Hitachi Announces Consolidated Financial Results for the First Quarter of Fiscal 2006.TOKYO -- Hitachi Hitachi (hētä`chē), city (1990 pop. 202,141), Ibaraki prefecture, E central Honshu, Japan, on the Kashima Sea. The city is a leading producer of Japan's electrical equipment. , Ltd. (NYSE NYSE See: New York Stock Exchange :HIT)(TOKYO:6501) today announced its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial results for the first quarter of fiscal 2006, ended June June: see month. 30, 2006.
Notes: 1. All figures, except for the outlook for the first half of
fiscal 2006, were converted at the rate of 115 yen to the
U.S. dollar, the approximate exchange rate on the Tokyo
Foreign Exchange Market as of June 30, 2006.
2. Segment information and operating income (loss) are
presented in accordance with financial reporting
principles and practices generally accepted in Japan.
Business Results (1) Summary of Fiscal 2006 First Quarter Consolidated Business Results
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 2,247.0 10% 19,539
Operating income 17.1 - 149
Income before income taxes
and minority interests 11.9 146% 104
Loss before minority
interests (5.6) - (49)
Net loss (22.0) - (192)
----------------------------------------------------------------------
During the first quarter, the U.S. economy remained firm, supported by healthy consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. job and wage environments, and continued strength in capital investments. This was despite the impact of surging surge v. surged, surg·ing, surg·es v.intr. 1. To rise and move in a billowing or swelling manner. 2. To roll or be tossed about on waves, as a boat. 3. prices for crude oil and other raw materials. Asian economies grew strongly due to a high growth rate in China and other factors. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. economies staged a solid recovery. As a whole, therefore, the world economy was steady during the first quarter. In Japan, economic conditions were firm as improving corporate earnings and a stronger job and wage environment, as well as other factors, fueled growth in plant and equipment investment and consumer spending. Under these circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or during the first quarter, Hitachi strengthened its social and industrial infrastructure business by transferring parts of its Industrial Systems Group to Hitachi Plant Engineering & Construction Co., Ltd. At the same time, Hitachi Kiden Kogyo, Ltd. and Hitachi Industries Co., Ltd. were merged into Hitachi Plant Engineering & Construction to form Hitachi Plant Technologies, Ltd. Furthermore, Hitachi Air Conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. Systems Co., Ltd. and Hitachi Home & Life Solutions, Inc. were merged to form Hitachi Appliances, Inc., thereby strengthening the air conditioning and home appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. business. Hitachi's consolidated revenues rose 10%, to 2,247.0 billion yen. Revenues were higher year on year in the Information & Telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. Systems segment on growth in sales of storage products; the Digital Media & Consumer Products segment due to growth in sales of flat-panel TVs and other factors; and the High Functional Materials & Components segment, mainly from growth in sales of components and materials for the electronics-related field. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rose 15.8 billion yen, to 17.1 billion yen. Earnings improved in the Information & Telecommunication Systems, the Electronic Devices, Power & Industrial Systems and High Functional Materials & Components segments mainly by expanding each business and promoting cost reductions. Due to foreign currency exchange gain and loss and other factors, other income declined 33%, to 9.1 billion yen and other deductions increased 42%, to 14.3 billion yen. As a result, Hitachi recorded income before income taxes and minority interests of 11.9 billion yen, up 146% year on year. After income taxes of 17.5 billion yen, Hitachi posted a loss before minority interests of 5.6 billion yen. Hitachi also posted a net loss of 22.0 billion yen, 2.0 billion yen less than a year earlier. (2) Revenues and Operating Income (Loss) by Segment Results by segment were as follows.
(Information & Telecommunication Systems)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 501.8 11% 4,364
Operating loss (6.5) - (57)
----------------------------------------------------------------------
Information & Telecommunication Systems revenues rose 11%, to 501.8 billion yen. Software and services revenues were higher than the corresponding quarter of the previous fiscal year due to firm growth in software sales and strong sales in services, particularly in the outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. business. Hardware revenues also rose on growth in storage products. The segment posted an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of 6.5 billion yen, an improvement of 16.6 billion yen from the same term of the previous year. Earnings improved in software and services year on year, mainly reflecting improved project management in services. Furthermore, hardware earnings were much improved year on year due to a narrower loss in hard disk drive (HDD (Hard Disk Drive) See hard disk and HDD caddy. HDD - hard disk drive ) operations, strong sales in disk array subsystems, and other factors.
Note: HDD operations are conducted by Hitachi Global Storage
Technologies (Hitachi GST), which has a December 31 fiscal
year-end, different from Hitachi's March 31 year-end. Hitachi's
results for the first quarter of fiscal 2006 include operating
results of Hitachi GST for the period from January through March
2006.
