Outline of Consolidated Financial Results for the Second
Quarter ended September 30, 2010
November 2, 2010

Hitachi, Ltd.

Outline of Consolidated Financial Results for the Second Quarter ended
September 30, 2010

Contents1.

2.
3.

Outline of Consolidated Financial
Results for the Second Quarter ended
September 30
30, 2010
Outlook for Fiscal 2010
Progress of 2012 Mid-termManagement Plan
Copyright © 2010, Hitachi, Ltd., All rights reserved.

2

Outline of Consolidated Financial Results for the Second Quarter ended
September 30, 2010

Contents1.

2.
3.

Outline of Consolidated Financial
Results for the Second Quarter ended
September 30
30, 2010
Outlook for Fiscal 2010
Progress of 2012 Mid-termManagement Plan
Copyright © 2010, Hitachi, Ltd., All rights reserved.

3

1-1. Financial Results Highlights
Highlights of Fiscal 2010 First-Half Results
Revenues rose 9% YoY
Revenues- Revenues increased yyear over yyear mainly
y in the Highg Functional Materials &Components, Automotive Systems, and Electronic Systems & Equipment segments
in line with recovering demand in automotive- and electronics-related fields.

Consolidated operating income rose 242.8 billion yen YoY
Operating income- Reduced fixed costs and materials procurement costs Companywide.
- Earnings improved year over year in all business segments, particularly High
Functional Materials & Components, and Components & Devices, due primarily tothe increased revenues and benefits of business structure reforms.

N t otherNet
th incomei
improved
i
d 131
131.1
1 billibillion yen YoY
Y Y
Net other income

Net income
attributable to Hitachi, Ltd.

- Gains on the sale of marketable securities improved due to gains on the transfer toPanasonic Corporation of management rights related to IPS Alpha Technology, Ltd.
- Improvement in equity in net earnings of affiliated companies, decrease in businessrestructuring expenses
expenses.

Net income attributable to Hitachi, Ltd. improved 291.2 billion
yen YoY- The bottom
bottom-line
line result was a record for a half-year
half year period
period.

Free cash flows was a positive 271.8 billion yen (195.2 billion
yen YoY improvement)
Free cash flows- Reflected increase in cash flows from operating activities due to higher operating
Income.
- The increase also reflected improved cash flows in investing activities due to someshare sales and strict selection of capital expenditures, etc..
Copyright © 2010, Hitachi, Ltd., All rights reserved.

4

1-2. Consolidated Statements of Operations
Billions of yen
Fiscal 2009/ 1H

Fiscal 2010/ 1H

Year-overyear

Previous
forecast
comparison(＊)

4,124.9

4,502.4[109%]
377.4[102%]
102.4

O
Operatingti incomei(l(loss))(24 7)(24.7)

218 0
218.0

242 8
242.8

48 0
48.0

Net other income((deduction))(85.3)

45.7

131.1

15.7

Income (loss) before
income taxes(110.1)

263.8

373.9

63.8

28 7
28.7

59 3
59.3

30.6

(6.3)

(138.8)

204.4

343.3

57.4

Net income (loss) attributable tononcontrolling interests

(5.6)

46.3

52.0

(0.6)

Net income (loss) attributable to
Hitachi, Ltd.

(133.2)

158.0

291.2

58.0

Revenues

I
Incometaxest
Net income (loss)(*) previous forecast announced on July 30, 2010
Copyright © 2010, Hitachi, Ltd., All rights reserved.

51-3. Major Factors for Change in Operating Income (Year-over-Year)
Billions of yen

Operating income

218.0

Improved
capacity
utilization :180.0
Lower sales
prices : (90.0)(24.7)
Fiscal 2009 Fiscal 2010
1H
1H

Effect offoreignexchange
movements :(30.0)

Cost reductions,Improved productmix and others :182.8

Copyright © 2010, Hitachi, Ltd., All rights reserved.

6

1-4. Major Factors for Change in Net Income Attributable to Hitachi, Ltd.
Operatingincome →Net income
attributable to
Hitachi, Ltd.

Incomes on disposal of
fixed asset and sharewrite downs : 75.9
write-downs
75 9Billions of yen

Net equity in losses ofaffiliated companies,
exchange losses,
structural reform-related
reform related
expenses and others :(30.2)
Incometaxes : (59.3)

218 0
218.0
158.0

Nett incomeNiattributable
to noncontrollinginterests : (46.3)

Fiscal 2010
1H
OperatingOtiincomeNet income
attributable to
Hitachi, Ltd.
Copyright © 2010, Hitachi, Ltd., All rights reserved.

