we will further upgrade Lumada as common-18-platform and support our customers’ accelerating innovation, serving as a bridge between digitaltechnologies and real world.
We implement optimal business strategies for each of five sectors. We aim for further growththrough acquisition integration of ABB's power grid business scheduled for 2020 in Energy sector
and make continuous investments necessary to our growth in Industry and IT sectors. We pursue
becoming a global leading company of social innovation business.
‒ Construct resilient management base
We focus on the cost of capital for our business management newly adopting the return of invested
capital (ROIC) as a key performance indicator. We will strive to improve capital efficiency of the
Hitachi Group by optimizing our business portfolio, making concentrated investment in growthareas, reforming unprofitable businesses and reducing underperforming assets. Also, we willcontinuously promote cost reductions through streamlining of business operations with digitaltechnologies including Lumada.
‒ Take further initiatives to gain the trust of society
The Hitachi Group reaffirms that gaining and maintaining the trust of society in quality, safety,
and compliance is one of the top priorities. In addition, we will proactively and continuously makeefforts to meet such needs of society or the times as promoting diversity in our workplace,
speeding up work-style reforms, and contributing to the environment and local communities.
(4) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
The Group invests a great deal of business resources in fundamental research and in thedevelopment of market-leading products and businesses that will bear fruit in the future, and realizing
the benefits from these management policies requires that they be continued for a set period of time. For
this purpose, the Company keeps its shareholders and investors well informed of not just the businessresults for each period but also of the Company’s business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities andperformance that can be brought about through a change in management control, but it recognizes thenecessity of determining the impact on company value and the interests of all shareholders of thebuying activities and buyout proposals of parties attempting to acquire a large share of stock of theCompany or a Group company by duly examining the business description, future business plans, past
investment activities, and other necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor
is there a specific threat, neither does the Company intend to implement specified so-called antitakeover measures in advance of the appearance of such a party, but the Company does understand that
it is one of the natural duties bestowed upon it by the shareholders and investors to continuously
monitor the state of trading of the Company’s stock and then to immediately take what the Company
deems to be the best action in the event of the appearance of a party attempting to purchase a large shareof the Company’s stock. In particular, together with outside experts, the Company will evaluate thebuyout proposal of the party and hold negotiations with the buyer, and if the Company deems that saidbuyout will not maintain the Company’s value and is not in the best interest of the shareholders, thenthe Company will quickly determine the necessity, content, etc., of specific countermeasures andprepare to implement them. The same response will also be taken in the event a party attempts toacquire a large percentage of the shares of a Group company.
2. Risk Factors
We conduct business on a global scale across a broad range of business areas and utilize sophisticated,
specialized technologies to carry out our operations. Therefore, we are exposed to risks attributable to theeconomic environment, risks inherent in individual industrial sectors and business lines and risks related toour operations. Investment in our securities also involves risks. The following risks are based on theassumption we consider reasonable as of the filing date of this report.

-19-

Risks Related to Operations
Economic Trends
Our business is influenced by the global economy and economic conditions in certain regions orcountries. We are affected by downward economic trends in the U.S., Europe, China, emerging countries
and Japan. Such economic conditions could cause decline in consumer spending or capital investment andsubsequently reduced demand for our products and services, which could adversely affect our business,financial condition, and results of operations.
Currency Exchange Rates Fluctuations
Since we conduct business in many foreign countries, our business activities are exposed to risks fromfluctuations in foreign currency exchange rates. We sell products, provide services and purchase raw
materials and components in local currencies. Therefore, fluctuations in foreign currency exchange rates
may result in lower revenues or higher costs in yen to us and thus affect our results of operations, which arereported in Japanese yen. Our price competitiveness, and thus our results of operations, may be harmed if
we seek to increase prices in local currencies to compensate for lower revenues or to increase prices in yen
to absorb the higher cost. In addition, since we hold assets and liabilities denominated in foreign currencies,
fluctuations in foreign currency exchange rates may adversely affect our financial condition presented inJapanese yen through foreign currency translation. While we take measures to reduce the risks fromfluctuations in foreign currency exchange rates, such measures may not be effective.
Access to Liquidity and Long-term Financing
Our primary sources of funds are cash flows from operations, borrowings from banks and otherinstitutional lenders, and funding from capital markets, such as offerings of commercial paper and otherdebt securities, as well as equity securities. We need liquid funds to pay our operating expenses, theprincipal of and interest on our debt and dividends on our capital stock. We also need long-term financing
to fund, among other things, capital expenditures and research and development expenses. We currently
believe our cash flows from operations, borrowings from banks and other institutional lenders and funding
from the capital markets can provide sufficient funding for our operations and other liquidity needs.
However, a global economic downturn could adversely affect our cash flows from operations, businessresults and financial condition and may adversely affect our credit ratings. If our ratings are downgraded,
our ability to obtain additional financing on terms we consider favorable may be negatively affected.
Our reliance on banks and institutional lenders exposes us to risks related to rising interest rates, andwe may need to increase our reliance on external sources of funding. An increased reliance on debt
instruments may adversely affect our credit ratings, which might affect our ability to successfully obtain
additional financing on terms we consider favorable. The inability to successfully obtain such financing
may increase our financing costs, and therefore could adversely affect our financial condition and results ofoperations.
Furthermore, failure of one or more of our major lenders or a decision by one or more of them tochange the terms and conditions of their loans or to stop lending to us could have an adverse effect on ouraccess to funding.
Marketable Securities Risks
We invest in marketable securities to maintain or promote our business or other relationships withother companies. These marketable securities are exposed to the risk of declining stock market prices. Suchdeclines may require that we write down equity securities that we hold. Further, contractual and otherobligations may require us to maintain our holdings of these securities despite declining share prices andthis may lead to material losses.

-20-

Material and Component Procurement
Our manufacturing operations rely on external suppliers for supplies of materials, parts, components
and services of adequate quality and quantity, delivered in a timely manner at a reasonable price. External
suppliers may not have sufficient capacity to meet all of our needs during periods of excess demand.
Shortages of materials, parts, components and services may cause a sharp rise in their prices. In addition,
prices of certain raw materials, parts and components which we purchase in local currencies, principally the
U.S. dollar and the euro, could be adversely affected by fluctuations in foreign currency exchange rates.
Increases in the market price of petroleum and other materials, such as copper, steel, synthetic resins, rare
metals and rare-earth minerals, can increase our production costs and may adversely affect our results ofoperations. Conversely, decreases in commodity prices, such as for raw materials, parts and components,
can result in write-downs of inventory.
If natural disasters disrupt the operations of our suppliers and damage supply chains, it may adversely
affect our production. Although we generally maintain multiple sources of supply and work closely with
our suppliers to avoid supply-related problems, such problems, including shortages and delays, may
continue to occur, which could harm our business, financial condition and results of operations.
Estimates, Fluctuations in Cost and Cancellation of Long-term Contracts
We enter into a substantial number of long-term contracts, particularly in connection with theconstruction of infrastructure systems. When the outcome of a construction can be estimated reliably, we
recognize revenue and expenses by reference to the stage of completion of the contract activity. In this case,
we recognize revenue in an amount equal to estimated total revenue from the arrangement multiplied by thepercentage that costs incurred to date bear to estimated total costs at completion based upon the mostrecently available information. When the outcome of a construction cannot be estimated reliably, we
recognize revenue only to the extent of contract costs incurred that it is probable will be recoverable, andrecognize contract costs as expenses in the period in which such costs are incurred. The revenue recognition
for such long-term contracts requires us to make significant assumptions about estimates of total contract
costs, remaining costs to completion, total contract revenues, contract risks and other factors. We charge
any anticipated losses on fixed price contracts to operations when we are able to estimate such losses.
While we employ our best judgment based on available information, there can be no assurance that theseestimates will, ultimately, prove to be correct. We regularly review these estimates and adjust them as wedeem necessary. Fluctuations in costs can occur for a variety of reasons, many of which are beyond ourcontrol. In addition, we or our counterparties may cancel these contracts. These factors would require us torevise our initial assumptions regarding a particular contract, and may adversely affect our business,financial condition and results of operations.
Credit Risks Arising from Business Transactions
We make transactions with diverse customers and suppliers in Japan and other countries. We sell our
products to certain customers on credit and pay in advance for products or services provided by certain
suppliers. While we take measures to manage counterparty credit risk, such as regularly monitoring credit
conditions of such customers or suppliers and setting a limit on transaction amount according to their credit
conditions, credit deterioration or failure of one or more of them could adversely affect our financial
condition, results of operations and cash flows.
Supply and Demand Balance
Oversupply in the markets in which we compete may lead to declines in sales prices, revenues andprofitability. In addition, adjustment to demand may force us to dispose of excess supply or obsolete
equipment or reduce production, which can result in losses. For example, the imbalance between supply
and demand in construction machinery and automotive equipment industries and a resultant deterioration inmarket conditions could negatively affect our businesses, financial condition and results of operations.

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Rapid Technological Innovation
New technologies are rapidly emerging in the segments in which we conduct business, with the paceof technological innovation. The development of new and advanced technologies, the continuous, timely
and cost-effective incorporation of such technologies into products and services and the effective marketingof such products and services are indispensable to remaining competitive. While introducing such products
and services requires significant resource commitment to research and development, there can be noassurance that our research and development will be successful. Failure in our endeavors to develop andincorporate such advanced technologies into products and services in a timely manner, or to achieve market
acceptance for such products and services, may negatively affect our business, financial condition andresults of operations.
Dependence on Specially Skilled Personnel
We believe recruiting and retaining additional people who are highly skilled in connection with ouroperations is indispensable to remaining competitive. However, the number of skilled personnel is limited
and the competition for attracting and maintaining such personnel is intense. We cannot ensure that we will
be able to successfully attract new or maintain our current skilled personnel.
Intense Competition
We are subject to intense competition in many of the markets in which we operate, and this may
adversely affect our results of operations. The industrial sectors and business lines in which we are engaged
are experiencing increasingly intense competition. We compete with diverse competitors ranging from huge
global corporations to specialized companies. Competitors are increasingly manufacturing products,
including sophisticated electronic products, and developing IT services in low-cost jurisdictions. Low-cost
manufacturing and the globalization of world markets have accelerated the commoditization of certain
products or services, which has resulted in increasingly intense price competition for many of our products.
To succeed in this competitive environment, we believe that our products and services must be pricecompetitive. The commoditization of such products affects our ability to set prices for our products. If weare unable to charge comparable prices to those of our competitors, our competitiveness and overallprofitability may be harmed. On the other hand, charging comparable prices to those of our competitors
may require us to sell products and services at a loss. Our products and services must also be competitive interms of engineering sophistication, quality and brand value. We must introduce our products and services
to the markets in a timely manner. There can be no assurance that the products or services that we offer will
be competitive. The failure of such products or services to be competitive may negatively affect ourbusiness, financial condition and results of operations.
Our Strategy to Strengthen Our Social Innovation BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure mainly by strengthening our Social Innovation Business, which supplies advanced social
infrastructure supported by information and communication technology. We plan to devote significant
resources including capital expenditures and R&Ds and are making investments in mergers and acquisitions
and in new projects to strengthen our Social Innovation Business. In addition, we attempt to design suitableorganizational structure for promoting our Social Innovation Business more effectively in response tomarket changes. To implement this strategy, we have incurred and may continue to incur considerable
expenses. Our efforts to implement this strategy may be unsuccessful or less successful than we currently
anticipate. Even if these efforts are successful, there is no assurance that we will be able to sustain or
increase profitability.

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Acquisitions, Joint Ventures and Strategic Alliances
In every operating sector, we depend to some degree on acquisitions of other companies, joint venturesand strategic alliances with outside partners to design and develop key new technologies and products, tostrengthen competitiveness by scaling up and to expand into new regions through acquiring local bases or
distribution channels. Such transactions are inherently risky because of the difficulties in integrating
operations, technologies, products and personnel and achieving return of the investment. Integration issues
are complex, time-consuming and expensive and, without proper planning and implementation, could
adversely affect our business. Decisions made by or the performance of alliance partners that we cannot
control or adverse business trends may also negatively affect the success of our alliances. We may incur
significant acquisition, administrative and other costs in connection with these transactions, including costs
related to integration or restructuring of acquired businesses. If it is expected that the amount invested isirrecoverable due to a decline in the profitability of an investee, we may incur significant losses, including
impairment loss for goodwill. There can be no assurance that these transactions will be beneficial to ourbusiness or financial condition. Even assuming these transactions are beneficial, there can be no assurance
that we will be able to successfully integrate acquired businesses or achieve all or any of the initial
objectives of these transactions.
Restructuring of Our BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure in part by:・ closing unprofitable operations;・ divesting our subsidiaries and affiliated companies;
・ reorganizing production bases and sales networks; and・ selling select assets.
Our restructuring efforts may not be implemented in a timely manner or at all, including due togovernmental regulations, employment issues or a lack of demand in the M&A market for businesses wemay seek to sell. In addition, we have listed subsidiaries and from time to time the interests of these listed
subsidiaries’ shareholders may conflict with our interests. Such conflicts of interest may result indifficulties in timely implementing group-wide policies, including mergers, company splits and othersimilar transactions to which the listed subsidiaries are parties. Restructuring efforts may also bring about
unintended consequences, such as negative customer or employee perceptions, and have caused and may
continue to cause us to incur significant expenses and other costs, including additional impairment losses on
our fixed assets and intangible assets, write-offs of inventory and losses on the disposal of fixed assets andlosses related to the sale of securities.
Current and future restructuring efforts may be unsuccessful or less successful than we presently
anticipate and may adversely affect our business, financial condition and results of operations.
Worsening of Business Performance of Equity-Method Associates and Joint Ventures
We use the equity-method to account for a number of associates and joint ventures. If one or more ofsuch associates or joint ventures, accounted for using the equity-method, records a loss during a given
period, we must record that loss in a manner proportionate to our ownership interest in our consolidated
financial statements. In addition, if the carrying amount of our equity-method investments in associates orjoint ventures is below the recoverable amount of the investments, we could be required to record an
impairment loss.

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Our Overseas Growth Strategies
We seek to expand our business, including our Social Innovation Business, in overseas markets as partof our business strategy. Through such overseas expansion, we aim to increase our revenues, reduce ourcosts and improve profitability. In many of these markets, we face barriers in the form of long-standing
relationships between our potential customers and their local suppliers. In addition, various factors inforeign countries where we operate may adversely affect our overseas business activities. These factors
include:・ changes in regulations relating to investments, exports, tariffs, antitrust, anti-bribery, consumer andbusiness taxation, intellectual property, foreign trade and exchange controls, environmental andrecycling requirements;
・ differences in commercial and business customs such as contract terms and conditions;・ labor relations;・ public sentiment against Japan and local residents’ sentiment against us; and・ other political and social factors as well as economic trends and currency exchange rate fluctuations.
Because of these factors, there can be no assurance that we will be able to achieve the aims of ouroverseas growth strategy. This may adversely affect our business growth prospects and results ofoperations.
Overhaul of Cost Structure
We implement “the Hitachi Smart Transformation Project,” which promotes cost reductions in all
activities of our value chain by thoroughly overhauling our cost structure across the Group. We seek tostabilize earnings and generate cash flows by improving our management efficiency through the Project.
The Project may be less successful than we currently anticipate. Even if the Project is successful, there is no
assurance that we will be able to sustain or increase profitability.
Intellectual Property
We depend in part on proprietary technology and our ability to obtain patents, trademarks and otherforms of intellectual property rights covering our products, product design, manufacturing processes andsoftware-based services in Japan and other countries. The fact that we hold such intellectual property rights
does not ensure that they will provide a competitive advantage to us. Various parties may challenge,
invalidate or circumvent our patents, trademarks and other intellectual property rights. There can be noassurance that claims allowed on any future patents will be sufficiently broad to protect our technology.
Effective patent, copyright and trade secret protection may be unavailable or limited in some of the markets
in which we operate, and our trade secrets may be vulnerable to disclosure or misappropriation by
employees, contractors and other persons.
We design many of our products to include software or other intellectual property licenses from third
parties. Competitors may not make their protected technology available to us, or may make it available tous only on unfavorable terms and conditions. There can be no assurance that we will be able to maintain alicense for such intellectual property if obtained, for economic or other reasons, or that such intellectual
property will give us the commercial advantages that we desire.
From time to time, we are sued or receive notices regarding patent and other intellectual property
claims. Whether or not these claims have merit, they may require significant resources to defend against
and may divert management attention from our business and operations and result in harm to our
reputation. In addition, a successful infringement claim and our inability to obtain the license for the
infringed technology or substitute similar non-infringing technology may adversely affect our business.

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Litigation and Regulatory Investigations
We face risks of being involved in litigation and alternative dispute resolution and regulatory
investigation and actions in connection with our operations. Lawsuits or any other legal procedures forresolving disputes and regulatory actions may seek payment of large, indeterminate amounts or otherwise
limit our operations, and their existence and magnitude may remain unknown for substantial periods oftime.
In the past several years, we have been the subject of several investigations of alleged antitrust
violations in relation to certain product markets in Japan, Europe and North America, etc. and received
claims for damages from our customers, etc., which may have adverse effects on our financial condition or
profitability. See “Consolidated Financial Statements－Notes to Consolidated Financial Statements－(30)Commitments and Contingencies.” These investigations or disputes may result in significant penalties orcompensation for damages, etc. Such substantial legal liability or regulatory action could have an adverse
effect on our business, results of operations, financial condition, cash flows, reputation and credibility.
In addition, our business activities are subject to various governmental regulations in countries where
we operate, which include investment approvals, export regulations, tariffs, antitrust, anti-bribery,
intellectual property, consumer and business taxation, foreign trade and exchange controls, andenvironmental and recycling requirements. These regulations limit, and other new or amended regulations
may further limit, our business activities or increase operating costs. In addition, the enforcement of such
regulations, including the imposition of fines or surcharges for violation of such regulations, may adversely
affect our results of operations, financial condition, cash flows, reputation and credibility.
Product Quality and Liability
We increasingly provide products and services utilizing sophisticated technologies, including but notlimited to components of power stations. Reliance on external suppliers reduces our control over quality
assurance. The occurrence of defects in our products and services could negatively affect our reputation for
quality of products and services, expose us to liability for damages caused by such defects and negatively
affect our ability to sell certain products. A significant product defect could adversely affect our results ofoperations, financial condition and future business prospects.
Significant Disasters and Similar Events
We have many facilities, including our R&D facilities, manufacturing facilities and our headquarters
in Japan. Historically, Japan has experienced numerous natural disasters such as earthquakes, tsunamis andtyphoons. Natural disasters in the future may have a significantly adverse affect on an array of ourcorporate activities, from production to sales. We also have overseas facilities in Asia, the U.S. and Europe,
which are also subject to similar natural disasters. Natural disasters in each of the areas may cause damage
on certain of our plants and offices and the operations of our suppliers and customers. Such significant
natural disasters may directly damage or destroy our facilities, which could disrupt our operations, delay
new production and shipments of existing inventory or result in costly repairs, replacements or other costs,
all of which would result in significant losses. Furthermore, even if such significant natural disasters do notdirectly affect our facilities, they could result in disruptions in distribution channels or supply chains. The
spread of infectious diseases and geopolitical and social instability, such as terrorism, crime, civil
disturbance and conflict, etc., may also disrupt our operations, render our employees unable to work, reduce
consumer demand for our products or disrupt our supply and distribution channels. In addition, we are notinsured against all potential losses, and even losses that insurance covers may not be fully covered and may
be subject to challenges of or delays in payment. Direct and indirect disruption of our operations as a resultof natural disasters or other events could have a negative impact on our operating activities, results ofoperations and financial condition.

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Dependence on Information Systems
With the increased importance of information systems to our operating activities, disruptions in such
systems due to computer viruses and other factors could have a negative impact on our operating activities,
results of operations and financial condition.
Management of Confidential Information
We maintain and manage personal information obtained from our customers, as well as confidential
information relating to our technology, research and development, or R&D, production, marketing andbusiness operations and those of our customers and clients, in various forms. Although we have
implemented controls to protect the confidentiality of such information, there can be no assurance that suchcontrols will be effective. Unauthorized disclosures of such information could subject us to complaints or
lawsuits for damages or could otherwise have a negative impact on our business, financial condition, resultsof operations, reputation and credibility.
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are key assumptions used inestimating pension costs including mortality, withdrawal and retirement rates, changes in wages and thediscount rate. We are required to make judgments regarding the key assumptions by taking into accountvarious factors including personnel demographics, market conditions and expected trends in interest rates.
Although management believes that its key assumptions are reasonable in light of the various underlying
factors, there can be no assurance that the key assumptions will correspond to actual results. If our key
assumptions differ from actual results, the consequent deviation of actual pension costs from estimatedcosts may have an adverse effect on our financial condition and results of operations. A decrease in the
discount rate may result in an increase in the amount of projected benefit obligations. In addition, we may
change these key assumptions, such as the discount rate. Changes in key assumptions may also have an
adverse effect on our financial condition and results of operations.

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Risks Related to Our American Depositary Shares
Rights of ADS holders
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining our accounting books and records andexercising appraisal rights are available only to shareholders of record. Because the depositary, through its
custodian agents, is the record holder of the shares underlying the American Depositary Shares, or ADSs,
only the depositary can exercise those rights in connection with the deposited shares. The depositary will
make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders andwill pay dividends and distributions collected from us as and to the extent provided in the deposit
agreement. However, ADS holders will not be able to bring derivative actions, examine our accounting
books and records, or exercise appraisal rights through the depositary.
We are incorporated in Japan with limited liability. A significant portion of our assets are locatedoutside the United States. As a result, it may be more difficult for investors to enforce against us judgments
obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of theUnited States or judgments obtained in other courts outside Japan. There is doubt as to the enforceability inJapanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil
liabilities predicated solely upon the federal securities laws of the United States.
Unit Share System
The Companies Act allows companies to establish a “unit” of shares for the purpose of exercising
voting rights at the general meetings of shareholders. Under our articles of incorporation, one unit of ourshares is composed of 100 shares, equivalent to 50 ADSs. Each unit of our shares has one vote. A holder
who owns shares or ADSs in other than multiples of 100 or 50, respectively, will own less than a whole unit
(i.e., for the portion constituting fewer than 100 shares, or fewer than 50 ADSs). Our articles ofincorporation, in accordance with the Companies Act, impose significant restrictions on the rights ofholders of shares constituting less than a whole unit, which include restrictions on the right to vote, toattend a shareholders meeting and to bring derivative actions. In addition, less than whole unit sharescannot be traded on Japanese stock markets. Under the unit share system, holders of our shares constituting
less than one unit have the right to require us to purchase their shares and the right to require us to sell them
additional shares to create a whole unit of 100 shares. However, holders of our ADSs are unable towithdraw underlying shares representing less than one unit and, as a practical matter, are unable to require
us to purchase those underlying shares. The unit share system, however, does not affect the transferabilityof ADSs, which may be transferred in lots of any number of whole ADSs.
Dilution of Your Shares by Issuances of Additional Shares
We may issue additional shares in the future within the unissued portion of our authorized sharecapital and sell shares held as treasury stock, generally without shareholder vote unless the subscription orsale price is significantly lower than the market price. Issuances and sales of our shares in the future may beat prices below the prevailing market prices and may be dilutive.
Foreign Exchange Fluctuations
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In
addition, the amount of cash dividends or other cash payments made to holders of ADSs will decline if thevalue of the yen declines against the dollar.

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3. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations andCash Flows(1) Progress of Management Plan
1) Status of Key Indicators laid out as Strategic and Operational Targets
The year ended March 31, 2019 was the last year of "2018 Mid-term Management Plan." We
achieved the improvement of profitability targeted under the mid-term management plan and built afoundation for the next stage of growth. The key indicators to measure performances in terms of meeting
our strategic and operational goals are as follows.
Year ended March 31, 2019 (Fiscal 2018)
ResultRevenues

Target9,480.6 billion yen

10,000.0 billion yen

754.9 billion yen

Over 800.0 billion yen

8.0%Over 8%EBIT
EBIT margin513.9 billion yen
5.4%

Over 800.0 billion yen
Over 8%Net income attributable to Hitachi,Ltd. stockholders

222.5 billion yen

Over 400.0 billion yen

Overseas revenues ratio

51%

Over 55%

ROA

3.3%

Over 5.0%

Adjusted operating income
Adjusted operating income margin

2) Global Business Expansion
We have strived to expand our business globally by making main line of our businesses further
grow with regional focus. The main results for the year ended March 31, 2019 are as follows.
Railway systems business- Received orders for intercity express cars in Taiwan, operation and maintenance services for the
Riyadh Metro in Saudi Arabia, and signal and traffic management systems for high-speed trains in
Italy
Digital solution- Established a joint venture with a local bank in India and built next-generation digital payment
platform there
3) Business Reorganization
We continuously reorganize our business in order to further focus our business resources on theSocial Innovation Business. The important business reorganizations conducted in the year ended March
31, 2019 are as follows:
In October 2018, the Company concluded an agreement to subscribe to a tender offer for thecommon shares of Clarion Co., Ltd. to be conducted by Hennape Six SAS, a subsidiary of Faurecia S.A.
The Company transferred all of its shares in Clarion Co., Ltd. by subscribing to the tender offer in March
2019. As a result of the transfer of shares, Clarion Co., Ltd. ceased to be a subsidiary of the Company.
In December 2018, the Company signed an agreement with ABB Ltd (ABB) regarding acquisitionof the power grids business from ABB. The Company plans to acquire an 80.1% stake in the company
operating the power grids business that will be divested by ABB in the first half of 2020 and make it aconsolidated subsidiary of the Company from the fourth year on since the company being launched.
We also continuously promote business restructuring in order to address challenges we face such as
improving profitability of unprofitable businesses and downsizing of or withdrawal from them, andredeploying employees.

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(2) Analysis of Results of Operations
1) Analysis of Statement of Operations
Revenues increased 1% to ¥9,480.6 billion, as compared with the year ended March 31, 2018,
despite the effect of conversion of Hitachi Kokusai Electric Inc. into an equity-method associate. This
increase was due mainly to an increase in revenues in the Social Infrastructure & Industrial Systems
segment owing to an increased revenues from the railway systems business for Europe, in theConstruction Machinery segment where sales rose mainly in North America and Asia-Pacific, in the
Information & Telecommunications Systems segment where the system integration business remained
firm and in the High Functional Materials & Components segment owing to corporate acquisitions by
Hitachi Chemical Company, Ltd. and Hitachi Metals, Ltd.
Cost of sales increased 1% to ¥6,964.6 billion, as compared with the year ended March 31, 2018,
and the ratio of cost of sales to revenues was 73%, which was the same level as for the year ended
March 31, 2018. Gross profit increased 1% to ¥2,515.9 billion, as compared with the year ended March
31, 2018.
Selling, general and administrative expenses decreased 1% to ¥1,761.0 billion, as compared withthe year ended March 31, 2018, and the ratio of selling, general and administrative expenses to revenues
was 19%, which was the same level as for the year ended March 31, 2018.
Adjusted operating income increased by ¥40.3 billion to ¥754.9 billion yen, as compared with theyear ended March 31, 2018. The increase was due mainly to higher profits owing to increased revenues
and profitability improvement in the Information & Telecommunication Systems segment, the Social
Infrastructure & Industrial Systems segment and the Construction Machinery segment. The increase
was partially offset by decreased profits in the High Functional Materials & Components segment andthe Automotive Systems segment.
Other income increased ¥194.3 billion to ¥206.3 billion and other expenses increased ¥301.9
billion to ¥442.6 billion, as compared with the year ended March 31, 2018, respectively. The details are
as follows. Net gain on sales and disposal of fixed assets was improved by ¥20.9 billion and turned togain of ¥18.4 billion, as compared with the year ended March 31, 2018. Impairment losses increased¥296.3 billion to ¥344.9 billion, as compared with the year ended March 31, 2018. This mainlyreflected impairment losses recognized as the result of the suspension of the UK nuclear power stations
construction project in power and energy business. Net gain on business reorganization and others
increased ¥174.8 billion to ¥184.6 billion, as compared with the year ended March 31, 2018, due mainly
to net gain by selling shares of Hitachi Kokusai Electric Inc. stock, shares of Clarion Co., Ltd. stock in
the Automotive Systems segment and a part of shares of Agility Trains West (Holdings) Limited stockin the Social Infrastructure & Industrial Systems segment. Special termination benefits increased ¥6.6
billion to ¥22.3 billion, as compared with the year ended March 31, 2018. Expenses related tocompetition law and others decreased ¥12.5 billion to ¥1.7 billion, as compared with the year ended
March 31, 2018.
Financial income (excluding interest income) increased by 6.6 billion to ¥13.6 billion and financial
expenses (excluding interest charges) decreased ¥7.7 billion to ¥3.4 billion, as compared with the year
ended March 31, 2018, respectively.
Share of loss of investments accounted for using the equity method was ¥15.0 billion, adeterioration of ¥77.4 billion from the year ended March 31, 2018, due to an exchange loss at a foreign
equity-method associate and impairment losses for investment on equity-method associates.
As a result of the foregoing, EBIT decreased ¥130.3 billion to ¥513.9 billion, as compared with theyear ended March 31, 2018.
Interest income increased ¥8.1 billion to ¥23.1 billion, as compared with the year ended March 31,2018 and interest charges was ¥20.5 billion, which was the same level as for the year ended March 31,
2018.
Income from continuing operations, before income taxes decreased ¥122.1 billion to ¥516.5
billion, as compared with the year ended March 31, 2018.

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Income taxes increased ¥54.6 billion to ¥186.3 billion, as compared with the year ended March 31,
2018, despite of decreased income from continuing operations, before income taxes owing mainly to
impairment losses recognized as the result of the suspension of the UK nuclear power stations
construction project. This increase was due mainly to increased taxable income due to such impairment
losses being non-deductible.
Loss from discontinued operations decreased ¥6.8 billion to ¥9.1 billion, as compared with theyear ended March 31, 2018.
Net income decreased ¥169.8 billion to ¥321.0 billion, as compared with the year ended March 31,
2018.
Net income attributable to non-controlling interests decreased ¥29.4 billion to ¥98.4 billion, as
compared with the year ended March 31, 2018.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders decreased ¥140.4
billion to ¥222.5 billion, as compared with the year ended March 31, 2018.
2) Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment
include intersegment transactions.
(Information & Telecommunication Systems)
Revenues increased 3% to ¥2,065.9 billion, as compared with the year ended March 31, 2018, due
mainly to higher revenues from system integration business, despite the effect of transfer of a subsidiary
operating communication network equipment business.
Adjusted operating income increased ¥36.0 billion to ¥225.2 billion, as compared with the year
ended March 31, 2018, due mainly to improved profitability in system integration business and IT
platform & products business.
EBIT increased ¥71.6 billion to ¥210.9 billion, as compared with the year ended March 31, 2018,
due mainly to the increased adjusted operating income and posting of gains on sales of land formerly
used as production site for telecommunication network products.
(Social Infrastructure & Industrial Systems)
Revenues increased 7% to ¥2,539.8 billion, as compared with the year ended March 31, 2018, due
mainly to revenue increase in railway systems business for Europe and revenues recognized foroverseas EPC project for industry and distribution field.
Adjusted operating income increased ¥35.7 billion to ¥151.3 billion, as compared with the year
ended March 31, 2018, due mainly to revenue increase in the railway systems business, and a higher
revenue and an improvement in profitability of the industrial products business.
EBIT was worsened by ¥253.2 billion to the loss of ¥151.9 billion, as compared with the profit of¥101.2 billion for the year ended March 31, 2018, despite posting of gains on business reorganizationand others for partial sales of shares of Agility Trains West (Holdings) Limited stock. The decrease wasdue mainly to impairment losses recognized as the result of the suspension of the UK nuclear power
stations construction project.
(Electronic Systems & Equipment)
Revenues decreased 12% to ¥951.2 billion, as compared with the year ended March 31, 2018, due
mainly to the effect of reorganization of Hitachi Kokusai Electric Inc., despite increased revenues at
Hitachi High-Technologies Corporation owing to higher sales of clinical analyzers and semi-conductor
processing equipment and increased revenues in healthcare business owing to higher sales of radiation
therapy systems.
Adjusted operating income decreased ¥11.3 billion to ¥75.6 billion, as compared with the year
ended March 31, 2018, due mainly to the effect of reorganization of Hitachi Kokusai Electric Inc.
EBIT decreased ¥18.0 billion to ¥70.8 billion, as compared with the year ended March 31, 2018,
due mainly to decreased adjusted operating income.

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(Construction Machinery)
Revenues increased 8% to ¥1,033.7 billion, as compared with the year ended March 31, 2018, due
mainly to increased sales in overseas countries mainly in North America and Asia-Pacific.
Adjusted operating income increased ¥23.2 billion to ¥115.7 billion, as compared with the year
ended March 31, 2018, due mainly to the increased revenues.
EBIT increased ¥7.4 billion to ¥104.5 billion, as compared with the year ended March 31, 2018,
due mainly to the increased adjusted operating income, despite of making a provision for concerns ofcollectability of VAT receivables which were overpaid by the subsidiary of Hitachi Construction
Machinery Co., Ltd. in China in the year ended March 31, 2018 and the increased structural reform
expenses.
(High Functional Materials & Components)
Revenues increased 3% to ¥1,704.4 billion, as compared with the year ended March 31, 2018, due
mainly to the effect of corporate acquisition by Hitachi Chemical Company, Ltd. and Hitachi Metals,Ltd., and sales price rise linked to higher raw material costs at Hitachi Metals, Ltd.
Adjusted operating income decreased ¥21.8 billion to ¥99.9 billion, as compared with the year
ended March 31, 2018, due mainly to decrease in demand for factory automation-related materials andmaterials for semiconductors and electronics products at Hitachi Metals, Ltd. and effects of changes in
product mix at Hitachi Chemical Company, Ltd.
EBIT decreased ¥12.2 billion to ¥86.4 billion, as compared with the year ended March 31, 2018,
due mainly to posting gain on business reorganization and others at Hitachi Metals, Ltd. and a decreasein expenses related to competition law and others at Hitachi Chemical Company, Ltd.
(Automotive Systems)
Revenues decreased 3% to ¥971.0 billion, as compared with the year ended March 31, 2018, due
mainly to sales decrease in China and North America and lower revenues from car information systems
business.
Adjusted operating income decreased ¥11.5 billion to ¥38.0 billion, due mainly to the decrease inrevenues, changes in product mix and deteriorated operational productivity of the production bases inNorth America.
EBIT increased ¥42.9 billion to ¥85.3 billion, as compared with the year ended March 31, 2018,
due mainly to posting gain on sales of the shares of Clarion Co., Ltd. and others.
(Smart Life & Ecofriendly Systems)
Revenues decreased 10% to ¥485.0 billion, as compared with the year ended March 31, 2018, due
mainly to decreased revenues both in Japan and overseas market.
Adjusted operating income decreased ¥2.6 billion to ¥22.4 billion, due mainly to the decline inrevenues.
EBIT decreased ¥3.7 billion to ¥29.5 billion, as compared with the year ended March 31, 2018,
due mainly to the decrease in adjusted operating income.
(Others)
Revenues decreased 4% to ¥534.4 billion, adjusted operating income increased ¥5.4 billion to¥26.8 billion and EBIT increased ¥3.8 billion to ¥25.6 billion, as compared with the year ended March
31, 2018, respectively.
3) Revenues by Geographic Area
The following is an overview of revenues attributed to geographic areas based on customer location.
Japan
Revenues in Japan was ¥4,664.5 billion, which was the same level as the year ended March 31,
2018. This was due mainly to increased revenues in the Information & Systems segment, the High
Functional Materials & Components segment and the Construction Machinery segment, which offset
decreased revenues in the Electronic Systems & Equipment owing to the effect of businessreorganization of Hitachi Kokusai Electric Inc.
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Overseas(Asia)
Revenues in Asia decreased 3% to ¥2,019.5 billion, as compared with the year ended March 31,
2018. This was due mainly to reduced revenues in the Electronic Systems & Equipment segmentowing to the effect of business reorganization of Hitachi Kokusai Electric Inc. and in the Automotive
Systems segment, despite higher revenues in the Social Infrastructure & Industrial Systems segmentowing to sales growth in the building systems business in China and in the Construction Machinery
segment.
(North America)
Revenues in North America increased 2% to ¥1,205.6 billion, as compared with the year ended
March 31, 2018. This was due mainly to the higher revenues in the Construction Machinery segment,
the Social Infrastructure & Industrial Systems segment and the High Functional Materials &Components segment, despite reduced revenues in the Information & Systems segment and theAutomotive Systems segment, etc.
(Europe)
Revenues in Europe increased 6% to ¥1,018.5 billion, as compared with the year ended March
31, 2018. This was due mainly to higher revenues in the Social Infrastructure & Industrial Systems
segment, reflecting sales growth in the railway systems business, the Construction Machinery
segment and the Information & Systems segment.
(Other Areas)
Revenues in other areas increased 14% to ¥572.3 billion, as compared with the year ended
March 31, 2018. This was due mainly to higher revenues in the Social Infrastructure & Industrial
Systems segment owing to revenues recognized for overseas EPC project for industry anddistribution field.
As a result of the foregoing, overseas revenues increased 2% to ¥4,816.0 billion, as comparedwith the year ended March 31, 2018, and the ratio to total revenues was 51%, which was 1% increase
as compared with the year ended March 31, 2018.
(3) Analysis of Financial Condition and Cash Flows
1) Liquidity and Capital Resources
Our management considers maintaining an appropriate level of liquidity and securing adequate
funds for current and future business operations to be important financial objectives. Through efficientmanagement of working capital and selective investment in new plants and equipment, we are working to
optimize the efficiency of capital utilization throughout our business operations. We endeavor to improve
our group cash management by centralizing such management among us and our overseas financial
subsidiaries. Our internal sources of funds include cash flows generated by operating activities and cashon hand. Our management also considers short-term investments to be an immediately available sourceof funds. In addition, we raise funds both in the capital markets and from Japanese and internationalcommercial banks in response to our capital requirements. Our management’s policy is to finance capital
expenditures primarily by internally generated funds and to a lesser extent by funds raised through theissuance of debt and equity securities in domestic and foreign capital markets. In order to flexibly accessfunding, we maintain our shelf registration with the maximum outstanding balance of ¥300.0 billion.
We maintain commitment line agreements with a number of domestic banks under which we may
borrow in order to ensure efficient access to necessary funds. These commitment line agreements
generally provide for a one-year term, renewable upon mutual agreement between us and each of thelending banks, as well as another commitment line agreement with a contract term of three years endingon July 29, 2019. As of March 31, 2019, our unused commitment lines totaled ¥465.0 billion, including
those of ¥400.0 billion which the Company maintained.