(Electronic Devices)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 303.9 11% 2,643
Operating income 9.8 108% 86
----------------------------------------------------------------------
Electronic Devices revenues increased 11%, to 303.9 billion yen. This was mainly due to higher sales at Hitachi High-Technologies Corporation and growth in sales of small and medium-sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized LCDs in the display business. Operating income climbed 108%, to 9.8 billion yen, mainly due to improved earnings in the display business.
(Power & Industrial Systems)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 603.4 3% 5,248
Operating income 10.9 21% 96
----------------------------------------------------------------------
Power & Industrial Systems revenues rose 3%, to 603.4 billion yen, mainly due to increased sales at Hitachi Construction Machinery Co., Ltd. and other factors, despite the effect of merging Hitachi Air Conditioning Systems Co., Ltd. and Hitachi Home & Life Solutions, Inc. in April 2006. The segment posted 21% increase in operating income, to 10.9 billion yen due to strong earnings at Hitachi Construction Machinery and other factors.
Note: On April 1, 2006, Hitachi Air Conditioning Systems Co., Ltd.
(Power & Industrial Systems segment) and Hitachi Home & Life
Solutions, Inc. (Digital Media & Consumer Products segment) were
merged to form Hitachi Appliances, Inc. The new company belongs
to the Digital Media & Consumer Products segment.
(Digital Media & Consumer Products)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 370.8 25% 3,225
Operating loss (16.1) - (140)
----------------------------------------------------------------------
Digital Media & Consumer Products segment revenues climbed 25%, to 370.8 billion yen, mainly due to strong sales growth in plasma and other flat-panel TVs and the effect of the formation of Hitachi Appliances, Inc. by merging Hitachi Air Conditioning Systems Co., Ltd. and Hitachi Home & Life Solutions, Inc. in April this year. However, the segment posted an operating loss of 16.1 billion yen, 7.9 billion yen more than a year earlier. This wider loss reflected increased investments for marketing digital media products such as plasma TVs A flat panel TV that uses the plasma display technology. See flat panel TV, plasma display and LCD vs. plasma. , as well as the impact of falling prices for home appliances, among other factors.
(High Functional Materials & Components)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 420.0 14% 3,652
Operating income 28.3 27% 246
----------------------------------------------------------------------
Segment revenues rose 14%, to 420.0 billion yen on the back of strong sales at Hitachi Chemical Co., Ltd. and Hitachi Metals, Ltd., principally of components and materials in the electronics-related field. Hitachi Cable Hitachi Cable, Ltd. (日立電線株式会社 , Ltd. also recorded sales growth. Operating income climbed 27%, to 28.3 billion yen, mainly due to higher sales and the benefits of cost-cutting.
(Logistics, Services & Others)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 304.3 12% 2,646
Operating income 1.1 (29%) 10
----------------------------------------------------------------------
Segment revenues rose 12%, to 304.3 billion yen on healthy growth in sales at Hitachi Transport System, Ltd., mostly in the third-party logistics A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part, or sometimes all of their supply chain management function. solutions business, and sales growth at overseas general trading companies. The segment posted operating income of 1.1 billion yen, 29% down year on year, mainly due to lower earnings at domestic services companies.
(Financial Services)
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 123.1 (4%) 1,071
Operating income 5.8 (6%) 50
----------------------------------------------------------------------
Revenues declined 4%, to 123.1 billion yen due to flat revenues at Hitachi Capital Corporation. Segment operating income declined 6%, to 5.8 billion yen. (3) Revenues by Market
Three months ended June 30, 2006
Billions of Year-over-year Millions of
Yen % change U.S. dollars
----------------------------------------------------------------------
Japan 1,265.8 2% 11,008
Overseas 981.1 21% 8,532
Asia 430.1 23% 3,740
North America 274.3 24% 2,385
Europe 196.4 14% 1,708
Other Areas 80.2 20% 698
----------------------------------------------------------------------
Revenues in Japan were 1,265.8 billion yen, 2% higher than in the first quarter of the previous fiscal year. Overseas revenues rose 21%, to 981.1 billion yen, due to year-on-year growth in sales in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , in addition to steep growth in
revenues in Asia, particularly in China, and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .As a result, the ratio of overseas revenues to consolidated revenues rose 4 percentage points year on year to 44%. (4) Capital Investment, Depreciation and R&D Expenditures Capital investment on a completion basis, excluding leasing assets, rose 31%, to 102.8 billion yen, mainly due to investments in HDDs, plasma display panels See plasma display. , automotive-related parts and other products. Depreciation, excluding leasing assets, increased 5%, to 85.7 billion yen. R&D expenditures, which are primarily used to strengthen frontier frontier, in U.S. history, the border area of settlement of Europeans and their descendants; it was vital in the conquest of the land between the Atlantic and the Pacific. and basic research, and upgrade development capabilities in HDDs, automotive-, displays- and digital media-related fields, increased 3%, to 95.7 billion yen, and corresponded to 4.3% of revenues. Financial Position
(1) Financial Position
As of June 30, 2006
Millions of
Billions of Change from U.S.
