17% 16% FY2009 FY % 24% FY2009 FY2010. Information & Telecommunication Systems. Review of Operations. Share of Revenues. Overseas Revenue Ratio

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1 Review of Operations Information & Telecommunication Systems Share of 17% 16% FY29 FY21 22% 24% FY29 FY21 2, 1,6 Segment revenues declined 3% year on year to 1,652. billion (U.S.$19,94 million) reflecting lower software and services as well as hardware sales. Robust storage solutions business growth in overseas markets arose from sound performance in disk array subsystems as well as related software and services on the back of a recovery in overseas IT-related investment. Persistent cutbacks in IT investment in Japan and the impact of the earthquake accounted for the year-on-year downturn. Segment profit improved 4% to 98.6 billion (U.S.$1,188 million) as ongoing initiatives aimed at bolstering project management and successful efforts to curtail costs more than offset the negative impacts of the drop in sales and the damage brought about by the earthquake. M Fiscal 21 Topics P In order to expand the consulting business overseas, steps were taken to acquire Sierra Atlantic, Inc. in the United States in December 21, and Aptivo Consulting, S.A. in Spain in January 211. Earlier in June and August of the previous year, new consulting companies were established in China and India, respectively. P Hitachi entered into partnership agreements with Telehouse International Corporation of Europe Ltd. of the U.K. and Eco2dc Initiative of the Netherlands in March 21 and April 21, respectively, regarding environmentconscious data centers. These moves were aimed at expanding the Group s data center business overseas. 1, yen FY21 FY29 FY28 FY ,652,4 1,75,587 1,945,351 $19,94 Segment profit... 98,641 94, ,452 1,188 (Property, plant and equipment)... 29,646 24,258 3, (Property, plant and equipment)... 35,535 37,724 4, R&D expenditures... 79,531 82,264 94, Assets... 1,289,99 1,261,16 1,468,481 15,531 Number of employees... 7,853 68,49 67,828 P Software and Services Software and services sales were lower year on year. In specific terms, software increased year on year due mainly to higher sales of middleware and storage management software. Services, on the other hand, decreased year on year as a result of systems integration decline reflecting cutbacks in domestic IT-related investment. In overall terms, earnings improved compared with the previous fiscal year. The principal factor was higher year-on-year earnings from services on the back of successful efforts to bolster project management and reduce costs, which more than covered the decline in software earnings due largely to the drop in profits from platform software for mainframes and falling prices. P Hardware Hardware sales were down compared with the previous fiscal year. This was mainly attributable to the drop in IT-related investment in Japan, which placed considerable downward pressure on storage-, server-, telecommunications network- and other-related products. From a profit perspective, earnings from storage products were up year on year due to cost cutting and other measures. Buffeted by the drop in revenues and a temporary suspension of operations as a result of the earthquake, earnings from servers, PCs, telecommunications equipment and other products were down. Accounting for each of the aforementioned factors, overall hardware earnings decreased compared with the previous fiscal year. 24 Hitachi, Ltd. Annual Report 211

2 Power Systems Share of 9% 8% FY29 FY21 4% 39% FY29 FY21 1, 75 Segment revenues decreased 8% year on year to billion (U.S.$9,798 million). This decrease mainly reflected lower year on year sales from thermal power generation systems due to certain projects being pushed back in overseas markets and lower sales recorded for preventative maintenance services for nuclear power generation systems. The Great East Japan Earthquake also affected the figures. Segment profit was essentially unchanged from the previous fiscal year at 22. billion (U.S.$265 million). During the fiscal year under review, improvements in project management, progress with cost reductions and other factors offset the impacts of lower revenues and the earthquake. M Fiscal 21 Topics P The Company, Mitsubishi Electric Corporation and Mitsubishi Heavy Industries, Ltd. reached a basic agreement in March 211 to consolidate their hydroelectric power generation system operations in an effort to strengthen and expand business activities in this area. P Hitachi established two joint-venture companies in India with BGR Energy Systems Limited, a leading EPC company for power plants. The two joint-venture companies set up in August and September 21 will design, manufacture, sell and service boilers and steam turbines/generators for super critical thermal power generation yen FY21 FY29 FY28 FY ,27 882, ,389 $ 9,798 Segment profit... 