UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                                 

Commission file number: 1-8320

KABUSHIKI KAISHA HITACHI SEISAKUSHO

(Exact name of Registrant as specified in its charter)

Hitachi, Ltd.

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

6-6, Marunouchi 1-chome, Chiyoda-ku,

Tokyo 100-8280, Japan

(Address of principal executive offices)

Legal Division; +81-3-3258-1111; +81-3-4564-2148; 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8280, Japan

(Name, Telephone, Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American depositary shares, or ADSs, each of which represents ten shares of common stock	New York Stock Exchange
Common stock without par value	New York Stock Exchange*

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of March 31, 2009, the number of outstanding shares of common stock was 3,324,152,092**.

* Not for trading, but only for technical purposes in connection with the listing of the ADSs.

** The number of outstanding shares of common stock excludes the number of shares of common stock held by Hitachi, Ltd. and its subsidiary.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes                 ¨ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

¨ Yes                 x No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes                 ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

¨ Yes                 ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

x U.S. GAAP

¨ International Financial Reporting Standards as issued by the International Accounting Standards Board

¨ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

¨ Item 17           ¨ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes                 x No

CAUTIONARY STATEMENT

Certain statements found in this annual report may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements” reflect management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “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 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 annual report.

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:

• economic conditions, including consumer spending and plant and equipment investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the major industrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;

• fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment, the Electronic Devices segment and the Digital Media & Consumer Products segment;

• increased commoditization of information technology products and digital media related products and intensifying price competition for such products, particularly in the Information & Telecommunication Systems segment, the Electronic Devices segment and the 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 basis and to achieve market acceptance for such products;

• rapid technological innovation, particularly in the Information & Telecommunication Systems segment, the Electronic Devices segment and the Digital Media & Consumer Products segment;

• exchange rate fluctuation for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;

• fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins;

• uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rate and/or price of raw materials;

• general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct or indirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;

• uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;

• uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties;

• the possibility of incurring 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; 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 elsewhere in this annual report and in other materials published by Hitachi.

TABLE OF CONTENTS

	Page
CERTAIN DEFINED TERMS, CONVENTIONS AND PRESENTATION OF FINANCIAL INFORMATION	ii
PART I	1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3. KEY INFORMATION	1
ITEM 4. INFORMATION ON THE COMPANY	8
ITEM 4A. UNRESOLVED STAFF COMMENTS	21
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	21
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	47
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	58
ITEM 8. FINANCIAL INFORMATION	60
ITEM 9. THE OFFER AND LISTING	62
ITEM 10. ADDITIONAL INFORMATION	64
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	72
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	78
PART II	79
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	79
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	79
ITEM 15. CONTROLS AND PROCEDURES	79
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT	80
ITEM 16B. CODE OF ETHICS	80
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES	81
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	81
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	82
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	82
ITEM 16G. CORPORATE GOVERNANCE	82
PART III	84
ITEM 17. FINANCIAL STATEMENTS	84
ITEM 18. FINANCIAL STATEMENTS	84
ITEM 19. EXHIBITS	84
SIGNATURES	85
EXHIBIT INDEX	86

i

CERTAIN DEFINED TERMS, CONVENTIONS AND

PRESENTATION OF FINANCIAL INFORMATION

Unless the context indicates otherwise, the term “Company” refers to Hitachi, Ltd. and the term “Hitachi” refers to the Company and its consolidated subsidiaries.

The Company’s fiscal year ends on March 31. The fiscal year ended March 31, 2009 is sometimes referred to in this annual report as “fiscal 2008,” and other fiscal years may be referred to in a corresponding manner. References to years not specified as fiscal years are to calendar years.

The consolidated financial statements of Hitachi, except for segment information, have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Unless otherwise stated or the context otherwise requires, all amounts in such financial statements are expressed in Japanese yen.

References in this annual report to “yen” or “¥” are to Japanese yen, references to “US$,” “$” or “U.S. dollars” are to United States dollars and references to ST£ are to United Kingdom sterling pounds.