yen March 31, 2006 dollars
----------------------------------------------------------------------
Total assets 9,984.0 (37.1) 86,818
Total liabilities 6,495.2 18.6 56,481
Interest-bearing debt 2,529.9 110.9 22,000
Minority interests 1,033.6 (3.1) 8,988
Stockholders' equity 2,455.1 (52.6) 21,349
Stockholders' equity ratio 24.6% 0.4 point
deterioration -
D/E ratio
(including minority 0.05 point
interests) 0.73 times deterioration -
----------------------------------------------------------------------
Total assets as of June 30, 2006 were 9,984.0 billion yen, largely the same as at March 31, 2006. Interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid debt increased 110.9 billion yen, to 2,529.9 billion yen as of June 30, 2006. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. decreased 52.6 billion yen, to 2,455.1 billion yen caused by the net loss in the first quarter. As a result of these changes, the stockholders' equity ratio declined by 0.4 of a percentage point to 24.6%. The debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. (including minority interests) deteriorated 0.05 of a point to 0.73 times due to the decrease in stockholders' equity and increase in interest-bearing debt.
(2) Cash Flows
Three months ended June 30, 2006
Billions of Year-over-year Millions of
yen change U.S. dollars
----------------------------------------------------------------------
Cash flows from operating
activities (39.8) 15.8 (347)
Cash flows from investing
activities (191.3) (73.0) (1,664)
Free cash flows (231.2) (57.2) (2,011)
Cash flows from financing
activities 63.6 (6.0) 553
----------------------------------------------------------------------
Operating activities used net cash of 39.8 billion yen, 15.8 billion yen less than in the first quarter of the previous fiscal year. Investing activities used net cash of 191.3 billion yen, 73.0 billion yen more than the first quarter of the previous fiscal year. This was mainly due to an increase in capital investment, particularly in businesses targeted for growth. Free cash flows, the sum of cash flows from operating and investing activities, were an outflow of 231.2 billion yen, 57.2 billion yen more than the first quarter of the previous fiscal year. Financing activities provided net cash of 63.6 billion yen, 6.0 billion yen less than the first quarter of the previous fiscal year. The net result of the above items was a 169.5 billion yen decrease in cash and cash equivalents to 488.6 billion yen. Outlook for the First Half of Fiscal 2006
The first half of fiscal 2006 ending September 30, 2006
Billions of Year-over-year Millions of
yen % change U.S. dollars
----------------------------------------------------------------------
Revenues 4,590.0 4% 41,727
Operating income 50.0 (36%) 455
Income before income taxes
and minority interests 60.0 (27%) 545
Income before minority
interests 20.0 (6%) 182
Net loss (10.0) - (91)
----------------------------------------------------------------------
Regarding the outlook for the global economy, the Hitachi Group Hitachi Group (Hitachi Gurupu) is a group of companies that uses the Hitachi name, which includes Hitachi Ltd. Hitachi Heavy Industries, etc. See also
A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. , owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de weaker growth in housing investment and consumer spending due to the effect of interest rate rises thus far. Although Asian economies are expected to remain strong, supported by domestic demand in China, there are concerns of a deceleration deceleration /de·cel·er·a·tion/ (de-sel?er-a´shun) decrease in rate or speed. early deceleration in the pace of economic recovery in Europe due to the slowdown of the U.S. economy. Overall, therefore, the global economy is expected to experience a slight slowdown in the second half of fiscal 2006. The forecast for the Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and economy is for strong growth due to growth in plant and equipment investment as corporate earnings rise and to increasing consumer spending in an improving job environment. However, economic growth is expected to moderate in the second half of fiscal 2006, due to lower growth in corporate earnings, primarily resulting from a global economic slowdown centered on the U.S. and persistently per·sis·tent adj. 1. Refusing to give up or let go; persevering obstinately. 2. Insistently repetitive or continuous: a persistent ringing of the telephone. 3. high prices for crude oil and other raw materials. Based on this outlook, the Hitachi Group is forecasting the operating results shown above for the first half of fiscal 2006, the same as those announced with fiscal 2005 consolidated financial results on April 27, 2006. Hitachi is pushing forward with business reforms targeting future business development. For example, Hitachi decided to reorganize re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. the network systems related subsidiaries in October October: see month. this year. In another move, Hitachi will establish the post of Chief Executive for Asia in August with the aim of expanding business in the Asia region. Furthermore, Hitachi will continue efforts to create new businesses and strengthen targeted businesses by maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: Hitachi's internal resources, such as R&D and marketing capabilities, personnel, and its funding system a system or scheme of finance or revenue by which provision is made for paying the interest or principal of a public debt. See also: Funding . Also, Hitachi is leveraging group-wide synergies to reduce procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. costs, business expenses, IT operational costs and other costs by standardizing and integrating business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Hitachi is implementing business restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). measures to build a high-earnings framework, and reinforce re·in·force v. 1. To give more force or effectiveness to something; strengthen. 