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 February 2004
Commission File Number 1-8320
------
Hitachi, Ltd.
-------------
(Translation of registrant's name into English)
6, Kanda-Surugadai 4-chome, Chiyoda-ku, Tokyo 101-8010, Japan
-------------------------------------------------------------
(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 _________
---------
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
-------
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. Press release dated February 3, 2004 regarding details of joint venture
with Casio in the field of mobile phones.
2. Press release dated February 4, 2004 regarding consolidated financial
results for the third quarter of fiscal year ending March 31, 2004.
3. Press release dated February 4, 2004 regarding progress on Hitachi's
medium-term management plan.
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.
-------------------------------------
(Registrant)
Date March 9, 2004 By /s/ Takashi Hatchoji
------------------------ -------------------------------------
Takashi Hatchoji
Vice President and Executive Officer
FOR IMMEDIATE RELEASE
Casio and Hitachi Announce Joint Venture Details
For Casio Hitachi Mobile Communications Co., Ltd.
Tokyo, February 3, 2004 --- Casio Computer Co., Ltd. (TSE:6952) and Hitachi,
Ltd. (NYSE:HIT / TSE:6501) today announced the name, method of establishment,
directors and other details for a joint venture mobile phone handset company
that was announced on November 18, 2003. On April 1, 2004, the two companies
will establish the new company, Casio Hitachi Mobile Communications Co., Ltd.,
and transfer their respective businesses to such company through corporate split
under the Japanese Commercial Code. The development, design, manufacture,
procurement, quality assurance, sales and service operations involving mobile
phone handsets in Japan and overseas of Casio's Mobile Communication Products
and Solution Division and of the Mobile Information & Communication Appliance
Division of Hitachi's Ubiquitous Platform Systems Group will be transferred to
the new company.
The new company will bring together Casio's proven high-density surface
mounting, image processing, application software and other technologies with
Hitachi's high-speed data communications technology, device application
technologies, secure systems design and other technologies. This will create a
more stable, robust business with many benefits that include: savings in
development expenses through the use of shared handset platforms and more
efficient use of development resources; shorter development lead times; and
lower manufacturing costs through the integration of procurement activities. The
new company will also be well positioned to develop attractive, competitive
products that keep pace with technological advances, and provide products based
on CDMA technology that can meet an expected expansion in overseas mobile phone
markets. These and other advantages of the new company will drive business
expansion.
-2-
Reorganization Overview
1. Company Name : Casio Hitachi Mobile Communications Co., Ltd.
2. Overview of Corporate Split:
(1) Schedule for the corporate split
February 2, 2004 Approval by executive officers of corporate split
agreement (Hitachi)
February 3, 2004 Approval by directors of corporate split
agreement (Casio)
February 3, 2004 Conclusion of corporate split agreement
April 1, 2004 Date of corporate split (tentative)
April 1, 2004 Registration of corporate split (tentative)
(2) Method used for corporate split
a) Method used for corporate split
Casio and Hitachi will transfer their business units to a new company
jointly established by them through a joint corporate split.
b) Reason for using this method
Casio and Hitachi have agreed to conduct joint development programs and to
jointly establish a new company. The objectives are to develop mobile phone
handsets more efficiently, stabilize business operations and bolster
overseas operations. The method was chosen to ensure a smooth transition of
these business activities to the new company.
(3) Stock allocation
a) Allocation ratio
Casio will receive 30,600 shares of common stock to be issued by the new
company. Hitachi will receive 29,400 shares of common stock to be issued by
the new company.
b) Basis for calculating allocation ratio
To ensure that the allocation ratio is fair and appropriate, Casio and
Hitachi respectively asked third parties to examine the value of their
business to be separated. Based on discussions by the two companies
concerning the results of this examination, Casio and Hitachi agreed on a
ratio of 51:49.
c) Results of third-party calculations, calculation method and basis for
calculations
The third parties analyzed the value of the businesses of Casio and Hitachi
that are to be separated using the discounted cash flow method and peer
company comparisons, etc. This process was conducted after confirming with
Casio and Hitachi valuation methods and assumptions and examining various
documents regarding the separations that were provided by the two
companies. Based on a comprehensive analysis using these elements, the
third parties provided Casio and Hitachi with a range for the allocation
ratio.
-3-
(4) Payments
There will be no payments with regard to the allocation of shares.
(5) Rights and obligations transferred to the new company
Casio and Hitachi will transfer to the new company all assets, liabilities
and contractual status in principal contracts relating to the businesses to
be separated.
(6) Outlook for fulfillment of financial obligations
Casio and Hitachi have judged that all obligations to be assumed by each
company will possibly be fulfilled.
(7) Newly appointed directors of the new company
President and Director Tateki Ohishi
(Corporate Vice President, Senior General
Manager, Casio's Mobile Communication
Products and Solution Division)
Vice president and Director Koutaro Kawamura
(General Manager, Mobile Information &
Communication Appliance Division of Hitachi's
Ubiquitous Platform Systems Group)
Director Kanji Ozawa
(General Manager, Casio Techno Co., Ltd.'s
Mobile Communication Products Service Division)
Director Youji Ogawa
(Manager, Mobile Information & Communication
Appliance Division of Hitachi's Ubiquitous
Platform Systems Group)
Director Shinichi Onoe
(Casio's Executive Adviser)
Director Kazuhiro Tachibana
(Chief Strategy Officer & General Manager,
Strategic Planning Office Hitachi's Ubiquitous
Platform Systems Group)
Director Kouichi Takeichi
(Director, Member of the Board, General
Manager, Casio's General Strategy &
Management Department)
Director Norio Ogimoto
(General Manager Storage Media System Operation
and Tokai Center Digital Media Division of
Hitachi's Ubiquitous Platform Systems Group)
Auditor Tatsuo Minamino
(Manager, Management Auditing Group, General
Strategy & Management Department of Casio)
Auditor Makoto Arakawa
(Manager, Credit Section, Accounting Division of Casio)
Auditor Masao Terada
(Senior Manager, Financial Dept. Hitachi's
Ubiquitous Platform Systems Group)
-4-
3. Profiles of Casio, Hitachi and Casio Hitachi Mobile Communications
(as of March 31, 2003, provisional data as of establishment for new company)
-------------------------------------------------------------------------------------------------------------
Casio Hitachi Mobile
Communications Co., Ltd.
Name Casio Computer Co., Ltd. Hitachi, Ltd. (New company)
-------------------------------------------------------------------------------------------------------------
Business content Development, manufacture, Development, manufacture, Development, design,
sale and services for sale and services for manufacture, procurement,
electronic equipment, information electronics, quality assurance, sales and
communications equipment, power and industrial services for mobile phones
electronic devices and other systems, digital media and
products consumer products and others
-------------------------------------------------------------------------------------------------------------
Established June 1, 1957 February 1, 1920 April 1, 2004
(Instigated in 1910)
-------------------------------------------------------------------------------------------------------------
Head office 1-6-2 Hon-machi, Shibuya-ku, 4-6, Kanda-Surugadai, 2-229-1, Sakuragaoka
location Tokyo Chiyoda-ku, Tokyo Higashi-Yamato City, Tokyo
-------------------------------------------------------------------------------------------------------------
President Kazuo Kasio Etsuhiko Shoyama Tateki Ohishi
President and Director President and Chief President and Director
Executive Officer
-------------------------------------------------------------------------------------------------------------
Capital Stock 41,549 million yen 282,032 million yen 3.0 billion yen
-------------------------------------------------------------------------------------------------------------
Number of 270,442,868 3,368,124,286 60,000
Shares Held
(shares)
-------------------------------------------------------------------------------------------------------------
Shareholders' 135,238 million yen 1,373,964 million yen 10.0 billion yen
equity
-------------------------------------------------------------------------------------------------------------
Total assets 412,854 million yen 3,825,029 million yen 13.0 billion yen
-------------------------------------------------------------------------------------------------------------
Settlement term March 31 March 31 March 31
-------------------------------------------------------------------------------------------------------------
Number of 3,371 42,375 350
Employees (Temporary transfer)
(Unconsolidated (Schedule)
Basis)
-------------------------------------------------------------------------------------------------------------
Principal Public-sector Public-sector Casio Computer Co., Ltd.
customers Manufacturing and Manufacturing and Hitachi, Ltd.
non-manufacturing industries non-manufacturing
as well as government industries as well as
agencies both domestic and government agencies both
overseas domestic and overseas
-------------------------------------------------------------------------------------------------------------
Major Japan Trustee Services Bank, Japan Trustee Services Casio Computer Co., Ltd.
shareholders and Ltd. 6.18% Bank, Ltd. 6.30% 51.0%
holdings Nippon Life Insurance NATS CUMCO 5.13% Hitachi, Ltd. 49.0%
Company 5.05% The Master Trust Bank of
Sumitomo Mitsui Banking Japan, Ltd. 5.02%
Corp. 4.94%
-------------------------------------------------------------------------------------------------------------
Primary Sumitomo Mitsui Banking Mizuho Corporate Bank, Ltd. To be decided
transaction banks Corp. UFJ Bank Ltd.
