Results of Operations Net Sales 4 Net Income 4 Industry Segments 5 Geographic Segments 6 Sales by Market 6 Profitability Return on Sales 7 Return on Equity 7 Cost Composition 8 Operating Income to Net Sales 8 Safety Interest Expense 9 Interest Coverage 9 Stockholders Equity to Total Assets 1 Current Ratio 1 Total Debt and Stockholders Equity 11 Debt/Equity Ratio 11 Efficiency Asset Turnover 12 Fixed Asset Turnover 12 Per Share Data Net Income per Share 13 Stockholders Equity per Share 13 Capital Investment and R&D Expenditure Capital Investment 14 Retained Cash Flow and Depreciation 14 R&D Expenditure 15 R&D Expenditure to Net Sales 15 Stock Information Common Stock Price (Tokyo Stock Exchange) 16 PER (Price Earnings Ratio) 16 PBR (Price Book Value Ratio) 17 PCFR (Price Cash Flow Ratio) 17
RESULTS OF OPERATIONS Net Sales Net Income 8, 7, 2 6, 5, 15 4, 1 3, 2, 5 1, Net Sales Net Income 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 5,717 6,41 7,78 7,737 7,766 7,536 7,4 7,592 8,124 8,523 137 186 211 23 128 77 65 114 142 88 RESULTS OF OPERATIONS 4
Industry Segments (Million ) 1995 1996 1997 Sales Information Systems & Electronics 2,688,976 3,25,63 3,289,337 28% 29% 3% Power & Industrial Systems 2,411,117 2,523,58 2,719,775 25% 25% 25% Consumer Products 923,534 952,751 99,895 1% 9% 9% Materials 1,3,282 1,372,263 1,413,174 14% 13% 13% Services & Other 2,225,161 2,472,154 2,424,41 23% 24% 23% Subtotal 9,549,7 1,345,739 1,837,591 1% 1% 1% Eliminations (1,956,84%) (2,221,929%) (2,314,491) Total 7,592,266 8,123,81 8,523,1 Operating Income Information Systems & Electronics 143,342 184,849 13,682 (Loss) 43% 47% 31% Power & Industrial Systems 117,711 114,8 116,67 35% 29% 35% Consumer Products (27,589%) (14,786%) 7,372 (8%) (4%) 2% Materials 62,461 75,193 63,532 19% 19% 19% Services & Other 36,54 36,974 41,1 11% 9% 13% Subtotal 331,979 396,31 331,753 1% 1% 1% Eliminations & Corporate items (27,389%) (63,728%) (34,587) Total 34,59 332,582 297,166 Notes: 1. Net sales by segment include intersegment transactions. 2. This information is disclosed in accordance with a ministerial ordinance under the Securities and Exchange Law of Japan. 3. From fiscal 1995, the Ministry of Finance is requiring the disclosure of Eliminations & Corporate items for Operating Income as part of the Industry Segments and Geographic Segments. Figures for the previous fiscal years have been adjusted to reflect the change. RESULTS OF OPERATIONS 5
Geographic Segments (Million ) 1995 1996 1997 Sales Japan Outside customer sales 6,349,766 6,656,251 6,948,21 76% 73% 72% Intersegment transactions 698,782 841,413 893,496 8% 9% 9% Total 7,48,548 7,497,664 7,841,517 84% 82% 81% Other Areas Outside customer sales 1,242,5 1,467,559 1,575,79 15% 16% 16% Intersegment transactions 133,83 212,974 255,751 1% 2% 3% Total 1,376,33 1,68,533 1,83,83 16% 18% 19% Subtotal 8,424,851 9,178,197 9,672,347 1% 1% 1% Eliminations (832,585%) (1,54,387%) (1,149,247%) Total 7,592,266 8,123,81 8,523,1 Operating Income Japan 32,941 369,848 318,998 88% 9% 94% Other Areas 42,228 41,615 21,597 12% 1% 6% Subtotal 345,169 411,463 34,595 1% 1% 1% Eliminations & Corporate items (4,579%) (78,881%) (43,429%) Total 34,59 332,582 297,166 Sales by Market (Million ) 1995 1996 1997 Domestic sales 5,768,963 6,2,922 6,7,552 76% 74% 71% Overseas sales 1,823,33 2,12,888 2,452,548 24% 26% 29% Total 7,592,266 8,123,81 8,523,1 Note: As for Eliminations & Corporate items for Operating Income as part of the Geographic Segments, see note 3 on page 5. RESULTS OF OPERATIONS 6