22,22 22,75 3, (Property, plant and equipment)... 1,57 31,149 28, (Property, plant and equipment)... 17,848 22,96 2, R&D expenditures... 16,41 17,629 15, Assets ,676 1,67,72 1,26,637 11,8 Number of employees... 16,852 15,977 15,611 P Thermal Power Generation Systems Sales were down compared with the previous fiscal year due mainly to delays in the progress of certain coal-fired power generation system projects in overseas markets. This drop in sales was also caused by restrictions in the shipment of products as well as delays in product receipt and inspections by customers as a result of the earthquake. Earnings were down compared with the previous fiscal year. Despite the positive effects of wide-ranging measures including efforts to bolster project management, this downturn in earnings was largely attributable to the year-on-year decrease in revenues and the impact of the earthquake including temporary suspensions in factory operations. P Nuclear Power Generation Systems Sales decreased year on year. In the fiscal year under review, new plant construction was firm in Japan. This positive environment was unable to offset the substantial drop in preventative maintenance projects and delays in product shipments as well as product quality inspections by customers as a result of the earthquake. Reflecting the downturn in revenues, temporary suspensions in factory operations following the earthquake and other factors, earnings declined compared with the previous fiscal year. P Others Delays in product shipment and other negative impacts attributable to the earthquake, were offset by solid results in such industrial-use electric devices as power semiconductors. As a result, sales were unchanged from the previous fiscal year. From a profit perspective, concerted efforts to cut costs more than made up for the negative impact of temporary suspensions in factory operations following the earthquake. Taking the aforementioned into consideration, earnings grew substantially year on year. Hitachi, Ltd. Annual Report

3 Social Infrastructure & Industrial Systems Share of 1,5 1, % 11% FY29 FY21 23% 23% FY29 FY Segment revenue decreased 7% year on year to 1,156.9 billion (U.S.$13,939 million). While sales of elevators and escalators witnessed robust growth in China, and industrial equipment recovered to surpass levels recorded in the previous fiscal year on the back of recovery in capital expenditures, the overall decline was mainly due to the impact of the Great East Japan Earthquake, in addition to lower overseas sales of rolling stocks and systems and a drop in revenues resulting from a transactional change in the method in which certain products were manufactured. Segment profit decreased 5% year on year to 39.9 billion (U.S.$481 million). Despite an increase in overseas earnings from such items as elevators and escalators, this decrease was attributable to a number of factors including the downturn in revenues and the impact of the earthquake. M Fiscal 21 Topics P In the fiscal year under review, Hitachi put in place a variety of measures aimed at expanding its overseas intracity railway systems business. In June 21, the Company and Mitsubishi Heavy Industries, Ltd. entered into a basic agreement to work cooperatively in the field of intra-city railway systems for overseas markets. In October of the same year, Hitachi executed an agreement on strategic alliance in electrical components for rolling stock in overseas markets with Toyo Denki Seizo K.K. More recently in December 21, the Company decided to establish a new plant for the manufacture of electrical components for rolling stock in China. P In November 21, Hitachi entered into an agreement with Chengdu Xingrong Group Co. Ltd., a major conglomerate in China, to cooperate in the field of water environment solutions. This and other initiatives are aimed at expanding the Group s overseas water environment solutions business. P In order to boost elevator and escalator business activities in the Asian Belt, Hitachi launched a regional headquarters for its elevator and escalator business in Singapore covering Southeast Asia, India and the Middle East in October 21. yen FY21 FY29 FY28 FY ,156,936 1,25,225 1,334,246 $13,939 Segment profit... 