-32-

We receive debt ratings from Moody’s Japan K.K. (Moody’s), S&P Global Rating Japan Inc.
(S&P), as well as Rating and Investment Information, Inc. (R&I). Our debt ratings as of March 31, 2019were as follows.
Rating Company
Moody’s
S&P
R&I

Long-term
A3
AA+

Short-term
P-2
A-1
a-1

With our current ratings, we believe that our access to the global capital markets will remain
sufficient for our financing needs. We seek to improve our credit ratings in order to ensure financial
flexibility for liquidity and capital management, and to continue to maintain access to sufficient funding
resources through the capital markets.
2) Cash Flows(Cash Flows from Operating Activities)
Net cash outflow from a change in trade payables increased by ¥114.0 billion, as compared withthe year ended March 31, 2018. Net cash inflow from a change in trade receivables and contract assets*
decreased by ¥45.4 billion, as compared with the year ended March 31, 2018. Net cash outflow from achange in inventories decreased by ¥31.7 billion, as compared with the year ended March 31, 2018.
As a result of the foregoing, net cash provided by operating activities was ¥610.0 billion in theyear ended March 31, 2019, a decrease of ¥117.1 billion compared with the year ended March 31, 2018.
* Due to the implementation of IFRS 15, "change in trade receivables" is presented as "change intrade receivables and contract assets" from the year ended March 31, 2019.
(Cash Flows from Investing Activities)
Net amount of investments related to property, plant and equipment** was ¥410.6 billion in theyear ended March 31, 2019.This net sum increased by ¥4.1 billion compared with the year ended March
31, 2018. Proceeds from sale of investments in securities and other financial assets (including
investments in subsidiaries and investments accounted for using the equity method) in the year ended
March 31, 2019 increased by ¥128.7 billion, as compared with the year ended March 31, 2018, due
mainly to the sale of shares of Clarion Co., Ltd. Purchase of investments in securities and otherfinancial assets (including investments in subsidiaries and investments accounted for using the equity
method) in the year ended March 31, 2019 decreased by ¥170.7 billion, as compared with the year
ended March 31, 2018, in which expenses related to acquiring Sullair business were paid.
As a result of the foregoing, net cash used in investing activities was ¥162.8 billion in the year
ended March 31, 2019, a decrease of ¥311.4 billion compared with the year ended March 31, 2018.
** The sum of the purchase of property, plant and equipment and the purchase of intangible assets,less the proceeds from sale of property, plant and equipment, and intangible assets.
(Cash Flows from Financing Activities)
Net cash outflow related to purchase of shares of consolidated subsidiaries from non-controllinginterests increased by ¥155.7 billion, due mainly to the additional acquisition of shares of Ansaldo STS
S.p.A. Proceeds related to short-term debt in the year ended March 31, 2019 were ¥3.7 billion, as
compared with ¥104.8 billion of payments related to short-term debt in the year ended March 31, 2018.
Net cash outflow related to long-term debt*** in the year ended March 31, 2019 decreased by ¥67.6
billion, as compared with the year ended March 31, 2018.
As a result of the foregoing, net cash used in financing activities was ¥320.4 billion in the year
ended March 31, 2019, a decrease of ¥1.0 billion compared with the year ended March 31, 2019.
*** The proceeds from long-term debt, less the payments on long-term debt.
As a result of the foregoing, as of March 31, 2019, cash and cash equivalents were ¥807.5 billion,
an increase of ¥109.6 billion from March 31, 2018. Free cash flows, the sum of cash flows fromoperating and investing activities, were an inflow of ¥447.1 billion in the year ended March 31, 2019,an increase of ¥194.3 billion from the year ended March 31, 2018.
-33-

3) Assets, Liabilities and Equity
As of March 31, 2019, total assets amounted to ¥9,626.5 billion, a decrease of ¥480.0 billion fromMarch 31, 2018. This was due mainly to impairment losses recognized for the suspension of the UK
nuclear power stations construction project, the conversion of Hitachi Kokusai Electric Inc. to an equity-method associate, and sales of shares of Clarion Co., Ltd. stock. Cash and cash equivalents as of March
31, 2019 amounted to ¥807.5 billion, an increase of ¥109.6 billion from the amount as of March 31,
2018.
As of March 31, 2019, total interest-bearing debt, the sum of short-term debt and long-term debt,
amounted to ¥1,004.7 billion, a decrease of ¥45.5 billion from March 31, 2018 as a result of repaymentof borrowings. As of March 31, 2019, short-term debt, consisting mainly of borrowings from banks andcommercial paper, amounted to ¥111.0 billion, a decrease of ¥10.4 billion from March 31, 2018. As of
March 31, 2019, current portion of long-term debt amounted to ¥185.2 billion, an increase of ¥68.0
billion from March 31, 2018. As of March 31, 2019, long-term debt (excluding current portion),
consisting mainly of debentures, and loans principally from banks and insurance companies, amounted
to ¥708.4 billion, a decrease of ¥103.1 billion from March 31, 2018.
As of March 31, 2019, total Hitachi, Ltd. stockholders’ equity amounted to ¥3,262.6 billion, adecrease of ¥15.4 billion from March 31, 2018. As a result, the ratio of total Hitachi, Ltd. stockholders’equity to total assets as of March 31, 2019 was 33.9%, compared with 32.4% as of March 31, 2018.
Non-controlling interests as of March 31, 2019 was ¥1,151.8 billion, a decrease of ¥81.8 billion
from March 31, 2018.
Total equity as of March 31, 2019 was ¥4,414.4 billion, a decrease of ¥97.2 billion from March 31,
2018. The ratio of interest-bearing debt to total equity was 0.23, which was the same level as that as ofMarch 31, 2018.
(4) Production, Order Received and Sales
The Hitachi Group does not present production and orders received in amount or volume terms foreach segment since it produces and sells a wide variety of products, there are variety of specifications insame kinds of products and certain products are mass-produced. The balance of unsatisfied performanceobligations for the segments that have contracts under which revenues are recognized over a long periodof time is described in “Consolidated Financial Statements － Notes to Consolidated Financial
Statements －(20) Revenues.” Regarding sales, see “(2) Analysis of Results of Operations.”(5) Important Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires ourmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management considers that certain
accounting estimates to be critical, and that their significance to the financial statements and thepossibility that future events affecting the estimate may differ significantly from management’s current
assumptions could have a material impact on the presentation of our financial condition, changes infinancial condition or results of operations. First, the estimates require us to make assumptions about
matters that are highly uncertain at the time the accounting estimates are made. Second, there could be
different estimates that we reasonably could have used for the accounting estimate in the current period,or changes in the accounting estimate that are reasonably likely to occur as time proceeds. Details ofimportant accounting policies and estimates are described in “Consolidated Financial Statements －Notes to Consolidated Financial Statements －(3) Summary of Significant Accounting Policies.”-34-

(6) Forward-Looking Statements
Certain statements found in “1. Management Policy, Economic Environment and Challenges
Hitachi Group Faces,” “2. Risks Factors” and “3. Management's Discussion and Analysis ofConsolidated Financial Condition, Results of Operations and Cash Flows” and other descriptions in thisreport may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Such “forward-looking statements” reflect management’s current views withrespect to certain future events and financial performance and include any statement that does notdirectly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,”“estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future eventsand trends may identify “forward-looking statements.” Such statements are based on currently available
information and are subject to various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the “forward-looking statements” and from historical
trends. Certain “forward-looking statements” are based upon current assumptions of future events
which may not prove to be accurate. Undue reliance should not be placed on “forward-looking
statements,” as such statements speak only as of the date of this report.
Factors that could cause actual results to differ materially from those projected or implied in any“forward-looking statement” and from historical trends include, but are not limited to:・ economic conditions, including consumer spending and plant and equipment investment in Hitachi’smajor markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in
the major industrial sectors Hitachi serves;
・ exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant
sales or in which Hitachi’s assets and liabilities are denominated;
・ uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term
financing;・ uncertainty as to general market price levels for equity securities, declines in which may require
Hitachi to write down equity securities that it holds;
・ fluctuations in the price of raw materials including, without limitation, petroleum and othermaterials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, orshortages of materials, parts and components;
・ the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts forwhich Hitachi uses the percentage-of-completion method to recognize revenue from sales;・ credit conditions of Hitachi’s customers and suppliers;
・ fluctuations in product demand and industry capacity;・ uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact offluctuations in product demand, exchange rates and/or price of raw materials or shortages ofmaterials, parts and components;
・ uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate newtechnologies on a timely and cost-effective basis and to achieve market acceptance for suchproducts;
・ uncertainty as to Hitachi’s ability to attract and retain skilled personnel;
・ increased commoditization of and intensifying price competition for products;
・ uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its
Social Innovation Business;
・ uncertainty as to the success of acquisitions of other companies, joint ventures and strategic alliances
and the possibility of incurring related expenses;
・ uncertainty as to the success of restructuring efforts to improve management efficiency by divestingor otherwise exiting underperforming businesses and to strengthen competitiveness;・ the potential for significant losses on Hitachi’s investments in equity-method associates and joint
ventures;・ general socioeconomic and political conditions and the regulatory and trade environment ofcountries where Hitachi conducts business, particularly Japan, Asia, the United States and Europe,
including, without limitation, direct or indirect restrictions by other nations on imports anddifferences in commercial and business customs including, without limitation, contract terms andconditions and labor relations;・ uncertainty as to the success of cost structure overhaul;・ uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property;
-35-

・

・
・

・
・

uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings ofwhich the Company, its subsidiaries or its equity-method associates and joint ventures have become
or may become parties;
the possibility of incurring expenses resulting from any defects in products or services of Hitachi;
the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes andtsunamis, the spread of infectious diseases, and geopolitical and social instability such as terrorism
and conflict;uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as
Hitachi’s ability to protect its confidential information or that of its customers; anduncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefitrelated costs.
The factors listed above are not all-inclusive and are in addition to other factors contained
elsewhere in this report and in other materials published by Hitachi.

-36-

4. Material Agreements, etc.
(1) Business Acquisition
On December 17, 2018, the Company decided to acquire the power grids business from ABB Ltd(ABB) in order to strengthen and expand energy solutions business globally and executed an agreement
regarding the acquisition with ABB. The Company plans to acquire an 80.1% stake in the company
operating the power grids business that will be divested by ABB and make it a consolidated subsidiary of
the Company in the first half of 2020. The amount of consideration is expected to be approximately USD
6.4 billion (approximately ¥710.3 billion).
(2) Absorption-type Company Split
On October 25, 2018, the Company decided to transfer its electrical systems business and machinery
systems business to Hitachi Industrial Products, Ltd. by way of an absorption-type company split (the“Company Split”) in order to strengthen the product business and executed an absorption-type company
split agreement with Hitachi Industrial Products, Ltd. on February 6, 2019.
The details of the Company Split are as follows.
1) Company Split Method
This is an absorption-type company split under which the Company is the transferring company and
Hitachi Industrial Products, Ltd. is the successor company.
2) Effective Date of the Company Split
April 1, 20193) Assets and Liabilities Transferred to the Successor Company (As of April 1, 2019)
Assets: ¥52.6 billion, Liabilities: ¥36.5 billion
4) Details of Allotments
Hitachi Industrial Products, Ltd., the successor company, issued 199,200 shares of common stock on
April 1, 2019 and allocated all the shares to the Company, the transferring company.
5) Basis of Calculation for Allotment
As the Company held all of issued shares of Hitachi Industrial Products, Ltd., it was consideredappropriate that Hitachi Industrial Products, Ltd. issues 199,200 shares of common stock and allots all theshares to the Company.
6) Profile of the Successor Company after the Company Split
Name

Hitachi Industrial Products, Ltd.

Head office

3 Kanda Neribei-cho, Chiyoda-ku, Tokyo

Representative

President Keizo Kobayashi

Capital¥10.0 billion

Business

Development, manufacture and sales of products and provision of services inthe electrical system business and the machinery system business-37-

(3) Cross License Agreement
Party

Country

Item undercontract

Contract
description

Hitachi, Ltd.
(The Company)

International
Business
Machines Corp.

U.S.A
.

Information
handling
systemsCrosslicense ofpatents

Hitachi, Ltd.
(The Company)

HP Inc.
Hewlett Packard
EnterpriseCompany

U.S.A
.

All
products
andservices

Crosslicense ofpatents

Hitachi, Ltd.
(The Company)

EMC
Corporation

U.S.A
.

Information
handling
systemsCrosslicense ofpatents

Hitachi-GE
Nuclear Energy,
Ltd.
(Consolidated
subsidiary)

GE-Hitachi
Nuclear Energy
Americas LLC

U.S.A
.

NuclearreactorsystemsCrosslicense ofpatents andtechnology

Party

-38-

Contract period
From January 1, 2008 to
the expiration of patents
applied on or before
January 1, 2023
From March 31, 2010 tothe expiration of patents
applied on or before
December 31, 2014
From January 1, 2003 to
the expiration of patents
applied on or before
December 31, 2002
From October 30, 1991
to June 30, 2023

5. Research and Development
The Hitachi Group (the Company and consolidated subsidiaries) is conducting business in a broad
range of fields, from information and telecommunications systems to automotive systems. The HitachiGroup places priority on allocating R&D resources on the Social Innovation Business, a core business ofthe Hitachi Group, and makes efforts for continuing and developing business.
In order to strengthen the global competitiveness of the business, the Hitachi Group works in R&D
activities to identify, share and resolve the customers’ problems, and is focusing on developing competitive
products and services to lead globalization of operations. In addition, the Hitachi Group conducts advanced
research to cultivate future core businesses.
The Hitachi Group also works to improve the efficiency of R&D through close coordination between
the R&D divisions of the Company and group companies. Furthermore, the Hitachi Group is actively
expanding collaborations with universities and other research institutions as well as with outside firms.
The Company has established an R&D framework to accelerate global growth through the Social
Innovation Business. In order to support the global growth, it aims to promote R&D that can meet local
needs quickly by expanding R&D facilities and personnel in North America, Europe, China, Asia, India andSouth America and accelerating locally-led R&D. The Company reorganized its R&D facilities in Japanand overseas to establish an R&D structure comprising the “Global Center for Social Innovation,” which
discovers customers’ issues and creates new solutions in collaboration with customers, the “Center forTechnology Innovation,” which creates innovative products and services and supports development of new
solutions by applying and integrating technology platforms in focused areas, and the “Center for
Exploratory Research,” which cultivates new areas through exploratory basic research based on our creative
vision in the form of open innovation. With this R&D structure, the Company aims to further promote R&D
that will contribute to solving customers’ issues.
The Hitachi Group’s R&D expenditures for the fiscal year ended March 31, 2019 were ¥323.1 billion,
3.4% of revenues. A breakdown of R&D expenditures by segment is shown below.
(Billions of yen)Segment

AmountInformation & Telecommunication Systems

46.9

Social Infrastructure & Industrial Systems

55.7

Electronic Systems & Equipment

46.1

Construction Machinery

24.7

High Functional Materials & Components

51.1

Automotive Systems

64.1

Smart Life & Ecofriendly Systems

7.9

Others3.7

Corporate Items

22.5
Total

323.1

Notable achievements of R&D activities in the fiscal year ended March 31, 2019 are as follows.
-

Development of a biometric authentication base technology that realizes safe and accurate identification
through multi-purpose cameras (Information & Telecommunication Systems segment)
We developed a biometric authentication base technology that realizes the authentication of publickeys based on palm print information captured by multi-purpose cameras incorporated in smartphones
and tablets. By combining the technology and face recognition techniques and conducting biometric
information authentication several times with the same camera, we established a safe and accuratebiometric authentication technology that does not require the use of any dedicated equipment. (Joint
development with KDDI research, Inc.)
-39-

-

Development of CMOS annealing machines whose performance can be enhanced according to the scaleand complexity of problems (Information & Telecommunication Systems segment)
To solve complex social problems such as traffic congestions at high speed, we developed a new
type of computer (CMOS annealing machine) whose performance can be enhanced according to thescale and complexity of problems to be addressed. This was achieved by connecting several CMOS
annealing chips that support the semiconductor circuit-based search of optimal solutions.

-

Development of a technology that supports integrated management and cooperative control of several
AI systems that control robot arms and transport carts (Social Infrastructure & Industrial Systems
segment)
To maximize improvements in the efficiency of order picking operations conducted in warehouses,
we developed a technology that enables robots to take out products while simultaneously allowing transport
carts to keep moving. This was achieved by leveraging artificial intelligence that decides optimal picking
methods based on images captured by cameras and the collaboration of several AI systems that control
picking robots and transport carts.

-

Development of an AI technology that recognizes the operation status of plant facilities based on sounds(Social Infrastructure & Industrial Systems segment)
We developed an AI technology that supports highly accurate status recognition without the effectof surrounding noises by decomposing sounds recorded by several microphones from perspectives suchas the direction of sound sources and differences in tones, and then making a comprehensive judgementon such decomposed sounds by means of several neural networks (simulated mathematical model ofneural circuits). The development was made for application for sound-based automatic diagnosis
services of plant facilities, among other services.

-

Development of a system that facilitates the creation of innovative ideas through AI (Information &Telecommunication Systems segment)
We developed a system that facilitates the creation of innovative ideas transcending business fields
through workshops for creating ideas for services and businesses. This was achieved by AI
automatically picking up key words from what is discussed by participants through voice recognition
technology and recommending knowledge based on examples of problem solving in a range of businessareas accumulated in Lumada.

-40-

III. Property, Plants and Equipment
1. Summary of Capital Investment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) selectively invests in R&D andproduct fields expected to grow over the long term, and it also invests to streamline manufacturing process,etc. and to improve the reliability of its products.
Capital investment (based on the amount recorded as tangible fixed assets and the investment
property) in the fiscal year ended March 31, 2019 was ¥414.7 billion. A breakdown of capital investment
by segment is as follows.

Segment
Information &Telecommunication
Systems

CapitalChange frominvestment
preceding fiscal(Billions of yen)year (%)
34.2

96

Social Infrastructure &Industrial Systems

73.4

92

Electronic Systems &Equipment

21.5

110

Construction Machinery

30.3

164

High Functional Materials& Components

143.3

109

Automotive Systems

73.5

111

Smart Life & Ecofriendly
Systems

12.1

143

Others24.7

189

Main purpose of investment
Renewal of data center equipment, streamline
development and production of other products
Facility for wind power generation system,
manufacturing facilities for railway systems,
streamline development and production ofother products
Streamline development and production of
products
Streamline production of construction
machinery, relocation of offices
Increase and streamline production of specialty
steel products, magnetic materials andapplications, wires, cables and related
products, etc.
Increase production of materials for lithiumion batteries and polishing materials
Streamline production of functional
components and equipment
Increase production of automotive equipment,
etc.
Streamline development and production of
products, delivery center
R&D facilities

Subtotal
413.4
111
Corporate Items &1.3
60
Eliminations
Total
414.7
111
(Notes) 1. The figures in the above table include the amount of the tangible fixed assets leased under finance leasetransactions and the investment property, each of which is recorded as property, plant and equipment
and other non-current assets, respectively.
2. These investments were mostly financed with the Hitachi Group’s own capital.

-41-

2. Major Property, Plants and Equipment
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse business
operations in Japan and overseas. It discloses information on major property, plants and equipment
represented in breakdown by segment and major facilities of the Company and consolidated subsidiaries.
The situation at the end of the fiscal year ended March 31, 2019 is as follows.
(1) Breakdown by Segment(As of March 31, 2019)
Book value (Millions of yen)Segment

Information &Telecommunication
Systems

Land[Area inthousandsof m2]
26,593[747]

Social Infrastructure &Industrial Systems

39,467[12,992]

Electronic Systems &22,058Equipment
Construction Machinery
High Functional
Materials &Components
Automotive Systems[580]
56,143[10,211]89,263[17,019]
39,645[5,280]

Buildings
andstructures

Machineryand vehicles

Tools,
furnitureandfixturesOther

67,57022,55447,886

21,694

1,649

187,946

73,086130,199

44,27924,583

9,011

12,072259,611

79,10833,716

16,854

16,815

3,689

2,328

95,46015,95998,83253,2198,519

79,846

14,686311,245

24,091

171,106

266,665

33,9585,814

61,075

627,881

51,89570,924

127,885

18,189954

44,066

301,663

25,052

Constructionin progress

Total

Number of
employees

Smart Life &Ecofriendly Systems

8,632[2,248]20,295

15,448

10,231

148

791

55,545

11,279Others37,551[1,858]62,986

3,843

10,768486

4,262

119,896

12,653319,352[50,934]

655,628

550,747

170,949

121,642

140,929 1,959,247

293,123

24,259370

3,524(2,237)

679,887

551,117

174,473

119,405

Subtotal
Corporate Items &Eliminations
Total(28,478)[882]
290,874[51,817]-(2,562)

2,818

140,929 1,956,685

295,941(Notes) 1. The “Book value - Other” column includes the amount of finance lease assets, etc.
2. The figures in the above table include ¥87,944 million of operating lease assets for leasing business.
3. The figures in the above table include ¥27,575 million of finance lease assets leased externally.
4. Except for the figures in the above table, there are operating lease assets leased, mainly machinery, etc.
The annual lease fee for such assets was ¥133,333 million.

-42-

(2) The Company(As of March 31, 2019)
Book value (Millions of yen)
Facility(Main location)

Segment

Details ofLand
Tools,
Number ofmajor facilities [Area in Buildings Machinery furniture
Construction
employees
and
and
Other
Total
and equipment thousands
andin progressstructures
vehiclesfixturesof m2]

Financial
Institutions
SystemBusiness Unit,
development
SocialInformation & facilities,
Infrastructure
Telecommuni- manufacturing
Systems Businesscationfacilities for
Unit and Systems
Systemsservers,& Services
mainframes,
Business Division
etc.
(Kawasaki,
Kanagawa)

13,562[210]

45,853

166

Research &Development
Group(Kokubunji,
Tokyo)

6,017
[776]

21,626

1,628

4,060

846
[666]

14,971

5,463

9,755
[3,312]

2,884

63
[53]

Others

R&D facilities

Manufacturing
facilities forrailway
vehicles, etc.
Manufacturing
Nuclear Energy
facilities forSocialBusiness Unit andInfrastructure power
Power Business& Industrial generating
Unit
equipment,
Systems(Hitachi, Ibaraki)etc.
Railway Systems
Business Unit
(Kudamatsu,
Yamaguchi)

SocialInfrastructure& Industrial
Systems

Corporate HospitalGroup
Corporate(Hitachi, Ibaraki)

Medicalfacilities

Head Office(Chiyoda-ku,
Tokyo)

Other facilities

Corporate

Manufacturing
facilities for
medicalequipments
Manufacturing
facilities forindustiralmachinery andplants,Services &SocialPlatforms
Infrastructure switchboards
Business Unit
& Industrial and calculation(Hitachi, Ibaraki) Systems
controlequipment,
systemdevelopment
facilities
Defense Systems Social
SystemBusiness Unit
Infrastructuredevelopment(Yokohama,& Industrial
facilities
Kanagawa)
Systems
Electronic
Healthcare
Business Unit
Systems &(Taito-ku, Tokyo) Equipment

Industry &Distribution
SocialBusiness Unit andInfrastructure
Water Business& Industrial
Unit
Systems(Toshima-ku,
Tokyo)

Manufacturing
facilities forindustrial
solution andwater solution
equipments

1,097

88,645

9,490

-

143

33,476

2,566

1,002

4

629

22,917

2,355

1,056

747

492

1,005

15,942

1,524

13,916

31

1,571

66

-

15,648

1,535

5,177
[790]

7,844

329

1,724

-

-

15,075

1,524

5,467
[84]

3,507

1,244

1,329 1,457

476

13,483

2,227

635
[206]

5,651

924

418

208

157

7,996

5,875

107
[7]

5,513

142

730

481

-

6,975

452

559
[125]

2,981

174

207

1,034

1,232

6,189

670

-43-

26,913 1,051

(3) Domestic subsidiaries(As of March 31, 2019)
Facility(Main location)
HitachiAutomotive
Systems, Ltd.
(Hitachinaka,Ibaraki)Segment

Book value (Millions of yen)
Details ofLand
Tools,
Number ofmajor facilities [Area in Buildings Machinery furniture
Construction
and
Other
Total employees
and equipment thousands andandin progressstructures vehicles
fixturesof m2]

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

6,724[2,493]31,80648,2397,162

948

Hitachi Metals,
HighLtd., Yasugi
Functional
Works
Materials &(Yasugi, Shimane) Components

Manufacturing
facilities for
specialty steel
products

8,584[1,108]12,88635,834

2,095

HitachiConstruction
Machinery Co.,
Construction
Ltd., HitachinakaMachinery
Rinko Works(Hitachinaka,Ibaraki)

Manufacturing
facilities forconstruction
machinery

12,330[495]

14,3063,832

High
Hitachi Metals
Functional
Neomaterial, Ltd.
Materials &(Suita, Osaka)
Components

Manufacturing
facilities for
specialty steel
products

11,150
[121]

3,338

Hitachi HighTechnologies
Corporation,
Naka Area(Hitachinaka,Ibaraki)Electronic
Systems &Equipment

Manufacturing
facilities forsemiconductor
processing
equipment andtest andmeasurement
equipment,
etc.

82
[115]

Hitachi Metals,Ltd., Kumagaya
Works(Kumagaya,
Saitama)High
Functional
Materials &Components

Manufacturing
facilities formagnets

HitachiConstruction
Machinery Co.,
Ltd., Tsuchiura
Works(Tsuchiura,
Ibaraki)Construction
Machinery

Hitachi Chemical
Company, Ltd.,
Yamazaki Works(Hitachi, Ibaraki)

14,793 109,674

8,727

-

2,017

61,416

1,663

233

-

1,997

32,700

418

5,672

800

-

9,546

30,506

1,057

14,572

3,246

8,082

-

240

26,223

2,492

1,194
[259]

9,585

9,085

448

-

4,382

24,694360

Manufacturing
facilities forconstruction
machinery

5,840[5,068]

10,412

5,663

1,651

-

842

24,4103,092

HighFunctional
Materials &Components

Manufacturing
facilities forsemiconductormaterials, etc.

892
[453]

11,086

9,821

837

26

1,074

23,736

1,001

Hitachi Chemical HighCompany, Ltd.,
Functional
Shimodate Works Materials &(Chikusei, Ibaraki) Components

Manufacturing
facilities forcircuit board
materials, etc.

4,535
[677]

7,590

9,345

719

56

270

22,515

1,633

Hitachi Metals,Ltd., Ibaraki
Works(Hitachi, Ibaraki)

Manufacturing
facilities forwires andcables andrubberproduct, etc.

4,637
[1,195]

7,658

5,670

885

65

985

19,900

1,416

HighFunctional
Materials &Components-44-(4) Overseas subsidiaries(As of March 31, 2019)
Subsidiary(Main location)

Segment

Waupaca Foundry, HighInc.
Functional(Wisconsin,
Materials &U.S.A.)
Components
HitachiAutomotive
Systems Mexico, Automotive
S.A. de C.V.
Systems(Querétaro,
Mexico)Hitachi Vantara
Corporation(California,
U.S.A.)

Book value (Millions of yen)
Details ofLand
Tools,
Number ofmajor facilities [Area in Buildings Machinery furniture
Construction
and
Other
Total employees
and equipment thousands andandin progressstructures vehicles
fixturesof m2]
Manufacturing
facilities for
780
17,02835,7313,080 1,508
5,455 63,582
4,426
automotive[5,754]components
Manufacturing
facilities forautomotive
equipment

3,151
[488]

5,905

25,763

2,137

-

6,578

43,534

4,031

Information &TelecommuniOther facilities
cationSystems[-]-

16,00014,750 5,386-

36,136

8,716

Manufacturing
facilities forautomotive
equipment

378[1,242]

8,517

13,640991-

11,15534,681

3,024

Manufacturing
facilities fortrains vehicles,
etc.

1,070
[684]

9,388

4,932

3,177

-

2,071

20,6382,370

HitachiAutomotive
Systems Americas, Automotive
Inc.
Systems(Kentucky,
U.S.A.)
Social
Hitachi Rail Italy
Infrastructure
S.p.A.
& Industrial(Naples, Italy)
Systems(Note) The figures for Hitachi Vantara Corporation and Hitachi Italy, S.p.A. are presented in consolidated basis ofeach company.

-45-

3.Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations inJapan and overseas, and has not decided on specific plans to newly install or expand each of facilities as ofthe end of the fiscal year. For this reason, it discloses amounts of capital investment by segment.
The amount of capital investment for the fiscal year ending March 31, 2020 will be ¥400.0 billion(new installation and expansions, based on the amount recorded as tangible fixed assets and the investment
property), and a breakdown by segment is as follows. The Company changed its reporting segments on the
beginning of the fiscal year ending March 31, 2020.
Segment

Amount(Billions of yen)

Main purpose of investment

IT

39.0

Expansion and renewal of data center equipment

Energy6.0

Facility for wind power generation systems

Industry

17.0

Manufacturing facilities for industrial products

Mobility

20.0

Manufacturing facilities for railway systems

Smart Life

77.0

Increase production of automotive equipment,
manufacturing facilities for healthcare equipment

Hitachi High-technologies

29.0

Streamline development and production of products

Hitachi Construction
Merchinery

70.0

Streamline production of construction machinery,
relocation of offices

Hitachi Metals

60.0

Increase and streamline production of specialty steel
products, magnetic materials and applications, powerelectronics materials, functional components andequipment, wires, cables and related products, etc.

Hitachi Chemical

46.0

Streamline development and production of products

Others26.0

R&D facilities

Subtotal

390.0-

Corporate Items &Eliminations

10.0

-

Total

400.0

-

(Notes) 1. The figures in the above table include the amount of the tangible fixed assets leased under finance leasetransactions and the investment property, each of which is recorded as property, plant and equipment
and other non-current assets, respectively.
2. These planned investments are expected to be mostly financed with the Hitachi Group’s own capital.
3. There are no plans to dispose or sell principal facilities, with the exception of disposing and selling
facilities due to routine upgrading.

-46-

IV. Information on the Company
1. Information on the Company’s Stock, etc.
(1) Total number of shares, etc.
1) Total number of shares
Total number of shares authorized to
be issued (shares)

Class
Common stock

2,000,000,000

Total

2,000,000,0002) Issued shares

Class

Number of sharesissued as of the endof fiscal year (shares)(March 31, 2019)

Number of sharesissued as of thefiling date (shares)(Note)(June 19, 2019)

Commonstock

966,692,677

967,280,477

Total

966,692,677

967,280,477

Stock exchange on which
the Company is listed

Tokyo, Nagoya-

Description

The number of shares
per one unit of sharesis 100 shares.
-(Note) The "Number of shares issued as of the filing date" does not include shares issued upon exercise of stock acquisition rightsfrom June 1, 2019 to the filing date.

-47-

(2) Information on the stock acquisition rights, etc.
1) Details of stock option plans
Name
Date of resolution
Category andnumber of person towhom stockacquisition rights are
grantedNumber of stockacquisition rights
Class, detail andnumber of shares tobe issued upon
exercise of stockacquisition rights
Amount to be paid in
upon exercise ofstock acquisitionrightsExercise period ofstock acquisitionrightsIssue price for sharesissued upon exerciseof stock acquisitionrights and amount of
capitalization
Conditions for the
exercise of stockacquisition rights
Matters regarding
acquisition of stockacquisition rights
through transfer
Matters regarding
substitute payment
Matters regarding
grant of stockacquisition rights
upon organizational
restructuring

The First Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)The Second Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)The Third Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)

June 29, 2016

April 6, 2017

April 11, 2018

31 Executive Officers of
the Company
42 Corporate Officers of
the Company

33 Executive Officers of
the Company
37 Corporate Officers of
the Company

33 Executive Officers of
the Company
35 Corporate Officers of
the Company

15,750[13,794]

17,090[15,062]

17,399[15,692]

Common stock
315,000 shares[275,880 shares](Note 2)

Common stock
341,800 shares[301,240 shares](Note 2)

Common stock
347,980 shares[313,840 shares](Note 2)

¥1 per share¥1 per share¥1 per share

From July 15, 2016
to July 14, 2046

From April 27, 2017
to April 26, 2047

From April 27, 2018
to April 26, 2048

Issue price: ¥1,345(Note 3)
Amount of capitalization:(Note 4)

Issue price: ¥1,843(Note 3)
Amount of capitalization:(Note 4)

Issue price: ¥2,431(Note 3)
Amount of capitalization:(Note 4)(Note 5, 6)(Note 5, 6)(Note 5, 6)

Acquisition of stockacquisition rights throughtransfer shall be subject
to the approval of theBoard of Directors.

Acquisition of stockacquisition rights throughtransfer shall be subject
to the approval of theBoard of Directors.

Acquisition of stockacquisition rights throughtransfer shall be subject
to the approval of theBoard of Directors.

－

－

－

(Note 7)(Note 7)(Note 7)(Notes) 1. The information is that as of the end of fiscal year (March 31, 2019). The number of stock acquisition rights and the numberof shares to be issued upon exercise of stock acquisition rights in brackets in the lower row is information as of the end of
the last month ended before the filing date (May 31, 2019). With regard to the other items, there is no change from theinformation as of the end of fiscal year.
2. If the Company implements a stock split (including gratis allotment of shares of common stock; the same shall apply toreferences to a stock split hereinafter) or a reverse stock split with respect to common stock of the Company after the dateof allotment of the stock acquisition rights, the Number of Shares to be Issued with respect to the stock acquisition rights
not exercised at that time will be adjusted in accordance with following formula:-48-

Number of Shares to be Issued
Number of Shares to be
Ratio of stock split or=×after adjustment
Issued before adjustment
reverse stock split
In addition, if there is an unavoidable ground requiring an adjustment of the Number of Shares to be Issued, the Number of
Shares to be Issued may be adjusted to the extent necessary by a resolution of the Board of Directors.
Any fractions of less than one share resulting from the adjustment will be rounded down.
3. Issue price for shares issued upon exercise of stock acquisition rights is the sum of the amount to be paid in upon exerciseof each of the stock acquisition rights (¥1 per share) and the fair value of each of the stock acquisition right as calculated at
the date of allotment.
4. The amount of common stock to be increased upon issuing shares through the exercise of stock acquisition rights shall be
one half of the maximum amount of common stock, etc. to be increased calculated in accordance with Article 17,
Paragraph 1 of the Ordinance on Company Accounting. Any fractions of less than one yen resulting from the calculation
shall be rounded up to the nearest yen.
5. A holder of stock acquisition rights may exercise all the stock acquisition rights together only within 10 days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
6. The number of stock acquisition rights which a holder of stock acquisition rights may exercise shall be determined based on
the ratio of (i) the total shareholder return for shares of Hitachi for three years from the beginning of the fiscal year inwhich the date of allotment of the stock acquisition rights falls to (ii) the growth rate of TOPIX (Tokyo Stock Price Index)
for the same period (the “TSR/TOPIX Growth Rate Ratio”), in accordance with the stock price conditions:a. In case the TSR/TOPIX Growth Rate Ratio is 120% or more
All the stock acquisition rights allotted (the “Allotted Rights”) may be exercised.
b. In case the TSR/TOPIX Growth Rate Ratio is 80% or more but less than 120%
Only a part of the Allotted Rights may be exercised according to the degree of the TSR/TOPIX Growth Rate Ratio(*).
*Number of stock acquisitionrights exercisable=

Number of
TSR/TOPIX×{(× 1.25) – 0.5}
Allotted Rights
Growth Rate Ratio

Any fraction less than one stock acquisition right will be rounded down.
c. In case the TSR/TOPIX Growth Rate Ratio is less than 80%
No Allotted Rights may be exercised.
7. In the event that the Company engages in a merger (only if the Company is to be dissolved as a result of the merger), an
absorption-type company split or incorporation-type company split (in each case, only if the Company is to be a split
company), or share exchange or share transfer (in each case, only if the Company is to be a wholly-owned subsidiary)(hereafter all of which are collectively referred to as “Corporate Reorganization”), then stock acquisition rights for theentities specified under Article 236, Paragraph 1, Item 8 (a) through (e) of the Companies Act (such entity hereinafterreferred to as the “Reorganized Company”) shall be issued to the Stock Acquisition Right Holders holding stockacquisition rights remaining in effect (the “Remaining Stock Acquisition Rights”) immediately prior to the effective date of
the Corporate Reorganization (hereinafter respectively referring to an effective date of absorption-type merger in case of anabsorption-type merger, a date of incorporation of a company incorporated through a consolidation-type merger in case of aconsolidation-type merger, an effective date of absorption-type company split in case of an absorption-type company split,a date of incorporation of a company incorporated through an incorporation-type company split in case of an incorporationtype company split, an effective date of a share exchange in case of a share exchange, or a date of incorporation of a wholly
owning parent company incorporated through share transfer). However, these stock acquisition rights shall be granted only
if provisions for issuing the stock acquisition rights of the Reorganized Company in accordance with the following
conditions are included in an absorption-type merger agreement, a consolidation-type merger agreement, an absorptiontype company split agreement, an incorporation-type company split plan, a share exchange agreement, or a share transfer
plan.
(1) The number of stock acquisition rights of the Reorganized Company to be issued
The number of stock acquisition rights equal to the number of Remaining Stock Acquisition Rights held byrespective Stock Acquisition Right Holders shall be issued.
(2) The class of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
Common shares of the Reorganized Company shall be issued.
(3) The number of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
The number shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights,
taking into account the conditions and other factors concerning Corporate Reorganization.
(4) Amount of assets to be contributed upon the exercise of stock acquisition rights
The amount of assets contributed upon the exercise of stock acquisition rights to be issued shall be amount derived
by multiplying the amount to be paid in per share to be delivered upon exercise of stock acquisition rights of theReorganized Company (the “Post-reorganization Exercise Price”) prescribed below by the number of shares of theReorganized Company to be issued determined in accordance with paragraph (3) of this section. The PostReorganization exercise price shall be one yen.
(5) Exercise period of stock acquisition rights
The exercise period of stock acquisition rights shall be from the later of the first day of the exercise period of stockacquisition rights or the effective date of the Corporate Reorganization to the expiration date of the exercise period ofstock acquisition rights.
(6) Matters concerning common stock and capital reserve to be increased due to the issuance of shares upon the exerciseof stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(7) Restrictions on acquisition of stock acquisition rights through transfer
The acquisition of stock acquisition rights through transfer shall be subject to the approval of the ReorganizedCompany.
(8) Conditions for the exercise of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(9) Matters concerning the acquisition of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.

-49-2) Details of shareholder right plans
Not applicable.
3) Details of other stock acquisition rights, etc.
Not applicable.
(3) Information on moving strike convertible bonds, etc.
Not applicable.
(4) Changes in the total number of issued shares and the amount of common stock and other
Balance
Balance
Change inChange inBalance of theofofcommoncapitaltotal number ofcommoncapitalstock
reserveissued sharesstock
reserve(Millions(Millions(shares)(Millions(Millionsof yen)of yen)of yen)of yen)Change in
the total
number ofissued shares(shares)

Date

From April 1, 2014
to March 31, 2015
From April 1, 2015
to March 31, 2016
From April 1, 2016
to March 31, 2017
From April 1, 2017
to March 31, 2018
October 1, 2018-

4,833,463,387-

458,790-

176,757-

4,833,463,387-

458,790-

176,757-

4,833,463,387-

458,790-

176,757-

4,833,463,387-

458,790-

176,757(Note 1) (3,866,770,710)

966,692,677-

458,790-

176,757-

966,692,677-

458,790-

176,757

From April 1, 2018
to March 31, 2019

(Notes) 1. The Company completed the share consolidation of every five shares into one share for its common stock.
2. The Company issued its new shares on May 31, 2019. The total number of issued shares, common stock and capitalreserve increased 587,800 shares, 1,071 million yens and 1,071 million yens respectively.

(5) Shareholders composition(As of March 31, 2019)
Status of shares (one unit of stock: 100 shares)
Class ofGovernment
Financialshareholders
andinstitution
municipality
Number ofshareholders
Shareownership

Foreign corporations,
Financial
etc.
Individuals
Other
instruments
and others
business institution
NonIndividuals
operator
individuals

Total

Number ofsharesless than
one unit(shares)

3

232

73

2,544

1,050

148

263,261

267,311-152

3,121,158

275,417

152,649

4,178,075

1,025

1,912,566

9,641,042

2,588,477

0.00

32.37

2.86

1.58

43.34

0.01

19.84

100.00-(units)Ownership
percentageof shares(%)(Notes) 1. Of 1,086,667 shares of treasury stock, 10,866 units are included in the “Individuals and others”
column, while 67 shares are included in the “Number of shares less than one unit” column.
2. Of the shares registered in the name of Japan Securities Depository Center, Incorporated (account for
managing stocks whose shareholders have not transferred titles), 53 units are included in the “Other
institution” column and 65 shares are included in the “Number of shares less than one unit” column.

-50-(6) Major shareholders(As of March 31, 2019)

Name

Address

The Master Trust Bank ofJapan, Ltd. (Trust Account)
Japan Trustee Services Bank,
Ltd. (Trust Account)Hitachi Employees’
Shareholding Association
Japan Trustee Services Bank,
Ltd. (Trust Account 9)
Nippon Life Insurance
Company
Japan Trustee Services Bank,
Ltd. (Trust Account 5)
State Street Bank West ClientTreaty 505234(Standing proxy: Mizuho Bank,
Ltd.)
State Street Bank and Trust
Company 505001(Standing proxy: Mizuho Bank,
Ltd.)

State Street Bank and Trust
Company 505223(Standing proxy: Mizuho Bank,Ltd.)

11-3, Hamamatsucho 2-chome,
Minato-ku, Tokyo
8-11, Harumi 1-chome, Chuo-ku,
Tokyo
6-6, Marunouchi 1-chome, Chiyodaku, Tokyo
8-11, Harumi 1-chome, Chuo-ku,
Tokyo
6-6, Marunouchi 1-chome, Chiyodaku, Tokyo
8-11, Harumi 1-chome, Chuo-ku,
Tokyo
1776 Heritage Drive, North Quincy,
MA 02171, U.S.A.
(15-1, Konan 2-chome, Minato-ku,
Tokyo)
P.O. Box 351
Boston, Massachusetts 02101 U.S.A.
(15-1, Konan 2-chome, Minato-ku,
Tokyo)
25 Bank Street, Canary Wharf,
London, E14 5JP, United Kingdom(15-1, Konan 2-chome, Minato-ku,
Tokyo)
P.O. Box 351
Boston, Massachusetts 02101 U.S.A.
(15-1, Konan 2-chome, Minato-ku,
Tokyo)Total-

JP Morgan Chase Bank 385151(Standing proxy: Mizuho Bank,
Ltd.)

Share
Ownership(shares)

Ownership
percentage to thetotal number ofissued shares(excluding treasury
stock) (%)

71,017,400

7.35

61,402,500

6.36

20,694,676

2.14

20,016,500

2.07

18,652,999

1.93

17,676,200

1.83

16,620,287

1.72

15,466,269

1.60

15,016,920

1.56

14,728,535

1.53

271,292,286

28.10(Note) Some reports on substantial shareholdings regarding the Company under the Financial Instruments andExchange Act are available for public inspection. However, the information in the reports is not describedin the above table since the Company does not confirm the actual status of shareholdings as of the record
date for the annual general meeting of shareholders held on June 19, 2019. The major contents of thereports are as follows. On October 1, 2018, the Company completed the share consolidation of every five
shares into one share for its common stock. The reports whose date on which the duty to file report is prior
to the effective date of the share consolidation show the number of shares before the share consolidation.