PROFITABILITY Return on Sales (%) Return on Equity (%) 4 12 3 9 2 6 1 3 Net Income Return on Sales Return on Equity 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 137 186 211 23 128 77 65 114 142 88 (%) 2.4 2.9 3. 3. 1.6 1..9 1.5 1.8 1. (%) 6.8 8.1 8.2 8.2 4.4 2.6 2.2 3.8 4.4 2.7 PROFITABILITY 7
Cost Composition 8, 7, 6, Operating Income Selling, General and Administrative Expenses Cost of Sales Operating Income to Net Sales (%) 8 7 5, 6 4, 5 3, 2, 4 1, 3 2 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Net Sales 5,717 6,41 7,78 7,737 7,766 7,536 7,4 7,592 8,124 8,523 Cost of Sales 4,123 4,552 5,24 5,417 5,489 5,438 5,312 5,394 5,829 6,251 Cost of Sales to Net Sales (%) 72.1 71.1 71. 7. 7.7 72.2 71.8 71. 71.7 73.3 Selling, General and Administrative (SG&A) Expenses 1,275 1,416 1,553 1,813 1,925 1,876 1,875 1,894 1,962 1,975 SG&A Expenses to Net Sales (%) 22.3 22.1 21.9 23.4 24.8 24.9 25.3 25. 24.2 23.2 Operating Income 319 433 51 56 352 222 213 35 333 297 Operating Income to Net Sales (%) 5.6 6.8 7.1 6.5 4.5 2.9 2.9 4. 4.1 3.5 Note: Figures may not agree due to rounding. PROFITABILITY 8
SAFETY Interest Expense Interest Coverage (Times) 8 12 7 9 6 6 5 4 3 3 2 Interest Expense Interest Coverage Note: Interest coverage= 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 73 71 97 13 14 114 78 75 63 61 (Times) 6.24 7.87 6.46 5.33 3.67 3.6 3.92 4.78 6.5 5.34 Income before income taxes + Interest expense Interest expense SAFETY 9
Stockholders Equity to Total Assets (%) Current Ratio (%) 32.5 16 15 3. 14 27.5 13 25. 12 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Current Assets 4,33 4,87 5,391 5,751 5,85 5,675 5,796 5,976 6,442 6,348 Current Liabilities 2,851 3,184 3,315 3,694 3,742 3,555 3,576 3,69 3,965 3,936 Stockholders Equity 2,19 2,282 2,561 2,811 2,918 2,94 2,959 3,33 3,2 3,284 Stockholders Equity to Total Assets (%) 32.6 32.9 32.8 33. 32.9 33.6 33.1 33.2 32.6 33. Current Ratio (%) 15.9 153. 162.6 155.7 156.3 159.6 162.1 162. 162.5 161.3 SAFETY 1
Total Debt and Stockholders Equity Debt / Equity Ratio (Times) 3, Stockholders Equity 2,5.8 2, Total Debt (Long-term and Short-term).7 1,5 1,.6 5.5 Short-term Debt Long-term Debt Total Debt Stockholders Equity Debt/Equity Ratio 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 848 864 828 915 1,2 928 92 97 1,33 1,181 468 521 887 891 976 99 1,25 1,12 1,23 1,245 1,316 1,385 1,715 1,86 1,996 1,918 1,927 1,919 2,237 2,426 2,19 2,282 2,561 2,811 2,918 2,94 2,959 3,33 3,2 3,284 (Times).65.61.67.64.68.65.65.63.7.74 SAFETY 11
EFFICIENCY Asset Turnover (Times) Fixed Asset Turnover (Times) 5..95 4.5.9 4..85 3.5.8 3. 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Total Assets 6,188 6,938 7,85 8,526 8,858 8,748 8,931 9,142 9,83 9,965 Fixed Assets 1,354 1,474 1,79 1,986 2,169 2,24 2,293 2,311 2,422 2,559 Asset Turnover (Times).92.92.91.91.88.86.83.83.83.86 Fixed Asset Turnover (Times) 4.22 4.34 4.14 3.9 3.58 3.42 3.23 3.29 3.35 3.33 Note: Fixed Assets represents the net carrying amounts of property, plant and equipment. EFFICIENCY 12