2. To reward an individual, especially an experimental subject, with a reinforcer subsequent to a desired response or performance. 3. its financial position. Regarding the HDD, flat-panel TV and LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. businesses, where there are issues concerning profitability, Hitachi is taking wide-ranging wide-rang·ing adj. Covering a wide area; including much: a pianist's wide-ranging repertoire; a wide-ranging interview. countermeasures That form of military science that, by the employment of devices and/or techniques, has as its objective the impairment of the operational effectiveness of enemy activity. See also electronic warfare. to quickly improve its development capabilities, cost competitiveness, marketing activities and other areas of its operations. Furthermore, Hitachi will work to become more competitive on a consolidated basis and to establish a more powerful earnings base by driving forward structural reforms that target future business development, such as efforts to expand overseas business. Projections assume exchange rates of 110 yen to the U.S. dollar and 140 yen to the euro for the second quarter of fiscal 2006. Since June 2006, damage has been discovered to Hitachi-manufactured steam turbines Steam turbine A machine for generating mechanical power in rotary motion from the energy of steam at temperature and pressure above that of an available sink. By far the most widely used and most powerful turbines are those driven by steam. installed at Hamaoka Nuclear Power Station No. 5, operated by Chubu Electric Power Co., Inc., and Unit 2 of Shika Nuclear Power Station, operated by Hokuriku Electric Power Company. Hitachi is currently focusing all its efforts on ascertaining the cause of and then repairing the damaged parts. Cautionary Statement Certain statements found in this document may constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined in the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such "forward-looking statements" reflect management's current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or current fact. Words such as "anticipate," "believe," "expect," "estimate," "forecast," "intend," "plan," "project" and similar expressions which indicate future events and trends may identify "forward-looking statements." Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the "forward-looking statements" and from historical trends. Certain "forward-looking statements" are based upon 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: --fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment; --uncertainty as to Hitachi's ability to continue to develop and market products that incorporate new technology on a timely and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. basis and to achieve market acceptance for such products; --rapid technological change, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment; --increasing commoditization Commoditization 1. A situation when illiquid financial contracts are changed or modified in a way that promotes trading and results in a more liquid market. 2. Making a product into a commodity. Notes: 1. of information technology products, and intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: price competition in the market for such products, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment; --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 implement measures to reduce the potential negative impact of fluctuations in product demand and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. exchange rates; --general socio-economic socio-economic adj → socioeconómico socio-economic adj → socioéconomique and political conditions and the regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and trade environment of Hitachi's major markets, particularly, the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Japan and elsewhere in Asia, including, without limitation, a return to stagnation Stagnation A period of little or no growth in the economy. Economic growth of less than 2-3% is considered stagnation. Sometimes used to describe low trading volume or inactive trading in securities. Notes: A good example of stagnation was the U.S. economy in the 1970s. or deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the Japanese economy, or direct or indirect restriction restriction - A bug or design error that limits a program's capabilities, and which is sufficiently egregious that nobody can quite work up enough nerve to describe it as a feature. by other nations on imports; --uncertainty as to Hitachi's access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a technologies; --uncertainty as to the results of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. of which the Company, its subsidiaries or its equity method affiliates have become or may become parties; --possibility of incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. expenses resulting from any defects in products or services of Hitachi; --uncertainty as to the success of restructuring efforts to improve management efficiency and to strengthen competitiveness; --uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products; --uncertainty as to Hitachi's ability to access, or access on favorable terms, liquidity or long-term financing Long-term financing Liabilities repayable in more than one year plus equity. ; 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.