39,952 42,86 34, (Property, plant and equipment)... 17,98 25,388 4, (Property, plant and equipment)... 21,67 25,345 26, R&D expenditures... 21,58 19,999 22, Assets... 1,33,11 971,743 1,98,712 12,447 Number of employees... 39,24 42,98 42,86 P Social Infrastructure and Industrial Systems Sales of the Industrial & Social Infrastructure Systems Company contracted compared with the previous fiscal year. This largely reflected the drop in overseas railway systems business projects and delays in product shipment as well as receipt and inspections by customers as a result of the earthquake. Sales recorded by Hitachi Plant Technologies, Ltd. were also affected by delays in product shipment as well as receipt and inspections by customers as a result of the earthquake. Due to these and other factors, revenues fell below levels recorded in the previous fiscal year. While impacted by delays in product shipment as well as receipt and inspections by customers as a result of the earthquake, Hitachi Industrial Equipment Systems Co., Ltd. reported higher year-on-year revenues. This was largely attributable to the recovery in capital expenditure. Both the Industrial & Social Infrastructure Systems Company and Hitachi Plant Technologies, Ltd. incurred a year-on-year drop in earnings owing mainly to the drop in revenues, the impact of temporary suspensions in factory operations in the aftermath of the earthquake and losses on the disposal of inventories. In contrast, Hitachi Industrial Equipment Systems Co., Ltd. experienced year-on-year earnings growth. Despite the impact of temporary suspensions in factory operations as a result of the earthquake, losses on the disposal of inventories and other negative factors, this was largely thanks to the upswing in revenues and successful costcutting measures. P Urban Planning and Development Systems Buoyed by robust sales of elevators and escalators in China, revenues in the Urban Planning and Development business increased year on year. Earnings were also higher year on year due mainly to higher sales and successful efforts to reduce costs. This was achieved despite the incidence of fixed asset-related expenses in the aftermath of the earthquake. 26 Hitachi, Ltd. Annual Report 211

4 Electronic Systems & Equipment Share of 1% 1% FY29 FY21 48% 53% FY29 FY21 1,2 Segment revenues increased 8% year on year to 1,79.3 billion (U.S.$13,4 million). Despite the impact of the Great East Japan Earthquake, the increase in revenues mainly reflected higher sales of semiconductor and LCD manufacturing equipment, electronic component processing and other equipment in line with the pickup in capital expenditures in electronic fields including semiconductors. While affected by the earthquake, segment profit turned around 42.5 billion compared with the previous fiscal year, returning to the black at 37.2 billion (U.S.$449 million). This was largely attributable to higher sales of semiconductor and LCD manufacturing equipment, electronic component processing equipment and other products. M Fiscal 21 Topics P In order to bolster its medical electronics equipment business including ultrasound systems for medical use, Hitachi Medical Corporation made Aloka Co., Ltd. (currently Hitachi-Aloka Medical, Ltd.), which is a manufacturer of medical equipment, a consolidated subsidiary in January Segment profit (loss)/ Percentage of revenues yen FY21 FY29 FY28 FY ,79, , ,821 $13,4 Segment profit (loss)... 37,284 (5,218) 25, (Property, plant and equipment)... 13,332 1,342 12, (Property, plant and equipment)... 13,267 16,146 12,45 16 R&D expenditures... 45,137 44,115 3, Assets ,741 82,7 829,126 1,455 Number of employees... 25,597 24,576 25,51 P Hitachi High-Technologies Corporation Sales increased year on year due to a number of factors. Despite delays in product shipments and other issues encountered as a result of the earthquake as well as a drop in science and medical systems results, Hitachi High-Technologies Corporation experienced robust sales of a wide range of its products including semiconductor manufacturing equipment mainly for dry etch systems and scanning electron microscopes (SEMs), such back-end assembly equipment as chip mounters and die bonders as well as LCD-related manufacturing equipment. Earnings from science and medical systems declined year on year owing mainly to the impacts of fluctuations in foreign currency exchange rates, temporary suspensions in factory operations as a result of the earthquake and other factors. In overall