71-5. Major Factors for Change in Net Income (Loss) Attributable to Hitachi, Ltd. (Year-over-Year)
Billions of yen
Net income (loss)
Attributable to Hitachi, Ltd.

158.0
Net income attrib
attributable
table
to noncontrolling
Income taxes : interests : (52.0)(30.6)Net equity in losses ofaffiliated companies,
structural reform-related
expenses and others :32.8(133.2)
Fiscal 2009 Fiscal 2010
1H
1H

Incomes on
disposal of fixed
asset and sharewrite-downs :98.3
Improved
operating income :242.8
Copyright © 2010, Hitachi, Ltd., All rights reserved.

8

1-6. Revenues by Market
Billions of yen
Fiscal 2009
1H

Ratio

Fiscal 2010
1H

Ratio

Yearover-yearJapan

2,420.3

59%

2,523.5

56%

104%

Outside Japan

1,704.541%%

1,978.8

44%
%

116%
6%

782.8

19%

1,022.6

23%

131%

China

439 1
439.1

11%

575 4
575.4

13%

131%

North America

353.9

9%

380.5

8%

108%

Europe

379 8
379.8

9%

363 2
363.2

8%

96%

Other Areas

187.9

4%

212.4

5%

113%

4,124.9100%4,502.4

100%

109%

Asia

Total

Ratio of overseas revenues 41 % → 44 %Copyright © 2010, Hitachi, Ltd., All rights reserved.

91-7. Consolidated Balance Sheets
Billions of yen
As of March 31,
2010

As of September 30,
2010

Change fromMarch 31, 2010

Total assets

8,964.4

9,318.4

353.9

Total liabilities

6,696.6

6,914.4

217.8Interest-bearing debt

2,367.1

2,864.7

497.6

Total Hitachi, Ltd.
stockholders’ equity
stockholders

1,284.6

1,415.0

130.4

Noncontrolling interests

983.1

988.9

5.7

Total Hitachi, Ltd.
stockholders’ equity ratio
stockholders

14.3%

15.2%

0.9 improvementp

D/E ratio

1.38times

1.19times

0.19 improvement

D/E ratio

1.04times

0.96times

0.08 improvement(Including noncontrolling interests) *1(Including noncontrolling interests)*2

Figures off IIntangible
Fit
ibl assets
t and
d Oth
Other liliabilities
biliti as off M
March
h 31
31, 2010 h
have bbeen restatedt t d sinceiththe ffair
i valuel measurementtrelated to a business combination recorded in March 31, 2010 was finalized in this six-month preriod.
*1: Including liabilities associated with the consolidation of securitized entities.
*2: Excluding liabilities associated with the consolidation of securitized entities.

Copyright © 2010, Hitachi, Ltd., All rights reserved. 10

1-8. Consolidated Statements of Cash Flows
Billions of yen

Fiscal 2009/ 1H

Fiscal 2010/ 1H

Year-over-year

Cash flows
from operating activities

332.5

377.5

44.9

Cash flows
from investing activities(255.8)(105.6)

150.2

76.6

271.8

195.2

(265.5)(193.8)

71.6

-

213.5

-

Free cash flows
CashC
h flflowsfrom financing activities
Effect of consolidation of securitizedentities upon previous adoption of
new accounting guidances

Copyright © 2010, Hitachi, Ltd., All rights reserved. 11

1-9. Consolidated Capital Investment, Consolidated R&D Expenditure(1) Consolidated capital investment

Billions of yen

Fiscal 2009/ 1H

Fiscal 2010/ 1H

271.3

263.5

97%

Internal use assets

127.3

120.2

94%

Leasing assets

143.9

143.2

99%

Consolidated capital investment(2) Consolidated R&D expenditure

Year-over-yearyBillions of yen

Fiscal 2009/ 1H

Fiscal 2010/ 1H

Consolidated R&D expenditures

178.9

194.8

109%

Percentage of revenues

4.3%

4.3%

-

Year-over-year

Copyright © 2010, Hitachi, Ltd., All rights reserved. 12

1-10. Revenues by Industry Segment
Billions of yen
Fiscal 2009/ 1H

Fiscal 2010/ 1H

Year-overyear

Previous
forecast
comparison(＊)