UFJ Bank Ltd. Mizuho Trust & Banking Co.,
Mizuho Corporate Bank, Ltd. Ltd.
The bank of Others
Tokyo-Mitsubishi, Ltd.
Others
-------------------------------------------------------------------------------------------------------------
Significant Capital Casio and Hitachi are the owners of the new company.
relationships ------------------------------------------------------------------------------------------
Human resources Casio plans to temporarily transfer 190 of its employees to the
new company. Hitachi plans to temporarily transfer 160 of its
employees to the new company.
------------------------------------------------------------------------------------------
Transactions The new company will sell products to Hitachi and Casio.
-------------------------------------------------------------------------------------------------------------
-5-
4. Financial Results (for the most recent three years) (million yen)
----------------------------------------------------------------------
Casio Computer Co., Ltd. Hitachi, Ltd.
(Separating company) (Separating company)
Fiscal year ended 2001/3/31 2002/3/31 2003/3/31 2001/3/31 2002/3/31 2003/3/31
-------------------------------------------------------------------------------------------------------------
Net sales 341,361 295,415 359,159 4,015,824 3,522,299 3,112,411
-------------------------------------------------------------------------------------------------------------
Operating income (loss) 8,561 (8,480) 12,327 98,577 (84,742) 53,741
-------------------------------------------------------------------------------------------------------------
Ordinary income (loss) 6,404 (13,830) 9,270 56,058 (81,663) 52,014
-------------------------------------------------------------------------------------------------------------
Net income (loss) 3,785 (20,838) 4,503 40,121 (252,641) 28,289
-------------------------------------------------------------------------------------------------------------
Net income per share (yen) 13.94 (76.76) 16.14 12.02 (75.69) 8.38
-------------------------------------------------------------------------------------------------------------
Dividend per share (yen) 12.50 12.50 12.50 11.00 3.00 6.00
-------------------------------------------------------------------------------------------------------------
Shareholder's per share (yen) 602.39 510.11 500.33 496.81 408.79 408.26
-------------------------------------------------------------------------------------------------------------
5. Business operations to be separated
(1) Mobile phone handset business
Casio Computer Co., Ltd.
Development, design, manufacture, procurement, quality assurance, sales and
service operations involving mobile phone handsets in Japan and overseas of
the Communications Business Division (excluding the Sales Division and
Product Planning Department within this division), and activities related
to the above operations.
Hitachi, Ltd.
Development, design, manufacture, procurement, quality assurance, sales and
service operations involving mobile phone handsets in Japan and overseas of
the Mobile Information & Communication Appliance Division (excluding the
Product Planning Division within this division), and activities related to
the above operations.
(2) Assets and liabilities to be transferred (estimate for March 31, 2004)
Casio Computer Co., Ltd.
----------------------------------- ----------------------------------------
Assets Liabilities
----------------------------------- ----------------------------------------
Inventories
-----------------
Property and
equipment
-----------------
Investments and 7.9 billion yen Loans Other liabilities 2.8 billion yen
intangible assets
-----------------
Other assets
----------------------------------- ----------------------------------------
Hitachi, Ltd.
----------------------------------- ----------------------------------------
Assets Liabilities
----------------------------------- ----------------------------------------
Inventories
-----------------
Property and
equipment
-----------------
Investments and 5.0 billion yen Loans Other liabilities 0.1 billion yen
intangible assets
-----------------
Other assets
----------------------------------- ----------------------------------------
-6-
6. Status of companies following corporate split
(1) There will be no changes in the names, business activities, head offices or
CEOs of Casio or Hitachi. Moreover, this transaction will not reduce the
paid-in capital of the two companies.
(2) Impact on operating results
Casio Computer Co., Ltd.
The company plans to announce post-split consolidated and
non-consolidated forecasts when it releases operating results for the
fiscal year ending in March 2004.
Hitachi, Ltd.
The corporate split will have a negligible impact on operating results.
About Casio Computer Co., Ltd.
Casio Computer Co., Ltd. is one of the leading consumer electronics companies in
the world. Since its establishment in 1957, Casio has been active in the
development of a range of consumer electronic products such as electronic
calculators, timepieces, musical instruments, digital cameras, and mobile
phones. In recent years, Casio has also focused on technologies for compact
LCDs, LSI chip mounting processes and other electronic devices. Visit Casio's
global web site at http://world.casio.com/
About Hitachi, Ltd.
Hitachi, Ltd. (NYSE: HIT), headquartered in Tokyo, Japan, is a leading global
electronics company, with approximately 340,000 employees worldwide. Fiscal 2002
(ended March 31, 2003) consolidated sales totaled 8,191.7 billion yen ($68.3
billion). The company offers a wide range of systems, products and services in
market sectors, including information systems, electronic devices, power and
industrial systems, consumer products, materials and financial services. For
more information on Hitachi, please visit the company's Web site at
http://www.hitachi.com.
# # #
FOR IMMEDIATE RELEASE
Hitachi Announces Consolidated Financial Results
for the Third Quarter of Fiscal 2003
Tokyo, February 4, 2004 --- Hitachi, Ltd. (NYSE:HIT / TSE:6501) today announced
its consolidated financial results for the third quarter of fiscal 2003, which
ended December 31, 2003.
During the quarter, the U.S. economy, driven by consumer spending and plant and
equipment investment, remained strong. In addition, Asian economies staged an
export-led recovery. Amid falling product and service prices as deflation
persisted, the Japanese economy as a whole continued its resurgence, supported
in part by the upswing in private-sector plant and equipment investment.
Against this backdrop, net sales rose 7% year on year, to 2,046.9 billion yen
(US$19,131 million). This came amid major year-on-year changes in the
Information & Telecommunication Systems and Electronic Devices segments that
resulted from ongoing business portfolio realignment across the Hitachi Group.
Operating income climbed 391%, to 63.2 billion yen (US$591 million) with major
contribution from improved earnings in Electronic Devices and Digital Media &
Consumer Products segments as well as the positive effect of return of the
substitutional portion of the Employees Pension Fund to the government.
-2-
By segment, Information & Telecommunication Systems sales increased 26%, to
514.5 billion yen (US$4,809 million), reflecting a solid performance in software
and services, notably in outsourcing services, and hardware operations were
bolstered by the inclusion of sales from hard disk drive (HDD) operations
acquired from IBM Corporation. Another factor was firm sales of base stations
for data communication systems for third-generation mobile phones in Japan. The
segment saw its operating income leap 640%, to 13.4 billion yen (US$125
million).
In Electronic Devices, segment sales declined 12%, to 334.8 billion yen
(US$3,130 million), mainly reflecting the April 2003 transfer of most
semiconductor operations to equity-method affiliate Renesas Technology Corp., a
joint venture with Mitsubishi Electric Corporation. Sales of Displays grew
sharply on brisk demand for TFT LCDs for mobile phones and large flat screen
TVs. The segment posted operating income of 11.8 billion yen (US$111 million),
reversing an operating loss of 6.0 billion yen (US$56 million) a year earlier.
Improved profitability in displays contributed to the turnaround.
In Power & Industrial Systems, sales decreased 3%, to 482.0 billion yen
(US$4,505 million) due to sluggish sales of power generation equipment, which
negated growth in sales to overseas markets at Hitachi Construction Machinery
Co., Ltd. Operating income dipped 68%, to 3.0 billion yen (US$28 million),
despite higher earnings at Hitachi Construction Machinery. The lower profit was
attributable to deterioration in profits in power generation equipment as sales
declined, as well as to additional work at environmental plant projects in
Japan.