terms, however, Hitachi High-Technologies Corporation enjoyed a return to profitability. This improvement in earnings largely reflected increased revenues from semiconductor and LCD-related manufacturing equipment. P Hitachi Medical Corporation Despite such factors as delays in product shipment as well as receipt and inspections by customers as a result of the earthquake, sales increased compared with the previous fiscal year. In addition to firm sales of ultrasound systems for medical diagnosis, this upswing was attributable to the acquisition of Aloka Co., Ltd. Earnings were also up year on year owing mainly to the increase in sales, successful efforts to reduce costs and the acquisition of Aloka Co., Ltd. which more than offset the negative impact of such factors as temporary suspensions in factory operations in the aftermath of the earthquake. P Hitachi Kokusai Electric Inc. Sales surpassed levels recorded in the previous fiscal year. While shipments of certain communications and information systems-related products were delayed as a result of the earthquake, this favorable performance reflected robust sales of semiconductor manufacturing systems-related products. The company saw a return to the black in the fiscal year under review despite temporary suspensions in factory operations due to the earthquake and other factors. This positive turnaround was the result of higher sales of semiconductor manufacturing systems-related products and the cutting of costs. P Hitachi Koki Co., Ltd. Sales increased year on year on the back of growth mainly in emerging markets including Russia, India and China. This was in turn attributable to successful efforts to strengthen sales channels and to cultivate new customers and despite the negative impact of fluctuations in foreign currency exchange rates. Earnings were essentially unchanged from the previous fiscal year. Fluctuations in foreign currency exchange rates, delays in product shipments due to the earthquake and other factors were offset by cutbacks in costs due to the shift of production to plants in China and the promotion of a variety of measures including reduction in inventories. Hitachi, Ltd. Annual Report

5 Construction Machinery Share of 6% 7% FY29 FY21 71% 78% FY29 FY21 Segment revenues increased 29% year on year to billion (U.S.$9,53 million). Despite the impact of the earthquake, results were buoyed by strong sales of hydraulic excavators and other machinery in such emerging markets as China and Southeast Asia as well as Australia. In March 21, Hitachi Construction Machinery Co., Ltd. raised its equity interest in Telco Construction Equipment Co., Ltd. to make it a consolidated subsidiary, which also boosted segment revenues. Segment profit surged 179% year on year to 49.1 billion (U.S.$593 million). Despite the negative impact of the earthquake, this was largely attributable to the increase in revenues. M Fiscal 21 Topics P In November 21, Hitachi Construction Machinery Co., Ltd. reached an agreement to construct a factory to manufacture hydraulic excavators with Tver Oblast authorities in Russia yen FY21 FY29 FY28 FY , , ,689 $ 9,53 Segment profit... 49,192 17,649 51, (Property, plant and equipment)... 36,557 32,851 66, (Property, plant and equipment)... 35,236 39,152 35, R&D expenditures... 15,888 15,451 15, Assets... 1,, ,482 84,693 12,58 Number of employees... 19,218 19,63 16,89 P Hitachi Construction Machinery Co., Ltd. In the fiscal year under review, the company s performance was affected by such factors as the temporary suspension of factory operations as a result of the earthquake. Robust demand for construction machinery, particularly hydraulic excavators, was underpinned by brisk activity in emerging markets including China and Southeast Asia mainly for the development of social infrastructure. Resource development in countries such as Australia also fed demand. Coupled with the conversion of Telco Construction Equipment Co., Ltd. into a consolidated subsidiary in the India, revenues surpassed levels recorded in the previous fiscal year. While buffeted by such factors as losses relating to a portion of the company s production equipment and inventories in the aftermath of the earthquake, earnings increased substantially year on year due mainly to the upswing in revenues from construction machinery, particularly hydraulic excavators. 28 Hitachi, Ltd. Annual Report 211