References in this annual report to the “Financial Instruments and Exchange Law” or the “Financial Instruments and Exchange Law of Japan” are to the Financial Instruments and Exchange Law of Japan which became effective as of September 30, 2007 and other laws and regulations amending and/or supplementing the Financial Instruments and Exchange Law of Japan.

References in this annual report to the “Securities and Exchange Law” or the “Securities and Exchange Law of Japan” are to the former Securities and Exchange Law of Japan and other laws and regulations amending and/or supplementing the former Securities and Exchange Law of Japan which have been revised or abolished when the Financial Instruments and Exchange Law took effect.

References in this annual report to the “Companies Act” or the “Japanese Companies Act” are to the Japanese Companies Act and other laws and regulations amending and/or supplementing the Japanese Companies Act.

ii

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following selected consolidated financial information has been derived from Hitachi’s consolidated financial statements as of each of the dates and for each of the periods indicated below. This information should be read in conjunction with and is qualified in its entirety by reference to Hitachi’s consolidated financial statements, including the notes thereto, included in this annual report. Translation of dividend amounts into U.S. dollars is based on the noon buying rates for Japanese yen in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York at each respective payment date.

	Year ended March 31,
	2005		2006		2007		2008		2009
	(Millions of yen, except per share amounts and number of shares issued)
Total revenues	9,027,043		9,464,801		10,247,903		11,226,735		10,000,369
Income (loss) before income taxes and minority interests	264,506		274,864		202,338		324,782		(289,871	)
Net income (loss)	51,496		37,320		(32,799	)	(58,125	)	(787,337	)
Per common share:
Net income (loss)
Basic	15.53		11.20		(9.84	)	(17.48	)	(236.86	)
Diluted	15.15		10.84		(9.87	)	(17.77	)	(236.87	)
Cash dividends declared	11.00		11.00		6.00		6.00		3.00
	($0.105	)	($0.094	)	($0.051	)	($0.057	)	($0.031	)
Cash and cash equivalents	708,715		658,255		617,866		560,960		807,926
Short-term investments	146,568		162,756		33,986		61,289		8,654
Total assets	9,736,247		10,021,195		10,644,259		10,530,847		9,403,709
Short-term debt and current portion of long-term debt	1,183,474		1,000,555		1,197,607		1,109,899		1,530,457
Long-term debt	1,319,032		1,418,489		1,489,843		1,421,607		1,289,652
Minority interests	921,052		1,036,807		1,073,749		1,142,508		1,129,401
Stockholders’ equity	2,307,831		2,507,773		2,442,797		2,170,612		1,049,951
Common stock	282,033		282,033		282,033		282,033		282,033
Number of shares issued (thousand shares)	3,368,126		3,368,126		3,368,126		3,368,126		3,368,126
Number of shares outstanding (thousand shares)	3,331,577		3,330,845		3,325,160		3,324,398		3,324,152

Note: See note 2(i) to Hitachi’s consolidated financial statements for information regarding accounting change.

1

The following table provides the noon buying rates for Japanese yen in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York. The average rate means the average of the exchange rates on the last day of each month during a fiscal year.

	Yen exchange rates per U.S. dollar
Year ended March 31, except month data	Average		High	Low
2005	¥	107.28	114.30	102.26
2006		113.67	120.93	104.41
2007		116.55	121.81	110.07
2008		113.61	124.09	96.88
2009		100.85	110.48	87.80
January 2009		—	94.20	87.80
February 2009		—	98.55	89.09
March 2009		—	99.34	93.85
April 2009		—	100.71	96.49
May 2009		—	99.24	94.45
June 2009		—	98.56	95.19
July 2009 (through July 17)		—	96.41	92.33

On July 17, 2009, the yen exchange rate per U.S. dollar was 94.08 yen per $1.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Hitachi operates in a broad range of business fields, conducts business on a global scale, and utilizes sophisticated specialized technologies to carry on its operations. It is therefore exposed to risks attributable to the economic environment, risks inherent in individual industrial sectors and business lines, and risks related to operations. Investments in Hitachi’s securities also involve risks.