In Digital Media & Consumer Products, sales rose 7%, to 328.3 billion yen
(US$3,069 million), overcoming lackluster demand in Japan for home appliances
and lower sales of heating appliances due to the mild winter. Moreover, at
Hitachi Maxell, Ltd., while sales of recordable DVDs increased, sales were
sluggish for computer tapes and lithium ion batteries for mobile phones. Pacing
growth in segment sales were higher sales of plasma TVs and optical disk drives
in a growing market, as well as sharply higher sales of mobile phones. Segment
operating income soared 313%, to 11.3 billion yen (US$106 million), as
structural reforms led to improved profits in home appliances and earnings
increased from optical disk drives.
-3-
In High Functional Materials & Components, sales increased 6%, to 329.8 billion
yen (US$3,083 million). At Hitachi Cable, Ltd., sales of wires and cables
increased while sales of electrical equipment and construction were weak. At
Hitachi Chemical Co., Ltd., sales growth was recorded by materials for
semiconductors and LCDs. At Hitachi Metals, Ltd., sales were lackluster in
construction components, plant and equipment, but remained strong in electronic
materials. Segment operating income climbed 110%, to 14.9 billion yen (US$139
million).
In Logistics, Services & Others, sales decreased 18%, to 307.6 billion yen
(US$2,876 million), despite strong sales from the logistics solutions business
at Hitachi Transport System, Ltd. Overseas sales companies saw sales decline due
to the transfer of semiconductor sales operations to the newly established
Renesas Technology, and the transfer of HDD sales operations to Hitachi Global
Storage Technologies. Segment operating income rose 28%, to 3.4 billion yen
(US$32 million).
In Financial Services, low interest rates and a declining volume of automobile
loans to individuals affected results. Segment sales edged down 3%, to 137.9
billion yen (US$1,289 million). However, operating income climbed 137%, to 7.3
billion yen (US$69 million).
Other income jumped 149%, to 18.2 billion yen (US$171 million), despite lower
interest income and dividends received. This increase was mainly attributable to
higher gains on the sale of marketable and investment securities. Other
deductions increased 80%, to 35.3 billion yen (US$330 million), due partly to
charges for structural reforms.
As a result, Hitachi recorded income before income taxes and minority interests
of 46.1 billion yen (US$432 million), and after 39.2 billion yen (US$367
million) in income taxes, income before minority interests of 6.9 billion yen
(US$65 million). Hitachi recorded net income of 2.5 billion yen (US$24 million),
reversing a net loss of 2.2 billion yen (US$21 million) a year earlier.
-4-
Financial Position
Operating activities used net cash of 56.9 billion yen (US$532 million), 26.7
billion yen (US$250 million) more than a year earlier, the result primarily of
higher inventory levels to meet expected sales in the fourth quarter.
Investing activities used net cash of 132.4 billion yen (US$1,238 million),
205.5 billion yen (US$1,921 million) less year on year. The decrease was mainly
due to the payment for the acquisition of the hard disk drive operations from
IBM Corporation in the third quarter of the previous year.
Free cash flows, the sum of cash flows from operating and investing activities,
were an outflow of 189.3 billion yen (US$1,770 million), an improvement of 178.7
billion yen (US$1,670 million) year on year.
Financing activities provided net cash of 103.3 billion yen (US$966 million), a
decrease of 166.1 billion yen (US$1,553 million) over the net cash provided in
the previous fiscal year, mainly due to a smaller increase in interest-bearing
debt.
Cash and cash equivalents as of December 31, 2003 amounted to 614.5 billion yen
(US$5,744 million), a net decrease of 94.4 billion yen (US$883 million) during
the third quarter.
Debt as of December 31, 2003 stood at 2,797.0 billion yen (US$26,141 million),
94.4 billion yen (US$883 million) higher than at September 30, 2003 as a result
of an increase in short-term debt.
Capital investment on a completion basis rose 16%, to 213.5 billion yen
(US$1,996 million). Of this, investment for internal use assets declined 5% to
70.1 billion yen (US$656 million) while investment for leasing assets increased
30% to 143.3 billion yen (US$1,340 million). Depreciation decreased 3%, to 113.9
billion yen (US$1,065 million) and R&D expenditures amounted to 86.6 billion yen
(US$810 million), a decrease of 4% from the previous year, and corresponded to
4.2% of net sales.
All figures were converted at the rate of 107 yen = U.S.$1, the approximate
exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2003.
-5-
Outlook for Fiscal 2003
The recovery in the world economy is expected to become even more evident based
on expectations for more growth in the U.S. economy driven by higher personal
spending and recovery in Asia on the back of the U.S. upswing.
The Japanese economy, while benefiting from the continuation of strong exports
to the U.S. and Asia as well as increasing private-sector plant and equipment
investment, is expected to remain clouded in uncertainty. There are still no
immediate expectations for a dramatic improvement in the job market, and the
recent significant changes in foreign exchange rates continue to impact
corporate earnings. These and other factors are creating an uncertain operating
environment.
Hitachi has decided not to revise its projections for fiscal 2003, as announced
in October last year and detailed below. The projections assume an exchange rate
of 105 yen to the U.S. dollar for the fourth quarter of fiscal 2003.
--------------------------------------------------------------------------------
Net sales 8,350.0 billion yen (year-on-year increase of 2%)
(US$79,524 million)
--------------------------------------------------------------------------------
Operating income 170.0 billion yen (year-on-year increase of 11%)
(US$1,619 million)
--------------------------------------------------------------------------------
Income before income 225.0 billion yen (year-on-year increase of 132%)
taxes and minority (US$2,143 million)
interests
--------------------------------------------------------------------------------
Income before minority 45.0 billion yen (year-on-year increase of 2%)
interests (US$429 million)
--------------------------------------------------------------------------------
Net income 10.0 billion yen (year-on-year decrease of 64%)
(US$95 million)
--------------------------------------------------------------------------------
Cautionary Statement
--------------------
Certain statements found in this document may constitute "forward-looking
statements" as defined in the U.S. Private Securities Litigation Reform Act of
1995. Such "forward-looking statements" reflect management's current views with
respect to certain future events and financial performance and include any
statement that does not directly relate to any historical or current fact. Words
such as "anticipate," "believe," "expect," "estimate," "intend," "plan,"
"project" and similar expressions which indicate future events and trends are
used to assist readers in identifying these "forward-looking statements." Such
statements are based on currently available information and are subject to
various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the "forward-looking statements"
and from historical trends. Certain "forward-looking statements" are based on
current assumptions of future events which may not prove to be accurate. Undue
reliance should not be placed on "forward-looking statements," as such
statements speak only as of the date of this document.
-6-
Factors that could cause actual results to differ materially from those
projected or implied in any "forward-looking statement" and from historical
trends include, but are not limited to:
- rapid technological change, particularly in the Information &
Telecommunication Systems segment and Electronic Devices segment;
- uncertainty as to Hitachi's ability to continue to develop and market
products that incorporate new technology on a timely and cost-effective
basis and to achieve market acceptance for such products;
- fluctuations in product demand and industry capacity, particularly in the
Information & Telecommunication Systems segment, Electronic Devices segment
and Digital Media & Consumer Products segment;
- increasing commoditization of information technology products, and
intensifying price competition in the market for such products;
- fluctuations in rates of exchange for the yen and other currencies in which
Hitachi makes significant sales or in which Hitachi's assets and
liabilities are denominated, particularly between the yen and the U.S.
dollar;
- uncertainty as to Hitachi's ability to access, or access on favorable
terms, liquidity or long-term financing, particularly in the context of
limited credit availability currently prevailing in Japan;
- uncertainty as to Hitachi's ability to implement measures to reduce the
potential negative impact of fluctuations in product demand and/or exchange
rates;
- general economic conditions and the regulatory and trade environment of
Hitachi's major markets, particularly, the United States, Japan and
elsewhere in Asia, including, without limitation, continued stagnation or
deterioration of the Japanese economy, or direct or indirect restriction by
other nations on imports;
- uncertainty as to Hitachi's access to, and ability to protect, certain
intellectual property rights, particularly those related to electronics and
data processing technologies;
- uncertainty as to the success of alliances upon which Hitachi depends, some
of which Hitachi may not control, with other corporations in the design and
development of certain key products; and
- uncertainty as to general market price levels for equity securities in
Japan, declines in which may require Hitachi to write-down equity
securities it holds.
The factors listed above are not all-inclusive and are in addition to other
factors contained in Hitachi's periodic filings with the U.S. Securities and
Exchange Commission and in other materials published by Hitachi.
