Product Excellence and Global Expansion - Hitachi Koki Co., Ltd.

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Consolidated Statements of Cash Flows Hitachi Koki Co., Ltd. and consolidated subsidiaries Years ended March 31, 2010, 2009 and 2008 Thousands of Millions of yen U.S. dollars (Note 1) 2010 2009 2008 2010 Cash flows from operating activities: Income before income taxes and minority interests .... Depreciation .............................................................. Increase (Decrease) in employees’ severance and retirement benefits ......................... Interest and dividend income ................................... Interest expense ....................................................... Gain on sale of property, plant and equipment ......... Special retirement benefits ....................................... Decrease (Increase) in notes and accounts receivable, trade ...................................... Decrease (Increase) in inventories ............................ Increase (Decrease) in notes and accounts payable, trade .......................................... Increase (Decrease) in accounts payable others ....... Increase (Decrease) in accrued expenses ................ Others, net ................................................................ ¥ 6,040 3,919 201 (208) 364 (657) — (3,913) 7,552 (2,678) (224) 428 707 11,530 ¥ 9,191 4,632 (1,216) (479) 768 (947) 2,032 3,433 (16,324) 2,361 (107) (125) (844) 2,376 ¥22,841 4,774 (561) (441) 635 — — (9,453) (6,851) 2,698 801 553 (723) 14,272 $ 64,918 42,122 2,160 (2,236) 3,912 (7,061) — (42,057) 81,169 (28,783) (2,408) 4,600 7,599 123,925 Interest and dividend received .................................. Interest paid .............................................................. Special retirement benefits paid ............................... Income taxes refunded ............................................. Income taxes paid ..................................................... Net cash (used in) provided by operating activities ..... 208 (367) (391) 1,987 (1,981) 10,986 479 (779) (1,645) — (10,529) (10,098) 440 (621) — — (6,999) 7,092 2,236 (3,945) (4,202) 21,356 (21,292) 118,078 Cash flows from investing activities: Purchase of investment securities ............................ Proceeds from sale of investment securities ........... Payment for acquisition of shares of a company, which became a new consolidated subsidiary (Note 2)... Purchase of property, plant and equipment .............. Proceeds from sale of property, plant and equipment ...... Purchase of intangible assets ................................... Purchase of business ................................................ Others, net ................................................................ Net cash used in investing activities ..................... (608) 446 — (1,789) 787 (291) — 127 (1,327) (122) 732 — (2,670) 1,021 (836) (172) 132 (1,916) (379) — (225) (4,413) 1,118 (778) (2,038) 104 (6,612) (6,535) 4,794 — (19,228) 8,459 (3,128) — 1,365 (14,263) Cash flows from financing activities: Net increase (decrease) in short-term bank loans .... Payment for acquisition of treasury stock ................. Proceeds from sale of treasury stock ....................... Cash dividends paid .................................................. Others, net ................................................................ Net cash provided by (used in) financing activities .... 1,072 (2) 11 (2,436) 114 (1,239) 7,017 (1,326) 45 (5,073) (64) 599 4,354 (1,558) 129 (4,623) (53) (1,750) 11,522 (21) 118 (26,182) 1,225 (13,317) Effect of changes in exchange rate on cash and cash equivalents ... Net increase (decrease) in cash and cash equivalents ..... Cash and cash equivalents at beginning of year .......... Cash and cash equivalents at end of year (Note 2) ...... 12 8,431 16,688 ¥25,120 (1,614) (13,029) 29,718 ¥ 16,688 13 (1,257) 30,975 ¥29,718 129 90,617 179,364 $269,991 See accompanying notes. 18 Hitachi Koki ANNUAL REPORT 2010
Notes to Consolidated Financial Statements Hitachi Koki Co., Ltd. and consolidated subsidiaries Years ended March 31, 2010, 2009 and 2008 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presenting consolidated financial statements The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions) from the consolidated financial statements of Hitachi Koki Co., Ltd. (the “Company”) prepared in accordance with accounting principles generally accepted in Japan and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law (the Securities and Exchange Law for 2007). Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements. Accounting principles generally accepted in Japan are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2010, which was ¥93.04 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange. (b) Principles of consolidation The consolidated financial statements include the accounts of the Company and its significant subsidiaries (50 subsidiaries in 2010, 48 subsidiaries in 2009 and 45 subsidiaries in 2008). All significant intercompany accounts, transactions and unrealized profits are eliminated in consolidation. Goodwill is amortized using the straight-line method over a reasonable period not exceeding 20 years. Investments in an affiliated company (20% to 50% owned) and an unconsolidated overseas subsidiary are stated at the underlying equity value, and the appropriate portion of the earnings of such companies is included in consolidated income. (Change in accounting policies) Prior to the year ended March 31, 2009, the Company consolidated the financial statements of overseas subsidiaries prepared in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. Effective April 1, 2008, the Company adopted Practical Issues Task Force No. 18 “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”) issued by the Accounting Standards Board of Japan on May 17, 2006. The effects on net income for 2009 of adopting PITF No. 18 were immaterial. However, sales and selling, general and administrative expenses each decreased by ¥1,110 million compared with what would have been reported under the previous accounting policies. (c) Foreign currency translation Receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. Resulting exchange gains or losses are credited or charged to income as incurred. The assets and liabilities of foreign currency financial statements are translated into Japanese yen at current rates of exchange at the balance sheet date. Common stock, capital surplus and retained earnings are translated at the historical exchange rates. Income and expenses are translated at average rates of exchange in effect during the year. Translation adjustments are debited or credited to the foreign currency translation adjustments account and minority interests, which are reported in net assets in the accompanying consolidated balance sheets. (d) Cash and cash equivalents For the purpose of the consolidated statements of cash flows, the Company and its consolidated subsidiaries classify cash on hand, readily available bank deposits and short-term highly liquid investments with low risk of value fluctuation with maturities not exceeding three months at the time of purchase as cash and cash equivalents. (e) Marketable securities and investment securities Under the Japanese accounting standards, companies are required to examine the intent of holding each security and classify those securities as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter, “held-tomaturity debt securities”), (c) equity securities issued by nonconsolidated subsidiaries and affiliated companies, and (d) for all other securities that are not classified in any of the above categories (hereafter, “available-forsale securities”). Equity securities issued by subsidiaries and affiliated companies which are neither consolidated nor accounted for by the equity method are stated at moving-average cost. Available-for-sale securities with fair market value are stated at fair market value. Unrealized gains and unrealized losses on these securities are reported, net of applicable income taxes, as a separate component of the net assets. Realized gain on sale of such securities is computed using the moving-average cost. Securities with no fair market values are stated principally at the moving-average cost. The Company and its consolidated subsidiaries had no trading securities or held-to-maturity debt securities. If the market value of equity securities issued by subsidiaries and affiliated companies neither consolidated nor accounted for using the equity method, and available-for-sale securities, declines significantly, such securities are stated at fair market value and the difference between fair market value and the carrying amount is recognized as a loss in the period of the decline. Hitachi Koki ANNUAL REPORT 2010 19
Page 1 and 2: ANNUAL REPORT 2 0 1 0 For the year
Page 3 and 4: Contents Financial Highlights......
Page 5 and 6: future business plans, business res
Page 7 and 8: Review of Operations The Hitachi Ko
Page 9 and 10: Research and Development The centra
Page 11 and 12: Management Team (As of June 25, 201
Page 13 and 14: Policy on Returns to Shareholders a
Page 15 and 16: Management’s Discussion and Analy
Page 17 and 18: Thousands of Millions of yen U.S. d
Page 19: Consolidated Statements of Changes
Page 23 and 24: Notes to Consolidated Financial Sta
Page 33 and 34: Independent Auditors’ Report Hita
Page 35 and 36: Manufacturing Company Sales Branche
Page 37 and 38: 30,000,000 Investor Information (As

Product Excellence and Global Expansion - Hitachi Koki Co., Ltd.

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