-51-

Holders

Mitsubishi UFJ Trust and Banking Corporation and twoother persons
November 13, 2017
266,423,703 shares

Date on which the duty to file report
Number of shares
Ownership percentage to the total
5.51%
number of issued shares(Note) The amendment to the report shown in the table above was filed by Mitsubishi UFJ Trust andBanking Corporation and two other persons, and is available for public inspection. The amendment
states that the number of shares and the ownership percentage to total number of issued shares
decreased to 45,175,020 shares and 4.67% respectively. The date on which the duty to file theamendment is June 10, 2019.
Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares
Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued sharesBlackRock Japan Co. Ltd and seven other persons
April 14, 2017
304,755,969 shares
6.31%
Sumitomo Mitsui Trust Asset Management Co., Ltd. andone other person
February 15, 2019
48,728,827 shares
5.04%

Holders
Asset Management One Co., Ltd. and four other persons
Date on which the duty to file report March 29, 2019
Number of shares
53,271,076 shares
Ownership percentage to the total
5.51％
number of issued shares(Note) The amendment to the report shown in the table above was filed by Asset Management One Co.,
Ltd. and four other persons, and is available for public inspection. The amendment states that the
number of shares and the ownership percentage to total number of issued shares decreased to45,826,600 shares and 4.74% respectively. The date on which the duty to file the amendment is
April 30, 2019.

-52-

(7) Information on voting rights
1) Issued sharesClassification(As of March 31, 2019)
Number of voting
Description
rightsNumber of shares (shares)

Shares without voting right
Shares with restricted voting right(treasury stock, etc.)
Shares with restricted voting right(others)
Shares with full voting right (treasury
stock, etc.)

－

－

－

－

－

－

－

－

－

－

－

Common stock

1,120,000

Shares with full voting right (others)

Common stock

962,984,200

Shares less than one unit

Common stock

2,588,477－－

966,692,677－－

Number of issued shares
Total number of voting rights

9,629,842

9,629,842－－－(Note) The “Shares with full voting right (others)” column includes 5,300 shares registered in the name of Japan
Securities Depository Center, Incorporated (account for managing stocks whose shareholders have nottransferred titles) and 53 voting rights for those shares.
2) Treasury stock, etc.
(As of March 31, 2019)

Name ofshareholder

Hitachi, Ltd.
Aoyama Special
Steel Co., Ltd.
ISHIIDENKOSHA
Co., Ltd.
SAITAKOUGYOU CO.,LTD.
Nitto Jidosha
Kiki K.K.
Mizuho Co., Inc.
Total

Address

Number of
Ownership
Number ofshares held
percentage toshares held
under the Total shares
the total
under own name names of held (shares) number of(shares)othersissued shares(shares)(%)

6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo
9-11, Shinkawa 2-chome,
Chuo-ku, Tokyo
1-11, Oroshishinmachi 3chome, Higashi-ku, Niigatashi, Niigata
5-3, Takinogawa 5-chome,
Kita-ku, Tokyo
3268, Nagaoka,
Ibarakimachi,
Higashiibaraki-gun, Ibaraki
4-1, Koishikawa 5-chome,
Bunkyo-ku, Tokyo－-53-

1,086,600－

1,086,600

0.11

2,100

－

2,100

0.00

200

－

200

0.00

17,600－17,6000.00

10,500－10,500

0.00

3,000

－

3,000

0.00

1,120,000－

1,120,000

0.12

2. Information on Acquisition, etc. of Treasury StockClass of shares
Acquisition of common stock under Article 155, Item 7 and 9 of the Companies Act(1) Acquisition of treasury stock resolved at the general meeting of shareholders
Not applicable.
(2) Acquisition of treasury stock resolved at the Board of Directors meetings
Not applicable.
(3) Details of acquisition of treasury stock not based on the resolutions of the general meeting ofshareholders or the Board of Directors meetings
Acquisition of stock less than one share under Article 235, Paragraph 2 and Article 234, Paragraph 4of the Companies Act
Classification

Number of shares (shares)

Treasury stock acquired during the fiscal year
ended March 31, 2019

Total amount (yen)12,095

41,219,760--

Treasury stock acquired during the current
periodAcquisition of stock less than one unit shares due to purchase requests from shareholders under
Article 192, Paragraph 1 of the Companies Act
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2019 (Note 1)

166,425

Total amount (yen)189,552,851

Treasury stock acquired during the current
4,055
15,014,713
period (Note 2)(Notes) 1. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. The treasury stock acquired during the fiscal year ended March 31, 2019 of
166,425 shares is the sum of the shares acquired before the share consolidation of 143,468 shares andthose acquired after the share consolidation of 22,957 shares.
2. The number of treasury stock acquired due to requests to purchase stock less than one unit shares from
June 1, 2019 to the filing date is not included.

-54-

(4) Status of the disposition and holding of acquired treasury stock
Classification
Acquired treasury stock which wasoffered to subscribers
Acquired treasury stock which wascanceled
Acquired treasury stock which wastransferred due to merger, shareexchange or company split
Others (Acquired treasury stock
which was transferred upon exerciseof stock acquisition rights, andwhich was sold due to requests fromshareholders holding shares less than
one unit shares to sell additional
shares)Total number of treasury stock held

Fiscal year ended March 31, 2019
Current period(Note 1)
(Note 2)
Number of shares Total disposition Number of shares Total disposition(shares)amount (yen)(shares)amount (yen)
-

-

-

-

-

-

-

-

-

-

-

-

603,660

448,234,994

74,330268,139,547

1,086,667-

1,016,392-(Notes) 1. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. The treasury stock disposed during the fiscal year ended March 31, 2019 of603,660 shares is the sum of the shares acquired before the share consolidation of 599,240 shares andthose acquired after the share consolidation of 4,420 shares.
2. The followings are not included: the number of treasury stock which was transferred upon exercise ofstock acquisition rights from June 1, 2019 to the filing date; the number of treasury stock which was solddue to requests from shareholders holding less than one unit shares to sell additional shares from June 1,
2019 to the filing date; and the number of treasury stock acquired due to purchase requests fromshareholders holding shares less than one unit shares from June 1, 2019 to the filing date.
3. Dividend Policy
The Company views the return of profits to shareholders through enhancing corporate value frommid- to long-term perspective and paying dividends continuously as an important managerial issue.
The policy of the Company regarding dividends is to aim for stable growth of dividends while also
securing funds necessary for investment, and the dividends are determined by comprehensively taking into
account factors such as financial performance trends, the financial situation, and the dividend payout ratio.
To complement its dividends, the Company flexibly conducts repurchase of its shares depending on
factors such as capital needs and the business environment.
In accordance with mid- to long-term management strategy, the Company utilize undistributed profits
in areas such as M&A, research and development, and capital expenditure, in order to securecompetitiveness and aim for growth of the business as global enterprise.
Based on the above policy, annual dividends of ¥58.0 per share were paid for the fiscal year ended
March 31, 2019. It was resolved to pay interim dividends of ¥8.0 per share at the Board of Directors
meeting held on October 26, 2018, resulting in the total amount of interim dividends of ¥38,625 million.
In addition, it was resolved to pay year-end dividends of ¥50.0 per share (the sum of an ordinary dividendof ¥45 and a special dividend of ¥5 in consideration of the level of achievement of targets set out in the2018 Mid-Term Management Plan.) at the Board of Directors meeting held on May 10, 2019, resulting in
the total amount of year-end dividends of ¥48,280 million. On October 1, 2018, the Company completed
the share consolidation of every five shares into one share for its common stock. The above mentioned
dividends per share are the actually paid amount. The annual dividends per share factoring in the impact of
the share consolidation is ¥90.0.
-55-

4. Corporate Governance, etc.
(1) Corporate governance1) Basic policy about corporate governance
The Company considers growth of profits for shareholders and investors from long-term
perspective as one of its important managerial objectives. As there are wide range of stakeholders for
the Company and Hitachi group from shareholders and investors to customers and clients, theCompany realizes that building good relationships with such stakeholders forms an important part ofits corporate value.
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming
to establish a framework for quick business operation and to realize highly transparent management byseparating responsibilities for management oversight and those for execution of business operations.
The Company attempts to have appropriate composition of the Board of Directors aiming to ensure theeffectiveness of management function in addition to reflect global and various perspective to the
management. The Company set the Corporate Governance Guidelines as basic framework of its
corporate governance including functions of the Board of Directors.
In addition, the Company set Hitachi Group Codes of Conduct as befaviour desciplines to beshared among Hitachi group to generate common values for the Hitachi group and promote
understanding of social responsibilities to be fulfilled by the Company.
2) Outline of corporate organizations
Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and supervises
the execution of the duties of executive officers and directors in order to sustainably enhance corporate
value and the shareholders’ common interests. The basic management policy includes medium-term
management plan and annual budget compilation. The Board of Directors focuses on strategic issues
related to the basic management policy as well as other items to be resolved that are provided in laws,
regulations, the Articles of Incorporation and Board of Directors Regulations. As of June 19, 2019, theBoard of Directors was made up of 11 Directors, and eight of whom are outside Directors and two
concurrently serve as Executive Officers. Within the Board of Directors, there are three statutory
committees of the Nominating Committee, the Audit Committee and the Compensation Committeewith outside Directors accounting for the majority of members of each committee. The Board of
Directors meetings were held 12 days during the fiscal year ended March 31, 2019, and the attendance
rate of Directors at those meetings was 96%. The Nominating Committee meetings were held 9 days,
the Audit Committee meetings were held 17 days, and the Compensation Committee meetings were
held 6 days during the fiscal year ended March 31, 2019.
The Nominating Committee has the authority to determine particular proposals submitted to thegeneral meeting of shareholders for the election and dismissal of Directors, and consists of four
Directors, three of whom are outside Directors.
The Audit Committee has the authority to audit the execution of duties of Directors and Executive
Officers and to determine on proposals submitted to the general meeting of shareholders for theelection and dismissal of accounting auditors, and consists of five Directors, including four outside
Directors and one standing Audit Committee member.
The Compensation Committee has the authority to determine remuneration policies for Directors
and Executive Officers and remuneration for individuals based on them. The Compensation
Committee consists of four Directors, three of whom are outside Directors.
The members of the board of directors and each committee are described in "(2) Directors andSenior Management - 1) Lists of directors and senior management - (a) Directors."
With regard to the number of Directors and their election, the Company stipulates in its Articles
of Incorporation that the Company shall have no more than 20 Directors. With regard to the adoptionof resolution for the election of Directors, the Company stipulates in its Articles of Incorporation thatthe presence of shareholders representing one-third or more of the voting, that resolutions for theelection of Directors shall be approved by attending shareholders possessing one-third or more of all-56-

voting rights of the shareholders who are entitled to exercise their votes, and that the resolution shallnot be made by cumulative voting.
The Company maintains a limited liability agreement (hereinafter referred to as “Agreement”)
stipulated in Article 427, Paragraph 1 of the Companies Act with each director (excluding Executive
Director, etc.) The general intent of the Agreement is to limit the liability of Directors to the aggregate
amount stipulated in each item under Article 425, Paragraph 1 of the Companies Act.
Executive Officers
Executive Officers decide on matters delegated to them by the Board of Directors and execute theCompany’s business affairs within the scope of assignments determined by the Board of Directors. As
of June 19, 2019, the Company has 39 Executive Officers (See "(2) Directors and Senior Management- 1) Lists of directors and senior management - (b) Executive Officers.")
The Company stipulates in its Articles of Incorporation that the Company shall have no morethan 40 Executive Officers.
Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides onimportant managerial matters, which may affect the Company or the Hitachi Group business, throughdiscussing from diverse viewpoints. It consists of 12 members as of June 19, 2019; President & CEO(Toshiaki Higashihara), six Executive Vice President and Executive Officers (Masakazu Aoki, Keiji
Kojima, Keiichi Shiotsuka, Hideaki Takahashi, Alistair Dormer and Toshikazu Nishino), four SeniorVice President and Executive Officers (Yoshihiko Kawamura, Yoshitaka Tsuda, Hidenobu Nakahata
and Mitsuaki Nishiyama) and one Vice President and Executive Officer (Osamu Naito).
3) Matters determined by resolution of the Board of Directors without resolution at the general meetingof shareholders pursuant to the provisions of the Articles of Incorporation
The Company stipulates in the Articles of Incorporation that it may, unless otherwise provided in
the applicable laws, determine on matters specified in each item of Article 459, Paragraph 1 of theCompanies Act by the resolution of the Board of Directors, without resolution at the general meetingof shareholders.
For the repurchase of the company’s own shares (Article 459, Paragraph 1, Item 1 of theCompanies Act), the Board of Directors shall determine on the matter in order to enable timely
implementation of capital strategies.
Regarding reduction of capital reserve or earned surplus reserve (Article 459, Paragraph 1, Item 2of the Companies Act), appropriation of surplus (excluding dividends of surplus and disposal of theproperty of the Company) (Article 459, Paragraph 1, Item 3 of the Companies Act) and dividends ofsurplus (Article 459, Paragraph 1, Item 4 of the Companies Act), since the Company was a company
with committees as of the date of enforcement of the Companies Act, it was deemed that its Articles ofIncorporation had stipulations that the Board of Directors was able to decide the above matters without
resolution at the general meeting of shareholders and that it should not stipulate that such matters shallbe resolved at the resolution of the general meeting of shareholders, in accordance with Article 57 of
the Act on Arrangement of Relevant Acts Incidental to Enforcement of the Companies Act (July 26,
2005, Act No. 87). Even after the enforcement of the Companies Act, the Company has made it a rule
to timely decide on these important business judgments by the Board of Directors to enhance theshareholders’ common interests.
The Company has stipulated in its Articles of Incorporation that it may, by resolution of theBoard of Directors, exempt any Director (including former Director) and Executive Officer (including
former Executive Officer) from liabilities as provided Article 423, Paragraph 1 of the Companies Act
to the extent as provided in laws or regulations.

-57-4) Requirement for special resolution of the general meeting of shareholders
To enable to securely meet the quorum of the general meeting of shareholders under Article 309,
Paragraph 2 of the Companies Act, the Company stipulates in its Articles of Incorporation that any
resolution as provided in Article 309, Paragraph 2 of the Companies Act shall be adopted at a general
meeting of shareholders where shareholders representing one-third or more of the voting rights of all
the shareholders shall be present, by a majority of two-thirds or more of the voting rights of theshareholders who are present in such meeting and are entitled to vote.
5) Internal control system and risk management system
Outlines of the internal control system and the risk management system of the Company are as
follows. In addition, these systems were resolved by the Board of Directors as the basic policy forinternal control system under the Companies Act.
i) The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(a) When necessary, the Board of Directors may appoint one or more director(s), who does notserve concurrently as an executive officer, as a director responsible for assisting with the dutiesof the Audit Committee. In addition, the Board of Directors’ Office (the “Office”) shall beestablished specifically to assist with the duties of each Committee and the Board of Directors.
(b) In order to ensure the independence of the Office personnel from Executive Officers and theeffect of instructions by the Audit Committee, the Office is staffed with personnel who work
only for the Office and are not subject to orders and instructions of Executive Officers, and the
Audit Committee shall be informed in advance of planned transfers of the Office personnel.
(c) Executive Officers and employees shall report without delay to the members of the Audit
Committee significant matters affecting the Company and its subsidiaries, results of internal
audits, and the implementation status of reporting under the internal reporting system. It shallbe provided for in the company regulation that reporters using the internal reporting system,
which applies to the employees of the Company and its subsidiaries, shall not receive
disadvantageous treatment for reason of having made a report, and the secretariat of the systemshall thoroughly administer this provision.
(d) The Office shall be in charge of payment for the expenses incurred in connection with theexecution of the duties of the Audit Committee members and other administrative duties, andshall promptly process the payment for the expense or debt except in the case where theexpense or debt of the claim is clearly found to be unnecessary to the execution of the duties ofthem.
(e) Standing Committee member(s) shall be appointed to the Audit Committee, and activity plansof the Audit Committee shall be prepared in coordination with the audit plans of Internal
Auditing Office.
ii) The following measures shall be effective to ensure the adequacy of business operations within the
Company and the Hitachi Group.
(a) Such fundamental policies as the emphasis of the social responsibilities of businessenterprises shall be shared with the subsidiaries of the Company.
(b) Each subsidiary of the Company shall develop systems to ensure the appropriateness ofoperations corresponding to its size and other characteristics, basic framework of which issimilar to ones employed in the Company. In order to ensure development of such systems ineach subsidiary, directors and auditors shall be sent from the Company to its subsidiary, andregular audits shall be conducted for the subsidiary.
(c) A reporting system to Directors shall be established to ensure that the execution of duties by
Executive Officers of the Company is in compliance with laws, regulations, and the Articles ofIncorporation.
(d) Information pertaining to the execution of duties by Executive Officers of the Company shall be
prepared and maintained in accordance with internal rules.

-58-

(e) A structure shall be established in which each relevant department shall establish regulations
and guidelines, conduct training, prepare and distribute manuals, and carry out other suchmeasures with respect to various risks. Efforts shall be made to identify possible new risks
through such things as progress reports on business operations and, should it become necessary
to respond to a new risk, an Executive Officer responsible for responding thereto shall be
appointed promptly.
(f) Efficient performance of duties of the Executive Officers of the Company, and Directors andExecutive Officers of the subsidiaries shall be ensured through the following business
management systems.
- The Senior Executive Committee shall be established in order to deliberate on and facilitate
the formulation of decisions based on due consideration of diverse factors regarding
important issues that affect the Company and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on which
performance management is based, shall be prepared in order to operate business in aplanned and efficient manner.
- Internal audits of the Company and its subsidiaries shall be conducted to monitor and identify
the status of their business operations and to facilitate improvements.
- The Audit Committee shall receive the audit plans of the accounting auditors in advance, andthe prior approval of the Audit Committee shall be required with respect to the fees to be
paid to the accounting auditors.
- Documented business processes for matters to be reflected in financial reports shall be
executed at the Company and its subsidiaries, and internal and external auditors shall
examine said processes in order to ensure the reliability of financial reports.
- A structure for the adequate and efficient conduct of business operations common to the
Hitachi Group companies shall be established.
(g) Continuous maintenance of a legal and regulatory compliance structure shall be ensured throughthe following business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal andregulatory compliance activities. Furthermore, an internal reporting system for employees of
the Company and its subsidiaries shall be established and education on legal and regulatorycompliance shall be provided.
- Various policies and rules on compliance with laws shall be established, aiming to ensurethat the employees are aware of the internal control systems overall and that the systems are
effective.
(h) A system shall be established, in which the subsidiaries report on important issues and theprogress in measures for operations to the Company through the Company’s Senior Executive
Committee, medium-term business plans and the budget system.
(i) The policy on transactions within the Hitachi Group is to trade fairly based on market prices.

-59-

(2) Directors and Senior Management
1) Lists of directors and senior management
Men: 46 persons, Women: 2 persons(Women’s percentage to total number of Directors and Senior Management: 4%)
The Company is a company with Nominating Committee, etc. pursuant to the Companies Act. The
information on its Directors and Executive Officers is as follows.
(a) Directors
Position andResponsibility

NameDate ofbirth

Director
Member of Audit
Committee andCompensation
Committee

Katsumi Ihara

Sept. 24
1950

Director
Member of
Nominating
Committee

Cynthia Carroll

Nov. 13,1956

Director

Joe Harlan

May 5,
1959

Business experience, including experiencein Hitachi, and functions
6/2005 Executive Deputy President,
Representative Corporate Executive
Officer, Member of the Board, Sony
Corporation
4/2009 Executive Deputy President, Corporate
Executive, Sony Corporation
6/2009 Executive Vice President, Representative
Director, Sony Financial Holdings Inc.
6/2010 President, Representative Director, SonyFinancial Holdings Inc.
6/2011 President, Representative Director, Sony
Life Insurance Co., Ltd.
4/2015 Chairman, Director, Sony Life InsuranceCo., Ltd. (Retired in June 2017)
6/2016 Chairman, Director, Sony Financial
Holdings Inc. (Retired in June 2017)
6/2018 Director, Hitachi, Ltd.
10/1991 General Manager, Foil Products, Alcan
Inc.
1/1996 Managing Director, Aughinish Alumina
Ltd., Alcan Inc.
10/1998 President, Bauxite, Alumina and Specialty
Chemicals, Alcan Inc.
1/2002 President & CEO, Primary Metal Group,
Alcan Inc.
3/2007 CEO, Anglo American plc. (Retired in
April 2013)
6/2013 Director, Hitachi, Ltd.
9/1999 Vice President and Chief Financial Officer,
Lighting Business, General ElectricCompany (USA)
9/2001 Vice President, Corporate Financial
Planning and Analysis, 3M Company(USA)
11/2002 President and Chief Executive Officer,
Sumitomo 3M Ltd.
10/2004 Executive Vice President, Electro andCommunications Business, 3M Company(USA)
10/2009 Executive Vice President, Consumer andOffice Business, 3M Company (USA)9/2011 Executive Vice President, Performance
Materials, The Dow Chemical Company(USA)
9/2012 Executive Vice President, Chemicals,
Energy and Performance Materials, The
Dow Chemical Company(USA)
10/2014 Chief Commercial Officer and Vice
Chairman, Market Business, The Dow
Chemical Company (USA)
10/2015 Vice Chairman and Chief Commercial
Officer, The Dow Chemical Company(USA) (Retired in August
2017)
6/2018 Director, Hitachi, Ltd.

-60-

Term ofofficeShareownership(shares)(Note 1)300

(Note 1)1,000

(Note 1)300

Position andResponsibility

NameDate ofbirth

Director

George Buckley

Feb. 23,
1947

Director

Louise Pentland

Apr. 11,1972

Chairman of the
Board
Member of Audit
Committee,
Nominating
Committee(Chair) andCompensation
Committee(Chair)Harufumi
Mochizuki

Jul. 26,
1949

Business experience, including experiencein Hitachi, and functions
2/1993 Chief Technology Officer, Motors, Drives
and Appliances, Emerson ElectricCompany
9/1994 President, US Electrical Motors, Emerson
Electric Company
7/1997 President, Mercury Marine Division andCorporate Vice President, Brunswick
Corporation
4/2000 President and Chief Operating Officer,
Brunswick Corporation
6/2000 Chairman and Chief Executive Officer,
Brunswick Corporation
12/2005 Chairman of the Board, President andChief Executive Officer, 3M Company
2/2012 Executive Chairman of the Board, 3M
Company (Retired in May 2012)
6/2012 Chairman, Arle Capital Partners Limited(Retired in December 2015)
Director, Hitachi, Ltd.
8/1997 Admitted as a Solicitor (UK)
7/2001 Senior Legal Counsel, Nokia Networks,
Nokia Corporation
9/2007 Vice President, Acting Chief Legal Officer
and Head of IP Legal, Nokia Corporation
7/2008 Senior Vice President and Chief Legal
Officer, Nokia Corporation
6/2009 Admitted to New York State Bar
Association
2/2011 Executive Vice President and Chief Legal
Officer, Nokia Corporation (Retired inMay, 2014)
4/2015 General Counsel, PayPal, eBay Inc.
6/2015 Director, Hitachi, Ltd.
7/2015 Senior Vice President and Chief Legal
Officer, PayPal Holdings, Inc.
9/2016 Executive Vice President and Chief
Business Affairs & Legal Officer, PayPal
Holdings, Inc. (Currently in office)7/2002 Director-General for Commerce andDistribution Policy, Minister’s Secretariat,
Ministry of Economy, Trade and Industryof Japan (“METI”)
7/2003 Director-General, Small and Medium
Enterprise Agency, METI
7/2006 Director-General, Agency for Natural
Resources and Energy, METI
7/2008 Vice-Minister of Economy, Trade andIndustry of Japan
8/2010 Special Advisor to the Cabinet of Japan(Retired in September 2011)10/2010 Senior Adviser to the Board, Nippon Life
Insurance Company (Retired in April
2013)
6/2012 Director, Hitachi, Ltd.
6/2013 President and Representative Director,
Tokyo Small and Medium Business
Investment & Consultation Co., Ltd.
(Currently in office)-61-

Term ofofficeShareownership(shares)(Note 1)5,300

(Note 1)700(Note 1)2,900

Position andResponsibility

NameDate ofbirth

Director
Member of Audit
Committee andCompensation
Committee

Takatoshi
Yamamoto

Oct. 20,1952

Director
Member of
Nominating
Committee andAudit Committee(Chair)Hiroaki Yoshihara

Feb. 9,1957

Executive
ChairmanMember of
Nominating
Committee

Hiroaki NakanishiMar. 14,
1946

Director
Member of Audit
Committee(Standing)

ToyoakiNakamura

Aug. 3,1952

Business experience, including experiencein Hitachi, and functions
12/1995 Managing Director, Morgan Stanley Japan
Limited6/1999 Managing Director and Vice Chairman,
Tokyo Branch, Morgan Stanley Japan
Limited7/2005 Managing Director and Vice Chairman,
UBS Securities Japan Co., Ltd.
6/2009 Managing Director, CASIO COMPUTER
CO., LTD.
6/2011 Advisor, CASIO COMPUTER CO., LTD.
(Retired in June 2012)
6/2016 Director, Hitachi, Ltd.
11/1978 Joined Peat Marwick Mitchell & Co.
7/1996 National Managing Partner, the Pacific
Rim Practice, KPMG LLP
10/1997 The Board Member, KPMG LLP
10/2003 Vice Chairman and Global Managing
Partner, KPMG International (Retired in
April 2007)
6/2014 Director, Hitachi, Ltd.
4/1970 Joined Hitachi, Ltd.
4/2003 General Manager, Global Business
6/2003 Vice President and Executive Officer
4/2004 Senior Vice President and Executive
Officer
6/2005 Senior Vice President and Executive
Officer, Hitachi, Ltd.
Chairman and Chief Executive Officer,
Hitachi Global Storage Technologies, Inc.
4/2006 Executive Vice President and Executive
Officer, Hitachi, Ltd. (Retired in December
2006)
4/2009 Executive Vice President and Executive
Officer, Hitachi, Ltd.
4/2010 President, Hitachi, Ltd.
6/2010 President and Director, Hitachi, Ltd.
4/2014 Chairman & CEO and Director, Hitachi,
Ltd.
4/2016 Executive Chairman and Representative
Executive Officer, Hitachi, Ltd.
4/2018 Executive Chairman and Executive
Officer, Hitachi, Ltd.
4/1975 Joined Hitachi, Ltd.
1/2006 General Manager, Finance Department I
4/2007 Senior Vice President and Executive
Officer
6/2007 Senior Vice President, Executive Officer
and Director
6/2009 Senior Vice President and Executive
Officer
4/2012 Executive Vice President and Executive
Officer (Retired in March 2016)
6/2016 Director-62-

Term ofofficeShareownership(shares)(Note 1)7,700

(Note 1)1,800

(Note 1)70,600(Note 1)

16,200Position andResponsibility

Director
Member ofCompensation
Committee

Date of
birth

Name

ToshiakiHigashihara

Feb. 16,
1955

Business experience, including experiencein Hitachi, and functions
4/1977 Joined Hitachi, Ltd.
4/2006 Chief Operating Officer, Information &Telecommunication Systems
4/2007 Vice President and Executive Officer(Retired in March 2008)
4/2008 President, Hitachi Power Europe GmbH
4/2010 President and Chief Executive Officer,
Hitachi Plant Technologies, Ltd.
6/2010 President and Representative Director,
Hitachi Plant Technologies, Ltd.
4/2011 Vice President and Executive Officer,
Hitachi, Ltd.
4/2013 Senior Vice President and Executive
Officer, Hitachi, Ltd.
4/2014 President & COO, Hitachi, Ltd.
6/2014 President & COO and Director, Hitachi,
Ltd.
4/2016 President & CEO and Director, Hitachi,
Ltd.
Total

Term ofofficeShareownership(shares)(Note 1)

69,900176,700(Notes) 1. The term of office of the Directors starts upon the election at the Annual General Meeting of
Shareholders on June 19, 2019 and expires at the close of the Annual General Meeting of Shareholders
for the fiscal year ending March 31, 2020.
2. Messrs. Katsumi Ihara, Joe Harlan, George Buckley, Harufumi Mochizuki, Takatoshi Yamamoto andHiroaki Yoshihara and Mses. Cynthia Carroll and Louise Pentland are directors who fulfill thequalification requirements to be outside directors as provided for in Article 2, Item 15 of theCompanies Act.
(b) Executive Officers
Position and Responsibility
Representative Executive
Officer, President & CEO
Overall management

Name

Date ofbirth

ToshiakiHigashihara

Feb. 16,1955

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President
Masakazu Aoki
(business for industry &distribution sectors, water &environment business, andindustrial products business)

Jun. 23,
1954

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(smart life & ecofriendly
systems business,
automotive systems
business, and healthcare
business) and smart life &
ecofriendly systems
business

Oct. 9,1956

Keiji Kojima

Business experience, including
experience in Hitachi, and functions
See “(a) Directors”
4/1977 Joined Hitachi, Ltd.
4/2012 President and Director, Hitachi
Industrial Equipment Systems
Co., Ltd.
10/2014 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2017 Executive Vice President andExecutive Officer, Hitachi, Ltd.
Chairman of the Board, Hitachi
Industrial Equipment Systems
Co., Ltd.
4/1982 Joined Hitachi, Ltd.
4/2011 General Manager, Hitachi
Research Laboratory
4/2012 Vice President and Executive
Officer
4/2016 Senior Vice President andExecutive Officer
4/2018 Executive Vice President andExecutive Officer-63-

Term ofofficeShareownership(shares)(Note 2)

69,900(Note 2)

24,000(Note 2)26,800Position and Responsibility
Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(systems & services
business and defense
systems business), systems& services business andsocial innovation businesspromotion

Name

Keiichi Shiotsuka

Date ofbirth

May 8,
1954

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(cost structure reform and
Hideakisupply chain management), Takahashi
cost structure reform andsupply chain
management(MONOZUKURI and
quality assurance)

Aug. 20,1952

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(building systems businessand railway systems
business)

Aug. 29,
1963

Alistair Dormer

Business experience, including
experience in Hitachi, and functions
4/1977 Joined Hitachi, Ltd.
4/2012 Chief Operating Officer, System
Solutions Business, Information& Telecommunication Systems
Company, Information &Telecommunication Systems
Group
4/2013 Vice President and Executive
Officer
4/2015 Senior Vice President andExecutive Officer
4/2017 Executive Vice President andExecutive Officer
4/1978 Joined Hitachi, Ltd.
4/2005 President, Hitachi Building
Systems Co., Ltd.
4/2007 Vice President and Executive
Officer, Hitachi, Ltd.
4/2011 President and Chief Executive
Officer, Hitachi Cable, Ltd.
6/2011 President and Chief Executive
Officer, Director, Hitachi Cable,
Ltd.
6/2013 Director, Hitachi Metals, Ltd.
7/2013 Executive Vice President andExecutive Officer, Director,
Hitachi Metals, Ltd.
4/2014 President and Chief Executive
Officer, Director, Hitachi Metals,
Ltd.
4/2017 Chairperson of the Board,
Hitachi Metals, Ltd.
4/2018 Executive Vice President andExecutive Officer
2/2001 Director of Business
Development, Alstom Transport
U.K. Ltd.
6/2003 Joined Hitachi Europe Ltd.
10/2009 Managing Director, Hitachi RailEurope Ltd.
9/2012 Executive Chairman and CEO,
Hitachi Rail Europe Ltd.
4/2014 Global CEO of Rail Systems
business, Hitachi, Ltd.
4/2015 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2019 Executive Vice President andExecutive Officer-64-

Term ofofficeShareownership(shares)(Note 2)

26,200(Note 2)

26,100(Note 2)

1,100

Position and Responsibility

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(nuclear energy businessand energy business)Name

Toshikazu
NishinoDate ofbirth

Jan. 9,1955

Senior Vice President andExecutive Officer
Atsushi Oda
Nuclear energy business andenergy businessFeb. 19,
1958

Senior Vice President andExecutive Officer
Management strategies,
investment strategies andstrategies for next
generation businessYoshihiko
Kawamura

Aug. 20,1956

Senior Vice President andExecutive Officer
Regional strategies (China)

Kenichi Kokubo

Nov. 25,
1955

Business experience, including
experience in Hitachi, and functions
4/1980 Joined Hitachi, Ltd.
4/2010 Senior Manager, Strategy &Project Office, Supervisory
Office for Management Reforms
4/2011 Vice President and Executive
Officer
4/2013 Senior Vice President andExecutive Officer
4/2015 Executive Vice President andExecutive Officer
4/1980 Joined Hitachi, Ltd.
4/2015 General Manager ofTransmission & Distribution
Systems Division, Energy
Solutions Company and Chief
Operating Officer of Power
Systems Company, Power &Infrastructure Systems Group
4/2016 Vice President and Executive
Officer
4/2019 Senior Vice President andExecutive Officer
4/1979 Joined Mitsubishi Corporation
4/2010 Senior Vice President, Division
COO, IT Service Division,
Mitsubishi Corporation
4/2015 Joined Hitachi, Ltd.
Executive Strategist, Information& Telecommunication Systems
Group
4/2016 Deputy General Manager of IoTBusiness Promotion Division andGeneral Manager of Incubation
Division, Hitachi, Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.
4/2018 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/1979 Joined Hitachi, Ltd.
4/2011 President, Hitachi (China) Ltd.
4/2014 Vice President and Executive
Officer
4/2018 Senior Vice President andExecutive Officer-65-

Term ofofficeShareownership(shares)(Note 2)

24,000(Note 2)

19,400(Note 2)

16,900(Note 2)

17,800Position and Responsibility

NameDate ofbirth

Senior Vice President andExecutive Officer
Services & platforms
business

Setsuo Shibahara

Feb. 3,
1958

Senior Vice President andExecutive Officer
Building systems business

Hideaki Seki

Mar. 10,1957

Representative Executive
Officer, Senior Vice
President and Executive
Officer
Yoshitaka Tsuda
Marketing & sales, regional
strategies and social
innovation businesspromotion

Jul. 3,
1955

Representative Executive
Officer, Senior Vice
President and Executive
Officer
Hidenobu
Corporate communications, Nakahata
legal matters, risk
management, corporate
auditing and human capital

Jan. 24,
1961

Business experience, including
experience in Hitachi, and functions
4/1982 Joined Hitachi, Ltd.
4/2014 Chief Operating Officer ofSystems & Solutions Business,
and General Manager of Service
Division Group, Information &Telecommunication Systems
Company, Information &Telecommunication Systems
Group
4/2015 Chief Strategy Officer ofInformation &Telecommunication Systems
Company, and Chief Operating
Officer of Systems & Services
Business, Information &Telecommunication Systems
Company, Information &Telecommunication Systems
Group
4/2016 Vice President and Executive
Officer
4/2018 Senior Vice President andExecutive Officer
4/1979 Joined Hitachi, Ltd.
4/2011 Board Director, Hitachi
Automotive Systems, Ltd.
4/2013 Vice President, Board Director,
Hitachi Automotive Systems,
Ltd.
4/2014 Executive Vice President, Board
Director, Hitachi Automotive
Systems, Ltd.
4/2015 President & COO, Director,
Hitachi Automotive Systems,
Ltd.
4/2016 President & CEO, Representative
Director, Hitachi Automotive
Systems, Ltd.
4/2018 Senior Vice President andExecutive Officer
4/1979 Joined Hitachi, Ltd.
4/2012 Chief Marketing Officer,
Information &Telecommunication Systems
Company
4/2014 Vice President and Executive
Officer
4/2017 Senior Vice President andExecutive Officer
4/2018 Senior Vice President andExecutive Officer
4/1983 Joined Hitachi, Ltd.
10/2013 Deputy General Manager,
Human Capital Group
4/2014 Vice President and Executive
Officer
4/2018 Senior Vice President andExecutive Officer-66-

Term ofofficeShareownership(shares)(Note 2)20,800(Note 2)

17,200(Note 2)

26,900(Note 2)

20,400Position and Responsibility

Representative Executive
Officer, Senior Vice
President and Executive
Officer
Finance and corporate
pension system

Name

MitsuakiNishiyama

Vice President andExecutive Officer
Marketing & sales (businessfor financial institutions,
Keiichi Akino
government, public
corporation and social
infrastructure systems anddefense systems business)

Date ofbirth

Sep. 25,
1956

Oct.13,
1958

Vice President andExecutive Officer
Business for industry &distribution sectors

Jun AbeJun. 14,
1961

Vice President andExecutive Officer
Governments & external
relations

Hitoshi Ito

Feb. 19,
1959

Vice President andExecutive Officer
Energy business

Kenji Urase

Jun. 18,
1961

Business experience, including
experience in Hitachi, and functions
4/1979 Joined Hitachi, Ltd.
4/2008 General Manager, Finance
Department I
4/2011 Executive Officer, Hitachi Cable,
Ltd.
6/2012 Executive Officer, Board
Director, Hitachi Cable, Ltd.
4/2013 Vice President and Executive
Officer, Board Director, Hitachi
Cable, Ltd.
7/2013 Vice President and Managing
Officer, Hitachi Metals, Ltd.
4/2014 Vice President and Executive
Officer, Hitachi Metals, Ltd.
4/2015 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/1981 Joined Hitachi, Ltd.
4/2016 General Manager, Kansai Area
Operation
4/2018 Vice President and Executive
Officer

4/1984 Joined Hitachi, Ltd.
4/2016 Senior General Manager, Control
System Platform Division,
Services & Platforms Business
Unit
4/2018 Vice President and Executive
Officer
4/1982 Joined Ministry of International
Trade and Industry
8/2011 Councillor, Cabinet Secretariat
1/2013 Director-General, Reconstruction
Agency7/2014 Commissioner, Japan Patent
Office10/2016 Advisor, Tokio Marine &Nichido Fire Insurance Co., Ltd.
1/2018 Joined Hitachi, Ltd.
4/2018 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
3/2015 President, Hitachi Power
Solutions Co., Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.