-7-
Hitachi, Ltd. and Subsidiaries
Consolidated Financial Statements
for the Third Quarter Ended December 31, 2003
The consolidated financial statements presented herein are expressed in yen and,
solely for the convenience of the reader, have been translated into United
States dollars at the rate of 107 yen = U.S.$1, the approximate exchange rate
prevailing on the Tokyo Foreign Exchange Market as of December 30, 2003.
Summary
In millions of yen and U.S. dollars, except Net income (loss) per share (6) and
Net income (loss) per American Depositary Share (7).
------------------------------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
------------------------------------------------------------------------------------------
Yen U.S. $ Yen U.S. $
(millions) (A)/(B) (millions) (millions) (C)/(D) (millions)
---------------------- X100(%) ----------------------------------- X100(%) -----------
2003 (A) 2002 (B) 2003 2003 (C) 2002 (D) 2003
--------------------------------------------------------------------------------------------------------------------------
1. Net sales 2,046,964 1,921,059 107 19,131 6,088,371 5,837,550 104 56,901
--------------------------------------------------------------------------------------------------------------------------
2. Operating income 63,274 12,896 491 591 83,513 74,584 112 780
--------------------------------------------------------------------------------------------------------------------------
3. Income before income taxes
and minority interests 46,186 603 -- 432 136,689 34,070 401 1,277
--------------------------------------------------------------------------------------------------------------------------
4. Income before minority
interests 6,955 2,122 328 65 21,279 19,508 109 199
--------------------------------------------------------------------------------------------------------------------------
5. Net income (loss) 2,519 (2,263) -- 24 7,903 3,403 232 74
--------------------------------------------------------------------------------------------------------------------------
6. Net income (loss) per share
Basic 0.76 (0.68) -- 0.01 2.39 1.02 234 0.02
Diluted 0.73 -- -- 0.01 2.32 0.93 249 0.02
--------------------------------------------------------------------------------------------------------------------------
7. Net income (loss) per ADS
(representing 10 shares)
Basic 8 (7) -- 0.07 24 10 240 0.22
Diluted 7 -- -- 0.07 23 9 256 0.21
--------------------------------------------------------------------------------------------------------------------------
Notes: 1. The Company's financial statements are prepared based on U.S. GAAPs
and are unaudited.
2. Figures for the third quarter and first nine months of fiscal 2002
have been restated to reflect the Company's adoption of 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," which was issued in January 2003.
3. Segment Information and operating income are presented in accordance
with financial reporting principles and practices generally accepted
in Japan.
4. The figures are for 966 consolidated subsidiaries and 166
equity-method affiliates.
-8-
Consolidated Statements of Income (Unaudited)
` -------------------------------------------
Three months ended December 31
-------------------------------------------
(A)/(B) U.S.
Yen X100(%) Dollars
(millions) (millions)
---------------------- ----------
2003 (A) 2002 (B) 2003
--------------------------------------------------------------------------------
Net sales 2,046,964 1,921,059 107 19,131
--------------------------------------------------------------------------------
Cost of sales 1,560,963 1,465,699 106 14,588
--------------------------------------------------------------------------------
Selling, general and
administrative expenses 422,727 442,464 96 3,951
--------------------------------------------------------------------------------
Operating income 63,274 12,896 491 591
--------------------------------------------------------------------------------
Other income 18,265 7,331 249 171
(Interest and dividends) 4,398 5,345 82 41
(Other) 13,867 1,986 698 130
--------------------------------------------------------------------------------
Other deductions 35,353 19,624 180 330
(Interest charges) 7,519 8,113 93 70
(Other) 27,834 11,511 242 260
--------------------------------------------------------------------------------
Income before income taxes
and minority interests 46,186 603 -- 432
--------------------------------------------------------------------------------
Income taxes 39,231 (1,519) -- 367
--------------------------------------------------------------------------------
Income before minority interests 6,955 2,122 328 65
--------------------------------------------------------------------------------
Minority interests 4,436 4,385 101 41
--------------------------------------------------------------------------------
Net income (loss) 2,519 (2,263) -- 24
--------------------------------------------------------------------------------
-9-
Consolidated Statements of Income (Unaudited)
-------------------------------------------
Nine months ended December 31
-------------------------------------------
U.S.
Yen Dollars
(millions) (C)/(D) (millions)
---------------------- X100(%) ----------
2003 (C) 2002 (D) 2003
--------------------------------------------------------------------------------
Net sales 6,088,371 5,837,550 104 56,901
--------------------------------------------------------------------------------
Cost of sales 4,718,939 4,435,257 106 44,102
--------------------------------------------------------------------------------
Selling, general and
administrative expenses 1,285,919 1,327,709 97 12,018
--------------------------------------------------------------------------------
Operating income 83,513 74,584 112 780
--------------------------------------------------------------------------------
Other income 125,781 34,043 369 1,176
(Interest and dividends) 14,932 16,326 91 140
(Other) 110,849 17,717 626 1,036
--------------------------------------------------------------------------------
Other deductions 72,605 74,557 97 679
(Interest charges) 23,837 25,916 92 223
(Other) 48,768 48,641 100 456
--------------------------------------------------------------------------------
Income before income taxes
and minority interests 136,689 34,070 401 1,277
--------------------------------------------------------------------------------
Income taxes 115,410 14,562 793 1,079
--------------------------------------------------------------------------------
Income before minority interests 21,279 19,508 109 199
--------------------------------------------------------------------------------
Minority interests 13,376 16,105 83 125
--------------------------------------------------------------------------------
Net income 7,903 3,403 232 74
--------------------------------------------------------------------------------
-10-
Consolidated Balance Sheets (Unaudited)
Yen Yen U.S. Dollars
(millions) (millions) (millions)
--------------------------- -------------------------
As of As of (A)/(B) As of As of
December 31, September 30, X100(%) March 31, December 31,
2003(A) 2003(B) 2003 2003
-----------------------------------------------------------------------------------------------------------------
Assets 9,867,566 9,884,473 100 10,179,389 92,220
-----------------------------------------------------------------------------------------------------------------
Current assets 5,326,623 5,132,368 104 5,193,465 49,782
Cash and cash equivalents 614,593 709,084 87 828,171 5,744
Short-term investments 263,431 254,178 104 186,972 2,462
Trade receivables (Notes and Accounts) 2,083,064 1,981,959 105 2,057,227 19,468
Investment in leases 499,588 455,485 110 437,076 4,669
Inventories 1,333,036 1,187,133 112 1,187,529 12,458
Other current assets 532,911 544,529 98 496,490 4,980
-----------------------------------------------------------------------------------------------------------------
Investments and advances 871,314 877,763 99 726,442 8,143
-----------------------------------------------------------------------------------------------------------------
Property, plant and equipment 2,276,856 2,339,046 97 2,601,050 21,279
-----------------------------------------------------------------------------------------------------------------
Other assets 1,392,773 1,535,296 91 1,658,432 13,017
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' equity 9,867,566 9,884,473 100 10,179,389 92,220
-----------------------------------------------------------------------------------------------------------------
Current liabilities 4,090,046 3,933,087 104 4,005,228 38,225
Short-term debt and current installments
of long-term debt 1,476,462 1,357,156 109 1,328,446 13,799
Trade payables (Notes and Accounts) 1,186,766 1,135,402 105 1,212,064 11,091
Other current liabilities 1,426,818 1,440,529 99 1,464,718 13,335
-----------------------------------------------------------------------------------------------------------------
Noncurrent liabilities 3,002,533 3,375,729 89 3,569,371 28,061
Long-term debt 1,320,636 1,345,461 98 1,512,152 12,342
Other liabilities 1,681,897 2,030,268 83 2,057,219 15,719
-----------------------------------------------------------------------------------------------------------------
Minority interests 756,519 750,142 101 751,578 7,070
-----------------------------------------------------------------------------------------------------------------
Stockholders' equity 2,018,468 1,825,515 111 1,853,212 18,864
Common stock 282,032 282,032 100 282,032 2,636
Capital surplus 550,051 549,548 100 562,214 5,141
Legal reserve and retained earnings 1,755,100 1,760,817 100 1,766,338 16,403
Accumulated other comprehensive
income (loss) (536,689) (734,958) -- (755,525) (5,016)
(Foreign currency translation adjustments) (92,548) (70,754) -- (60,948) (865)
(Minimum pension liability adjustments) (472,338) (691,794) -- (698,916) (4,414)
(Net unrealized holding gain on
available-for-sale securities) 29,151 28,536 102 4,874 272
(Cash flow hedges) (954) (946) -- (535) (9)
Treasury stock (32,026) (31,924) -- (1,847) (299)
-----------------------------------------------------------------------------------------------------------------
-11-
Consolidated Statements of Cash Flows (Unaudited)
------------------------------------
Three months ended December 31
------------------------------------
Yen U.S. Dollars
(millions) (millions)
------------------------------------
2003 2002 2003
---------------------------------------------------------------------------------------
Cash flows from operating activities
Net income (loss) 2,519 (2,263) 24
Adjustments to reconcile net income (loss) to
net cash used in operating activities
Depreciation 113,909 117,683 1,065
Increase in receivables and inventories (255,328) (185,323) (2,386)
Increase in payables 69,053 85,098 645
Other 12,903 (45,353) 121
---------------------------------------------------------------------------------------
Net cash used in operating activities (56,944) (30,158) (532)
Cash flows from investing activities
(Increase) decrease in short-term investments (21,737) 3,898 (203)
Purchase of rental assets and other
properties, net (178,783) (166,211) (1,671)
Proceeds from sale of (purchase of)
investments and subsidiaries' common
stock, net 20,927 (3,982) 196
Collection of investment in leases 78,733 72,090 736
Other (31,560) (243,718) (295)
---------------------------------------------------------------------------------------
Net cash used in investing activities (132,420) (337,923) (1,238)
Cash flows from financing activities
Increase in interest-bearing debt 116,726 284,352 1,091
Dividends paid to stockholders (9,077) (8,524) (85)
Dividends paid to minority stockholders of
subsidiaries (5,497) (5,390) (51)
Other 1,163 (969) 11
---------------------------------------------------------------------------------------
Net cash provided by financing
activities 103,315 269,469 966
Effect of exchange rate changes on cash and cash
equivalents (8,442) (1,584) (79)
------------------------------------
Net decrease in cash and cash equivalents (94,491) (100,196) (883)
Cash and cash equivalents at beginning
of the period 709,084 875,212 6,627
------------------------------------
Cash and cash equivalents at end of the period 614,593 775,016 5,744
====================================
---------------------------------------------------------------------------------------
-12-
Consolidated Statements of Cash Flows (Unaudited)
------------------------------------
Nine months ended December 31
------------------------------------
Yen U.S. Dollars
(millions) (millions)
------------------------------------
2003 2002 2003
---------------------------------------------------------------------------------------
Cash flows from operating activities
Net income 7,903 3,403 74
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 327,825 343,963 3,064
Increase in receivables and inventories (282,662) (10,059) (2,642)
Increase in payables 31,232 59,187 292
Other 83,351 (235,149) 779
---------------------------------------------------------------------------------------
Net cash provided by operating
activities 167,649 161,345 1,567
Cash flows from investing activities
(Increase) decrease in short-term investments (90,351) 21,489 (844)
Purchase of rental assets and other
properties, net (508,559) (471,719) (4,753)
Proceeds from sale of investments and
subsidiaries' common stock, net 138,327 52,007 1,293
Collection of investment in leases 276,218 281,959 2,581
Other (105,234) (350,618) (983)
---------------------------------------------------------------------------------------
Net cash used in investing activities (289,599) (466,882) (2,707)
Cash flows from financing activities
Increase (decrease) in interest-bearing debt (10,687) 92,445 (100)
Dividends paid to stockholders (19,188) (8,606) (179)
Dividends paid to minority stockholders of
subsidiaries (12,288) (12,346) (115)
Other (28,272) 119 (264)
---------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (70,435) 71,612 (658)
Effect of exchange rate changes on cash and cash
equivalents (21,193) (20,433) (198)
------------------------------------
Net decrease in cash and cash equivalents (213,578) (254,358) (1,996)
Cash and cash equivalents at beginning
of the period 828,171 1,029,374 7,740
------------------------------------
Cash and cash equivalents at end of the period 614,593 775,016 5,744
====================================
---------------------------------------------------------------------------------------
- 13 -
Segment Information (Unaudited)
Industry Segments
---------------------------------------------------------------------------------------------------------
Three months ended December 31
-------------------------------------------------------
Yen U.S. Dollars
(millions) (A)/(B) (millions)
----------------------- X100 ----------------
2003 (A) 2002 (B) (%) 2003
---------------------------------------------------------------------------------------------------------
Information & Telecommunication 514,599 409,665 126 4,809
Systems 21% 17%
----------------------------------------------------------------------------------------
Electronic Devices 334,899 378,452 88 3,130
14% 16%
----------------------------------------------------------------------------------------
Power & Industrial Systems 482,057 498,747 97 4,505
20% 20%
----------------------------------------------------------------------------------------
Digital Media & Consumer 328,396 307,473 107 3,069
Products 13% 13%
----------------------------------------------------------------------------------------
Sales High Functional Materials 329,844 310,323 106 3,083
& Components 13% 13%
----------------------------------------------------------------------------------------
Logistics, Services & Others 307,685 375,994 82 2,876
13% 15%
----------------------------------------------------------------------------------------
Financial Services 137,942 142,924 97 1,289
6% 6%
----------------------------------------------------------------------------------------
Subtotal 2,435,422 2,423,578 100 22,761
100% 100%
----------------------------------------------------------------------------------------
Eliminations & Corporate items (388,458) (502,519) -- (3,630)
----------------------------------------------------------------------------------------
Total 2,046,964 1,921,059 107 19,131
=========================================================================================================
Information & Telecommunication 13,408 1,811 740 125
Systems 21% 9%
----------------------------------------------------------------------------------------
Electronic Devices 11,871 (6,010) -- 111
18% (29%)
----------------------------------------------------------------------------------------
Power & Industrial Systems 3,045 9,552 32 28
5% 45%
----------------------------------------------------------------------------------------
Digital Media & Consumer 11,360 2,748 413 106
Products 17% 13%
----------------------------------------------------------------------------------------
Operating High Functional Materials 14,909 7,113 210 139
income (loss) & Components 23% 34%
----------------------------------------------------------------------------------------
Logistics, Services & Others 3,437 2,678 128 32
5% 13%
----------------------------------------------------------------------------------------
Financial Services 7,383 3,116 237 69
11% 15%
----------------------------------------------------------------------------------------
Subtotal 65,413 21,008 311 611
100% 100%
----------------------------------------------------------------------------------------
Eliminations & Corporate items (2,139) (8,112) -- (20)
----------------------------------------------------------------------------------------
Total 63,274 12,896 491 591
---------------------------------------------------------------------------------------------------------
Note: Net sales by industry segment include intersegment transactions.
-14-
Segment Information (Unaudited)
Industry Segments
-------------------------------------------------------
Nine months ended December 31
-------------------------------------------------------
Yen U.S. Dollars
(millions) (C)/(D) (millions)
----------------------- X100(%) ----------------
2003 (C) 2002 (D) 2003
---------------------------------------------------------------------------------------------------------
Information & Telecommunication 1,567,878 1,287,895 122 14,653
Systems 22% 17%
----------------------------------------------------------------------------------------
Electronic Devices 942,428 1,144,869 82 8,808
13% 16%
----------------------------------------------------------------------------------------
Power & Industrial Systems 1,555,496 1,566,848 99 14,537
21% 21%
----------------------------------------------------------------------------------------
Digital Media & Consumer 913,807 905,162 101 8,540
Products 12% 12%
----------------------------------------------------------------------------------------
Sales High Functional Materials 952,050 923,384 103 8,898
& Components 13% 13%
----------------------------------------------------------------------------------------
Logistics, Services & Others 920,654 1,076,607 86 8,604
13% 15%
----------------------------------------------------------------------------------------
Financial Services 405,865 436,245 93 3,793
6% 6%
----------------------------------------------------------------------------------------
Subtotal 7,258,178 7,341,010 99 67,833
100% 100%
----------------------------------------------------------------------------------------
Eliminations & Corporate items (1,169,807) (1,503,460) -- (10,933)
----------------------------------------------------------------------------------------
Total 6,088,371 5,837,550 104 56,901
=========================================================================================================
Information & Telecommunication 18,807 43,978 43 176
Systems 19% 44%
----------------------------------------------------------------------------------------
Electronic Devices 15,546 (13,928) -- 145
15% (14%)
----------------------------------------------------------------------------------------
Power & Industrial Systems 10,980 20,663 53 103
11% 20%
----------------------------------------------------------------------------------------
Digital Media & Consumer 12,088 8,495 142 113
Products 12% 8%
----------------------------------------------------------------------------------------
Operating High Functional Materials 24,142 16,155 149 226
income (loss) & Components 24% 16%
----------------------------------------------------------------------------------------
Logistics, Services & Others 3,040 4,135 74 28
3% 4%
----------------------------------------------------------------------------------------
Financial Services 15,578 21,769 72 146
16% 22%
----------------------------------------------------------------------------------------
Subtotal 100,181 101,267 99 936
100% 100%
----------------------------------------------------------------------------------------
Eliminations & Corporate items (16,668) (26,683) -- (156)
----------------------------------------------------------------------------------------
Total 83,513 74,584 112 780
---------------------------------------------------------------------------------------------------------
Note: Net sales by industry segment include intersegment transactions.
-15-
Segment Information (Unaudited)
Sales by Market
------------------------------------------------------
Three months ended December 31
------------------------------------------------------
Yen U.S. Dollars
(millions) (A)/(B) (millions)
----------------------- X100(%) ---------------
2003 (A) 2002 (B) 2003
--------------------------------------------------------------------------------------------------------
Japan 1,277,820 1,244,908 103 11,942
62% 65%
--------------------------------------------------------------------------------------------------------
Asia 310,118 254,008 122 2,898
15% 13%
---------------------------------------------------------------------------------------
North America 230,161 242,035 95 2,151
11% 13%
---------------------------------------------------------------------------------------
Europe 171,689 135,257 127 1,605
9% 7%
---------------------------------------------------------------------------------------
Other Areas 57,176 44,851 127 534
3% 2%
---------------------------------------------------------------------------------------
Outside Japan 769,144 676,151 114 7,188
38% 35%
--------------------------------------------------------------------------------------------------------
Total 2,046,964 1,921,059 107 19,131
100% 100%
--------------------------------------------------------------------------------------------------------
------------------------------------------------------
Nine months ended December 31
------------------------------------------------------
Yen U.S. Dollars
(millions) (C)/(D) (millions)
----------------------- X100(%) ---------------
2003 (C) 2002 (D) 2003
--------------------------------------------------------------------------------------------------------
Japan 3,914,182 3,878,016 101 36,581
64% 66%
--------------------------------------------------------------------------------------------------------
Asia 863,901 752,602 115 8,074
14% 13%
---------------------------------------------------------------------------------------
North America 658,379 669,015 98 6,153
11% 12%
---------------------------------------------------------------------------------------
Europe 475,147 397,442 120 4,441
8% 7%
---------------------------------------------------------------------------------------
Other Areas 176,762 140,475 126 1,652
3% 2%
---------------------------------------------------------------------------------------
Outside Japan 2,174,189 1,959,534 111 20,320
36% 34%
--------------------------------------------------------------------------------------------------------
Total 6,088,371 5,837,550 104 56,901
100% 100%
--------------------------------------------------------------------------------------------------------
# # #
February 4, 2004
Hitachi, Ltd.
Supplementary Information
for the Third Quarter Ended December 31, 2003 (Consolidated basis)
1. Summary (Billions of yen)
----------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
----------------------------------------------------------------------
2003 2003
------------------ -------------------
(B)/(A) (D)/(C)
2002(A) (B) X100(%) 2002(C) (D) X100(%)
-------------------------------------------------------------------------------------------------------------
Average exchange rate (Yen / U.S.$) 122 108 -- 122 115 --
-------------------------------------------------------------------------------------------------------------
Capital investment (Completion basis) 184.0 213.5 116 559.3 594.4 106
----------------------------------------------------------------------------------------------------------
Leasing assets 110.1 143.3 130 323.9 379.9 117
----------------------------------------------------------------------------------------------------------
Other 73.8 70.1 95 235.3 214.5 91
-------------------------------------------------------------------------------------------------------------
Depreciation 117.6 113.9 97 343.9 327.8 95
----------------------------------------------------------------------------------------------------------
Leasing assets 20.3 26.9 132 60.5 80.2 132
----------------------------------------------------------------------------------------------------------
Other 97.2 86.9 89 283.3 247.6 87
-------------------------------------------------------------------------------------------------------------
R&D expenditure 90.7 86.6 96 280.4 271.1 97
----------------------------------------------------------------------------------------------------------
Percentage of net sales 4.7% 4.2% -- 4.8% 4.5% --
-------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
As of March 31, As of September 30, As of December 31,
2003 2003 2003
-------------------------------------------------------------------------------------------------------------
Stockholders' equity per share (Yen) 550.76 553.48 612.01
-------------------------------------------------------------------------------------------------------------
Cash & cash equivalents, Short-term
investments (Billions of yen) 1,015.1 963.2 878.0
-------------------------------------------------------------------------------------------------------------
Interest-bearing debt (Billions of
yen) 2,840.5 2,702.6 2,797.0
-------------------------------------------------------------------------------------------------------------
Number of employees 339,572 326,500 327,758
----------------------------------------------------------------------------------------------------------
Japan 256,085 243,476 240,912
----------------------------------------------------------------------------------------------------------
Overseas 83,487 83,024 86,846
-------------------------------------------------------------------------------------------------------------
Number of consolidated subsidiaries 1,112 967 966
----------------------------------------------------------------------------------------------------------
Japan 708 560 554
----------------------------------------------------------------------------------------------------------
Overseas 404 407 412
-------------------------------------------------------------------------------------------------------------
2.Overseas sales by industry segment (Billions of yen)
----------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
----------------------------------------------------------------------
2003 2003
------------------ -------------------
(B)/(A) (D)/(C)
2002(A) (B) X100(%) 2002(C) (D) X100(%)
-------------------------------------------------------------------------------------------------------------
Information & Telecommunication
Systems 79.5 186.1 234 208.5 492.9 236
-------------------------------------------------------------------------------------------------------------
Electronic Devices 137.7 132.6 96 400.9 364.2 91
-------------------------------------------------------------------------------------------------------------
Power & Industrial Systems 88.3 120.7 137 282.5 356.3 126
-------------------------------------------------------------------------------------------------------------
Digital Media & Consumer Products 114.9 126.2 110 360.9 363.8 101
-------------------------------------------------------------------------------------------------------------
High Functional Materials
& Components 78.4 85.1 109 234.0 245.6 105
-------------------------------------------------------------------------------------------------------------
Logistics, Services & Others 166.9 108.9 65 444.0 322.5 73
-------------------------------------------------------------------------------------------------------------
Financial Services 9.6 9.2 95 28.1 28.5 102
-------------------------------------------------------------------------------------------------------------
Eliminations & Corporate items 0.4 0.0 -- 0.3 0.0 --
-------------------------------------------------------------------------------------------------------------
Total 676.1 769.1 114 1,959.5 2,174.1 111
-------------------------------------------------------------------------------------------------------------
# # #
February 4, 2004
Hitachi, Ltd.
Supplementary Information on Information & Telecommunication Systems and
Displays
Note: *1. Segment information and operating income (loss) are presented in
accordance with financial reporting principles and practices
generally accepted in Japan.
1. Information & Telecommunication Systems
--------------------------------------------
(1) Sales and operating income by product sector *2 *3 (Billions of yen)
---------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
---------------------------------------------------------------------
(A)/(B) (C)/(D)
2003 (A) 2002 (B) X100(%) 2003 (C) 2002 (D) X100(%)
-------------------------------------------------------------------------------------------------------------
Sales 514.5 409.6 126% 1,567.8 1,287.8 122%
----------------------------------------------------------------------------------------------------------
Software & Services 191.2 189.2 101% 650.7 642.6 101%
----------------------------------------------------------------------------------------------------------
Hardware 323.3 220.4 147% 917.0 645.2 142%
-------------------------------------------------------------------------------------------------------------
Operating income 13.4 1.8 740% 18.8 43.9 43%
-------------------------------------------------------------------------------------------------------------
Notes: *2. On April 1, 2003, all hard disk drive operations were integrated with
Hitachi Global Storage Technologies (Hitachi GST), a Hitachi
subsidiary which started operations on January 1, 2003. Hitachi GST
has a December 31 year-end and the consolidated results for Hitachi,
Ltd. for the nine months ended December 31, 2003, includes Hitachi
GST's business results for the nine months ended September 30, 2003.
*3. Figures for each product exclude intra-segment transactions.
(2) Sales by product sector *2 *3 (Billions of yen)
---------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
---------------------------------------------------------------------
(A)/(B) (C)/(D)
2003 (A) 2002 (B) X100(%) 2003 (C) 2002 (D) X100(%)
-------------------------------------------------------------------------------------------------------------
Sales 514.5 409.6 126% 1,567.8 1,287.8 122%
----------------------------------------------------------------------------------------------------------
Software & Services 191.2 189.2 101% 650.7 642.6 101%
-------------------------------------------------------------------------------------------------------
Software 37.3 39.8 94% 121.1 131.4 92%
-------------------------------------------------------------------------------------------------------
Services 153.9 149.4 103% 529.6 511.2 104%
----------------------------------------------------------------------------------------------------------
Hardware 323.3 220.4 147% 917.0 645.2 142%
-------------------------------------------------------------------------------------------------------
Storage *4 176.3 88.0 200% 468.4 253.5 185%
-------------------------------------------------------------------------------------------------------
Servers *5 30.0 33.8 89% 97.0 93.9 103%
-------------------------------------------------------------------------------------------------------
PCs *6 32.7 32.3 101% 99.5 103.9 96%
-------------------------------------------------------------------------------------------------------
Telecommunication 31.2 25.1 124% 90.0 72.3 124%
-------------------------------------------------------------------------------------------------------
Others 53.1 41.2 129% 162.1 121.6 133%
-------------------------------------------------------------------------------------------------------------
-2-
Notes: *4. Figures for Storage include disk array subsystems, hard disk
drives, etc.
*5. Figures for Servers include general-purpose computers, UNIX
servers, supercomputers, etc.
*6. Figures for PCs include PC servers, client PCs, etc.
(3) SAN/NAS Storage Solutions
(Billions of yen)
----------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
-------------------------------------------------------------------------------------------------------------
(A)/(B) (C)/(D)
2003 (A) 2002 (B) X100(%) 2003 (C) 2002 (D) X100(%)
-------------------------------------------------------------------------------------------------------------
Sales 65.0 70.0 93% 193.0 200.0 97%
-------------------------------------------------------------------------------------------------------------
(4) Hard Disk Drives *7 *8
[ Period from April 1, 2002 through December 31, 2002 ]
--------------------------------------------------------------------------------
Period recorded for Three months ended Nine months ended
consolidated accounting December 31 December 31
purposes (Oct.2002 to Dec.2002) (Apr.2002 to Dec.2002)
--------------------------------------------------------------------------------
Shipment Period Oct.2002 to Dec.2002 Apr.2002 to Dec.2002
--------------------------------------------------------------------------------
Sales (billions of yen) -- --
--------------------------------------------------------------------------------
Shipments (thousand units) *9 2,200 6,200
--------------------------------------------------------------------------------
Mobiles *10 1,900 5,400
--------------------------------------------------------------------------------
Servers *11 300 800
--------------------------------------------------------------------------------
Desktops *12 -- --
--------------------------------------------------------------------------------
Emerging *13 -- --
--------------------------------------------------------------------------------
[ Period from April 1, 2003 through December 31, 2003 ]
--------------------------------------------------------------------------------
Period recorded for Three months ended Nine months ended
consolidated accounting December 31 December 31
purposes (Oct.2003 to Dec.2003) (Apr.2003 to Dec.2003)
--------------------------------------------------------------------------------
Shipment Period Jul.2003 to Sep.2003 Jan.2003 to Sep.2003
--------------------------------------------------------------------------------
Ref *14
--------------------------------------------------------------------------------
Sales (billions of yen) 128.6 321.5 348.3
--------------------------------------------------------------------------------
Shipments (thousand units) *9 11,600 28,400 30,700
--------------------------------------------------------------------------------
Mobiles *10 6,600 15,800 17,800
--------------------------------------------------------------------------------
Servers *11 900 2,100 2,300
--------------------------------------------------------------------------------
Desktops *12 3,900 10,200 10,200
--------------------------------------------------------------------------------
Emerging *13 160 360 360
--------------------------------------------------------------------------------
-3-
[ Period from April 1, 2003 through March 31, 2004 ]
--------------------------------------------------------------------------------
Period recorded for Three months ended Twelve months ended
consolidated accounting March 31 December 31
purposes (Jan.2004 to Mar.2004) (Apr.2003 to Mar.2004)
--------------------------------------------------------------------------------
Shipment Period Oct.2003 to Dec.2003 *15 Jan.2003 to Dec.2003
--------------------------------------------------------------------------------
Ref *14
--------------------------------------------------------------------------------
Sales (billions of yen) 135.9 457.4 484.2
--------------------------------------------------------------------------------
Shipments (thousand units) *9 12,600 41,100 43,400
--------------------------------------------------------------------------------
Mobiles *10 7,300 23,100 25,100
--------------------------------------------------------------------------------
Servers *11 1,100 3,100 3,400
--------------------------------------------------------------------------------
Desktops *12 4,200 14,400 14,400
--------------------------------------------------------------------------------
Emerging *13 130 480 480
--------------------------------------------------------------------------------
Notes: *7. Figures include intra-segment transactions.
*8. On December 31, 2002, Hitachi purchased majority ownership in a
company to which IBM Corporation's hard disk drive operations had
been transferred. On January 1, 2003, the company began operating
as Hitachi GST. Hitachi GST has a December 31 year-end and Hitachi,
Ltd. has a March 31 year-end. The third-quarter consolidated
results for Hitachi, Ltd. include the results of Hitachi GST for
the three-month period from July 1, 2003 through September 30,
2003. Meanwhile, the results of Hitachi, Ltd.'s HDD operations for
the period from January 1, 2003 through March 31, 2003 were
included in Hitachi's consolidated financial results for the year
ended March 31, 2003. On April 1, 2003, Hitachi, Ltd.'s HDD
operations were integrated in Hitachi GST.
*9. Shipment less than 100,000 units have been rounded, with the
exception of Emerging, where shipment less than 10,000 units have
been rounded.
*10. Note-PCs (2.5inch), consumer electronics applications (1.8inch),
etc.
*11. Disk array subsystems, servers (3.5inch), etc.
*12. Desktop-PCs, consumer electronics applications (3.5inch), etc.
*13. Hand held devices (1 inch), automotive (2.5 inch), etc.
*14. The figures provided for reference purposes represent the combined
sales and shipments of Hitachi, Ltd.'s HDD operations prior to
integration and Hitachi GST's operations, and are shown to give an
overall picture of Hitachi's HDD operations for the nine-month
period ended September 30, 2003 and for the twelve-month period
ended December 31, 2003.
*15. Results for HDD operations in the period from October 1, 2003
through December 31, 2003 will be included in Hitachi's fiscal 2003
fourth-quarter, ending March 31, 2004 results.
-4-
2. Displays
-----------
(1) Sales and operating income (loss)
(Billions of yen)
---------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
---------------------------------------------------------------------
(A)/(B) (C)/(D)
2003(A) 2002(B) X100(%) 2003(C) 2002(D) X100(%)
-------------------------------------------------------------------------------------------------------------
Sales 69.0 43.7 158% 187.8 143.7 131%
-------------------------------------------------------------------------------------------------------------
Operating income (loss) 4.5 (7.7) -- (0.4) (9.0) --
-------------------------------------------------------------------------------------------------------------
(2) LCD sales
(Billions of yen)
-------------------------------------------------------------------------------------------------------------
Three months ended December 31 Nine months ended December 31
---------------------------------------------------------------------
(A)/(B) (C)/(D)
2003(A) 2002(B) X100(%) 2003(C) 2002(D) X100(%)
-------------------------------------------------------------------------------------------------------------
Sales 61.0 32.0 191% 161.0 112.0 144%
-------------------------------------------------------------------------------------------------------------
Large-size LCDs 29.0 20.0 145% 84.0 78.0 108%
-------------------------------------------------------------------------------------------------------------
Small and medium-size LCDs 32.0 12.0 267% 77.0 34.0 226%
-------------------------------------------------------------------------------------------------------------
# # #
FOR IMMEDIATE RELEASE
Progress on the "i.e.HITACHI Plan II" Medium-Term Management Plan
Tokyo, February 4, 2004 --- Hitachi, Ltd. (NYSE:HIT / TSE:6501) today announced
progress with initiatives designed to achieve positive FIV* (Future Inspiration
Value) in fiscal 2005, a goal of its current medium-term management plan,
"i.e.HITACHI Plan II."
Hitachi is realigning its business portfolio based on reviews of the activities
and growth potential of all businesses. With many of the acquisitions and joint
ventures conducted thus far having proven successful, targeted businesses are
expected to grow between now and fiscal 2005.