Information & Telecommunication Systems

794.7

774.8

97%

102%

Power Systems

389.6

384.8

99%

96%

S i l IInfrastructure
Socialf t t& Industrial
I d t i l Systems
S t

534 6
534.6

508 9
508.9

95%

102%

Electronic Systems & Equipment

451.3

529.0

117%

104%

Construction Machinery
y

259.0

334.4

129%

101%

High Functional Materials & Components

580.4

700.4

121%

100%

Automotive Systems

286.6

364.6

127%

104%

Components & Devices

355.8

414.7

117%

101%

Digital media & Consumer Products

461.3

506.9

110%

101%

Fi
Financial
i lS
Services
i

230 1
230.1

186 6
186.6

81%

104%

Others

366.4

375.2

102%

101%

Eli i tiEliminations&C
Corporatet ititems(585 4)(585.4)(578 2)(578.2)

-

-

Total

4,124.9

4,502.4

109%

102%

(*) previous forecast announced on July 30, 2010

Copyright © 2010, Hitachi, Ltd., All rights reserved. 13

1-11. Operating Income (Loss) by Industry Segment
Billions of yen
Fiscal 2009/ 1H

Fiscal 2010/ 1H

Year-overyear

Previous
forecast
comparison(＊)

32.3

34.5

2.2

5.5

3.8

14.3

10.4

2.3

(0 9)
(0.9)

10 7
10.7

11 7
11.7

47
4.7

(13.3)

16.2

29.6

6.2

Construction Machinery
y

1.5

18.2

16.6

7.2

High Functional Materials & Components

5.0

50.2

45.1

3.2

Automotive Systems(17.1)

10.9

28.0

2.9

Components & Devices(13.1)

30.2

43.4

4.2

Digital media & Consumer Products(11.2)

10.9

22.2

3.4

Fi
Financial
i lS
Services
i

25
2.5

11 2
11.2

87
8.7

22
2.2

Others

7.3

12.8

5.5

4.8

Eli i tiEliminations&C
Corporatet ititems(21 6)(21.6)

(2 6)
(2.6)

18 9
18.9

08
0.8

Total

(24.7)

218.0

242.8

48.0

Information & Telecommunication Systems
Power Systems
S i l IInfrastructure
Socialf t t& Industrial
I d t i l Systems
S tElectronic Systems & Equipment(*) previous forecast announced on July 30, 2010

Copyright © 2010, Hitachi, Ltd., All rights reserved. 14

Outline of Consolidated Financial Results for the Second Quarter ended
September 30, 2010

Contents1.

2.
3.

Outline of Consolidated Financial
Results for the Second Quarter ended
September 30
30, 2010
Outlook for Fiscal 2010
Progress of 2012 Mid-termManagement Plan
Copyright © 2010, Hitachi, Ltd., All rights reserved. 15

2-1. Fiscal 2010 Full-year Forecasts (YoY Comparison)
Hitachi is projecting an operating income ratio of 4.4%,despite the expected impact of the yen’s appreciation anduncertainty surrounding the global economic outlook. The revised forecasts are based on a steady contribution
from the Social Innovation Business, faster global development, the benefits of business structure reforms, andprogresspgwith ongoingg g cost-containment initiatives to reduce p
procurement costs and fixed expenses.
p

Revenues

OperatingincomeNet otherdeductions
Net income
attributable
tt ib t bl tto
Hitachi, Ltd.

Revenues: Projecting a 4% YoY increase
Operating income: Projecting a 207.8 billion yen increase- Slowing
Sl i recovery iin ddemanddd
due tto global
l b l economici sluggishness.
li h- Impact of foreign currency movements.
However, Hitachi is projecting higher revenues and earnings year overyyear because it expects
preductions in p
procurement costs and indirect
expenses, the benefits of efforts to constrain fixed expenses andbenefits of business structure reforms to outweigh the abovementioned
negative factors.