-67-

Term ofofficeShareownership(shares)(Note 2)

17,200(Note 2)

11,200(Note 2)

12,900(Note 2)8,300

(Note 2)

11,300Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Investment strategies

Ryuichi Otsuki

Mar. 15,
1958

Vice President andExecutive Officer
Legal matters, risk
management and corporate
auditing

Kohei Kodama

May 24,1961

Vice President andExecutive Officer
Research & development

Norihiro Suzuki

Dec. 5,
1961

Vice President andExecutive Officer
Marketing & sales (businessfor industry & distributionsectors, water &Yoji Takeuchi
environment business,building systems business,railway systems businessand healthcare business)

Jul. 1,
1958

Vice President andExecutive Officer
Nuclear energy business

Hidetoshi
Takehara

Jun. 25,
1957

Vice President andExecutive Officer
Services & platforms
business

ToshiakiTokunaga

Mar. 15,
1967

Vice President andExecutive Officer
Governments & external
relations, CSR &environmental strategy andexecutive support

Osamu Naito

Feb. 6,
1959

Business experience, including
experience in Hitachi, and functions
4/1981 Joined Hitachi, Ltd.
4/2014 Chief Strategy Officer andGeneral Manager of Group
Business Development Division,
Information &Telecommunication Systems
Company, Information &Telecommunication Systems
Group
4/2015 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2017 Chief Business Risk management
Officer, Systems & Services
Business Division
4/2018 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
10/2014 General manager of Central
Research Laboratory
4/2015 General Manager of Global
Center for Social Innovation,
Research & Development Group,
and General Manager of Central
Research Laboratory Group
4/2016 Vice President and Executive
Officer
4/1981 Joined Hitachi, Ltd.
4/2018 CMO of Building Systems
Business Unit, General Manager
of Global Business Strategy
Planning Division, Building
Systems Business Unit
4/2019 Vice President and Executive
Officer
4/1981 Joined Hitachi, Ltd.
4/2013 President, Hitachi-GE Nuclear
Energy, Ltd.
4/2017 Chief Operating Officer of
Nuclear Power Business Unit,
Hitachi, Ltd.
4/2018 Vice President and Executive
Officer, Hitachi, Ltd.
4/1990 Joined Hitachi, Ltd.
4/2017 President, Hitachi Appliances,Inc.
4/2018 General Manager, Smart Life &Ecofriendly Systems Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1983 Joined Hitachi, Ltd.
4/2016 General Manager of Board of
Directors Office4/2018 Vice President and Executive
Officer-68-

Term ofofficeShareownership(shares)(Note 2)

15,400(Note 2)7,900

(Note 2)9,100

(Note 2)9,100

(Note 2)

12,700(Note 2)

10,200(Note 2)

12,000Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Kojin Nakakita
Regional strategies (APAC)

Sep. 28,
1963

Vice President andExecutive Officer
Katsuya Nagano
Business for government,
public corporation andsocial infrastructure systems

Aug. 30,
1958

Vice President andExecutive Officer
Business for industry &distribution sectors

Seiichiro Nukui

Jan. 3,
1965

Vice President andExecutive Officer
Information technology
strategies

Yasushi Nomura

Aug. 21,
1957

Vice President andExecutive Officer
Railway systems businessAndrew Barr

Jan. 9,1973

Vice President andExecutive Officer
Supply chain management(MONOZUKURI and
quality assurance)

Kentaro Masai

May 22,
1959

Vice President andExecutive Officer
Railway systems businessShinya Mitsudomi

Jul. 5,1958

Business experience, including
experience in Hitachi, and functions
10/1988 Joined Hitachi, Ltd.
4/2017 Chairman of Hitachi Asia Ltd.
(Currently in office)6/2017 Chairman of Hitachi India Pvt.
Ltd. (Currently in office)4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1983 Joined Hitachi, Ltd.
4/2016 General Manager of Social
Infrastructure Information
Systems Division, Information &Communication Technology
Business Division
4/2017 Vice President and Executive
Officer
4/1988 Joined Accenture, Ltd. (Japan)
2/2010 Vice President of Company
Executive, and General Mangerof Communication, Electric,
Media and High-tech Industry,Power & Industrial Equipment
Division, Accenture Ltd. (Japan)
4/2015 Joined Hitachi, Ltd.
Executive IT Strategist, Hitachi,
Ltd.
4/2017 Urban Mobility Project Leader,
Future Investment Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1980 Joined Hitachi, Ltd.
4/2018 General Manager of IT Strategy
Division
4/2019 Vice President and Executive
Officer
1/2002 Engineering Manager, Rolling
Stock, UK Government Strategic
Rail Authority
1/2005 Head of Maintenance Delivery[Rail Business], Hitachi EuropeLtd.
1/2014 COO, Hitachi Rail Europe Ltd.
5/2016 CEO, Ansaldo STS S.p.A.
(Currently Hitachi Rail STS
S.p.A.) (Currently in office)4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1982 Joined Hitachi, Ltd.
4/2014 President & CEO of Rail
Systems Company, Infrastructure
Systems Group
4/2016 Vice President and Executive
Officer
4/1982 Joined Hitachi, Ltd.
4/2017 Group Head of Sales andManaging Director, Japan / Asia
Pacific, Railway Systems
Business Unit
4/2018 Vice President and Executive
Officer-69-

Term ofofficeShareownership(shares)(Note 2)8,300

(Note 2)

11,300(Note 2)8,700

(Note 2)

12,100(Note 2)0(Note 2)

12,000(Note 2)9,400

Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Supply chain management(procurement)

Masashi
Murayama

Dec. 23,
1961

Vice President andExecutive Officer
Management strategies

Mamoru Morita

Apr. 12,1959

Vice President andExecutive Officer
Business for financial
institutions

Tsugio Yamamoto

Aug. 27,
1959

Vice President andExecutive Officer
Marketing & sales (nuclear Takashi Yoda
energy business and energy
business)

Aug. 22,
1966

Vice President andExecutive Officer
Information security
management and cost
syructure reform

Masaya Watanabe

Jan. 31,1958

Executive Officer
GeneralHiroaki Nakanishi

Business experience, including
experience in Hitachi, and functions
4/1985 Joined Hitachi, Ltd.
4/2016 CPO and General Manager,
Value Chain Integration Division
4/2019 Vice President and Executive
Officer
4/1983 Joined Hitachi, Ltd.
4/2015 General Manager of Strategy
Planning Division
4/2016 Vice President and Executive
Officer
3/1978 Joined Hitachi, Ltd.
4/2016 CEO of Financial Institutions
Business Unit and CEO of
Government & Public
Corporation Business Unit
4/2017 Vice President and Executive
Officer
4/1990 Joined Hitachi, Ltd.
4/2018 General Manager of Energy
Business Co-Creation &Promotion Division, Power andEnergy Business Administration
Division
4/2019 Vice President and Executive
Officer
4/1982 Joined Hitachi, Ltd.
4/2011 Chief Strategy Officer,
Information &Telecommunication Systems
Company
4/2012 Vice President and Executive
OfficerMar. 14,
See “(a) Directors”
1946
Total

Term ofofficeShareownership(shares)(Note 2)

10,700(Note 2)

16,400(Note 2)9,500

(Note 2)9,000

(Note 2)

20,400(Note 2)70,600673,200(Notes) 1. The “Position and Responsibility” column describes positions and matters delegated to each of the
Executive Officers by the Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2020.
2) Outside Directors(a) Qualification for the outside Directors and criteria for the independency
For electing an outside Director, the Nominating Committee of the Company considers, inaddition to the following criteria for the independency, whether the outside Director has the highest
personal and professional ethics, integrity and insight, and distinguished records of leadership orexperience at policy making levels in business, law, administration, accounting or education, etc.
For the independency of an outside Director, the Company considers the outside director to be
independent unless:- his or her immediate family member* is, or has been within the last three years, a director or an
executive officer, of the Company or any of its subsidiaries;- he or she is currently an executive director, an executive officer or an employee of a company
that has made payments to, or received payments from, the Company for property or services
in an amount which, in any of the last three fiscal years, exceeds 2% of any of the companies’
consolidated gross revenues;- he or she has received during any of the last three fiscal years more than ¥10 million in directcompensation for his or her service as a specialist in law, accounting or tax, or as a consultant
from the Company, other than director compensations; or-70-

- he or she serves as an executive officer or director of a not-for-profit organization, and theCompany’s discretionary charitable contributions to the organization in any of the last threefiscal years are more than ¥10 million and 2% of that organization’s annual gross revenues.
* An “immediate family member” includes a person’s spouse, parents, children, siblings, grandparents, grand-children, mothers and fathers-in-law, sons and daughters-in-law, spouses ofsiblings, grand-children-in-law, and brothers and sisters-in-law.
(b) Function of the outside Directors
Following the policy stated in “(a) Qualification for outside Directors and criteria for the
independency,” the Company has elected eight persons; Messrs. Katsumi Ihara, Joe Harlan, George
Buckley, Harufumi Mochizuki, Takatoshi Yamamoto and Hiroaki Yoshihara and Mses. Cynthia
Carroll and Louise Pentland, as outside Directors under Article 2, Item 15 of the Companies Act. Eachoutside Director is expected to enhance functions of the Company’s Board of Directors throughsupervising execution of duties of Executive Officers and others from an independent perspective,
based on rich experiences and insights in the area of global corporate management in the cases ofMessrs. Katsumi Ihara and Joe Harlan, based on rich experiences and insights as top executive ofmajor global companies in the cases of Ms. Cynthia Carroll and Mr. George Buckley, based on deep
insight into corporate legal matters and corporate governance gained through her rich experience as
the chief legal officer of major global companies in the case of Ms. Louise Pentland, based on diverse
experiences and insights in such areas as public administration in the cases of Mr. Harufumi
Mochizuki, based on a broad range of insight in business and management gained through his
experience in the area of corporate analysis and global corporate management in the case of Mr.
Takatoshi Yamamoto and based on rich experiences and insights in the area of global corporate
management and accounting in the case of Mr. Hiroaki Yoshihara.
(c) Relationship between outside Directors and the Company
Each of outside Directors has no relationship with the Company regarding his or her
independency as described in “(a) Qualification for the outside Directors and criteria for the
independency.” In addition, there is no particular conflict of interest between each of outside Directors
and the Company.
The Company considers that all outside Directors are independent, and therefore has notified
them as independent directors to each of the Company’s listing stock exchanges in Japan.
In addition, the number of shares of the Company owned by each outside Director is described in“1) Lists of directors and senior management.”(d) Supervising by the outside Directors
Outside Directors, comprising of majority of Directors, supervise execution of duties of
Executive Officers from an independent perspective. As described in the item “(3) Audit,” the Audit
Committee, of which majority members are outside Directors, receives reports and explanations about
results of internal audits, accounting audit and internal control audit, and verifies the matters reported
or explained. In addition, the Audit Committee reports the results of its verification to the Board of
Directors.

-71-

(3) Audit
1) Audit by the Audit Committee
The Audit Committee consists of five Directors, including four outside Directors and one standing
Audit Committee member.
Mr. Hiroaki Yoshihara, the Chair of the Audit Committee, has considerable knowledge of financeand accounting based on his long experience at KPMG Group with businesses related to accounting, etc.
Mr. Toyoaki Nakamura, the member of the Audit Committee, has considerable knowledge of finance andaccounting due to his long experience as the General Manager of accounting and finance of the Company
as well as Executive Officer responsible for accounting and finance for many years.
The Audit Committee conducts audits for whether corporate administration by Directors andExecutive Officers are properly carried out under appropriate internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives reports
or conducts hearing for execution of duties from Directors and Executive Officers. In addition, themembers of the Audit Committee, who are in charge of internal inspection, examine business units of theCompany and receive reports from subsidiaries in order to check whether business transaction andproperty management are properly carried out, and then report the results to the Audit Committee.
Furthermore, such members of the Audit Committee attend the important meetings including the budget
meeting, the Senior Executive Committee and the Disclosure Committee, inspect audit reports frominternal audit division, and provide internal audit division with instructions about divisions to be subject
to auditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of the audit
from the accounting auditor, and based on the reports, verifies results of financial audits and internal
control audits. In addition, the Audit Committee receives reports and explanations of quality control
systems of the accounting auditor. Furthermore, the Company makes it a rule to obtain the prior approvalof the Audit Committee for remuneration to the accounting auditor.

Katsumi Ihara (Note 2)

Attendance / Number of days held the
Audit Committee (Note 1)
11 days / 11 days

Name

Attendance rate (Note 1)
100%

Harufumi Mochizuki

17 days / 17 days

100%

Takatoshi Yamamoto

17 days / 17 days

100%

Hiroaki Yoshihara

17 days / 17 days

100%

Toyoaki Nakamura

17 days / 17 days

100%

Kazuyuki Tanaka (Note 3)
11 days / 12 days
92%
(Notes) 1. They are based on the days held the Audit Committee during each member's term of office.
2. Mr. Katsumi Ihara was appointed on June 20, 2018.
3. Mr. Kazuyuki Tanaka resigned on November 22, 2018.

During the fiscal year ended March 31, 2019, the Audit Committee engaged in a variety ofactivities to study priority matters such as strengthening of collaboration and the facilitation of
information sharing under a “tripartite audit” (audit by the Audit Committee, internal audit and audit byaccounting auditors), and auditing of the establishment and operation of internal control systems from theperspective of risk management and validity of execution of duties. In addition, a standing committee
member worked to obtain information as needed in a timely and accurate manner, mainly bycollaborating with the Internal Auditing Office, among other departments, and attending importantinternal meetings such as the Senior Executive Committee, and facilitated information sharing with othercommittee members.
2) Internal audit
The Internal Auditing Office is in charge of internal audit within Hitachi Group and audits business
units, corporate divisions of headquarters and subsidiaries and affiliates. The number of staff of theInternal Auditing Office is 47 as of March 31, 2019.
The Internal Auditing Office monitors and assesses whether overall business operations, including
marketing, personnel management, labor management, compliance, procurement transactions,production, environment, disaster prevention, export regulations, information system, accounting andfinancing activities, and property management of Hitachi Group are properly carried out pursuant to audit
standards established by the Company, and points out items required to be improved based on the results-72-

of auditing and follows up their improvements. The Internal Auditing Office reports in advance its
internal audit plan to the Audit Committee, and reports results of auditing to the President & CEO and the
Audit Committee. Furthermore, relating to the internal control over financial reporting, the internal
control division in the Internal Audit Office promotes to establish and maintain the internal control
systems pursuant to the Company’s guideline, assesses its effectiveness, and reports the results to the
President & CEO and the Audit Committee.
3) Accounting audit(a) Name of accounting auditor
Ernst & Young ShinNihon LLC(b) Certified public accountants (CPAs) who executed accounting audit
Takashi Ouchida, Takuya Tanaka, Ken Sudo(c) Assistants for audit works
42 CPAs and 73 staffs belonging to Ernst & Young ShinNihon LLC assiste execution of
accounting audit works as instructed by the three CPAs mentioned in (b).
(d) Policy and reason for the selection of accounting auditors
With a view to ensuring the appropriate execution of duties by accounting auditors, the Audit
Committee selects accounting auditors by considering such factors as quality control systems foraccounting auditors, implementation systems for auditing and the level of audit fees.
In addition, the Audit Committee has prepared the following policies with respect to “policies
for determination of removal and non-reappointment of accounting auditors” set forth in Item 4 of
Article 126 of the Ordinance for Enforcement of the Companies Act.
- In the event the Audit Committee determines that the causes provided for in each item of
Paragraph 1 of Article 340 of the Companies Act apply to an accounting auditor and theaccounting auditor needs to be removed immediately, the Audit Committee shall remove theaccounting auditor by unanimity. Should this occur, the Audit Committee member selected by
the Audit Committee shall give a report on the removal of the accounting auditor and the reason
therefor at the first general meeting of shareholders to be convened after the said removal.
- Besides the case above, it is determined that an accounting auditor should be replaced for suchreason as the difficulty of ensuring an adequate performance of duties by the accounting
auditor, the Audit Committee shall determine the contents of the agenda item on the nonretention of the accounting auditor to be submitted to the general meeting of shareholders.
The Audit Committee comprehensively evaluated and studied Ernst & Young ShinNihon LLC
from the perspectives of its history, business size, past performance of auditing and efforts tofacilitate communication with the Audit Committee and other internal divisions, among other factors.
As a result, the Audit Committee decided to select Ernst & Young ShinNihon LLC as the accounting
auditor since the Audit Committee judged that none of the abovementioned policies applies to Ernst& Young ShinNihon LLC and therefore adequate performance of duties by Ernst & Young
ShinNihon LLC is continuously secured.
(e) Evaluation for accounting auditor by the Audit Committee
The Audit Committee evaluated the appropriateness and relevance of auditing conducted byaccounting auditor from the perspectives of the effectiveness of initiatives to facilitatecommunication with the Audit Committee and the top management in particular, the details andimplementation of audit systems and auditing manuals and remuneration for auditing in accordancewith evaluation criteria the Audit Committee formulated in advance. For evaluating the accounting
auditor, the Audit Committee gathered information on matters such as the independence of theaccounting auditor, audit systems and the implementation of audits and audit quality thereof from the
Accounting Control Department and the Internal Auditing Office. The Audit Committee also received
reports from the accounting auditor regarding compliance with laws and regulations, including theaccounting auditor’s independence, methods for evaluating risks with respect to the acceptance andcontinuation of audit services, audit and inspection systems and quality control systems, and detailed
audit plans based on the accounting auditor’s evaluations for risks pertaining to the Company, as well
as results of audits and details of and progress on plans for improving business operations andauditing efficiency at the time of the completion of quarterly reviews and annual audits. Based onsuch reports, the Audit Committee concluded that the accounting auditor conducted highly
transparent audits and its activities were appropriate and relevant.
-73-4) Audit Fees(a) Fees to Certified Public Accountants
Fiscal year ended March 31, 2018
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2019

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company

502 (Note 1)

58

497 (Note 1)

80

Consolidated
subsidiaries

914 (Note 2)

61

888 (Note 2)

85

Total

1,416

119

1,385

165

(Notes) 1. The non-audit services were basically assurance engagements and various consulting services.
2. The non-audit services were bascally various consulting services.
(b) Audit fees (excluding the amount mentioned in (a)) to the Company’s accounting auditor, Ernst &Young ShinNihon LLC Group (including Ernst & Young and its group firms which belong to thesame network as Ernst & Young ShinNihon LLC)
Fiscal year ended March 31, 2018
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2019

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company- (Note 1)

14- (Note 1)

6

Consolidated
subsidiaries

2,691 (Note 2)461

2,800 (Note 2)

489

2,691

475

2,800

495

Total

(Notes) 1. The non-audit services were basically various consulting services.
2. The non-audit services were basically assurance engagements and various consulting services.
(c) Policy on determination of audit fees
For determining the amount of audit fees, the Company conducts hearing of the audit plan andverify efficiency of audit services, including the number of days, hours for auditing, the number ofsubjects to be audited and the scope of audit, etc., and appropriateness of the estimate. The Company
also discusses with the accounting auditor taking into consideration the formation of auditors andaudit fees for the preceding fiscal year. In addition, the Audit Committee receives the audit plans of
the accounting auditors and the results of discussion between the auditors and Executive Officers of
the Company and approves the amount of the fees in advance of the Company’s decision.
(d) Reasons why the Audit Committee accepted the audit fees
The Audit Committee has obtained necessary information and examined the status of theexecution of duties by the accounting auditor, content of the audit plan, and grounds for calculating
the estimated amount of fees, etc. and concluded that these are reasonable. Therefore, the Audit
Committee has given the consent with regard to the fees etc. to accounting auditor, in accordancewith Article 399, Paragraph 1 of the Companies Act.

-74-

(4) Compensation to Directors and Executive Officers
1) Policy on the determination of Compensation of Directors and Executive Officers[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the policy on the determination of theamount of compensation, etc. of each Director and Executive Officer pursuant to applicable provisionsof the Companies Act.
[Basic Policy]
Compensation for Directors and Executive Officers shall be determined in accordance withthe following basic policy.
- Compensation shall be such that it enables the company to attract necessary personnel to achieve an
improvement in corporate value through global business growth.
- Compensation shall be commensurate with roles and responsibilities of each Directors andExecutive Officers.
- Compensation for Directors shall be such that it enables them to exercise functions of supervision ofmanagement effectively.
- Compensation for Executive Officers shall be such that it enables them to contribute to sustained
improvement in corporate value through the execution of business and employs an appropriatebalance between short-term performance and medium- and long-term performance.
- The level of compensation shall be determined taking into account compensation levels at othercompanies as well as economic and market trends.
- The Compensation Committee utilizes external experts to gain expert advice and an objective
viewpoint, if necessary, for considering the details and amounts of compensation.
[Compensation Structure](i) Matters relating to Directors
Compensation for Directors is basic remuneration as fixed pay. The amount of basic
remuneration is decided by adjusting a basic amount to reflect full-time or part-time status, committee
membership and position, and travel from place of residence, etc. A Director concurrently serving as
an Executive Officer is not be paid compensation as a Director.
It was decided that the year-end allowance that has been paid in the past will be integrated
into basic remuneration from compensation for Directors to be elected at the annual general meeting ofshareholders on June 19, 2019.
(ii)Matters relating to Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay, and shortterm incentive compensation and medium- and long-term incentive compensation as variable pay.
With regard to compensation for fiscal 2018, the basic amount of short-term incentive
compensation and that of medium- and long-term incentive compensation were set within the range ofabout 25 to 35% of the total annual compensation and within the range of about 10 to 40% of the total
annual compensation in accordance with the relevant position, respectively.
The basic amount of each type of compensation is set based on the ratio of 1:1:1 as thestandard from compensation for the fiscal year that commenced in April 2019, taking into account thecomposition of executive compensation for major global companies, in order to improve corporate
value through the growth of global businesses. The higher position Executive Officers holds, thehigher proportion of variable pay is set to the total annual compensation.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount set in accordance with therelevant position to reflect the results of an assessment.

-75-

Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of abasic amount set according to the relevant position by adjusting that amount to reflect financial
results and individual performance. Evaluation items and proportion of evaluation item are as shownin the following table.
Evaluation items
Performanc
e-linkedcomponent

Company performance

Proportion of evaluation item
Executive Officers that
constitute the Senior
Other Executive Officers
Executive Committee (Note)80%30%

Division performance

Individual target-linked component

-

50%

20%

20%

(Note) In case that an “Executive Officers that constitute the Senior Executive Committee” is incharge of business units or businesses, the same proporation of evaluation item as for “Other
Executive Officers” is used.
- The amount of the performance-linked component varies according to the evaluation of company
performance and division performance.
- Company performance is evaluated referring to consolidated revenues, adjusted operating income,
EBIT, and net income attributable to Hitachi, Ltd. stockholders in order to measure the level ofachievement of consolidated financial forecasts disclosed to stakeholders, including shareholders
and investors.
- Division performance is evaluated referring to adjusted operating income and operating cash flows
for each division, among other indicators, to measure the level of achievement of targets under the
Mid-term Management Plan and the annual budgets for divisions.
- The amount of the individual target-linked component varies according to the evaluation of the levelof achievement of individual target for each Executive Officer determined based on his/her
responsibility.
Medium- and Long-term incentive compensation- The shares of restricted stock are granted in order to propel management from a medium- and longterm perspective and to provide incentives to bring about a sustainable increase in enterprise value
by further promoting senior management’s shared values with shareholders through the holding ofshares during their term of office.
- The restriction on transfer shall be lifted if executive officers resign from all of the positions of theCompany’s executive officer, director, and corporate officer.
- With regard to one-half of granted shares of restricted stock, the number of shares whose transfer
restriction is lifted shall be determined after ex-post evaluation in which the total shareholder returnof Hitachi stock is compared with growth rate of TOPIX. Lifting of transfer restrictions shall apply
to all granted shares if the TSR/TOPIX Growth Rate Ratio is 120% or more. Lifting of transfer
restrictions shall apply to part of granted shares if the TSR/TOPIX Growth Rate Ratio is between
80% or more but less than 120% (*). Transfer restrictions shall not be lifted for any shares if the
TSR/TOPIX Growth Rate Ratio is less than 80%. Shares whose transfer restrictions are not liftedshall be acquired by the Company without consideration.
* Number of shares whose transfer restrictions are lifted= Number of granted shares × {(TSR/TOPIX Growth Rate Ratio × 1.25) － 0.5}
- If it is deemed to be inappropriate to grant shares of restricted stock due to laws and regulations in
the country of residence, etc., cash award based on the value of the Company’s share price shall be
substituted for restricted stock.
- From the fiscal year that commenced in April 2019, shares of restricted stock are granted in place ofthe stock options as stock-based compensation the Company has granted previously.
If it is found that an executive officer has been engaged in misconduct during his/her term ofoffice, compensation for Executive Officers that has been already paid shall be returned to theCompany.
With regard to persons who are hired externally such as foreign persons, a compensation
package could be individually determined based on the level of compensation in a job market which isconsidered for compensation benchmarking while referring the above policy.
-76-

(iii) Miscellaneous- It was decided at the Compensation Committee meetings held on December 18, 2007 and March 26,
2008 that the compensation structure for Directors and Executive Officers will be re-examined
starting with the compensation for fiscal 2008 and that the retirement allowance will be abolished.
The payment of retirement allowance to Directors and Executive Officers due to the abolition of theretirement allowance system will be in an amount determined by the Compensation Committee atthe time of the retirement of a relevant Director or Executive Officer.
2) Amount of compensation
Total amount of each type(Millions of yen)
Category

Total amount ofcompensation, etc.
(Millions of yen)

Variable pay

Fixed pay

Number of
Medium- and persons
Short-termlong-term
incentive
incentivecompensationcompensation

Directors(excluding outside64
64
2
Directors)
Outside Directors
348
348
11
Executive Officers
3,517
1,467
1,247
801
34
Total
3,930
1,880
1,247
801
47
(Notes) 1. The number of Directors indicated excludes two Directors who concurrently serve as
Executive Officers.
2. Fixed pay includes a year-end allowance to Directors.
3. Compensation, etc. to Directors (excluding Outside Directors) includes compensation to
one Director for his service period, who resigned as of November 22, 2018.
4. Compensation, etc. to Outside Directors includes compensation to three Outside Directors
for their service period, who retired due to expiration of their terms of office at the close of
the 149th Annual General Meeting of Shareholders held on June 20, 2018.
Performance indicators referred to in company performance evaluations for short-term
incentive compensation are as follows.
(Unit: billions of yen)
Fiscal year ended March 31, 2019
Indicators
TargetResults
Revenues

9,400.0

9,480.6

Adjusted Operating Income

750.0

754.9

EBIT
Net income attributable to
Hitachi, Ltd. stockholders

750.0

513.9

400.0

222.5

The TSR/TOPIX Growth Rate Ratios defined in conditions for exercising stock option as stock-based compensation (stock acquisition rights) issued as medium- and long-term incentive
compensation are as follows.
Total shareholder return / TOPIX
Name
Term
Growth Rate Ratio
The First Stock Acquisition
From April 1, 2016125.8%
Rights of Hitachi, Ltd.
to March 29, 2019The Second Stock Acquisition
From March 31, 2017118.0%
Rights of Hitachi, Ltd.
to March 29, 2019 (Note)
The Third Stock Acquisition
From March 30, 2018102.5%
Rights of Hitachi, Ltd.
to March 29, 2019 (Note)(Note) The ratios are calculated to determine the number of stock acquisition rights that can be
exercised by persons who retires from executive officers before the expiration of the waiting
period (three years from the beginning of the fiscal year in which the allocation date of stockacquisition rights falls).

-77-

In addition, Directors or Executive Officers whose compensation from the Company and its
subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:
Total amount of each type (Millions of yen)
Name

Company

Toshiaki
Hitachi, Ltd.
Higashihara (The Company)

Masakazu
Aoki

Keiji
KojimaKeiichi
Shiotsuka
HideakiTakahashi

Toshikazu
NishinoShinichiro
Omori
Yoshihiko
Kawamura

Category

Executive
Officer(Note 4)
Executive
Officer

Hitachi, Ltd.
(The Company)
Hitachi Industrial
Chairman
Equipment
Systems Co., Ltd. of the
Board(Consolidated
subsidiary)
Hitachi, Ltd.
Executive(The Company) Officer
HitachiAppliances, Inc.
Chairman(Consolidated
subsidiary)
HitachiAutomotive
Systems, Ltd.
Chairman(Consolidated
subsidiary)
Hitachi, Ltd.
Executive(The Company) Officer
Hitachi, Ltd.
Executive(The Company) Officer
Hitachi Metals,
ChairmanLtd.
of the(Consolidated
Board
subsidiary)
Hitachi, Ltd.
Executive(The Company) Officer
Hitachi Metals,
ChairmanLtd.
of the(Consolidated
Board
subsidiary)
Hitachi, Ltd.
Executive(The Company) Officer
Hitachi Chemical
Company, Ltd.
Director(Consolidated
subsidiary)
Hitachi, Ltd.
Executive(The Company) Officer

Variable pay
Total amount ofcompensation,
Medium andShort-term
Othersetc.
Long-term
Fixed pay
incentive
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)
106

83

179

-

30

30

38

-

30

27

-

-

52

43

29

-

4

3

-

-

369

158

140
4

3

-

-

61

69

38

-

60

46

16

-

1

-

-

-

56

48

46

-

5

1

-

-

47

38

20

-

0

-

-

-

51

42

14

-

-78-

169

125

158

107

109

Total amount of each type (Millions of yen)
Name

Company

Category

Variable pay
Total amount ofcompensation,
Medium andShort-termetc.
Long-term Others
Fixed pay
incentive
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)

Hitachi, Ltd.
Executive
8(The Company) Officer
Hitachi (China),
Kenichi123
Ltd.
KokuboChairman57
43
14(Consolidated
subsidiary)(Note 5)
Hitachi, Ltd.
Executive
49
55
16(The Company) Officer
SetsuoHitachi
124
Shibahara
Solutions, Ltd.
Director
2
1(Consolidated
subsidiary)
Hitachi, Ltd.
Executive
26
24
7(The Company) Officer
Hideaki Seki Hitachi Building President
108
Systems Co., Ltd.
and
24
24
(Consolidated
Director
subsidiary)
YoshitakaHitachi, Ltd.
Executive
48
48
19
116
Tsuda
(The Company) Officer
Hitachi RailEurope Ltd.
Alistair(Consolidated
CEO
81
70
171
10
333
Dormersubsidiary)(Note 5)Hidenobu
Hitachi, Ltd.
Executive
51
39
16
107
Nakahata(The Company) Officer
Mitsuaki
Hitachi, Ltd.
Executive
51
42
20
114
Nishiyama (The Company) Officer
Hitachi, Ltd.
Executive
08(The Company) Officer
Hitachi Global
Ryuichi
Digital Holdings
112
Chairman
Otsuki
Corporationof the6930
20(Consolidated
Board
subsidiary)(Note 5)
Executive
Hiroaki
Hitachi, Ltd.
Officer
97
75
110
282
Nakanishi(The Company)(Note 4)(Notes) 1. Compensations from the Company and consolidated subsidiaries paid depending on financial results
and individual performances in the short term are collectively called.
2. Medium and long-term incentive compensation is stock options as stock-based compensation or cash
award based on the value of the Company’s share price.
3. The "Others" column shows the fringe benefit equivalent.
4. Although concurrently serving as Director for the fiscal year ended March 31, 2019, Messrs. Toshiaki
Higashihara and Hiroaki Nakanishi did not receive compensation as Director.
5. The amount of the remuneration, etc. from foreign subsidiaries shows yen equivalent.

-79-3) Authorities, roles and activities of the Compensation Committee
The Compensation Committee, which was established under the Companies Act, includes
independent outside directors that have majority in the number of committee members, holds the legal
authority to determine remuneration for Directors and Executive Officers, and strives to ensure theobjectivity, transparency and fairness of the remuneration determination processes. The Compensation
Committee has the authority to determine remuneration policies and the details of remuneration(amount of compensation, etc.) of Directors and Executive Officers individually based on the policies.
To determine the details of remuneration individually, the Committee confirms and reviews processes
and details with respect to the assessment of basic remuneration amounts, evaluation of performanceand individual targets related to short-term incentive compensation.
For the fiscal year ended March 31, 2019, based on policies for determining compensation for
Directors and Executive Officers, the Compensation Committee confirmed and reviewed the process
and details of performance and individual target evaluations in conjunction with short-term incentive
compensation, and determined amounts of remuneration for Directors and Executive Officers
individually. Furthermore, the Compensation Committee re-examined the executive compensation
system from the viewpoint of remuneration for top management at global enterprises and sharing ofvalues with shareholders, and decided on policies for determining remuneration for Directors andExecutive Officers that is applied in the fiscal year commenced in April 2019, including the review of
the composition of each compensation component and introduction of restricted stock compensation.

-80-

(5) Information on shareholdings(a) Criteria for classification of investment securities
The Company classifies investment securities that it holds into two types. If investment
securities are held for the purpose of receiving benefits exclusively through stock price fluctuations
and dividends, those are classified as investment securities for pure investment and the rest ofinvestment securities are classified as investment securities owned for other purposes than pureinvestment.
(b) Equity securities held for purposes other than pure investment(i) Policy for shareholding and examination of the reasonableness of holding
Under the basic policy, the Company will not acquire and hold other companies’ shares except
for cases where acquiring or holding such shares is necessary in terms of transactions or business
relationship. The Company will promote reducing shares that it already owns unless significance ofholding shares and economic rationales of holding are confirmed.
The Board of Directors verifies whether it is appropriate to hold shares for all stock theCompany owns ever year. In such verification, each individual stock was re-examined as to the
purpose of holding the shares and whether benefits from holding shares are in line with target level ofcapital efficiency. As the result of verification, the Company promotes the sales of shares for whichsignificance of holding shares and economic rationale are not confirmed. Details of shares sold in thefiscal year ended March 31, 2019, are presented in (ii) below.
(ii) Number of stock names and balance sheet amount
Number ofstock names

Total amount recordedin the balance sheet(stock names)(millions of yen)

Unlisted stocks

204

38,742Others68

140,926<Stocks increased in the fiscal year ended March 31, 2019> (Note 1)
Number ofstock names

Total purchase price forthe shares increased(stock names)(millions of yen)

Reasons of increase
Purchasing related to business

Unlisted stocks

5

10,565reorganization (Note 2)
Purchasing for strengthening and keeping
the relationship for business or transactions

Others---<Stocks decreased in the fiscal year ended March 31, 2019> (Note 1)
Number of

Total selling price forstock names(stock names)

the shares decreased(millions of yen)

Unlisted stocks

8

14,201Others21

39,977(Notes) 1. In addition to the stocks in the above tables, the Company holds a compnay's stocks whoseclassification in accounting was changed from affiliated company's common stock toinvestment securities.
2. This includes investments of ¥10,000 million in HKE Holdings, K.K. (currently Kokusai
Electric Corporation) in relation to the business reorganization of Hitachi Kokusai Electric,
Inc.

-81-

(iii) Stock name, number of shares, amount recorded in the balance sheet, and purpose of holding
regarding equity securities held for purposes other than pure investment
Specified investment securities
Fiscal year ended Fiscal year ended
March 31, 2019
March 31, 2018
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

6,250,000

6,250,000

33,33861,267

61,990,548

92,530,648

31,73999,007

Central Japan Railway
Company

900,000

900,000

23,13918,117

East Japan Railway
Company

812,400

812,400

8,676

8,011

31,817,168

31,817,168

Stock nameWestern Digital
Corporation

Renesas Electronics
Corporation

Yungtay Engineering
Co., Ltd.
7,313

6,543

521,000

521,000

4,834

5,733

1,603,000

1,603,000

2,516

3,321

1,286,900

1,286,900

2,492

2,383

3,269,000

3,269,000

1,964

2,794

West Japan Railway
Company

215,000

215,000

1,792

1,597

Electric Power
Development Co., Ltd.

653,980

653,980

1,763

1,753

800,000

800,000

1,737

2,354

Shin-Etsu ChemicalCo., Ltd.

Maxell Holdings, Ltd.

Seibu Holdings Inc.

The Chiba Bank, Ltd.

Benefit One Inc.

-82-

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
relationship

No

Received in relation to thereorganization, etc. of Renesas
Technology Corp. which was anaffiliate of the Company

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
relationship
The issuer has turned it into an equitymethod associate of the Company asof the filing date of this report.

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
relationship

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

NoFiscal year ended Fiscal year ended
March 31, 2019
March 31, 2018
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

400,000

400,000

1,556

1,800

300,000

300,000

1,530

1,057

206,574

206,574

1,477

938

Sapporo Holdings
Limited597,600

597,600

1,444

1,852

Ono PharmaceuticalCo., Ltd.

600,000

600,000

1,301

1,976

Chubu Electric Power
Co., Inc.

600,254600,254

1,037

902

NGK INSULATORS,
LTD.

607,000

607,000

976

1,113

TOKYU
CORPORATION

394,016

394,016761

653

830,320

1,030,320

645

971

474,000

592,500

619

751

225,000

225,000

617

689

121,927

121,927

567

399

328,500

328,500

565

685

Kintetsu Group
Holdings Co.,Ltd

104,291

164,291

538

680

The Bank of Kyoto,Ltd.

100,000

100,000

463

594

Stock nameShowa Denko K.K.
DAIICHI SANKYOCOMPANY,
LIMITED
Keio Corporation

Seiko Electric Co., Ltd.

Kyushu Electric Power
Company Inc.

Japan Tobacco Inc.

Keihan Holdings
Co.,Ltd.

Tosoh Corporation-83-

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of purchasing raw
materials and components, etc.

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

NoFiscal year ended Fiscal year ended
March 31, 2019
March 31, 2018
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

Yamaguchi Financial
Group, Inc.

484,310484,310454

623

ANA HOLDINGS
INC.

100,000

100,000

405

411

Hokuriku ElectricPower Company

466,560

466,560

404

421

114,103214,103

388

605

550,275

1,100,550

355

522

679,200

679,200

285

321

375,000

375,000

257

384

RENESAS EASTON
Co., Ltd.

612,520

612,520

249

425

Nankai Electric
Railway Co., Ltd.

71,49471,494218

190

BANDAI NAMCO
Holdings Inc.

37,00074,100192

258

300,000

300,000

153

171

Kita-Nippon Bank,
Ltd.

73,500100,000

144

297

THE TAIKO BANK，
LTD．

88,00088,000

143

198

Tokyo Electric Power
Company Holdings,
Inc.

187,500

375,000

131

153

Taiwan High Speed
Rail Corporation

957,361

957,361

123

78

Stock name

Sotetsu Holdings, Inc.

The Keiyo Bank, Ltd.

TOMONY Holdings,
Inc.

euglena Co.,Ltd.

Daido Signal Co., Ltd.

-84-

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing
cooperative relationship in the area of
R&DNo

Maintaining and enhancing business
transactions of purchasing raw
materials and components, etc.

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of purchasing raw
materials and components, etc.

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

NoFiscal year ended Fiscal year ended
March 31, 2019
March 31, 2018
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

TOYO ELECTRIC
MFG. CO., LTD.

100,000

220,000

121

394

Taragaon Regency
Hotel508,030

508,030

121

134

513,150

513,150120

210

73,623－113－

THE SHIGA BANK，
LTD．

40,000200,000

105

107

Nippon Yakin Kogyo
Co., Ltd.

404,250

404,250

101

117

Nippon Shinyaku Co.,Ltd.

12,00012,0009685Senshu Ikeda
Holdings, Inc.

315,327

315,327

89

126

Yashima Denki Co.,Ltd.

100,000

400,000

82

345

THE DAITO BANK,
LTD.

110,000

110,000

70

137

Yodogawa SteelWorks, Ltd.

34,04034,04069

97

50,00050,00057

52

69,90069,90056

91

16,250

16,25055

87

32,00032,00052

67

Stock nameTochigi Bank, Ltd.

San ju San Financial
Group, Inc.

Ricoh Company, Ltd.

THE BANK OF
KOCHI, LTD.

The Aichi Bank, Ltd.

ISEKI&CO,. LTD.

-85-

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
relationship

Yes

Received as a result of substituteperformance for accounting
receivables

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services(Note 4)

Yes
(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

NoFiscal year ended Fiscal year ended
March 31, 2019
March 31, 2018
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

Tokyo Kiraboshi
Financial Group, Inc.

30,00030,000

46

75

THE CHUKYOBANK, Ltd.

20,00020,00045

46

38,00038,00042

58

The Japan Steel Works,LTD.

－

505,000－

1,714

Tohoku Electric Power
Co., Inc.

－

505,000－

717－

750,000－

621－

122,400－

599－

209,652－

398－

88,894－290－

195,000－

266－

105,177－

183

Stock name

Zeon Corporation

eREX Co., Ltd.
NIPPONTELEGRAPH AND
TELEPHONECORPORATION
Aeon Co., Ltd.

TOHO GAS Co., Ltd.
The Kansai ElectricPower Company,
Incorporated
The Daisan Bank, Ltd.

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Held for maintaining and enhancing
business transactions of purchasing
raw materials and components, etc.

No

Held for maintaining and enhancing
business transactions of selling
products and providing services

No

Held for maintaining and enhancing
business relationshipNo

Held for maintaining and enhancing
business transactions of selling
products and providing services

No

Held for maintaining and enhancing
business transactions of selling
products and providing services

No

Held for maintaining and enhancing
business transactions of selling
products and providing services

Yes

Held for maintaining and enhancing
business transactions of selling
products and providing services

No

Held for maintaining and enhancing
business transactions of selling
products and providing services(Note 4)

Yes

(Notes) 1. Since the number of stock of which balance sheet amount exceeds 1% of the amount of theCompany’s common stock on the balance sheet is less than 60, the top 60 stocks in balance sheet
amount are listed.
2. Since it is hard to state quantitative effects of holding the investment securities, such effects are notdescribed. Regarding the way to verify significance and relations of holding shares are described in"(i) Policy for shareholding and examination of the reasonableness of holding."
3. Shareholding by major subsiduaries of the issuers of each stock is counted.
4. San ju San Financial Group stock was alloted in return for the Daisan Bank stock through sharetransfer.
(c) Equity securities held for pure investment
None.
V. Financial Information
Refer to the consolidated financial statements incorporated in this Annual Securities Report.
-86-VI. Stock-Related Administration for the Company
Fiscal year

From April 1 to March 31

Annual General Meetingof Shareholders

To be held within three months from the following day of the end of every fiscal
year

Record date

End of every fiscal year

Record date for
distribution of surplus
Number of sharesconstituting one unit
Purchase and sale ofshares less than one unit
Handling officeTransfer agent

End of March and end of September
100 shares(Special account)
11, Kanda Nishikicho 3-chome, Chiyoda-ku, Tokyo
Main Office, Tokyo Securities Transfer Agent Co., Ltd.
(Special account)
Tokyo Securities Transfer Agent Co., Ltd.

Forward office-

Purchasing and selling fee

Free of charge

Method of public notice

The Company’s method of public notice is through electronic public notice.
However, if the Company cannot use the above-mentioned method of public
notice due to an accident or other inevitable reasons, Nihon Keizai Shimbun will
be adopted as its medium.

Special benefit for
None
Shareholders(Notes) 1. Under the Articles of Incorporation, distribution of surplus through dividend payment, if any, will bemade to shareholders of record as of March 31 and September 30 of each year. In addition, theCompany may make further distributions of surplus to shareholders of record as of another record date.
2. The Articles of Incorporation provide that a holder of shares representing less than one unit does nothave any other rights of a shareholder in respect of those shares, other than those specified in the
Articles of Incorporation. This includes:(1) Rights under each item of Article 189, Paragraph 2 of the Companies Act;
(2) Rights to be allotted rights to subscribe for free for new shares and stock acquisition rights whensuch rights are granted to shareholders; or(3) Rights stipulated in the Articles of Incorporation-87-VII. Reference Information on the Company
1. Information on a Parent Company, etc. of the Company
The Company has no parent company.
2. Other Reference Information
The Company filed the following documents during the period from the commencing date of the fiscal
year ended March 31, 2019 to the filing date of this Annual Securities Report.
(1) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 9-2 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on June 21, 2018

(2) Annual Securities Report and documents attached, and Confirmation
Letter(The 149th business term (from April 1, 2017 to March 31, 2018))

Filed with the Director of the
Kanto Local Finance Bureau
on June 29, 2018(3) Internal Control Report

Filed with the Director of the
Kanto Local Finance Bureau
on June 29, 2018(4) Quarterly Report and Confirmation Letter(The First Quarter of the 150th business term (from April 1, 2018 toJune 30, 2018))

Filed with the Director of the
Kanto Local Finance Bureau
on August 7, 2018(5) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 7 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on October 26, 2018(6) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on October 26, 2018(7) Quarterly Report and Confirmation Letter(The Second Quarter of the 150th business term (from July 1, 2018 toSeptember 30, 2018))

Filed with the Director of the
Kanto Local Finance Bureau
on November 12, 2018(8) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 8-2 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on December 19, 2018(9) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 and 19 of the Cabinet
Office Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on January 18, 2019(10) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 9 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on February 1, 2019(11) Amended Extraordinary Report(Amendment to Extraordinary Report (5) above)

Filed with the Director of the
Kanto Local Finance Bureau
on February 6, 2019(12) Quarterly Report and Confirmation Letter(The Third Quarter of the 150th business term (from October 1, 2018
to December 31, 2018))

Filed with the Director of the
Kanto Local Finance Bureau
on February 13, 2019(13) Securities Registration Statement

Filed with the Director of the
Kanto Local Finance Bureau
on April 23, 2019(14) Amended Securities Registration Statement(Amendment to Securities Registration Statement (13) above)

Filed with the Director of the
Kanto Local Finance Bureau
on April 26, 2019(15) Amended Securities Registration Statement(Amendment to Securities Registration Statement (13) above)

Filed with the Director of the
Kanto Local Finance Bureau
on May 10, 2019-88-

(16) Amended Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report filed on June 21, 2017)

Filed with the Director of the
Kanto Local Finance Bureau
on June 19, 2019(17) Amended Annual Securities Report and Confirmation Letter(Amendment to Annual Securities Report filed on June 29, 2018)

Filed with the Director of the
Kanto Local Finance Bureau
on June 19, 2019(18) Amended Shelf Registration Statement(Amended Shelf Registration Statement concerning the Shelf
Registration Statement filed on June 22, 2017)

Filed with the Director of the
Kanto Local Finance Bureau
on April 11, 2018
April 27, 2018
June 21, 2018
October 26, 2018
December 19, 2018
January 18, 2019
February 1, 2019
February 6, 2019 andJune 19, 2019

Part II Information on Guarantors, etc. for the Company
Not applicable.