6 High Functional Materials & Components Share of 12% 13% FY29 FY21 37% 38% FY29 FY21 1,6 Segment revenues increased 13% year on year to 1,48.1 billion (U.S.$16,966 million). This result reflects the recovery in demand in each of the automotive-related components and electronics fields, which led to solid sales of automotive-, semiconductor and LCD-related products. Segment profit jumped 9% year on year to 84.5 billion (U.S.$1,18 million). Despite the negative impact of the earthquake, this outstanding performance was the result of higher sales. M Fiscal 21 Topics P Hitachi Metals, Ltd. established a joint venture (Japan Aeroforge, Ltd.) in March 211 to manufacture large forgings for use in aircrafts and power plants together with Kobe Steel, Ltd., IHI Corporation and Kawasaki Heavy Industries, Ltd. P Hitachi Cable, Ltd. decided in January 211 to establish a production base for the manufacture of wires for rolling stock as well as heat-resistant wires in Suzhou, China. P Hitachi Chemical Co., Ltd. decided in September 21 to establish a production base for the manufacture of powder metal products in Indonesia and decided in October 21 to establish a production base for the manufacture of advanced performance resins and chemical materials in Jiangsu Province, China. 1, yen FY21 FY29 FY28 FY ,48,153 1,249,327 1,561,45 $16,966 Segment profit... 84,56 44,412 25,257 1,18 (Property, plant and equipment)... 6,727 49,728 14, (Property, plant and equipment)... 68,817 78,542 81, R&D expenditures... 46,736 44,843 5, Assets... 1,267,1 1,264,372 1,232,271 15,265 Number of employees... 48,745 47,342 49,48 P Hitachi Metals, Ltd. Sales increased significantly compared with the previous fiscal year. This largely reflected favorable performances in high-grade metal products and materials including materials for molds and tool steel for automobiles, amorphous metal and other soft magnetic materials, electronic and IT devices including magnets for household appliance and automotive use and such high-grade functional components and equipment as casting components. Earnings grew substantially year on year. Despite sharp rises in material costs and the drop in capacity utilization due to rolling blackouts, this dramatic improvement in earnings was attributable mainly to higher sales and cost reductions. P Hitachi Cable, Ltd. Sales improved year on year. While Hitachi Cable, Ltd. was confronted by difficulties with respect to a portion of its production activities in the aftermath of the earthquake, this improvement in sales was mainly the result of the recovery in demand for electronics- and automotive-related products as well as an upswing in product prices reflecting the high cost of copper throughout the fiscal year under review. Against this backdrop, sales of magnet wires, electronic wires, wiring devices and metallic materials including copper products were firm. From a profit perspective, earnings were impacted by such factors as fluctuations in foreign currency exchange rates, the sharp rise in material costs, fixed asset-related expenditure due to the earthquake and suspension in operations of certain production bases. This was, however, more than offset by the increase in revenues and cost-cutting measures. As a result, the company recorded a return to profitability compared with the previous fiscal year. P Hitachi Chemical Co., Ltd. Sales increased year on year despite the impact of the earthquake on a portion of the company s production activities. In addition to robust results in advanced components and systems including molded products and lead-acid batteries for automobiles, this favorable performance was largely attributable to increased sales of such semiconductor-related materials as epoxy molding compounds and slurry for chemical mechanical planarization and advanced performance products including carbon anode materials for lithium-ion batteries. Earnings improved compared with the previous fiscal year. The steady upswing in revenues and successful efforts to reduce costs more than outweighed the negative impacts of foreign currency exchange rate movements, the sharp rise in material costs, stoppages in production activity at certain bases as a result of the earthquake and other factors. Hitachi, Ltd. Annual Report