YoY improvement of 118.5 billion yen- FY2010 forecast: net other deductions of 20.0 billion yen
1H FY2010: net other income of 45.7 billion yen
2H FY2010: net other expenses (projected) of 65.7 billion yen

P j t d 306
Projected
306.9
9 billion
billi yen YoY
Y Y improvementit
Copyright © 2010, Hitachi, Ltd., All rights reserved. 16

2-2. Outlook for Fiscal 2010
Projections
Pj ti
ffor fifiscall 2010 assume an exchangehrate of 80 yen to the U.S. dollar and 110 yen to the euro.
Fiscal 2009previous fiscal
2010(Forecast) (＊)

Billions of yen
Fiscal 2010
(Forecast)Year-overyear

Previous
forecast
comparison(＊)

8,968.5

9,200.09,300.0[104%]
331.4[101%]
100.0

Operating income

202.1

340.0

410.0

207.8

70.0

Net other deductions(138.5)(25.0)(20.0)

118.5

5.0

Income before
income taxes

63.5

315.0

390.0

326.4

75.0

I
Income
taxes
t

147 9
147.9

110 0
110.0

110 0
110.0

(37 9)(37.9)00
0.0

Net income (loss)(84.3)

205.0

280.0

364.3

75.0

22.5

75.0

80.0

57.4

5.0

(106.9)

130.0

200.0

306.9

70.0

Revenues

Nett iincome attributableN
tt ib t bl
to noncontrollinginterests
Net income ((loss))
attributable to Hitachi,Ltd.

(*) previous forecast announced on May 11, 2010

Copyright © 2010, Hitachi, Ltd., All rights reserved. 17

2-3. Major Factors for Change in Net Income (Loss) Attributable to Hitachi, Ltd.
【Fiscal 2009】

410.0

Billions of yen

Net otherdeductions :(20.0)Net otherdeductions :(138.5)

Income taxes :(110.0)

202.1

200.0

Attributable tononcontrolling
Interests : (80.0)

Income taxes :(147.9)OperatingincomeOperatingincomeAttributable tononcontrolling
Interests : (22.5)【Fiscal 2010】

Net income attributable
to Hitachi, Ltd.

(106.9)Net loss attributable
to Hitachi, Ltd.
Copyright © 2010, Hitachi, Ltd., All rights reserved. 18

2-4. Outlook for Fiscal 2010 Revenues by Industry Segment
Y Y andd Diff
YoY
Difference fromfpreviousi
Forecast
Ft

Billions of yen
Year-overyear

Previous
forecast
comparison(＊)

Fiscal 2009

Fiscal 2010
(Forecast)

1,705.5

1,730.0

101%

100%

882.1

880.0

100%

100%

1 250 2
1,250.2

1 160 01,160.093%

106%Electronic Systems & Equipment

998.6

1,090.0

109%

102%

Construction Machinery
y

583.6

720.0

123%

100%

1,249.3

1,420.0

114%

101%

Automotive Systems

638.8

710.0

111%

104%

Components & Devices

754.8

800.0

106%

92%

Digital media & Consumer Products

929.2

930.0

100%

101%

Fi
Financial
i lS
Services
i

419 6
419.6

350 0
350.0

83%

97%

Others

763.6

760.0

100%

97%

(1 207 2)(1,207.2)(1 250 0)(1,250.0)--

8,968.5

9,300.0

104%

101%

Information & Telecommunication Systems
Power Systems
S i l IInfrastructure
Socialf t t& Industrial
I d t i l Systems
S tHigh Functional Materials & Components

Eliminations & Corporate items
Total(*) previous forecast announced on May 11, 2010

Copyright © 2010, Hitachi, Ltd., All rights reserved. 19

2-5. Outlook for Fiscal 2010 Operating Income (Loss) by Industry Segment
Y Y andd Diff
YoY
Difference fromfpreviousi
Forecast
Ft

Billions of yen
Year-overyear

Previous
forecast
comparison(＊)

Fiscal 2009

Fiscal 2010
(Forecast)Information & Telecommunication Systems

94.5

100.0

5.4

0.0

Power Systems

22.0

29.0

6.9

0.0

S i l IInfrastructure
Socialf t t& Industrial
I d t i l Systems
S t

42 0
42.0

46 0
46.0

39
3.9

90
9.0

Electronic Systems & Equipment

(5.2)

40.0

45.2

12.0

Construction Machinery
y

17.6

44.0

26.3

9.0

High Functional Materials & Components

44.4

88.0

43.5

6.0

Automotive Systems

(5.4)

21.0

26.4

4.0

Components & Devices

1.1

43.0

41.8

(11.0)

(7.2)

11.0

18.2

4.0

85
8.5

21 0
21.0

12 4
12.4

60
6.0

19.4

23.0

3.5

3.0

Eliminations & Corporate items(29 8)(29.8)(56 0)(56.0)(26 1)(26.1)

28 0
28.0

Total

202.1

410.0

207.8

70.0

Digital media & Consumer ProductsFi
Financial
i lS
Servicesi
Others(*) previous forecast announced on May 11, 2010

Copyright © 2010, Hitachi, Ltd., All rights reserved. 20

Outline of Consolidated Financial Results for the Second Quarter ended
September 30, 2010

Contents1.