Supplementary Information on Information &
Telecommunication Systems, Displays and Digital Media
Note: 1. Segment information and operating income are presented in
accordance with financial reporting principles and
practices generally accepted in Japan.
1. Information & Telecommunication Systems (2)
(1) Revenues and Operating Loss (3) (billions of yen)
Three months ended June 30
-----------------------------------------
2005 2006
(A)/
(A) FY 2004 (B) (B)/(A)
-----------------------------------------
Revenues 452.9 94% 501.8 111%
Software & Services 190.4 102% 219.1 115%
Software 34.4 95% 35.6 103%
Services 156.0 104% 183.5 118%
Hardware 262.5 89% 282.7 108%
Storage 4 152.9 100% 177.5 116%
Servers 5 16.4 80% 17.4 106%
PCs 6 23.9 80% 14.2 59%
Telecommunication 31.2 89% 27.9 89%
Others 38.1 69% 45.7 120%
Operating loss (23.1) - (6.5) -
Notes: 2. The Hard Disk Drive operations are conducted by Hitachi
Global Storage Technologies (Hitachi GST), which has a
December 31 fiscal year-end, different from Hitachi's
March 31 year-end. Hitachi's results for the three months
ended June 30, 2006 include the operating results of
Hitachi GST for the three months ended March 31, 2006.
3. Figures for each product exclude intersegment transactions.
4. Figures for Storage include disk array subsystems, hard
disk drives, etc.
5. Figures for Servers include general-purpose computers, UNIX
servers, etc.
6. Figures for PCs include PC servers, client PCs (only
commercial use from FY2006), etc.
(2) SAN/NAS Storage Solutions (billions of yen)
Three months ended June 30
-----------------------------------------
2005 2006
-----------------------------------------
(A) /
(A) FY 2004 (B) (B)/(A)
-----------------------------------------
Revenues 63.0 102% 77.0 122%
(3) Hard Disk Drives (7) (8)
(The upper rows show comparisons to the previous year)
Fiscal 2005 Fiscal 2006
Period recorded for ----------------------------------------------
consolidated accounting 1st half 1st half
purposes 1st 2nd 1st 2nd
quarter quarter quarter quarter
----------------------------------------------------------------------
Jan. Apr. Jan. Jan. Apr. Jan.
2005 2005 2005 2006 2006 2006
Shipment Period to to to to to to
Mar. Jun. Jun. Mar. Jun. Jun.
2005 2005 2005 2006 2006 2006
----------------------------------------------------------------------
Yen 98% 108% 103% 118% 108% 113%
(billions
Revenues of yen) 110.8 112.4 223.2 130.6 121.7 252.3
----------------------------------------------
U.S. dollar 100% 110% 105% 106% 103% 104%
(millions
of dollar) 1,053 1,037 2,090 1,115 1,068 2,183
----------------------------------------------------------------------
Yen - - - - - -
(billions
Operating of yen) (11.5) (12.9) (24.4) (5.4) (12.9) (18.4)
loss ----------------------------------------------
U.S. dollar - - - - - -
(millions
of dollar) (109) (120) (229) (46) (112) (159)
----------------------------------------------------------------------
122% 145% 133% 110% 107% 108%
Shipments (thousand
units) 9 13,400 13,900 27,300 14,700 14,800 29,600
----------------------------------------------
100% 110% 105% 133% 119% 126%
1.8/2.5inch
Consumer 10 6,300 6,500 12,800 8,400 7,700 16,100
and ----------------------------------------------
Commercial 124% 191% 150% 119% 133% 126%
3.5inch 11
4,300 4,200 8,600 5,100 5,700 10,800
----------------------------------------------
78% 66% 72% 128% 149% 138%
Servers 12
700 700 1,400 900 1,000 1,900
-------------------------------------------------------------------
842% 551% 654% 17% 18% 18%
Emerging 13
2,080 2,500 4,580 350 450 810
Notes: 7. Figures include intersegment transactions.
8. Hitachi GST's operating currency is U.S. dollar. Yen
figures include yen/dollar conversion fluctuation.
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. Consumer electronics applications (1.8inch), note-PCs
(2.5inch), etc.
11. Desktop-PCs, consumer electronics applications (3.5inch),
etc.
