[Translation]

Quarterly Report(The Third Quarter of 151st Business Term)
From October 1, 2019 to December 31, 2019

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

Hitachi, Ltd.

[Cover][Document Filed]

Quarterly Report (“Shihanki Hokokusho”)[Applicable Law]

Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

February 10, 2020

[Fiscal Year]

The Third Quarter of 151st Business Term (from October 1, 2019 to December 31, 2019)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name of Representative]

Toshiaki Higashihara, President & CEO[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 for PublicTokyo Stock Exchange, Inc.

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 Quarterly 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 of Japan.
The translation of the Confirmation Letter for the original Quarterly Report is included at the end of this document.
Unless the context indicates otherwise, the term “Company” refers to Hitachi, Ltd. and the term “Hitachi” refers to theCompany and its consolidated subsidiaries.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we havetruncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures presented incolumns or otherwise may not equal the total of the individual items. We have rounded all percentages to the nearest percent, onetenth 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 and Exchange Act
of Japan and other laws and regulations amending and/or supplementing the Financial Instruments and Exchange Act of Japan.

Contents
Part I Information on the Company ………………………………………………………………………………………………

1

I. Overview of the Company ……………………………………………………………………………………………………
1. Key Financial Data ………………………………………………………………………………………………………

1
1

2. Description of Business ……………………………………………………………………………………………………
II. Business Overview …………………………………………………………………………………………………………

1
4

1. Risk Factors ………………………………………………………………………………………………………………
2. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations and Cash Flows …

44

3. Material Agreements, etc. …………………………………………………………………………………………………
III. Information on the Company ………………………………………………………………………………………………

10
11

1. Information on the Company’s Stock, etc. ……………………………………………………………………………… 11(1) Total number of shares, etc. …………………………………………………………………………………………… 11(2) Information on the stock acquisition rights, etc. ……………………………………………………………………… 11(3) Information on moving strike convertible bonds, etc. ………………………………………………………………… 11(4) Changes in the total number of issued shares and the amount of common stock and other ………………………… 11(5) Major shareholders …………………………………………………………………………………………………… 11(6) Information on voting rights …………………………………………………………………………………………
2. Changes in Senior Management …………………………………………………………………………………………

12
12

IV. Financial Information ……………………………………………………………………………………………………… 13
Part II Information on Guarantors, etc. for the Company ………………………………………………………………………… 13[Condensed Quarterly Consolidated Financial Statements] ……………………………………………………………………… F1[Confirmation Letter] ……………………………………………………………………………………………………………… A1

Part I Information on the Company
I. Overview of the Company
1. Key Financial Data
Consolidated financial data, etc.
(Millions of yen, unless otherwise stated)
Nine months ended
December 31, 2018

Nine months ended
December 31, 2019

6,782,969

6,344,181[2,291,135][2,122,854]

Income from continuing operations, before
income taxes

306,761

52,121

516,502

Net income (loss) attributable to Hitachi, Ltd.
stockholders

82,627[(110,368)]

55,146[(134,147)]

222,546

25,24765,516

171,140

Total Hitachi, Ltd. stockholders’ equity

3,142,280

3,229,473

3,262,603

Total equity

4,298,371

4,362,253

4,414,403

Total assets

9,693,492

10,281,357

9,626,592

Earnings (loss) per share attributable to Hitachi,Ltd. stockholders, basic (yen)85.57[(114.30)]

57.10[(138.91)]

230.47

85.50

57.03

230.25

32.4

31.4

33.9

Net cash provided by operating activities

202,351

307,847

610,025

Net cash used in investing activities(175,495)(492,022)(162,872)

3,857

86,883(320,426)

708,745694,460

807,593

Revenues

Comprehensive income attributable to Hitachi,Ltd. stockholders

Earnings per share attributable to Hitachi, Ltd.
stockholders, diluted (yen)Total Hitachi, Ltd. stockholders’ equity ratio (%)

Net cash provided by (used in) financing
activities
Cash and cash equivalents at end of period

Year ended
March 31, 2019
9,480,619(Notes) 1. Hitachi's consolidated financial statements have been prepared in conformity with the International Financial ReportingStandards (“IFRS”) as issued by the International Accounting Standards Board.
2. Revenues do not include the consumption tax, etc.
3. The figures of “Revenues,” “Net income (loss) attributable to Hitachi, Ltd. stockholders” and “Earnings (loss) per share
attributable to Hitachi, Ltd. stockholders, basic” in square bracket are those for the three months ended December 31,
2018 and 2019, respectively.
4. 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 earnings (loss) per share attributable to Hitachi, Ltd. stockholders arecalculated on the assumption that the Company conducted this share consolidation at the beginning of the fiscal year
ended March 31, 2019.
2. Description of Business
There were no material changes in principal businesses of Hitachi during the nine months ended December 31, 2019. The
Hitachi Group is comprised of the Company, 824 consolidated subsidiaries, and 452 equity-method associates and joint-ventures.
Effective from April 1, 2019, the Company reclassified its reportable segments in ten segments: five areas as IT, Energy,
Industry, Mobility and Smart Life, four listed subsidiary groups as Hitachi High-Technologies, Hitachi Construction Machinery,
Hitachi Metals and Hitachi Chemical, and Others.
Major business and the positioning of principal affiliated companies in each segment and changes in principal affiliatedcompanies during the nine months ended December 31, 2019 were as follows. The Company mainly engages in manufacturing andsales of products and providing services in the segments of IT, Energy, Industry, Mobility and Smart Life.

1

Main products and services
IT

Systems Integration, Consulting,Control Systems, Cloud Services,
Software, IT Products (Storage,
Servers), ATMs

EnergyPower Generation Systems(Nuclear, Renewable Energy,
Thermal), Power Grid Systems
Industry
Industry & Distribution Systems,
Water & Environment Systems,
Industrial Machinery
Mobility
Building Systems (Elevators,
Escalators), Railway Systems
Smart Life
Medical Electronics,
Smart Life & Ecofriendly Systems(Refrigerators, Washing Machines,
Room Air Conditioners, AirConditioning Equipment),
Automotive Systems (Powertrain
Systems, Chassis Systems,
Advanced Driver Assistance
Systems)
Hitachi High-Technologies
Medical and Life Science Products,
Analytical Equipment,
Semiconductor Processing
Equipment, Manufacturing andInspection Equipment, Advanced
Industrial Products
Hitachi Construction Machinery
Hydraulic Excavators, Wheel
Loaders, Mining Machinery,
Maintenance and Services,
Construction Solutions, MineManagement Systems
Hitachi Metals
Specialty Steel Products,
Functional Components andEquipment, Magnetic Materials
and Power Electronics Materials,
Wires, Cables and Related
Products
Hitachi Chemical
Functional Materials (Electronics
Materials, Printed Wiring Boards
Materials, Electronics
Components), Advanced
Components and Systems(Mobility Components, Energy
Storage Devices, Life Sciencerelated Products)
Others
Optical Disk Drives, Property
Management(As of December 31, 2019)
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.
[Equity-method associates]
Mitsubishi Hitachi Power Systems, Ltd.
[Consolidated subsidiaries]
Hitachi Industrial Equipment Systems Co.,Ltd.
Hitachi Industrial Products, Ltd. (Note 3)[Equity-method associates]
Hitachi Kokusai Electric Inc.
[Consolidated subsidiaries]
Hitachi Elevator (China) Co., Ltd.
[Consolidated subsidiaries]
Hitachi Automotive Systems, Ltd.
Hitachi Global Life Solutions, Inc. (Note6)
Hitachi Automotive Systems Americas,
Inc.
Hitachi Consumer Products (Thailand),
Ltd.

Sales and services[Consolidated subsidiaries]
Hitachi Solutions, Ltd.
Hitachi Systems, Ltd.
Hitachi Consulting Corporation (Note 2)
Hitachi Global Digital Holdings
Corporation
Hitachi Payment Services Private Limited
Hitachi Vantara Corporation (Note 2)[Consolidated subsidiaries]
Hitachi Plant Construction, Ltd.
Hitachi Power Solutions Co., Ltd.
[Consolidated subsidiaries]
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Services Co., Ltd.
JR Technology Group, LLC (Note 4)
Sullair US Purchaser, Inc.
[Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi Rail Ltd. (Note 5)[Equity-method associates]
Johnson Controls-Hitachi Air Conditioning
Holding (UK) Ltd[Consolidated subsidiaries]
Hitachi High-Technologies Corporation[Consolidated subsidiaries]
Hitachi Construction Machinery Co., Ltd.

[Consolidated subsidiaries]
Hitachi Metals, Ltd.

[Consolidated subsidiaries]
Hitachi Chemical Company, Ltd.

[Consolidated subsidiaries]
Hitachi-LG Data Storage, Inc.

2

[Consolidated subsidiaries]
Hitachi Life, Ltd.
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 Vantara Corporation and Hitachi Consulting Corporation were merged into Hitachi Vantara LLC as of January 1,
2020.
3. Hitachi Industrial Products, Ltd. is the company which succeeded the electrical systems business and machinery systems
business through absorption-type company split from the Company on April 1, 2019.
4. JR Technology Group, LLC has become a consolidated subsidiary of the Company on December 27, 2019 as Hitachi
America, Ltd., a consolidated subsidiary of the Company, acquired all interests of JR Technology Group, LLC from JR
Intermediate Holdings, LLC.
5. Hitachi Rail Europe Ltd. changed its company name to Hitachi Rail Ltd. on April 1, 2019.
6. Hitachi Appliances, Inc. merged with Hitachi Consumer Marketing, Inc. and changed its company name to Hitachi Global
Life Solutions, Inc. on April 1, 2019.
7. In addition to the table above, the major equity-method associates are Hitachi Capital Corporation and Hitachi Transport
System, Ltd.

3

II. Business Overview
1. Risk Factors
There were no new risk factors recognized during the nine months ended December 31, 2019.
There were no material changes in the risk factors stated in the Annual Securities Report for the 150th business term
pursuant to the Financial Instruments and Exchange Act of Japan.
2. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations and Cash Flows(1) Analysis of Results of Operations
Results of Operations
The results of operations in the nine months ended December 31, 2019 were as follows.
Revenues decreased 6% to ¥6,344.1 billion, as compared with the nine months ended December 31, 2018, due mainly todecreased revenues in the Smart Life segment, the Energy segment and Hitachi Metals. This decrease was partially offset byincreased revenues in the IT segment and the Industry segment.
Cost of sales decreased 6% to ¥4,631.1 billion, as compared with the nine months ended December 31, 2018, and the ratioof cost of sales to revenues was 73%, which was the same level as for the nine months ended December 31, 2018. Gross profit
decreased 7% to ¥1,712.9 billion, as compared with the nine months ended December 31, 2018.
Selling, general and administrative expenses (“SG&A”) decreased 3% to ¥1,267.3 billion, as compared with the nine months
ended December 31, 2018, and the ratio of SG&A to revenues increased 1% to 20%, as compared with the nine months ended
December 31, 2018.
Adjusted operating income (presented as revenues less cost of sales as well as SG&A) decreased ¥88.9 billion to ¥445.6
billion, as compared with the nine months ended December 31, 2018, despite higher profits in the IT segment, the Industry
segment and the Smart Life segment. This decrease was due mainly to lower profits in the Energy segment, Hitachi Construction
Machinery and Hitachi Metals.
Other income decreased ¥79.7 billion to ¥29.0 billion, as compared with the nine months ended December 31, 2018, due
mainly to the absence of the gains on business reorganization and others by selling shares of Hitachi Kokusai Electric Inc. stock
posted in the nine months ended December 31, 2018 and decreased gains on sales of fixed assets. This decrease was partially
offset by a settlement gain recognized at the time of the shift to a risk-sharing corporate pension plan. Other expenses increased¥107.7 billion to ¥468.4 billion, as compared with the nine months ended December 31, 2018, despite the absence of impairment
losses recognized as the result of the suspension of the UK nuclear power stations construction project posted in the nine months
ended December 31, 2018. This increase was due mainly to the loss due to the settlement of the South African project conductedby Mitsubishi Hitachi Power Systems, Ltd. (“MHPS”) and higher impairment losses owing to the lower than expected revenues
for the magnetic material business in Hitachi Metals.
Financial income (excluding interest income) decreased ¥2.1 billion to ¥12.1 billion and financial expenses (excludinginterest charges) decreased ¥1.1 billion to ¥0.8 billion, as compared with the nine months ended December 31, 2018,
respectively.
Share of profits (losses) of investments accounted for using the equity method increased ¥26.9 billion to profits of ¥37.4
billion, as compared with the nine months ended December 31, 2018.
EBIT (earnings before interest and taxes, which is presented as income from continuing operations, before income taxes lessinterest income plus interest charges) decreased ¥250.5 billion to ¥54.9 billion, as compared with the nine months ended
December 31, 2018, due mainly to the loss due to the settlement of the South African project and the impairment losses
recognized in Hitachi Metals, as well as decreased adjusted operating income.
Interest income decreased ¥1.2 billion to ¥15.4 billion and interest charges increased ¥2.8 billion to ¥18.2 billion, as
compared with the nine months ended December 31, 2018, respectively.
Income from continuing operations, before income taxes decreased ¥254.6 billion to ¥52.1 billion, as compared with thenine months ended December 31, 2018.
Income taxes was income of ¥35.2 billion, as compared with expenses of ¥137.5 billion for the nine months ended
December 31, 2018, due mainly to the loss in the settlement of the South African project conducted by MHPS.
Loss from discontinued operations improved ¥3.2 billion to ¥1.1 billion, as compared with the nine months ended December
31, 2018.
Net income decreased ¥78.6 billion to ¥86.2 billion, as compared with the nine months ended December 31, 2018.
Net income attributable to non-controlling interests decreased ¥51.1 billion to ¥31.0 billion, as compared with the ninemonths ended December 31, 2018.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders decreased ¥27.4 billion to ¥55.1 billion, as
compared with the nine months ended December 31, 2018.
Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment include intersegment
transactions. Effective from April 1, 2019, the Company reclassified its reportable segments in ten segments: IT, Energy,
Industry, Mobility, Smart Life, Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals, Hitachi Chemical
and Others. Accordingly, the amounts previously reported for the nine months ended December 31, 2018 have been restated inconformity with the new segments.

4

(IT)
Revenues increased 1% to ¥1,494.2 billion, as compared with the nine months ended December 31, 2018, despite lower
sales of storage systems for overseas market. This increase was due mainly to higher revenues from system integration businessfor social infrastructure, industry and public fields.
Adjusted operating income increased ¥9.0 billion to ¥165.6 billion, as compared with the nine months ended December 31,
2018, due mainly to increased revenues. This increase was partially offset by an increase in strategic investment for expansion ofdigital solution business.
EBIT decreased ¥7.2 billion to ¥158.1 billion, as compared with the nine months ended December 31, 2018, despite
increased adjusted operating income. This decrease was due mainly to decrease in gains from selling the land of former
production basis posted in the nine months ended December 31, 2018.
(Energy)
Revenues decreased 10% to ¥245.7 billion, as compared with the nine months ended December 31, 2018, due mainly to thedecrease of projects related to new regulations in nuclear power generation systems business and the effect of business transfer of
power receiving and transforming facilities business for industry field.
Adjusted operating income worsened ¥11.8 billion to loss of ¥1.4 billion, as compared with the nine months ended
December 31, 2018, due mainly to decreased revenues and decline in profitability of some projects.
EBIT worsened ¥99.2 billion to loss of ¥379.2 billion, as compared with the nine months ended December 31, 2018, despite
the absence of impairment losses recognized as the result of the suspension of the UK nuclear power stations construction project
posted in the nine months ended December 31, 2018. This loss was due mainly to the loss due to the settlement of the South
African project conducted by MHPS.
(Industry)
Revenues increased 2% to ¥554.9 billion, as compared with the nine months ended December 31, 2018, due mainly tohigher revenues from air conditioning systems business for industry field.
Adjusted operating income increased ¥2.1 billion to ¥25.5 billion, as compared with the nine months ended December 31,
2018, due mainly to the steady performance of the digital solution business for manufacturing and distribution as well as
increased revenues.
EBIT increased ¥6.0 billion to ¥30.2 billion, as compared with the nine months ended December 31, 2018, due mainly to an
improvement in share of profits of investments accounted for using the equity method as well as the increased adjusted operating
income.
(Mobility)
Revenues decreased 8% to ¥832.6 billion, as compared with the nine months ended December 31, 2018, due mainly todecreased revenues from railway systems business in the U.K. and the sales price down of building systems in China as well as
the impact of foreign currency translation.
Adjusted operating income decreased ¥3.8 billion to ¥61.3 billion, as compared with the nine months ended December 31,
2018, despite increased profitability improvement resulted from cost reduction, etc. in building systems business. This decrease
was due mainly to decreased revenues.
EBIT decreased ¥12.1 billion to ¥91.6 billion, as compared with nine months ended December 31, 2018, due mainly todecreased gains by selling a part of shares of Agility Trains West (Holdings) Limited stock.
(Smart Life)
Revenues decreased 11% to ¥1,076.8 billion, as compared with the nine months ended December 31, 2018, despite
increased revenues in healthcare business. This decrease due mainly to the effect of business sell-off of car information systems,
etc. in automotive systems business.
Adjusted operating income increased ¥16.5 billion to ¥44.0 billion, as compared with the nine months ended December 31,
2018, due mainly to profitability improvement resulted from cost reduction in home appliances business, automotive systems
business and healthcare business.
EBIT improved ¥36.8 billion to profit of ¥36.4 billion, as compared with nine months ended December 31, 2018, due
mainly to the business reorganization expenses in automotive systems business posted in the nine months ended December 31,
2018 as well as the increased adjusted operating income.
(Hitachi High-Technologies)
Revenues decreased 4% to ¥516.9 billion, as compared with the nine months ended December 31, 2018, despite higher salesof semiconductor processing equipment. The decrease was due mainly to a decrease in demand for industrial materials and lower
sales of liquid crystal display exposure systems.
Adjusted operating income decreased ¥3.2 billion to ¥48.1 billion, as compared with the nine months ended December 31,
2018, due mainly to decreased revenues, and EBIT decreased ¥1.0 billion to ¥48.4 billion, as compared with nine months ended
December 31, 2018, due mainly to decreased adjusted operating income.
(Hitachi Construction Machinery)
Revenues decreased 8% to ¥687.1 billion, as compared with the nine months ended December 31, 2018, due mainly to alower sales mainly in China and India and the production suspension by typhoon damage as well as the impact of foreign
currency translation.
Adjusted operating income decreased ¥26.3 billion to ¥57.9 billion, as compared with the nine months ended December 31,
2018, due mainly to an increase in indirect expenses and the impact of foreign currency translation as well as the decreased
revenues.
5