2.
3.

Outline of Consolidated Financial
Results for the Second Quarter ended
September 30
30, 2010
Outlook for Fiscal 2010
Progress of 2012 Mid-termManagement Plan
Copyright © 2010, Hitachi, Ltd., All rights reserved. 21

3-1. Progress of 2012 Mid-term Management Plan (1)Leverage Hitachi’s strengths to promote a global growth strategy
Promote and expand global localization centered on the “Asian
Asian belt”
belt
9Thermal power generation systems:
systems:- Established joint venture with BGR Energy Systems Limited (India).

9ElevatorsEltandd escalators:
escalators
l t- Established a Regional HQ in Singapore for Southeast Asia, India, and the Middle East.

9Consulting:Consulting- Established a new company in China.

9High Functional Materials & Components:
Components- Established a powder metal product manufacturing base in Indonesia.

9Construction Machinery:
Machinery- Made Indian company Telco Construction Equipment Company Limited. a subsidiary.

9Others:
Others- Reached an agreement to cooperate with Singapore Economic Development Board.
- Strengthened corporate research divisions in China and India.
- Hitachi Research Institute established an office in China
China, and plans to open one in India
India.

Copyright © 2010, Hitachi, Ltd., All rights reserved. 22

3-2. Progress of 2012 Mid-term Management Plan (2)Leverage Hitachi’s strengths to promote a global growth strategy
Expand business opportunities through partnerships
9Smart cities：
cities- Cooperative relationship with Osaki Electric Co., Ltd. in overseas smart grid-related business.
g concrete initiatives in Sino-Singapore
g pTianjinj Eco-Cityy ((China).
)- Promoting- Collaboration with Dalian City (China) in the field of recycling resources and low-carbon economy.
- Cooperating in the energy management field with Panasonic Corporation

9Nuclear power generation systems:- Plan to establish joint sale offices with Hitachi-GE Nuclear Energy and GE-Hitachi Nuclear Energy.
- GE-Hitachi Nuclear Energy ‘s ESBWR* passed a critical safety review performed by NRC* .
- Participate in International Nuclear Energy Development of Japan.

9Overseas railway systems：
systems- Collaboration with Mitsubishi Heavy Industries, Ltd. in the intra-city railway business.
- Business and capital alliance with Toyo Denki Seizo K.K. for electrical components.

9Data centers：
centers- Formed alliances with local companies in the UK and the Netherlands.

9Batteries：
Batteries- Studying opportunities for collaboration with Johnson Controls,
Controls Inc.
Inc (U.S.)(U S ) in the field of advancedenergy storage.
* ESBWR: Economic and Simplified Boiling Water Reactor* NRC: U.S. Nuclear Regulatory Commission

Copyright © 2010, Hitachi, Ltd., All rights reserved. 23

3-3. Progress of 2012 Mid-term Management Plan (3)Focusing business resources on the Social Innovation Business
Make capex and strategic investments and focus on advanced technology→1H FY2010 R&D investment: 100 billion yen (51% of total)⇒FY2010-FY2012 R&D investment: 600 billion yen

9Smart cities：
cities- Plan to establish R&D base within Sino-SingaporegTianjinj Eco-City.
y- Launched smart grid demonstration project with an isolated grid at Rokkasho Village, Aomori Prefecture.

9Thermal power generation:- Cooperated with the Government of Saskatchewan (Canada) in development of energy and environmentrelated technologies.

9Hydroelectric
H d l t i power generation:ti- Considering business integration with Mitsubishi Heavy Industries, Ltd. and Mitsubishi Electric Corporation.

9Water business:- Established Water Environment Solutions Division (FY2015 revenue target: 200 billion yen).

9CloudCl d computing：computingti- Accelerated supplying high reliabilities cloud computing service by new business management.
(FY2015 revenue target: 500 billion yen).

9Data centers：
centers- Reinforced framework in China
China.

9Batteries
Batteries：- Developed technology to extend the life of industrial lithium-ion batteries.