Moreover, Hitachi is actively making investments in R&D in the ubiquitous
application products, the automotive equipment, biomedical and other businesses,
all of which are expected to expand from fiscal 2006 onward. Advanced research,
the wellspring of future growth, is another area where Hitachi is bolstering
R&D.
At present, Hitachi expects it will be capable of generating consolidated
operating income in excess of 400 billion yen on net sales in the order of 9
trillion yen in fiscal 2005. Based on this assumption, Hitachi expects to
generate positive FIV that year.
* FIV is Hitachi's economic value-added evaluation index in which the cost of
capital is deducted from after-tax operating profit. After-tax operating
profit must exceed the cost of capital to achieve positive FIV.
-2-
1. Progress With Realigning the Business Portfolio and Measures to Increase
Profitability
Hitachi is projecting that consolidated net sales in fiscal 2005 will be
approximately 650 billion yen higher than in fiscal 2002 due to the acquisition
of IBM Corporation's hard disk drive (HDD) operations, the acquisition of
Sumitomo Special Metals Co., Ltd. by Hitachi Metals, Ltd. and other business
portfolio realignment actions. Conversely, the transfer of Hitachi, Ltd.'s
semiconductor operations to joint venture Renesas Technology Corp. and other
developments are expected to lower net sales over the same period by
approximately 540 billion yen.
The integration of semiconductor operations in joint ventures, which are
accounted for as equity-method affiliates, has bolstered competitiveness and
improved earnings.
In the display business, earnings have improved significantly by changing the
product mix. The focus in this business has shifted from the highly volatile
notebook PC market to small and medium-size LCD panels, particularly for the
expanding market in Japan for mobile phones featuring color screens. Growth in
LCD panels for flat panel TVs is another factor behind the improvement in
earnings. At this time, Hitachi has decided to invest an additional 12 billion
yen in a production line for low-temperature polysilicon TFT LCDs in response to
increasing demand for mobile phones equipped with high-resolution color
displays.
In the consumer business, Hitachi Home & Life Solutions, Inc. has initiated
structural reforms, mainly focused on reducing fixed expenses. Initiatives such
as expanding sales in Japan of home appliances manufactured overseas are
intended to give the company a more competitive structure, particularly
regarding fixed costs, with which it can expand its business going forward.
Meanwhile, Hitachi, Ltd.'s Ubiquitous Platform Systems Group has reorganized and
integrated bases producing CRT TVs, VTRs and other existing audio-visual
products in Japan and overseas, while refocusing on digital consumer
electronics, a category which includes plasma TVs, projection TVs and optical
storage drives.
In addition to these initiatives, Hitachi has been pushing ahead with Corporate
Innovation Initiative II to improve profitability. Measures include upgrading
cash flow management and initiatives to reduce expenses. Moreover, Hitachi is
continuing with measures designed to nurture employees and create new
businesses, including the establishment of virtual venture companies by
"corporate senior staff." The objective is to turn venture companies into
full-fledged businesses much in the same manner as Hitachi has done with
Mu-Solutions. With FIV as its key management benchmark, Hitachi is thus working
on many fronts to improve profitability while creating attractive products and
services that dovetail with customer needs.
-3-
2. Measures for Continuous Growth
In tandem with business portfolio realignment, Hitachi is pushing ahead with
measures to ensure growth over the medium and long terms. Investments are being
made in R&D in the automotive equipment, battery, biomedical and other
businesses, all of which are expected to grow significantly going forward. An
example is a pilot production line for rechargeable lithium-ion batteries.
Businesses where Hitachi can best leverage its strengths, in an environment
where elemental technologies and markets now cut across several different
business groups, will be designated as "Inspire A Businesses." Hitachi is
prepared to take whatever steps are necessary to strengthen these businesses,
including strategically allocating funds and establishing an operating framework
that facilitates collaboration across many businesses in the Hitachi Group.
In Information & Telecommunication Systems, efforts are being made to upgrade
Hitachi's development capabilities with respect to disk array subsystems, HDDs
and other hardware, as well as middleware and other software. Hitachi will
explore alliances with other companies and conduct M&As, as required, to better
facilitate the provision of total solutions in this field, which is a key
component of a ubiquitous information society.
In Power & Industrial Systems, structural reforms are being implemented to
Hitachi, Ltd.'s Power & Industrial Systems Group to improve earnings.
In the display business, Hitachi is continuing with the development of a
next-generation display device that achieves high picture quality and low power
consumption.
Hitachi has positioned the consumer market as an important market for providing
"New Era Lifeline Support Solutions." At the heart of this stance is
establishment of the Consumer Business Strategy Division to open up new markets
through a business model transformation--switching from a household appliance
business operated along individual product lines to a consumer products business
that directly supports individuals' lifestyles as a vital part of the social
infrastructure. Headed by President and CEO Etsuhiko Shoyama, this new body's
activities will extend beyond the scope of the current consumer field. It will
capitalize fully on the resources of Hitachi's consumer products business as
well as the involvement Hitachi Air Conditioning Systems Co., Ltd. and Hitachi
Industrial Equipment Systems Co., Ltd. have in the technology and business
spheres. The goal is to create viable consumer business models for the
ubiquitous era.
-4-
Moreover, Hitachi is actively investing in advanced research fields that are of
common interest to the Group. These are fields in which the Hitachi Group can
give full play to its strengths from a long-term perspective.
Together, these investments, including ongoing investments in IT to facilitate
faster decision-making, are intended to support consistent growth.
Hitachi is accelerating the pace of its transformation into a highly profitable
organization as it aims to expand and achieve positive FIV in fiscal 2005, a
goal of "i.e.HITACHI Plan II," and generate consistent growth afterward.
Cautionary Statement
--------------------
Certain statements found in this document may constitute "forward-looking
statements" as defined in the U.S. Private Securities Litigation Reform Act of
1995. Such "forward-looking statements" reflect management's current views with
respect to certain future events and financial performance and include any
statement that does not directly relate to any historical or current fact. Words
such as "anticipate," "believe," "expect," "estimate," "intend," "plan,"
"project" and similar expressions which indicate future events and trends are
used to assist readers in identifying these "forward-looking statements." Such
statements are based on currently available information and are subject to
various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the "forward-looking statements"
and from historical trends. Certain "forward-looking statements" are based on
current assumptions of future events which may not prove to be accurate. Undue
reliance should not be placed on "forward-looking statements," as such
statements speak only as of the date of this document.
Factors that could cause actual results to differ materially from those
projected or implied in any "forward-looking statement" and from historical
trends include, but are not limited to:
- rapid technological change, particularly in the Information &
Telecommunication Systems segment and Electronic Devices segment;
- uncertainty as to Hitachi's ability to continue to develop and market
products that incorporate new technology on a timely and cost-effective
basis and to achieve market acceptance for such products;
- fluctuations in product demand and industry capacity, particularly in the
Information & Telecommunication Systems segment, Electronic Devices segment
and Digital Media & Consumer Products segment;
- increasing commoditization of information technology products, and
intensifying price competition in the market for such products;
- fluctuations in rates of exchange for the yen and other currencies in which
Hitachi makes significant sales or in which Hitachi's assets and
liabilities are denominated, particularly between the yen and the U.S.
dollar;
- uncertainty as to Hitachi's ability to access, or access on favorable
terms, liquidity or long-term financing, particularly in the context of
limited credit availability currently prevailing in Japan;
-5-
- uncertainty as to Hitachi's ability to implement measures to reduce the
potential negative impact of fluctuations in product demand and/or exchange
rates;
- general economic conditions and the regulatory and trade environment of
Hitachi's major markets, particularly, the United States, Japan and
elsewhere in Asia, including, without limitation, continued stagnation or
deterioration of the Japanese economy, or direct or indirect restriction by
other nations on imports;
- uncertainty as to Hitachi's access to, and ability to protect, certain
intellectual property rights, particularly those related to electronics and
data processing technologies;
- uncertainty as to the success of alliances upon which Hitachi depends, some
of which Hitachi may not control, with other corporations in the design and
development of certain key products; and
- uncertainty as to general market price levels for equity securities in
Japan, declines in which may require Hitachi to write-down equity
securities it holds.
The factors listed above are not all-inclusive and are in addition to other
factors contained in Hitachi's periodic filings with the U.S. Securities and
Exchange Commission and in other materials published by Hitachi.
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