-89-

Consolidated Financial Statements
Page
NumberConsolidated Financial Statements of Hitachi, Ltd. and Subsidiaries:
Consolidated Statement of Financial Position as ofMarch 31, 2019 and 2018

F-2

Consolidated Statement of Profit or Loss andConsolidated Statement of Comprehensive Income for the years ended
March 31, 2019 and 2018

F-3

Consolidated Statement of Changes in Equity for the years ended
March 31, 2019 and 2018

F-4

Consolidated Statement of Cash Flows for the years ended
March 31, 2019 and 2018

F-5

Notes to Consolidated Financial Statements

F-6

Reports of Independent Registered Public Accounting Firm

F-1

F-72

Consolidated Financial Statements
Consolidated Statement of Financial Position
Millions of yen
Note
AssetsCurrent assets
Cash and cash equivalents
Trade receivables
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets

26
3,6,263,6,20,26
7
8,26

Total current assets
Non-current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Intangible assets
Other non-current assets

9
8,26
10
11
12

Total non-current assets
Total assets
Liabilities
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Advances received
Contract liabilities
Other current liabilities

26
8,26
26
13
3
3,20
14,30

Total current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities

8,26
15
12,14,26

Total non-current liabilities
Total liabilities
EquityHitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income
Treasury stock, at cost

16
16,19
16,18
17
16

Total Hitachi, Ltd. stockholders’ equity
Non-controlling interests

March 31, 2019

March 31, 2018807,5932,399,933
1,356,762
284,267
187,238

697,964
2,501,414
1,375,232
373,324
203,866

5,035,793

5,151,800

724,461
568,349
1,956,685
960,016
381,288743,407
716,431
2,124,827
1,054,370
315,768

4,590,799

4,954,803

9,626,592

10,106,603

111,031
185,250
257,792
1,406,012
653,676
553,510438,289

121,439
117,191
254,735
1,536,983
697,185
551,182
516,679

3,605,560

3,795,394

708,490526,688371,451

811,664
575,156
412,718

1,606,629

1,799,538

5,212,189

5,594,932

458,790
463,786
2,287,587
56,360(3,920)458,790575,809
2,105,395
142,167(4,137)

3,262,603

3,278,024

1,151,800

1,233,647

Total equity

4,414,403

4,511,671

Total liabilities and equity

9,626,592

10,106,603

See accompanying notes to consolidated financial statements.

F-2

Consolidated Statement of Profit or Loss
Years ended March 31, 2019 and 2018

Millions of yen

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using the equity
methodEBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income from continuing operations, before income taxes
Income taxes
Income from continuing operations
Loss from discontinued operations
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
DilutedEarnings per share attributable to Hitachi, Ltd. stockholders
Basic
Diluted

Note
20

21
21
22
22

2019
9,480,619(6,964,635)
2,515,984(1,761,008)
206,371(442,659)
13,693(3,459)2018
9,368,614(6,866,522)
2,502,092(1,787,462)
12,068(140,686)
7,005(11,243)

9(15,016)

62,483513,906
23,122(20,526)
516,502(186,344)
330,158(9,136)
321,022644,257
14,928(20,539)
638,646(131,708)
506,938(16,020)
490,918

222,546
98,476362,988
127,930

239.93239.70Yen
392.52392.17230.47230.25375.93375.60

12
14,23

24

24

Consolidated Statement of Comprehensive Income
Years ended March 31, 2019 and 2018

Millions of yen
Note

Net income
Other comprehensive income (OCI)
Items not to be reclassified into net income
Net changes in financial assets measured at fair value through OCI
Remeasurements of defined benefit plans
Share of OCI of investments accounted for using the equity method
Total items not to be reclassified into net income
Items that can be reclassified into net income
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total items that can be reclassified into net income
Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
See accompanying notes to consolidated financial statements.
F-3

2019
321,0222018
490,918(45,356)(11,881)(1,964)(59,201)

1,530
22,753
3,302
27,585(4,175)(6,274)12,0091,560(8,042)5,703(45)(2,384)(57,641)
263,381

25,201
516,119

171,140
92,241

382,341
133,77817

Consolidated Statement of Changes in Equity

Year ended March 31, 2019

Millions of yen
2019

Balance at beginning of year

Commonstock(note 16)

Capitalsurplus(notes 5
and 16)

Retainedearnings(notes 16
and 18)

Accumulated
othercomprehensive
income(note 17)458,790575,809

2,105,395

142,167

Cumulative effects of changes inaccounting policies (note 3)

Treasurystock,
at cost(note 16)
(4,137)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests(note 5)

Total equity

3,278,024

1,233,647

4,511,671

-

-

3,209

-

-

3,209

(1,406)

1,803

458,790575,809

2,108,604

142,167(4,137)

3,281,233

1,232,241

4,513,474

Reclassified into retained earnings--

33,683(33,683)

-

-

-

-

Net income--

222,546--

222,546

98,476

321,022

Other comprehensive loss

-

-

-

(51,406)-(51,406)(6,235)(57,641)

Dividends to Hitachi, Ltd. stockholders--(77,246)--(77,246)-(77,246)

Restated balance
Changes in equity

Dividends to non-controlling interests

-

-

-

-

-

-

(42,968)(42,968)

Acquisition of treasury stock

-

-

-

-

(231)

(231)

-

(231)

Sales of treasury stock

-

(237)

-

-

448

211

-

211
(242,218)-(111,786)

-

(718)

-

(112,504)(129,714)

Total changes in equity-(112,023)

178,983(85,807)217(18,630)(80,441)(99,071)

Balance at end of year

458,790

463,786

2,287,587

56,360(3,920)3,262,603

1,151,800

4,414,403

Changes in non-controlling interests

Year ended March 31, 2018

Millions of yen
2018

Balance at beginning of year

Accumulated
othercomprehensive
income(note 17)

Commonstock(note 16)

Capitalsurplus(note 16)

Retainedearnings(notes 16
and 18)Treasurystock,
at cost(note 16)

458,790

577,573

1,793,570

141,068(3,916)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

2,967,085

1,129,910

4,096,995

Changes in equity
Reclassified into retained earnings--

16,428(16,428)

-

-

-

-

Net income--

362,988--362,988

127,930

490,918

Other comprehensive income

-

-

-

19,353-

19,353

5,848

25,201Dividends to Hitachi, Ltd. stockholders--(67,591)--(67,591)-(67,591)

Dividends to non-controlling interests

-

-

-

-

-

-

(34,395)(34,395)

Acquisition of treasury stock

-

-

-

-

(292)

(292)

-

(292)

Sales of treasury stock

-

(27)

-

-

71

44

-

44

Changes in non-controlling interests-(1,737)-(1,826)-(3,563)

4,354

791

Total changes in equity-(1,764)

311,825

1,099

(221)

310,939

103,737

414,676

Balance at end of year

458,790575,809

2,105,395

142,167(4,137)

3,278,024

1,233,647

4,511,671

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statement of Cash Flows
Years ended March 31, 2019 and 2018

Millions of yen
Note

2019

2018

321,022490,918

368,044344,997
183,699
15,016(6,387)(184,630)(18,966)
1,793(149,500)(13,419)(16,107)(38,461)(35,257)
3,925

364,432
48,656
131,659(62,483)(862)(9,774)
2,395
47,216(181,207)(17,321)97,923(40,137)
44,320(7,743)775,769
22,34322,710(22,530)(188,267)
610,025

907,992
9,767
17,902(21,582)(186,911)
727,168(382,351)(89,898)
61,623(352,047)(91,528)
37,076(72,422)(243,124)

306,971
13,205

178,188(2,893)(162,872)(474,328)

3,706
87,636(133,581)
5,149(77,194)(43,375)(231)
211(162,692)(55)(104,819)
143,354(256,944)
3,953(67,568)(32,066)(292)
49(6,982)
205(344)(320,426)(321,454)

Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents(17,098)
109,629

1,336(67,278)

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

697,964
807,593765,242
697,964

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
Impairment losses
Income taxes
Share of (profits) losses of investments accounted for using the equity method
Financial income and expenses
Net (gain) loss on business reorganization and others(Gain) loss on sale of property, plant and equipment
Change in trade receivables
Change in trade receivables and contract assets
Change in inventories
Change in other assets
Change in trade payables
Change in retirement and severance benefits
Change in other liabilities
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment, and intangible assets
Purchase of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)Other
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Change in short-term debt, net
Proceeds from long-term debt
Payments on long-term debt
Proceeds from payments from non-controlling interests
Dividends paid to Hitachi, Ltd. stockholders
Dividends paid to non-controlling interests
Acquisition of common stock for treasury
Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from non-controlling interests
Proceeds from partial sales of shares of consolidated subsidiaries to non-controlling interests
Other
Net cash provided by (used in) financing activities

See accompanying notes to consolidated financial statements.

F-5

2
2
2

25

Notes to Consolidated Financial Statements(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
accompanying consolidated financial statements comprise the Company, its subsidiaries and the Company’s interests in associates
and joint ventures. The Company’s and its subsidiaries’ businesses are global and diverse, and include manufacturing and services
in eight segments consisting of information and telecommunication systems, social infrastructure and industrial systems, electronicsystems and equipment, construction machinery, high functional materials and components, automotive systems, smart life andecofriendly systems and others.
(2) Basis of Presentation
As the Company meets the requirements of a “Specified Company applying Designated International Financial ReportingStandards” pursuant to Article 1-2 of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial
Statements (Ordinance of the Ministry of Finance of Japan No. 28 of 1976), the consolidated financial statements of the Company
have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International AccountingStandards Board (IASB), as permitted by the provision of Article 93 of the Ordinance. The Company’s fiscal year begins on April
1 and ends on March 31 of the following calendar year.
The Company’s consolidated financial statements have been prepared on a historical cost basis, except for derivative assets andliabilities, financial assets and liabilities measured at fair value through profit or loss (FVTPL), financial assets measured at fairvalue through other comprehensive income (FVTOCI) and assets and liabilities associated with defined benefit plans.
The consolidated financial statements are presented in millions of Japanese yen, the functional currency of the Company.
Management of the Company has made a number of judgments, estimates and assumptions relating to the application of
accounting policies, reporting of revenues and expenses and assets and liabilities in the preparation of these consolidated financial
statements. Actual results could differ from those estimates.
Estimates and assumptions are continually evaluated. The effect of a change in accounting estimates, if any, is recognized in thereporting period in which the change was made and in future periods.
The information regarding judgments used in applying accounting policies that could have a material effect on the Company’s
consolidated financial statements is included in the following notes:
・note 3. (a) Basis of Consolidation・note 3. (d) Financial Instruments and note 26. Financial Instruments and Related Disclosures
The information regarding uncertainties arising from assumptions and estimates that could result in material adjustments in thesubsequent consolidated financial statements is included in the following notes:
・note 3. (h) Impairment of Non-financial Assets
・note 3. (i) Retirement and Severance Benefits and note 15. Employee Benefits
・note 3. (j) Provisions, note 3. (k) Contingencies, note 14. Provisions and note 30. Commitments and Contingencies
・note 3. (l) Revenue Recognition・note 3. (m) Income Taxes and note 12. Deferred Taxes and Income Taxes
Regarding the consolidated statement of cash flows, changes in presentation have been made effective the fiscal year beginning
April 1, 2018 due to materiality of some cash-flow items as a result of business reorganization and others. “Purchase of leased
assets”, which was separately presented, has been included in “Purchase of property, plant and equipment” or “Purchase ofintangible assets”. “Proceeds from sale of leased assets”, which were separately presented, have been included in “Proceeds fromsale of property, plant and equipment, and intangible assets”. The consolidated statement of cash flows for the year ended March
31, 2018 has been reclassified in order to reflect these changes in presentation.
As a result, regarding the consolidated statement of cash flows for the year ended March 31, 2018, “Purchase of leased assets” of¥2,659 million and ¥604 million has been reclassified as “Purchase of property, plant and equipment” and “Purchase of intangible
assets” respectively. In addition, “Proceeds from sale of leased assets” of ¥9,628 million have been reclassified as “Proceeds fromsale of property, plant and equipment, and intangible assets”.

F-6Notes to Consolidated Financial Statements(3) Summary of Significant Accounting Policies(a) Basis of Consolidation(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control is obtained when the Company has risks or rights to variable
returns from its involvement with the entity and has the ability to use its power over the entity to affect the variable returns.
The Company consolidates all subsidiaries from the date on which the Company acquires control until the date on which theCompany loses control.
Subsidiaries’ financial statements are adjusted as necessary if their accounting policies differ from those of the Company.
Changes in ownership interests in subsidiaries without a loss of control are accounted for as equity transactions. Changes inownership interests in subsidiaries with a loss of control are accounted for by derecognizing assets and liabilities, noncontrolling interests, equity and accumulated other comprehensive income (AOCI) attributable to the subsidiaries.
(ii) Associates and Joint Ventures
Associates are entities over whose operational and financial policies the Company has the ability to exercise significant
influence but which are not controlled by the Company.
Joint ventures are jointly controlled by more than one party, including the Company, and require unanimous agreement of allparties in deciding operational and financial policies of the entity.
Investments in associates and joint ventures are accounted for using the equity method. The consolidated financial statementsof the Company include changes in profit or loss and other comprehensive income (OCI) of these associates and joint
ventures from the date on which the Company obtains significant influence or joint control to the date on which it loses
significant influence or joint control. The financial statements of the associates and joint ventures are adjusted as necessary if
their accounting policies differ from those of the Company.
(iii) Structured Entities
The Company consolidates structured entities in case it is exposed or has rights to variable returns from its involvement withsuch entities and has the ability to affect those returns through its power over the entities.
(b) Cash Equivalents
Cash equivalents are highly liquid investments with insignificant risk of changes in value, with original maturities of threemonths or less from the date of acquisition.
(c) Foreign Currency Translation
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency.
(i) Foreign Currency Transactions
Foreign currency transactions are converted into the functional currency of each company using the exchange rate prevailingat the transaction date or a rate that approximates such rate. Monetary assets and liabilities denominated in foreign currencies
are converted into the functional currency using the exchange rate at the end of the reporting period. Foreign exchange gains
and losses resulting from the currency conversion and settlement are recognized in profit or loss, except where gains andlosses on assets or liabilities are recognized in OCI, foreign exchange effects relating to such assets or liabilities are also
recognized in OCI, and presented in AOCI.
(ii) Foreign Operations
Assets and liabilities of foreign entities are translated into Japanese yen using the exchange rate at the end of the reporting
period, and revenue and expense items are translated using the average exchange rates during the period. Gains or losses
derived from translating foreign entities’ financial statements are recognized in OCI, and presented in AOCI.

F-7

Notes to Consolidated Financial Statements(d) Financial Instruments(i) Non-derivative Financial Assets
The Company initially recognizes trade and other receivables on the date such receivables arise. All other financial assets are
initially recognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial assets when contractual rights to cash flows from the financial assets expire or when thecontractual rights to receive cash flows from the financial assets are transferred in transactions where the risks and economic
rewards of owning the financial assets are substantially transferred. In transactions where the risks and economic rewards ofowning the financial assets are neither substantially transferred nor retained, the Company continues to recognize thefinancial assets to the extent of its continuing involvement and derecognizes such financial assets only if its control istransferred.
The classification and measurement model of non-derivative financial assets is summarized as follows:
Financial Assets Measured at Amortized Cost
Financial assets are subsequently measured at amortized cost in case they meet the following requirements:
・The financial asset is held within a business model with the objective of collecting contractual cash flows.
・The contractual terms of the financial asset provide cash flows on specified dates that are solely payments of principal andinterest on the principal amount outstanding.
Financial assets measured at amortized cost are initially measured at fair value (including direct transaction costs). The
carrying amount of financial assets measured at amortized cost is subsequently measured using the effective interest method.
Interest accrued on financial assets measured at amortized cost is included in Interest income in the consolidated statement of
profit or loss.
FVTOCI Financial Assets
The Company holds certain equity instruments with the purpose of expanding its revenue base by maintaining andstrengthening business relations with the investees. These equity instruments are classified as FVTOCI financial assets bydesignation. They are initially and subsequently measured at fair value, and the changes in fair value are recognized in OCI.
The cumulative amount of OCI is recognized in equity as AOCI. Dividends on equity instruments designated as FVTOCI arerecognized in profit or loss, except where they are considered to be a return of the investment.
FVTPL Financial Assets
Equity instruments not designated as FVTOCI financial assets and debt instruments not classified as financial assets
measured at amortized cost are classified as FVTPL financial assets. These instruments are subsequently measured at fairvalue and the changes in fair value are recognized in profit or loss.
Impairment of Financial Assets
On a regular basis, but no less frequently than at the end of each quarterly reporting period, the Company evaluates theallowance for doubtful receivables based on expected credit losses on trade receivables, contract assets, and other receivables
depending on whether the credit risk has increased significantly since initial recognition.
If the credit risk has increased significantly since initial recognition, the allowance for doubtful receivables is measured at theamount equal to the lifetime expected credit losses on the financial assets. If the credit risk has not increased significantly
since initial recognition, the allowance for doubtful receivables is measured at the amount equal to 12-month expected credit
losses. However, for trade receivables, contract assets, and lease receivables, allowance for doubtful receivables is always
measured at the amount equal to the lifetime expected credit losses.
Whether credit risk has increased significantly is determined based on changes in the risk of default. Default is defined as thestate in which a critical problem with debtor’s payment of contractual cash flows has been identified and there are no
reasonable expectations of recovering the financial asset in its entirety or a portion. To determine whether there have been
any changes in the risk of default, external credit ratings, past due information and other factors are mainly taken into
consideration.

F-8

Notes to Consolidated Financial Statements
Expected credit losses are measured by taking the probability weighted average of the discounted present values ofdifferences between the total amount of the contractual cash flows and the total amount of cash flows expected to be received
in the future from the financial assets. If one or more events occur, such as overdue payments, extended payment terms,
negative evaluation by third party credit rating agencies, and/or a deterioration in financial position and operating results,
including capital deficit, the financial assets are individually assessed as credit-impaired financial assets and expected credit
losses are measured based mainly on historical credit loss experience, future collectible amounts and other factors. The
expected credit losses on the financial assets that are not credit-impaired are measured through collective assessment based
mainly on provision rates depending on historical credit loss experience adjusted by the current and future economic situationand other factors, if necessary.
For the expected credit losses on trade receivables, contract assets, and other receivables, the allowances for doubtfulreceivables are recorded instead of directly reducing the carrying amounts. Changes in expected credit losses are recognizedin profit or loss as impairment losses and are included in Selling, general and administrative expenses in the consolidated
statement of profit or loss. For financial assets, after all means of collection have been exhausted and the potential forrecovery is considered remote, it is determined that there are no longer any reasonable expectations of recovering thefinancial assets in their entirety or a portion and the carrying amounts are generally written off.
(ii) Non-derivative Financial Liabilities
The Company initially recognizes debt instruments on the date of issuance. All other financial liabilities are initiallyrecognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial liabilities if extinguished, or if the obligation in the contract is redeemed or the liability
is discharged, cancelled or expires.
Non-derivative financial liabilities the Company holds include bonds, debts, trade payables and other financial liabilities.
They are initially measured at fair value (less direct transaction costs), and bonds and long-term debt are subsequently
measured at amortized cost using the effective interest method. Interest accrued on these financial liabilities is included inInterest charges in the consolidated statement of profit or loss.
(iii) Derivatives and Hedge Accounting
The Company uses derivative instruments including forward exchange contracts, cross currency swaps and interest rate
swaps in order to hedge foreign currency exchange risks and interest rate risks. All derivatives are measured at fair valueirrespective of the objective and intent of holding them.
The Company accounts for hedging derivatives as follows:・Fair value hedge: a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment. Thechanges in fair value of the recognized assets or liabilities or unrecognized firm commitments and the related derivatives areboth recorded in profit or loss if the hedge is considered effective.
・Cash flow hedge: a hedge of a forecast transaction or of the variability of cash flows to be received or paid related to arecognized asset or liability. The changes in fair value of the derivatives designated as cash flow hedges are recorded inother comprehensive income (OCI) if the hedge is considered effective. This treatment continues until profit or loss isaffected by the variability of cash flows or the unrecognized firm commitment of the designated hedged item, when changes
in fair value of the derivative are recognized in profit or loss. If a non-financial asset or a non-financial liability isrecognized due to a hedged forecast transaction, the changes in the fair value of the derivative recognized in OCI are
included directly in the acquisition cost or other carrying amount of the asset or liability when the asset or liability isrecognized.
The Company follows the documentation requirements as prescribed by IFRS 9 “Financial Instruments” (amended in July2014), which includes the risk management objective and strategy for undertaking various hedge transactions. In addition, aformal assessment is made at the hedge’s inception and subsequently on a periodic basis, as to whether the derivative used in
hedging activities is effective in offsetting changes in fair values or cash flows of the hedged items. Hedge accounting is
discontinued if a hedge becomes ineffective.

F-9

Notes to Consolidated Financial Statements(iv) Offsetting Financial Assets and Liabilities
Financial assets and liabilities are offset and reported as net amounts in the consolidated statement of financial position, only
if the Company currently has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis
or to realize the asset and settle the liability simultaneously.
(e) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the specific identification method or by
the moving average method for finished goods, semi-finished goods and work in process, and generally by the moving averagemethod for raw materials. Net realizable value is the estimated selling price in the ordinary course of business less the estimatedcosts of completion and the estimated costs necessary to sell.
(f) Property, Plant and Equipment
Property, plant and equipment are measured using the cost model and stated at cost less accumulated depreciation andaccumulated impairment losses. Acquisition cost includes direct costs of acquisition, costs of dismantling, removing andrestoration of the assets. Each asset is depreciated mainly using the straight-line method over the following estimated useful
lives for major classes of assets:
Buildings and structures
2 to 60 years
Machinery, equipment and vehicles
2 to 17 years
Tools, furniture and fixtures

2 to 20 years

Estimated useful lives and the method of depreciation are reviewed at the fiscal year end. Changes in estimated useful lives ordepreciation method are accounted for on a prospective basis as a change in accounting estimate.
(g) Intangible Assets
Intangible assets with finite useful lives are measured using the cost model and stated at cost less accumulated amortization andimpairment losses. Each asset is amortized mainly using the straight-line method over the following estimated useful lives for
major classes of assets:
2 to 10 years
Software for internal use
Software for sale
Other

2 to 10 years
2 to 20 years

Intangible assets with indefinite useful lives and goodwill are stated at cost less accumulated impairment losses.
(h) Impairment of Non-Financial Assets
For each non-financial asset, the Company reviews the carrying amount and tests for impairment if there are events orcircumstances indicating an asset’s carrying amount may not be recoverable. For an asset that does not generate cash flows thatare largely independent of the cash flows from other assets, the Company considers indicators of impairment based on a cash
generating unit (CGU) or a group of CGUs. Irrespective of any indicators of impairment, the Company tests intangible assets
with indefinite useful lives and goodwill for impairment annually, mainly in the fourth quarter, by estimating the recoverable
amount of each CGU (or group of CGUs) to which such assets are allocated.

F-10

Notes to Consolidated Financial Statements
The Company measures the recoverable amount of an asset or a CGU (or a group of CGUs) as the higher of fair value less costsof disposal and value in use. In measuring fair values, the Company and its subsidiaries primarily use the income approach(present value technique) based on the estimated future cash flows expected to result from the use of the asset and its eventual
disposal or the market approach to derive reasonable estimates of values in orderly market transactions, such as comparisons ofsimilar public companies and the current gross value of the asset. The Company consults with outside specialists, as appropriate,
depending on the complexity of estimating fair values. Value in use is calculated by the estimated future cash flows based on
business plans approved by management, discounted at the discount rate which is derived from the weighted average cost ofcapital. The business plan used is based on external information, reflects historical experiences, and generally has a maximum of
five years. Since the Company and its subsidiaries are engaged in a wide range of business activities from development,
production and sales of diverse products and the provision of various services, appropriate external information for eachbusiness activity is used for evaluating value in use for each business. Estimated cash flows beyond the period covered by thebusiness plan are calculated using the estimated growth rate not exceeding the long-term average growth rate of the market towhich the asset belongs.
If the carrying amount of the asset or the CGU (or the group of CGUs) exceeds its recoverable amount, an impairment loss isrecognized at the excess amount.
For an asset or a CGU (or a group of CGUs) other than goodwill, its recoverable amount is subsequently estimated if there is asignificant change in facts and circumstances and there is an indication that an impairment loss previously recognized on theasset may no longer exist or has decreased. If the estimated recoverable amount exceeds the carrying amount, the impairment
loss recognized previously is reversed to the extent of the carrying amount that would have been recorded, net of depreciation oramortization, if impairment had not been recognized previously.
(i) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans and severance lump-sum payment plans to provide
retirement and severance benefits to employees. The present value of defined benefit obligations and retirement benefit costs aremeasured based on the projected unit credit method.
The present value of defined benefit obligations and the fair value of plan assets are remeasured as of the end of reporting
period. Actuarial differences arising during the year and changes in fair value of plan assets (excluding interest income) arerecognized in OCI and are not subsequently reclassified into profit or loss. Any prior service cost, which arises at the time of aplan amendment, is recognized immediately in profit or loss when such an amendment occurs.
The present value of defined benefit obligations less the fair value of plan assets is presented as the net amount of defined
benefit liability or asset in non-current liabilities or assets.
(j) Provisions
The Company recognizes provisions if it has a present obligation (legal or constructive) as a result of past events, it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount of obligation
can be reliably estimated.
In case that the time to settle an obligation is expected to be long, and thus the time value of money is material, the amount of aprovision is measured at the present value of the amount of expenditures expected to be required to settle the obligation.
(k) Contingencies
The Company discloses contingent liabilities in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent
Assets” if an obligation does not meet the recognition criteria of provisions prescribed above in (j) Provisions, excluding thosewhere the possibility of an outflow of resources is remote.
The Company and its subsidiaries have financial guarantee contracts that require them to make payments to compensate theholder for a loss it incurs if a specified debtor defaults on payment based on the terms of a debt instrument.

F-11

Notes to Consolidated Financial Statements(l) Revenue Recognition
The Company recognizes revenue in accordance with the following five-step approach.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation
The Company offers multiple solutions to meet its customers’ needs which may involve the delivery or performance of multiple
elements, such as goods or services. When the Company enters into multiple contracts for providing the goods or services,
related contracts are combined based on interdependencies between each contract’s consideration and the time the Company
entered into such contracts, and the transaction price is allocated to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or service for the purpose of recognizing revenue.
In estimating the stand-alone selling price, the Company considers various factors such as market conditions, entity-specificfactors and information about the customer or class of customer.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferringpromised goods or services to a customer. Variable consideration, such as discounts and rebates, is included in the transaction
price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved. The promised amount ofconsideration does not include a significant financing component.
For a performance obligation satisfied over time, the Company measures its progress towards complete satisfaction of that
performance obligation on the basis of output or input methods in consideration of the nature of the goods and services for the
purpose of recognizing revenue. When the Company cannot reasonably measure the progress, revenue is recognized only to theextent of the costs incurred.
The Company recognizes the incremental costs of obtaining a contract with a customer and the costs directly related to fulfillinga contract as an asset if those costs are expected to be recovered, and those assets are amortized based on the methods used torecognize revenue of the goods or services to which the assets relate. The Company recognizes the incremental costs of obtaining
a contract as an expense when incurred if the amortization period of the asset is less than one year.
(m) Income Taxes
Deferred tax assets and liabilities resulting from temporary differences and others are accounted for based on a liability method.
A deferred tax liability is not recognized for temporary differences arising from goodwill, temporary differences arising froman asset or liability in a transaction other than a business combination, which at the time of transaction affects neither
accounting nor taxable income and future taxable difference arising from investments in subsidiaries, associates and joint
ventures where that the Company is able to control the timing of reversal of the temporary difference while it is probable thatthe temporary difference will not reverse in the foreseeable future. A deferred tax asset is recognized to the extent that it isprobable that future taxable income will be available against which unused tax loss carryforwards, unused tax credits and future
deductible temporary differences can be utilized. Current tax and deferred tax on items recognized in OCI are also recognizedin OCI.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years inwhich those temporary differences are expected to be reversed. The effect on deferred tax assets and liabilities of a change intax rates is recognized in profit or loss and OCI in the period that includes the enactment date.
(n) Consumption Tax
Consumption tax collected and remitted to taxing authorities is excluded from revenues, cost of sales and expenses in the
consolidated statement of profit or loss.
(o) Earnings per Share
Basic earnings per share (EPS) for net income attributable to Hitachi, Ltd. stockholders is calculated based on the weighted
average number of ordinary shares outstanding during the period. Diluted EPS for net income attributable to Hitachi, Ltd.
stockholders is calculated based on the sum of weighted average number of ordinary shares outstanding during the period andthe conversion of securities with dilutive effects or the number of authorized shares.

F-12

Notes to Consolidated Financial Statements(p) Business Combinations
Business combinations are accounted for using the acquisition method. Consideration is measured as the sum of the fair value ofthe consideration transferred at acquisition date and the non-controlling interests in the acquiree. The Company determines, on atransaction by transaction basis, whether to measure non-controlling interests at fair value or by the appropriate share in the fairvalue of identifiable net assets of the acquiree. Acquisition related costs are expensed in the period in which the costs are
incurred.
(q) Changes in Accounting Policies(i) Adoption of IFRS 9 “Financial Instruments” (amended in July 2014)
While the Company had historically adopted IFRS 9 (issued in November 2009, amended in October 2010), it has adopted
IFRS 9 (amended in July 2014) from the beginning of the fiscal year ended March 31, 2019. IFRS 9 (amended in July 2014)
amends guidance for hedge accounting and classification and measurement of financial instruments and introduces
impairment guidance based on expected credit losses on financial assets. As a transitional measure upon the adoption of IFRS
9 (amended in July 2014), the Company applied this standard and recognized the cumulative effect of the initial application
as an adjustment to the beginning balance of retained earnings for the fiscal year ended March 31, 2019. The effect of
adopting this standard on the Company’s financial position and operating results was not material.
(ii) Adoption of IFRS 15 “Revenue from Contracts with Customers”
From the beginning of the fiscal year ended March 31, 2019, the Company has adopted IFRS 15 “Revenue from Contracts
with Customers.” IFRS 15 provides a comprehensive framework for recognizing revenue. In accordance with the five-step
approach, revenue is measured based on changes in assets and liabilities arising from contracts with customers andrecognized when control over goods or services is transferred to the customer.
As a transitional measure upon the adoption of IFRS 15, the Company applied this standard retrospectively and recognized
the cumulative effect of the initial application as an adjustment to the beginning balance of retained earnings for the fiscal
year ended March 31, 2019.
Primarily in a transaction whereby the Company provides a customer with a combination of multiple elements such as goods,
services or right to use assets, the transaction price is allocated to each performance obligation based on the stand-alone
selling price then revenue is recognized in accordance with the five-step approach even if no fair value is available. However,
the effect of adopting this standard on the Company’s financial position and operating results was not material, comparedwith the application of the previous accounting standard.
In addition, due to the application of IFRS 15, unbilled receivables, which were previously included in Trade receivables,
have been reclassified as contract assets, and billed receivables have been classified as trade receivables and presented as
Trade receivables and contract assets. Advances received from customers, which were previously presented as Advances
received, are presented as Contract liabilities.
(r) New Accounting Standards not yet Adopted by the Company
IFRS 16 “Leases” (IFRS 16) is the principal new accounting standards and interpretations issued or amended prior to theapproval date of the consolidated financial statements that is not yet adopted by the Company as of the reporting date.
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases, and lessees are required
to account for all leases under a single on-balance sheet model. IFRS 16 is effective for annual reporting periods beginning on orafter January 1, 2019, and the Company will adopt IFRS 16 on April 1, 2019. As a transitional measure upon the adoption of
IFRS 16, the Company will apply this standard and a method of recognizing the cumulative effect of the initial application as an
adjustment to the beginning balance of retained earnings at the date of initial application.
The Company’s leases will consist mainly of the leasing of real estate, and the impact of adopting IFRS 16 on the consolidated
statement of financial position at the beginning of the subsequent consolidated fiscal year will include an increase in assets ofapproximately ¥222 billion associated with the recognition of right-of-use assets, an increase in liabilities of approximately ¥226
billion associated with the recognition of lease liabilities, and a decrease in equity of approximately ¥4 billion associated withthe recognition of an adjustment to the beginning balance of retained earnings at the date of initial application.
The impact on the consolidated statement of profit or loss will not be material. In addition, with respect to the consolidated
statement of cash flows, while lease payments for operating leases were previously included in cash flows from operating
activities, adjustments for depreciation expense for right-of-use assets will be included in cash flows from operating activities
and payments of lease liabilities will be included in cash flows from financing activities as a result of adopting IFRS 16;
therefore, compared with the previous accounting standard, cash flows from operating activities will increase while cash flows
from financing activities will decrease.

F-13

Notes to Consolidated Financial Statements(4) Segment Information
Business Segments
The operating segments of the Company are the components for which separate financial information is available and which isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company discloses its business in eight reportable segments, corresponding to categories of activities classified primarily by
the similarities for the nature of markets, products and services, and economic characteristics. Several operating segments areaggregated into Social Infrastructure & Industrial Systems, Electronic Systems & Equipment and High Functional Materials &Components for financial reporting purposes so that users of the financial statements better understand the Company’s financial
position and business performance. The Company aggregates operating segments based on the similarities of economic
characteristics mainly using profit margin ratios of operating segments. The primary products and services included in eachsegment are as follows:
Information & Telecommunication Systems:
Systems integration, Consulting, Cloud services, Servers, Storage, Software, Telecommunications & network and ATMs
Social Infrastructure & Industrial Systems:
Industrial machinery and plants, Elevators, Escalators, Railway systems, Thermal, Nuclear and Renewable energy power
generation systems and Transmission & distribution systems
Electronic Systems & Equipment:
Semiconductor processing equipment, Test and measurement equipment, Advanced industrial products and Medical electronics
equipment
Construction Machinery:Hydraulic excavators, Wheel loaders and Mining machinery
High Functional Materials & Components:
Semiconductor and display related materials, Circuit boards and materials, Automotive parts, Energy storage devices, Specialty
steel products, Magnetic materials and applications, Functional components and equipment and Wires, cables and related products
Automotive Systems:
Engine powertrain systems, Electric powertrain systems and Integrated vehicle control systems
Smart Life & Ecofriendly Systems:
Air-conditioning equipment, Room air conditioners, Refrigerators and Washing machines
Others:
Optical disk drives, Property management and others
Effective from April 1, 2019, the Company changed its business structure in order to increase customer’s social, environmental
and economic values by accelerating the Social Innovation Business. Accordingly, the Company will reclassify its reportablesegments in ten segments which include five focused areas as IT, Energy, Industry, Mobility and Smart Life, four listed subsidiarygroups as Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals and Hitachi Chemical, and Others.

F-14

Notes to Consolidated Financial Statements
The following tables show business segment information for the years ended March 31, 2019 and 2018.
Revenues from Outside Customers
Millions of yen
2019

2018

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems

1,939,536
2,311,314

1,888,394
2,136,313

Electronic Systems & Equipment
Construction Machinery

846,920
1,033,342

976,252
958,630High Functional Materials & Components
Automotive Systems

1,649,483
963,131

1,603,582
996,202453,485
270,770

509,442
292,402

9,467,981

9,361,217

12,6387,397

9,480,619

9,368,614

Smart Life & Ecofriendly Systems
OthersSubtotal
Corporate items
Total
Revenues from Intersegment Transactions

Millions of yen
2019

2018

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems

126,377
228,498

120,513238,699

Electronic Systems & Equipment
Construction Machinery

104,293361

110,299523

High Functional Materials & Components
Automotive Systems

54,963
7,876

53,955
4,834

Smart Life & Ecofriendly Systems
Others31,604
263,695

30,710265,374

Subtotal

817,667

824,907

Corporate items and Eliminations(817,667)(824,907)

-

-

Total
Total Revenues

Millions of yen
2019

2018

Information & Telecommunication Systems

2,065,913

2,008,907

Social Infrastructure & Industrial Systems
Electronic Systems & Equipment

2,539,812
951,213

2,375,012
1,086,551

Construction Machinery
High Functional Materials & Components

1,033,703
1,704,446

959,153
1,657,537

Automotive Systems
Smart Life & Ecofriendly Systems

971,007
485,089

1,001,036
540,152

Others534,465

557,776

Subtotal

10,285,648

10,186,124

Corporate items and Eliminations(805,029)(817,510)

Total

9,480,619

9,368,614

F-15

Notes to Consolidated Financial Statements
Segment Profit (Loss)
Millions of yen
2019

2018

Information & Telecommunication Systems

210,917

139,279

Social Infrastructure & Industrial Systems
Electronic Systems & Equipment(151,984)
70,841

101,257
88,852

Construction Machinery
High Functional Materials & Components

104,515
86,452

97,09598,672

Automotive Systems
Smart Life & Ecofriendly Systems

85,361
29,56042,42933,352Others25,69521,874

Subtotal

461,357

622,810

Corporate items and Eliminations

52,54921,447

Total

513,906

644,257

Interest income
Interest charges

23,122(20,526)

14,928(20,539)

Income from continuing operations, before income taxes

516,502638,646

Segment profit (loss) is measured by EBIT.
Intersegment transactions are generally recorded at the same prices used in arm’s length transactions. Corporate items include
corporate expenses not allocated to individual business segments, such as expenditures for leading-edge R&D, a part of net gain
(loss) on business reorganization and share of profits (losses) of investments accounted for using the equity method, and others.
Total Assets
Millions of yen
March 31, 2019

March 31, 2018

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems

1,793,458
3,126,462

1,729,842
3,430,705

Electronic Systems & Equipment
Construction Machinery

839,126
1,219,806

1,050,025
1,125,791

High Functional Materials & Components
Automotive Systems

1,833,613
661,845

1,787,348
797,101

Smart Life & Ecofriendly Systems
Others347,522
1,653,523

331,810
1,581,745

Subtotal
Corporate assets and Eliminations

11,475,355(1,848,763)

11,834,367(1,727,764)

Total

9,626,592

10,106,603

Corporate assets mainly consist of cash and cash equivalents, investments in securities and other financial assets, and investments
accounted for using the equity method.

F-16

Notes to Consolidated Financial Statements
Investments Accounted for Using the Equity Method
Millions of yen
March 31, 2019

March 31, 2018

Information & Telecommunication Systems

45,772

15,414Social Infrastructure & Industrial Systems
Electronic Systems & Equipment

358,812
1,101

407,923
1,221

Construction Machinery
High Functional Materials & Components

32,31737,331

29,23836,136

Automotive Systems
Smart Life & Ecofriendly Systems

4,283
59,5085,217
58,877

Others

5,740

6,126

Subtotal

544,864

560,152

Corporate items and Eliminations

179,597

183,255

Total

724,461

743,407

Depreciation and Amortization
Millions of yen
2019

2018

Information & Telecommunication Systems
Social Infrastructure & Industrial Systems

86,69949,43487,49347,583

Electronic Systems & Equipment
Construction Machinery

17,832
37,98720,046
38,833High Functional Materials & Components
Automotive Systems

88,30053,301

81,10553,524

Smart Life & Ecofriendly Systems
Others

10,33820,077

10,122
21,580Subtotal
Corporate items and Eliminations

363,968
4,076

360,286
4,146

Total

368,044364,432

Depreciation consists of that of property, plant and equipment and investment properties.
Impairment Losses
Millions of yen
2019

2018

Information & Telecommunication Systems

14,68022,370Social Infrastructure & Industrial Systems
Electronic Systems & Equipment

282,058
940

3,073
2,579

Construction Machinery
High Functional Materials & Components

2,143
14,966549
11,088Automotive Systems
Smart Life & Ecofriendly Systems

25,422
1,794

613
6

Others2,994

467

Subtotal

344,997

40,745-

7,911

344,997

48,656

Corporate items and Eliminations
Total

Impairment losses mainly consist of those recognized on property, plant and equipment, investment properties and intangible
assets.