9Others
Others:- Established strategic marketing and bbusinesssiness organi
organization
ation in the field of social and industrial
ind strial systems.
s stems- Integrated Hitachi Software Engineering Co., Ltd. and Hitachi Systems & Services, Ltd.
- Merged mobile terminal business with that of NEC Corporation
Copyright © 2010, Hitachi, Ltd., All rights reserved. 24- Transferred shares of IPS Alpha Technology, Ltd.

3-4. Progress of 2012 Mid-term Management Plan (4)Strengthen the business structure to stabilize profitability
Reduce material costs→ Cost cuts achieved in 1H FY2010: Approx. 100 billion yen ⇒ FY2010 target: Approx. 220 billion yen

9Expand global procurement, procurement from emerging countries→ 1H FY2010: 30% ((FY2010 target:
g 35%)) ⇒ FY2012 target:
g 50%
Reinforce procurement functions around Brazil, Vietnam, India and others.

9Promote centralized purchasing→ 1H FY2010: 25% (FY2010 target: 27%) ⇒ FY2012 target: 35%

Continue to promote fixed cost-reductions
9Reduce indirect material costs→ Deploy the “Indirect Material Cost Reduction Project” across the Group.
→ Cost reduction effect in 1H FY2010: Approx.
Approx 15 billion yen⇒ FY2010 target: Reduction of approx. 30 billion yen

Realize speedier management
9Accelerate management decision
decision--making and strengthen autonomous
management through full deployment of inin-house company system.
9Expand each company’s discretion to make decisions through internal rating
systemy9Reinforce Group IT systems to enhance management infrastructure.
→Compatibility with IFRS, global financial and accounting system, procurement system, HR statistics
system.
Copyright © 2010, Hitachi, Ltd., All rights reserved. 25

3-5. Progress of 2012 Mid-term Management Plan (5)Fiscal 2009

Fiscal 2010
(Forecast)

FY2012 Targets

Revenues

8,968.5 billion yen

9,300.0 billion yen

10,500.0 billion yen

Operating income[2.3%]
202.1billion yen[4.4%]
410.0 billion yen

Over 5%

Net income (loss)
attributable
to Hitachi, Ltd.

(106.9) billion yen

200.0 billion yen

Consistently generate
at least 200 billion yen

D/E Ratio
Total Hitachi, Ltd.
Stockholders’ equity
Ratio*1, *2

1.04 times

1.19times

0.8 times
or below

*2

14.3%

15.2%

20%

(*1) Including liabilities associated with the consolidation of securitized entities.
(*2) As of September 30, 2010.

Copyright © 2010, Hitachi, Ltd., All rights reserved. 26

Cautionary Statement
Certain statements found in this document 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 with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or
current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and 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
eventst whichhi h may nott prove tto b
be accurate.
t U
Undue
d reliancelishouldh ld nott b
be placedld on “f“forward-looking
d l ki statements,”t t
t ” as suchh statementst tt speakk only
l as off the
th d
date
t off thi
this ddocument.
t
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 investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the majorindustrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;- exchange rate fluctuations for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;- 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 in Japan, declines in which may require Hitachi to write down equity securities that it holds;- the potential for significant losses on Hitachi’s investments in equity method affiliates;- increased commoditization of information technology products and digital media-related products and intensifying price competition for such products, particularly in the Components & Devices and the Digital Media &Consumer Products segments;- uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technology on a timely and cost-effective basis and to achieve market acceptance for such products;- rapid technological innovation;- the possibility of cost fluctuations during the lifetime of or cancellation of long-term contracts, for which Hitachi uses the percentage-of-completion method to recognize revenue from sales;- fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins;- fluctuations in product demand and industry capacity;- uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials;- uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;- uncertainty
y as to the success of restructuring
g efforts to improvep
managementgefficiency
y byy divestingg or otherwise exitingg underperformingpg businesses and to strengthengcompetitivenessp
and other cost reduction
measures;- general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct orIndirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;- uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products;- uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;- uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates 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 in Japan by earthquakes or other natural disasters;- 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 and that of its customers;- uncertainty as to the accuracy of key assumptions Hitachi uses to valuate its significant employee benefit related costs; and- uncertainty as to Hitachi’s ability to attract and retain skilled personnel.

The factors listed above are not all-inclusive and are in addition to other factors contained in Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.

Copyright © 2010, Hitachi, Ltd., All rights reserved. 27

Copyright © 2010, Hitachi, Ltd., All rights reserved. 28