PER SHARE DATA Net Income per Share ( ) Stockholders Equity per Share ( ) 6 8 5 4 6 3 4 2 2 1 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Net Income per Share ( ) 42.3 56.14 61.71 65.96 36.91 22.68 19.27 33.2 4.9 25.55 Stockholders Equity per Share ( ) 69.89 756.6 833.37 858.71 89.64 897.42 91.71 922.73 961.23 983.85 Cash Dividends per Share ( ) 9. 9. 11. 11. 11. 11. 11. 11. 11. 11. Notes: 1. Net income per share is based on common stock and common stock equivalents of Hitachi, Ltd. Stockholders equity per share is based on common stock of Hitachi, Ltd. 2. Figures for net income per share are after retroactive adjustment for the free distribution. See note 4 on page 1. PER SHARE DATA 13
CAPITAL INVESTMENT AND R&D EXPENDITURE Capital Investment 7 Retained Cash Flow and Depreciation 7 6 6 Retained Cash Flow 5 5 Depreciation 4 4 3 3 2 2 1 1 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Capital Investment (Property, plant and equipment) 371 532 658 781 757 615 662 655 723 74 Retained Cash Flow 47 545 68 663 69 529 53 64 687 662 Depreciation (Property, plant and equipment) 346 366 47 448 54 48 496 521 557 544 Note: Retained cash flow = Net income + Depreciation + Minority interests - Dividends paid - Gain on equity method shareholdings + Dividend received from equity method shareholdings CAPITAL INVESTMENT AND R&D EXPENDITURE 14
R&D Expenditure R&D Expenditure to Net Sales (%) 75 6.5 6 6. 45 5.5 3 5. 15 4.5 4. 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Net Sales 5,717 6,41 7,78 7,737 7,766 7,536 7,4 7,592 8,124 8,523 R&D Expenditure 332 374 429 491 52 51 484 491 494 54 R&D Expenditure to Net Sales (%) 5.8 5.83 6.7 6.34 6.69 6.65 6.54 6.47 6.8 5.91 CAPITAL INVESTMENT AND R&D EXPENDITURE 15
STOCK INFORMATION Common Stock Price (Tokyo Stock Exchange) ( ) ( ) PER (Price Earnings Ratio) (Times) 3,5 35, 4 3, 3, 2,5 Adjusted Average for 225 Stocks at Fiscal Year-End (right scale) 25, 3 2, 2, 1,5 15, 2 1, 1, 5 Hitachi, Ltd. s Common Stock Price at Fiscal Year-End (left scale) 5, 1 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Price Range 1,67* ( ) High 1,61 2,4 1,74 1,72 1,27 873 979 1,12 1,14 1,18 1,49* ( ) Low 844 1,35 1,25 1,2 75 67 729 799 781 961 Price at Fiscal Year-End ( ) 1,41 1,51 1,59 1,23 785 848 93 9 1,4 1,1 Net Income per Share ( ) 42.3 56.14 61.71 65.96 36.91 22.68 19.27 33.2 4.9 25.55 PER (Times) 33.5 26.9 25.8 18.6 21.3 37.4 48.3 27.3 25.9 43.1 Notes: 1. Figures marked * are the highest and lowest prices during the ex rights period accompanying the Company s free distribution of new shares. 2. Common stock prices are those of Hitachi, Ltd. 3. Net income per share is based on common stock and common stock equivalents of Hitachi, Ltd. STOCK INFORMATION 16
PBR (Price Book Value Ratio) (Times) PCFR (Price Cash Flow Ratio) (Times) 2. 8 1.5 6 1. 4.5 2. 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 Stockholders Equity per Share ( ) 69.9 756.1 833.4 858.7 89.6 897.4 91.7 922.7 961.2 983.8 Retained Cash Flow per Share ( ) 141.4 162.1 173. 187.6 172.4 149.5 149.9 17.9 192.6 186.5 Price at Fiscal Year-End ( ) 1,41 1,51 1,59 1,23 785 848 93 9 1,4 1,1 PBR (Times) 2. 2. 1.9 1.4.9.9 1. 1. 1.1 1.1 PCFR (Times) 1. 9.3 9.2 6.6 4.6 5.7 6.2 5.3 5.4 5.9 Note: Stockholders equity per share is based on common stock of Hitachi, Ltd. Retained cash flow per share is based on common stock and common stock equivalents of Hitachi, Ltd. STOCK INFORMATION 17