7 Automotive Systems Share of 8 6% 7% FY29 FY21 42% 42% FY29 FY21 Segment revenues increased 16% year on year to billion (U.S.$8,89 million) despite the negative impact of the Great East Japan Earthquake. This increase reflected healthy growth in demand for automotive equipment, which mirrored the increase of automobile manufacturers production in response to automobile sales growth, particularly in the United States and emerging countries. From a segment loss in the previous fiscal year, earnings improved 29.2 billion for a return to segment profit of 23.7 billion (U.S.$287 million). While feeling the effects of the earthquake, this positive about-face reflected the fruits of past business structure reform measures and improvements in capacity utilization in line with the recovery in automotive equipment demand. M Fiscal 21 Topics P Three automotive equipment subsidiaries in the United States were consolidated to form a regional headquarters in January 211 in order to promote a locally led framework that would ensure a swift decision-making process across each of the sale, marketing and product development functions of the automotive equipment business Segment profit (loss)/ Percentage of revenues yen FY21 FY29 FY28 FY ,91 638, ,75 $8,89 Segment profit (loss)... 23,791 (5,486) (6,57) 287 (Property, plant and equipment)... 17,341 15,215 39, (Property, plant and equipment)... 27,438 35,916 38, R&D expenditures... 45,35 38,41 63, Assets , ,183 45,966 5,438 Number of employees... 25,599 24,62 26,839 During the fiscal year under review, operating conditions in the automotive systems segment were impacted by such factors as delays in the shipment of products as a result of the earthquake. Despite this difficult environment, sales increased year on year on account of robust sales across all business divisions including engine management systems. The segment benefited from the recovery in globalscale automobile production on the back of increased new vehicle sales mainly in the United States and emerging countries. Earnings improved substantially returning to the black in the fiscal year under review. Despite such factors as the temporary suspensions in factory operations and fixed asset-related expenditure as a result of the earthquake, the segment enjoyed the benefits of business structure reforms that it had continued to put in place for a considerable amount of time. The dramatic turnaround in profits was also the result of improvements in capacity utilization. 3 Hitachi, Ltd. Annual Report 211

8 Components & Devices Share of 7% 8% FY29 FY21 7% 74% FY29 FY21 Segment revenues increased 7% year on year to 89.8 billion (U.S.$9,757 million) reflecting robust sales on the back of solid demand for hard disk drives (HDDs) for use in PCs and servers. Segment profit was up 42.5 billion to 43.6 billion (U.S.$526 million) with the increase in HDD sales, the release of new products and efforts to reduce costs more than offsetting the impact on operations of the earthquake. M Fiscal 21 Topics P Hitachi decided in March 211 to transfer its HDD business to Western Digital Corporation. P Hitachi Displays, Ltd. granted its IPS LCD technology to Taiwanese LCD manufacturer Chimei Innolux Corporation; contracted production of medium-sized IPS liquid crystal panels for use in tablet PCs commenced. 1, yen FY21 FY29 FY28 FY , , ,297 $9,757 Segment profit... 43,652 1,149 5, (Property, plant and equipment)... 56,632 39,38 62, (Property, plant and equipment)... 53,165 62,935 77, R&D expenditures... 74,69 69,16 78, Assets , ,999 64,824 7,144 Number of employees... 55,474 51,34 5,85 P Hard Disk Drives (Hitachi Global Storage Technologies (Hitachi GST)) Sales surged substantially year on year. In the fiscal year under review, shipments of HDDs and particularly mainstay 2.5-inch products increased. This was largely attributable to firm demand for PC use and particularly notebook PCs, as well as servers. Buoyed by the release of new products and the subsequent upswing in sales, coupled with successful efforts to reduce costs, earnings were higher than the previous fiscal year. Note: Hitachi GST has a December 31 fiscal year-end. As a result, fiscal 21 for this company was the period from January 21 to December 21. P Battery Systems Company (Hitachi Maxell, Ltd. and Hitachi Vehicle Energy, Ltd.) Sales declined year on year. Despite firm sales of batteries including prismatic lithium-ion rechargeable and micro batteries at Hitachi Maxell, Ltd., this downturn in sales reflected the drop in such products as optical disks and computer tapes. While cost-cutting measures helped improve profits from computer tapes at Hitachi Maxell, Ltd., returns from the company s prismatic lithium-ion rechargeable batteries and other products deteriorated due to such factors as fluctuations in foreign currency exchange rates. In addition to the aforementioned, the company was confronted by difficulties in component procurement owing to the earthquake. As a result the loss in the battery