Although certain risks that may affect Hitachi’s businesses are listed in this section, the list is not exhaustive. Hitachi’s businesses may in the future also be affected by other risks that are currently unknown or that are not currently considered as significant as those described in this section. The items set forth in this section contain forward-looking statements as described in the “Cautionary Statement” in this annual report.

Certain of the risk factors that may affect Hitachi are set out below.

Risks Related to Economic Environment

Economic recession

During fiscal 2008, the global economy saw the U.S. sub-prime loan problem escalate into a worldwide financial crisis, triggered by the collapse of a major U.S. investment bank in September 2008. The turmoil in the financial markets then spread to the world economy as a whole, causing rapid economic downturns in most industrialized countries. Japan, in particular, witnessed a rapid economic downturn due to a decline in exports and a corresponding decline in private-sector investment, as well as a fall in consumer demand. The Japanese economy shrank by 3.8 percent, or an annualized 14.2 percent, in the quarter ended March 31, 2009.

2

Hitachi’s revenues declined in all segments over fiscal 2008, but especially in the Power & Industrial Systems segment, the Digital Media & Consumer Products segment and the High Functional Materials & Components segment, in tandem with rapidly falling demand for automobiles, semiconductors, industrial equipment and other products. The deteriorating market and economic conditions which led to this fall in demand, including declines in real estate and equity values, rising worldwide unemployment, tightened credit markets, depressed consumer confidence and weak housing markets, are not likely to improve significantly during fiscal 2009 and may continue past fiscal 2009 and may get worse. On a segment-by-segment basis, Hitachi expects the following impact:

• Information & Telecommunication Systems. Domestic businesses and financial institutions that purchase computer systems and systems integration services from Hitachi have been affected by the economic downturn, and may seek to control costs in part by canceling or deferring investment in information technology systems, with consequent adverse impact on sales of Hitachi’s products and services. The economic conditions have already affected Hitachi’s hard disk drive (“HDD”) volumes, and may continue. Industry consolidation may also, in the near term, lead to more robust competition from other HDD makers.

• Electronic Devices. Sales of semiconductor manufacturing equipment have been adversely affected by reduced capital spending by manufacturers in the semiconductor industry. Semiconductor manufacturers may continue to restrain capital spending in fiscal 2009, with adverse impact on sales of Hitachi’s products.

• Power & Industrial Systems. Sales of automotive equipment have been severely affected by the worldwide collapse in demand for automobiles. Sales of construction machinery have also been severely affected by the worldwide decline in demand for residential and private-sector investment. These trends may not improve or may even worsen in fiscal 2009, with adverse impact on sales of Hitachi’s automotive equipment and construction machinery.

• Digital Media & Consumer Products. Sales are depressed due to restrained consumer spending in most markets. High-end TV models, which Hitachi focuses on, are experiencing declines in both volume and price due to restrained consumer spending and product commoditization. The restrained consumer spending may continue or even worsen, with adverse impact on sales of Hitachi’s consumer products such as flat-panel TVs. Sales of optical disk drives have been adversely affected by the worldwide economic downturn. The reduced demand for optical disk drives may continue in fiscal 2009, with adverse impact on sales of Hitachi’s products.

• High Functional Materials & Components. Sales, particularly of semiconductor-related materials and automotive-related components, have been depressed due to reduced production volume by manufacturers in the semiconductor and automotive industries, and such production volume may be lower yet in fiscal 2009, with adverse impact on sales of Hitachi’s products.

• Logistics, Services & Others. Sales, particularly in overseas sales subsidiaries, have been depressed due to an overall reduced level of economic activity. Such economic downturn may continue in fiscal 2009, with adverse impact on sales by overseas sales subsidiaries and on sales in the logistics business.