12. Disk array subsystems, servers (3.5inch), etc.
13. Hand held devices (1inch), automotive (2.5inch), etc.
2. Displays
(1) Revenues and Operating Loss (billions of yen)
Three months ended June 30
------------------------------------
2005 2006
------------------------------------
(A)/
(A) FY 2004 (B) (B)/(A)
------------------------------------
Revenues 47.3 72% 48.3 102%
Operating loss (4.9) - (3.8) -
(2) LCD Revenues (billions of yen)
Three months ended June 30
-----------------------------------
2005 2006
-----------------------------------
(A)/
(A) FY 2004 (B) (B)/(A)
-----------------------------------
Revenues 40.0 67% 40.0 100%
Large-size LCDs 15.0 55%
Small and medium-
size LCDs 25.0 77%
3. Digital Media
Shipments of Main Products (14) (thousand units)
Three months ended June 30
------------------------------------
2005 2006
------------------------------------
(A)/
(A) FY 2004 (B) (B)/(A)
------------------------------------
Optical Disk Drives (15) 18,000 113% 18,000 100%
Plasma TVs (16) 80 100% 160 200%
LCD TVs 40 200% 100 250%
Notes: 14. Shipment less than 10,000 units have been rounded, with
the exception of Optical Disk Drives, where shipment less
than 100,000 units have been rounded.
15. The Optical Disk Drive operations are conducted by
Hitachi-LG Data Storage, Inc. (HLDS), which has a December
31 fiscal year-end, different from Hitachi's March 31
year-end. Hitachi's results for the three months ended
June 30, 2006 include the operating results of HLDS for
the three months ended March 31, 2006.
16. The sum of plasma TV and plasma monitor shipments.
HITACHI, LTD. AND SUBSIDIARIES
Consolidated Financial Statements
for the First Quarter ended June 30, 2006
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 115 yen =
U.S.$1, the approximate exchange rate prevailing on the Tokyo Foreign
Exchange Market as of June 30, 2006.
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 June 30
-----------------------------------------
U.S.
Yen Dollars
(millions) (A)/(B) (millions)
---------------------- X100 ----------
2006 (A) 2005 (B) (%) 2006
-----------------------------------------
1. Revenues 2,247,003 2,048,745 110 19,539
2. Operating income 17,135 1,289 - 149
3. Income before income
taxes and minority
interests 11,950 4,851 246 104
4. Income (loss) before
minority interests (5,639) (12,809) - (49)
5. Net income (loss) (22,044) (24,081) - (192)
6. Net income (loss) per
share
Basic (6.61) (7.23) - (0.06)
Diluted (6.62) (7.23) - (0.06)
7. Net income (loss) per ADS
(representing 10 shares)
Basic (66) (72) - (0.57)
Diluted (66) (72) - (0.57)
Notes: 1. The Company's consolidated financial statements are
prepared based on U.S. GAAP.
2. Segment Information and operating income are presented in
accordance with financial reporting principles and
practices generally accepted in Japan.
3. The figures are for 884 consolidated subsidiaries,
including Variable Interest Entities, and 162
equity-method affiliates.
4. Consolidated quarterly figures are unaudited.
Consolidated Statements of Operations (Unaudited)
Three months ended June 30
-----------------------------------------
U.S.
Yen Dollars
(millions) (A)/(B) (millions)
---------------------- X100 ----------
2006 (A) 2005 (B) (%) 2006
----------------------------------------------------------------------
Revenues 2,247,003 2,048,745 110 19,539
Cost of sales 1,762,843 1,606,261 110 15,329
Selling, general and
administrative expenses 467,025 441,195 106 4,061
Operating income 17,135 1,289 - 149
Other income 9,189 13,686 67 80
(Interest and dividends) 7,808 6,954 112 68
(Other) 1,381 6,732 21 12
Other deductions 14,374 10,124 142 125
(Interest charges) 8,233 7,608 108 72
(Other) 6,141 2,516 244 53
Income before income taxes
and minority interests 11,950 4,851 246 104
Income taxes 17,589 17,660 100 153
Income (loss) before
minority interests (5,639) (12,809) - (49)
Minority interests 16,405 11,272 146 143
Net income (loss) (22,044) (24,081) - (192)
Consolidated Balance Sheets (Unaudited)
U.S.