F-17

Notes to Consolidated Financial Statements
Share of Profits (Losses) of Investments Accounted for Using the Equity Method
Millions of yen
2019

2018

Information & Telecommunication Systems

2,131

1,252

Social Infrastructure & Industrial Systems
Electronic Systems & Equipment(44,965)
144

18,844220

Construction Machinery
High Functional Materials & Components

4,716
5,753

4,355
6,654

Automotive Systems
Smart Life & Ecofriendly Systems

55
11,505100
10,798Others143

167

Subtotal(20,518)

42,390

5,502

20,093(15,016)

62,483

Corporate items and Eliminations
Total

Share of profits (losses) of investments accounted for using the equity method include impairment losses on investments accounted
for using the equity method.
Capital Expenditures
Millions of yen
2019

2018

Information & Telecommunication Systems

74,67981,346Social Infrastructure & Industrial Systems
Electronic Systems & Equipment

88,17027,177

98,62923,939Construction Machinery
High Functional Materials & Components

37,857148,208

23,933
135,385

Automotive Systems
Smart Life & Ecofriendly Systems

83,606
13,30972,434
9,173

Others30,077

18,984

Subtotal

503,083

463,823

2,117

2,792

505,200

466,615

Corporate items and Eliminations
Total

Capital expenditures represent additions to property, plant and equipment, investment properties and intangible assets.

F-18

Notes to Consolidated Financial Statements
Geographic Information
The following table shows revenues attributed to geographic areas based on the location of the customers for the years ended
March 31, 2019 and 2018.
Millions of yen
2019

2018

Japan

4,664,535

4,643,080

Asia

2,019,598

2,081,150

North America
Europe1,205,628
1,018,542

1,177,581
964,474

Other Areas

572,316

502,329

Overseas Revenues Subtotal

4,816,084

4,725,534

Total Revenues

9,480,619

9,368,614

Revenues in China for the years ended March 31, 2019 and 2018 were ¥1,009,855 million and ¥1,041,046 million, respectively.
Revenues in the U.S.A. for the years ended March 31, 2019 and 2018 were ¥1,095,428 million and ¥1,082,593 million,
respectively. Revenues from outside customers attributable to any individual country and region other than Japan, China and the
U.S.A. were not material for the years ended March 31, 2019 and 2018.
The following table shows the balances of property, plant and equipment, investment properties and intangible assets for eachgeographic area as of March 31, 2019 and 2018.
Millions of yen
March 31, 2019Japan

March 31, 2018

1,638,996

1,684,732

Asia
North America

374,490565,961

383,729531,270

EuropeOther Areas

227,402130,869

459,968
142,9222,937,718

3,202,621

Subtotal
Corporate items and Eliminations
Total

23,217

22,7982,960,935

3,225,419

The balances of property, plant and equipment, investment properties and intangible assets in the U.S.A. as of March 31, 2019 and2018 were ¥553,796 million and ¥519,432 million, respectively. The balances of property, plant and equipment, investment
properties and intangible assets in any individual country and region other than Japan and the U.S.A. were not material as of March
31, 2019 and 2018.
Significant Customer Information
There was no concentration of revenues from a specific customer for the years ended March 31, 2019 and 2018.

F-19

Notes to Consolidated Financial Statements(5) Business Acquisitions and Divestitures
The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2019, including the period up to
the approval date of the consolidated financial statements.
(a) Acquisition of ABB's power grids business
On December 17, 2018, the Company decided to acquire the power grids business from ABB Ltd (ABB) and signed anagreement with ABB in order to strengthen and expand energy solutions business globally. The Company plans to acquire an
80.1% stake in the company operating the power grids business that will be divested by ABB in the first half of 2020 and makeit a consolidated subsidiary of the Company. The consideration is expected to be approximately USD 6.4 billion(approximately ¥710.3 billion). The effects of this transaction on the Company’s consolidated financial statements are currently
being evaluated.
(b) Acquisition of JR Automation’s robotic systems integration business
On April 23, 2019, the Company signed an agreement with JR Intermediate Holdings, LLC (JR Intermediate) to acquire
robotic systems integration business mainly operated by JR Automation Technologies, LLC, an American subsidiary of JR
Intermediate, in order to expand global business of robotic systems integration business. The acquisition is expected to be
executed by the end of 2019. The consideration is expected to be USD 1,425 million (¥158,161 million). The effects of thistransaction on the Company’s consolidated financial statements are currently being evaluated.
(c) Acquisition of Yungtay Engineering Co., Ltd. (Yungtay)
On October 26, 2018, the Company decided to conduct a tender offer to acquire all issued shares of Yungtay, an elevator andescalator company in Taiwan to enrich its product lineup and expand its new installation business with improved costcompetitiveness in China and Asia and improve its profitability through increasing the number of maintenance units, andsubmitted a binding letter to Yungtay. Additionally, the Company signed a contract with Yungtay’s Honorary Chairman who isa member of its founding family, whereby he will tender his 4.3% of shares in Yungtay, in the case of the tender offer by theCompany. On January 17, 2019, the Company commenced the tender offer, through Hitachi Elevator Taiwan Co., Ltd., aconsolidated subsidiary of the Company in the Social Infrastructure & Industrial Systems segment; and the tender offer wascompleted on April 22, 2019.
As a result, the Company's ownership ratio of shares of Yungtay increased to 39.7% and Yungtay turned into an equity-method
associate of the Company. The consideration paid for the tender offer was TWD 7,437 million (¥26,846 million).
(d) Sale of all shares of Clarion Co., Ltd. (Clarion)
On October 26, 2018, the Company signed a tender offer agreement with Hennape Six SAS (Hennape), a subsidiary ofFaurecia S.A. (Faurecia), and Faurecia under which the Company agrees to tender all shares of common stock in Clarion heldby the Company, in response to a tender offer to be carried out by Hennape for the shares of common stock of Clarion, a
consolidated subsidiary of the Company in the Automotive Systems segment. Hennape commenced the tender offer on January
30, 2019, and the tender offer was completed on February 28, 2019. The consideration to be received by the Company was¥89,908 million.
As a result, the Company's ownership ratio of shares of Clarion decreased from 63.8% to 0%, and Clarion was deconsolidated.
A gain on the sale of shares of Clarion in the amount of ¥67,918 million was recognized in Other income in the consolidated
statement of profit or loss. Changes in non-controlling interests in the consolidated statement of changes in equity include
derecognition of non-controlling interest in Clarion as a result of its deconsolidation.
On December 26, 2018, Faurecia S.A. changed its name to Faurecia S.E..
(e) Additional acquisition of shares of Ansaldo STS S.p.A. (STS)On October 29, 2018, the Company and Hitachi Rail Italy Investments S.r.l. (HRII), a consolidated subsidiary of the Company
in the Social Infrastructure & Industrial Systems segment, signed an agreement with Elliott International, L.P., Elliott
Associates, L.P. and The Liverpool Limited Partnership (together, “Elliott Selling Entities”), and Elliott Management
Corporation for HRII to acquire the 31.8% stake in STS, a consolidated subsidiary of the Company in the Social Infrastructure& Industrial Systems segment, owned by Elliott Selling Entities. On November 2, 2018, the transaction was settled.
Furthermore, HRII later acquired additional outstanding issued shares of STS. As a result, the Company's ownership ratio ofshares of STS increased to 100% on January 30, 2019. The total consideration paid was EUR 1,250 million (¥159,031 million),and the Company recognized a decrease in the total of capital surplus and non-controlling interest by the same amount for theyear ended March 31, 2019.
On April 1, 2019, STS changed its name to Hitachi Rail STS S.p.A..

F-20

Notes to Consolidated Financial Statements(f) Sale of shares and business reorganization of Hitachi Kokusai Electric Inc. (Hitachi Kokusai)
On April 26, 2017, the Company signed a basic agreement with HKE Holdings K.K. (HKE), which is indirectly held andoperated by a related investment fund whose equity interests are wholly owned by Kohlberg Kravis Roberts & Co. L.P. andwith HVJ Holdings Inc. (HVJ), in which is invested by funds which are managed, operated, provided with information and thelike by Japan Industrial Partners, Inc., regarding (i) a tender offer to be conducted by HKE for the common shares of Hitachi
Kokusai, which was a consolidated subsidiary of the Company in the Electronic Systems & Equipment segment and a shareconsolidation of the share of Hitachi Kokusai, and the acquisition of treasury shares by Hitachi Kokusai, through which Hitachi
Kokusai becomes a wholly-owned subsidiary of HKE, (ii) an absorption-type company split of the thin-film process solutions
business of Hitachi Kokusai, whereby HKE is the company succeeding in the absorption-type split, to be conducted by HKE
and Hitachi Kokusai after Hitachi Kokusai becomes a wholly-owned subsidiary of HKE, and (iii) the transfer by HKE of 20%of the share of Hitachi Kokusai to the Company and 20% of the share of Hitachi Kokusai to HVJ to take place after theabsorption-type company split, and other transactions that are incidental or related to those transactions. Furthermore, on
October 11, 2017, on November 24, 2017 and on March 30, 2018, the Company signed a memorandum of understanding toamend the basic agreement (the Amendment Memorandum) with HKE and HVJ.
HKE commenced the tender offer on October 12, 2017 pursuant to the Amendment Memorandum, and the tender offer wascompleted on December 8, 2017. Following the completion of the tender offer, the above related transactions, such as the shareconsolidation of Hitachi Kokusai shares, took place and the all related transactions were completed on June 4, 2018. As aresult, the Company's ownership ratio of shares of Hitachi Kokusai decreased from 51.7% to 20.0% and Hitachi Kokusai
turned into an equity-method associate of the Company. A gain on the sale of shares of Hitachi Kokusai in the amount of¥32,049 million was recognized in Other income in the consolidated statement of profit or loss. Changes in non-controllinginterests in the consolidated statement of changes in equity include derecognition of non-controlling interest in Hitachi Kokusai
as a result of its deconsolidation.
On June 1, 2018, HKE changed its name to Kokusai Electric Corporation.
The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2018.
(a) Acquisition of “Sullair” business
On April 25, 2017, the Company signed an agreement with Accudyne Industries Borrower, S.C.A. (Accudyne) to acquire
Accudyne’s subsidiaries and certain related assets that manufacture and sell air compressors under the “Sullair” brand mainly
in North America, in order to expand global business of industrial equipment business. In accordance with the agreement, on
July 12, 2017 (the acquisition date), the Company and Hitachi America, Ltd., a subsidiary of the Company, acquired the Sullairbusiness by acquiring all the shares of holding companies of the Sullair business.
The following table summarizes the fair value of the consideration paid for the Sullair business and the amounts of the assets
acquired and liabilities assumed recognized as of the acquisition date.
Millions of yen
9,341
9,351
7,409
790
10,102

Cash and cash equivalents
Trade receivables
Inventories
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (deductible for tax purposes)
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

16,29455,361
52,709161,357

Current liabilities
Non-current liabilities
Total

66,805
1,264
68,069Cash paid for the acquisition

93,288The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Hitachi America, Ltd. repaid USD 517 million (¥57,502 million) of loans which were included in the Sullair business, inaddition to the acquisition.
The operating results of the Sullair business for the period from the acquisition date to March 31, 2018 were not material.
F-21

Notes to Consolidated Financial Statements
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition date for
the Sullair business of April 1, 2017 would not differ materially from the amounts reported in the consolidated financial
statements for the year ended March 31, 2018.
(6) Trade Receivables, Trade Receivables and Contract Assets
The components of trade receivables, trade receivables and contract assets are as follows:
Millions of yen
March 31, 2019

March 31, 2018

1,790,520

2,322,554

Contract assets

432,881-

Others176,532

178,860-

2,501,414

2,399,933-

Accounts receivable

Total trade receivables
Total trade receivables and contract assets

Trade receivables, trade receivables and contract assets are stated as net of the allowance for doubtful receivables.
Others include notes receivable and electronically recorded monetary claims.
(7) Inventories
The components of inventories are as follows:
Millions of yen
March 31, 2019

March 31, 2018

Finished goods

567,454561,548

Semi-finished goods and work in process

522,308554,354

Raw materials

267,000

259,330

1,356,762

1,375,232

Total

For the years ended March 31, 2019 and 2018, the amounts of inventories expensed and included as cost of sales were ¥5,749,913
million and ¥5,821,340 million, respectively, and the write-downs of inventories were ¥35,542 million and ¥52,407 million,
respectively.

F-22

Notes to Consolidated Financial Statements(8) Leases(a) Lessee
The Company and certain subsidiaries use leased facilities and equipment, including buildings, machinery and equipment andvehicles under finance leases or operating leases.
The following table shows the undiscounted amounts and present value of minimum lease payments under finance leases as ofMarch 31, 2019 and 2018.
Millions of yen
March 31, 2019
Minimum
Present value
leaseof minimum
payments
lease
payments

March 31, 2018
Minimum
Present value
leaseof minimum
payments
lease
payments

Within 1 year

19,29017,933

16,98815,537After 1 year but not more than 5 years

30,87328,32233,81730,840More than 5 years

3,541

2,944

4,254

3,101

Total

53,70449,19955,05949,478Finance charges(4,505)(5,581)49,19949,478Present value of minimum lease payments,
total

The following table shows the future minimum lease payments under non-cancelable operating leases as of March 31, 2019and 2018.
Millions of yen
March 31, 2019

March 31, 2018

Within 1 year

36,87930,098After 1 year but not more than 5 years

70,083

61,777More than 5 years

29,00133,458

Total

135,963

125,333

Total operating lease expenses for the years ended March 31, 2019 and 2018 are as follows:
Millions of yen
2019
Operating lease expenses

2018
132,336F-23

125,000

Notes to Consolidated Financial Statements(b) Lessor
The Company and certain subsidiaries lease certain assets such as manufacturing machinery and equipment under finance andoperating lease arrangements.
The following table shows the undiscounted amounts and present value of minimum lease payments receivable under financeleases as of March 31, 2019 and 2018.
Millions of yen
March 31, 2019
Gross
Present value
investmentof minimumin leaselease
payments
receivable

March 31, 2018
Gross
Present value
investmentof minimumin leaselease
payments
receivable

Within 1 year

54,70551,03351,46747,903After 1 year but not more than 5 years

46,351

43,51946,48843,908More than 5 years

1,528

1,317

1,532

1,301

Total

102,584

95,86999,487

93,112

Unearned income(6,157)(5,518)Net investment in the lease

96,427

93,969Unguaranteed residual value

(558)

(857)

95,86993,112Present value of minimum lease payments
receivable, total

The amounts of the allowance for uncollectable minimum lease payments receivable as of March 31, 2019 and 2018 were
¥1,354 million and ¥1,771 million, respectively.
The following table shows the future minimum lease payments receivable under non-cancelable operating leases as of March 31,
2019 and 2018.

March 31, 2019
Within 1 year
After 1 year but not more than 5 years

4,137
6,545

Millions of yen
March 31, 2018
5,361
5,938

More than 5 years

5,245

4,280

Total

15,927

15,579F-24

Notes to Consolidated Financial Statements(9) Investments Accounted for Using the Equity Method
The aggregated carrying amounts of investments accounted for using the equity method as of March 31, 2019 and 2018, and theCompany and certain subsidiaries’ share of total comprehensive income (loss) of equity-method associates and joint ventures forthe years ended March 31, 2019 and 2018 are as follows:
Millions of yen
Associates
March 31, 2019
Carrying amount of investments

Joint ventures

March 31, 2018

669,349

March 31, 2019

712,406

March 31, 201855,11231,001

As of March 31, 2019 and 2018, the Company and certain subsidiaries’ interests in certain joint ventures operating at a loss havethe cumulative loss exceeding the Company and certain subsidiaries’ investments, and thus the negative amounts of ¥79,747
million and ¥99,276 million, respectively, were recognized in other non-current liabilities.
Millions of yen
Associates
2019

Joint ventures
2018

2019

2018

Net income (loss) fromcontinuing operations(23,644)

51,8908,628

10,593

Other comprehensive income (loss)

11,098330(1,053)

2,927

Total comprehensive income (loss)(12,546)

52,2207,575

13,520In addition to the share of Net income (loss) from continuing operations of equity method associates and joint ventures,
impairment losses on investments accounted for using the equity method were recognized in Share of profit (loss) of investments
accounted for using the equity method. The amount of impairment losses recognized in the consolidated statement of profit orloss for the year ended March 31, 2019 was ¥20,274 million.

F-25

Notes to Consolidated Financial Statements(10) Property, Plant and Equipment
The following table shows the changes in the net carrying amounts of property, plant and equipment.
Millions of yen
Land

Buildings
andstructures

MachineryandvehiclesTools,
furnitureandfixtures360,330

687,242

533,522

171,673

93,028

152,616

1,998,411

Additions

1,192

5,919

25,04925,781

10,926

303,375

372,242

Transfers between accounts

1,990

42,024130,842

35,776

216(210,848)-

Sales and disposals(3,882)(6,178)(4,913)(3,598)(4,059)(3,557)(26,187)-(52,859)(118,324)(69,027)(23,899)-(264,109)

Impairment losses(5,658)(6,077)(8,286)(1,133)(1,238)(2,313)(24,705)

Acquisitions and divestitures

1,720

5,525

4,438

1,662

1,784

1,330

16,459Currency translation effect

3,596

1,944

(5,526)

(24)

(559)

4,133

3,564

Other

2,470

9,016

774

11,83926,485(1,432)

49,152361,758

686,556

557,576

172,949

102,684

243,304

2,124,827

1,755

8,169

27,86623,55012,476339,246

413,062

Other

Constructionin progress

Total

Net carrying amountMarch 31, 2017

Depreciation

March 31, 2018
Additions
Transfers between accounts

855

78,592140,258

46,7762,809(269,290)-(1,169)(3,242)(8,579)(4,791)(3,673)(4,530)(25,984)-(54,567)(124,182)(66,822)(24,470)-(270,041)

Impairment losses(54,208)(9,103)(29,470)(5,729)(4)(155,439)(253,953)

Acquisitions and divestitures(10,100)(25,823)(13,518)(5,177)

(761)

(545)

(55,924)

Currency translation effect(3,644)(1,431)

3,030

4,404

(340)

(8,561)(6,542)Other(4,373)736(1,864)

9,313

30,684(3,256)

31,240March 31, 2019

290,874

679,887

551,117

174,473

119,405

140,929

1,956,685

Sales and disposals
Depreciation

The amount of depreciation recognized is included in Cost of sales and Selling, general and administrative expenses in the
consolidated statement of profit or loss. Impairment losses are included in Other expenses in the consolidated statement of profit
or loss.
Finance lease assets are included in Other in the table above, and their carrying amounts as of March 31, 2019 and 2018 were¥31,461 million and ¥29,269 million, respectively.

F-26

Notes to Consolidated Financial Statements
The following table shows the gross carrying amounts and accumulated depreciation and impairment losses of property, plant andequipment.
Millions of yen
Land

Buildings
andstructures

Machinery
Tools,
andfurniturevehicles and fixtures

Other

March 31, 2017377,817

1,723,950

2,391,448

937,139

216,120

153,0075,799,481

March 31, 2018

383,862

1,760,206

2,475,707

961,975

230,553245,630

6,057,933

March 31, 2019

366,350

1,747,110

2,475,446

937,581249,976

300,0076,076,470

March 31, 2017(17,487) (1,036,708) (1,857,926)(765,466)(123,092)(391) (3,801,070)

March 31, 2018(22,104) (1,073,650) (1,918,131)(789,026)(127,869)(2,326) (3,933,106)

March 31, 2019(75,476) (1,067,223) (1,924,329)(763,108)(130,571)(159,078) (4,119,785)

Constructionin progress

Total

Gross carrying amount

Accumulated depreciation andimpairment losses

Impairment Losses Recognized for the Year Ended March 31, 2019:The Social Infrastructure & Industrial Systems segment recognized impairment losses of ¥209,145 million, of which ¥206,799
million was attributable to the suspension of the UK nuclear power stations construction project (the project) relating toconstruction in progress and land etc. The recoverable amount was determined on the basis of fair value less costs of disposal,
which was measured at ¥2,494 million as of December 31, 2018, the date on which impairment losses were recognized. A market
approach was used in measuring the fair value of the relevant assets. These fair value measurements were based on real estateappraisal value, and thus classified as Level 3 of fair value hierarchy. Details of the project are described in note 21.
The Automotive Systems segment recognized impairment losses of ¥25,120 million, of which ¥10,590 million was attributable tothe decrease in productivity at one of factories of a subsidiary in Mexico relating to business assets of buildings and machinery.
The recoverable amount was determined on the basis of value in use, which was measured at ¥10,812 million as of September 30,
2018, the date on which impairment losses were recognized. The value in use was discounted at 13.5% (before tax), which wasderived from the weighted average cost of capital.
The High Functional Materials & Components segment recognized impairment losses of ¥12,569 million, of which ¥6,975
million was attributable to the lower than expected future revenue projected for its heat-resistant exhaust casting components
business relating to business assets of buildings and machinery. The recoverable amount was determined on the basis of fairvalue less costs of disposal, which was measured at ¥7,394 million as of December 31, 2018, the date on which impairment
losses were recognized. A market approach was used in measuring the fair value of the relevant assets. These fair value
measurements were based on real estate appraisal value, and thus classified as Level 3 of fair value hierarchy.
Impairment Losses Recognized for the Year Ended March 31, 2018:
The High Functional Materials & Components segment recognized impairment losses of ¥11,012 million, of which ¥8,011
million was attributable to the lower than expected future revenue projected for its aluminum wheel business relating to businessassets of buildings and machinery. The recoverable amount was determined on the basis of fair value less costs of disposal, which
was measured at ¥3,514 million as of March 31, 2018. A market approach was used in measuring the fair value of the relevant
assets. These fair value measurements were based on real estate appraisal value, and thus classified as Level 3 of fair value
hierarchy.
Impairment losses of ¥7,910 million were recognized on corporate assets, of which ¥7,717 million was attributable to the lower
than expected future revenue projected for the office leasing business, due to a decrease in the number of occupants of a part ofrental assets. The recoverable amount of the CGU was largely determined on the basis of fair value less costs of disposal. The
costs of disposal exceeded the fair value thus the recoverable amount of the CGU was recorded at nominal value as of March 31,
2018. A market approach was used in measuring the fair value of the relevant assets. These fair value measurements were basedon real estate appraisal value corresponding to the selling prices of comparable properties, or published market prices, and thusclassified as Level 2 of fair value hierarchy.

F-27

Notes to Consolidated Financial Statements(11) Intangible Assets
The following table shows the changes in the net carrying amounts of goodwill and other intangible assets.
Millions of yen
Software for Software forinternal use
sale

Goodwill

Other

Total

Net carrying amountMarch 31, 2017527,247

114,868

45,205

231,881919,201

Internal developments

-

2,032

1,632

53,14156,805Purchases
Transfers between accounts

-

7,170
34,118

1,595
20,21825,158(54,336)

33,923-(922)(46,704)(2,367)(22,629)(3,981)(29,686)(16,209)(99,019)(23,479)

Disposals
Acquisitions and divestitures

100,125(1,233)
406

(150)
(978)

(1,752)
90,833(3,135)
190,386

Currency translation effectOther(10,066)(28,219)

297
(262)

145
(19)

(4,953)22,765(14,577)(5,735)

March 31, 2018588,165

108,325

41,038316,842

1,054,370

Internal developments
Purchases

-

886
9,851

1,852
1,045

47,01229,80649,75040,702

Transfers between accounts
Amortization-

30,339(42,925)

22,331(23,253)(52,670)(30,184)(96,362)

Impairment losses
Disposals(43,853)-(1,093)(1,980)(6,888)(66)(38,610)(672)(90,444)(2,718)Acquisitions and divestitures
Currency translation effect

11,425
5,823(9,041)
152

(31)
(167)

(4,684)
1,912(2,331)
7,720

Amortization
Impairment losses

Other
March 31, 2019

376

224

(363)

(908)

(671)

561,936

94,73835,498267,844960,016

The amount of amortization recognized is included in Cost of sales and Selling, general and administrative expenses in the
consolidated statement of profit or loss. Impairment losses are included in Other expenses in the consolidated statement of profit
or loss.
“Intangible lease assets”, which had previously been separately presented, have been included in “Other” due to a change inmateriality.
The following table shows the gross carrying amount and accumulated amortization and impairment losses of goodwill and otherintangible assets.
Millions of yen
Goodwill

Software for Software forinternal use
sale

Other

Total

Gross carrying amountMarch 31, 2017536,277

593,412552,868

487,930

2,170,487

March 31, 2018592,870

617,264

530,778

606,406

2,347,318

March 31, 2019568,643

590,831544,840

590,367

2,294,681

March 31, 2017

(9,030)(478,544)(507,663)(256,049)(1,251,286)

March 31, 2018

(4,705)(508,939)(489,740)(289,564)(1,292,948)

March 31, 2019

(6,707)(496,093)(509,342)(322,523)(1,334,665)

Accumulated amortization andimpairment losses

The Company writes off goodwill if it has been fully impaired.
“Intangible lease assets”, which had previously been separately presented, have been included in “Other” due to a change inmateriality.

F-28Notes to Consolidated Financial Statements
Impairment Losses Recognized for the Year Ended March 31, 2019:The Social Infrastructure & Industrial Systems segment recognized impairment losses of ¥72,912 million, of which ¥70,409
million was attributable to the suspension of the UK nuclear power stations construction project (the project). The amount of
goodwill and other intangible assets related to the project was fully written off. Details of the project are described in note 21.
Impairment Losses Recognized for the Year Ended March 31, 2018:
The Information & Telecommunication Systems segment recognized impairment losses of ¥22,007 million, of which ¥6,425
million was attributable to the lower than expected future revenue projected for its ATM service business in India as a result ofchanges in market trends relating to other intangible assets. The recoverable amount of the CGU was determined on the basis ofvalue in use, which was measured at ¥4,050 million as of March 31, 2018. The value in use was discounted at 22.1% (before tax),
which was derived from the weighted average cost of capital.
The carrying amounts of intangible assets with indefinite useful lives as of March 31, 2019 and 2018 amounted to ¥6,265 millionand ¥9,952 million, respectively. The main components of such assets are acquired brands. They are assessed to have indefinite
useful lives because there is no foreseeable limit to the period over which such assets are expected to generate net cash inflows forthe entity.
Expenditures on research activities aimed at obtaining new scientific or technical knowledge or understanding are expensed whenincurred. Expenditures on development activities for a new or major improvement of production plan or design prior to thebeginning of commercial production or use are capitalized as an internally generated intangible asset only when such
expenditures attributable to the intangible asset can be reliably measured, it is feasible for the Company to complete thedevelopment, and it is highly probable that the Company will obtain the future economic benefit. Otherwise, the expenditures arerecognized as an expense when incurred.
The carrying amounts of internally generated intangible assets (at cost less accumulated amortization and impairment losses) as ofMarch 31, 2019 and 2018 amounted to ¥122,238 million and ¥173,267 million, respectively. These assets are mainly included insoftware for internal use or software for sale.
Research and development expenditures recognized as an expense for the years ended March 31, 2019 and 2018 were ¥323,145
million and ¥332,920 million, respectively, and they are included in Cost of sales and Selling, general and administrative
expenses in the consolidated statement of profit or loss.
The Company tests goodwill acquired through business combinations for impairment by comparing the carrying amount and therecoverable amount per CGU (or group of CGUs).
As of March 31, 2019 and 2018, the group of CGUs with a significant proportion of goodwill allocated was the System & Service
Business Division, which belongs to the Information & Telecommunication Systems segment, and the carrying amounts ofgoodwill allocated to the System & Service Business Division were ¥200,282 million and ¥184,530 million, respectively. The
recoverable amount used for the impairment test of goodwill of the System & Service Business Division for the years ended
March 31, 2019 and 2018 was calculated based on the value in use. The value in use was calculated by the estimated future cash
flows based on the business plans approved by the management, discounted at the discount rate which was derived from theweighted average cost of capital. The business plan reflected past experience based on external information. For the years ended
March 31, 2019 and 2018, cash flows were projected over three years, the discount rates (before tax) used were 7.69% and6.90%, respectively, and the growth rate used was 1.0% for both years.
The Company considers it unlikely for the carrying amount of each CGU (or group of CGUs), together with allocated goodwill,
would exceed the respective recoverable amounts of the CGU (or group of CGUs) even if the primary assumptions used for the
impairment test changed within a reasonable range.

F-29

Notes to Consolidated Financial Statements(12) Deferred Taxes and Income Taxes
The components of income taxes recognized in the consolidated statement of profit or loss and deferred taxes recognized in the
consolidated statement of comprehensive income are as follows:
Millions of yen
2019

2018

Income taxes
Current tax expense

201,204

160,514

Deferred tax expense
Temporary differences originated and reversed(91,528)

10,110Changes in realizability of deferred tax assets

76,668(38,916)

186,344

131,708

Total
Deferred taxes recognized in OCI
Net changes in financial assets measured at fair value through
OCI
Remeasurements of defined benefit plans
Net changes in cash flow hedges
Foreign currency translation adjustments
Total(13,928)

368

(44)

4,766

(2,549)

1,222

-

-

(16,521)6,356

The Company and its Japanese subsidiaries were subject to a national corporate tax, an inhabitant tax and business tax, for theyears ended March 31, 2019 and 2018, which in the aggregate resulted in a combined statutory income tax rates of approximately
30.5% and 30.8%, respectively.
The Company and certain subsidiaries file consolidated income tax returns in certain jurisdictions.

F-30

Notes to Consolidated Financial Statements
Reconciliations between the combined statutory income tax rate and the effective income tax rate are as follows:
2019

2018

Combined statutory income tax rate

30.5%

30.8%

Share of (profits) losses of investments accounted for using the equity
method0.9(3.0)

Change in excess amounts over the tax basis of investments in
subsidiaries and investments accounted for using the equity method

0.1

0.2

Gain or loss on sale of investments in subsidiaries and investments
accounted for using the equity method(10.6)(0.1)

Expenses not deductible for tax purposes
Impairment of goodwill

1.1
2.6

0.9
0.1

Change in realizability of deferred tax assets
Difference in statutory tax rates of foreign subsidiaries

14.8
(3.5)

(6.1)
(2.5)

Other, net

0.2

0.3

36.1%

20.6%

Effective income tax rate
Changes in deferred tax assets and liabilities are as follows:

Millions of yen
March 31, 2019

March 31, 2018

Deferred tax assets, net at beginning of year

129,105

114,811

Recognized in profit or loss
Recognized in OCI

14,86016,52128,806(6,356)

Acquisitions, divestitures and others
Discontinued operations(1,351)
2,556(8,193)37

Deferred tax assets, net at end of year

161,691

129,105

Significant components of the deferred tax assets and liabilities are as follows:
Millions of yen
Consolidated statement offinancial position
March 31,2019

March 31,2018

Consolidated statement of
profit or loss
2019

2018

Deferred tax assets
Retirement and severance benefits
Accrued expenses

74,693
103,685

75,553
107,954(2,482)685

Depreciation of property, plant andequipment

12,565

11,384

1,911

7,280

10,156

9,665

491(4,618)31,01835,361(2,442)

2,984

Net operating loss carryforwards
Net intercompany profits oninventories, P.P.E. and others
Deferred revenues(1,198)
11,63020,814

20,659

(425)

(632)

Other

40,32738,895(2,349)(22,459)

Total deferred tax assets

293,258

299,471(4,611)(7,013)(8,506)(66,953)(8,837)(92,258)

124
(614)

(1,126)
1,735

Deferred tax liabilities
Deferred profit on sale of properties
Investments in securities
Tax purpose reserves regulated by
Japanese tax laws-

(13,468)

13,468

13,579Intangible assets
Other(32,619)(23,489)(38,494)(17,309)

5,418
1,075

13,405
8,226

Total deferred tax liabilities(131,567)(170,366)

19,47135,819Net deferred tax assets

161,691

129,105

14,86028,806F-31

Notes to Consolidated Financial Statements
Net deferred tax assets are included in the following accounts in the consolidated statement of financial position.

March 31, 2019
205,809

Millions of yen
March 31, 2018180,781

Other non-current liabilities(44,118)(51,676)

Total

161,691

129,105

Other non-current assets

Deferred tax liabilities are not recognized for excess amounts over the tax basis of investments in subsidiaries and investments
accounted for using the equity method that are considered to be reinvested indefinitely, for such differences will unlikely reversein the foreseeable future. The temporary differences related to undistributed earnings of subsidiaries for which deferred tax
liabilities are not recognized were ¥794,022 million and ¥700,901 million, respectively, as of March 31, 2019 and 2018.
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income in specific tax jurisdictions during the periods in which these deductible differences become deductible.
Although realization is not assured, the Company carries out an assessment of the scheduled reversals of deferred tax liabilities
and projected future taxable income, including the execution of certain available tax strategies if needed. Based on these factors,
the Company believes it is more likely than not it will realize the benefits of these deductible differences as of March 31, 2019.
Deductible temporary differences and net operating loss carryforwards for unrecognized deferred tax assets are as follows:
Millions of yen
March 31, 2019

March 31, 2018

Deductible temporary differences

1,447,286

1,191,495

Net operating loss carryforwards

505,514568,783

1,952,800

1,760,278

Total

Net operating loss carryforwards for unrecognized deferred tax assets will expire as follows:
Millions of yen
March 31, 2019

March 31, 2018

Within 5 years

160,567

190,765

After 5 years but not more than 10 years

111,682

133,072More than 10 years

233,265244,946

Total

505,514568,783

F-32

Notes to Consolidated Financial Statements(13) Trade Payables
The components of trade payables are as follows:
Millions of yen
March 31, 2019

March 31, 2018

1,224,454

1,267,047

Others181,558

269,936

Total

1,406,012

1,536,983

Accounts payable

Others include electronically recorded monetary claims and notes payable.
(14) Provisions
Changes in the balance and components of provisions for the year ended March 31, 2019 are as follows:
Millions of yen

March 31, 2018

Provisions for
Provisions related
Asset retirement
Product warranty expected losses on
to restructuring
obligations
provisions
construction(structural reform)
contracts
26,139
9,146
38,16375,571

Other
provisions
215,298

Additions

1,813

35,2938,414

73,437

7,878

Utilized(2,078)(32,890)(10,939)(45,909)(37,049)-(211)(2,398)(390)(3,563)Acquisitions and divestitures
Currency translation effects,
and others

(116)

115

(572)

276

(22,530)

March 31, 201925,75811,45332,668102,985

160,034

Current

1,014

11,453

21,341

102,213

148,906

Non-current

24,744-

11,327772

11,128Other provisions include provisions made for expenses including competition law and others. As information required by IAS 37
could adversely affect the outcome of litigations and other disputes, the details of these provisions are not disclosed.
Due to the application of IFRS 15, provisions for expected losses on construction contracts are newly disclosed as a provision
under IAS 37.
The provisions, which were previously deducted from Trade receivables, are presented on a gross basis, and the correspondingbalance as of March 31, 2018 disclosed in the above table has been restated.
Asset Retirement Obligations
The Company and its subsidiaries recognize asset retirement obligations principally based on the estimated future expendituresusing historical experience when the Company and its subsidiaries have a legal or contractual obligation associated with theretirement of tangible fixed assets used in normal operations, such as lease dilapidations of factory facilities and premises.
Provisions Related to Restructuring (Structural Reform)
Provision related to restructuring (structural reform) is recognized when the Company and its subsidiaries have a detailed formal
plan for the restructuring of the business or a part of business and have raised a valid expectation in those affected that it will
carry out the restructuring by starting to implement the plan or announcing its main features to those affected. The provision isrecognized based on the estimated amount of direct expenditures attributable to restructuring.
Provisions related to restructuring (structural reform) mainly include special termination benefits for restructuring (structuralreform).
Product Warranty Provisions
The Company and its subsidiaries provide warranties for certain products and services. Product warranty provisions arerecognized by estimating future expenditures based principally on historical experience of warranty claims.

F-33

Notes to Consolidated Financial Statements
Provisions for expected losses on construction contracts
Provisions for expected losses on construction contracts are recognized based on future estimated losses as the Company and its
subsidiaries fulfill contracts.
(15) Employee Benefits(a) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans and severance lump-sum payment plans, as well as
defined contribution pension plans to provide retirement and severance benefits to substantially all employees.
The principal defined benefit pension plan is a corporate pension plan based on the Japanese Defined Benefit Corporate
Pension Plan Act (the Act). Additionally, certain corporate pension plans adopt cash balance plans. Benefits under cash
balance plans are calculated per each plan participant with a notional account balance, based on the contribution credits per
salary level and interest credits based on market interest rate trends.
Pursuant to the Act, the Company has an obligation to make contributions to the Hitachi Pension Fund (the Fund) thatmanages the corporate pension plans. The directors of the Fund are responsible for faithfully executing operations incompliance with laws and regulations, and any orders issued by the Minister of Health, Labor and Welfare, and the directorgenerals of Regional Bureaus of Health and Welfare based on laws and regulations, as well as the rules of the Fund and theresolution of the Board of Representatives. The Fund prohibits the directors from acts that constitute conflicts of interests inthe management and operation of the funds contributed for benefit payments (the contributions). If breached, the board
members are jointly and severally held responsible.
The Fund is legally independent from the Company. The Board of Representatives comprises an equal number ofrepresentatives selected by the company and certain subsidiaries and representatives from the employee side. The proceedingsof a Board of Representatives are decided by a majority vote of the members attending. In case of a tied vote, the chairman
has the power to decide, except for exceptionally significant matters.
The actual management of the contributions is conducted by trustees in accordance with rules approved by the Board ofRepresentatives. The Fund is responsible for managing the contributions to safely and efficiently manage the contributions by
establishing the basic management policy of the contributions and preparing the management guidance in line with the policy
submitted to the trustees.
The Company has future obligations to make contributions as defined by the Fund. The amount of contribution is periodicallyreviewed to the extent allowed by law.
The severance lump-sum payment plans provide a lump-sum payment at the time of retirement, and the benefit is calculated
based on factors such as the salary level at retirement and the years of service. The Company and certain subsidiaries have an
obligation to pay benefits directly to beneficiaries.
Defined contribution plans require companies to make contributions over a participation period, and plan participants
themselves are responsible for the management of plan assets. Benefits are paid by the trustee, and the Company and certain
subsidiaries’ responsibility is limited to making contributions.