• Financial Services. Revenues, particularly in the leasing business for industrial equipment have been depressed due to reduced levels of capital spending for these services, and the reduced capital spending may continue in fiscal 2009, with adverse impact on sales in the leasing business.

These downturns have been characterized by reduced product demand, manufacturing overcapacity and resulting impairment losses on long-lived assets, and lower average selling prices. If adverse economic conditions continue, Hitachi’s revenues may decrease as mentioned above, with adverse impact on its profitability. In addition, Hitachi may in the current and future periods be required to record additional impairment losses on its long-lived assets, including facilities and equipment, as well as intangible assets, which would increase its expenses. Hitachi could be required to write off inventory, which would have a negative impact on its gross margin. Factory-planning decisions may shorten the useful lives of long-lived assets, including facilities and equipment, and cause Hitachi to accelerate depreciation. In addition, Hitachi may take restructuring measures in addition to those taken in recent periods, including reorganizing production bases and reducing its workforce, to reduce fixed costs to respond to reduced demand levels, which would involve associated expenses.

Marketable securities risks

Hitachi owns marketable securities that are exposed to stock market risks. Declines in stock market prices may require Hitachi to write down equity securities that it holds, which may have an adverse effect on Hitachi’s financial condition and results of operations.

3

Access to liquidity and long-term financing

Hitachi’s primary sources of funds are cash flows from operations, borrowings from banks and other institutional lenders, and funding from the capital markets, such as offerings of commercial paper and other debt securities. Hitachi needs liquid funds to pay operating expenses, interest on its debt and dividends on its capital stock. Hitachi believes its cash flows from operations, borrowings from banks and other institutional lenders, and funding from the capital markets can provide sufficient funding for its operations and other liquidity needs.

However, the global economic recession is adversely affecting Hitachi’s cash flows from operations, business results and financial condition, which has had an adverse effect on Hitachi’s credit ratings. Moody’s downgraded Hitachi’s long-term credit rating from A1 to A2 in February 2009, and downgraded Hitachi’s long-term and short-term credit ratings from A2 to A3 and from P-1 to P-2, respectively, in May 2009. In June 2009, S&P downgraded Hitachi’s long-term credit rating from A- to BBB+, and R&I downgraded Hitachi’s long-term and short-term credit ratings from AA- to A+ and from a-1+ to a-1, respectively. Past and potential future rating downgrades, in conjunction with uncertainty as to the stability of the financial markets, may adversely affect Hitachi’s ability to obtain additional financing on favorable terms. Hitachi may need to increase its reliance on external sources of funding. An increased reliance on debt instruments may further adversely affect Hitachi’s credit ratings, which might further affect Hitachi’s ability to successfully obtain additional financing on favorable terms.

Furthermore, failure of one or more of Hitachi’s major lenders, a decision by one or more of them to stop lending to Hitachi or instability in the capital markets could have an adverse impact on Hitachi’s access to funding.

Currency exchange rate fluctuations

Since Hitachi conducts business in many foreign countries, the portion of its assets and liabilities that are denominated in various currencies is exposed to risks from fluctuations in foreign currency exchange rates. In addition, Hitachi exports products and imports raw materials in local currencies, principally the U.S. dollar and the euro. Therefore, fluctuations in foreign currency exchange rates affect Hitachi’s financial results, which are reported in Japanese yen. A strong yen, for example, reduces the price competitiveness of products exported to foreign markets and diminishes profit by decreasing revenues. While Hitachi takes measures to reduce the risks from fluctuations in foreign currency exchange rates, there can be no assurance that such measures will succeed.