systems company increased year on year. P Liquid Crystal Displays (Hitachi Displays, Ltd.) Sales decreased year on year on account of such factors as delays in the shipment of products as a result of the earthquake and lower sales of small and medium-sized displays for overseas mobile phones and game consoles. This was also despite the commencement of shipments of medium-sized displays for tablet PCs and robust results in high-resolution products for domestic mobile phones. Despite temporary suspensions in factory operations in the aftermath of the earthquake and losses on the disposal of inventories and other factors, the loss for the period was reduced by the benefits of business structure reform and improvements in the product mix. Hitachi, Ltd. Annual Report

9 Digital Media & Consumer Products Share of 1,2 9% 9% FY29 FY21 48% 46% FY29 FY21 Segment revenue increased 2% year on year to billion (U.S.$11,465 million). While sales of optical disk drive-related products declined due mainly to a sluggish demand and falling prices, this modest increase was largely attributable to an upswing in domestic sales of such products as room air conditioners and refrigerators reflecting the positive flow-on effects of Japan s eco-points program and the recovery in capital expenditures for air-conditioning equipment both in and outside Japan. From a profit perspective, the segment returned to the black. Segment profit totaled 14.9 billion (U.S.$18 million), a turnaround of 22.1 billion compared with the previous fiscal year. Despite the effects of the earthquake, this improvement reflected the fruits of past business structure reforms in flat-panel TV operations as well as higher sales of air conditioning equipment and room air conditioners. M Fiscal 21 Topics P Hitachi Appliances, Inc. merged with Hitachi Lighting, Ltd., the lighting business company, in October Segment profit (loss)/ Percentage of revenues yen FY21 FY29 FY28 FY , ,258 1,13,86 $11,465 Segment profit (loss)... 14,949 (7,26) (11,548) 18 (Property, plant and equipment)... 14,729 14,728 27, (Property, plant and equipment)... 2,373 23,83 36, R&D expenditures... 23,87 18,775 22, Assets , ,591 57,935 5,234 Number of employees... 26,253 26,491 29,649 P Digital Media Sales fell year on year. With respect to flat-panel TVs, Japan s ecopoints program provided considerable support ensuring performance on a par with the previous fiscal year, despite earthquake caused delays in shipments. The slump in demand and drop in prices of optical disk drives led to the decline in overall sales. The loss in Digital Media significantly narrowed from the previous fiscal year. In addition to the decline in sales and falling prices of optical disk drive-related products, lower shipments of flat-panel TVs had negative impact on earnings. The substantial improvement, on the other hand, reflected the success of past business structure reforms in flat-panel TV operations. P Comprehensive Air Conditioning and Home Appliances Sales increased compared with the previous fiscal year. In Japan, air conditioning equipment performed well on the back of a recovery in capital expenditures. At the same time, sales of room air conditioners and home appliances were robust due mainly to the extreme heat during summer and the positive flow-on effects of the ecopoints program. Overseas, home appliances and air conditioners also performed strongly. Earnings rose substantially year on year. This was despite the impact of delays in product shipments and the incidence of fixed asset-related expenses as a result of the earthquake. In Japan, profits increased owing to improved earnings in air conditioning equipment and room air conditioners. Overseas, home appliance and room air conditioner profits declined due mainly to fluctuations in foreign currency exchange rates and the sharp rise in material prices. This was more than offset by increased earnings in air conditioning equipment, which led to an upswing in overseas earnings year on year. 32 Hitachi, Ltd. Annual Report 211

10 Financial Services Share of 4% 4% FY29 FY21 12% 13% FY29 FY21 Segment revenue decreased 11% year on year to billion (U.S.$4,494 million). Despite healthy growth in outsourcing and other businesses that generate revenues from commission services, this downturn was largely attributable to the recording to sales of large cancellation penalty receipts on leasing operations in the previous fiscal year. Notwithstanding the impact of the earthquake, segment profit improved 67% to 14.2 billion (U.S.$172 million). This was due to successful efforts to strengthen credit exposure management and reduce financing costs in the U.S. and Europe as well as the consolidation of securitization entities based on new accounting standards. M Fiscal 21 Topics P Hitachi Capital Corporation signed a basic agreement to commence talks on a business and capital alliance with Sumitomo Mitsui Auto Service Company, Limited in March 211 with the aim of forming a strategic joint partnership in the auto leasing business yen FY21 FY29 FY28 FY , ,65 41,317 $ 4,494 Segment profit... 14,255 8,518 6, (Property, plant and equipment) ,53 295, ,444 3,44 (Property, plant and equipment)... 58,842 65,224 69, R&D expenditures Assets... 1,937,643 1,789,49 1,914,863 23,345 Number of employees... 3,22 3,429 3,539 P Hitachi Capital Corporation Commission income businesses including outsourcing services performed well. Taking into consideration the absence of large cancellation receipts on leasing operations recorded to sales in the previous fiscal year, revenues declined year on year. While buffeted by the impact of non-recoverable assets and other factors as a result of the earthquake, earnings rose substantially compared with the previous fiscal year. This largely reflected successful efforts to strengthen credit exposure management and reduce financing costs in the U.S. and Europe, and the recording of earnings related to receivables that were recorded as gains on sales up through to March 31, 21 in line with the consolidation of securitization entities based on new U.S. GAAP accounting standards. Hitachi, Ltd. Annual Report

11 Others Share of 1, 8 8% 7% FY29 FY21 11% 13% FY29 FY21 Segment revenues were essentially unchanged from the previous fiscal year amounting to billion (U.S.$9,247 million) as higher revenues at Hitachi Transport System, Ltd. on healthy growth in third-party logistics solutions were mainly offset by the impact of the transfer in June 21 of the Hitachi Group s internal food service business. Despite the impact of the earthquake, segment profit improved 49% year on year to 28.9 billion (U.S.$349 million). This was largely due to higher earnings in line with increased revenues at Hitachi Transport System, Ltd. M Fiscal 21 Topics P The Hitachi Group transferred its food services business to Nissin Healthcare Food Service Co., Ltd. in June 21. P In order to bolster its logistics business, Hitachi Transport System made Flyjac Logistics Pvt. Ltd. a consolidated subsidiary in April 21, and subsequently consolidated the Chinese company Dahang International Transportation Co., Ltd., a previous equity-method affiliate, in December 21. The Company also included distribution subsidiaries of DIC Corporation and Homac Corp., a company engaged in home center activities and a consolidated subsidiary of DCM Holdings Co., Ltd., in the company s scope of consolidation in January 211 and February 211, respectively. Furthermore, the Company decided to make Vantec Corporation, which is a logistics company for automotive parts, a consolidated subsidiary from April yen FY21 FY29 FY28 FY , ,665 83,834 $ 9,247 Segment profit... 28,93 19,423 24, (Property, plant and equipment)... 33,926 25,22 37, (Property, plant and equipment)... 27,158 32,84 36, R&D expenditures... 4,912 4,692 4,58 59 Assets... 1,344,356 1,374,882 1,612,556 16,197 Number of employees... 27,448 32,538 31,629 P Hitachi Transport System, Ltd. Sales increased year on year. In the domestic logistics business, the company experienced strong growth in new contracts for third-party logistics in such fields as retailing and lifestyle-related areas. Moreover, revenues were up compared with the previous fiscal year due to the inclusion of distribution subsidiaries of DIC Corporation and Homac Corp., a company engaged in home center activities and a consolidated subsidiary of DCM Holdings Co., Ltd., in the company s scope of consolidation. In the global logistics business, the company witnessed an increase in its global third-party logistics solutions operations which encompass contract services of procurement through to sales both in and outside Japan. Results were also buoyed by acquisitions in North America, Europe, China and Asia aimed at expanding the company s global network. Earnings rose substantially compared with the previous fiscal year. Despite a drop in transportation volumes due to the earthquake, this favorable result reflected the increase in revenues, improved transport and operating efficiencies, and other factors including reduced costs. 34 Hitachi, Ltd. Annual Report 211