F-34

Notes to Consolidated Financial Statements
Changes in the present value of defined benefit obligations and the fair value of plan assets for the years ended March 31,
2019 and 2018 are as follows:
Millions of yen
March 31, 2019

March 31, 2018

Defined benefit obligations
At beginning of year
Service cost

2,246,857
78,2602,247,924
79,410Interest cost
Plan amendments

12,311
32

13,917449

Actuarial losses
Benefits paid

24,523(117,277)

25,055(121,751)

Acquisitions and divestitures
Transfer to defined contribution pension plan

(78,868)
(633)

2,364
(203)

Settlements/curtailments
Currency translation effect(6,146)995(3,388)3,080

2,160,054

2,246,857

1,711,076
10,255

1,643,638
12,397Return on plan assets (excluding interest income)
Employers’ contributions

13,31290,42753,521
99,204

Employees’ contributions
Benefits paid

281
(87,550)

609(96,942)

Acquisitions and divestitures
Transfer to defined contribution pension plan

(57,375)
(84)

928
-

Settlements/curtailments
Currency translation effect(7,089)(1,277)(4,331)
2,052

1,671,976

1,711,076

7,476

6,762

495,554542,543

At end of year
Fair value of plan assets
At beginning of year
Interest income

At end of year
Effect of asset ceiling
Net liability amount recognized in the consolidated statementof financial position
The components of actuarial gain or loss are as follows:

Millions of yen
March 31, 2019

March 31, 2018

Arising from changes in financial assumptions(22,225)(11,551)

Arising from changes in demographic assumptions
Other

6,748
(9,046)(5,995)(7,509)The Company and certain subsidiaries remeasure the defined benefit obligations and plan assets at the end of the fiscal year.
The discount rates used in actuarial calculation of defined benefit obligations are as follows:
Percentage
March 31, 2019
Discount rate

0.5

F-35

March 31, 2018
0.6

Notes to Consolidated Financial Statements
If, at March 31, 2019, the discount rate rose by 0.5%, the defined benefit obligations would decrease by ¥128,306 million,
and if the discount rate decreased by 0.5%, the defined benefit obligations would increase by ¥140,653 million.
The sensitivity analysis is based on an assumption that all other variables other than the one analyzed are held constant; inreality, changes in other assumptions may impact the outcome of the analysis.
The Fund’s plan asset management is based on the safe and efficient management of the contributions, diversified
investments and determination of the investment ratio that should be sustained over the long term. The Fund seeks to maintaincurrent value of assets sufficient for future obligations. A target rate of return is established to ensure a stable long term rateof return on assets. A diversified investment strategy is carried out while a target asset allocation is established to achieve thetarget rate of return. The target asset allocation is based on the expected rate of return by each class of asset, the standard
deviation of the rate of return and the correlation coefficient among the assets. It is currently approximately 20% in equity,
50% in public and corporate bonds, and 30% in hedge funds, securitization products, life insurance general accounts andother assets. If market values fluctuate exceeding certain levels, the investment ratio is adjusted to the target allocation ratio inorder to control risks.
In selecting trustees or asset management companies, the Fund takes into account appropriate quantitative and qualitativeevaluations. The Fund also presents its management policies to the trustees or asset management companies, and periodicallyreceives asset management reports.
The fair values of plan assets invested as of March 31, 2019 and 2018 are as follows:
Millions of yen
March 31, 2019
With quoted market
price in an active
marketEquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

With no quoted market
price in an active
marketTotal

12,552

2,233

14,785

118,71451,023
2,091
184,380

1,031
52,76755,21759,326
170,974
1,118,967
27,081
1,487,596

119,745
52,76755,21759,32651,023
170,974
1,118,967
29,172
1,671,976
Millions of yen

March 31, 2018
With quoted market
price in an active
marketEquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

With no quoted market
price in an active
marketTotal

18,7482,613

21,361

148,356
55,093
2,468
224,665

2,028
31,59550,35071,281
160,733
1,142,694
25,117
1,486,411

150,384
31,59550,35071,28155,093
160,733
1,142,694
27,585
1,711,076

F-36

Notes to Consolidated Financial Statements
As of March 31, 2019, investments in equity were allocated to approximately 50% in stocks listed in Japan and 50% in stocks
listed in foreign markets. As of March 31, 2018, investments in equity were allocated to approximately 35% in stocks listed inJapan and 65% in stocks listed in foreign markets.
As of March 31, 2019, Japanese government bonds made up approximately 95% of the government bonds and municipal debt
securities, the majority of which were Japanese national bonds. As of March 31, 2018, Japanese government bonds made up
approximately 75% of the government bonds and municipal debt securities, the majority of which were Japanese nationalbonds. Foreign public bonds, as of March 31, 2019, took approximately 5%, the majority of which were foreign nationalbonds, and as of March 31, 2018, foreign public bonds took approximately 25%, the majority of which were foreign nationalbonds.
As of March 31, 2019 and 2018, investments in corporate bonds and other debt securities were allocated to approximately 5%
in Japanese corporate bonds and debt instruments, and 95% in foreign corporate bonds and debt instruments.
Hedge funds primarily consist of investments in relative value strategy funds, event driven funds, equity long or short funds,
and macroeconomic and Commodity Trading Advisor (CTA) funds.
Securitization products primarily consist of investments in equity of Japanese real estate funds, and debt and equity ofcollateralized loan obligations (CLO).
Commingled funds represent pooled institutional investments. As of March 31, 2019, commingled funds were allocated to
30% in listed stocks, 45% in government bonds, 10% in corporate bonds and other debt securities, 10% in cash and cash
equivalents and 5% in other assets. As of March 31, 2018, commingled funds were allocated to 30% in listed stocks, 45% ingovernment bonds, 5% in corporate bonds and other debt securities, 10% in cash and cash equivalents and 10% in otherassets.
Funding by the Fund is conducted by taking into account various factors such as funded status, the limit of tax deductions,and actuarial calculations. For the purpose of maintaining balanced finance into the future, the bylaws of the Fund require
recalculation of the contribution amounts at the end of fiscal year every five years. Basic assumptions (expected interest rates,
mortality rates, withdrawal rate, etc.) are reviewed to recalculate the appropriate level of contribution.
The amount of contributions expected to be paid by the Company and its subsidiaries to the plan assets for the year ending
March 31, 2020 is ¥43,886 million.
The weighted average duration (expected average maturity) of defined benefit obligations as of March 31, 2019 and 2018
were 12.6 years and 12.7 years, respectively.
Contributions made to defined contribution plans and expensed in profit or loss in the years ended March 31, 2019 and 2018
were ¥27,601 million and ¥28,212 million, respectively.
(b) Employee Benefit Expenses
The aggregated amounts of employee benefit expenses including salary recognized in the consolidated statement of profit orloss for the years ended March 31, 2019 and 2018 were ¥2,336,033 million and ¥2,323,429 million, respectively.

F-37

Notes to Consolidated Financial Statements(16) Equity(a) Common Stock
Number of shares
March 31, 2019
Total number of authorized shares

March 31, 2018

2,000,000,000

10,000,000,000

Note: Since the item of share consolidation (to consolidate every five the Company's shares into one share and to change the total
shares authorized to be issued by the Company from 10 billion shares to 2 billion shares) was approved at the general
meeting of shareholders held on June 20, 2018, the total shares authorized to be issued by the Company decreased
8,000,000,000 shares and became 2,000,000,000 shares on October 1, 2018.
Issued shares outstanding(Number of shares)

Capital amount(Millions of yen)March 31, 2017

4,833,463,387

458,790

March 31, 2018

4,833,463,387

458,790

March 31, 2019

966,692,677

458,790

Note: As a result of the share consolidation on October 1, 2018, the total number of issued shares decreased 3,866,770,710 sharesand became 966,692,677 shares.
Shares issued by the Company are non-par value common stock. The issued shares above include treasury stock. The changes
in treasury stock for the years ended March 31, 2019 and 2018 are as follows:
Treasury stock(Number of shares)
March 31, 2017

(Millions of yen)

5,460,572

3,916

Acquisition of treasury stock

375,918

292

Sales of treasury stock(100,543)(71)

5,735,947

4,137

178,520

231

March 31, 2018
Acquisition of treasury stock
Sales of treasury stock
March 31, 2019

(4,827,800)(448)

1,086,667

3,920

Note: Sales of treasury stock for the year ended March 31, 2019 include the decrease in treasury stock of 4,224,140 shares as aresult of the share consolidation on October 1, 2018.
The number of shares of the Company held by the Company’s associates as of March 31, 2019 and 2018 were 33,400 sharesand 167,000 shares, respectively.
(b) Surplus(i) Capital Surplus
The Companies Act of Japan mandates that at least half of paid-in capital be appropriated as common stock and the rest be
appropriated as legal reserve within capital surplus.
The changes in capital surplus include the effect of changes in the Company’s ownership interest in its consolidated
subsidiaries. For the year ended March 31, 2019, the changes in capital surplus were due mainly to the decrease of ¥104,507
million in capital surplus in additional acquisition of shares of STS by HRII.
(ii) Retained Earnings
The Companies Act of Japan requires that ten percent of retained earnings appropriated for dividends be retained until the
total amount of earned reserves included in capital reserve and retained earnings reaches a quarter of the nominal value ofcommon stock. Earned reserves may be available for dividends by resolution at the shareholders’ meeting.

F-38

Notes to Consolidated Financial Statements(17) Accumulated Other Comprehensive Income (AOCI) and Other Comprehensive Income (OCI)
Components of AOCI, net of related tax effects, presented in the consolidated statement of changes in equity, and changes in eachcomponent for the years ended March 31, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Foreign currency translation adjustments
Balance at beginning of year

60,80778,987

OCI, net of reclassification(7,836)(18,032)

Net transfer of non-controlling interests

(805)

(148)

52,16660,807

Balance at beginning of year

22,675(847)

OCI

Balance at end of year
Remeasurements of defined benefit plans(12,887)

22,059Net transfer of non-controlling interests

(401)

-

Reclassified into retained earnings

925

1,463

10,312

22,675

Balance at beginning of year

174,588

192,110OCI(44,255)

369

Reclassified into retained earnings(34,608)(17,891)

Balance at end of year

95,725

174,588

Balance at beginning of year

(115,903)(129,182)

OCI, net of reclassification

13,572

14,957

Balance at end of year
Net changes in financial assets measured at FVTOCINet changes in cash flow hedges

Net transfer of non-controlling interests

(664)

-

Others

1,152(1,678)(101,843)(115,903)

Balance at beginning of year

142,167

141,068

OCI, net of reclassification(51,406)

19,353

Net transfer of non-controlling interests(1,870)(148)

Reclassified into retained earnings(33,683)(16,428)

Balance at end of year
Total AOCIOthers

1,152(1,678)

Balance at end of year

56,360142,167

F-39

Notes to Consolidated Financial Statements
The following shows a reconciliation of OCI, including non-controlling interests, to profit or loss items and deferred income tax
effect per components of OCI during the years ended March 31, 2019 and 2018.
Millions of yen
2019
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments(5,979)-(5,979)Remeasurements of defined benefit plans(11,925)

44(11,881)

Net changes in financial assets measured at FVTOCI(59,284)

13,928(45,356)

Net changes in cash flow hedges(9,449)2,874(6,575)

Share of OCI of investments accounted for using the equity method(10,211)

1,502(8,709)Total(96,848)

18,348(78,500)

1,804

-

1,804

626

(325)

301

Share of OCI of investments accounted for using the equity method

23,699(4,945)18,754

Total

26,129(5,270)20,859Foreign currency translation adjustments(4,175)-(4,175)Remeasurements of defined benefit plans(11,925)

44(11,881)

Net changes in financial assets measured at FVTOCI(59,284)

13,928(45,356)

Net changes in cash flow hedges(8,823)

2,549(6,274)

Share of OCI of investments accounted for using the equity method

13,488(3,443)

10,045

Total(70,719)

13,078(57,641)

Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments
Net changes in cash flow hedges

OCI, net of reclassification adjustments:

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments(3,286)

Remeasurements of defined benefit plans

162

Net changes in financial assets measured at FVTOCI(2,221)

Net changes in cash flow hedges

(890)

Total

(6,235)

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments(889)

Remeasurements of defined benefit plans(12,043)

Net changes in financial assets measured at FVTOCI(43,135)

Net changes in cash flow hedges(5,384)

Share of OCI of investments accounted for using the equity method

10,045

Total(51,406)

F-40

Notes to Consolidated Financial Statements

Millions of yen
2018
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments(5,671)-(5,671)Remeasurements of defined benefit plans

27,519(4,766)22,753

Net changes in financial assets measured at FVTOCI

1,898

(368)

1,530

Net changes in cash flow hedges

14,530(3,686)

10,844

Share of OCI of investments accounted for using the equity method

6,922(3,632)

3,290

Total

45,198(12,452)

32,746

Foreign currency translation adjustments(2,371)-(2,371)

Net changes in cash flow hedges(7,605)2,464(5,141)

(33)

-

(33)

(10,009)

2,464(7,545)

Foreign currency translation adjustments(8,042)-(8,042)Remeasurements of defined benefit plans

27,519(4,766)22,753

Net changes in financial assets measured at FVTOCI

1,898

(368)

1,530

Net changes in cash flow hedges

6,925(1,222)

5,703

Share of OCI of investments accounted for using the equity method

6,889(3,632)

3,257

Total

35,189(9,988)25,201

Reconciliation of OCI to profit or loss:

Share of OCI of investments accounted for using the equity method
Total
OCI, net of reclassification adjustments:

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments

435

Remeasurements of defined benefit plans

2,819

Net changes in financial assets measured at FVTOCI

2,338

Net changes in cash flow hedges

256

Total

5,848

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments(8,477)

Remeasurements of defined benefit plans

19,934

Net changes in financial assets measured at FVTOCI(808)

Net changes in cash flow hedges

5,447

Share of OCI of investments accounted for using the equity method

3,257

Total

19,353F-41

Notes to Consolidated Financial Statements(18) Dividends
Dividends paid on the Company’s common stock for the years ended March 31, 2019 and 2018 are as follows:
Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)The Board of Directors
on October 26, 2018

38,625Retained earnings

The Board of Directors
on May 10, 2018

38,621The Board of Directors
on October 26, 2017
The Board of Directors
on May 12, 2017

Decision

Record date

Effective date

8.0

September 30, 2018

November 27, 2018

Retained earnings

8.0

March 31, 2018

May 29, 2018

33,795Retained earnings

7.0

September 30, 2017

November 28, 201733,796

Retained earnings

7.0

March 31, 2017

May 29, 2017

Note: Dividends per share do not reflect the share consolidation effective on October 1, 2018, since the record date was September 30,
2018.
The dividend on the Company’s common stock whose record date falls in the year ended March 31, 2019 and the effective datefalls in the next fiscal year is as follows:

Decision
The Board of Directors
on May 10, 2019

Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)48,280Retained earnings

50.0

F-42

Record date

Effective date

March 31, 2019

May 31, 2019

Notes to Consolidated Financial Statements(19) Stock-based Compensation
The Company introduced a stock option plan as stock-based compensation. Under the Company’s stock option plan, Executive
Officers and Corporate Officers are granted the right to purchase shares of common stock of the Company (stock acquisitionrights).
Note: Since the item of share consolidation (to consolidate every five the Company's shares into one share and to change the total
shares authorized to be issued by the Company from 10 billion shares to 2 billion shares) was approved at the general meetingof shareholders held on June 20, 2018, the total shares authorized to be issued by the Company decreased 8,000,000,000 sharesand became 2,000,000,000 shares on October 1, 2018.
The figures are translated into on the assumption that the Company conducted this share consolidation at the beginning of the
fiscal year ended March 31, 2018.
Details of the Company’s stock option plan for the years ended March 31, 2019 and 2018 are as follows.

Fiscal Year of Issuance and Name

Grant Date

Exercise period

Year ended March 31, 2019
The Third Stock Acquisition Rights of Hitachi, Ltd.

April 11, 2018

From April 27, 2018
to April 26, 2048

Year ended March 31, 2018
The Second Stock Acquisition Rights of Hitachi, Ltd.

April 6, 2017

From April 27, 2017
to April 26, 2047

Year ended March 31, 2017
The First Stock Acquisition Rights of Hitachi, Ltd.

June 29, 2016

From July 15, 2016
to July 14, 2046

Conditions for the exercise of stock acquisition rights(1) During the above exercise period, a holder of stock acquisition rights may exercise all the stock acquisition rights
determined in accordance with the provisions of paragraph (2) or (3) below in a lump sum only within ten days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
(2) The number of stock acquisition rights that a holder of stock acquisition rights may exercise, shall be determined based on
the ratio of (i) the total shareholder return (TSR) for shares of the Company for three years from the beginning of the fiscal
year in which the date of allotment of the stock acquisition rights falls (Waiting Period) to (ii) the growth rate of TOPIX(Tokyo Stock Price Index) for the same period (TSR/TOPIX Growth Rate Ratio): market condition.
(3) The number of stock acquisition rights, that a holder of stock acquisition rights who has left his/her position in the
Company before the end of the Waiting Period (Resignee) may exercise, shall be determined by reducing the number ofstock acquisition rights allotted to him/her in proportion to the term of office of the Resignee in the Waiting Period, andapplying the TSR/TOPIX Growth Rate Ratio for the period from the beginning of the fiscal year in which the date ofallotment of the stock acquisition rights falls to the time of resignation in accordance with the provision of paragraph (2)above.
Stock-based compensation expenses recognized for the years ended March 31, 2019 and 2018 were ¥684 million and ¥625
million, respectively.

F-43

Notes to Consolidated Financial Statements
A summary of stock option activity for the years ended March 31, 2019 and 2018 is as follows. The number of stock options istranslated into their equivalent number of shares (20 shares per stock option).

Outstanding at beginning of year

2019
2018
Weighted average
Weighted average
Number of shares
Number of shares
exercise priceexercise price（shares）(shares)
(yen)
(yen)
889,7801
484,3801Granted

347,9801

458,120

1

Forfeited (a)(118,240)

1(36,900)

1

Exercised(114,740)

1(15,820)

1

-

-

-

-

Outstanding at end of year

Expired

1,004,780

1889,780

1

Exercisable at end of year

-

-

-

-

(a) Including the stock acquisition rights which became non-exercisable because of the market condition.
The weighted average share prices at the date of exercise for the years ended March 31, 2019 and 2018 were ¥3,871.0 and¥3,166.0.
The range of exercise price as of March 31, 2019 and 2018 was ¥1. The weighted average remaining contractual lives of stock
options outstanding as of March 31, 2019 and 2018 were 28.2 years and 28.7 years, respectively.
The weighted average fair values (per share) at the measurement date of stock options issued under the Company’s stock option
plan for the years ended March 31, 2019 and 2018 were ¥2,426.0 and ¥1,838.0, respectively.
Fair value of stock options is estimated using Monte Carlo simulation based on the following assumptions.
March 31, 2019

March 31, 2018

1 yen

1 yen

3.2 years

3.2 years

4,044.5 yen

3,092.5 yen

Expected volatility (c)29.582%31.528%

Expected dividends (d)65 yen60 yen(0.121%)(0.184%)103.8%

104.1%

39.6%

39.5%

Exercise price
Expected life (a)Stock price at the measurement date (b)Risk-free rate (e)Average value of the normal distribution of
TSR/TOPIX Growth Rate Ratio (f)Standard deviation of the normal distribution of
TSR/TOPIX Growth Rate Ratio (f)(a) Based on the expected term of office of each grantee.
(b) Based on the closing prices of the Company's stocks on the Tokyo Stock Exchange at the measurement date.
(c) Based on historical volatility of weekly stock price fluctuations during a directly preceding period that is equal to the expected
life of the stock options.
(d) Based on actual annual dividends in the fiscal year preceding that of the measurement date.
(e) Calculated based on the yield of a Japanese government bond with a term to maturity that is equal to the expected life of thestock options.
(f) Calculated based on historical data in fiscal years preceding that of the measurement date.

F-44

Notes to Consolidated Financial Statements(20) Revenues(a) Disaggregation of revenue
The Company derives revenues primarily from contracts with customers. The following table shows the disaggregation ofrevenue attributable to each reportable segment and geographic area.
(Millions of yen)
2019

Overseas
Revenues
Subtotal

Total
Revenues

44,736

593,7812,065,913

394,162

151,715

1,175,067

2,539,812

91,272

127,700

35,474559,830

951,213276,356

168,668

146,034

236,570827,628

1,033,703

700,622494,249

359,754

120,899

28,922

1,003,824

1,704,446

Automotive Systems

428,217

170,080

257,428

60,165

55,117542,790971,007

Smarts Life & Ecofriendly
Systems

389,930

73,621

1,449

3,367

16,722

95,159485,089

Others435,29362,366

19,473

10,0337,300

99,172534,465

Subtotal

5,388,397

2,073,295

1,217,441

1,029,959

576,556

4,897,251

10,285,648(723,862)(53,697)(11,813)(11,417)(4,240)(81,167)(805,029)

4,664,535

2,019,598

1,205,628

1,018,542

572,316

4,816,084

9,480,619

Japan

Asia

North
America

Europe1,472,132

176,580

204,866

167,599

1,364,745

514,659

114,531391,383

305,384

Construction Machinery

206,075

High Functional Material &Components

Information &Telecommunication Systems
Social Infrastructure &Industrial Systems
Electronic Systems &Equipment

Corporate items andEliminations
Total

Other
Areas

The Information & Telecommunication Systems segment consists of Front Business and IT Platform & Products, for whichrevenue amounted to ¥1,475,715 million and ¥742,271 million, respectively (including intersegment transactions). Front
Business is operated mainly in Japan, and IT Platform & Products is operated mainly in Japan, North America and Europe.
(b) Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services of eachreportable segment.
(Information & Telecommunication Systems)
Front Business primarily provides services such as system integration, consulting and cloud services. The business provides
goods and services according to customers’ specifications over a specified period of time, and revenue is recognized based on
the pattern of the cost accrual or the passage of time as performance obligations are satisfied over time.
Many of the contracts require payments based on milestones, and in some cases, payments are made before performanceobligations are satisfied.
IT Platform & Products primarily sells server, storage, telecommunication network equipment and related software. Revenue
is recognized when control over the goods is transferred to customers as performance obligations are satisfied at the point intime upon the completion or upon delivery of the goods. The Company’s general terms and conditions apply, and there are no
significant transactions in which payment terms include deferred payments, etc.

F-45

Notes to Consolidated Financial Statements(Social Infrastructure & Industrial Systems)
This segment includes revenue from businesses such as building systems, railway systems, and power and energy. The
building system business is operated mainly in China, the railway system business is operated mainly in Europe, and thepower and energy business is operated mainly in Japan.
Contracts such as construction in this segment involve manufacturing and providing goods based on customers’
specifications over a long period of time. As performance obligations are satisfied over time, revenue is recognized based on
the pattern of the cost accrual. In addition, the segment provides certain services promised in the contracts such as
maintenance throughout the duration of the contract, and recognizes revenue over time based on the passage of time. Many of
the contracts require payments based on milestones, and, in some cases, payments are made before performance obligations
are satisfied.
Further, in the sale of industrial equipment, etc., revenue is recognized when control over the goods is transferred tocustomers as performance obligations are satisfied at the point in time upon the completion or upon delivery of the goods.
The Company’s general terms and conditions apply, and there are no significant transactions in which payment terms include
deferred payments, etc.
(Other)In the Electronic Systems & Equipment, Construction Machinery, High Functional Materials & Components, Automotive
Systems, and Smart Life & Ecofriendly Systems segments, performance obligations are generally satisfied at a point in timeupon completion of the sale and customers’ acceptance and inspection of the goods, and revenue is recognized when control
over goods is transferred to customers. The Company’s general terms and conditions apply, and there are no significant
transactions in which payment terms include deferred payments, etc.
These segments provide certain services promised in the contracts such as maintenance throughout the duration of thecontract, and they recognize revenue over time based on the passage of time. The Company’s general terms and conditions
apply, and there are no significant transactions in which payment terms include deferred payments, etc.
(c) Information about contract balances
The following table shows the beginning and ending balances of Trade receivables, Contract assets and Contract liabilities fromcontracts with customers for the fiscal year ended March 31, 2019:
Millions of yen
March 31, 2019

April 1, 2018

Trade receivables

1,980,165

2,139,961

Contract assets

484,120

443,031

Contract liabilities

654,536712,354

Of the revenue recognized during the fiscal year ended March 31, 2019, the amount included in Contract liabilities at the
beginning of the fiscal year was ¥399,256 million, and the amount related to performance obligations satisfied during the fiscal
year ended March 31, 2018 was not material.
(d) Transaction price allocated to remaining performance obligations
Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over a long period of time
are primarily the Information & Telecommunication Systems segment and the Social Infrastructure & Industrial Systems
segment. The balance of unsatisfied performance obligations of the Information & Telecommunication Systems segment was¥943,153 million (including intersegment transactions of ¥37,174 million), of which approximately 90% was expected to besatisfied within three years and approximately 10% after three years but no more than five years. The balance of unsatisfied
performance obligations of the Social Infrastructure & Industrial Systems segment was ¥4,514,796 million (includingintersegment transactions of ¥100,901 million), of which approximately 60% was expected to be satisfied within three years andapproximately 10% after three years but no more than five years.
Segments other than the Information & Telecommunication Systems segment and the Social Infrastructure & Industrial Systems
segment have contracts whose initial expected terms are generally one year or less. Accordingly, they are excluded from thisdisclosure in accordance with a practical expedient.

F-46

Notes to Consolidated Financial Statements(e) Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
The Company and its subsidiaries recognize the costs incurred for obtaining or fulfilling contracts with customers as an asset tothe extent those costs are expected to be recovered. Such costs recognized as an asset as of March 31, 2019 were not material.
(21) Other Income and Expenses
The main components of other income and expenses for the years ended March 31, 2019 and 2018 are as follows:
Millions of yen
2019
Net gain (loss) on sales and disposals of fixed assets

2018

18,460(2,535)

Impairment losses(344,997)(48,656)

Net gain (loss) on business reorganization and others

184,630

9,774

Special termination benefits(22,376)(15,728)

Expenses related to competition law and others(1,730)(14,280)

Impairment losses are mainly recognized on property, plant and equipment, investment properties and intangible assets. Net gain
(loss) on business reorganization and others include gains and losses related to obtaining and losing control of investees and gains
and losses related to obtaining and losing significant influence over investees.
Restructuring charges (structural reform expenses) included in other expenses for the years ended March 31, 2019 and 2018 were
¥380,846 million and ¥64,384 million, respectively. Restructuring charges (structural reform expenses) mainly include
impairment losses and special termination benefits.
Restructuring charges (structural reform expenses) for the year ended March 31, 2019 include expenses due to the suspension of
the UK nuclear power stations construction project (the project). The Company decided to suspend the project from the view
point of its economic rationality as a private enterprise at the Board of Directors meeting held on January 17, 2019, as it is clearthat further time is needed to develop a financial structure for the project and conditions for building and operating the nuclear
power stations to secure its business continuation. Consequently, the Social Infrastructure & Industrial System segment
recognized restructuring charges (structural reform expenses) of ¥294,613 million including impairment losses of ¥277,208
million on the related assets of the project.
(22) Financial Income and Expenses
The main components of financial income and expenses for the years ended March 31, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Dividends received

6,054

6,227

Exchange gain (loss)

7,640(10,587)

Dividends received for the years ended March 31, 2019 and 2018 are from FVTOCI financial assets.

F-47

Notes to Consolidated Financial Statements(23) Discontinued Operations
In the Social Infrastructure & Industrial Systems segment, the Company classified the part of thermal power generation systems
business which was not transferred to Mitsubishi Hitachi Power Systems, Ltd. for business integration in the thermal power
generation systems business with Mitsubishi Heavy Industries, Ltd. but was operated by the Company and certain subsidiaries as
discontinued operations in the consolidated statement of profit or loss since the projects were completed in the year ended March
31, 2015.
Profit or loss and cash flows from the discontinued operations for the years ended March 31, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Profit or loss from discontinued operations
Revenues(10,123)

1,077

Cost of sales and expenses(1,658)(17,146)(11,781)(16,069)

2,645

49

(9,136)(16,020)

Loss from discontinued operations, before income taxes
Income taxes
Loss from discontinued operations

Millions of yen
2019

2018

Cash flows from discontinued operations
Cash flows from operating activities(18,074)

2,000

Cash flows from investing activities-(5)

Cash flows from financing activities

17,671(1,299)F-48

Notes to Consolidated Financial Statements(24) Earnings Per Share (EPS) Information
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders are as follows:
Number of shares
2019
Weighted average number of shares on which basic EPS is calculated

2018

965,630,489

965,574,865

911,653

857,637

966,542,142

966,432,502

Effect of dilutive securities
Stock options
Number of shares on which diluted EPS is calculated

Millions of yen
2019

2018

Net income from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic231,682

Effect of dilutive securities
Diluted

379,008--

231,682

379,008(9,136)(16,020)--(9,136)(16,020)

222,546

362,988--

222,546

362,988

Net loss from discontinued operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted
Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

Yen
2019

2018

EPS from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic239.93392.52

Diluted239.70392.17Basic(9.46)(16.59)Diluted(9.45)(16.58)Basic

230.47375.93

Diluted230.25375.60

EPS from discontinued operations,
attributable to Hitachi, Ltd. stockholders

EPS attributable to Hitachi, Ltd. stockholders

Note : On October 1, 2018, the Company completed the share consolidation of every five (5) shares of common stock into one (1)share. The figures for basic and diluted EPS attributable to Hitachi, Ltd. stockholders are calculated on the assumption that
the Company conducted this share consolidation at the beginning of the fiscal year ended March 31, 2018.

F-49

Notes to Consolidated Financial Statements(25) Supplementary Cash Flow Information
Changes in liabilities from financing activities for the years ended March 31, 2019 and 2018 are as follows:
Millions of yen
Short-term debt

Long-term
borrowings

Bonds

Lease payables

Total

March 31, 2017

196,357

159,820

770,723

49,703

1,176,603

Cash flows(104,819)(9,649)(89,957)(13,984)(218,409)---

13,46913,469Non-cash changes
Finance lease payables incurred
Acquisitions and divestitures

13,297-

59,7791,787

74,863Currency translation effect and others

16,604(334)(11,005)(1,497)

3,768

March 31, 2018

121,439

149,837

729,540

49,4781,050,294

Cash flows

3,706

20,032(49,326)(16,651)(42,239)---

13,522

13,522Acquisitions and divestitures(4,156)

1,010(11,758)(1,419)(16,323)

Currency translation effect and others(9,958)

(381)

5,587

4,269

(483)

111,031

170,498

674,043

49,1991,004,771

Non-cash changes
Finance lease payables incurred

March 31, 2019

F-50

Notes to Consolidated Financial Statements(26) Financial Instruments and Related Disclosures(a) Capital Management
The Company manages its capital under the policy of maintaining appropriate level of assets, liabilities and capital for current
and future business operations, as well as optimizing the efficiency of capital utilization throughout the business operations.
The Company uses the total Hitachi, Ltd. stockholders’ equity ratio as an important indicator in capital management and it isregularly monitored. The total Hitachi, Ltd. stockholders’ equity ratio as of March 31, 2019 and 2018 were 33.9% and 32.4%,
respectively.
The Company is not subject to any capital requirements except for the general rules such as the Japanese Company Law.
(b) Financial Risks
The Company is engaged in business activities world-wide, and constantly exposed to various risks such as market risks(mainly currency exchange risk and interest rate risk), credit risk and liquidity risk. The Company implements risk
management policies to avoid or mitigate these financial risks.
(i) Currency Exchange Risk
The Company and its subsidiaries hold assets and liabilities exposed to currency exchange risk. In order to hedge this risk,
the management uses forward exchange contracts or cross currency swaps.
For trade receivables and payables denominated in foreign currencies, the Company and its subsidiaries measure the future
cash flows per currency on a monthly basis, and enter into forward exchange contracts using a constant ratio with the
purpose of fixing the future cash flows arising from receivables and payables and forecasted transactions denominated inforeign currencies. The terms of forward exchange contracts are largely within one year. If necessary, the Company and its
subsidiaries establish a risk control policy and a risk management approach specific to each transaction by reviewing thebusiness characteristics, the structure of income and expenditure, and conditions of the contract. The Company and its
subsidiaries hedge the risk exposure arising from specific transactions based on the risk control policy and the risk
management approach.
To fix cash flows from long-term debt denominated in foreign currencies, the Company and its subsidiaries enter intocross currency swap agreements with the same maturities as the underlying debt. The hedging relationship between theforward exchange contracts or cross currency swaps and the underling hedged items is highly effective in offsetting theimpact from changes in foreign currency exchange rates.
The sensitivity analysis for currency exchange rates shown below indicates the impact on income from continuing
operations, before income taxes, in the Company’s consolidated statement of profit or loss, if the Japanese yen depreciatedby 1% on the foreign-currency-denominated financial instruments held by the Company and its subsidiaries as of March
31, 2019 and 2018, while all other variables are held constant.
Millions of yen
Currency
Impact on income from continuing
operations, before income taxes

2019

2018

US Dollar

307

696

Euro

172

139

British Pound

52

340

F-51

Notes to Consolidated Financial Statements(ii) Interest Rate Risk
The Company and its subsidiaries are exposed to interest rate risk related principally to long-term debt obligations. In
order to minimize this risk, the Company and its subsidiaries enter into interest rate swap agreements to control fluctuation
risk of cash flows. The interest rate swaps entered into are mainly receive-variable, pay-fixed interest rate swaps. Under
the interest rate swaps, the Company and its subsidiaries receive variable interest rate payments on long-term debt andmake fixed interest rate payments, thereby creating fixed interest rate long-term debt.
Certain financing subsidiaries raise funds by issuing long-term debt with a fixed interest rate and lending it at variableinterest rates, creating interest rate risk. In order to minimize this risk, interest rate swaps are used to convert, in effect, thefixed rate to a variable rate to manage fluctuations in fair value resulting from interest rate risk. The hedging relationshipbetween the interest rate swaps and the underlying hedged items is highly effective in offsetting the impact from changes
in cash flows and fair value resulting from interest rate risk.
The sensitivity analysis for interest rate shown below indicates the impact on income from continuing operations, before
income taxes, in the consolidated statement of profit or loss, if interest rates increased by 1% on the financial instruments(floating-interest financial assets and liabilities measured at amortized cost, FVTPL financial assets and liabilities andderivatives) held by the Company and its subsidiaries as of March 31, 2019 and 2018, while all other variables are held
constant.
Millions of yen
2019
Impact on income from continuing operations,
before income taxes

2018
(584)

(684)

(iii) Credit Risk
Trade receivables and contract assets, and other receivables resulting from operating activities of the Company and its
subsidiaries are exposed to credit risk of the customers. Investments in debt securities held for managing cash surplus andequity instruments held for strategic purposes are exposed to credit risk of the issuers. Derivative transactions entered into
in order to lower market risks are exposed to credit risk of the counter-party financial institutions.
For credit risk of customers, the Company conducts periodic credit checks as appropriate for the products sold and thecustomers’ financial conditions and credit ratings. A credit limit is set according to the credit risk. For cash surplus,
investment is restricted to low risk debt securities, and derivative transactions are entered into with financial institutions
with high credit rating only.
No significant concentration of credit risk is present in a particular region or a customer, as the Company and its
subsidiaries are engaged in diverse industries worldwide.
The following table presents the aging of trade receivables and other receivables past due but not impaired as of March 31,
2018. The Company considers that trade receivables and other receivables neither past due nor impaired are all collectible.
Millions of yen
March 31, 2018
Past due within 30 days

39,386

Past due between 31 and 90 days

31,165

Past due between 91 days and 1 year

23,214

Past due over 1 year

10,847

Total

104,612

F-52

Notes to Consolidated Financial Statements
The changes in the balance of allowance for doubtful receivables are as follows:
Millions of yen
Trade receivables

Other receivables

29,223

3,466

32,689

(873)

(178)

(1,051)(1,489)(357)(1,846)

779

107

886

27,6403,038

30,678March 31, 2017

Total

Impairment loss
provision or reversals
Amounts written off
Other
March 31, 2018

Other includes the impact of acquisitions and divestitures and currency translation effect.
As of March 31, 2018, the total balances of trade receivables and other receivables individually determined to be impaired
were ¥71,321 million, respectively, and the allowance for doubtful receivables corresponding to such receivables wasrecorded in the amounts of ¥18,951 million, respectively.
The changes in the balance of allowance for doubtful receivables for trade receivables, contract assets and otherreceivables, and the changes in the gross carrying amounts of trade receivables and contract assets, and other receivables
corresponding to the allowance for doubtful receivables for the year ended March 31, 2019 are as follows. Other
receivables mainly consist of lease receivables and financial assets measured at amortized cost such as short-term loans
receivable, other accounts receivable, debt securities measured at amortized cost and long-term loans receivable.
Millions of yen
Trade receivables and contract
assetsAllowance for doubtful receivables

Gross carrying amount

Total

Collective
assessment

Individual
assessment

16,36927,6402,518,227

63,066

2,581,293

14

-

14

-

-

-

(After restatement)

11,285

16,36927,6542,518,227

63,066

2,581,293

Change, net

4,694(1,263)3,431(121,272)

42,951(78,321)

Credit-impairment [1]

(765)

765

-

(2,266)

2,266-

Write-off [2](511)(1,530)(2,041)(853)(1,531)(2,384)

Other [3]

3,917

(439)

3,478

(2,197)(1,584)(3,781)March 31, 201918,62013,90232,522

2,391,639

105,168

2,496,807

March 31, 2018
(Before restatement)Collective
assessment

Individual
assessment

11,271

Total

Cumulative effects of changes
in accounting policies
April 1, 2018

F-53

Notes to Consolidated Financial Statements
Millions of yen
Allowance for doubtful receivables
Other receivables

Collective
assessment

Individual
assessment

456

2,582

-

(After restatement)
Change, net

Gross carrying amountCollective
assessment

Individual
assessment

3,038

519,135

8,255

527,390

-

-

-

-

-

456

2,582

3,038

519,135

8,255

527,390

(63)

202

139

(15,987)

8,232(7,755)Credit-impairment [1]

-

-

-

-

-

-

Write-off [2]

(6)

(727)

(733)

(299)

(727)

(1,026)

Other [3]

(2)

(170)

(172)

1,137

(347)

790

March 31, 2019

385

1,887

2,272

503,986

15,413519,399

March 31, 2018
(Before restatement)
Cumulative effects of changes
in accounting policies

Total

Total

April 1, 2018[1] The Company measures the allowance for doubtful receivables relating to credit-impaired financial assets based on
individual assessment and, therefore, transfers them from collective assessment.
[2] The Company generally writes off and derecognizes the corresponding carrying amount when it has no reasonable
expectations of recovering the financial asset in its entirety or a portion.
[3] Other mainly includes the impact of acquisitions and divestitures and currency translation effect.
The maximum exposure to the credit risk equals the financial assets’ carrying amount, net of allowance for doubtfulreceivables, in the consolidated statement of financial position, if collateral held is not included. The maximum exposure
to the credit risk from loan commitments is disclosed in note 30. The maximum exposure to the credit risk from guarantee
obligations is disclosed in note 30.

F-54

Notes to Consolidated Financial Statements(iv) Liquidity Risk
Trade payables and financial liabilities, such as long-term debts, held by the Company and its subsidiaries are exposed toliquidity risk. With respect to this risk, the Company and its subsidiaries try to optimize capital efficiency through efficientmanagement of working capital, and maintain cash control through a centralized cash management system. They are alsoable to raise funds, as necessary, from capital markets through the issuance of debt and equity securities, and fromcommercial banks through borrowings and commitment lines. The total unused commitment lines as of March 31, 2019are disclosed in note 30.
The following tables present the maturities of non-derivative financial liabilities. Trade payables are not included in thetables since the carrying amounts agree with the contractual cash flows and they all mature in less than one year.
Millions of yen
Carrying
amountShort-term debt

Contractual
cash flows

March 31, 2019
Within 1 year

After 1 year
but not morethan 5 years

More than 5
years

111,031112,072

112,072--

19,29030,873

3,541

Long-term debt
Lease payables

49,19953,704

Bonds

170,498

176,594

31,66478,071

66,859Long-term borrowings

674,043

685,412

144,386

346,677

194,349
Millions of yen

Carrying
amountShort-term debt

Contractual
cash flows

March 31, 2018
Within 1 year

After 1 year
but not morethan 5 years

More than 5
years

121,439

122,436

122,436--

Lease payables

49,47855,05916,98833,817

4,254

Bonds

149,837

156,168

20,97962,951

72,238Long-term borrowings

729,540

746,161

95,227436,967

213,967

Long-term debt

The weighted average interest rate for short-term debt is 2.7%, and the weighted average interest rate for long-termborrowings is 0.8% with maturities ranging from 2019 to 2031.

F-55

Notes to Consolidated Financial Statements
The details on each bond issued are provided below.

Issuer

The Company
The Company
The Company

Subsidiaries

Name of bondMarch 31,
2019

2013

-

10,000 Unsecured

0.3

2018

2013

30,00030,000 Unsecured

0.8

2023

Unsecureddebenture #17

2013

20,00020,000 Unsecured

1.4

2028

Unsecured2012-

120,498

89,837 Unsecured

0.1
-

2019
-

1.2

2028

Unsecureddebenture #15
Unsecureddebenture #16

debentures

March 31,2018

Security

Millions of yen
Interest
Mature
rates
in
(%)

Issued

2018

Total

170,498

149,837

The following table shows the maturities of the main types of derivatives, expressed in gross amounts, even though they
are net settlement derivatives.
Millions of yen
Within 1 year

Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

March 31, 2019
More than 5
After 1 year
years
but not morethan 5 years

Total

In

14,9281,606

116,535

Out

13,824

3,200-

17,024

In

57

432

7,448

7,937

Out

36

3,185

699

3,920

In

272

468

-

740

Out

149

1,899

7

2,055

In

387

6,707

-

7,094

Out

29

-

-

29
Millions of yen

Within 1 year

March 31, 2018
More than 5
After 1 year
but not more
years
than 5 years

Forward exchange contracts

In

11,8919,421

Out19,868Cross currency swaps

In

164

Out
Interest rate swaps
Option contracts

Total

-

21,312

7,489-

27,357

30

4,648

4,842

98

5,234

746

6,078

In

13

1,403

-

1,416

Out

86

2,091

1

2,178

In

75

7,760

-

7,835

Out

10

-

-

10

F-56

Notes to Consolidated Financial Statements(c) Fair Value of Financial Instruments(i) Fair Value Measurements
The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Trade receivables, Short-term loans receivable, Other accounts receivable, Short-term
debt, Other accounts payable and Trade payables
The carrying amount approximates the fair value because of the short maturity of these instruments.
Investments in securities and other financial assets
The fair value of lease receivables is based on the present value of lease payments receivable calculated for each group ofyears to maturity using discount rates that reflect the time to maturity and credit risk.
Investment securities with quoted market prices are estimated using the quoted share prices. In the absence of an active
market for investment securities, quoted prices for similar investment securities, quoted prices associated with transactions
that are not distressed for identical or similar investment securities or other relevant information including market interest
rate curves, referenced credit spreads or default rates, are used to determine fair value. If significant inputs of fair value
measurement are unobservable, the Company uses price information provided by financial institutions to evaluate suchinvestments. The information provided is corroborated by the income approach using its own valuation model, or themarket approach using comparisons with prices of similar securities.
The fair value of long-term loans receivable is estimated based on the present value of future cash flows using the interest
rate applicable to an additional loan of the same type.
Derivative assets are measured at fair value based on quoted prices associated with transactions that are not distressed,
prices in inactive markets, or based on models using interest rate curves and forward and spot prices for currencies andcommodities. If significant inputs are unobservable, the Company mainly uses the income approach or the market
approach to corroborate relevant information provided by financial institutions and other available information.
Long-term debt
The fair value of long-term debt is estimated based on quoted market prices or the present value of future cash flows using
the market interest rates applicable to the same contractual terms.
Other financial liabilities
Derivative liabilities are measured at fair value based on quoted prices associated with transactions that are not distressed,
prices in inactive markets, or based on models using interest rate curves and forward and spot prices for currencies andcommodities. If significant inputs are unobservable, the Company uses mainly the income approach or the market
approach to corroborate relevant information provided by financial institutions and other available information.

F-57

Notes to Consolidated Financial Statements(ii) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as of March 31,
2019 and 2018 are as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 of the fairvalue hierarchy.
Millions of yen
March 31, 2019
Carrying amounts

March 31, 2018

Estimated
fair values

Carrying amounts

Estimated
fair values

AssetsInvestments in securities and otherfinancial assets
Lease receivables

95,07396,377

92,19893,165

Debt securities

72,41872,422120,915

120,920

Long-term loans receivable

105,061

106,390

95,37396,859Liabilities
Long-term debt [1]Lease obligations

49,19949,59549,47849,723

Bonds

170,498

174,747

149,837

153,614Long-term borrowings

674,043

678,481729,540

734,912[1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the consolidated statement offinancial position.
(iii) Financial Instruments Measured at Fair Value
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into three levelsof the fair value hierarchy based on the measurement inputs’ observability as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2: Valuations measured by direct or indirect observable inputs other than Level 1
Level 3: Valuations measured by significant unobservable inputs
When several inputs are used for a fair value measurement, the level is determined based on the input that is significant
with the lowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

F-58

Notes to Consolidated Financial Statements
The following tables present the assets and liabilities that are measured at fair value on a recurring basis as of March 31,
2019 and 2018.
March 31, 2019
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

FVTPL financial assets:
Investments in securities and otherfinancial assets
Equity securities
Debt securities

-

-

2,743

2,743

10,127

4,895

9,344

24,366-25,2697,059

32,328

183,585-

102,334

285,919

193,71230,164

121,480

345,356-

23,078-23,078-23,078-23,078Derivatives
FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value
March 31, 2018
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

FVTPL financial assets:
Investments in securities and otherfinancial assets
Equity securities
Debt securities
Derivatives

-

-

1,114

1,114

10,749

6,535

9,590

26,874-

27,6697,760

35,429298,307669

113,620

412,596

309,056

34,873132,084

476,013-35,791-35,791-35,791-35,791FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

F-59

Notes to Consolidated Financial Statements
The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended March
31, 2019 and 2018.
2019

Millions of yen
Level 3 financial assets

Balance at beginning of year

Equitysecurities

Debt
securities

Derivatives

Total

114,734

9,590

7,760

132,084

(58)
6,241

55
-

(1,053)-(1,056)
6,241

Purchases
Sales and redemption

5,301(14,961)

3,040(3,251)-

8,341(18,212)Acquisitions and divestitures
Transfer from Level 3 [3](5,405)
(378)

(78)
-

-

(5,483)
(378)

Other
Balance at end of year

(397)
105,077

(12)
9,344

352
7,059

(57)
121,480(58)

59(1,053)(1,052)Gain (loss) in profit or loss [1]Gain in OCI [2]Unrealized gain (loss) relating tofinancial assets held at end of year [4]2018

Millions of yen
Level 3 financial assets

Balance at beginning of year
Gain (loss) in profit or loss [1]Equitysecurities

Debt
securities

Derivatives

Total

110,470
66

8,991
(62)

6,061
(7)

125,522(3)

Gain in OCI [2]Purchases

5,329
3,876

1,350

1,706

5,329
6,932

Sales and redemption
Acquisitions and divestitures(5,349)
254

(652)
(190)

-

(6,001)64

Other
Balance at end of year

88
114,734

153
9,590

7,760

241
132,084

66

5

(7)

64

Unrealized gain (loss) relating tofinancial assets held at end of year [4][1] Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial expenses
in the consolidated statement of profit or loss.
[2] Gain in OCI related to FVTOCI financial assets is included in Net changes in financial assets measured at fair value
through OCI in the consolidated statement of comprehensive income.
[3] Transfer from Level 3 is mainly the result of an investee being listed on the stock market.
[4] Unrealized gain (loss) relating to FVTPL financial assets held at the end of year is included in Financial income andFinancial expenses in the consolidated statement of profit or loss.
Written put options on non-controlling interests of subsidiaries are not included in the above table. Such put options areclassified as Level 3 financial liabilities measured on a recurring basis, and changes in fair value are recognized in Capitalsurplus. The fair values of the put options above as of March 31, 2019 and 2018 were ¥17,678 million and ¥17,098
million, respectively, included in Other financial liabilities in the consolidated statement of financial position.
Fair values are measured by the finance departments in accordance with the Company’s policies and procedures.
Valuation models are determined so that they reflect each financial instrument’s nature, characteristics and risks mostappropriately. The finance departments continually examine changes in important inputs that could affect the fair value. Incase the fair value of a financial instrument was significantly impaired, administrators review and approve the impairment
loss.

F-60

Notes to Consolidated Financial Statements
Equity instruments held with the objective of maintaining and strengthening business relations with the issuers areclassified as FVTOCI financial assets. The following is a list of principal equity instruments designated as FVTOCI andtheir fair values.
March 31, 2019

Millions of yen

Principal FVTOCI financial assets

Fair value

Western Digital Corporation

33,338Renesas Electronics Corporation

31,739Central Japan Railway Company

23,139JECC Corporation

20,942

Yungtay Engineering Co., Ltd.

10,978

East Japan Railway Company

8,676

Nippon Steel Kowa Real Estate Co., Ltd.

7,909

Shin-Etsu Chemical Co., Ltd.

6,126

Honda Motor Co., Ltd.

5,990

Nippon Tochi-Tatemono Co., Ltd.

4,945

March 31, 2018

Millions of yen

Principal FVTOCI financial assets

Fair value

Renesas Electronics Corporation

99,007

Western Digital Corporation

61,267JECC Corporation

20,139Central Japan Railway Company

18,117

Yungtay Engineering Co., Ltd.

9,823

World Trade Center Building, Inc.

9,214

East Japan Railway Company

8,011

Honda Motor Co., Ltd.

7,468

Shin-Etsu Chemical Co., Ltd.

7,265

Nippon Steel Kowa Real Estate Co., Ltd.

7,214

See note 22 for dividends received from investment securities classified as FVTOCI financial assets.
Accumulated gains and losses on valuation of FVTOCI financial assets are reclassified into retained earnings when
derecognized during the fiscal year. The net gains reclassified, net of taxes, for the years ended March 31, 2019 and 2018
were ¥34,608 million and ¥17,891 million, respectively. These financial assets were derecognized upon disposal of shares
after reviewing particular business relations, or acquisitions and divestitures.
The information on FVTOCI financial assets that were derecognized for the years ended March 31, 2019 and 2018 is asfollows:
Millions of yen
2019

2018

Fair value at the time of derecognition

69,82160,044

Accumulated gains at the time of derecognition

46,67723,449F-61

Notes to Consolidated Financial Statements(d) Derivatives and Hedging Activities(i) Fair Value Hedge
Changes in the fair value of recognized assets and liabilities, and of derivatives designated as a fair value hedge of these assets
and liabilities are recognized in profit or loss for the period in which the changes occur. Derivatives designated as a fair value
hedge include forward exchange contracts associated with operating transactions, cross currency swaps agreements and interest
rate swaps associated with financing transactions.
(ii) Cash Flow Hedge
Foreign Currency Risk
Changes in the fair value of forward exchange contracts designated as an effective cash flow hedge of forecasted transactions
are recognized in OCI. AOCI is subsequently reclassified into profit or loss when the hedged items affect profit or loss for theperiod.
Interest Rate Risk
Changes in the fair value of interest rate swaps designated as a hedge of the variability of cash flows associated with long-term
debt are recognized in OCI. AOCI is subsequently reclassified to interest charges over the period in which the interest on thedebt affects profit or loss.
As of March 31, 2018, the period in which the cash flows from the hedged items are expected to occur and in which they are
expected to affect profit or loss is between April 2018 and March 2025.
The fair values of the main types of derivatives designated as hedging instruments are as follows:
Millions of yen
March 31, 2018
Asset

Liability

Fair value hedge
Forward exchange contracts

3,610

1,175

Cross currency swaps

4,119

4,671

Interest rate swaps
Total

798

42

8,527

5,888

16,046

13,755

Cash flow hedge
Forward exchange contracts
Cross currency swaps

718

602

Interest rate swaps

618

2,136

17,382

16,493Total

The fair values of derivative assets and liabilities for which hedge accounting was not applied as of March 31, 2018 were
¥9,507 million for derivative assets, and ¥13,245 million for derivative liabilities, respectively.
The contract amounts and notional amounts of the main types of derivatives are as follows:
Millions of yen
March 31, 2018
Forward exchange contracts
To sell foreign currencies

716,035

To buy foreign currencies

188,085

Cross currency swaps
To sell foreign currencies

17,786

To buy foreign currencies

108,760

Interest rate swaps

274,490

F-62

Notes to Consolidated Financial Statements
When applying hedge accounting, the Company assesses hedge effectiveness through a qualitative assessment of whether thecritical terms of the hedged item and the hedging instrument match or are closely aligned and whether changes in the fair value
or cash flows of the hedging instrument offset changes in the fair value or cash flows of the hedged item in order to confirm thatan economic relationship exists between the hedged item and the hedging instrument. The Company also sets appropriate hedge
ratios based on the economic relationship between the hedged item and the hedging instrument and the Company’s risk
management policies. For the year ended March 31, 2019, hedge ineffectiveness recognized in profit or loss was not material.
The notional amount and carrying amount of hedging instruments as of March 31, 2019 are as follows. The carrying amount ofhedging instruments is included in Investments in securities and other financial assets and Other financial liabilities or Other
non-current liabilities in the consolidated statement of financial position.
Millions of yen
Carrying amount

Notional amountHedging instruments

More than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

621,771

109,001

9,120

6,273

Interest rate risk

55,672

26,138382

120

Cash flow hedge
Foreign currency risk

328,148

64,96013,0495,489Interest rate risk

209,317

188,357

358

1,935

1,214,908

388,456

22,90913,817Total

The carrying amount of hedged items related to fair value hedges as of March 31, 2019 is as follows.
Millions of yen
Hedged items related tofair value hedges

Carrying amount

Recognized in statement offinancial position

AssetsLiabilities

Trade receivables and contract assets,
Foreign currency risk

Investments in securities and other financial assets,
and Trade payables, Long-term debt

468,967

152,804

Interest rate risk

Investments in securities and other financial assets

55,672-524,639

152,804

Total

For the year ended March 31, 2019, changes in the fair value of hedging instruments and hedged items related to fair value
hedges and the accumulated amount of fair value hedge adjustments on hedged items included in the carrying amount of thehedged items were not material.
For the year ended March 31, 2019, changes in the fair value of hedging instruments related to cash flow hedges recorded inAccumulated other comprehensive income are as follows.
Millions of yen
Changes in fairAmount directly
value of hedging
included in
instruments
carrying amount ofrecognized in otherhedged assets orcomprehensive
liabilities
incomeApril 1,
2018

Amountreclassified to
profit or loss
[1]

March 31,2019

Price risk

(111)

(462)

539

(2)

(36)

Foreign currency risk

2,943

(8,976)

1,252

577

(4,204)

Interest rate risk

(1,623)

(11)

-

51

(1,583)

Total

1,209

(9,449)

1,791

626

(5,823)[1] In the consolidated statement of profit or loss, the amount reclassified to profit or loss is included mainly in Revenues andFinancial expenses for hedges of foreign currency risk and in Cost of sales and Interest charges for hedges of interest rate
risk.

F-63

Notes to Consolidated Financial Statements
The following table, “Effective portion of derivatives designated as hedging instruments and related hedged items” shows theeffects of derivative instruments for fair value hedges in the consolidated statement of profit or loss for the year ended March
31, 2018.
Effective Portion of Derivatives Designated as Hedging Instruments and Related Hedged Items
Hedging instruments

Millions of yen Hedged items
Recognized in
profit or loss

Derivatives

AmountrecognizedMillions of yen

Recognized instatement of financial
position

Recognized in
profit or loss

Amountrecognized

Trade receivables,

Forwardexchange contracts

Financial expenses(13,136)other current assets
and trade payables

Financial expenses

12,493Cross
currency swaps

Financial expenses(5,515)Long-term debt

Financial expenses

5,580(18,651)

Total

Total

18,073

The amounts recognized in the consolidated statement of profit or loss and consolidated statement of comprehensive income forthe year ended March 31, 2018, related to cash flow hedges are detailed in the following tables:“Gain (loss) recognized in OCI, Effective portion of derivatives designated as hedging instruments,”“Gain (loss) reclassified from OCI into profit or loss, Effective portion of derivatives designated as hedging instruments,” and“Gain (loss) on derivatives designated as cash flow hedging instruments, ineffective portion.”
Gain (Loss) Recognized in OCI, Effective Portion of Derivatives Designated as Hedging Instruments
Millions of yen
Amountrecognized

Derivatives
Forward exchange contracts(6,464)

Cross currency swaps

837

Interest rate swaps

2,184

Total

(3,443)Gain (Loss) Reclassified from OCI into Profit or Loss, Effective Portion of Derivatives Designated as Hedging
Instruments
Millions of yen
Derivatives

Recognized in profit or loss

Amountrecognized

Forward exchange contracts

Cost of sales and Financial
expenses

9,429Interest rate swaps

Cost of sales and Interest charges(1,075)

Total

8,354

Gain (Loss) on Derivatives Designated as Cash Flow Hedging Instruments, Ineffective Portion
Millions of yen
Derivatives
Forward exchange contracts

Recognized in profit or loss
Financial expenses

Amountrecognized
4,085

Total

4,085

F-64

Notes to Consolidated Financial Statements(e) Securitization of Financial Assets
For the purpose of providing diversified and stable financing, the Company and certain subsidiaries securitize certain financial
assets, and transfer trade and lease receivables through certain third-party financial institutions or structured entities formed bythese financial institutions. The Company does not consolidate such structured entities used for securitization purposes since it has
been determined that they are not controlled by the Company.
These unconsolidated structured entities used for securitization purposes are operated in the ordinary course of business of thefinancial institutions, and they procure funds by issuing commercial paper and other borrowings. Basically, investors in thesestructured entities only have recourse to the assets owned by the entity itself, but not to any other assets held by the Company or its
subsidiaries. The amount of assets transferred by the Company and certain subsidiaries is considerably small compared to the total
assets of the structured entities sponsored by the financial institutions that purchase a large amount of assets from entities otherthan the Company and certain subsidiaries. The Company and certain subsidiaries have only limited exposure to the risks borne bythese structured entities. The majority of the involvement with these structured entities used for securitization purposes by theCompany and certain subsidiaries concerns the servicing of assets. The Company and certain subsidiaries do not provide any noncontractual support to the structured entities and have not made any implicit support arrangements with them.
For the securitizations of financial assets by the Company and certain subsidiaries, which resulted in derecognizing the financial
assets in their entirety, the Company and certain subsidiaries retain no significant continuing involvement. For other securitizationsof financial assets, the Company and certain subsidiaries do not derecognize the financial assets in their entirety when they retain
substantially all credit risks and economic value related to the transferred financial assets through holding subordinated interests,
and the carrying amounts of these financial assets are not material.
(27) Pledged Assets
As a general contractual term for long-term and short-term debt, banks may demand collateral and guarantees for present andfuture obligations, and retain rights to offset the liabilities with bank deposits when repayment is overdue or any breach ofcontract occurs.
Per trustee agreements of secured bonds and particular secured or unsecured loan agreements, trustees or lenders generally havethe right to pre-approve profit distributions including dividend payments and new stock issues, as well as the right to demand
additional collateral or mortgage.
The Company and its subsidiaries pledged a portion of their assets as collateral primarily for bank loans as follows:
Millions of yen
March 31, 2019
Trade receivables

March 31, 2018
-

9,349

Trade receivables and contract assets

6,057

-

Inventories

16,535

10,292Other current assets-

37

Investments in securities and other financial assets

681

890

Land

177

185

Buildings and structures

1,327

1,592

Machinery and other property, plant and equipment

43,73837,161

Total

68,51559,506F-65

Notes to Consolidated Financial Statements(28) Principal Subsidiaries
The Company’s consolidated financial statements include the following subsidiaries listed below.

Reporting segment

Name of subsidiary

Information &Hitachi Information & Telecommunication

Telecommunication Systems

Engineering, Ltd.

Information &Business location

Ownership
percentage
of votingrights (%)

Yokohama, Kanagawa

100.0

Hitachi-Omron Terminal Solutions, Corp.

Shinagawa-ku, Tokyo

55.0

Information &Telecommunication Systems

Hitachi Solutions, Ltd.

Shinagawa-ku, Tokyo

100.0

Information &Telecommunication Systems

Hitachi Systems, Ltd.

Shinagawa-ku, Tokyo

100.0

Information &Hitachi Computer Products (America), Inc.

Oklahoma,

100.0

Telecommunication Systems

Telecommunication Systems
Information &U.S.A.
Hitachi Consulting Corporation

Telecommunication Systems

Texas,

100.0

U.S.A.

Information &Telecommunication Systems

Hitachi Global Digital Holdings Corporation

California,
U.S.A.

100.0

Information &Telecommunication Systems

Hitachi Payment Services Private Limited

Chennai,
India

100.0

Information &Hitachi Vantara Corporation

California,

100.0

Telecommunication Systems
Social Infrastructure &U.S.A.
Hitachi Building Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Social Infrastructure &Industrial Systems

Hitachi-GE Nuclear Energy, Ltd.

Hitachi, Ibaraki

80.0Social Infrastructure &Industrial Systems

Hitachi Industrial Equipment Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Social Infrastructure &Industrial Systems

Hitachi Industry & Control Solutions, Ltd.

Hitachi, Ibaraki

100.0Social Infrastructure &Hitachi Plant Construction, Ltd.

Toshima-ku, Tokyo

100.0

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0

Social Infrastructure &Industrial Systems

Hitachi Power Solutions Co., Ltd.

Hitachi, Ibaraki

100.0Social Infrastructure &Industrial Systems

Hitachi Elevator (China) Co., Ltd.

Guangzhou,
China

70.0

Social Infrastructure &Hitachi Rail Europe Ltd.

London,100.0

Industrial Systems

Industrial Systems
Social Infrastructure &Industrial Systems

Industrial Systems
Social Infrastructure &U.K.
Sullair US Purchaser, Inc.

Indiana,

Industrial Systems

100.0

U.S.A.

Electronic Systems &Equipment

Hitachi High-Technologies Corporation

Minato-ku, Tokyo

51.8

Construction Machinery

Hitachi Construction Machinery Co., Ltd.

Taito-ku, Tokyo

51.5

High Functional Materials &Components

Hitachi Chemical Company, Ltd.

Chiyoda-ku, Tokyo

51.4

F-66

Notes to Consolidated Financial Statements

Reporting segment
High Functional Materials &Name of subsidiaryBusiness location

Ownership
percentage
of votingrights (%)

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.5

Automotive Systems

Hitachi Automotive Systems, Ltd.

Hitachinaka, Ibaraki

100.0

Automotive Systems

Hitachi Automotive Systems Americas, Inc.

Kentucky,
U.S.A.

100.0

Smart Life & Ecofriendly
Systems

Hitachi Appliances, Inc.

Minato-ku, Tokyo

100.0

Smart Life & Ecofriendly

Hitachi Consumer Marketing, Inc.

Minato-ku, Tokyo

100.0

Hitachi Consumer Products (Thailand), Ltd.

Prachinburi,

80.1

Components

Systems
Smart Life & Ecofriendly
Systems

Thailand

OthersHitachi-LG Data Storage, Inc.

Minato-ku, Tokyo

51.0

OthersHitachi Life, Ltd.

Hitachi, Ibaraki

100.0

OthersHitachi Urban Investment, Ltd.

Chiyoda-ku, Tokyo

100.0

OthersHitachi America, Ltd.

California,

100.0

U.S.A.
OthersHitachi Asia Ltd.

Singapore

100.0

OthersHitachi (China), Ltd.

Beijing,
China

100.0

OthersHitachi Europe Ltd.

Maidenhead,
U.K.

100.0

OthersHitachi India Pvt. Ltd.

New Delhi,

100.0

India
-

Other 767 companies--

Notes: 1. Hitachi Rail Europe Ltd. changed its company name to Hitachi Rail Ltd. on April 1, 2019.
2. Hitachi Appliances, Inc. merged with Hitachi Consumer Marketing, Inc. and changed its name to Hitachi Global Life
Solutions, Inc on April 1, 2019.

F-67

Notes to Consolidated Financial Statements(29) Related Party Transactions(a) Related Party Transactions
The Company’s and its subsidiaries’ receivable and payable balances with associates and joint ventures are as follows:
Millions of yen
With associates

March 31, 2019

Trade receivables
Trade receivables and contract assets
Short-term loans receivable [1]March 31, 2018-

121,759

119,236-

7,789

10,015Long-term loans receivable [2]70,55873,951

Trade payables

102,256

103,553

Other accounts payable [3]16,397

12,563

Lease obligations [4]19,177

17,592Millions of yen

With joint ventures

March 31, 2019

Trade receivables

March 31, 2018-

101,388

Trade receivables and contract assets

88,294-Long-term loans receivable [2]30,696

18,079Trade payables

10,771

14,341[1] Included in Investments in securities and other financial assets in the consolidated statement of financial position.
[2] Included in Investments in securities and other financial assets in the consolidated statement of financial position.
[3] Included in Other financial liabilities in the consolidated statement of financial position.
[4] Included in Current portion of long-term debt and Long-term debt in the consolidated statement of financial position.
Revenue and purchase transactions of the Company and its subsidiaries with associates and joint ventures are as follows:
Millions of yen
With associates

2019

2018

Revenues

444,744409,826

Purchases

357,317364,490
Millions of yen

With joint ventures

2019

2018

Revenues

160,777

150,675

Purchases

17,05815,684(b) Compensation for Directors and Executive Officers of the Company
Millions of yen
2019
Basic remuneration, year-end allowance andperformance-linked compensation

2018
3,251

3,054

etc.)

574

490

Total

3,825

3,544

Medium and long-term incentive compensation(Stock options as stock-based compensation,

F-68

Notes to Consolidated Financial Statements(30) Commitments and Contingencies(a) Loan Commitments(i) Loan Commitments to Associates and Others
The Company provides loan commitments to associates and others. The outstanding balance of loan commitments as ofMarch 31, 2019 is as follows:
Millions of yen
March 31, 2019
Total commitments available

73,131Less amount utilized

70,039Balance available

3,092

Since some loan commitments require credit approval before execution, the amount of total commitments available may
not be necessarily utilized in full.
(ii) Commitments with Financial Institutions
The Company and certain subsidiaries have line of credit arrangements with banks in order to secure efficient financing forbusiness operations. The total unused line of credit as of March 31, 2019 amounted to ¥465,009 million, primarily
belonging to the Company. The Company has commitment line agreements with a number of banks and pays commitment
fees as consideration. These commitment agreements generally provide a one year term with renewal at the end of theterm. The unused line of credit under these arrangements as of March 31, 2019 amounted to ¥200,000 million. The
Company also maintains other commitment line agreements with several financial institutions, with terms of three years
ending in July 2019. The unused line of credit under these arrangements as of March 31, 2019 amounted to ¥200,000
million.
(b) Commitments for Acquisition of Assets
As of March 31, 2019, outstanding commitments made to purchase property, plant and equipment were ¥77,906 million.
(c) Guarantee Obligations
The Company and certain subsidiaries provide debt guarantees to their associates, joint ventures and third parties. As of
March 31, 2019, the balance of the guarantee obligations was ¥56,630 million. It consisted of guarantees to associates of¥37,845 million, to joint ventures of ¥3,087 million and to third parties of ¥15,698 million.
(d) Litigation
In July 2011, a subsidiary in the U.S.A. received a grand jury subpoena from the Antitrust Division of the U.S. Department ofJustice, the Company and a subsidiary in Europe received requests for information from the European Commission, and a
subsidiary in Canada received requests for information from the Canadian Competition Bureau, all in respect of alleged
antitrust violations relating to automotive equipment. In November 2013, a subsidiary in Japan, which had been also primarily
responsible for responding to the investigation from the Antitrust Division of the U.S. Department of Justice, paid fines. In
January 2016, the Company and the subsidiary in Japan which had been also primarily responsible for responding to theinvestigation from the European Commission reached a settlement with the European Commission, and paid fines in April
2016.
In April 2014, a subsidiary in the U.S.A. received a grand jury subpoena in connection with the investigation conducted by
the Antitrust Division of the U.S. Department of Justice in respect of alleged antitrust violations relating to automotive
equipment. In August 2016, a subsidiary in Japan, which had been also primarily responsible for responding to theinvestigation, concluded an agreement in which the subsidiary will pay fines, and paid fines in March 2017.
In addition to the above, the Company, its subsidiaries and associates have cooperated with the competent authorities.
Depending upon the outcome of these matters, fines or surcharge payments, the amount of which is uncertain, may be
imposed on them. Also, in connection with pending and settled antitrust violations, civil disputes, including class action
lawsuits, involving the Company and some of these companies have arisen in a number of countries, including in the U.S.A.
and Canada. An amount, which was considered to be a reasonable estimate in respect of these claims, was accrued for the
potential losses in relation to certain of these civil disputes.
F-69Notes to Consolidated Financial Statements
In November 2017, a subsidiary in Japan received a complaint that was filed against three companies, namely a construction
company of a condominium complex, the subsidiary and a secondary subcontractor, by a contractee in Japan seeking
approximately ¥45.9 billion in compensation for expenses allegedly incurred arising from concerns over partial deficienciesof piling work during the construction phases of the condominium complex, which the subsidiary contracted as the primary
subcontractor. In July 2018, the compensation claim against these three companies was amended to approximately ¥51.0
billion by the contractee.
In relation to the aforementioned lawsuit, in April 2018, the subsidiary in Japan received a complaint that was filed against
the subsidiary and the secondary subcontractor, by the construction company of the condominium complex seeking
approximately ¥49.6 billion in compensation for expenses allegedly incurred arising from the aforementioned lawsuit. In July
2018, the compensation claim against these two companies was amended to approximately ¥54.8 billion by the construction
company of the condominium complex. Although the subsidiary in Japan will address these claims and explain its position,
there can be no assurance that it will not be held liable for any amounts claimed.
In December 2017, a subsidiary and an associate in Europe received a complaint filed by a customer in Europe seeking
compensation for consequential losses of EUR 263 million (¥32,765 million) and interest allegedly incurred by performance
defects of a power plant. As of March 31, 2019, the amount of compensation claimed by the customer was changed to EUR
270 million (¥33,634 million). Although the subsidiary and the associate in Europe will vigorously defend themselves against
this lawsuit, there can be no assurance that they will not be held liable for any amounts claimed.
The Company and its subsidiaries execute a number of business reorganizations, including mergers, acquisitions anddivestitures. Contracts for these reorganizations include clauses for transaction price adjustments subsequent to thereorganizations. There is a possibility products or services provided by the Company and its subsidiaries contain defects. As
the result of price adjustments, or in compensation for defects in products or services etc. there is a possibility that theCompany pays for any amounts.
Depending upon the outcome of the above legal proceedings, there may be an adverse effect on the consolidated financial
position or results of operations. Currently, the Company is unable to estimate the adverse effect, if any, of many of theseproceedings. The actual amount of fines, surcharge payments or any other payments resulting from these legal proceedings
may be different from the accrued amounts.
In addition to the above, the Company and its subsidiaries are subject to legal proceedings and claims which have arisen in
the ordinary course of business and have not been finally adjudicated. These actions when ultimately concluded anddetermined will not, in the opinion of management, have a material adverse effect on the consolidated financial statements of
the Company and subsidiaries.
(e) Other
On February 1, 2014 (hereinafter the “effective date of company split”), the Company and Mitsubishi Heavy Industries, Ltd.
(hereinafter “MHI”) integrated their thermal power generation systems businesses into MHI’s consolidated subsidiary,
MITSUBISHI HITACHI POWER SYSTEMS, LTD. (hereinafter “MHPS”), through a spin-off in the form of an absorptiontype company-split. As part of this business integration, assets and liabilities associated with boiler construction projects forMedupi and Kusile Power Stations for which the Company’s consolidated subsidiaries in the Republic of South Africa,
Hitachi Power Africa Proprietary Limited (hereinafter “HPA”) and other companies received orders in 2007, as well as theircontractual status in relation to customers, and rights and obligations thereof were transferred from HPA to MHI’s
consolidated subsidiary, Mitsubishi Hitachi Power Systems Africa Proprietary Limited (hereinafter “MHPS Africa”)(hereinafter, the “Transfer of South African Business”).
Under the agreement executed between the Company and MHI regarding the Transfer of South African Business, theCompany and HPA shall be liable for contingent liabilities resulting from events that occurred before the effective date ofcompany split as well as claims that had already been made as of the said date, while MHPS and MHPS Africa shall be held
responsible for the execution of business on and after the effective date of company split. Given these conditions, it has been
agreed upon to determine the final transfer price upon agreement on future construction schedule as of the effective date ofcompany split and confirmation of estimated project cash flows based on such schedule between the parties, and settle thedifference with the provisional price.

F-70

Notes to Consolidated Financial Statements
On March 31, 2016, MHI requested the Company to pay ZAR 48,200 million (approximately ¥379.0 billion when ZAR 1 =¥7.87) to MHPS Africa as a portion of transfer price adjustment, etc. The Company replied to MHI on April 6, 2016 that thedetails of the demand letter lacked legal grounds under any agreement and thus the Company cannot accept it.
On January 31, 2017, MHI extended the amount above and requested the Company to pay ZAR 89,700 million(approximately ¥763.4 billion when ZAR 1 = ¥8.51). The Company again replied to MHI that the Company cannot accept therequest since it lacks legal grounds under any agreement as does the request of March 2016. On August 21, 2017, theCompany received a notice from the Japan Commercial Arbitration Association (hereinafter, the “JCAA”) stating that MHI
had filed a request for arbitration with the JCAA on July 31, 2017 in order to claim for payment of ZAR 90,779 million(approximately ¥774.3 billion when ZAR 1 = ¥8.53) as the said transfer price adjustment, etc. against the Company. The
Company will address this claim and explain its position in the arbitration proceedings.
The Company has recorded provisions based on reasonable estimates for the aforementioned agreement related to the South
African Business. The amount of the said transfer price adjustment, etc. to be determined under the agreement may bedifferent from the accrued amount.
(31) Subsequent Events(a) Revision of defined benefit pension plan
On April 1, 2019, for current employees participating in the defined benefit pension plan managed by the Hitachi Pension
Fund, the Company introduced a risk-sharing corporate pension plan. Under this plan, a risk reserve contribution isdetermined in advance in accordance with the rules governing the plan, and the pension benefits are adjusted annually basedon the financial position of the plan to maintain balanced finance.
In terms of the corresponding accounting treatment for retirement benefits, risk-sharing corporate pension plans, for which anentity accepts contribution obligations to the extent stipulated in the rules but has no further obligations to make any
additional contributions, are classified as defined contribution plans. Since this risk-sharing corporate pension plan imposesno additional contribution obligations, at the time of the shift to the revised plan, the difference between the defined benefit
obligations related to the portion transferred to the revised plan and the amount of assets transferred to the revised plancorresponding to the decrease in defined benefit obligations, approximately ¥20.0 billion, will be recognized as a settlement
gain.
Furthermore, the shift to the risk-sharing corporate pension plan is only applicable to the Company at present, but will be
expanded to other subsidiaries participating in the Hitachi Pension Fund.
(b) Issuance of New Shares as Restricted Stock Compensation
On April 23, 2019, pursuant to the decision made by the President in accordance with the authority delegated by the
resolution of the Board of Directors, the Company decided to issue new shares as restricted stock compensation to Executive
Officers and Corporate Officers (hereinafter the “Eligible Persons”), in order to propel management from a medium- and long-term perspective and to provide incentives to bring about a sustainable increase in enterprise value by further promoting
senior management’s shared values with shareholders through the holding of shares during their term of office.
On May 31, 2019, the Eligible Persons made an in-kind contribution of monetary compensation receivables granted under the
restricted stock compensation plan in order to purchase of shares of common stock of the Company to be issued.
The outline of issuance is as follows.
Payment date

May 31, 2019

Class and number of shares to be issued

587,800 shares of Hitachi’s common stock

Issue price¥ 3,647 per share

Total amount of issuance¥ 2,143,706,600

Allottees, number of Allottees and number ofshares to be allotted

37 Executive Officers:
34 Corporate Officers:

472,600 shares
115,200 shares(32) Approval of Consolidated Financial Statements
The consolidated financial statements were approved on June 19, 2019 by Toshiaki Higashihara, President and CEO of theCompany.

F-71

Independent Auditor’s Report
To the Stockholders and Board of Directors ofHitachi, Ltd.
We have audited the accompanying consolidated financial statements of Hitachi, Ltd. and its consolidated
subsidiaries, which comprise the consolidated statement of financial position as at March 31, 2019, and theconsolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for the year
then ended and notes to the consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with International Financial Reporting Standards, and for designing and operating such internal control
as management determines is necessary to enable the preparation and fair presentation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Hitachi, Ltd. and its consolidated subsidiaries as at March 31, 2019, and theirconsolidated financial performance and cash flows for the year then ended in conformity with International
Financial Reporting Standards.
/s/ Ernst & Young ShinNihon LLC
June 19, 2019
Tokyo, Japan

F-72

(Translation)
Following is an English translation of the Internal Control Report filed under the Financial Instruments andExchange Act of Japan. We have made the assessment of internal control over financial reporting in accordancewith assessment standards for internal control over financial reporting generally accepted in Japan.
[Cover][Document Filed]Internal Control Report[Applicable Law]

Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 19, 2019

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name ofToshiaki Higashihara, President & CEO

Representative][Name and title of CFO]

Mitsuaki Nishiyama, Senior Vice President and Executive Officer[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)A-1

1. Matters Related to Basic Framework of Internal Control over Financial Reporting
Mr. Toshiaki Higashihara, President & CEO, and Mr. Mitsuaki Nishiyama, Senior Vice President andExecutive Officer, are responsible for establishing and maintaining internal control over financial reporting of
Hitachi, Ltd. (the “Company”) and have established and maintained internal control over financial reporting inaccordance with the basic framework for internal control set forth in the “On the Revision of the Standards andPractice Standards for Management Assessment and Audit concerning Internal Control Over Financial
Reporting (Council Opinions)” published by the Business Accounting Council.
The internal control over financial reporting is designed to achieve its objectives to the extent reasonablethrough the effective function and combination of its basic elements. Therefore, there is a possibility that internal
control over financial reporting may not completely prevent or detect misstatements.
2. Matters Related to Scope of Assessment, Record Date, and Assessment Procedure
We assessed the effectiveness of our internal control over financial reporting on the record date as of March
31, 2019. We made this assessment in accordance with assessment standards for internal control over financial
reporting generally accepted in Japan.
In making this assessment, we evaluated internal control which may have a material effect on the entire
financial reporting on a consolidated basis (“company-level controls”) and based on the result of this assessment,
we appropriately selected business processes to be evaluated, analyzed these selected business processes,
identified key controls that may have a material impact on the reliability of our financial reporting, and assessed
the design and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of
our internal controls.
We determined the required scope of assessment of internal control over financial reporting for theCompany, as well as its consolidated subsidiaries, equity-method associates and joint ventures, from theperspective of the materiality that may affect the reliability of our financial reporting. The materiality that may
affect the reliability of our financial reporting is determined taking into account the materiality of quantitativeand qualitative impacts. We confirmed that we had reasonably determined the scope of assessment of internal
controls over business processes in light of the results of assessment of company-level controls conducted for theCompany, its consolidated subsidiaries, equity-method associates and joint ventures. We did not include a partof consolidated subsidiaries, equity-method associates and joint ventures which do not have any quantitatively or
qualitatively material impact on the consolidated financial statements in the scope of assessment of companylevel controls.
Regarding the scope of assessment of internal control over business processes, we accumulated business
units in descending order of total revenues (after elimination of intercompany transactions) for the previous
fiscal year, and those business units whose combined amount of revenues reaches approximately 80% of total
revenues on a consolidated basis were selected as “significant business units.” In addition, some of our equitymethod associates and joint ventures which have a significant effect to our consolidated financial statements
were selected as “significant business units.” At the selected significant business units, we included, in the scopeof assessment, those business processes leading to revenues, accounts receivables and inventories and thosebusiness processes relating to greater likelihood of material misstatements and significant account involving
estimates or forecasts as significant accounts that may have a material impact on our business objectives.
Further, not only at selected significant business units, but also at other business units, we added to the scope ofassessment, as business processes having greater materiality considering their impact on the financial reporting,those business processes relating to businesses or operations dealing with high-risk transactions.
3. Matters Related to Results of Assessment
As a result of the assessment above, we concluded that our internal control over financial reporting was
effective as of March 31, 2019.
4. Supplementary Matters
None.
5. Special Notes
None.
A-2

TRANSLATION
Following is an English translation of the Independent Auditors’ Report filed under the Financial Instruments
and Exchange Act of Japan. This report is presented merely as supplemental information.
There are differences between an audit of internal control over financial reporting under the Financial
Instruments and Exchange Act and an audit of internal control over financial reporting under the attestation
standards established by the American Institute of Certified Public Accountants.
In an audit of internal control over financial reporting under the Financial Instruments and Exchange Act, theauditors express an opinion on management’s report on internal control over financial reporting, and do not
express an opinion on the Company’s internal control over financial reporting taken as a whole.

Independent Auditors’ Report(filed under the Financial Instruments and Exchange Act of Japan)
June 19, 2019
Mr. Toshiaki Higashihara, President & CEO
Hitachi, Ltd.

Ernst & Young ShinNihon LLC
Designated and Engagement Partner,
Certified Public Accountant:

Takashi Ouchida

Designated and Engagement Partner,
Certified Public Accountant:

Takuya Tanaka

Designated and Engagement Partner,
Certified Public Accountant:

Ken Sudo[Audit of Financial Statements]
Pursuant to the Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements included in the Financial Section, namely, the consolidated statement of financial
position as at March 31, 2019 of Hitachi, Ltd. (the “Company”) and its consolidated subsidiaries, and the related
consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year thenended, including notes to the consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with International Financial Reporting Standards pursuant to the provision of Article 93 of theRegulation for Terminology, Forms and Preparation of Consolidated Financial Statements, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial statements thatare free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
A-3

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments, the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient an appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of the Company and its consolidated subsidiaries as at March 31, 2019, and theresults of their operations and their cash flows for the year then ended in conformity with International Financial
Reporting Standards.
[Audit of Internal Control]
Pursuant to the Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited
management’s report on internal control over financial reporting of the Company and its consolidated subsidiaries
as of March 31, 2019.
Management’s Responsibility for the Report on Internal Control
The Company’s management is responsible for designing and operating effective internal control over financial
reporting and for the preparation and fair presentation of its report on internal control in conformity withassessment standards for internal control over financial reporting generally accepted in Japan. There is a possibility
that misstatements may not be completely prevented or detected by internal control over financial reporting.
Auditors’ Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our internal
control audit as independent position. We conducted our internal control audit in accordance with auditing
standards for internal control over financial reporting generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether management’s report on internal control isfree from material misstatement.
An internal control audit involves performing procedures to obtain audit evidence about the results of theassessment of internal control over financial reporting in management’s report on internal control. The procedures
selected depend on the auditors’ judgment, including the significance of effects on reliability of financial reporting.
An internal control audit includes examining representations on the scope, procedures and results of the assessmentof internal control over financial reporting made by management, as well as evaluating the overall presentation ofmanagement’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

A-4

Audit Opinion
In our opinion, management’s report on internal control referred to above, which represents that the internal control
over financial reporting of the consolidated financial statements of the Company and its consolidated subsidiaries
as of March 31, 2019 is effectively maintained, presents fairly, in all material respects, the results of the assessmentof internal control over financial reporting in conformity with assessment standards for internal control overfinancial reporting generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required
under the provisions of the Certified Public Accountants Act.
(The above represents a translation, for convenience only, of the original report issued in the Japanese language.)A-5

(Translation)
Following is an English translation of the Confirmation Letter filed under the Financial Instruments andExchange Act of Japan.
[Cover][Document Filed]

Confirmation Letter[Applicable Law]

Article 24-4-2, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 19, 2019

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name ofToshiaki Higashihara, President & CEO

Representative][Name and title of CFO]

Mitsuaki Nishiyama, Senior Vice President and Executive Officer[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)A-6

1. Matters Related to Adequacy of Statements Contained in the Annual Securities Report
Mr. Toshiaki Higashihara, President & CEO, and Mr. Mitsuaki Nishiyama, Senior Vice President andExecutive Officer, confirmed that statements contained in the Annual Securities Report for the 150th fiscal year
(from April 1, 2018 to March 31, 2019) were adequate under the Financial Instruments and Exchange Act.
2. Special Notes
None.

A-7