Risks Related to Industrial Sectors and Business Lines

Intense competition

The industrial sectors and business lines in which Hitachi is engaged are experiencing increasingly intense competition. Hitachi competes with diverse competitors ranging from huge global corporations to specialized companies. Competitors are increasingly manufacturing products, including sophisticated electronic products, in low-cost jurisdictions. Low cost manufacturing and the globalization of the world markets have accelerated the commoditization of certain products, which has resulted in increasingly intense price competition for many of Hitachi’s products. Products which are facing intense price competition or decreases in prices include computer-related products, such as HDDs, disk array subsystems and optical disk drives, semiconductors, liquid crystal displays (“LCDs”), digital media products such as flat-panel TVs and home appliances. To succeed in this competitive environment, Hitachi believes that its products and services must be competitive in terms of price, engineering sophistication, quality and brand value and that such products and services must be introduced to the markets in a timely manner. Hitachi cannot be certain that the products or services that it offers will be competitive, and should such products or services fail to be competitive, Hitachi’s business results may be negatively affected.

Rapid technological innovation

New technologies are rapidly emerging in the segments in which Hitachi does business, with the pace of technological innovation being especially notable in the fields of information systems, electronics and digital media. The development of new and advanced technologies; the continuous, timely and cost-effective incorporation of such technologies into products and services; and the effective marketing of such products and services are indispensable to remaining competitive. While introducing such products and services requires a significant commitment to research and development, there can be no assurance that Hitachi’s research and development will be successful. Should Hitachi fail in its endeavors to develop and incorporate such advanced technologies into products and services, or achieve market acceptance for such products and services, the results of operations of related Hitachi businesses may be negatively affected.

4

Material and component procurement

Hitachi’s manufacturing operations rely on third parties for supplies of materials, parts, components and services of adequate quality and quantity and delivered in a timely manner. External suppliers may have other customers and may not have sufficient capacity to meet all of the needs of such customers during periods of excess demand. Shortages of materials, parts, components and services may cause a sharp rise in their prices. Prices of certain raw materials, parts and components that Hitachi purchases, such as petroleum products, copper, aluminum and semiconductor memory chips, are extremely volatile. Increases in the price of petroleum and other materials, such as copper, steel and synthetic resins, can increase Hitachi’s production costs and may adversely affect its results of operations. Conversely, decreases in commodity prices can result in write-downs of inventory. Although, in general, Hitachi maintains multiple sources of supply and works closely with its suppliers to avoid supply-related problems, such problems including shortages and delays may occur, which could materially harm Hitachi’s business.

Supply and demand balance

Oversupply in the markets in which Hitachi competes may lead to declines in sales prices and revenues and adversely affect Hitachi’s performance. In addition, Hitachi may be forced to dispose of excess supply or obsolete equipment or reduce production to adjust to demand, which can cause Hitachi losses. For example, market demand for HDDs has been volatile, and unexpected decline in demand and oversupply could result in a sharp decline in unit prices of HDDs. The semiconductor industry and the LCD industry, in particular, are highly cyclical, and cyclical downturns are characterized by sharp declines in prices and overcapacity. These businesses conducted primarily by subsidiaries and affiliates of the Company may be negatively affected by oversupply in the global markets.

Risks Related to Operations

Dependence on specially skilled personnel

Hitachi believes it can continue to remain competitive only if it can maintain and secure additional people who are highly skilled in the fields of management and technology. However, the number of skilled personnel is limited and the competition for attracting and maintaining such personnel is intense, particularly in the information technology industry. Hitachi cannot ensure that it will be able to successfully attract new or maintain its current skilled personnel.

Acquisitions, joint ventures and strategic alliances

In every operating sector, Hitachi depends to some degree on acquisitions of other companies, joint ventures and strategic alliances with outside partners to design and develop key new technologies and products and to strengthen competitiveness. Such transactions are inherently risky, including because of the difficulties in integrating operations, technologies, products and personnel. Integration issues are complex, time-consuming and expensive and, without proper planning and implementation, could adversely affect Hitachi’s business. The success of alliances may also be adversely affected by decisions or performance of alliance partners that Hitachi cannot control or by adverse business trends. Hitachi may incur significant acquisition, administrative and other costs in connection with these transactions, including costs related to integration or restructuring of acquired businesses. There can be no assurance that these transactions will be beneficial to Hitachi’s business or financial condition. Even assuming these transactions are beneficial, there can be no assurance that Hitachi will be able to successfully integrate acquired businesses or achieve all or any of the initial objectives of these transactions.