EBIT decreased ¥21.6 billion to ¥58.4 billion, as compared with the nine months ended December 31, 2018, despite postingof gain on business reorganization and others. This decrease was due mainly to decreased adjusted operating income and postingof business reorganization expenses.
(Hitachi Metals)
Revenues decreased 13% to ¥670.9 billion, as compared with the nine months ended December 31, 2018, due mainly to adecrease in demand for products for automobile, semiconductor and factory automation and the effect of business transfer ofaluminum wheel business.
Adjusted operating income decreased ¥30.9 billion to ¥11.8 billion, as compared with the nine months ended December 31,
2018, due mainly to posting revaluation losses on inventories as well as decreased revenues.
EBIT worsened ¥89.9 billion to loss of ¥52.8 billion, as compared with the nine months ended December 31, 2018, due
mainly to posting of impairment losses in the magnetic material business as well as decreased adjusted operating income.
(Hitachi Chemical)
Revenues decreased 8% to ¥479.6 billion, as compared with the nine months ended December 31, 2018, due mainly to theimpact of foreign currency translation as well as a decrease in demand for products for semiconductor and automobile.
Adjusted operating income decreased ¥10.9 billion to ¥28.3 billion, as compared with the nine months ended December 31,
2018, due mainly to decreased revenues, and EBIT decreased ¥11.5 billion to ¥24.0 billion, as compared with the nine months
ended December 31, 2018, due mainly to decreased adjusted operating income.
(Others)
Revenues decreased 17% to ¥351.6 billion, as compared with the nine months ended December 31, 2018, due mainly to theeffect of reorganization of Hitachi Kokusai Electric Inc.
Adjusted operating income decreased ¥9.7 billion to ¥16.8 billion, and EBIT decreased ¥2.0 billion to ¥26.7 billion, as
compared with the nine months ended December 31, 2018, respectively.
Revenues by Market
Revenues in Japan decreased 2% to ¥3,153.4 billion, as compared with the nine months ended December 31, 2018, due
mainly to decreased revenues in the Smart Life segment owing to the effect of business sell-off in automotive systems business,decrease in demand for products for domestic market and lower capacity utilization and the Others segment owing to the effect ofreorganization of Hitachi Kokusai Electric Inc. as well as decreased revenues in the Energy segment, Hitachi High-Technologies
and Hitachi Metals. The decrease was partially offset by the increased revenues in the IT segment, the Industry segment and the
Mobility segment.
Overseas revenues decreased 10% to ¥3,190.7 billion, as compared with the nine months ended December 31, 2018, due
mainly to decreased revenues in Asia, mainly in the Mobility segment due mainly to lower sales from building systems business,and in Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals and Hitachi Chemicals, decreased revenues
in North America, particularly in the Smart Life Segment and Hitachi Metals, and decreased revenues in Europe, mainly in the
Mobility segment due mainly to lower sales from railway system business and the IT segment. This decrease was also
attributable to decreased revenues owing to the effect of business sell-off in automotive systems business in the Smart Lifesegment and reorganization of Hitachi Kokusai Electric Inc.
As a result, the ratio of overseas revenues to total revenues decreased 3% to 50%, as compared with the nine months ended
December 31, 2018.
(2) Analysis of Financial Condition and Cash Flows
Liquidity and Capital Resources
During the nine months ended December 31, 2019, there were no major changes in the Company’s policies of maintaining
liquidity and ensuring funds, efforts for improvement in fund management efficiency, and ideas regarding funding sources andfundraising.
Regarding debt ratings we received, Rating and Investment Information, Inc. (R&I) changed its long-term rating from A+ to
AA- and short-term rating from a-1 to a-1+, respectively, on August 29, 2019.
Cash Flows(Cash Flows from Operating Activities)
Net income in the nine months ended December 31, 2019 decreased by ¥78.6 billion, as compared with the nine months
ended December 31, 2018. Net cash outflow from a change in trade payables increased by ¥28.9 billion, as compared with thenine months ended December 31, 2018. Net cash outflow from a change in inventories decreased by ¥53.3 billion, as comparedwith the nine months ended December 31, 2018. Net cash inflow from a change in trade receivables and contract assets increasedby ¥50.2 billion, as compared with the nine months ended December 31, 2018.
As a result of the foregoing, net cash provided by operating activities was ¥307.8 billion in the nine months ended December
31, 2019, an increase of ¥105.4 billion, compared with the nine months ended December 31, 2018.
(Cash Flows from Investing Activities)
Net amount of investments related to property, plant and equipment* was ¥277.1 billion in the nine months ended December
31, 2019. This net sum decreased by ¥16.3 billion compared with the nine months ended December 31, 2018. Proceeds from saleof investments in securities and other financial assets (including investments in subsidiaries and investments accounted for using
the equity method) in the nine months ended December 31, 2019 decreased by ¥108.0 billion, as compared with the nine months
ended December 31, 2018. Purchase of investments in securities and other financial assets (including investments in subsidiaries
and investments accounted for using the equity method) in the nine months ended December 31, 2019 increased by ¥193.3
billion, as compared with the nine months ended December 31, 2018, due mainly to the purchase of interest of JR Technology
Group, LLC.
6

As a result of the foregoing, net cash used in investing activities was ¥492.0 billion in the nine months ended December 31,
2019, an increase of ¥316.5 billion compared with the nine months ended December 31, 2018.
* The sum of the purchase of property, plant and equipment and the purchase of intangible assets, less the proceeds from sale ofproperty, plant and equipment, and intangible assets.
(Cash Flows from Financing Activities)
Net cash outflow related to long-term debt** in the nine months ended December 31, 2019 increased by ¥116.7 billion, as
compared with the nine months ended December 31, 2018. Net cash inflow from a change in short-term debt in the nine months
ended December 31, 2019 increased by ¥78.2 billion, as compared with the nine months ended December 31, 2018. Purchase ofshares of consolidated subsidiaries from non-controlling interests in the nine months ended December 31, 2019 decreased by¥137.5 billion, as compared with the nine months ended December 31, 2018.
As a result of the foregoing, net cash flows provided in financing activities were ¥86.8 billion in the nine months ended
December 31, 2019, an increase of ¥83.0 billion compared with the nine months ended December 31, 2018.
** The proceeds from long-term debt, less the payments on long-term debt.
As a result of the foregoing, cash and cash equivalents as of December 31, 2019 were ¥694.4 billion, a decrease of ¥113.1
billion from March 31, 2019. Free cash flows, the sum of cash flows from operating and investing activities, were an outflow of¥184.1 billion in the nine months ended December 31, 2019, a decrease of ¥211.0 billion compared with the nine months ended
December 31, 2018.
Assets, Liabilities and Equity
The following is an overview of Hitachi’s assets, liabilities and equity as of December 31, 2019.
Total assets were ¥10,281.3 billion, an increase of ¥654.7 billion from March 31, 2019, despite cash collection of trade
payables. This increase was due mainly to the impact of adopting IFRS 16 "Leases" and an increase in inventories.
Total interest-bearing debt, the sum of short-term debt and long-term debt, was ¥1,562.5 billion, an increase of ¥557.8
billion from March 31, 2019. This was due mainly to the impact of adopting IFRS 16 "Leases" and an increase in short-term debt.
Total Hitachi, Ltd. stockholders’ equity decreased by ¥33.1 billion from March 31, 2019, to ¥3,229.4 billion. The ratio of
total Hitachi, Ltd. stockholders’ equity to total assets was 31.4%, as compared with 33.9% as of March 31, 2019.
Non-controlling interests were ¥1,132.7 billion, a decrease of ¥19.0 billion from March 31, 2019.
Total equity was ¥4,362.2 billion, a decrease of ¥52.1 billion from March 31, 2019. The ratio of interest-bearing debt to total
equity was 0.36, as compared with 0.23 as of March 31, 2019.
(3) Management Policy
There were no material changes in Hitachi’s management policy during the nine months ended December 31, 2019.
(4) Challenges Hitachi Group Faces
1) Business and Financial Challenges Hitachi Group Faces
There were no material changes in Hitachi’s business strategy during the nine months ended December 31, 2019.
2) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial and Business Policies
The Group invests a great deal of business resources in fundamental research and in the development of market-leading
products and businesses that will bear fruit in the future, and realizing the benefits from these management policies requiresthat they be continued for a set period of time. For this purpose, the Company keeps its shareholders and investors wellinformed of not just the business results 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 and performance that can be brought
about through a change in management control, but it recognizes the necessity of determining the impact on company value
and the interests of all shareholders of the buying activities and buyout proposals of parties attempting to acquire a large shareof stock of the Company 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 specificthreat, neither does the Company intend to implement specified so-called anti-takeover measures in advance of the appearanceof such a party, but the Company does understand that it is one of the natural duties bestowed upon it by the shareholders andinvestors 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 share of the Company’s
stock. In particular, together with outside experts, the Company will evaluate the buyout proposal of the party and holdnegotiations with the buyer, and if the Company deems that said buyout will not maintain the Company’s value and is not in
the best interest of the shareholders, then the Company will quickly determine the necessity, content, etc., of specificcountermeasures and prepare to implement them. The same response will also be taken in the event a party attempts to acquirea large percentage of the shares of a Group company.

7(5) Research and Development
There were no material changes in the research and development of the Hitachi Group (the Company and consolidated
subsidiaries) stated in the Annual Securities Report for the 150th business term pursuant to the Financial Instruments andExchange Act of Japan. The Hitachi Group’s R&D expenditures in the nine months ended December 31, 2019 were ¥212.4
billion, 3.3% of revenues. A breakdown of R&D expenditures by segment is shown below.
(Billions of yen)Segment

Nine months ended
December 31, 2019

IT

38.5

Energy5.4

Industry

8.1

Mobility

21.4

Smart Life

45.2

Hitachi High-Technologies

22.4

Hitachi Construction Machinery

18.4

Hitachi Metals

12.1

Hitachi Chemical

24.3

Others1.0

Corporate Items

15.1
Total

212.4

(6) Property, Plant and Equipment
Hitachi Metals, Ltd. recognized impairment losses on property, plant and equipment such as machinery of ¥22.4 billion for
the nine months ended December 31, 2019, due to the lower than expected future revenue projected for the magnetic material
business. Details of these impairment losses are described in “Condensed Quarterly Consolidated Financial Statements －Notes
to Condensed Quarterly Consolidated Financial Statements －(11) Other Income and Expenses.”(7) Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations in Japan and overseas, andhas not decided on specific plans to newly install or expand each of facilities as of the end of the consolidated fiscal year andeach quarter of the consolidated 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 is updated as follows (new installation andexpansions, based on the amount recorded as tangible fixed assets and the investment property) from the amount initially planned
as of March 31, 2019.
The amount of capital investment
for the fiscal year ending March 31, 2020
Segment(Billions of yen)
Initial Plan
Updated Plan
IT
390
630
EnergyIndustry

60
170

60
170

Mobility
Smart Life

200
770

200
770

Hitachi High-Technologies
Hitachi Construction Machinery

290
700

380
700

Hitachi Metals
Hitachi Chemical

600
460

500
420

OthersSubtotal

260
3,900

370
4,200

Corporate Items & Elimination
Total

100
4,000

100
4,300

(Notes) 1. The figures in the above table include the amount of the right-of-use assets and the investment property, each ofwhich 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 toroutine upgrading.

8(8) Forward-Looking Statements
Certain statements found in “2. Management’s Discussion and Analysis of Consolidated Financial Conditions, Operating
Results and Cash Flows” and other descriptions in this report 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 not directly relate to any historicalor 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 “forwardlooking statements” are based upon current assumptions of future events which may not prove to be accurate. Undue relianceshould 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’s major 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 other materials, such as copper, steel,aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials, parts and components;• the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts for which Hitachi uses thepercentage-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 of fluctuations in productdemand, exchange rates and/or price of raw materials or shortages of materials, parts and components;• uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technologies on a timely
and cost-effective basis and to achieve market acceptance for such products;• 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 divesting or 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 of countries where Hitachi
conducts business, particularly Japan, Asia, the United States and Europe, including, without limitation, direct or indirect
restrictions by other nations on imports and differences in commercial and business customs including, without limitation,
contract terms and conditions 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;• uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which 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 and tsunamis, 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; and• uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefit-related costs.
The factors listed above are not all-inclusive and are in addition to other factors contained elsewhere in this report and inother materials published by Hitachi.

93. Material Agreements, etc.
(1) Absorption-type Company Split and Share Transfer
On December 18, 2019, the Company decided to execute an absorption-type split (the “Company Split”) involving thediagnostic imaging-related business (the “Business”), currently undertaken by the Company and its consolidated subsidiaries andaffiliate companies, through which the Business will be transferred to FUJIFILM Healthcare Corporation as a successor company(the “New Company”), and transfer all shares in the New Company to FUJIFILM Corporation (such share transfer, the “Share
Transfer”) after the Company Split in order to strengthen competitiveness of the healthcare business.
The overview of the Company Split and Share Transfer is as follows.
1) Company Split Method
An absorption-type split under which the Company will be the splitting company and the New Company will be thesucceeding company.
2) Effective Date of the Company Split
July 1, 2020 (tentative)3) Assets and Liabilities Transferred to the Succeeding Company
To be determined4) Details of Allotments
To be determined5) Basis of Calculation for Allotment
To be determined
6) Profile of the Successor Company after the Company Split
Name

FUJIFILM Healthcare Corporation

Head office

2-1 Shintoyofuta, Kashiwa, Chiba

Representative

To be determined

Capital

To be determined
Research and development, manufacturing, sales andBusiness

maintenance service of diagnostics imaging systems (CT, MRI,
X-ray systems, Ultrasound) and electronic health records(2) Settlement
On December 18, 2019, the Company and Mitsubishi Heavy Industries, Ltd. (“MHI”) reached a settlement relating to atransfer of the boiler construction projects in the Republic of South Africa conducted by Mitsubishi Hitachi Power Systems, Ltd.
(“MHPS”), the joint venture company that integrated the respective thermal power generation systems businesses of MHI and theCompany.
The overview of the settlement is as follows.
・The Company will transfer all of its shares of MHPS (share-holding ratio of 35%) to MHI. In addition, the Company willrecognize settlement money of 200.0 billion yen as a debt for MHI, offset the amount by transferring its credit for a
subsidiary of MHPS to MHI at 70.0 billion yen and make a payment of 130.0 billion yen to MHI in March, 2020.
・The Company and MHI will promptly request Japan Commercial Arbitration Association (the “JCAA”) to stop the progressof the arbitration. MHI will withdraw the request for arbitration in JCAA after the completion of the payment and thetransfer of shares mentioned above.

10

III. Information on the Company
1. Information on the Company’s Stock, etc.
(1) Total number of shares, etc.
1) Total number of shares
Class

Total number of shares authorized to
be issued (shares)

Common stock

2,000,000,000

Total

2,000,000,0002) Issued shares

Class

Number of sharesissued as of the end of
third quarter (shares)(December 31, 2019)

Number of sharesissued as of thefiling date (shares)(Note)(February 10, 2020)

Stock exchange on which
the Company is listed

Description

The number of shares per

Commonstock

967,280,477

967,280,477

Tokyo, Nagoya

Total

967,280,477

967,280,477-

one unit of shares is 100
shares.
-(Note) The "Number of shares issued as of the filing date" does not include shares issued upon exercise of stock acquisition rightsfrom February 1, 2020 to the filing date.
(2) Information on the stock acquisition rights, etc.
1) Details of stock option plans
Not applicable.
2) 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

Date

From October 1, 2019
to December 31, 2019

Change in
the total
number ofissued shares(shares)－

Balance of thetotal number ofissued shares(shares)

Change incommonstock(Millionsof yen)Balance ofcommonstock(Millionsof yen)Change incapitalreserve(Millionsof yen)Balance ofcapitalreserve(Millionsof yen)967,280,477－

459,862－

177,828(5) Major shareholders
Not applicable.

11(6) Information on voting rights
Information on voting rights as of September 30, 2019 is stated in this item because the Company does not identify the
number of voting rights as of December 31, 2019 due to the lack of information on the number of the Company’s shares held by
the entity which the Company holds one quarter or more of total number of voting rights of such entity as of December 31, 2019.
1) Issued shares(As of September 30, 2019)
Classification

Number of voting
rightsNumber of shares (shares)

Description

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

1,063,800

Shares with full voting right (others)

Common stock

963,680,500

Shares less than one unit

Common stock2,536,177－－

967,280,477－－

Number of issued shares
Total number of voting rights

9,636,805

9,636,805－－－(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 not transferred titles) and 53 voting
rights for those shares.
2) Treasury stock, etc.
(As of September 30, 2019)

Name ofshareholder

Hitachi, Ltd.
Aoyama Special SteelCo., Ltd.
ISHII DENKOSHA
Co., Ltd.

Address

6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo
9-11, Shinkawa 2-chome, Chuoku, Tokyo
1-11, Oroshishinmachi 3chome, Higashi-ku, Niigata-shi,

Number ofshares held
under thenames ofothers(shares)

Total shares
held (shares)

Ownership
percentage tothe total
number ofissued shares(%)

1,030,400－

1,030,400

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

1,063,800－

1,063,800

0.11Niigata

SAITA KOUGYOU

5-3, Takinogawa 5-chome, Kita-

CO., LTD.

ku, Tokyo

Nitto Jidosha

3268, Nagaoka, Ibarakimachi,

Kiki K.K.

Higashiibaraki-gun, Ibaraki

Mizuho Co., Inc.

4-1, Koishikawa 5-chome,
Bunkyo-ku, Tokyo

Total

Number ofshares held
under own name(shares)－

2. Changes in Senior Management
There were no changes in senior managements from the filing date of the Annual Securities Report for the 150th businessterm pursuant to the Financial Instruments and Exchange of Act of Japan to December 31, 2019.
12

IV. Financial Information
Refer to the condensed quarterly consolidated financial statements incorporated in this Quarterly Report.

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

13

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

6
7
5

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

5
5,7
3
3,5

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
Contract liabilities
Other current liabilities

3,7
5,7

5

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

3,7
8

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

9

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

December 31, 2019

March 31, 2019694,460
2,194,934
1,614,479
321,140
718,562

807,5932,399,933
1,356,762
284,267
187,238

5,543,575

5,035,793

505,884
490,171
2,207,089
1,150,203
384,435

724,461
568,349
1,956,685
960,016
381,288

4,737,782

4,590,799

10,281,357

9,626,592

471,276
245,484
468,107
1,298,394
512,532
645,944552,095

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

4,193,832

3,605,560

845,825
513,259
366,188

708,490526,688371,451

1,725,272

1,606,629

5,919,104

5,212,189

459,862460,295
2,263,586
49,505(3,775)

458,790
463,786
2,287,587
56,360(3,920)3,229,473

3,262,603

1,132,780

1,151,800

Total equity

4,362,253

4,414,403

Total liabilities and equity

10,281,357

9,626,592

See accompanying notes to condensed quarterly consolidated financial statements.

F-1

Condensed Quarterly Consolidated Statement of Profit or Loss
Nine months ended December 31, 2019 and 2018
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
DilutedMillions of yen
Note
10

8,11
5,11
12
12

13

2019
6,344,181(4,631,184)
1,712,997(1,267,363)
29,006(468,413)
12,183(880)

2018
6,782,969(4,948,029)
1,834,940(1,300,400)
108,784(360,615)
14,349(2,077)37,42010,473

54,95015,413(18,242)
52,12135,26687,387(1,187)
86,200305,454
16,711(15,404)
306,761(137,541)
169,220(4,404)
164,816

55,146
31,054

82,627
82,189

58.33
58.26

Yen
90.13
90.06

57.10
57.03

85.57
85.50

14

14

Condensed Quarterly Consolidated Statement of Comprehensive Income
Nine months ended December 31, 2019 and 2018
Note

Millions of yen

Net income

2019
86,2002018
164,816

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

28,368787
29,155(60,405)(1,488)(61,893)

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(44,168)
14,179(1,296)(31,285)(24,881)(1,855)20,192(6,544)(2,130)84,070(68,437)
96,37965,516
18,55425,247
71,132Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
See accompanying notes to condensed quarterly consolidated financial statements.
F-2

Condensed Quarterly Consolidated Statement of Profit or Loss
Three months ended December 31, 2019 and 2018

Millions of yen
Note

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
Loss from continuing operations, before income taxes
Income taxes
Loss from continuing operations
Loss from discontinued operations
Net loss
Net loss attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Loss per share from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
DilutedLoss per share attributable to Hitachi, Ltd. stockholders
Basic
Diluted5,11

2019
2,122,854(1,556,393)
566,461(418,030)
236(401,895)
7,747
-

2018
2,291,135(1,668,547)
622,588(432,638)
73,202(316,279)
858(1,918)

9,914

7,307

(235,567)
5,016(6,304)(236,855)
125,912(110,943)(391)(111,334)(46,880)
6,473(5,752)(46,159)(44,790)(90,949)(401)(91,350)(134,147)
22,813(110,368)
19,018(138.50)(138.50)

Yen(113.88)(113.88)(138.91)(138.91)(114.30)(114.30)14

14

Condensed Quarterly Consolidated Statement of Comprehensive Income
Three months ended December 31, 2019 and 2018
Note

Millions of yen
2019(111,334)

2018(91,350)

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

8,319
654
8,973

(36,655)(1,909)(38,564)

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

52,004
9,534
15,676
77,214(59,269)
1,376
9,550
(48,343)

86,187(25,147)(86,907)(178,257)(65,755)
40,608(179,221)964

Net loss

Other comprehensive income (OCI)
Comprehensive loss
Comprehensive loss attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
See accompanying notes to condensed quarterly consolidated financial statements.
F-3

Condensed Quarterly Consolidated Statement of Changes in Equity
Nine months ended December 31, 2019

Millions of yen
2019

Commonstock

CapitalsurplusRetainedearnings(note 9)458,790

463,786

2,287,587

Balance at beginning of period
Cumulative effects of changes inaccounting policies (note 3)
Restated balance

Accumulated
othercomprehensive
income56,360Treasurystock,
at cost(3,920)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

3,262,603

1,151,800

4,414,403--(2,596)--(2,596)(1,075)(3,671)

458,790

463,786

2,284,991

56,360(3,920)3,260,007

1,150,725

4,410,732

Changes in equity
Reclassified into retained earnings--

15,210(15,210)

-

-

-

-

Net income--

55,146--55,146

31,054

86,200

Other comprehensive income (loss)

-

-

-

10,370-10,370(12,500)(2,130)

Dividends to Hitachi, Ltd. stockholders--(91,761)--(91,761)-(91,761)

Dividends to non-controlling interests

-

-

-

-

-

-

(40,266)(40,266)

Acquisition of treasury stock

-

-

-

-

(129)

(129)

-

(129)

Sales of treasury stock

-

(138)

-

-

274

136

-

136

Issuance of new shares

1,072

1,072

-

-

-

2,144

-

2,144

-

(4,425)-(2,015)-(6,440)3,767(2,673)

Total changes in equity

1,072(3,491)(21,405)(6,855)145(30,534)(17,945)(48,479)

Balance at end of period

459,862460,295

2,263,586

49,505(3,775)

3,229,473

1,132,780

4,362,253

Changes in non-controlling interests

Nine months ended December 31, 2018

Millions of yen
2018

Balance at beginning of period
Cumulative effects of changes inaccounting policies
Restated balanceCommonstock

Capitalsurplus(note 5)Retainedearnings(note 9)

Accumulated
othercomprehensive
income

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

458,790575,809

2,105,395

142,167

Total equity(4,137)

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

Treasurystock,
at costChanges in equity
Reclassified into retained earnings--

20,450(20,450)

-

-

-

-

Net income--

82,627--

82,627

82,189164,816

Other comprehensive loss

-

-

-

(57,380)-(57,380)(11,057)(68,437)

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

Dividends to non-controlling interests

-

-

-

-

-

-

(37,940)(37,940)

Acquisition of treasury stock

-

-

-

-

(198)

(198)

-

(198)

Sales of treasury stock

-

(237)

-

-

442

205

-

205

Changes in non-controlling interests-(86,512)

-

(449)

-

(86,961)(109,342)(196,303)

Total changes in equity-(86,749)

25,831(78,279)244(138,953)(76,150)(215,103)

Balance at end of period

458,790

489,060

2,134,435

63,888(3,893)

3,142,280

1,156,091

4,298,371

See accompanying notes to condensed quarterly consolidated financial statements.

F-4

Condensed Quarterly Consolidated Statement of Cash flows
Nine months ended December 31, 2019 and 2018

Millions of yen
Note

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 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

3

2019

2018

86,200164,816

316,482
76,933(35,267)(37,420)(1,117)(27,508)
1,642
316,753(300,531)(2,543)(130,254)(16,318)
209,371
4,922

270,807322,335
134,935(10,473)(4,872)(82,376)(24,139)
266,479(353,866)(40,865)(101,345)(23,916)(162,777)(1,441)

461,345
18,60012,983(18,849)(166,232)

353,30215,806
16,552(17,099)(166,210)

307,847

202,351(232,758)(64,939)
20,502(293,081)(60,830)
60,349(234,499)(41,149)

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

53,170(33,498)

161,237(2,021)(492,022)(175,495)

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
Other

357,02288,484(229,559)
5,004(91,766)(40,509)(129)
136(1,340)(460)

278,748
84,724(109,023)
4,949(77,264)(39,363)(198)
205(138,894)(27)

86,883

3,857

Net cash provided by (used in) financing activities

3

Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents(15,841)(19,932)(113,133)

10,781

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

807,593
694,460

697,964
708,745

See accompanying notes to condensed quarterly consolidated financial statements.

F-5

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
condensed quarterly consolidated financial statements of the Company as of and for the nine months ended December 31, 2019
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 ten segments consisting of IT, Energy,
Industry, Mobility, Smart Life, Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals, Hitachi Chemicaland 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 Quarterly Consolidated
Financial Statements (Cabinet Office Ordinance No.64 of 2007), the condensed quarterly consolidated financial statements of theCompany have been prepared in accordance with International Accounting Standards (IAS) 34 “Interim Financial Reporting,” aspermitted by the provision of Article 93 of the Ordinance. They do not include all the information and disclosures required for acomplete set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), and should
be read in conjunction with the financial statements and notes included in the Company’s annual consolidated financial statements
for the year ended March 31, 2019.
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 condensed quarterly
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.
Judgments, estimates and assumptions that could have a material effect on these condensed quarterly consolidated financial
statements are basically the same as those disclosed in the Company’s annual consolidated financial statements for the year ended
March 31, 2019.

F-6

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(3) Significant Accounting Policies
Significant accounting policies adopted in preparation of the condensed quarterly consolidated financial statements are consistent
with those used in the preparation of the Company’s annual consolidated financial statements for the year ended March 31, 2019,
except for the following matters.
(a) Leases(i) Lessee
The Company and certain subsidiaries lease facilities, mainly buildings, machines, and vehicles, and recognize a right-of-use
asset, a right to use the underlying asset, and a lease liability, an obligation to make lease payments, and recognize lease costs
as depreciation charges for right-of-use assets and interest expenses on lease liabilities. Lease payments for short-term leases
with a lease term of 12 months or less are recognized in profit or loss on a straight-line basis.
Right-of-use asset
A lessee shall apply a cost model to measure the right-of-use asset, and shall present the corresponding amount in Property,
Plant and Equipment or Intangible assets as the amount of the right-of-use asset at cost at the commencement date of thelease less any accumulated depreciation and any accumulated impairment losses. The right-of-use asset at cost includes theamount of the initial measurement of the lease liability and the initial direct cost incurred by the lessee. The lessee shalldepreciate the right-of-use asset from the commencement date of the lease to the earlier of the end of the useful life of theunderlying asset or the end of the lease term on a straight-line basis. Changes in the useful life or the lease term are accounted
for on a prospective basis as a change in accounting estimate.
Lease liability
The lease liability is measured at the present value of lease payments that are not paid at the commencement date of the lease,
discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate, and is included in the
Current portion of long-term debt or Long-term debt. Interest expense on the lease liability in each period during the leaseterm that produce a constant periodic rate of interest on the remaining balance of the lease liability is recognized in profit orloss over the lease term and is included in Interest charges in the condensed quarterly consolidated statement of profit or loss.
(ii) Lessor
The Company and certain subsidiaries, as lessors, lease facilities, mainly buildings, machines, and equipment, whereby
substantially all the risks and rewards incidental to the ownership of items of property, plant and equipment are transferred to
the lessee. Therefore, such leases are classified as finance leases with the recognition of the underlying asset discontinued andthe present value of the total amount of lease payments is used to recognize and measure the net investment in the lease.
If substantially all the risks and rewards incidental to the ownership remain with the lessor in a lease, it is classified as an
operating lease, and the underlying asset is continuously recognized, and lease income is recognized over the lease term on astraight-line basis.
Changes in Accounting Policies
From the beginning of the fiscal year ending March 31, 2020, the Company has adopted IFRS 16 “Leases” (IFRS 16). IFRS
16 sets out the principles for the recognition, measurement, presentation and disclosure of leases, and lessees are required toaccount for all leases under a single on-balance sheet model. As a transitional measure upon the adoption of IFRS 16, theCompany applies this standard and the 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 consist mainly of the leasing of real estate, and the impact of adopting IFRS 16 on the condensed
quarterly consolidated statement of financial position at the beginning of the fiscal year ending March 31, 2020 includes anincrease in assets of ¥218,161 million associated with the recognition of right-of-use assets, an increase in liabilities of¥221,832 million associated with the recognition of lease liabilities, and a decrease in equity of ¥3,671 million associatedwith the recognition of an adjustment to the beginning balance of retained earnings, etc. at the date of initial application. The
impact on the condensed quarterly consolidated statement of profit or loss was not material. In addition, with respect to thecondensed quarterly consolidated statement of cash flows, while lease payments for operating leases were previously
included in cash flows from operating activities, adjustments for depreciation charges for right-of-use assets are included in
cash flows from operating activities and payments of lease liabilities are included in cash flows from financing activities as aresult of adopting IFRS 16; therefore, compared with the previous accounting standard, cash flows from operating activities
increased while cash flows from financing activities decreased.

F-7

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
The Company elects to use the practical expedient under which it is not required to perform a review for the existence of alease in a contract judged under IAS 17 “Lease” (hereinafter “IAS 17”) and IFRIC 4 “Determining whether an Arrangement
contains a Lease” in prior periods at the commencement date of IFRS 16. In addition, when IFRS 16 is applied to a lease thatis classified as an operating lease under IAS 17, the following practical expedients are mainly elected to use.
・A lessee accounts for the leases for which the lease term ends within 12 months of the date of initial application, in thesame way as short-term leases.
・A lessee uses hindsight, in determining the lease term if the contract contains options to extend or terminate the lease.
The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized in the condensed quarterly
consolidated statement of financial position at the beginning of the fiscal year ending March 31, 2020 is 1.46%.
The difference between the future minimum lease payments of ¥135,963 million under non-cancelable operating leases as ofMarch 31, 2019 disclosed in accordance with IAS 17 and the lease liabilities of ¥273,812 million recognized in thecondensed quarterly consolidated statement of financial position at the beginning of the fiscal year ending March 31, 2020 is¥137,849 million. The main factors for the reconciliation from the future minimum lease payments based on non-cancelable
operating leases as of March 31, 2019 to lease liabilities recognized in the condensed quarterly consolidated statement offinancial position at the beginning of the fiscal year ending March 31, 2020 include decreases of ¥32,940 million due to theapplication of the practical expedient related to short-term leases, ¥17,980 million due to the separation of non-lease
components of the contract and ¥9,456 million due to the measurement of the discounted present value of lease liabilities,
and increases of ¥149,026 million due to the impact of periods covered by extension options and termination options
included in the lease term and ¥49,199 million due to the inclusion of lease liabilities classified as finance leases under IAS
17.
(b) Income Taxes
Income taxes for the nine months ended December 31, 2019 are computed using the estimated annual effective tax rate.

F-8

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(4) Segment Information
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 ten reportable segments, corresponding to categories of activities classified primarily by thesimilarities for the nature of markets, products and services, and economic characteristics. Several operating segments areaggregated into IT, Industry, Mobility and Smart Life 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 basedon the similarities of economic characteristics mainly using gross profit margin ratios of operating segments. The primary products
and services included in each segment are as follows:IT:
Systems integration, Consulting, Control systems, Cloud services, Software, IT products (Storage, Servers) and ATMs
Energy:Power generation systems (Nuclear, Renewable energy, Thermal) and Power grid systems
Industry:
Industry & distribution systems, Water & environment systems and Industrial machinery
Mobility:
Building systems (Elevators, Escalators) and Railway systems
Smart Life:
Medical electronics, Smart life & ecofriendly systems (Refrigerators, Washing machines, Room air conditioners, Air-conditioning
equipment) and Automotive systems (Powertrain systems, Chassis systems, Advanced driver assistance systems)
Hitachi High-Technologies:
Medical and life science products, Analytical equipment, Semiconductor processing equipment, Manufacturing and inspection
equipment, and Advanced industrial products
Hitachi Construction Machinery:Hydraulic excavators, Wheel loaders, Mining machinery, Maintenance and services, Construction solutions and Mine management
systems
Hitachi Metals:
Specialty steel products, Functional components and equipment, Magnetic materials and power electronics materials, and Wires,
cables and related products
Hitachi Chemical:
Functional materials (Electronics materials, Printed wiring boards materials, Electronics components) and Advanced components
and systems (Mobility components, Energy storage devices, Life science-related products)
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 reclassified 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. Figures
for the nine months ended December 31, 2018 have been restated on the basis of the reclassification.

F-9

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
The following tables show business segment information for the nine months ended December 31, 2019 and 2018.
Revenues from Outside Customers
Millions of yen
2019
IT

2018

1,385,112

1,356,002

EnergyIndustry

203,155442,631

222,750
431,386

Mobility
Smart Life

825,288
1,048,175

897,828
1,175,176

Hitachi High-Technologies
Hitachi Construction Machinery

449,973
686,906

464,718
742,898

Hitachi Metals
Hitachi Chemical

648,394
465,070

749,770
506,655

Others181,851

226,978

Subtotal

6,336,555

6,774,161

7,626

8,808

6,344,181

6,782,969

Corporate items
Total
Revenues from Intersegment Transactions

Millions of yen
2019

2018

IT
Energy109,154
42,577

119,932
49,515

Industry
Mobility

112,349
7,383

114,846
9,671

Smart Life
Hitachi High-Technologies

28,64167,00430,30275,754

Hitachi Construction Machinery
Hitachi Metals

282
22,569294
25,761

Hitachi Chemical
Others

14,628
169,839

15,711
195,242

Subtotal
Corporate items and Eliminations

574,426(574,426)

637,028(637,028)

-

-

Total
Total Revenues

Millions of yen
2019
IT

2018

1,494,266

1,475,934

EnergyIndustry

245,732
554,980

272,265546,232

Mobility
Smart Life

832,671
1,076,816

907,499
1,205,478

Hitachi High-Technologies
Hitachi Construction Machinery

516,977
687,188

540,472
743,192

Hitachi Metals
Hitachi Chemical

670,963479,698

775,531522,366

Others351,690422,220

Subtotal

6,910,981

7,411,189

Corporate items and Eliminations(566,800)(628,220)

Total

6,344,181

6,782,969

F-10Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
Segment Profit (Loss)
Millions of yen
2019

2018

IT

158,184

165,467

EnergyIndustry(379,214)
30,200(279,962)
24,156

Mobility
Smart Life

91,60836,492

103,741(345)

Hitachi High-Technologies
Hitachi Construction Machinery

48,49358,45949,59080,153

Hitachi Metals
Hitachi Chemical(52,864)
24,08537,03735,607

Others

26,734

28,825

Subtotal

42,177244,269

Corporate items and Eliminations

12,773

61,185

Total
Interest income

54,95015,413

305,454
16,711

Interest charges(18,242)(15,404)

Income from continuing operations, before income taxes

52,121

306,761

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.

F-11

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(5) Business Acquisitions and Divestitures
The following are the main Business Acquisitions and Divestitures for the nine months ended December 31, 2019, including theperiod up to the approval date of the condensed quarterly consolidated financial statements.
(a) Additional acquisition of shares of Hitachi High-Technologies Corporation (Hitachi High-Technologies)
On January 31, 2020, the Company decided to conduct a tender offer to acquire all issued shares of Hitachi High-Technologies,
a consolidated subsidiary of the Company in the Hitachi High-Technologies segment, to establish the measurement andanalysis platform to strengthen Lumada. The tender offer is scheduled to commence on February 17, 2020. The consideration is
expected to be ¥531.1 billion.
Assuming the tender offer is completed successfully, the Company will conduct a series of procedures to make Hitachi HighTechnologies a wholly-owned subsidiary of the Company, and as a result, it is expected that the Company’s ownership ratio ofshares of Hitachi High-Technologies will increase from 51.7% to 100% and the Company will recognize a decrease in the totalof capital surplus and non-controlling interest by the same amount as the consideration.
(b) Settlement regarding the South African projectAt the meeting of the Board of Directors held on December 18, 2019, the Company approved a settlement with Mitsubishi
Heavy Industries, Ltd. (hereinafter “MHI”) regarding the transfer price adjustment for the South African project previously inthe process of arbitration based on economic rationality and business strategy, etc., and reached a settlement agreement withMHI on the same day. As a result of the conclusion of this agreement, all common shares of Mitsubishi Hitachi Power Systems
Co., Ltd. (hereinafter “MHPS”) held by the Company will be transferred to MHI, and the Company will pay ¥130,000 million
to MHI comprising a settlement payment of ¥200,000 million offset by a consideration of ¥70,000 million in loans receivable
to Mitsubishi Hitachi Power Systems Africa Proprietary Limited (hereinafter “MHPS Africa”) to be transferred to MHI.
Accordingly, the Company recorded other accounts payable of ¥200,000 million related to the settlement payment to MHI andother provision of ¥273,272 million related to the transfer of shares of MHPS. The Company also reversed the provision of¥105,041 million related to the transfer price adjustment, etc. of the South African project, which had been recorded prior to theconclusion of this agreement. As a result of the above, the Energy segment recorded a loss of ¥375,967 million due to thesettlement, which is included in Other expenses in the condensed quarterly consolidated statement of profit or loss for the ninemonths ended December 31, 2019. Other accounts payable and other provision related to this agreement are included in Other
financial liabilities and Other current liabilities, respectively, in the condensed quarterly consolidated statement of financial
position as of December 31, 2019. The amount of ¥130,000 million, comprising a settlement payment offset by a consideration
in loans receivable to MHPS Africa to be transferred to MHI, is scheduled to be paid to MHI in March 2020, and the shares of
MHPS will be delivered to MHI as soon as the procedures required for the transfer are completed. Regarding the assets to betransferred to MHI under this agreement, the shares of MHPS previously included in Investments accounted for using theequity method and loans receivable to MHPS Africa previously included in Investments in securities and other financial assets
classified as non-current assets in the condensed quarterly consolidated statement of financial position, the total of which is¥333,614 million, were reclassified to Other current assets in the condensed quarterly consolidated statement of financial
position since they met the criteria as held-for-sale assets in accordance with IFRS 5 “Non-current Assets Held for Sale andDiscontinued Operations”.
(c) Sale of Diagnostic Imaging-related Business
On December 18, 2019, the Company signed an agreement with FUJIFILM Corporation (Fujifilm) regarding the transfer of the
Diagnostic Imaging-related Business included in the Company’s subsidiaries and associates to Fujifilm.
On July 1, 2020, the Company plans to transfer all shares of common stock of a new company established by the Company toFujifilm after the Diagnostic Imaging-related Business is absorbed and split from the Company and succeeded to the newcompany. The consideration is expected to be ¥179 billion.
Assuming the transaction is settled, it is expected that the Company’s ownership ratio of shares of the new company will
decrease from 100% to 0%, and the new company will be deconsolidated. An expected gain on the sale of shares of the newcompany in the amount of ¥111 billion will be recognized in Other income in the consolidated statement of profit or loss.
(d) Sale of all shares of Hitachi Chemical Company, Ltd. (Hitachi Chemical)
On December 18, 2019, the Company signed a tender offer agreement with Showa Denko K.K. (Showa Denko) and HC
Holdings K.K. (HC Holdings), a wholly-owned subsidiary of Showa Denko, under which the Company agrees to tender all
shares of common stock in Hitachi Chemical held by the Company, in response to a tender offer to be carried out by HC
Holdings for the shares of common stock of Hitachi Chemical, a consolidated subsidiary of the Company in the Hitachi
Chemical segment. The tender offer is scheduled to commence in February 2020, and the consideration to be received by theCompany will be approximately ¥495 billion.

F-12

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
Assuming the tender offer is completed successfully, it is expected that the Company’s ownership ratio of shares of Hitachi
Chemical will decrease from 51.4% to 0%, and Hitachi Chemical will be deconsolidated. An expected gain on the sale ofshares of Hitachi Chemical in the amount of ¥279 billion will be recognized in Other income in the consolidated statement of
profit or loss. Furthermore, non-controlling interest in Hitachi Chemical will decrease approximately ¥230 billion in the
consolidated statement of changes in equity as a result of its deconsolidation.
(e) Reorganization of automotive systems business
On October 30, 2019, the Company and Hitachi Automotive Systems, Ltd. (HiAMS), a consolidated subsidiary of theCompany in the Smart Life segment, signed an agreement with Honda Motor Co., Ltd. (Honda), and Keihin Corporation,
Showa Corporation, and Nissin Kogyo Co., Ltd. (together, “the Associates of Honda”), to integrate management of HiAMS
and the Associates of Honda, in order to strengthen development and distribution of global and competitive solutions in the
CASE area.
HiAMS and the Associates of Honda plan to conduct an absorption-type merger in which HiAMS will be the surviving
company (the Integrated Company) and each of the Associates of Honda will be the disappearing companies after they become
wholly-owned subsidiaries of Honda through tender offers to be conducted by Honda for the common shares of the Associatesof Honda. The consideration will be the common shares of the Integrated Company. After the merger, the Company’sownership ratio of shares of the Integrated Company will become 66.6% and the Integrated Company will become aconsolidated subsidiary of the Company. The effects of this transaction on the Company’s consolidated financial statements are
currently being evaluated.
(f) Acquisition of robotic systems integration business
On April 23, 2019, the Company signed an agreement with JR Intermediate Holdings, LLC (JR Intermediate) to acquire allinterests of JR Technology Group, LLC (JR Technology), a subsidiary of JR Intermediate, in order to expand the robotic
systems integration business globally. On December 27, 2019, Hitachi America, Ltd., a consolidated subsidiary of theCompany, executed the acquisition. As a result, the Company’s ownership ratio of interests of JR Technology became 100%and JR Technology turned into a subsidiary of the Company. Furthermore, Hitachi America, Ltd. repaid USD 231 million(¥25,304 million) of certain loans owed by JR Technology, in addition to the acquisition cost.
The following table summarizes the fair value of the consideration paid for JR Technology and the provisional amounts of theassets acquired and liabilities assumed recognized as of the acquisition date.
Millions of yen
3,056
26,963
433
871
7,766

Cash and cash equivalents
Trade receivables
Inventories
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (deductible for tax purposes)
Other intangible assets
Total

122,963
15,055
177,107

Current liabilities
Non-current liabilities
Total

17,131
29,87247,003

Cash paid for the acquisition

130,104

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
The Company is currently evaluating the fair values to be assigned to assets and liabilities of JR Technology at the acquisitiondate, and therefore the above amounts are subject to change.
The operating results of JR Technology for the period from the acquisition date to December 31, 2019 were not material.
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition date for
JR Technology of April 1, 2019 would not differ materially from the amounts reported in the condensed quarterly consolidated
financial statements for the nine months ended December 31, 2019.

F-13

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(g) Acquisition of Chassis Brakes International B.V. (Chassis Brakes)
On July 24, 2019, the Company and HiAMS, a consolidated subsidiary of the Company in the Smart Life segment, signed anagreement with Caliper Acquisition International S.à r.l. (Caliper), a special purpose vehicle of KPS Capital Partners, for
HiAMS to acquire all shares of Chassis Brakes in order to further strengthen core businesses and build HiAMS’s global
presence. On October 11, 2019, the acquisition was executed. As a result, the Company’s ownership ratio of shares of Chassis
Brakes became 100% and Chassis Brakes turned into a subsidiary of the Company. Furthermore, Hitachi International(Holland) B.V., a consolidated subsidiary of the Company, repaid EUR 194 million (¥23,066 million) of certain loans owed by
Chassis Brakes, in addition to the acquisition cost.
The following table summarizes the fair value of the consideration paid for Chassis Brakes and the provisional amounts of theassets acquired and liabilities assumed recognized as of the acquisition date.
Millions of yen
3,666
13,815
10,894
5,940
28,548Cash and cash equivalents
Trade receivables
Inventories
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

47,66334,139144,665

Current liabilities
Non-current liabilities
Total

50,07434,51384,587

Cash paid for the acquisition

60,078The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
The Company is currently evaluating the fair values to be assigned to assets and liabilities of Chassis Brakes at the acquisitiondate, and therefore the above amounts are subject to change.
The operating results of Chassis Brakes for the period from the acquisition date to December 31, 2019 were not material.
On a pro forma basis, revenues and net income attributable to Hitachi, Ltd. stockholders using an assumed acquisition date for
Chassis Brakes of April 1, 2019 would not differ materially from the amounts reported in the condensed quarterly consolidated
financial statements for the nine months ended December 31, 2019.
The following are the main Business Acquisitions and Divestitures for the nine months ended December 31, 2018.
(a) 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 Mobility 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 Mobility 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 of shares of STS increased to 100% on January 30, 2019. The total consideration
paid for the year ended March 31, 2019, was EUR 1,250 million (¥159,031 million). For the nine months ended December 31,
2018, the total of capital surplus and non-controlling interest decreased by EUR 1,060 million (¥ 135,335 million).
On April 1, 2019, STS changed its name to Hitachi Rail STS S.p.A.. Additionally, on October 31, 2019, STS and HRII
conducted an absorption-type merger in which STS was the surviving company and HRII was the disappearing company.

F-14

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(b) 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 included in Others under segment information 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 condensed quarterly consolidated statement of profit or loss. Changes
in non-controlling interests in the condensed quarterly 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 is a material Business Acquisition other than the above.
(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 USD 6.4 billion (¥701.2 billion). Furthermore,
the Company is expected to repay certain loans owed by the company operating the power grids business to be divested by
ABB, in addition to the acquisition cost. The effects of this transaction on the Company’s consolidated financial statements are
currently being evaluated.

F-15

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(6) Trade Receivables and Contract Assets
The components of trade receivables and contract assets are as follows:
Millions of yen
December 31, 2019
Accounts receivable

March 31, 2019

1,530,039

1,790,520

Contract assets

494,264

432,881

Others170,631

176,532

Total

2,194,934

2,399,933

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) Fair Value of Financial Instruments(a) 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 of years
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 notdistressed 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 areunobservable, the Company uses price information provided by financial institutions to evaluate such investments. The
information provided is corroborated by the income approach using its own valuation model, or the market 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 rateapplicable 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 ininactive markets, or based on models using interest rate curves and forward and spot prices for currencies and commodities. 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 themarket 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 and commodities. 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-16

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

March 31, 2019

Estimated
fair values

Carrying amounts

Estimated
fair values

AssetsInvestments in securities and otherfinancial assets
Lease receivables

89,16789,576

95,07396,377

Debt securities

73,18873,191

72,41872,422Long-term loans receivable

28,05329,177105,061

106,390

Bonds

155,778

158,849

170,498

174,747

Long-term borrowings

653,666

657,431674,043

678,481

Liabilities
Long-term debt [1][1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the condensed quarterly consolidated
statement of financial position.
(c) Financial Instruments Measured at Fair Value
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into three levels of thefair 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 thelowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

F-17Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
The following tables present the assets and liabilities that are measured at fair value on a recurring basis as of December 31 andMarch 31, 2019.
December 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

-

-

3,683

3,683

9,972

5,185

8,621

23,778-35,711

6,875

42,586

190,939-

100,170

291,109200,91140,896

119,349

361,156-

24,308-24,308-24,308-24,308Derivatives
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, 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
Derivatives

-

-

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-

23,078-23,078-23,078-23,078FVTOCI 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-18

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
The following tables present the changes in Level 3 instruments measured on a recurring basis for the nine months ended
December 31, 2019 and 2018.
December 31, 2019
Level 3 financial assets
Balance at beginning of period

Millions of yen
Equitysecurities

Debt
securities

Derivatives

Total

105,077

9,344

7,059

121,480

Loss in profit or loss [1]Gain in OCI [2]

(92)
1,845

(18)
-

(184)
-

(294)
1,845

Purchases
Sales and redemption

2,848(1,658)384(1,005)-

3,232(2,663)Acquisitions and divestitures
Other

(505)
(3,662)

(46)
(38)

-

(551)
(3,700)

Balance at end of period

103,853

8,621

6,875

119,349

(92)

4

(184)

(272)

Unrealized gain (loss) relating tofinancial assets held at end of period [4]December 31, 2018
Level 3 financial assets

Millions of yen
Equitysecurities

Debt
securities

Derivatives

Total

Balance at beginning of period

114,734

9,590

7,760

132,084

Gain (loss) in profit or loss [1]Gain in OCI [2]

68
3,316

67
-

(853)
-

(718)
3,316

Purchases
Sales and redemption

2,032(1,244)2,413(1,216)-

4,445(2,460)Acquisitions and divestitures
Transfer from Level 3 [3](5,232)
(378)

(51)
-

-

(5,283)
(378)

Other
Balance at end of period(39)
113,257(198)
10,605

6,907

(237)
130,769

68

66

(853)

(719)

Unrealized gain (loss) relating tofinancial assets held at end of period [4][1] Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial expenses in thecondensed quarterly 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 throughOCI in the condensed quarterly 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 period is included in Financial income andFinancial expenses in the condensed quarterly 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 value of the put options above as of December 31 and March 31, 2019 were ¥10,923 million and ¥17,678
million, respectively, included in Other financial liabilities in the condensed quarterly 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 most appropriately. The
finance departments continually examine changes in important inputs that could affect the fair value. In case the fair value of afinancial instrument was significantly impaired, administrators review and approve the impairment loss.

F-19

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(8) Employee Benefits(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 and Hitachi Industrial Products, Ltd., a consolidated subsidiary of the Company in the Industry segment, introduced
a risk-sharing corporate pension plan. Under this plan, a risk reserve contribution is determined in advance in accordance with therules governing the plan, and the pension benefits are adjusted annually based on the financial position of the plan to maintainbalanced 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 imposes no additional
contribution obligations, at the time of the shift to the revised plan, the difference between the defined benefit obligations related tothe portion transferred to the revised plan and the amount of assets transferred to the revised plan corresponding to the decrease in
defined benefit obligations, ¥21,206 million, was recognized as a settlement gain in Other income in the condensed quarterly
consolidated statement of profit or loss, and Retirement and severance benefits in the condensed quarterly consolidated statementof financial position decreased by ¥21,206 million. The amount of risk reserve contributions to be paid for the fiscal year ending
March 31, 2020 are not material.
(9) Dividends
Dividends paid on the Company’s common stock for the nine months ended December 31, 2019 are as follows:

Decision

Cash dividends

Appropriation

Cash dividends(millions of yen)fromper share (yen)Record date

Effective date

March 31, 2019

May 31, 2019

The Board of Directors
on May 10, 2019

48,280Retained earnings

50.0

The Board of Directors
on October 30, 2019

43,481Retained earnings

45.0 September 30, 2019 November 29, 2019

Dividends paid on the Company’s common stock for the nine months ended December 31, 2018 are as follows:

Decision
The Board of Directors
on May 10, 2018
The Board of Directors
on October 26, 2018

Cash dividends

Appropriation

Cash dividends(millions of yen)fromper share (yen)Record date

Effective date

March 31, 2018

May 29, 2018

38,621Retained earnings

8.0

38,625Retained earnings

8.0 September 30, 2018 November 27, 2018

Note: Dividends per share do not reflect the share consolidation with an effective date of October 1, 2018.

F-20

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(10) 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.
Effective from April 1, 2019, the Company reclassified its reportable segments. Accordingly, figures for the nine months ended
December 31, 2018 have been restated on the basis of the reclassification. Details of the reclassification are described in note 4.
(Millions of yen)
December 31, 2019
Overseas
Revenues
Subtotal

Total
Revenues

29,761

426,286

1,494,266

3,086

2,227

32,488245,732

37,0398,467

16,078128,113554,980

300,342

32,805219,541

29,977

582,665

832,671

603,460

183,097

167,767

74,22548,267473,356

1,076,816

Hitachi High-Technologies

186,287

161,442

85,181

69,715

14,352

330,690

516,977

Hitachi Construction Machinery

145,410

161,321130,043

98,628

151,786

541,778

687,188

Hitachi Metals

309,153

128,268

185,81132,662

15,069361,810

670,963

Hitachi Chemical

171,997

209,896

36,26647,968

13,571

307,701

479,698

Others291,875

39,255

10,901

5,166

4,493

59,815

351,690

Subtotal

3,666,279

1,411,967

831,640

675,514

325,5813,244,702

6,910,981

Corporate items and Eliminations(512,864)(39,270)(6,551)(4,267)(3,848)(53,936)(566,800)

Total

3,153,415

1,372,697

825,089

671,247

321,733

3,190,766

6,344,181

Japan

Asia

North
America

Europe

Other
Areas

1,067,980

140,494

139,975

116,056

Energy213,244

21,323

5,852

Industry

426,867

66,529

Mobility

250,006

Smart LifeIT(Millions of yen)
December 31, 2018
Overseas
Revenues
Subtotal

Total
Revenues

33,173446,789

1,475,934

4,098

2,455

31,549272,265

38,70010,92919,144

137,345546,232

315,200

40,875277,31434,517

667,906

907,499

662,911

204,777

215,736

65,61356,441

542,567

1,205,478

Hitachi High-Technologies

203,244

200,628

42,33071,76222,508337,228

540,472

Hitachi Construction Machinery

145,546

194,602124,207

101,074

177,763597,646

743,192

Hitachi Metals

342,162

154,692

231,926

37,685

9,066

433,369

775,531

Hitachi Chemical

190,521229,776

36,48453,605

11,980331,845522,366

Others321,641

69,722

18,263

7,901

4,693

100,579

422,220

Subtotal

3,784,366

1,590,185

904,541

760,357

371,740

3,626,823

7,411,189

Corporate items and Eliminations(562,830)(43,458)(8,554)(10,198)(3,180)(65,390)(628,220)

Total

3,221,536

1,546,727

895,987

750,159

368,560

3,561,433

6,782,969

Japan

Asia

North
America

Europe

Other
Areas

1,029,145

132,966

150,274

130,376

Energy240,716

19,2505,746

Industry

408,887

68,572

Mobility

239,593

Smart Life

IT

F-21

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
The IT segment consists of Front Business and Services & Platforms, for which revenue amounted to ¥1,000,256 million and¥571,628 million for the nine months ended December 31, 2019 and ¥964,393 million and ¥579,641 million for the nine months
ended December 31, 2018, respectively (including intersegment transactions). Front Business is operated mainly in Japan, andServices & Platforms 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.
(IT)
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.
Services & Platforms primarily sells control systems, software and IT products. Revenue is recognized when control over the
goods is transferred to customers as performance obligations are satisfied at the point in time upon the completion or upondelivery 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.
(Energy, Industry and Mobility)
The Energy segment includes revenue from businesses such as power generation systems, and the Industry segment includes
revenue from businesses such as industry & distribution systems. These segments are operated mainly in Japan. The Mobility
segment includes revenue from building systems and railway systems businesses. The building systems business is operated
mainly in China and the railway systems business is operated mainly in Europe.
Contracts such as construction in these segments 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, these segments provide certain services promised in the contracts such as
maintenance throughout the duration of the contract, and recognize 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. included in the Industry segment, and in the sale of elevators, etc. included in
the Mobility segment, revenue is recognized when control over the goods is transferred to customers as performanceobligations are satisfied at the point in time upon the completion or upon delivery of the goods. The Company’s generalterms and conditions apply, and there are no significant transactions in which payment terms include deferred payments, etc.
(Other)In the Smart Life, Hitachi High-Technologies, Hitachi Construction Machinery, Hitachi Metals, and Hitachi Chemical
segments, performance obligations are generally satisfied at a point in time upon 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.

F-22

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(11) Other Income and Expenses
The main components of other income and expenses for the nine months ended December 31, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Net gain (loss) on sales and disposals of fixed assets(1,651)

23,668

Impairment losses(76,933)(322,335)

Net gain (loss) on business reorganization and others

27,50882,376

Special termination benefits(8,062)(9,584)(254)(1,730)(375,967)-

Expenses related to competition law and others
Loss due to the settlement of the South African project

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 nine months ended December 31, 2019 and2018 were ¥86,358 million and ¥332,462 million, respectively. Restructuring charges (structural reform expenses) mainly include
impairment losses and special termination benefits.
Impairment losses for the nine months ended December 31, 2018 include impairment losses 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 clear that further
time is needed to develop a financial structure for the project and conditions for building and operating the nuclear power stations tosecure its business continuation. Consequently, the Energy segment recognized impairment losses of ¥277,208 million on therelated assets of the project. These consisted of impairment losses on property, plant and equipment of ¥206,799 million and on
intangible assets of ¥70,409 million. The recoverable amount of the CGU was measured at ¥2,494 million on the basis of fair valueless costs of disposal as of December 31, 2018. A market approach was mainly 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 for the nine months ended December 31, 2019 mainly include ¥61,431 million due to the lower than expected,
future revenue projected for the magnetic materials business in the Hitachi Metals segment consisting of impairment losses onproperty, plant and equipment of ¥22,479 million and on intangible assets of ¥38,952 million. The recoverable amount wasdetermined on the basis of value in use, which was measured at ¥106,313 million as of September 30, 2019, the date on which
impairment losses were recognized. The value in use was discounted at 9.6% (before tax), which was derived from the weighted
average cost of capital.
The detail of loss due to the settlement of the South African project is disclosed in note 5.

(12) Financial Income and Expenses
The main components of financial income and expenses for the nine months ended December 31, 2019 and 2018 are as follows:
Millions of yen
2019

2018

Dividends received

4,628

5,060

Exchange gain (loss)

7,542

9,289

Dividends received for the nine months ended December 31, 2019 and 2018 are from FVTOCI financial assets.

F-23

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(13) Discontinued Operations
In the Energy segment, the Company classified the part of thermal power generation systems business which was not transferredto 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 thecondensed quarterly 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 nine months ended December 31, 2019 and 2018 are as
follows:
Millions of yen
2019

2018

Profit or loss from discontinued operations
Revenues
Cost of sales and expenses
Loss from discontinued operations, before income taxes
Income taxes
Loss from discontinued operations

24(6,429)(1,212)(581)(1,188)(7,010)1

2,606(1,187)(4,404)
Millions of yen

2019

2018

Cash flows from discontinued operations
Cash flows from operating activities(2,181)(17,236)

Cash flows from investing activities--

Cash flows from financing activities

2,247

16,793F-24

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(14) Earnings Per Share (EPS) Information
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders for the nine months ended December 31, 2019and 2018 are as follows:
Nine months ended December 31
Number of shares
2019
Weighted average number of shares on which basic EPS is calculated

2018

965,702,013

965,637,627

Stock options

890,960

759,283

Restricted stock

361,911-

966,954,884

966,396,910

Effect of dilutive securities

Number of shares on which diluted EPS is calculated

Millions of yen
2019

2018

Net income from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted56,33387,031--

56,33387,031(1,187)(4,404)--(1,187)(4,404)

55,146

82,627--55,146

82,627Net 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
Basic

58.33

90.13

Diluted

58.26

90.06

Basic

(1.23)(4.56)

Diluted(1.23)(4.56)

Basic

57.10

85.57

Diluted

57.03

85.50

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, 2019.

F-25

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders for the three months ended December 31,
2019 and 2018 are as follows:
Three months ended December 31
Number of shares
2019
Weighted average number of shares on which basic EPS is calculated

2018

965,716,582

965,617,891

Stock options--

Restricted stock--

965,716,582

965,617,891

Effect of dilutive securities

Number of shares on which diluted EPS is calculated

Millions of yen
2019

2018

Net loss from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted(133,756)(109,967)--(133,756)(109,967)

(391)

(401)

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

-

-

(391)

(401)

(134,147)(110,368)

Net loss attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted--(134,147)(110,368)
Yen

2019

2018

EPS from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic(138.50)(113.88)

Diluted(138.50)(113.88)

Basic(0.40)(0.42)

Diluted(0.40)(0.42)

Basic(138.91)(114.30)

Diluted(138.91)(114.30)

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

EPS attributable to Hitachi, Ltd. stockholders

Note: Stock options and restricted stock are excluded from the calculations of diluted EPS attributable to Hitachi, Ltd.
stockholders for the three months ended December 31, 2019 and 2018 because they are antidilutive.

F-26

Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019(15) Contingencies(a) 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.
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 (¥32,234 million) and interest allegedly incurred by performance
defects of a power plant. As of December 31, 2019, the amount of compensation claimed by the customer was changed to
EUR 270 million (¥33,089 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.

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Notes to Condensed Quarterly Consolidated Financial Statements
December 31, 2019
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 condensed quarterly consolidated
financial statements of the Company and subsidiaries.
(b) 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.
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.
On December 18, 2019, the Company approved a settlement based on economic rationality and business strategy, etc., andreached a settlement agreement with MHI on the same day. The effect of this settlement is disclosed in note 5.
(16) Subsequent Events(Issuance of unsecured straight bonds)
On January 31, 2020, the Company decided to issue unsecured straight bonds up to ¥200 billion after February 2020 in order tosecure funds for its growth strategy. The Company plans to issue the bonds through a public offering in Japan for investment
purposes and loan.
(17) Approval of Condensed Quarterly Consolidated Financial Statements
The condensed quarterly consolidated financial statements were approved on February 10, 2020 by Toshiaki Higashihara,
President and CEO of the Company.

F-28

[Cover][Document Filed][Applicable Law]

Confirmation Letter
Article 24-4-8, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with][Filing Date]

Director, Kanto Local Finance Bureau
February 10, 2020

[Company Name][Company Name in English]

Kabushiki Kaisha Hitachi Seisakusho
Hitachi, Ltd.

[Title and Name of Representative][Name and title of CFO]

Toshiaki Higashihara, President & CEO
Mitsuaki Nishiyama, Senior Vice President and Executive Officer[Address of Head Office][Place Where Available for Public Inspection]

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Tokyo Stock Exchange, Inc.
(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 Adequacy of Statements Contained in the Quarterly Report
Mr. Toshiaki Higashihara, President & CEO, and Mr. Mitsuaki Nishiyama, Senior Vice President and Executive Officer,
confirmed that statements contained in the Quarterly Report for the third quarter of the 151st fiscal year (from October 1, 2019 to
December 31, 2019) were adequate under the Financial Instruments and Exchange Act.
2. Special Notes
None.

A-2