Yen Dollars
(millions) (millions)
----------------------- ----------
As of June As of March As of June
30, 31, (A)-(B) 30,
2006 (A) 2006 (B) 2006
----------------------------------------------------------------------
Assets 9,984,067 10,021,195 (37,128) 86,818
Current assets 5,480,988 5,512,805 (31,817) 47,661
Cash and cash
equivalents 488,682 658,255 (169,573) 4,249
Short-term investments 163,939 162,756 1,183 1,426
Trade receivables
(Notes and Accounts) 2,273,277 2,430,681 (157,404) 19,768
Investments in leases 482,134 451,757 30,377 4,192
Inventories 1,466,553 1,262,308 204,245 12,753
Other current assets 606,403 547,048 59,355 5,273
Investments and advances 1,025,834 1,029,673 (3,839) 8,920
Property, plant and
equipment 2,472,989 2,460,186 12,803 21,504
Other assets 1,004,256 1,018,531 (14,275) 8,733
Liabilities and
Stockholders' equity 9,984,067 10,021,195 (37,128) 86,818
Current liabilities 4,147,516 4,121,451 26,065 36,065
Short-term debt and
current portion
of long-term debt 1,101,628 1,000,555 101,073 9,579
Trade payables (Notes
and Accounts) 1,449,073 1,484,966 (35,893) 12,601
Other current
liabilities 1,596,815 1,635,930 (39,115) 13,885
Noncurrent liabilities 2,347,777 2,355,164 (7,387) 20,415
Long-term debt 1,428,318 1,418,489 9,829 12,420
Other liabilities 919,459 936,675 (17,216) 7,995
Minority interests 1,033,643 1,036,807 (3,164) 8,988
Stockholders' equity 2,455,131 2,507,773 (52,642) 21,349
Common stock 282,033 282,033 0 2,452
Capital surplus 565,531 561,484 4,047 4,918
Legal reserve and
retained earnings 1,737,391 1,778,203 (40,812) 15,108
Accumulated other
comprehensive loss (110,800) (95,997) (14,803) (963)
(Foreign currency
translation
adjustments) (46,634) (43,426) (3,208) (406)
(Minimum pension
liability
adjustments) (146,161) (145,903) (258) (1,271)
(Net unrealized
holding gain on
available-for-sale
securities) 81,420 92,626 (11,206) 708
(Cash flow hedges) 575 706 (131) 5
Treasury stock (19,024) (17,950) (1,074) (165)
Consolidated Statements of Cash Flows (Unaudited)
Three months ended June 30
--------------------------------
Yen U.S.
(millions) Dollars
(millions)
--------------------------------
2006 2005 2006
----------------------------------------------------------------------
Cash flows from operating activities
Net income (loss) (22,044) (24,081) (192)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities
Depreciation 119,275 111,522 1,037
Decrease in receivables and
inventories 17,362 33,998 151
Decrease in payables (26,057) (93,889) (227)
Other (128,408) (83,275) (1,117)
----------------------------------------------------------------------
Net cash used in operating
activities (39,872) (55,725) (347)
Cash flows from investing activities
Increase in short-term investments (1,479) (32,261) (13)
Purchase of rental assets and other
properties, net (206,738) (173,239) (1,798)
Proceeds from sale of investments
and subsidiaries' common stock,
net (22,744) 44,450 (198)
Collection of investments in leases 68,999 92,451 600
Other (29,423) (49,732) (256)
----------------------------------------------------------------------
Net cash used in investing
activities (191,385) (118,331) (1,664)
Cash flows from financing activities
Increase in interest-bearing debt 97,530 98,768 848
Dividends paid to stockholders (18,325) (18,335) (159)
Dividends paid to minority
stockholders of subsidiaries (9,702) (8,019) (84)
Other (5,884) (2,718) (51)
----------------------------------------------------------------------
Net cash provided by financing
activities 63,619 69,696 553
Effect of exchange rate changes on
cash and cash equivalents (1,935) 5,333 (17)
--------------------------------
Net decrease in cash and cash
equivalents (169,573) (99,027) (1,475)
Cash and cash equivalents at
beginning of the period 658,255 708,715 5,724
--------------------------------
Cash and cash equivalents at end of
the period 488,682 609,688 4,249
================================
Segment Information (Unaudited)
----------------------------------------------------------------------
(1) Industry Segments
----------------------------------------------------------------------
Three months ended June 30
-------------------------------------------
Yen (A)/(B) U.S. Dollars
(millions) X100 (millions)
--------------------- (%) -------------
2006 (A) 2005 (B) 2006
-------------------------- ---------- ---------- ------- -------------
Information &
Telecommuni-
cation 501,882 452,996 111 4,364
Systems 19% 19%
---------------- ---------- ---------- ------- -------------
Electronic 303,937 273,326 111 2,643
Devices 11% 12%
---------------- ---------- ---------- ------- -------------
Power & 603,476 587,935
Industrial 103 5,248
