Sumitomo Heavy Industries, Ltd.
CONSOLIDATED REPORT FY 2005, 1H
For the Six-Month Period to September 30, 2005

Note: All financial information has been prepared in accordance with generally accepted accounting principles inJapan. This document has been translated from the Japanese original as a guide to non-Japanese investors and contains
forward-looking statements that are based on managements’ estimates, assumptions and projections at the time of
publication. A number of factors could cause actual results to differ materially from expectations. Amounts shown in thisfinancial statement have been rounded down to the nearest million yen.

Consolidated Results FY 2005 1H

November 10, 2005

CONSOLIDATED FINANCIAL RESULTS
For the First Half Ended September 30, 2005
Sumitomo Heavy Industries, Ltd.
Listed Exchanges
Stock CodeHead Office
President
URL
Inquiries

Tokyo Stock Exchange
6302
Tokyo
Yoshio Hinoh
www.shi.co.jp
Hideo Ohshima,
General Manager, Corporate Communications Dept.
+81 3 5488 8219
November 10, 2005

Telephone
Date of the Board of Directors meeting
concerning consolidated interim accounts
U.S. GAAP accounting principles

Not adopted

1. FY 2005 1H Consolidated Results (April 1, 2005 to September 30, 2005)(1) Business Results(Units: millions of yen)

Net Sales
Operating Income
Ordinary Income
Net Income
Net Income per Share (yen)Fully Diluted Net Income per Share*Notes:First Half

Previous First Half

Previous Full Term

April 1, 2005
to September 30, 2005

April 1, 2004
to September 30, 2004

April 1, 2004
to March 31, 2005

% change
245,857
3.3
18,494(13.0)
18,520(17.2)
12,527
15.5
20.83
--

% change
238,078
11.9
21,26355.7
22,355105.7
10,850
136.4
18.03
--

521,310
48,77347,853
22,79237.80--(1) Gain from investments in subsidiaries and affiliated companies accounted for by equity method:
September 2005:
1,714 million yen
September 2004:
2,485 million yen
March 2005:
4,080 million yen(2) Average number of outstanding shares for the term (consolidated):
As of September 2005:
601,535,553 shares
As of September 2004:
601,927,871 shares
As of March 2005:
601,826,660 shares(3) Changes to accounting procedures: Yes(4) Percentages for net sales, operating income, ordinary income and net income represent year-on-year changes.

Consolidated Results1Consolidated Results FY 2005 1H(2) Financial Position(Units: millions of yen)
End of First Half

End of Previous
First Half

End of Previous
Full YearAs of Sept. 30, 2005

As of Sept. 30, 2004

As of March 31, 2005

Total Assets
562,609
Shareholders’ Equity
148,252
Equity Ratio (%)
26.4
Shareholders’ Equity per Share (yen)246.50*Notes: Number of shares outstanding at the end of the period (consolidated):
As of September 30, 2005:
As of September 30, 2004:
As of March 31, 2005:

558,334
124,255
22.3
206.45569,771
137,15624.1
227.90601,419,314 shares
601,871,903 shares
601,644,571 shares(3) Cash Flows(Units: millions of yen)

Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Cash and Cash Equivalents at Period
EndFirst Half
April 1, 2005
to September 30, 2005

Previous First Half
April 1, 2004
to September 30, 2004

Previous Full Year
April 1, 2004 to
March 31, 2005

25,638(2,010)(25,944)

26,104(3,493)(34,532)

45,451(6,087)(46,490)

46,98845,763

49,108(4) Scope of Consolidation and Application of equity method:
Number of consolidated subsidiaries:
Number of non-consolidated subsidiaries accounted for by the equity method:
Number of affiliates accounted for by the equity method:(5) Changes in the scope of consolidation and Application of equity method:
Consolidated subsidiaries:(New) 1Equity method:(New) --

9028(Removed) 2(Removed) --2. FY 2006 Consolidated Forecasts (April 1, 2005 to March 31, 2006)(Units: millions of yen)
Full Year
April 1, 2005 to March 31, 2006

Net Sales
Ordinary Income
Net Income

540,000
41,00023,500*Notes: (1) Projected net income per share for FY2005 (ending March 31, 2006): ................................... 39.07 yen(2) Please consult page 10 of 3. Outlook for Fiscal Year in III. Business Results and Financial Position section forfurther information concerning the projections.

Consolidated Results2

Consolidated Results FY 2005 1H

I. State of the Group

Nihon Spindle
Mfg.Co., Ltd.
Izumi Food
Machinery Co. Ltd.
Lightwell Co., Ltd.

Sumitomo (SHI) Cyclo Drive Germany, GmbH

Sumitomo (SHI) Cyclo Drive Asia Pacific PTE. Ltd.

Mass-Produced Machinery

Sumitomo (SHI) Cyclo Drive China, Ltd.

Sumitomo Heavy Industries PTC Sales Co., LTD.

SHI Plastics Machinery

SHI Plastics Machinery, Inc. of America

Sumitomo Eaton Nova Corporation

Sumitomo NACCO Materials Handling Co., Ltd.
Sumitomo Heavy Industries Himatex Co., Ltd.

Sumitomo (S.H.I.) Construction Machinery Co.,
Ltd.

Construction Machinery

Sumiju Environmental
Engineering, Inc.

Sumitomo Machinery Corporation of America

Sumitomo Heavy Industries (Parent Company)

Sumitomo Heavy
Industries Marine &Engineering Co., Ltd.

Industrial Machinery

Sumitomo Heavy
Industries TechnoFort Co., Ltd.

Ship, Steel Structure & Other specialized Equipment

Shin Nippon
Machinery Co., Ltd.

Seisa Gear Ltd.

Environmental Protection Facilities, Plants & Others

Sumitomo Heavy
Industries Engineering &Services Co., Ltd.

Hitachi Sumitomo Heavy Industries
Construction Crane Co., Ltd.

Link-Belt Construction Equipment Company

Sumitomo (S.H.I.) Construction Machinery Co.,
Ltd
Sumitomo (S.H.I.) Construction Machinery
Manufacturing Co., Ltd.
Sumitomo (S.H.I.) Construction Machinery Sales Co., Ltd.

Consolidated Results3Consolidated Results FY 2005 1H

II. Management Policies
1. Basic Management Policies
The Group believes that securing long term customer trust through continuously "building value for consumer" isinterconnected with the Group's efforts to maintain sustained development and increase business worth, andreflects the desires of shareholders, employees, and the local community.
In order to realize high, stable growth on a global level, the Group intends to be an "organized, knowledge-buildingtype company" that provides quality products to customers. Then, the Group will strengthen marketing, researchand development, and production, and focus even more closely on the product itself.

2. Basic Policies Relating to Profit Distribution
The Company's basic policy is to pay shareholder dividends according to periodic income and to continue toincrease these dividends, while replenishing internal reserves necessary for stable, long-term businessdevelopment.