Restructuring of business

Hitachi is continuing to restructure its business to improve management efficiency and strengthen competitiveness by increasing its focus on targeted businesses investment, research and development; closing unprofitable operations; divesting its subsidiaries and affiliated companies; reorganizing production bases and sales networks; and reducing its workforce. There can be no assurance that Hitachi’s efforts will be successful. In addition, significant costs have been and may continue to be incurred in connection with these efforts, including costs related to the restructuring of businesses, impairment losses, losses on the disposal of fixed assets and losses related to the sale of securities, that may adversely affect Hitachi’s financial results and condition. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Restructuring” for additional information. Restructuring measures may be constrained or plans may not be implemented in a timely manner due to governmental regulations, employment issues and a lack of demand in the M&A market for businesses Hitachi may seek to sell. Moreover, Hitachi may not achieve all of the objectives of these actions.

5

Business activities in overseas markets

Hitachi seeks to expand its business in overseas markets as part of its business strategy. Through such overseas expansion, Hitachi aims to increase its revenues, reduce its costs and improve its profitability. Hitachi’s overseas business activities may be adversely affected by various factors in foreign countries where it operates, including changes in regulations relating to investments, export, tariffs, antitrust, anti-bribery, consumer and business taxation, intellectual property, foreign trade and exchange controls, and environmental and recycling requirements; differences in commercial and business customs such as contract terms and conditions; labor relations; public sentiment against Japan; and other political and social factors as well as economic trends and currency exchange rate fluctuations. There can be no assurance that Hitachi will be able to achieve all or any of the initial aims of its strategy.

Intellectual property

Hitachi depends in part on intellectual property rights covering its products, product design and manufacturing processes. Hitachi owns or licenses a large number of intellectual property rights and, when Hitachi believes it is necessary or desirable, obtains additional licenses for the use of other parties’ intellectual property rights. If Hitachi fails to protect, maintain or obtain such rights, its performance and ability to compete may be adversely affected. In addition, since intellectual property litigation is costly and unpredictable, Hitachi’s efforts to protect its intellectual property rights or to defend itself against claims relating to intellectual property rights made by others, including employee-inventors, could impose considerable or unexpected expenses on Hitachi.

Litigation and regulatory investigations

Hitachi faces risks of litigation and regulatory investigation and actions in connection with its operations. Lawsuits, including regulatory actions, may seek recovery of very large, indeterminate amounts or limit Hitachi’s operations, and their existence and magnitude may remain unknown for substantial periods of time. A substantial legal liability or regulatory action could have a material adverse effect on Hitachi’s business, results of operations, financial condition, cash flows, reputation and credibility. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings” for additional information.

Product quality and liability

Hitachi increasingly provides products and services utilizing sophisticated and complicated technologies, including but not limited to components of nuclear power stations. Reliance on external suppliers reduces Hitachi’s control over quality assurance. There is a risk that defects may occur in Hitachi’s products and services. The occurrence of such defects could negatively affect Hitachi’s reputation for quality products, expose Hitachi to liability for damages caused by such defects and negatively affect Hitachi’s ability to sell certain products. Even a single significant product defect could materially and adversely affect Hitachi’s results of operations, financial condition and future business prospects. In September 2008, Chubu Electric Power Co., Inc. filed a lawsuit with the Tokyo District Court against the Company seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Hamaoka Nuclear Power Station in the amount of ¥41.8 billion plus interest. In May 2009, Hokuriku Electric Power Company filed a lawsuit with the Tokyo District Court against the Company seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Shika Nuclear Power Station in the amount of ