FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of December 2003
Commission File Number 1-8320
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Hitachi, Ltd.
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(Translation of registrant's name into English)
6, Kanda-Surugadai 4-chome, Chiyoda-ku, Tokyo 101-8010, Japan
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F _________
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ________
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ________ No x
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-________
This report on Form 6-K contains the following:
1. Consolidated financial statements for the first half of the fiscal year
ending March 31, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Hitachi, Ltd.
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(Registrant)
Date January 7, 2004 By /s/ Takashi Hatchoji
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Takashi Hatchoji
Vice President and Executive Officer
HITACHI, LTD. AND SUBSIDIARIES
Consolidated Financial Statements
and
Segment Information
Six months ended September 30, 2003
HITACHI
CONSOLIDATED BALANCE SHEETS
Hitachi, Ltd. and Subsidiaries
September 30, 2003 and March 31, 2003
Thousands of
Millions of yen U.S. dollars (note 2)
------------------------------ ----------------------
September 30, March 31, September 30,
Assets 2003 2003 2003
----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 709,084 828,171 6,388,144
Short-term investments (note 3) 254,178 186,972 2,289,892
Trade receivables, net of allowance for doubtful receivables
and unearned income-
September 30, 2003 JPY 41,973 million ($378,135 thousand);
March 31, 2003 JPY 40,520 million:
Notes (note 6) 153,017 153,587 1,378,532
Accounts (note 6) 1,828,942 1,903,640 16,476,955
Inventories (note 4) 1,187,133 1,187,529 10,694,892
Deferred income tax assets (current) 296,391 274,865 2,670,189
Prepaid expenses and other current assets 248,138 221,625 2,235,478
Investment in leases (note 6) 455,485 437,076 4,103,468
Investments and advances, including affiliated companies (note 3) 877,763 726,442 7,907,775
Property, plant and equipment (note 5):
Land 433,302 445,283 3,903,622
Buildings 1,699,508 1,838,853 15,310,883
Machinery and equipment 4,901,036 5,709,409 44,153,477
Construction in progress 54,208 67,909 488,360
--------------- --------------- -----------------
7,088,054 8,061,454 63,856,342
Less accumulated depreciation 4,749,008 5,460,404 42,783,856
--------------- --------------- -----------------
Net property, plant and equipment 2,339,046 2,601,050 21,072,486
--------------- --------------- -----------------
Deferred income tax assets (non-current) 878,533 976,368 7,914,711
Other assets (note 7) 656,763 682,064 5,916,784
--------------- --------------- -----------------
9,884,473 10,179,389 89,049,306
=============== =============== =================
See accompanying notes to consolidated financial statements.
Thousands of
Millions of yen U.S. dollars (note 2)
---------------------------------- -----------------------
September 30, March 31, September 30,
Liabilities and Stockholders' Equity 2003 2003 2003
-------------------------------------------------------------------------------------------------------------------------------
Short-term debt 736,583 825,860 6,635,883
Current installments of long-term debt 620,573 502,586 5,590,748
Trade payables:
Notes 62,569 71,934 563,685
Accounts 1,072,833 1,140,130 9,665,162
Accrued expenses 774,847 799,211 6,980,604
Income taxes 75,908 54,091 683,856
Advances received 251,287 252,861 2,263,847
Deferred income tax liabilities (current) 3,022 5,454 27,225
Other current liabilities 335,465 353,101 3,022,207
Long-term debt 1,345,461 1,512,152 12,121,270
Retirement and severance benefits 1,909,242 1,932,646 17,200,378
Deferred income tax liabilities (non-current) 13,564 12,489 122,198
Other liabilities 107,462 112,084 968,126
--------------- ---------------- ---------------------
Total liabilities 7,308,816 7,574,599 65,845,189
--------------- ---------------- ---------------------
Minority interests 750,142 751,578 6,758,036
Stockholders' equity:
Common stock 282,032 282,032 2,540,829
Capital surplus 549,548 562,214 4,950,883
Legal reserve 108,411 111,309 976,676
Retained earnings 1,652,406 1,655,029 14,886,540
Accumulated other comprehensive loss:
Foreign currency translation adjustments (70,754) (60,948) (637,423)
Minimum pension liability adjustments (691,794) (698,916) (6,232,378)
Net unrealized holding gain on available-for-sale
securities 28,536 4,874 257,081
Cash flow hedges (946) (535) (8,523)
Treasury stock (31,924) (1,847) (287,604)
--------------- ---------------- ---------------------
Total stockholders' equity 1,825,515 1,853,212 16,446,081
Commitments and contingencies (note 10)
--------------- ---------------- ---------------------
9,884,473 10,179,389 89,049,306
=============== ================ =====================
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Hitachi, Ltd. and Subsidiaries
Six months ended September 30, 2003 and 2002
Thousands of
Millions of yen U.S. dollars (note 2)
--------------------------------- ---------------------
2003 2002 2003
--------------------------------------------------------------------------------------------------- ---------------------
Revenues 4,041,407 3,916,491 36,409,072
Costs of sales (3,157,976) (2,969,558) (28,450,234)
Selling, general and administrative expenses (863,192) (885,245) (7,776,505)
Restructuring charges (note 11) (10,317) - (92,946)
Interest income 6,301 6,589 56,766
Dividends received 4,233 4,392 38,135
Other income (note 12) 101,400 15,731 913,514
Interest charges (16,318) (17,803) (147,009)
Other deductions (note 12) (15,035) (37,130) (135,451)
-------------- ---------------- ---------------------
Income before income taxes and minority interests 90,503 33,467 815,342
Income taxes:
Current (71,127) (57,559) (640,783)
Deferred (5,052) 41,478 (45,514)
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Total Income taxes (76,179) (16,081) (686,297)
Income before minority interests 14,324 17,386 129,045
Minority interests (8,940) (11,720) (80,540)
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Net income 5,384 5,666 48,505
============== ================ =====================
Net income per share (note 13): Yen U.S. dollars (note 2)
--------------------------------------------------------------------------------------------------- ---------------------
Basic 1.63 1.70 0.01
Diluted 1.59 1.62 0.01
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Hitachi, Ltd. and Subsidiaries
Six months ended September 30, 2003 and 2002
Thousands of
Millions of yen U.S. dollars (note 2)
---------------------------- ---------------------
2003 2002 2003
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Common stock:
Balance at beginning of period 282,032 282,032 2,540,829
--------------- ------------- -----------------
Balance at end of period 282,032 282,032 2,540,829
=============== ============= =================
Capital surplus:
Balance at beginning of period 562,214 527,010 5,064,991
Conversion of convertible debentures 937 652 8,442
Gain on sale of treasury stock 23 - 207
Increase (decrease) arising from issuance of
subsidiaries' common stock, divestiture and other (13,626) 2,798 (122,757)
--------------- ------------- -----------------
Balance at end of period 549,548 530,460 4,950,883
=============== ============= =================
Legal reserve:
Balance at beginning of period 111,309 110,751 1,002,784
Transfers from (to) retained earnings (2,693) 203 (24,261)
Transfers to minority interests arising from
conversion of subsidiaries' convertible debentures (108) (18) (973)
Transfers from (to) minority interests arising from
issuance of subsidiaries' common stock and other (97) 24 (874)
--------------- ------------- -----------------
Balance at end of period 108,411 110,960 976,676
=============== ============= =================
Retained earnings:
Balance at beginning of period 1,655,029 1,643,248 14,910,171
Net income 5,384 5,666 48,505
Cash dividends (10,095) - (90,946)
Transfers from (to) legal reserve 2,693 (203) 24,261
Net transfer to minority interests arising from
conversion of subsidiaries' convertible debentures (1,189) (263) (10,712)
Net transfer from (to) minority interests arising from
change in ownership interest in subsidiaries' common stock and other 584 (4,687) 5,261
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Balance at end of period 1,652,406 1,643,761 14,886,540
=============== ============= =================
Accumulated other comprehensive loss:
Foreign currency translation adjustments
Balance at beginning of period (60,948) (38,012) (549,081)
Other comprehensive loss, net of reclassification adjustments (9,459) (18,133) (85,216)
Net transfer from minority interests arising from
conversion of subsidiaries' convertible debentures 172 - 1,550
Net transfer to minority interests arising from
issuance of subsidiaries' common stock and other (519) (479) (4,676)
--------------- ------------- -----------------
Balance at end of period (70,754) (56,624) (637,423)
=============== ============= =================
Minimum pension liability adjustments
Balance at beginning of period (698,916) (260,100) (6,296,540)
Other comprehensive income (loss) 5,919 (159,008) 53,324
Net transfer from minority interests arising from
conversion of subsidiaries' convertible debentures 1,163 1 10,478
Net transfer from minority interests arising from
issuance of subsidiaries' common stock and other 40 14 360
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Balance at end of period (691,794) (419,093) (6,232,378)
=============== ============= =================
Net unrealized holding gain on available-for-sale securities
Balance at beginning of period 4,874 39,997 43,910
Other comprehensive income (loss), net of reclassification adjustments 23,610 (22,369) 212,703
Net transfer from minority interests arising from
conversion of subsidiaries' convertible debentures 31 1 279
Net transfer from (to) minority interests arising from
issuance of subsidiaries' common stock and other 21 (8) 189
--------------- ------------- -----------------
Balance at end of period 28,536 17,621 257,081
=============== ============= =================
Cash flow hedges
Balance at beginning of period (535) (369) (4,820)
Other comprehensive income (loss), net of reclassification adjustments (426) 113 (3,838)
Net transfer from minority interests arising from
conversion of subsidiaries' convertible debentures 20 - 180
Net transfer to minority interests arising from
issuance of subsidiaries' common stock and other (5) (4) (45)
--------------- ------------- -----------------
Balance at end of period (946) (260) (8,523)
=============== ============= =================
Total accumulated other comprehensive loss (734,958) (458,356) (6,621,243)
=============== ============= =================
Treasury stock:
Balance at beginning of period (1,847) (333) (16,640)
Acquisition for treasury (30,166) (376) (271,766)
Sale of treasury stock 89 - 802
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Balance at end of period (31,924) (709) (287,604)
=============== ============= =================
Total stockholders' equity 1,825,515 2,108,148 16,446,081
=============== ============= =================
Total comprehensive income (loss) 25,028 (193,731) 225,477
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Hitachi, Ltd. and Subsidiaries
Six months ended September 30, 2003 and 2002
Thousands of
Millions of yen U.S. dollars (note 2)
--------------------------- ---------------------
2003 2002 2003
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Cash flows from operating activities:
Net income 5,384 5,666 48,505
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 213,916 226,280 1,927,171
Deferred income taxes 5,052 (41,478) 45,514
Equity in earnings of affiliated companies 2,245 8,425 20,225
Gain on sale of investments and subsidiaries'
common stock (100,193) (40,333) (902,640)
Impairment of investment in securities 1,983 19,636 17,865
Loss on disposal of rental assets
and other property 5,712 4,306 51,460
Income applicable to minority interests 8,940 11,720 80,540
Decrease in receivables 79,253 183,658 713,991
Increase in inventories (106,587) (8,394) (960,243)
Increase in prepaid expenses
and other current assets (2,507) (17,594) (22,586)
Decrease in payables (37,821) (25,911) (340,730)
Increase (decrease) in accrued expenses and retirement
and severance benefits 63,626 (164,061) 573,207
Increase in accrued income taxes 23,790 95 214,324
Increase (decrease) in other liabilities 585 (18,555) 5,270
Other 61,215 48,043 551,487
------------ -------------- -----------------
Net cash provided by operating activities 224,593 191,503 2,023,360
Cash flows from investing activities:
(Increase) decrease in short-term investments (68,614) 17,591 (618,144)
Capital expenditures (145,310) (155,148) (1,309,099)
Purchase of assets to be leased (236,613) (213,742) (2,131,649)
Collection of investment in leases 197,485 209,869 1,779,144
Proceeds from disposal of rental assets
and other property 52,147 63,382 469,793
Proceeds from sale of investments and
subsidiaries' common stock 181,296 98,169 1,633,297
Purchase of investments and subsidiaries' common stock (63,896) (42,180) (575,640)
Purchase of software (51,974) (63,245) (468,234)
Other (21,700) (43,655) (195,495)
------------- -------------- -----------------
Net cash used in investing activities (157,179) (128,959) (1,416,027)
Cash flows from financing activities:
Decrease in short-term debt (95,112) (79,236) (856,865)
Proceeds from long-term debt 303,036 163,608 2,730,054
Payments on long-term debt (335,337) (276,279) (3,021,054)
Proceeds from sale of common stock by subsidiaries 619 1,464 5,577
Dividends paid to stockholders (10,111) (82) (91,090)
Dividends paid to minority stockholders of subsidiaries (6,791) (6,956) (61,180)
Acquisition of common stock for treasury (30,166) (376) (271,766)
Proceeds from sale of treasury stock 112 - 1,009
------------- -------------- -----------------
Net cash used in financing activities (173,750) (197,857) (1,565,315)
Effect of exchange rate changes on cash and cash equivalents (12,751) (18,849) (114,874)
------------- -------------- -----------------
Net decrease in cash and cash equivalents (119,087) (154,162) (1,072,856)
Cash and cash equivalents at beginning of period 828,171 1,029,374 7,461,000
------------- -------------- -----------------
Cash and cash equivalents at end of period 709,084 875,212 6,388,144
============= ============== =================
See accompanying notes to consolidated financial statements.
HITACHI, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended September 30, 2003
(1) Basis of Presentation and Summary of Significant Accounting Policies
(a) Basis of Presentation
Hitachi, Ltd. (the Company) and its domestic subsidiaries maintain
their books of account in conformity with the financial accounting
standards of Japan, and its foreign subsidiaries in conformity with
those of the countries of their domicile.
The consolidated financial statements presented herein have been
prepared in a manner and reflect the adjustments which are necessary
to conform them with accounting principles generally accepted in the
United States of America. Management of the Company has made a
number of estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements. Actual results
could differ from those estimates.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and those of its majority-owned subsidiaries, whether
directly or indirectly controlled. Intercompany accounts and
significant intercompany transactions have been eliminated in
consolidation.
Investments in corporate joint ventures and affiliated companies
that are accounted for using the equity method primarily relate to
20% to 50% owned companies to which the Company has the ability to
exercise significant influence over operational and financial
policies of the investee company. Investments of less than 20% or
where the Company does not have significant influence are accounted
for using the cost method.
(c) Investment in Securities
The Company classifies investments in securities that have readily
determinable fair values and all investments in debt securities in
three categories, such as held-to-maturity securities, trading
securities and available-for-sale securities.
Held-to-maturity securities are debt securities that the Company has
the positive intent and ability to hold to maturity. Trading
securities are debt and equity securities that are bought and held
principally for the purpose selling them in the near term.
Available-for-sale securities are debt and equity securities not
classified as either held-to-maturity securities or trading
securities.
Held-to-maturity securities are reported at amortized cost. Trading
securities are reported at fair value, with unrealized gains and
losses included in earnings. Available-for-sale securities are
reported at fair value, with unrealized gains and losses reported in
other comprehensive income.
A decline in fair value of any available-for-sale or
held-to-maturity security below the amortized cost basis that is
deemed to be other than temporary results in a write-down of the
amortized cost basis to fair value as a new cost basis and the
amount of the write-down is included in earnings.
On a continuous basis, but no less frequently than at the end of
each semi-annual period, the Company evaluates the cost basis of an
available-for-sale security for possible impairment. Factors
considered in assessing whether an indication of other than
temporary impairment exists include: the degree of change in ratio
of market prices per share to book value per share at date of
evaluation compared to that at date of acquisition, the financial
condition and prospects of each investee company, industry
conditions in which the investee company operates, the fair value of
an available-for-sale security relative to the cost basis of the
investment, the period of time the fair value of an
available-for-sale security has been below the cost basis of the
investment and other relevant factors.
The Company evaluates the cost basis of a held-to-maturity security
for possible impairment by taking into consideration the financial
condition, business prospects and credit worthiness of the issuer.
Impairment to be recognized is measured based on the amount by which
the carrying amount of the investment exceeds the fair value of the
investment. Fair value is determined based on quoted market prices,
projected discounted cash flows or other valuation techniques as
appropriate.
On a continuous basis, but no less frequently than at the end of
each semi-annual period, the Company evaluates the carrying amount
of its ownership interests in investee companies of the equity
method and the cost method for possible impairment. Factors
considered in assessing whether an indication of other than
temporary impairment exists include the achievement of business plan
objectives and milestones including cash flow projections and the
results of planned financing activities, the financial condition and
prospects of each investee company, the fair value of the ownership
interest relative to the carrying amount of the investment, the
period of time the fair value of the ownership interest has been
below the carrying amount of the investment and other relevant
factors. Impairment to be recognized is measured based on the amount
by which the carrying amount of the investment exceeds the fair
value of the investment. Fair value is determined based on quoted
market prices, projected discounted cash flows or other valuation
techniques as appropriate.
The cost of a security sold or the amount reclassified out of
accumulated other comprehensive income into earnings was determined
by the average method.
(d) Securitization
The Company and certain subsidiaries have securitized certain
financial assets such as lease receivables, trade receivables and
others. In the securitization process, securitized assets are sold
to Special Purpose Entities (SPE) which are funded through the
issuance of asset-backed securities to investors. When the Company
and its subsidiaries sell the financial assets to the SPE in a
securitization transaction, the carrying amount of the financial
assets is allocated based on relative fair values to the portions to
be retained and sold. The Company and its subsidiaries recognize a
gain or loss for the difference between the net proceeds received
and the allocated carrying amount of the assets sold when the
transaction is consummated.
Fair values are based on the present value of estimated future cash
flows which take into consideration various factors such as expected
credit loss and others.
(e) Goodwill and Other Intangible Assets
The Company accounts for goodwill and other intangible assets in
accordance with Statement of Financial Accounting Standards (SFAS)
No.142, "Goodwill and Other Intangible Assets." Goodwill and
intangible assets with indefinite useful lives are no longer
amortized, but instead are tested for impairment at least annually
in accordance with the provisions of this statement. Intangible
assets with finite useful lives are amortized over their respective
estimated useful lives and are reviewed for impairment in accordance
with SFAS No.144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."
(f) Capitalized Software Costs
Costs incurred for computer software developed or obtained for
internal use are capitalized and amortized on a straight-line basis
over their estimated useful lives. In addition, the Company and its
subsidiaries develop certain computer software to be sold where
related costs are capitalized after establishment of technological
feasibility. Such capitalized costs are amortized based on the ratio
of each software's expected future revenue to current year's
revenue.
(g) Retirement and Severance Benefits
The Company accounts for retirement and severance benefits in
accordance with SFAS No. 87, "Employers' Accounting for Pensions."
Unrecognized gains and losses are amortized using the straight-line
method over the average remaining service period of active
employees.
(h) Derivative Financial Instruments
The Company accounts for derivative financial instruments in
accordance with SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended. SFAS No. 133 requires that all
derivative financial instruments, such as forward exchange and
interest rate swap contracts, be recognized in the financial
statements as either assets or liabilities and measured at fair
value regardless of the purpose or intent for holding them.
The Company designates and accounts for hedging derivatives as
follows:
. "Fair value" hedge: a hedge of the fair value of a recognized asset
or liability or of an unrecognized firm commitment. The changes in
fair value of the recognized assets or liabilities or unrecognized
firm commitment and the derivatives are recorded in earnings if the
hedge is considered highly effective.
. "Cash flow" hedge: a hedge of a forecasted transaction or of the
variability of cash flows to be received or paid related to a
recognized asset or liability. The changes in the fair value of the
derivatives designated as cash flow hedges are recorded as other
comprehensive income if the hedge is considered highly effective.
This treatment is continued until earnings are affected by the
variability in cash flows or the unrecognized firm commitment of the
designated hedged item, at which point changes in fair value of the
derivative is recognized in income.
. "Foreign currency" hedge: a hedge of foreign-currency fair value or
cash flow. The changes in fair value of the recognized assets or
liabilities or unrecognized firm commitment and the derivatives are
recorded as either earnings or other comprehensive income if the
hedge is considered highly effective. Recognition as earnings or
other comprehensive income is dependent on the treatment of foreign
currency hedges as fair value or cash flow hedges.
The Company follows the documentation requirements as prescribed by
the standard, which includes risk management objective and strategy
for undertaking various hedge transactions. In addition, a formal
assessment is made at the hedge's inception and periodically on an
ongoing basis, as to whether the derivative used in hedging
activities is highly effective in offsetting changes in fair values
or cash flows of hedged items. Hedge accounting is discontinued for
ineffective hedges, if any. Subsequent changes in the fair value of
derivatives related to discontinued hedges are recognized in
earnings immediately.
(i) Revenue Recognition
Staff Accounting Bulletin No. 101 (SAB 101) expresses certain views
of the United States Securities and Exchange Commission (SEC) in
applying generally accepted accounting principles to revenue
recognition in the financial statements. In accordance with SAB 101,
we generally recognize revenue when persuasive evidence of an
arrangement exists, delivery has occurred or services are rendered,
the sales price is fixed and determinable and collectibility is
probable. Our more specific revenue recognition policies based on
the type of revenue earned and our product offerings are discussed
below.
The Company enters into transactions that include multiple element
arrangements which may include any combinations of hardware
products, related software products, installment and maintenance.
When some elements are delivered prior to others in an arrangement,
revenue is deferred until the delivery of the last service element,
unless transactions are such that vendor specific objective evidence
("VSOE") of fair value of the undelivered elements is available, the
functionality of the delivered element is not dependent on the
undelivered elements and delivered elements represents the
culmination of the earnings process. VSOE is the price charged by
the Company to an external customer for the same element when such
element is sold separately. The Company allocates revenue on
software arrangements involving multiple elements to each element
based on its relative fair value.
Product Sales:
Revenue from sales of these products are recognized when title and
risk of loss have been transferred to the customer. Depending upon
the terms of the contract or arrangement with the customer, this may
occur at the time of shipment, when installation is completed or
upon the attainment of customer acceptance. The Company's policy is
not to accept product returns unless the products are defective. The
conditions of acceptance are governed by the terms of the contract
or customer arrangement and those not meeting the predetermined
specification are not recorded as revenue. Product warranties are
offered on our products and a warranty accrual is established when
sales are recognized and is based on estimated future costs of
repair and replacement principally using our historical experience
of warranty claims.
Price protections are provided to retailers of the Company's
consumer products business and others. Price protection is provided
to compensate the customers and retailers for decline in product's
value due mainly to competition. Price protection granted to our
customers is classified as a reduction of revenue on our
consolidated statement of income. In addition, it is our policy to
accrue reasonably and reliably estimated price adjustment at the
later of the date at which the related sales are recognized, or the
date at which the price protection is offered. The estimate is made
based primarily upon historical experience or agreement on the
adjustment rate and the number of units that are subject to such
adjustment (e.g., units in distribution channel).
Product revenues which are recognized upon shipment are IT system
products, semiconductor manufacturing equipment, test and
measurement equipments, construction equipment, displays, disk
drives, televisions, air conditioners, batteries, magnetic tapes,
high functional materials, cable products and automotive equipment.
Product revenues which are recognized upon acceptance or shipment
are railway vehicles. Product revenues that are recognized upon
acceptance are medical electronic devices, industrial machinery and
equipment, nuclear, thermal and hydroelectric power plant, and
elevators and escalators.
Revenue from sales of tangible products under long-term construction
type arrangements, principally in connection with the construction
of nuclear, thermal and hydroelectric power plants, are recognized
under the percentage-of-completion method. Under the
percentage-of-completion method, revenue is recognized as percentage
of estimated total revenue that incurred costs to date bear to
estimated total costs after giving effect to estimates of costs to
complete based upon most recent information. Any anticipated losses
on fixed price contracts are charged to operations when such losses
can be estimated. Provisions are made for contingencies (i.e.
performance penalty, benchmarking, etc.) in the period in which they
become known pursuant to specific contract terms and conditions and
are estimable.
The Company recognizes revenue in accordance with the provisions of
Statement of Position No. 97-2, "Software Revenue Recognition" as
amended by Statement of Position No. 98-9. Revenue from software
consists of software licensing, customized software development and
post contract customer support. Revenues from software license
arrangements are recognized upon shipment of the software if
evidence of the arrangement exists, pricing is fixed and
determinable and collectibility is probable. Customized software
revenue is recognized upon customer acceptance. Revenue from post
contract customer support is amortized over the period of the post
contract customer support. Consulting and training services are
recognized when the services are rendered.
Our standard software license agreement provides for a limited
warranty that the license will operate substantially in accordance
with the functionality described in the documentation provided with
the products. The standard software license does not provide for
right of return. We provide for warranty at the time of revenue
recognition using our historical experience of warranty claims. To
date such warranty provisions have been insignificant.
Service Revenues:
Service revenues from maintenance and distribution services are
recognized upon completion of service delivery. Revenue from time
service contracts is recognized as services are rendered. Revenue
from long-term fixed price service contracts such as support or
maintenance contracts is recognized ratably over the contractual
period. Finance lease income is recognized at level rates of return
over the term of the leases. Operating lease income is recognized on
a straight-line basis over the term of the lease.
(j) Treasury Stock
Treasury stock is accounted for by the cost method.
(k) Stock-based Compensation
As of September 30, 2003, the Company has three stock-based employee
compensation plans. The Company accounts for those plans under the
recognition and measurement principles of Accounting Principles
Board Opinion (APB) No. 25, "Accounting for Stock Issued to
Employees." No stock-based employee compensation cost is reflected
in net income, as all options granted under those plans had an
exercise price not less than market value of the underlying common
stock on the date of grant.
SFAS No. 123, "Accounting for Stock-based Compensation," prescribes
the recognition of compensation expense based on the fair value of
options on the grant date and allows continuous application of APB
No. 25 if certain pro forma disclosures are made assuming
hypothetical fair value method application. The Company elected to
continue applying APB No. 25, however, the pro forma effects of
applying SFAS No. 123 on net income (loss) and the per share
information for the six months ended September 30, 2003 and 2002
were not material.
(l) Disclosures about Segments of an Enterprise and Related Information
SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," was issued in June 1997. This standard
establishes standards for the manner in which a public business
enterprise is required to report financial and descriptive
information about its operating segments. This standard defines
operating segments as components of an enterprise for which separate
financial information is available and evaluated regularly as a
means for assessing segment performance and allocating resources to
segments. A measure of profit or loss, total assets and other
related information is required to be disclosed for each operating
segment. Further, this standard requires the disclosure of
information concerning revenues derived from the enterprise's
products or services, countries in which it earns revenue or holds
assets and major customers. This standard is effective for the
Company's fiscal year ended March 31, 1999. However, foreign issuers
are presently exempted from the segment disclosure requirements of
SFAS No. 131 in Securities Exchange Act filings with SEC, and the
Company has not presented the segment information required to be
disclosed in the footnotes to the consolidated financial statements
under SFAS No. 131.
(m) New Accounting Standards
In January 2003, the FASB issued Interpretation No. 46,
"Consolidation of Variable Interest Entities, an interpretation of
ARB No. 51." This interpretation addresses the consolidation by
business enterprises of variable interest entities as defined in the
interpretation. The interpretation applies immediately to variable
interests in variable interest entities created and acquired after
January 31, 2003. For variable interest in a variable interest
entity created before February 1, 2003, the interpretation is
applicable no later than the beginning of the first interim or
annual reporting period beginning after December 15, 2003. The
application of this interpretation did not have a material effect on
the Company's consolidated financial statements for the year ended
March 31, 2003 and for the six months ended September 30, 2003 and
is not expected to have a material effect for the year ending
March 31, 2004.
(n) Restatement and Reclassification
In January 2003, the FASB's Emerging Issues Task Force (EITF) Issue
No. 03-2, "Accounting for the Transfer to the Japanese Government of
the Substitutional Portion of Employee Pension Fund Liabilities" was
issued. The Company adopted EITF Issue No. 03-2 and restated
previously issued financial statements for the interim period ending
September 30, 2002 of that fiscal year. In addition, certain
reclassifications have been made to the prior period's consolidated
financial statements to conform with the classifications used in the
current period's consolidated financial statements.
(2) Basis of Financial Statement Translation
The accompanying consolidated financial statements are expressed in yen
and, solely for the convenience of the reader, have been translated into
United States dollars at the rate of JPY 111=U.S.$1, the approximate
exchange rate prevailing on the Tokyo Foreign Exchange Market as of
September 30, 2003. This translation should not be construed as a
representation that all amounts shown could be converted into U.S.
dollars.
(3) Investment in Securities
Short-term investments as of September 30, 2003 and March 31, 2003 are as
follows:
Thousands of
Millions of yen U.S. dollars
-------------------------------- --------------
September 30, March 31, September 30,
2003 2003 2003
------------- ------------- --------------
Investment in securities:
Available-for-sale securities 91,879 100,288 827,739
Held-to-maturity securities 1,237 6,057 11,144
Trading securities 161,062 80,627 1,451,009
------- ------- ---------
Short-term investments 254,178 186,972 2,289,892
======= ======= =========
Investments and advances, including affiliated companies as of September
30, 2003 and March 31, 2003 are as follows:
Thousands of
Millions of yen U.S. dollars
-------------------------------- --------------
September 30, March 31, September 30,
2003 2003 2003
------------- -------------- --------------
Investment in securities:
Available-for-sale securities 325,144 297,656 2,929,225
Held-to-maturity securities 1,091 1,487 9,829
Securities without readily
determinable fair values 80,696 75,860 726,991
Investments in affiliated companies 362,033 237,024 3,261,559
Advances and others 108,799 114,415 980,171
------- ------- ---------
Investments and advances, including
affiliated companies 877,763 726,442 7,907,775
======= ======= =========
The following is a summary of the amortized cost basis, gross unrealized
holding gains, gross unrealized holding losses and aggregate fair value of
available-for-sale securities by the consolidated balance sheets
classification as of September 30, 2003 and March 31, 2003.
Millions of yen
-----------------------------------------------------
September 30, 2003
-----------------------------------------------------
Amortized Gross Gross Aggregate
cost basis gains losses fair value
-----------------------------------------------------
Short-term investments:
Debt securities 40,616 44 25 40,635
Other securities 51,258 28 42 51,244
------- ------ ----- ------
91,874 72 67 91,879
Investments and advances:
Equity securities 104,127 89,057 3,146 190,038
Debt securities 117,235 528 3,960 113,803
Other securities 21,040 303 40 21,303
------- ------ ----- -------
242,402 89,888 7,146 325,144
------- ------ ----- -------
334,276 89,960 7,213 417,023
======= ====== ===== =======
Thousands of U.S. dollars
-----------------------------------------------------
September 30, 2003
-----------------------------------------------------
Amortized Gross Gross Aggregate
cost basis gains losses fair value
-----------------------------------------------------
Short-term investments:
Debt securities 365,910 396 225 366,081
Other securities 461,784 253 379 461,658
------- ------- ------ ---------
827,694 649 604 827,739
Investments and advances:
Equity securities 938,081 802,315 28,342 1,712,054
Debt securities 1,056,171 4,757 35,676 1,025,252
Other securities 189,549 2,730 360 191,919
--------- ------- ------ ---------
2,183,801 809,802 64,378 2,929,225
--------- ------- ------ ---------
3,011,495 810,451 64,982 3,756,964
========= ======= ====== =========
Millions of yen
-----------------------------------------------------
March 31, 2003
-----------------------------------------------------
Amortized Gross Gross Aggregate
cost basis gains losses fair value
-----------------------------------------------------
Short-term investments:
Debt securities 52,432 61 50 52,443
Other securities 47,897 5 57 47,845
------ ------ ------ -------
100,329 66 107 100,288
Investments and advances:
Equity securities 115,999 51,951 8,772 159,178
Debt securities 117,394 606 2,484 115,516
Other securities 23,033 75 146 22,962
------ ------ ------ -------
256,426 52,632 11,402 297,656
------- ------ ------ -------
356,755 52,698 11,509 397,944
======= ====== ====== =======
Debt securities consist mainly of national, local and foreign governmental
bonds, debentures issued by banks and corporate bonds. Other securities
consist mainly of investment trusts.
The proceeds from sale of available-for-sale securities for the six months
ended September 30, 2003 and 2002 are JPY 25,192 million ($226,955
thousand) and JPY 68,057 million, respectively. The gross realized gains
on the sale of those securities for the six months ended September 30,
2003 and 2002 are JPY 8,382 million ($75,514 thousand) and JPY 25,905
million, respectively, while gross realized losses on the sale of those
securities for the six months ended September 30, 2003 and 2002 are JPY
193 million ($1,739 thousand) and JPY 1,099 million, respectively.
For the six months ended September 30, 2003 and 2002 the amount of the net
unrealized holding gain or loss on available-for-sale securities that has
been included in accumulated other comprehensive loss is a gain of JPY
47,449 million ($427,468 thousand) and a loss of JPY 20,247 million,
respectively, and the amount of gains and losses reclassified out of
accumulated other comprehensive loss is net gain of JPY 5,756 million
($51,856 thousand) and net gain of JPY 22,594 million, respectively.
Various held-to-maturity securities are held by certain subsidiaries.
Gross unrealized holding gains and losses of these securities were not
material.
Trading securities consist mainly of investments in trust accounts. The
portions of trading losses that relate to trading securities still held
at the balance sheet date are not material for the six months ended
September 30, 2003 and JPY 1,090 million for the six months ended
September 30, 2002.
The contractual maturities of debt securities and other securities
classified as Investment and advances in the consolidated balance sheet
as of September 30, 2003 are as follows:
Millions of yen
--------------------------------------------------
September 30, 2003
--------------------------------------------------
Held-to- Available-
maturity for-sale Total
--------------- -------------- --------------
Due within five years 684 57,087 57,771
Due after five years 407 78,019 78,426
--------------- -------------- --------------
1,091 135,106 136,197
=============== ============== ==============
Thousands of U.S. dollars
--------------------------------------------------
September 30, 2003
--------------------------------------------------
Held-to- Available-
maturity for-sale Total
--------------- -------------- --------------
Due within five years 6,162 514,297 520,459
Due after five years 3,667 702,874 706,541
--------------- -------------- --------------
9,829 1,217,171 1,227,000
=============== ============== ==============
Expected redemptions may differ from contractual maturities because these
securities are redeemable at the option of the issuers.
The aggregate fair values of investments in affiliated companies based on
the quoted market price as of September 30, 2003 and March 31, 2003 are JPY
119,264 million ($1,074,450 thousand) and JPY 179,884 million,
respectively. The aggregate carrying amount of such investments as of
September 30, 2003 and March 31, 2003 are JPY 108,307 million ($975,739
thousand) and JPY 127,343 million, respectively.
As of September 30, 2003 and March 31, 2003, recognitions of other than
temporary declines in values of investments in certain affiliated companies
resulted in the difference of JPY 22,886 million ($206,180 thousand) and
JPY 25,061 million, respectively between the carrying amount and the amount
of underlying equity in net assets. In addition, equity method goodwill of
JPY 11,145 million ($100,405 thousand) is included in investments in
certain affiliated companies as of September 30, 2003 and March 31, 2003.
(4) Inventories
Inventories as of September 30, 2003 and March 31, 2003 are summarized as
follows:
Thousands of
Millions of yen U.S. dollars
---------------------------------- -----------------
September 30, March 31, September 30,
2003 2003 2003
----------------- ------------- -----------------
Finished goods 370,242 373,317 3,335,514
Work in process 657,574 646,932 5,924,090
Raw materials 159,317 167,280 1,435,288
----------------- ------------- -----------------
1,187,133 1,187,529 10,694,892
================= ============= =================
(5) Leases
The Company and certain subsidiaries are lessors of manufacturing machinery
and equipment under operating leasing arrangements with terms ranging from
3 to 6 years.
Machinery and equipment at cost under operating leases and accumulated
depreciation as of September 30, 2003 amounted to JPY 1,259,661 million
($11,348,297 thousand) and JPY 948,662 million ($8,546,505 thousand),
respectively. The leased assets are recorded at cost and depreciated using
the straight-line method over their estimated useful lives.
The following table shows the future minimum lease receivables of
non-cancelable operating leases as of September 30, 2003:
Millions of Thousands of
Years ending September 30 yen U.S. dollars
------------------------- ----------------- -----------------
2004 63,331 570,549
2005 50,709 456,838
2006 34,725 312,838
2007 16,756 150,955
2008 7,720 69,550
Thereafter 10,463 94,261
----------------- -----------------
Total minimum payments to be received 183,704 1,654,991
================= =================
The Company and certain subsidiaries lease certain manufacturing machinery
and equipment under operating leasing arrangements.
In March 2003, the Company entered into a sale and lease back agreement for
its headquarter land and building for a total proceeds of JPY 40,000
million. The lease back is classified as an operating lease with a term of
thirty-eight months. A part of the gain on sale of JPY 8,551 million which
represents the present value of the minimum lease payments over the lease
term has been deferred and will be recognized over the lease term.
The following table shows the future minimum lease payments of
non-cancelable operating leases as of September 30, 2003:
Millions of Thousands of
Years ending September 30 yen U.S. dollars
------------------------- ----------------- -----------------
2004 9,771 88,027
2005 6,916 62,306
2006 4,393 39,577
2007 1,851 16,676
2008 1,236 11,135
Thereafter 5,360 48,288
----------------- -----------------
Total minimum lease payments 29,527 266,009
================= =================
(6) Securitization
For the six months ended September 30, 2003 and 2002, Hitachi Capital
Corporation (HCC), a financing subsidiary, transferred lease receivables.
In these transactions, HCC sold mainly lease receivables to Special Purpose
Entities (SPE), and the SPE issued asset-backed commercial papers to
investors. The investors and the SPE have no recourse to HCC's other assets
for failure of debtors to pay when due. HCC retained servicing
responsibilities and subordinated interests, but has not recorded a
servicing asset or liability since the cost to service the receivables
approximates the servicing income. The retained interests are not material
and subordinate to investor's interests. For the six months ended September
30, 2003 and 2002, gains recognized on the transfer of lease receivables
amounted to JPY 5,885 million ($53,018 thousand) and JPY 4,064 million,
respectively.
The table below summarizes certain cash flows received from and paid to the
SPE during the six months ended September 30, 2003 and 2002:
Thousands of
Millions of yen U.S. dollars
------------------------------------- -----------------
September 30, September 30, September 30,
2003 2002 2003
----------------- ------------------- -----------------
Proceeds from transfer of lease receivables 128,216 124,010 1,155,099
Servicing fees received 10 14 90
Purchases of delinquent or ineligible assets (3,701) (3,936) (33,342)
Quantitative information about delinquencies, net credit losses, and
components of lease receivables subject to transfer and other assets
managed together as of and for the six months ended September 30, 2003 are
as follows:
Millions of yen
-----------------------------------------------------------
September 30, 2003
-----------------------------------------------------------
Principal
amount of
Total principal receivables
amount of 90 days or Net credit
receivables more past due losses
--------------- ----------------- -----------------
Total assets managed or transferred:
Lease receivables 907,843 1,035 1,405
Assets transferred (452,358)
---------------
Assets held in portfolio 455,485
===============
Thousands of U.S. dollars
-----------------------------------------------------------
September 30, 2003
-----------------------------------------------------------
Principal
amount of
Total principal receivables
amount of 90 days or Net credit
receivables more past due losses
----------------- ------------------ ---------------
Total assets managed or transferred:
Lease receivables 8,178,765 9,324 12,658
Assets transferred (4,075,297)
-----------------
Assets held in portfolio 4,103,468
=================
For the six months ended September 30, 2003 and 2002, the Company and
certain subsidiaries sold trade receivables mainly through the SPE which
securitized these receivables. In these securitizations, the Company and
certain subsidiaries retained servicing responsibility. No servicing asset
or liability has been recorded because the fees for servicing the
receivable approximate the related costs. In addition, the Company and
certain subsidiaries retained subordinated interests which were not
material.
During the six months ended September 30, 2003 and 2002, proceeds from
transfer of trade receivables were JPY 482,051 million ($4,342,802
thousand) and JPY 531,191 million, respectively and losses recognized on
those transfers were JPY 1,389 million ($12,514 thousand) and JPY 1,267
million, respectively.
(7) Goodwill and Other Intangible Assets
Intangible assets excluding goodwill acquired during the six months ended
September 30, 2003 and 2002 amounted to JPY 88,585 million ($798,063
thousand) and JPY 82,889 million, respectively, and related amortization
expense during the six months ended September 30, 2003 and 2002 amounted to
JPY 54,294 million ($489,135 thousand) and JPY 40,061 million,
respectively. The main component of intangible assets subject to
amortization was capitalized software. Amortization of capitalized computer
software costs for software to be sold, leased or otherwise marketed is
charged to cost of sales.
Intangible assets excluding goodwill as of September 30, 2003 and March 31,
2003 are presented below:
Millions of yen
------------------------------------------ -----------------------------------------
September 30, 2003 March 31, 2003
------------ ------------ ------------- ------------- ------------ ------------
Gross Accumulated Net Gross Accumulated Net
carrying amortization carrying carrying amortization carrying
amount amount amount amount
------------ ------------ ------------- ------------- ------------ ------------
Amortized intangible assets
Software 300,826 191,464 109,362 288,066 169,239 118,827
Software for internal use 298,086 133,169 164,917 290,204 132,917 157,287
Other 147,769 50,925 96,844 153,130 47,997 105,133
------------ ------------ ------------- ------------- ------------ ------------
746,681 375,558 371,123 731,400 350,153 381,247
============ ============ ============= ============= ============ ============
Unamortized intangible assets 14,561 - 14,561 13,603 - 13,603
Thousands of U.S. dollars
------------------------------------------
September 30, 2003
------------ ------------ -------------
Gross Accumulated Net
carrying amortization carrying
amount amount
------------ ------------ -------------
Amortized intangible assets
Software 2,710,144 1,724,901 985,243
Software for internal use 2,685,460 1,199,721 1,485,739
Other 1,331,252 458,784 872,468
------------ ------------ -------------
6,726,856 3,383,406 3,343,450
============ ============ =============
Unamortized intangible assets 131,180 - 131,180
The changes in the carrying amount of goodwill for the six months ended
September 30, 2003 and 2002 are as follows:
Millions of yen
--------------------------------------------------------------------------------------------------------------------
March 31, Acquired Impairment Decrease from Translation September 30,
2003 during the loss divestiture adjustment 2003
period and other
---------------- ---------------- --------------- ---------------- -------------- ----------------
Goodwill 60,317 7,496 (1,169) (8,232) (1,818) 56,594
Thousands of U.S. dollars
--------------------------------------------------------------------------------------------------------------------
March 31, Acquired Impairment Decrease from Translation September 30,
2003 during the loss divestiture adjustment 2003
period and other
---------------- ---------------- --------------- ---------------- -------------- ----------------
Goodwill 543,396 67,532 (10,532) (74,162) (16,378) 509,856
Millions of yen
--------------------------------------------------------------------------------------------------------------------
April 1, Acquired Impairment Decrease from Translation September 30,
2002 during the loss divestiture adjustment 2002
period and other
---------------- ---------------- --------------- ---------------- -------------- ----------------
Goodwill 27,299 8,232 - - (2,183) 33,348
(8) Restricted Assets
The Company and its subsidiaries provide their investment in certain
subsidiaries as collateral for bank loans of JPY 7,103 million ($63,991
thousand). The collateralized number of shares and their fair values as of
September 30, 2003 are as follows:
Fair value
Number of Collateralized as of September 30, 2003
shares number of ---------------------------
owned Percent of shares Millions Thousands of
Subsidiary name in thousand ownership in thousand of yen U.S. dollars
-----------------------------------------------------------------------------------------------------------------------
Hitachi Capital Corporation 71,043 56.2% 6,800 9,520 85,766
Hitachi Maxell, Ltd. 51,526 52.1% 400 717 6,459
Hitachi Powdered Metals Co., Ltd. 17,072 53.3% 3,700 2,586 23,297
In accordance with Trustee agreements for the unsecured convertible
debentures series 7th, the 11,981,000 shares of investments in Hitachi
Software Engineering Co., Ltd. and the 48,400,000 shares of investments in
Hitachi High-Technologies Co., Ltd. are held in trust. As of September 30,
2003, the fair values of the shares held in trust are JPY 40,136 million
($361,586 thousand) and JPY 77,101 million ($694,604 thousand),
respectively.
(9) Dividend Restriction
Pursuant to the terms of the indentures under which the unsecured
convertible debentures due in 2004 were issued, accumulated cash dividends
(including interim dividends) paid by the Company for the fiscal years
beginning after March 31, 1989 may not exceed accumulated net income in the
audited consolidated statements of income for the fiscal years beginning
after March 31, 1989 plus JPY 65,000 million ($585,586 thousand) as long as
these debentures are outstanding. In determining the accumulated cash
dividends, interim cash dividends to be paid on and after April 1, 1990 are
considered to be a part of the cash dividends of the previous fiscal year.
As of March 31, 2003, the accumulated cash dividends and the accumulated
net income including JPY 65,000 million ($585,586 thousand), which are
defined by the above terms, amounted to JPY 419,072 million ($3,775,423
thousand) and JPY 452,233 million ($4,074,171 thousand), respectively.
(10) Commitments and Contingencies
The Company and its operating subsidiaries are contingently liable for loan
guarantees to its affiliates in the amount of approximately JPY 31,956
million ($287,892 thousand) as of September 30, 2003.
Hitachi Capital Corporation (HCC), a financing subsidiary of the Company,
provides guarantees to financial institutions for extending loans to
customers of HCC. As of September 30, 2003, the undiscounted maximum
potential future payments under such guarantees amounted to JPY 577,226
million ($5,200,234 thousand) of which JPY 142,459 million ($1,283,414
thousand) is covered by consumer credit insurance. The Company has accrued
JPY 4,732 million ($42,631 thousand) as an obligation to stand ready to
perform over the term of the guarantees.
HCC provides certain revolving lines of credit to its credit card holders
in accordance with the terms of the credit card business customer service
contracts. Furthermore, HCC provides credit facilities to parties in
accordance with the service agency business contracts from which temporary
payments on behalf of such parties are made. In addition, the Company
provides a loan commitment to an affiliated company.