3. Medium- and Long-Term Management Strategies
Under "Leap to Excellence ‘07", the new FY2005 medium term management plan, the Group is forging an
independent, vertically integrated business management model from the inter-business value chain model that itpreviously followed.
In order to create this new management model, about 50 business units will be reorganized into three segments.
The new segments will be "Key Components", centered on speed reducer and transmission equipment, precisioncontrol equipment, and other components; "Appliances", centered on injection molding machine; and "Total
Systems", consisting of systems such as materials handling systems and energy plants.
These segments will be tied together through the value chain: “Appliances” will be differentiated from "KeyComponents", and “Total Systems” will be differentiated from " Appliances ".
Additionally, a base for stable growth was formed as a result of strengthening the Group's financial position during
the previous medium term management plan. This will make it possible to accept a certain degree of risk and carryout aggressive investment during "Leap to Excellence ‘07", which in turn will allow business expansion in the future.
As for investment in research and development, it is believed that there are several possibilities for development of
new products between "Key Components" and " Appliances". This area promises potential for new products, and isdriving a revolution in the prioritization of research and development investment.
"Leap to Excellence ‘07", the new medium term management plan, calls for the following quantitative indicators to
be met by the end of 2007.
Operating income: More than 60 billion yen
Interest bearing debt: Less than 150 billion yen
The plan further calls for keeping ROIC (return on invested capital), a Group management indicator, above WACC
(weighted average cost of capital), and above 10%.

4. Issues to be Addressed
The Group, in accordance with its new growth strategy, is, in addition to striving to revolutionize business building,marketing, product development, and craftsmanship, also exerting itself to build value for customers by providing
quality products.
In this first half, selective capital investment in speed reducer and transmission equipment, a mechatronics
business, a speed reducer n and transmission equipment business fusion project, and other business expansion
and strengthening measures were carried out as means to manufacture quality products.
Further, the Group has continued to invest aggressively in the cultivation and appropriate posting of personnel andincreasing educational opportunities to improve organizational strength.
Consolidated Results4Consolidated Results FY 2005 1H

Finally, the new personnel system introduced last Fiscal Year was firmly established, with clearly delineatedobjectives for each employee's position and performance evaluations based on those objectives which allows theGroup to promote an organizational structure that provides increased job satisfaction.

5. Basic Approach to Corporate Governance and the Status of its Implementation(1) Basic Approach to Corporate GovernanceIn order to increase business worth and, starting with stockholders, raise the confidence of customers, Company
employees, the community, and other stakeholders, the Company is establishing an efficient and highly transparent
management system as the basis of corporate governance.

(2) Status of Corporate Governance Implementation
A. Condition of upgrades to compliance and risk management within the internal control system
The Company has adopted the auditor system. Within this framework, it introduced the executive officer system in
1999, separating business management functions and supervisory functions.
The board of directors is small, consisting of only 9 directors, of which 1 member is elected from outside of theCompany. The board works hard to insure that management remains transparent and that management
supervisory functions are strengthened.
The board of directors deliberates items specified by commercial law. Important management issues are also
selected beforehand for discussion.
In addition, the Compensation Committee, an advisory body to the board of directors, half of whose members comefrom outside the Company, was established in order to insure transparency and the appropriateness of thedirectors' compensation.
The Auditing Committee consists of 4 auditors (of which 2 are external auditors).
The organizational audit carried out by the directors and auditors checks for both legitimacy and appropriateness.
In addition, the Group periodically holds meetings with auditors from the Company and its affiliates in order toexchange auditing related information and allow the Group's auditing functions to be carried out fully.
Moreover, an Auditing Committee Executive Office, a staff organization subordinate to the Auditing Committee,
was established to support the Auditing Committee.
There are 16 executive officers (including 8 who serve concurrently as directors) elected to take responsibility forbusiness management.
The Group established an Executive Committee, comprised of executive officers, as well as a Group Management
Committee, consisting of the presidents of the Company and its primary related companies, and it is carrying out
performance management from a consolidated base and following-up management measures.
Finally, a Management Strategy Meeting, comprised of the president of the Company and other Company
executive officers and held in principle weekly, was established. In addition to serving as a forum for the advancedeliberation of items for resolution at the meeting of the board, the Meeting also deliberates key management items
within the scope of its authority as delegated by the board.

Consolidated Results
5Consolidated Results FY 2005 1H

The Company's corporate governance system can be graphically represented as shown below.

Stockholders

Audit Officers/
Audit Committee

Board of Directors
Compensation
Committee

Auditing

Oversight

Oversight

President

Management
Strategy Meeting

Internal
Management
Promotion Section

Internal Audit
SectionExecutive
Committee
Group Management
Committee

Internal
check

Operating Divisions

Affiliated Companies

Auditor Officers/Audit Committeeof Affiliated Companies

Consolidated Results
6

Auditing

Accounting Auditor

EthicalCommittee

Consolidated Results FY 2005 1H

B. Condition of upgrades to compliance and risk management within the internal control system
The Company instigated a code of ethics, established an Ethics Committee, and established an internal hotline forreporting unethical behavior in its efforts to maintain and improve respect for law, fairness, and ethical practice inits business activities.
The comprehensive risk management system introduced in 2001 was also reinforced and enhanced.
Starting in 2004, a Group-wide effort to build and enhance an internal control system that would function to unify
business ethics and risk management activities was undertaken.
In August of 2004, a risk management office was reorganized within the internal control promotion office as apromotional organization for this activity, and an internal control promotion organization was established within theoperations division.
In October of the same year, a compliance manual was formulated, and thorough dissemination of compliancethroughout the Group was emphasized. By March of 2005, awareness-training activities had been undertaken
throughout the entire Group, and throughout the Group's affiliated companies.
Given this background, the current incident involving the violation of Japan's Antimonopoly Law has been taken
seriously. In addition to a resolution to strictly observe Japan's Antimonopoly Law that was passed at the meetingof the board of directors this July, a message of strict compliance has been sent out repeatedly.
In addition, the existing internal control promotion organization, which has the inherent function of strongly
promoting compliance, was further expanded.
Further concrete management efforts to emphasize compliance, in addition to carrying out the re-education of all
employees concerning Japan's Antimonopoly Law, required all officers and managers (except for auditors) to study
and sign a compliance and Antimonopoly Law observance pledge book, and the "Ethics Hotline", a previously
established internal reporting system, has been enhanced by including an external lawyer as the point of contact.
In order to enhance compliance where business operations related to public works projects are concerned, in
addition to each business division self-checking bids for conformity with compliance issues, a new organization was
also created within the Company to monitor orders.
Finally, in order to guarantee the effectiveness of these compliance programs, a compliance monitoring function
was added to the audit office, the results of which are reported to the board of directors each quarter.

6. Items concerning the Parent Company, etc.
Not applicable as the company has no parent company.

Consolidated Results
7

Consolidated Results FY 2005 1H

III. Business Results and Financial Position
1. Business Results
Despite rising costs of materials such as steel and crude oil, Japan's economy in this first half was characterized bya steady revival of business activity with increases in private capital investment, following a recovery in businessrevenues, and increases in personal consumption.
Overseas, business activity expanded in the United States and China, and to a degree in Europe, where activity
showed modest recovery.
Against this backdrop, the new mid-term management plan "Leap to Excellence ‘07" was launched. Due tomeasures in progress to improve profitability, this first half became the third accounting period to post continued
increases in both sales and profits (interim simple profit base), and first half net sales and profits posted at thehighest levels on record.
As regards orders received, the Construction Machinery segment expanded considerably on the back of strong ordervolume from North America. However, due to a slump in demand for bridges, environment-related works, and othergovernment related demand, orders received totaled 282.4 billion yen, a year-on-year decrease.
Net sales increased 3% year-on-year to 245.9 billion yen, the result of strong overseas sales centering on North
America. Strong sales were registered in Construction Machinery segment, the turbines & pumps, and forging
presses for automobiles in Industrial Machinery segment. The Mass-Produced Machinery segment also
experienced strong sales growth in speed reducer and transmission equipment.
Regards operating profit and loss, income from the Construction Machinery and Industrial Machinery segment
increased. However, a relative year-on-year loss appears in operating income as a result of one-time sales in thereal estate section in the previous interim. In the absence of real estate sales in this term, operating income
decreased relatively 13% year-on-year to 18.5 billion yen.
Non-operating profit and loss also decreased as earnings on the equity method decreased. Ordinary income
posted 18.5 billion yen, a year on year decrease of 17%.
Extraordinary profits posted at 12.5 billion yen, a year on year increase of 15% and record result for the Company,
as a result of major improvements following the absence of the time differential for change in the standard pension
benefit plan, which had been depreciating for a 5 year period ending last year, and the absence of losses on
disposals of fixed assets.
Following these management results, the Company has resolved to pay out a dividend of 2.50 yen per sharesemiannually.
Results for each division are as follows.
Mass Produced Machinery Segment
Private capital investment in Japan stregnthened since the last accounting period, and overseas business activity
improved greatly. Results, especially from activities targeted at the United States, power transmission & controls
business showed steady improvement.
Plastic machinery business sales in Japan, centering on automobile-related machinery, were steady. However
overseas sales decreased, due to a decline in IT-related investment.
Precision control equipment and components business sales increased markedly in cyrogenics, precision forgedparts and machine tools, and other areas.
Orders received totaled 106.1 billion yen, roughly the same year-on-year, while net sales reached 103.6 billion yen,a year-on-year increase of 5%.
Operating income posted 13.1 billion yen, a year-on-year decrease of 2.6 billion yen, as sales for plastic machineryfell.
Consolidated Results8Consolidated Results FY 2005 1H

Environmental Protection Facilities, Plants, and Others Segment
Rising crude oil prices and increasing electric power demand worldwide resulted in an increase for the energy plantsegment, however orders for public works construction decreased, and overall orders in the segment registered37.4 billion yen, a year-on-year decrease of 19%.
Net sales totaled 31.9 billion yen, showing a year-on -year decrease of 7%, as this interim had nothing to replace
the effect of the real estate section's sale of part of the land from the Tanashi plant during the previous first half.
Operating income posted at 0.1 billion yen, a year-on-year decrease of 2.5 billion yen.
Ship, Steel Structure and Other Specialized Equipment Segment
Shipbuilding orders for 5 Aframax tankers were awarded, the same number year-on-year, and as ship prices rose,order revenue levels showed an increase.
However steel structure and process equipment group orders decreased substantially, and orders for the entire
segment totaled 43.9 billion yen, a year on year decrease of 8% .
Net sales for the entire segment was 24.3 billion yen, a year-on-year decrease of 4%, as an increase in
shipbuilding sales following the delivery of 3 Aframax tankers, however, was offset by a decrease in ship repairs.
Operating losses registered 1.3 billion yen, a year-on-year deterioration of 0.7 billion yen, due to the influence ofincreases in the costs of steel and other raw materials.
Industrial Machinery Segment
Orders for forging presses for the automobile industry grew, while orders for large cranes also increased after
reinvesting in the iron mill. Furthermore, turbines and pumps, centered on overseas business, also remained strong.
Orders received totaled 32.8 billion yen, almost the same year-on-year, and net sales reached 27.3 billion yen, ayear on year increase of 7%.
Operating income nearly doubled year-on-year to 3.1 billion yen, following focus on marketing and exhaustive
project management.
Construction Machinery Segment
Hydraulic excavator sales showed significant expansion overseas, centering on North America.
Sales of mobile cranes for construction were also strong, supported by the vigorous market in North America.
Orders received rose 11% year-on-year to 62.2 billion yen, and net sales registered 58.9 billion yen, a year on year
increase of 8%.
Operating income registered 3.5 billion yen, a year on year increase of 1.5 billion yen.

2. Financial Position
Due to a steady recovery in collection of trade receivables, total assets posted 562.6 billion yen, a year-on-year
decrease of 7.2 billion yen.
As a result of asset reduction efforts, interest-bearing debt posted 145.9 billion yen, a year-on-year decrease of
23.3 billion yen, or 25.9% of total assets, a year on year decrease of 3.8 points.
Stockholder's equity results for this first half were strong, posting 148.3 billion yen, a year-on-year increase of 11.1
billion yen, and stockholder's equity ratio, at 26.4%, showed a year on year improvement of 2.3 points.
Cash flows from operating activities totaled 25.6 billion yen, roughly the same as the previous year. Though
corporate tax paid showed a year on year increase, we recorded steady progress in collection of trade receivables.

Consolidated Results
9Consolidated Results FY 2005 1H

Cash flows from investing activities declined to 2 billion yen, a year on year decrease of 1.5 billion yen， despite
income as a result of the clearing off distributions from overseas subsidiary companies from the previous
accounting period.
Cash flows from financing activities posted a decrease of 25.9 billion yen due to repayment of loans.
As a result of the foregoing, cash and cash equivalents at the end of this interim accounting period registered 47
billion yen, a year on year decrease of 2.1 billion yen.

Cash Flow Indicators
2003

2004

2005

InterimFull Year

InterimFull Year

Interim

Shareholders’ equity ratio

17.1

19.7

22.3

24.1

26.4

Shareholders’ equity ratio at market value

25.0

30.7

35.1

44.6

86.1

Years to debt redemption

3.9

2.8

3.5

3.7

2.8

Interest coverage ratio

14.7

19.5

16.1

15.0

18.9

(Notes)
1. Indicators calculated using the following formulae.
Stockholders' equity ratio: Shareholders' equity/Total assets
Stockholders’ equity ratio at market value: Market capitalization/Total assets
Years to debt redemption: Interest-bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payments
2. All are calculated based on consolidated financial figures.
3. Interest-bearing debt indicates all liabilities posted in the balance sheets on which the Company pays
interest.

3. Outlook for the Fiscal YearAs for the future business environment, there is some uncertainty, due to rising material costs and hesitant public
investment. However, the Group will move forward to achieve the goals of the new medium term management plan
"Leap to Excellence ‘07", and steadily carry out related management measures.
The outlook for this year's performance are as follows.
(Units: billions of yen)
Consolidated

AmountNon-consolidated

AmountNet sales

540.0

Net sales

265.0

Operating income

45.0

Operating income

19.0

Ordinary income

41.0

Ordinary income

17.0

Net income

23.5

Net income

9.0*Expectations and outlooks for future performance are rational judgments made based on the information currently
available.
Therefore, actual results may vary from written expectations and outlooks due to changes in various factors.
Please see Business Risks section for detailed information about those factors.

Consolidated Results
10Consolidated Results FY 2005 1H

IV. Business Risks
The Group's operating results and financial position could be influenced by any of items enumerated below.
Items from the text that concern the future are based on the Group's judgments made at the end of the current
interim consolidated accounting period.

(1) Economic conditions
Demand for the capital goods, which comprise the majority of the Group's net sales, is influenced by economic
conditions of the areas within Japan and overseas where the Group conducts its sales.
Therefore, recessions in Japan, Asia, North America, Europe, and other major markets, and the subsequent
reduction in demand for the Group's products, may affect the Group's performance and financial position.

(2) Exchange rate fluctuation
The Group's business activities include production and sales of its products in many countries around the world.
Transactions, including sales, expenses, assets, and liabilities, that are carried out in the local currency of eachcountry are converted to yen in order to prepare consolidated financial statements.
Values of these items in the local currency may not change, however it is possible that the value after conversion to
yen will be affected by the exchange rate at the time of conversion.
Moreover, as of September 31, 2005, dollar denominated back orders, centered on the shipbuilding business, wereabout 11 billion dollars.
To minimize the affects of fluctuations in the exchange rate on results, risk hedges such as forward exchange
contracts are used, but it is difficult to remove risk entirely in this way.
As a result, the Group's performance results may be influenced by fluctuations in the exchange rate.

(3) Rise in raw materials prices
Increases in prices of raw materials such as iron, copper, and petroleum that accompanied worldwide businessrecovery have become pronounced, and the Company is concerned about the subsequent rise in the costs of raw
materials necessary for its products.
The Group has endeavored to reduce costs through VE and similar activities, and has attempted to capture rising
raw materials prices in the estimated costs of its products, but it is possible that not all cost increases can beabsorbed, and results may be affected.

(4) Overseas business development
The Group works to develop global businesses, particularly in the Mass-Produced Machinery segment and theConstruction Machinery segment, and focuses on markets in North America, Asia, and Europe. In order to increase
overseas demand, it must enhance overseas sales networks, services and production facilities.
However, depending on the country, there are times when political changes and unforeseeable changes in laws
and regulations may influence the market for a particular product. Especially in China, where the market canoverheat due to sudden economic growth, financial regulation may be imposed as part of the application of
investment control measures.
As a result, it is possible that the results of the Group's overseas business activities may be affected.

Consolidated Results
11Consolidated Results FY 2005 1H(5) Product quality
All of the Group's products are manufactured according to an exacting quality standard. None the less, not every
product produced by the Group can be free of defects, and there is no guarantee that situations will not arise inwhich the Group will have to bear the burden of guarantee construction.
In addition, the Group carries product liability compensation insurance, but there is no guarantee that this insurance
will cover all compensation amounts.
If the sums involved in guarantee construction and product liability compensation obligations borne by the Group asa result of problems with product quality are large, then they could have an adverse influence on the Group's
performance results and financial position.

(6) Effects of impairment accounting
On March 31, 2002, the Company revaluated its land used for business purposes in accordance with Japan's Law
Concerning Land Revaluation (Law No. 34, dated March 31, 1998) and Law Amending the Law Concerning Land
Revaluation (Law No. 19, dated March 31, 2001) on the basis.
The difference between the book value of land at the end of the last accounting period and its value after therevaluation was 19.2 billion yen, a decrease of 18%. If the value of the land further depreciates in the future, there
is a possibility it will register as a depreciation of fixed assets.
When the decrease is registered, it may be reflected in the Group's performance results.

(7) Environmental protection
The Group, in accordance with its Group Environmental Policy, devotes itself to the reduction of environmental
impact, such as by avoiding environmental risks and minimizing waste.
Although the group has an exhaustive system in place to prevent environmental pollution, there is always thepossibility that environmental pollution could occur due to unexpected circumstances.
If environmental pollution were to occur, the large costs involved might affect the Group's performance results.

(8) Disasters
In order to prevent or reduce to the smallest extent possible damages arising from disasters such as fire,
earthquake, typhoon, and storms and flooding, the Group carries out inspections and training and has installed acommunications system.
Nonetheless, physical damages and injuries resulting from disasters may impact the Group's activities.
Moreover, there is no insurance that can provide complete coverage of damages from disasters.

Consolidated Results
12Consolidated Results FY 2005 1H

V. Consolidated Financial Statements(1) Consolidated Income Statements(Units: millions of yen)PreviousFirst HalfFirst Half
April 1, 2005 to
September 30, 2005
Amount%ChangePrevious
Fiscal Year
April 1, 2004 to, March
31, 2005

AmountAmountApril 1, 2004 to
September 30, 2004
Amount%%Net sales

245,857

100.0

238,078

100.0

7,778

521,310

100.0

Cost of sales

193,56478.7

184,300

77.4

9,264

407,51278.2

Gross profit

52,292

21.3

53,77822.6(1,486)

113,798

21.8

Selling, general &administrative
expenses

33,7991,283

65,025

Operating income

18,494(2,769)48,77332,516
7.5

21,263

8.9

Interest income

33

74

(40)

172

Dividend income

296

208

88

289

1,714

2,485

(771)

4,080

407

387

20

561

Equity in earnings ofunconsolidated
subsidiaries andaffiliatedcompanies
Collection ofallowance for
doubtful accounts
Interest expense

1,293

1,609

(316)

2,995

(1,130)

(453)

(677)

(3,026)

Gain on sale of securities

661

--

661

506

Gain on sale of property,
plant and equipment

--

1,134

(1,134)

1,575

Amortization of priorservice cost

--

--

--

2,515

Other-net

Consolidated Results
13

9.4

Consolidated Results FY 2005 1H(Units: millions of yen)PreviousFirst HalfFirst Half
April 1, 2005 to
September 30, 2005
Amount%ChangePrevious
Fiscal Year
April 1, 2004 to, March
31, 2005

AmountAmountApril 1, 2004 to
September 30, 2004
Amount%%Provision for retirement
benefits to directors,
statutory auditors andcorporate officers

257

--

257

488

Impairment losses

229

--

229

--

77

--

77

--

--

2,792

(2,792)

5,584

--

1,925

(1,925)

1,925

--

724

(724)

2,810

Loss from liquidation ofsubsidiaries

--

--

--

3,053

Other income (expenses)

125(3,216)

3,341(10,185)

Income before incometaxes

18,619572

38,588

Corporate income tax
current

6,404

3,378

3,026

13,415

(490)

3,784

(4,275)

2,406

(178)

(35)

(144)

26

1,677

22,792

Loss on valuation ofaffiliated companies
Amortization of net
transition obligation ofseverance andretirement benefits
Loss on disposal ofproperty, plant andequipment
Loss from reorganizationof businessCorporate income tax
deferred
Minority interests inconsolidated
subsidiaries
Net income

12,527

7.6

5.1

18,047

10,850

7.6

4.6

Consolidated Results
14

7.4

4.4

Consolidated Results FY 2005 1H(2) Consolidated Statements of Surplus(Units: millions of yen)
TermFirst Half
April 1, 2005 to
September 30,
2005

PreviousFirst Half
April 1, 2004 to
September 30,
2004

16,803

16,8002

16,800

Increase in capital surplus

1

1

(0)

2

Gain on disposition oftreasury stock

1

1

(0)

2

16,804

16,802

2

16,803Retained earnings at the
beginning of term

42,677

19,84822,82919,848

Increase in retained earnings

12,78910,943

1,846

23,027

12,527

10,8501,677

22,792Item

Previous
Fiscal Year
April 1, 2004 to
March 31, 2005

Y/YchangeCapital Surplus
Capital surplus at the beginning ofterm

Capital surplus at the end of term
Retained earnings

Net income
Increase owing to merger

117

--

117

--

Increase from transfer fromrevaluation reserve for land

145

93

52

235

Decrease in retained earnings

2,701

88

2,614

198

Dividends

1,805

--

1,805

--

42

13

29

13

839

--

839

--

12

--

12

--

--

39

(39)

149

--

35

(35)

35

4

--

4

--

52,76530,70422,061

42,677

Bonuses for directors
Return of retirement allowanceof overseas subsidiaries
Decrease due to increase in
numbers of consolidated
subsidiaries
Decrease due to decrease in
numbers of consolidated
subsidiaries
Decrease due to increase in
numbers of consolidated
subsidiaries and companies
accounted for by the equity
methodOther
Retained earnings at the end ofterm

Consolidated Results
15

Consolidated Results FY 2005 1H(3) Consolidated Balance Sheets for the FY 2005 First Half
(Units: millions of yen)
End of First Half

End of Previous
Consolidated Fiscal
Year

As of September 30,
2005

As of March 31, 2005

AmountAmountY/Y change

End of Previous
First Half
As of September
30, 2004

ChangeAmountAssetsCash and deposits
Notes and accountreceivable
Inventories
Deferred income taxes
Other
Allowance for doubtful
accounts

Current assets
Buildings and structure
Equipment andtransportation tools
Land
Construction in progress
Other
Tangible assets

47,504

49,636(2,132)

46,271

133,469

151,618(18,149)

129,834

100,451
8,589
17,32088,8597,838
20,151

11,593751(2,832)103,930
7,123
18,584(1,626)(1,937)311(2108)

305,707
41,588316,166
42,046(10,458)(458)

303,634
43,142

18,62718,362

264

19,575

114,898
2,020
3,741
180,873

115,536
1,462
3,583
180,990

(639)
558
158
(117)

115,968
3,780
3,719
186,184

Intangible assets

4,259

3,995

265

3,450

Investment securities
Deferred income taxes
Other
Allowance for doubtful
accounts
Investments and otherassets47,925
9,176
20,63041,544
11,49820,4436,381(2,322)
187

37,487
11,49023,021(5,962)(4,864)(1,097)(6,932)

Fixed assets
Total assets

71,77068,621

3,149

65,065

256,902562,609

253,605
569,771

3,297(7,162)

254,700
558,334

Consolidated Results
16Consolidated Results FY 2005 1H(Units: millions of yen)
End of First Half

End of Previous
Consolidated Fiscal
Year

As of September 30,
2005

As of March 31, 2005

AmountAmountY/Y change

End of Previous
First Half
As of September
30, 2004

ChangeAmountLiabilities
Notes and accounts payable
Short-term debt payable
Commercial paper
Long-term debt within one
year
Bond redemption within
one year
Advance payments
received on contracts
Allowance for guaranteed
construction
Allowance for loss onordered construction
Allowance for loss on
liquidation ofsubsidiaries
Other

Current liabilities
Bond
Long-term debt due after one
year
Employees’ severance andretirement benefits
Allowance for directors’
retirement benefits
Deferred income taxes onrevaluation
Allowance for loss on
liquidation ofsubsidiaries
Other

Long-term liabilities
Total liabilities
Minority interests
Stockholders’ equity
Common stock:
Paid in capital
Capital surplus
Retained earnings
Revaluation reserve for land
Unrealized gains on securities
Foreign currency translation
adjustments
Treasury stock

Total stockholders’ equity
Liabilities minority interest,and stockholders’ equity

128,326
33,98015,000134,439
44,883
11,500(6,113)(10,904)
3,500

126,780
46,48015,00039,64652,471(12,825)

47,826

1,000

1,000

--

3,000

40,327

27,417

12,91037,658

3,729

2,940

790

2,735

411

--

411

--

1,939

--

1,939

200

29,559293,918
10,00035,704
310,356
10,000(6,145)(16,438)--

26,456306,134
1,000

46,28449,373(3,090)68,165

21,86820,0491,819

18,429

938

629

309

--

33,67931,055

2,625

31,152--

1,881(1,881)--

4,293
117,061
410,979
3,379

5,444
118,430
428,786
3,829(1,151)(1,369)(17,807)
(450)

5,234
123,979
430,1123,966

30,872
16,80452,76542,396
7,495

30,872
16,80342,67745,2654,476-110,088(2,869)3,020

30,872
16,80230,70445,407
4,074(1,758)(2,741)983(3,492)(321)
148,252(195)
137,156(126)
11,096(111)
124,255

562,609569,771(7,162)

558,334

Consolidated Results
17Consolidated Results FY 2005 1H(4) Consolidated Cash Flow Statements(Units: millions of yen)First Half

Previous First Half

April 1, 2005 toApril 1, 2004 to

September 30, 2005

September 30,
2004

Previous
Consolidated
Fiscal Year
April 1, 2005 to
March 31, 2005

Cash flows from operating activities
Income before income taxes

18,61918,047

38,588Depreciation

4,253

4,609

9,282

229

--

--

Amortization of consolidation adjustment

(341)

(333)

(651)

Gain on sale of property, plant and equipment(28)(1,134)(1,575)

Loss on sale of property, plant and equipment

130

132

214

Loss on disposal of property, plant and equipment

243

324

1,074

Impairment losses

Loss on disposal of other assets

--

1,925

1,925

Gain on sale of securities

(661)

(96)

(506)

Loss on sale of securities

1

--

4

Loss on valuation of affiliated companies

77

--

--

Loss from liquidation of subsidiaries

--

--

3,053

Loss from reorganization of business

--

724

2,810

820

2,247

3,826

309

--

629

(1,714)(2,485)(4,080)

Increase (decrease) in allowances

1,962

270

(790)

Interest and dividend income

(329)

(282)

(461)

Interest expense

1,293

1,609

2,995

30,782

22,400(9,483)(10,866)(10,146)

4,126(6,904)(3,347)

4,421

(388)

(1,300)518

37,48533,16555,921

Increase in employees’ severance and retirement
benefits
Increase in provision for retirement benefits todirectors, statutory auditors and corporate
officers
Equity in earnings of unconsolidated subsidiaries
and affiliated companies(Increase) decrease in notes and accounts
receivable
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payableOther-net
Sub-totalInterest and dividend received

396

302

481

Payments for interest(1,356)(1,626)(3,023)

Payments for income taxes(10,886)(5,736)(7,928)25,638

26,10445,451

Net cash provided by operating activities

Consolidated Results
18Consolidated Results FY 2005 1H(Units: millions of yen)First Half

Previous First Half

April 1, 2005 toApril 1, 2004 to

September 30,

September 30,

2005

2004

Previous
Consolidated
Fiscal Year
April 1, 2005 to
March 31, 2005

Cash flows from investing activities
Decrease in time deposits

29

295

256

(610)

(30)

(2,338)

893

1,355

2,758

(1,080)

(183)

(494)

1,528

33

65

(4,960)(6,226)(10,178)

854

1,418

3,257

Purchase of securities
Proceeds from sale of securities
Disbursements for investment in affiliates
Proceeds from liquidation of affiliates
Payments for purchases of property, plant andequipment
Proceeds from sale of property, plant andequipment
Proceeds from refund of investment

1,462

--

--

Payments for long-term loans receivables

(32)

(223)

(344)

Collection of long-term loans receivables

320

152

936

(415)

(83)

(5)

(2,010)(3,493)(6,087)

Decrease in short-term loans(11,563)(24,102)(25,355)

Increase in commercial paper

3,500

5,000

1,500

Proceeds from long-term debt

17,580

1,630

2,930

Repayments for long-term debt

(33,495)(16,474)(31,916)

Proceeds from issue of bonds----

10,000

Payment for redemption of bonds

--

(542)

(3,521)

Proceeds from sale of treasury stock

2

2

4

(127)

(39)

(124)

(1,805)

--

--

(36)

(8)

(8)

(25,944)(34,532)(46,490)

162

29

1

Decrease in cash and cash equivalents(2,153)(11,892)(7,125)

Cash and cash equivalents at the beginning of term

49,10857,67857,678

3

--

--

215

--

--

(184)

(23)

(1,446)

46,98845,763

49,108Other-net
Net cash used in investing activities

Cash flows from financing activities

Disbursement for acquisition of treasury stock
Dividends paid
Payment of dividends for minority stockholders
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents

Increase due to new consolidation
Increase due to merger and acquisition
Net decrease from the change in consolidated companies
Cash and cash equivalents at the end of term

Consolidated Results
19Consolidated Results FY 2005 1H

VI. Significant Items Forming the Basis for Preparation ofInterim Consolidated Financial Statements
1. Items concerning scope of consolidation
Number of subsidiaries: 90 companies
Names of major consolidated subsidiaries
Sumitomo (S.H.I.) Construction Machinery Co., Ltd., Shin Nippon Machinery Co., Ltd., Seisa Gear, Ltd.,
Sumitomo Heavy Industries Marine & Engineering Co., Ltd., Sumitomo Heavy Industries PTC Sales Co., Ltd.
Sumiju Environmental Engineering, Inc., Link-Belt Construction Equipment Company, Sumitomo Machinery
Corporation of America, and Sumitomo (SHI) Cyclo Drive Germany, GmbH
Non-consolidated subsidiaries (Shin Nichizo Engineering Co., Ltd. etc.) are small companies, and their combined
total assets, sales, net income (amount corresponding to equity holding) and retained earnings (amountcorresponding to equity holding) all have no important impact on first half consolidated financial statements.

2. Application of equity method
Number of non-consolidated subsidiaries accounted for by equity method: 2 companies
Number of affiliated companies not accounted for by the equity method: 8 companies
Names of major companies accounted for by equity method.
Sumitomo Eaton Nova Corporation, and Nihon Spindle Mfg. Co., Ltd.
Subsidiaries (Shin Nichizo Engineering Co., Ltd. etc.) and affiliated companies (Toa Koki Co., Ltd. etc.) that are
not accounted for by the equity method have been excluded from the application of the equity method because
they have minimal impact on first half consolidated net income and consolidated retained earnings, and havelittle importance in terms of overall group.

3. Changes in scope of consolidation and application of equity method
This interim consolidated accounting period, in addition to adding SM-Cyclo De Argentina S.A., a company which
increased in importance, to the scope of consolidation, Ohtsuka Tech, which was completely liquidated, andSumiju Structural Engineering & Construction, Ltd, which decreased in importance, were both removed from thescope of consolidation.

4. Fiscal years of consolidated subsidiaries
The consolidated overseas companies, Link-Belt Construction Equipment Company, Sumitomo Machinery
Corporation of America, Sumitomo (SHI) Cyclo Drive Germany, GmbH, etc. have a first half account settlement
date of June 30. When preparing first half consolidated financial statements, first half financial statement as ofthat date were used, and in the case of important transactions that occurred between that date and the first halfconsolidated account settlement date, necessary adjustments were made on a consolidated basis.

5. Accounting standards(1) Valuation criteria and valuation methods for major assets
1) Securities
Bonds held to maturity
Amortized cost method
Other marketable securities
With fair market value ･･･Market value method based on quoted market price on first half consolidated
account settlement date
(Appraisal differences are dealt with by means of the direct capital influx method, with cost of securities soldcalculated with the moving average method.)
Without fair market value ･･･Stated at cost determined by the moving average method

Consolidated Results
20Consolidated Results FY 2005 1H

2) Inventories
Work in process: Principally stated at cost based on specific cost method
Finished products, semi-finished products, raw materials and spplies: Principally stated at cost based on the
total average method
As for products in Construction Machinery segment are principally stated at cost or market, whichever is lower
based on specific cost method.

(2) Methods of depreciation for major depreciable assets
1) Property, plant and equipment
The Company computes depreciation by the declining balance method. Furthermore, as for useful life andresidual value, the standard used is principally the same as the method stipulated in the income tax code.
However, the Company and some consolidated subsidiaries apply the straight-line method to buildings acquired
after April 1, 1998 (excluding equipment belonging to buildings).
2) Intangible fixed assets
Depreciation is computed by the straight-line method. Furthermore, as for useful life and residual value, thestandard used is principally the same as the method stipulated in the income tax code.
However, in the case of software used by the Company itself, the straight-line method based on the period of
possible use within the Company (5 years) is adopted.

(3) Criteria for appropriation of important allowance1) Allowance for doubtful accounts
To prepare s against credit losses, the Company makes additions to this allowance on the basis of loan loss
ratios for standard loans, and on an individual basis for loans considered unlikely to be repaid in full, recording anamount equivalent to that thought to be irretrievable.

2) Allowance for guaranteed construction
In preparation for disbursements for expenses for gratuitous repair made after product delivery, allowances forguarantee construction are recorded based on historical results and the like.
3) Allowance for losses on ordered construction
As for undelivered construction orders for which it is estimated, at the end of the interim consolidated accounting
period, that extensive losses are likely to occur after the interim consolidated accounting period, and for which a
rational estimate of the amount of said losses is possible, the estimated amount of losses that are expected tooccur after this first half are recorded.
4) Employees’ severance and retirement benefits
To provide for employees’ accrued retirement benefits, the Company charged to income the amount recognized
as having been incurred at the end of the first half consolidated accounting period based on the projectedamounts of the liability for accrued retirement benefit liabilities and pension assets at the end of the consolidated
accounting fiscal year.
Additionally, the Company accounts for past service liability as expenses in the consolidated accounting year inwhich they occurred. Consolidated subsidiaries account for past service liability as expenses calculated by thestraight line method, based on a fixed number of years (mainly 12 years) within the average remaining employee
service time when they occurred.
Actuarial differences are amortized on a straight-line basis over a period which falls within the average estimatedremaining years of service (12 years) of the participants commencing the year following.

Consolidated Results
21Consolidated Results FY 2005 1H

5) Accrued retirement benefits to directors and corporate officers
As for accrued retirement benefits to directors and corporate officers, the retirement benefits system has beenabolished within the Company and some of its consolidated subsidiaries: the amount recorded as an allowance
for retirement benefits is determined on the basis of compensation commensurate with work performance during
the term of duty.
6) Allowances for losses on the reorganization of affiliates
An amount equal to the estimated losses associated with the liquidation of an unconsolidated domestic
subsidiary, which has entered liquidation proceedings, has been recorded.

(4) Procedure of important lease transaction
For financial lease where ownership of leased properties is not recognized to transfer to borrower, an accounting
procedure pursuant to common methods for lease transaction is adopted.

(5) Derivatives and hedging activities
1) Hedge accounting methods
The Company uses deferral hedge accounting. In the case of Interest-rate swaps, if conditions for a special
application are met, the special application is adopted. In addition, as for foreign currency futures contract, if
conditions for appropriation are fulfilled, appropriation treatment is adopted.
2) Hedging measures and hedged items
Hedging instruments

Hedged items

Forward foreign exchange contracts
Interest-rate swaps

Foreign currency-denominated liabilities and planned transactions
Loans3) Hedging policy
Based on the “Market Risk Management Rule” provided for by the board of directors, the Company aims at thedecrease of the risk, and therefore does not engage in any speculative transactions.
4) Method of evaluating effectiveness of hedging
The fluctuations in the total sum and the quotation for fair value hedging and the fluctuation in the total sum andquotation for cashflows hedging are compared every 6 months, and, based on the amount of the fluctuation for
each, hedge effectiveness is evaluated.
The Company does not evaluate the effectiveness of hedging interest-rate swaps by special applications.

(6) Other important items forming the basis for preparation of consolidated financial
statements
1) Method of accounting for consumption tax, etc.
The Company adopts the tax exclusion method.
2) Adoption of a consolidated tax payment system
A consolidated tax payment system has been adopted.