Systems 23% 25%
---------------- ---------- ---------- ------- -------------
Digital Media
& Consumer 370,843 297,236 125 3,225
Products 14% 13%
---------------- ---------- ---------- ------- -------------
Revenues High
Functional
Materials 420,024 368,313 114 3,652
& Components 16% 15%
---------------- ---------- ---------- ------- -------------
Logistics, 304,347 271,351
Services & 112 2,646
Others 12% 11%
---------------- ---------- ---------- ------- -------------
Financial 123,157 127,759 96 1,071
Services 5% 5%
---------------- ---------- ---------- ------- -------------
2,627,666 2,378,916 110 22,849
Subtotal 100% 100%
---------------- ---------- ---------- ------- -------------
Eliminations &
Corporate
items (380,663) (330,171) - (3,310)
---------------- ---------- ---------- ------- -------------
Total 2,247,003 2,048,745 110 19,539
========================== ========== ========== ======= =============
Information &
Telecommuni-
cation (6,542) (23,173) - (57)
Systems (20%) (184%)
---------------- ---------- ---------- ------- -------------
Electronic 9,896 4,757 208 86
Devices 30% 38%
---------------- ---------- ---------- ------- -------------
Power & 10,992 9,081
Industrial 121 96
Systems 33% 72%
---------------- ---------- ---------- ------- -------------
Digital Media
& Consumer (16,101) (8,189) - (140)
Products (48%) (65%)
---------------- ---------- ---------- ------- -------------
Operating High
income Functional
(loss) Materials 28,301 22,289 127 246
& Components 84% 177%
---------------- ---------- ---------- ------- -------------
Logistics, 1,175 1,653
Services & 71 10
Others 4% 13%
---------------- ---------- ---------- ------- -------------
Financial 5,803 6,152 94 50
Services 17% 49%
---------------- ---------- ---------- ------- -------------
33,524 12,570 267 292
Subtotal 100% 100%
---------------- ---------- ---------- ------- -------------
Eliminations &
Corporate (16,389) (11,281) - (143)
items
---------------- ---------- ---------- ------- -------------
Total 17,135 1,289 - 149
Note: Revenues by industry segment include intersegment transactions.
(2) Revenues by Market
Three months ended June 30
----------------------------------------------------
Yen (A)/(B) U.S. Dollars
(millions) X100 (millions)
---------------------- (%) --------------------
2006 (A) 2005 (B) 2006
----------------------------------------------------------------------
Japan 1,265,880 1,239,202 102 11,008
56% 60%
Asia 430,137 349,846 123 3,740
19% 17%
North America 274,325 220,558 124 2,385
12% 11%
Europe 196,424 172,209 114 1,708
9% 9%
Other Areas 80,237 66,930 120 698
4% 3%
Outside
Japan 981,123 809,543 121 8,532
44% 40%
----------------------------------------------------------------------
Total 2,247,003 2,048,745 110 19,539
100% 100%
Supplementary Information
for the First Quarter ended June 30, 2006
(Consolidated Basis)
1. Summary (Billions of Yen)
Three months ended June 30
---------------------------------------------
2005 2006
(A) (A)/FY2004 (B) (B)/(A)
----------------------------------------------------------------------
Average exchange rate
(Yen / U.S.$) 108 - 114 -
Capital investment
(Completion basis) 217.4 96% 243.1 112%
Leasing assets 138.7 91% 140.3 101%
Other 78.6 109% 102.8 131%
Depreciation 111.5 107% 119.2 107%
Leasing assets 29.8 117% 33.5 113%
Other 81.7 104% 85.7 105%
R&D expenditure 93.0 107% 95.7 103%
Percentage of revenues 4.5% - 4.3% -
----------------------------------------------------------------------
As of March 31, 2006 As of June 30, 2006
----------------------------------------------------------------------
Stockholders' equity per
share (Yen) 752.91 736.67
Cash & cash equivalents,
Short-term
investments (Billions of
Yen) 821.0 652.6
Interest-bearing debt
(Billions of Yen) 2,419.0 2,529.9
Number of employees 355,879 365,834
Japan 242,659 247,257
Overseas 113,220 118,577
Number of consolidated
subsidiaries 932 884
Japan 476 431
Overseas 456 453
2. Overseas Revenues by Industry Segment (Billions of Yen)
Three months ended June 30
---------------------------------------------
2005 2006
(A) (A)/FY2004 (B) (B)/(A)
----------------------------------------------------------------------
Information &
Telecommunication
Systems 166.0 99% 203.8 123%
Electronic Devices 103.5 75% 110.9 107%
Power & Industrial
Systems 203.1 128% 246.8 122%
Digital Media & Consumer
Products 128.6 100% 152.1 118%
High Functional Materials
& Components 114.4 105% 141.0 123%
Logistics, Services &
Others 82.5 85% 113.3 137%
Financial Services 11.1 113% 12.8 115%
Total 809.5 100% 981.1 121%
----------------------------------------------------------------------
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