The outstanding balance of the revolving lines of credits, credit
facilities and loan commitments as of September 30, 2003 is as follows:
Thousands of
Millions of yen U.S. dollars
------------------ -------------------
Total commitment available 666,341 6,003,072
Amount utilized (5,047) (45,468)
------------------ -------------------
Balance available 661,294 5,957,604
================== ===================
A portion of the revolving lines of credit which are pending credit
approval cannot be utilized.
The Company and certain of its subsidiaries hold line of credit
arrangements with banks in order to secure source of working capital. The
unused line of credit as of September 30, 2003 amounted to JPY 179,345
million ($1,615,721 thousand).
The Company and its subsidiaries generally warrant its products over
respective warranty periods. The accrued product warranty costs are based
primarily on historical experience of actual warranty claims. Change in
accrued product warranty cost for the six months ended September 30, 2003
is as follows:
Millions of Thousands of
yen U.S. dollars
-------------------- --------------------
Balance at beginning of the period 105,297 948,621
Addition 21,858 196,919
Utilization (23,507) (211,775)
Other (1,374) (12,378)
-------------------- --------------------
Balance at end of the period 102,274 921,387
==================== ====================
It is common practice in Japan for companies, in the ordinary course of
business, to receive promissory notes in the settlement of trade accounts
receivable and to subsequently discount such notes to banks or to transfer
them by endorsement to suppliers in the settlement of accounts payable.
As of September 30, 2003 and March 31, 2003, the companies were
contingently liable for trade notes discounted and endorsed in the
following amounts:
Thousands of
Millions of yen U.S. dollars
---------------------------------- -----------------
September 30, March 31, September 30,
2003 2003 2003
----------------- ------------- -----------------
Notes discounted 4,212 3,639 37,946
Notes endorsed 18,158 24,924 163,586
----------------- ------------- -----------------
22,370 28,563 201,532
================= ============= =================
The Company and certain subsidiaries are subject to several legal
proceedings and claims which have arisen in the ordinary course of business
and have not been finally adjudicated. These actions when ultimately
concluded and determined will not, in the opinion of the management, have a
material adverse effect on the financial position and results of operations
of the Company and certain subsidiaries.
(11) Restructuring charges
Certain losses incurred in the reorganization of the certain subsidiaries'
operations are considered as restructuring charges. Components and related
amounts of the restructuring charges, before the related tax effects, for
the six months ended September 30, 2003 and 2002 are as follows:
Thousands of
Millions of yen U.S. dollars
------------------------------------- -----------------
September 30, September 30, September 30,
2003 2002 2003
---------------- ----------------- -----------------
Special termination benefits 3,357 - 30,243
Loss on disposal of fixed assets 6,960 - 62,703
---------------- ----------------- -----------------
Total restructuring charges 10,317 - 92,946
================ ================= =================
Certain subsidiaries provided special termination benefits to those
employees voluntarily leaving the companies. The accrued special
termination benefits were recognized at the time voluntary termination was
offered and benefits accepted by the employees. An analysis of the accrued
special termination benefits for the six months ended September 30, 2003
and 2002 are as follows:
Thousands of
Millions of yen U.S. dollars
------------------------------------- -----------------
September 30, September 30, September 30,
2003 2002 2003
---------------- ----------------- -----------------
Balance at beginning of the period - 114,266 -
New charges 3,357 - 30,243
(number of employees to be terminated) 518 - -
Cash payments (1,593) (113,102) (14,351)
(number of employees actually terminated) 345 9,981 -
Foreign currency translation adjustment - (60) -
---------------- ----------------- -----------------
Balance at end of the period 1,764 1,104 15,892
================ ================= =================
The following represent significant restructuring activities for the six
months ended September 30, 2003 by business line:
1. Digital Media & Consumer Products division restructured its consumer
products plants and related distribution network in order to address the
general weakness in consumer demand for consumer products in mostly
Japan. The accrued special termination benefits newly charged amounted
to JPY 2,177 million ($19,613 thousand). The liabilities for special
termination benefits in the amount of JPY 1,764 million ($15,892
thousand) will be paid by March 2004. Total restructuring charges
amounted of JPY3,011 million ($27,126 thousand).
2. High Functional Materials & Components division mainly restructured the
semiconductor packaging materials field because the business environment
took a far more dramatic downturn than expected in Japan. The accrued
special termination benefits newly charged amounted to JPY 1,180 million
($10,631 thousand) and were paid by September 30, 2003. Total
restructuring charges amounted of JPY 7,306 million ($65,820 thousand).
(12) Other Income and Other Deductions
"Other income" for the six months ended September 30, 2003 includes net
gain on securities in the amount of JPY 97,957 million ($882,495 thousand).
"Other deductions" for the six months ended September 30, 2003 includes
foreign currency transaction loss of JPY 12,216 million ($110,054 thousand)
and a loss of JPY 2,245 million ($20,225 thousand) of equity in earning of
affiliated companies.
"Other income" for the six months ended September 30, 2002 includes net
gain on securities in the amount of JPY 14,027 million.
"Other deductions" for the six months ended September 30, 2002, the Company
and certain subsidiaries recorded a net periodic benefit cost of JPY 12,410
million which were generated as the result of adopting EITF Issue No.03-2
"Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities". "Other
deductions" for the six months ended September 30, 2002 includes foreign
currency transaction loss of JPY 15,712 million and a loss of JPY 8,425
million of equity in earnings of affiliated companies.
(13) Net Income Per Share Information
The reconciliations of the numbers and the amounts used in the basic and
diluted net income per share computations for the six months ended
September 30, 2003 and 2002 are as follows:
Number of shares
---------------------------------
September 30, September 30,
2003 2002
------------- -------------
Weighted average number of shares on
which basic net income per share is calculated 3,309,174,874 3,337,869,526
Effect of dilutive securities:
6th series convertible debentures - -
7th series convertible debentures - -
Stock option 31,184 -
Number of shares on which diluted net income ------------- -------------
per share is calculated 3,309,206,058 3,337,869,526
============= =============
Thousands of
Millions of yen U.S. dollars
------------------------------------- ------------------
September 30, September 30, September 30,
2003 2002 2003
---------------- ----------------- ------------------
Net income applicable to common stockholders 5,384 5,666 48,505
Effect of dilutive securities:
6th series convertible debentures - - -
7th series convertible debentures - - -
Other (137) (260) (1,235)
---------------- ----------------- ------------------
Net income on which diluted net income
per share is calculated 5,247 5,406 47,270
================ ================= ==================
Net income per share: Yen U.S. dollars
------------------------------------- ------------------
Basic 1.63 1.70 0.01
Diluted 1.59 1.62 0.01
The net income per share computation for the six months ended September 30,
2003 and 2002 excludes 6th and 7th series convertible debentures because
their effect would have been antidilutive. In addition, 6th series
convertible debentures were redeemed in September 2003.
(14) Derivative Instruments and Hedging Activities
Overall risk profile
The major manufacturing bases of the Company and its subsidiaries are
located in Japan and Asia. The selling bases are located globally, and the
Company and its subsidiaries generate approximate 35% of their sales from
overseas. These sales are mainly denominated in U.S. dollar or Euro. As a
result, the Company and its subsidiaries are exposed to market risks from
changes in foreign currency exchange rate.
The financing subsidiaries in London, New York and Singapore issue U.S.
dollar denominated, variable rate, medium-term notes mainly through the
Euro markets to finance its overseas long-term operating capital. As a
result, the Company and its subsidiaries are exposed to market risks from
changes in foreign currency exchange rate and interest rate.
The Company and its subsidiaries are also exposed to credit-related losses
in the event of non-performance by counterparties to derivative financial
instruments, but it is not expected that any counterparties will fail to
meet their obligations, because most of the counterparties are
internationally recognized financial institutions and contracts are
diversified into a number of major financial institutions.
Risk management policy
The Company and its subsidiaries assess foreign currency exchange rate risk
and interest rate risk by continually monitoring changes in these exposures
and by evaluating hedging opportunities. It is the Company's principal
policy that the Company and its subsidiaries do not enter into derivative
financial instruments for speculation purposes.
Foreign currency exchange rate risk management
The Company and its subsidiaries have assets and liabilities which are
exposed to foreign currency exchange rate risk and, as a result, they enter
into forward exchange contracts and cross currency swap agreements for the
purpose of hedging these risk exposures.
In order to fix the future net cash flows principally from trade
receivables and payables recognized, which are denominated in foreign
currencies, the Company and its subsidiaries on a monthly basis measure the
volume and due date of future net cash flows by currencies. In accordance
with their policy, a certain portion of measured net cash flows is covered
using forward exchange contracts, which principally mature within one year.
The Company and its subsidiaries enter into cross currency swap agreements
with the same maturities as underlying debts to fix cash flows from
long-term debts denominated in foreign currencies. The hedging relationship
between the derivative financial instrument and its hedged item is highly
effective in achieving offsetting changes in foreign currency exchange
rates.
Interest rate risk management
The Company's and certain subsidiaries' exposure to interest rate risk is
related principally to long-term debt obligations. Management believes it
is prudent to minimize the variability caused by interest rate risk. To
meet this objective, the Company and certain subsidiaries principally enter
into interest rate swaps to manage fluctuations in cash flows. The interest
rate swaps enter into receive-variable, pay-fixed interest rate swaps.
Under the interest rate swaps, the Company and certain subsidiaries receive
variable interest rate payments on long-term debt associated with
medium-term notes and make fixed interest rate payments, thereby creating
fixed interest rate long-term debt.
The Company and certain financing subsidiaries mainly finance a portion of
their operations by long-term debt with fixed interest rate and lend funds
at variable interest rate. Therefore, such companies are exposed to
interest rate risk. Management believes it is prudent to minimize the
variability caused by interest rate risk. To meet this objective, the
Company and certain financing subsidiaries principally enter into interest
rate swaps converting the fixed rate to the variable rate to manage
fluctuations in fair value resulting from interest rate risk. Under the
interest rate swaps, the Company and certain financing subsidiaries receive
fixed interest rate payments associated with medium-term notes and make
variable interest rate payments, thereby creating variable-rate long-term
debt.
The hedging relationship between the interest rate swaps and its hedged
item is highly effective in achieving offsetting changes in cash flows and
fair value resulting from interest rate risk.
Fair value hedge
Changes in fair value of both recognized assets and liabilities, and
derivative financial instruments designated as fair value hedges of these
assets and liabilities are recognized in other income (deductions).
Derivative financial instruments designated as fair value hedges include
forward exchange contracts associated with operating transactions, cross
currency swap agreements and interest rate swaps associated with financing
transactions.
Interest charges for the six months ended September 30, 2003 includes
losses of JPY 448 million ($4,036 thousand) which represents the component
excluded from the assessment of hedge effectiveness.
Cash flow hedge
Foreign Currency Exposure
Changes in fair value of forward exchange contracts designated and
qualifying as cash flow hedges of forecasted transactions and recognized
assets and liabilities are reported in accumulated other comprehensive
income (AOCI). These amounts are reclassified into earnings in the same
period as the hedged items affect earnings.
The sum of the amount of the hedging ineffectiveness and net gain or loss
excluded from the assessment of hedge effectiveness is not material for the
six months ended September 30, 2003 and 2002.
As of September 30, 2003, the maximum length of time over which the Company
and its subsidiaries are hedging their exposure to the variability in
future cash flows associated with foreign currency forecasted transactions
is approximately 56 months.
Interest Rate Exposure
Changes in fair values of interest rate swaps designated as hedging
instruments for the variability of cash flows associated with long-term
debt obligations are reported in AOCI. These amounts subsequently are
reclassified into interest charges as a yield adjustment in the same period
in which the hedged debt obligations affect earnings.
Interest charges for the six months ended September 30, 2003 and 2002
includes losses of JPY 244 million ($2,198 thousand) and losses of JPY 87
million, respectively, which represents the component excluded from the
assessment of hedge effectiveness. And interest charges for the six months
ended September 30, 2003 includes losses of JPY 127 million ($1,144
thousand) which represents the component of the hedging ineffectiveness.
The contract or notional amounts of derivative financial instruments held
as of September 30, 2003 and March 31, 2003 are summarized as follows:
Thousands of
Millions of yen U.S. dollars
------------------------------------ ----------------
September 30, March 31, September 30,
2003 2003 2003
----------------- --------------- ----------------
Forward exchange contracts:
To sell foreign currencies 142,898 187,093 1,287,369
To buy foreign currencies 57,138 27,584 514,757
Cross currency swap agreements:
To sell foreign currencies 34,441 51,789 310,279
To buy foreign currencies 125,599 128,717 1,131,523
Interest rate swaps 477,525 484,961 4,302,027
Option contracts 14,596 828 131,495
(15) Fair Value of Financial Instruments
The following methods and assumptions are used to estimate the fair values
of financial instruments:
Investment in securities
The fair value of investment in securities is estimated based on quoted
market prices for these or similar securities.
Long-term debt
The fair value of long-term debt is estimated based on quoted market prices
or the present value of future cash flows using the companies' incremental
borrowing rates for similar borrowing arrangements.
Cash and cash equivalents, Trade receivables, Short-term debt and Trade
payables The carrying amount approximates the fair value because of the
short maturity of these instruments.
Derivative financial instruments
The fair values of forward exchange contracts, cross currency swap
agreements, interest rate swaps and option contracts are estimated on the
basis of the market prices of derivative financial instruments with similar
contract conditions.
The carrying amounts and estimated fair values of the financial instruments
as of September 30, 2003 and March 31, 2003 are as follows:
Millions of yen
---------------------------------------------------------------------------
September 30, 2003 March 31, 2003
------------------------------------- -----------------------------------
Carrying Estimated Carrying Estimated
amounts fair values amounts fair values
----------------- ---------------- ---------------- ----------------
Investment in securities:
Short-term investments 254,178 254,178 186,972 186,972
Investments and advances 326,235 326,238 299,143 299,138
Derivatives (Assets):
Forward exchange contracts 4,576 4,576 668 668
Cross currency swap agreements 563 563 279 279
Interest rate swaps 1,793 1,793 1,921 1,921
Option contracts 8 8 10 10
Long-term debt (1,966,034) (1,986,080) (2,014,738) (2,064,192)
Derivatives (Liabilities):
Forward exchange contracts (401) (401) (1,333) (1,333)
Cross currency swap agreements (6,486) (6,486) (3,045) (3,045)
Interest rate swaps (4,104) (4,104) (3,853) (3,853)
Option contracts (59) (59) (3) (3)
Thousands of U.S. dollars
--------------------------------------
September 30, 2003
--------------------------------------
Carrying Estimated
amounts fair values
------------------ ----------------
Investment in securities:
Short-term investments 2,289,892 2,289,892
Investments and advances 2,939,054 2,939,081
Derivatives (Assets):
Forward exchange contracts 41,225 41,225
Cross currency swap agreements 5,072 5,072
Interest rate swaps 16,153 16,153
Option contracts 72 72
Long-term debt (17,712,018) (17,892,613)
Derivatives (Liabilities):
Forward exchange contracts (3,613) (3,613)
Cross currency swap agreements (58,432) (58,432)
Interest rate swaps (36,973) (36,973)
Option contracts (532) (532)
It is not practicable to estimate the fair value of investments in unlisted
common stock because of the lack of a market price and difficulty in
estimating fair value without incurring excessive cost. The carrying
amounts of these investments at September 30, 2003 and March 31, 2003
totaled JPY 80,696 million ($726,991 thousand) and JPY 75,860 million,
respectively.
(16) Merger and Acquisition
On May 28, 2002, the Company signed a share exchange agreement with Hitachi
Unisia Automotive, Ltd., former UNISIA JECS Corporation (UJ), to assume
full ownership of UJ by exchanging 0.197 shares of the Company's common
stock for each share of UJ common stock outstanding. The Company and UJ
obtained third party valuations of the respective share prices which were
used as a basis in negotiating the share exchange ratio. On October 1,
2002, the Company issued 25,143,245 shares of common stock, in the amount
of JPY 23,635 million based on the quoted market price of JPY 940 per share
as of the announcement date, April 18, 2002, for exchange with the UJ
registered shareholders as of September 30, 2002.
UJ manufactures automotive systems and components that support every area
of basic vehicle function. The Company has strategically targeted the
automotive products business and the purpose of making UJ a wholly owned
subsidiary is to further expand this business.
The effects of the acquisition to the balance sheet as of October 1, 2002
are as follows:
Millions of yen
---------------
Current assets 68,427
Non-current assets 121,248
Goodwill 10,435
Current liabilities (99,453)
Non-current liabilities (76,120)
Net assets acquired (23,635)
Net assets previously acquired (902)
On a pro forma basis, revenue, net income and the per share information of
the Company, with assumed acquisition dates for UJ of April 1, 2002 and
2001, respectively, would not differ materially from the amount reported in
the accompanying consolidated financial statements as of and for the years
ended March 31, 2003 and 2002.
On December 31, 2002, the Company purchased a majority ownership in a
company to which hard disk drive operations and related intellectual
property portfolio had been transferred from International Business
Machines Corp. (IBM) for a total cash purchase price, subject to
adjustment, of JPY 243,480 million. This purchase price adjustment may
reduce the purchase price and the amount of goodwill recorded upon
acquisition. The purchase price is payable in three installments, of which
the first installment payment was paid on December 31, 2002 with the
remaining payments due in December 2003 and 2005.
On January 1, 2003, this company began operating as Hitachi Global Storage
Technologies Netherlands B.V. (HGST). HGST offers full array of hard-disk
and this acquisition complemented and expanded the Company's product
portfolio, production capacity, research and development and distribution
channel globally.
Upon closing, the Company obtained full voting rights to HGST and, as a
result, has consolidated all of its assets and liabilities in the
consolidated balance sheet, with the remaining installment payments
recorded as liabilities.
The effects of this purchase as of December 31, 2002 are as follows:
Millions of yen
---------------
Current assets 106,357
Non-current assets 184,326
Goodwill 13,653
Current liabilities (24,737)
Non-current liabilities (32,159)
Net assets acquired (247,440)
The purchase price upon closing is as follows:
Millions of yen
---------------
Cash paid to IBM as of December 31, 2002 169,680
Cash to be paid to IBM 73,800
Direct acquisition costs 3,960
-------
Total purchase price 247,440
=======
In-process research and development assets amounting to JPY 2,787 million
have been acquired as part of the purchase and have been written off at the
date of acquisition as these assets are considered as not having
alternative use. The write-off has been recorded as selling, general and
administrative expenses.
On a pro forma basis, revenue, net loss and the per share information of
the Company, with assumed acquisition dates of April 1, 2002 and 2001,
respectively, are as follows:
Millions of yen
---------------------------------
2003 2002
--------------- -----------------
Revenue 8,541,202 8,480,778
Net loss (149,891) (529,055)
Yen
---------------------------------
2003 2002
--------------- -----------------
Basic net loss (44.72) (158.50)
Diluted net loss (44.84) (158.50)
(17) Divestiture of Semiconductor & Integrated Circuits operation
On April 1, 2003, Renesas Technology Corp., which focuses on system LSI
(Large Scale Integration) operation, was incorporated through a corporate
split procedure, where Semiconductor & Integrated Circuits operations of
the Company and Mitsubishi Electric Corporation were spun-off. Renesas
Technology Corp. was capitalized with JPY 50,000 million through the
issuance of 5,000,000 shares of common stock. The Company and Mitsubishi
Electric Corporation received 2,750,000 shares and 2,250,000 shares,
respectively. Renesas Technology Corp. is accounted for under the equity
method by the Company as major decisions require consensus between the
Company and Mitsubishi Electric Corporation in accordance with the joint
venture agreement and assets and liabilities of the operations will be
excluded from the consolidated balance sheet. Total assets and net assets
of the operations as of April 1, 2003 amounted to approximately JPY 596,118
million and JPY 147,443 million, respectively.
SEGMENT INFORMATION
Industry Segments
Hitachi, Ltd. and Subsidiaries
Six months ended September 30, 2003 and 2002
Millions of
Millions of yen U.S. dollars (A)/(B)
--------------------------------- ------------
2003 (A) 2002 (B) 2003 x 100
------------------------------------------------------------------------------------------------------------------------------------
Sales:
Information & Telecommunication Systems 1,053,279 878,230 9,489 120%
(22%) (18%)
--------------- ---------------- -------------- ---------
Electronic Devices 607,529 766,417 5,473 79
(13%) (16%)
--------------- ---------------- -------------- ---------
Power & Industrial Systems 1,073,439 1,068,101 9,671 100
(22%) (22%)
--------------- ---------------- -------------- ---------
Digital Media & Consumer Products 585,411 597,689 5,274 98
(12%) (12%)
--------------- ---------------- -------------- ---------
High Functional Materials & Components 622,206 613,061 5,605 101
(13%) (12%)
--------------- ---------------- -------------- ---------
Logistics, Services & Others 612,969 700,613 5,522 87
(13%) (14%)
--------------- ---------------- -------------- ---------
Financial Services 267,923 293,321 2,414 91
(5%) (6%)
--------------- ---------------- -------------- ---------
Subtotal 4,822,756 4,917,432 43,448 98
(100%) (100%)
--------------- ---------------- -------------- ---------
Eliminations & Corporate items (781,349) (1,000,941) (7,039) -
--------------- ---------------- -------------- ---------
Total 4,041,407 3,916,491 36,409 103%
=============== ================ ============== =========
Operating Income (Loss):
Information & Telecommunication Systems 5,399 42,167 49 13%
(15%) (53%)
--------------- ---------------- -------------- ---------
Electronic Devices 3,675 (7,918) 33 -
(11%) (-10%)
--------------- ---------------- -------------- ---------
Power & Industrial Systems 7,935 11,111 71 71
(23%) (14%)
--------------- ---------------- -------------- ---------
Digital Media & Consumer Products 728 5,747 7 13
(2%) (7%)
--------------- ---------------- -------------- ---------
High Functional Materials & Components 9,233 9,042 83 102
(26%) (11%)
--------------- ---------------- -------------- ---------
Logistics, Services & Others (397) 1,457 (4) -
(-1%) (2%)
--------------- ---------------- -------------- ---------
Financial Services 8,195 18,653 74 44
(24%) (23%)
--------------- ---------------- -------------- ---------
Subtotal 34,768 80,259 313 43
(100%) (100%)
--------------- ---------------- -------------- ---------
Eliminations & Corporate items (14,529) (18,571) (131) -
--------------- ---------------- -------------- ---------
Total 20,239 61,688 182 33%
=============== ================ ============== =========
Notes: 1. Net sales by industry segment include intersegment transactions.
2. SEGMENT INFORMATION is disclosed in accordance with a ministerial
ordinance under the Securities and Exchange Law of Japan.
3. In order to be consistent with financial reporting principles and
practices generally accepted in Japan, operating income (loss) is
presented as net sales less cost of sales and selling, general and
administrative expenses. The Company believes that this is useful to
investors in comparing the company's financial results with those of
other Japanese companies. Under accounting principles generally
accepted in the United States of America, restructuring charges, net
gain or loss on sale and disposal of rental assets and other property,
impairment losses, special termination benefits and the losses
resulting from the adoption of EITF Issue No. 03-2 "Accounting for the
Transfer to the Japanese Government of the Substitutional Portion of
Employee Pension Fund Liabilities" are included as part of operating
income (loss). See the consolidated statements of income and notes 11
and 12 to the consolidated financial statements.
4. The figures in this information are expressed in yen and, solely for
the convenience of the reader, have been translated into United States
dollars at the rate of JPY 111=U.S.$1, the approximate exchange rate
prevailing on the Tokyo Foreign Exchange Market as of September 30,
2003.
Geographic Segments
Hitachi, Ltd. and Subsidiaries
Six months ended September 30, 2003 and 2002
Millions of
Millions of yen U.S. dollars (A)/(B)
---------------------------------- ------------
2003 (A) 2002 (B) 2003 x 100
-------------------------------------------------------------------------------------------------------------------------------
Sales:
Japan
Outside customer sales 2,964,920 3,003,621 26,711 99%
(64%) (65%)
Intersegment transactions 413,478 501,040 3,725 83
(9%) (11%)
Total 3,378,398 3,504,661 30,436 96
(73%) (76%)
--------------- --------------- -------------- ----------
Asia
Outside customer sales 455,943 312,220 4,107 146
(10%) (7%)
Intersegment transactions 144,482 168,355 1,302 86
(3%) (3%)
Total 600,425 480,575 5,409 125
(13%) (10%)
--------------- --------------- -------------- ----------
North America
Outside customer sales 399,425 394,660 3,598 101
(9%) (9%)
Intersegment transactions 12,890 19,434 116 66
(0%) (0%)
Total 412,315 414,094 3,714 100
(9%) (9%)
--------------- --------------- -------------- ----------
Europe
Outside customer sales 182,461 177,056 1,644 103
(4%) (4%)
Intersegment transactions 19,622 12,281 177 160
(0%) (0%)
Total 202,083 189,337 1,821 107
(4%) (4%)
--------------- --------------- -------------- ----------
Other Areas
Outside customer sales 38,658 28,934 349 134
(1%) (1%)
Intersegment transactions 1,155 1,323 10 87
(0%) (0%)
Total 39,813 30,257 359 132
(1%) (1%)
--------------- --------------- -------------- ----------
Subtotal 4,633,034 4,618,924 41,739 100
(100%) (100%)
--------------- --------------- -------------- ----------
Eliminations (591,627) (702,433) (5,330) -
--------------- --------------- -------------- ----------
Total 4,041,407 3,916,491 36,409 103%
=============== =============== ============== ==========
Millions of
Millions of yen U.S. dollars (A)/(B)
---------------------------------- --------------
2003 (A) 2002 (B) 2003 x 100
-----------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss):
Japan 37,208 65,775 335 57%
(79%) (78%)
--------------- ---------------- -------------- ----------
Asia (513) 7,740 (5) -
(-1%) (9%)
--------------- ---------------- -------------- ----------
North America 1,714 3,037 16 56
(4%) (4%)
--------------- ---------------- -------------- ----------
Europe 7,188 6,442 65 112
(15%) (8%)
--------------- ---------------- -------------- ----------
Other Areas 1,368 748 12 183
(3%) (1%)
--------------- ---------------- -------------- ----------
Subtotal 46,965 83,742 423 56
(100%) (100%)
--------------- ---------------- -------------- ----------
Eliminations & Corporate items (26,726) (22,054) (241) -
--------------- ---------------- -------------- ----------
Total 20,239 61,688 182 33%
=============== ================ ============== ==========
Sales by Market
Hitachi, Ltd. and Subsidiaries
Six months ended September 30, 2003 and 2002
Millions of
Millions of yen U.S. dollars (A)/(B)
---------------------------------- ------------
2003 (A) 2002 (B) 2003 x 100
-----------------------------------------------------------------------------------------------------------------------------
Japan 2,636,362 2,633,108 23,751 100%
(65%) (67%)
--------------- ---------------- -------------- ---------
Outside Japan
Asia 553,783 498,594 4,989 111
(14%) (13%)
--------------- ---------------- -------------- ---------
North America 428,218 426,980 3,858 100
(11%) (11%)
--------------- ---------------- -------------- ---------
Europe 303,458 262,185 2,734 116
(7%) (7%)
--------------- ---------------- -------------- ---------
Other Areas 119,586 95,624 1,077 125
(3%) (2%)
--------------- ---------------- -------------- ---------
Subtotal 1,405,045 1,283,383 12,658 109
(35%) (33%)
--------------- ---------------- -------------- ---------
Total 4,041,407 3,916,491 36,409 103%
(100%) (100%)
=============== ================ ============== =========