5. Fund range in the statement of cash flows
Funds in the statement of cash flows(cash and cash equivalents) comprise cash in hand, deposits withdrawable at any time, and easily cashable
short -term investment with little risk and maturity date coming within three months from the acquisition date.
Consolidated Results
22Consolidated Results FY 2005 1H

Changes in Accounting Method
Allowances for losses on ordered construction
The recording method has changed: from this interim consolidated financial period, if there are undelivered
construction orders for which it is estimated, at the end of the interim consolidated financial period, that extensive
losses are likely to occur after the interim consolidated financial period, and for which a rational estimate of theamount of the losses is possible, then the estimated amount of the losses which are expected to occur after the
first half will be recorded under allowances for losses on construction orders.
This change is believed to firmly establish said allowances as accounting practices. It was made in order toimprove financial reporting and to further improve the balancing of period profits and losses.
As a result, in comparison with previous methods, the cost of sales increased by 411 million yen, while operating
profit, ordinary profit, and interim net income before taxes and other adjustments were all decreased by the sameamount.
Accrued retirement benefits for directors and corporate officers
The recording method has changed: previously, retirement benefits for directors at some domestic consolidated
subsidiaries were recorded at the time of retirement. However, this interim consolidated financial period, theretirement benefit system is abolished, and the amount recorded for directors’ retirement benefit allowances isdetermined on the basis of compensation commensurate with work performance during the term of duty, in thehopes of further improving financial health.
The sum of 29 million yen incurred this interim consolidated financial period as a result of this change is recorded
under selling, general, and administrative expenses, and the corresponding sum of 257 million yen from last
financial year is recorded under extraordinary expenses.
As a result of the above, in comparison with former methods, operating income and ordinary income were eachdecreased by 29 million yen, and interim net income before taxes was decreased by 286 million yen.
Accounting standard for losses on fixed assets
Starting this interim consolidated financial period, the "Accounting Standards for Losses on Fixed Assets" ("Opinion
Concerning the Establishment of Accounting Standards for Losses on Fixed Assets" (Business Accounting Council,
August 9, 2002) and "Guidelines for Adopting Accounting Standards for Losses on Fixed Assets" (Guidelines for
Adopting Business Accounting Standards No. 6, October 31, 2003)) will be adopted.
As a result of the above, net income before taxes and other adjustments posted a decrease of 229 million yen.

Consolidated Results
23Consolidated Results FY 2005 1H

Notes to the Consolidated Balance Sheet(Units: millions of yen)
Current First Half

Previous First Half

Previous Full Year

1. Totaldepreciation on
tangible fixed
assets

166,807

1. Totaldepreciation on
tangible fixed
assets169,478

1. Totaldepreciation on
tangible fixed
assets

164,541

2. Totaldepreciation on
tangible fixed
assets39,9601. Totaldepreciation on
tangible fixed
assets40,1601. Totaldepreciation on
tangible fixed
assets40,101

6,978

8,309

7,940

3. Totaldepreciation on
tangible fixed
assets148

1. Totaldepreciation on
tangible fixed
assets411

1. Totaldepreciation on
tangible fixed
assets338

4. Totaldepreciation on
tangible fixed
assets6,095

1. Totaldepreciation on
tangible fixed
assets7,141

1. Totaldepreciation on
tangible fixed
assets

6,970

5,985
224
224

7,009
589
589

6,848
194
194

Notes to the Consolidated Statement of Income
The Company recorded the following impairment loss in the current interim consolidated period.
Application
Idle

Category
Land

Location
Kurashiki-shi,
Okayama prefecture

Amount229 million yen

The above-mentioned land was previously held as company housing for employees, but the housing has since
been dismantled, and it has become an idle asset.
There was no utilization plan, and, due to depreciation of the value of the land, it has been recorded as an
impairment loss.
To make the impairment loss decision, business segments are as the basis, and, as idle property for which future
use is not anticipated, it is grouped as an individual real estate unit.
Furthermore, the collectible value amount is measured by net sales worth.

Consolidated Results24Consolidated Results FY 2005 1H

VII. Marketable Securities
Current First Half (As of September 30, 2005)
1) Other marketable securities with market value
Acquisition Price
Stock(Millions of yen)
Value on theinterim Balance
Sheets
20,6408,0962) Other Marketable Securities without market value

Difference
12,544(Millions of yen)
Value on the Consolidated Balance Sheets

Bonds held to maturity
Unlisted bond

10
10

Total
Other marketable securities
Unlisted stock
Other

4,674
1,016
5,690

Total

Previous First Half (As of September 30, 2004)
1) Other marketable securities with market value
Acquisition Price
Stock
Bond
Other
Total

(Millions of yen)
Value on theinterim Balance
Sheets13,89710
11
13,918

7,078
8
13
7,099

2) Other Marketable Securities without market value
Bonds held to maturity
Unlisted bondDifference
6,819
2
(2)
6,819

(Millions of yen)
Value on the Consolidated Balance Sheets
10
10

Total
Other marketable securities
Unlisted stock
Other

5,518
1,024
6,542

Total

Consolidated Results
25Consolidated Results FY 2005 1H

Previous Fiscal Year (As of March 31, 2005)
1) Other marketable securities with market value
Acquisition Price
Stock(Millions of yen)
Value on theinterim Balance
Sheets
15,7178,2322) Other Marketable Securities without market value
Bonds held to maturity
Unlisted bondDifference
7,486(Millions of yen)
Value on the Consolidated Balance Sheets
10
10

Total
Other marketable securities
Unlisted stock
Other

4,775
1,024
5,800

Total

Consolidated Results
26Consolidated Results FY 2005 1H

VIII. Segment Information
1. Segment Information by BusinessCurrent First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

103,566

31,85324,281

27,27458,882245,857--

245,857

680

1,313

229

125

35

2,382

2,382

--

104,246

33,166

24,50927,40058,918248,2392,382

245,857

24,29755,381

229,7362,373

227,363

3,102

3,537

18,502

918,494F

Item
Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total

Operating
91,18233,09325,783
expenses
Operating
13,06473(1,274)income/loss
Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general

Previous First Half (April 1, 2004 to September 30, 2004)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

98,65434,25525,26525,42954,476238,078--

238,078

491

1,193

281

137

37

2,138

2,138

--

99,14535,44725,54625,56654,512

240,2172,138

238,078

24,00552,523218,956

2,140

216,815

1,561

1,989

21,261

2

21,263F

Item
Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total

Operating
83,491
32,826
26,110expenses
Operating
15,6542,621(564)
income/loss
Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general

Consolidated Results27Consolidated Results FY 2005 1H

Previous Full Year (April 1, 2004 to March 31, 2005)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

205,091

87,93765,28854,008108,985

521,310--

521,310

1,253

2,653

553

397

69

4,926

4,926

--

206,345

90,591

65,84254,405

109,054526,236

4,926

521,310

175,930

83,49765,36449,571103,093

477,454

4,917

472,537

30,415

7,094

478

4,834

5,961

48,782

9

48,773F

Item
Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operatingincome/loss

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general
Notes:
1. Business segment depends on sales total segment
2. Main products of each business segment
Businesses
Mass-Produced Machinery

Environmental Protection Facilities,
Plants & Others
Ship, Steel Structure & Other Specialized
Equipment
Industrial Machinery
Construction Machinery

Main Products
Power Transmission Equipment, Plastic Injection Molding Machines,
Laser Processing Systems, Defense Equipment, Cryogenic
Equipment, Precision XY Stages, Cyclotrons for Medical Use
Water and Sewage Treatment Systems, Industrial Waste Treatment
Facilities, Chemical Process Equipment & Plants, Software, Real
EstateShips, Bridge & Steel Structures
Forging Machines, Material Handling Systems, Turbines, Pumps
Hydraulic Excavators, Mobile Cranes

3. Changes in Accounting Method
Allowances for losses on ordered construction
The recording method has changed: from this interim consolidated financial period, if there are undelivered
construction orders for which it is estimated, at the end of the interim consolidated financial period, that extensive
losses are likely to occur after the interim consolidated financial period, and for which a rational estimate of theamount of the losses is possible, then the estimated amount of the losses which are expected to occur after the
first half will be recorded under allowances for losses on construction orders.
As a result, in comparison with former method, "Ship, Steel Structure and Other specialized equipment" operating
expenses and operating losses each increased by 411 million yen.

Consolidated Results28Consolidated Results FY 2005 1H

Accrued retirement benefits to directors and corporate officers
The recording method has changed: previously, retirement benefits for company officers at some domestic
consolidated subsidiaries were recorded at the time of retirement. However, this interim consolidated financial
period, the retirement benefit system is abolished, and the amount recorded for company officer retirement benefit
allowances is determined on the basis of compensation commensurate with work performance during the term ofduty, in the hopes of further improving financial health.
As a result of the above, in comparison with former method, operating expenses increased by 29 million yen, andoperating income decreased by the same amount.
Effect by segment is as follows.
(Units: millions of yen)Segment
Item

Increase inoperating expenses
Decrease inoperating expenses

MassProduced
Machinery

Environmen
talProtection
Facilities,
Plants &Others

Ship, Steel
Structure &OtherSpecialized
Equipment

Industrial
Machinery

9

5

3

3

9

29

9

5

3

3

9

29

Consolidated Results
29

Construction
Machinery
Total

Consolidated Results FY 2005 1H

2. Segment Information by Geographical Area
Current First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellation or
generalConsolidation

Net sales(1) Sales to externalcustomers(2) Internal sales
between segments or
exchanges

207,537

25,556

12,764

245,857--

245,857

13,068416

1,260

14,744

14,744--

Total

220,605

25,972

14,023

260,601

14,744

245,857

Operating expenses

205,079

24,052

13,093242,224

14,861

227,363

Operating income

15,5261,920

931

18,377

117

18,494Previous First Half (April 1, 2004 to September 30, 2004)(Units: millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellation or
generalConsolidation

Net sales(1) Sales to externalcustomers(2) Internal sales
between segments or
exchanges

207,917

19,368

10,793

238,078--

238,078

13,335502

1,421

15,25915,259--Total

221,252

19,87012,214

253,337

15,259238,078

Operating expenses

201,506

19,084

11,243

231,833

15,018

216,815

Operating income

19,747786

971

21,504241

21,263

Consolidated Results
30Consolidated Results FY 2005 1H

Previous Full Year (April 1, 2004 to March 31, 2005)(Units: millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellation or
generalConsolidation

Net sales(1) Sales to externalcustomers(2) Internal sales
between segments or
exchanges

458,947

39,53522,829521,310--

521,31023,920872

2,894

27,68527,685--

Total

482,867

40,40625,723548,996

27,685

521,310

Operating expenses

437,675

38,39023,963500,027

27,490472,537

Operating income

45,192

2,017

1,760

48,968

195

48,773

Notes:
1. Countries and regions classified by geographical proximity.
2. Countries and regions belonging to each classification:
North America: USA, and Canada
Others: UK, Germany, Singapore, and China
3. Changes in Accounting Method
Allowances for losses on ordered construction
The recording method has changed: after this interim consolidated financial period, if there are undelivered
construction orders for which it is estimated, at the end of the interim consolidated financial period, that extensive
losses are likely to occur after the interim consolidated financial period, and for which a rational estimate of theamount of the losses is possible, then the estimated amount of the losses which are expected to occur after the
first half will be recorded under allowances for losses on construction orders.
As a result, in comparison with former method, operating expenses for "Japan" increased by 411 million yen, andoperating income decreased by the same amount.
Accrued retirement benefits to directors and corporate officers
The recording method has changed: previously, retirement benefits for company officers at some domestic
consolidated subsidiaries were recorded at the time of retirement. However, this interim consolidated financial
period, the retirement benefit system is abolished, and the amount recorded for company officer retirement benefit
allowances is determined on the basis of compensation commensurate with work performance during the term ofduty, in the hopes of further improving financial health.
As a result of the above, in comparison with former method, operating expenses for "Japan" increased by 29
million yen, and operating income decreased by the same amount.

Consolidated Results
31Consolidated Results FY 2005 1H

3. Overseas Sales
Current First Half (April 1, 2005 to September 30, 2005)(Units: millions of yen)North
AmericaI. Overseas sales

Asia

41,34830,669Others29,629II. Consolidated sales
III. Overseas sales ratio（％）

Total
101,646
245,857

16.8

12.5

12.1

41.3

Previous First Half (April 1, 2004 to September 30, 2004)(Units: millions of yen)North
AmericaI. Overseas sales

Asia

35,72431,061Others29,380II. Consolidated sales
III. Overseas sales ratio（％）

Total
96,165238,078

15.0

13.0

12.3

40.4

Previous Full Year (April 1, 2004 to March 31, 2005)(Units: millions of yen)North
AmericaI. Overseas sales

Asia

78,471

63,126

Others56,211

II. Consolidated sales
III. Overseas sales ratio（％）

Total
197,807521,310

15.1

12.1

10.8

Notes:
1. Countries and regions classified by geographical proximity.
2. Countries and regions belonging to each classification:
North America: USA, and Canada
Asia: Singapore, and China
Others: UK, and Germany
3. Sales are from the Company and subsidiaries’ countries and regions other than Japan.

Consolidated Results
32

37.9

Consolidated Results FY 2005 1H

IX. Orders, Sales and Balance of Orders by Segment
Orders received
Businesses

Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total(Units: millions of yen)
April 1, 2005 to
September 30,
2005
Amount%April 1, 2004 to
September 30, 2004
Amount%Y/Y
Change%Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

%

37.6

105,667

36.6

0.4

213,12338.0

37,41913.3

46,416

16.1(19.4)

100,34317.9

43,87515.5

47,888

16.6

(8.4)

75,72513.5

32,831
62,18811.6
22.0

32,39656,239

11.2
19.5

1.3
10.6

60,012
111,52910.7
19.9

282,403

100.0

288,606

100.0

(2.1)

560,731

100.0(Units: millions of yen)
April 1, 2005 to
September 30,
2005
Amount%April 1, 2004 to
September 30, 2004

Y/Y
Change%April 1, 2004 to
March 31, 2005

Amount%Amount%103,566

42.1

98,65441.1

5.0

205,091

39.3

31,853

12.9

34,255

14.4

(7.0)

87,93716.9

24,281

9.9

25,265

10.6

(3.9)

65,28812.5

27,27458,882

11.1
24.0

25,42954,476

10.7
22.9

7.3
8.1

54,008108,98510.4
20.9

245,857

100.0

238,078

100.0

3.3

521,310100.0

Balance of Orders received
Businesses

Amount106,089

Sales
Businesses

April 1, 2004 to
March 31, 2005

(Units: millions of yen)

April 1, 2005 to
September 30,
2005
Amount%April 1, 2004 to
September 30, 2004
Amount%Y/Y
Change%April 1, 2004 to
March 31, 2005
Amount%70,57920.0

67,787

21.4

4.1

66,141

20.1

77,56021.9

71,99422.7

7.7

71,75021.9

142,243

40.2

122,648

38.7

16.0

134,83441.0

48,621
14,81313.7
4.2

43,064
11,507

13.6
3.6

12.9
28.7

44,028
11,87213.4
3.6

353,815100.0

317,000

100.0

11.6

328,625

100.0

Consolidated Results
33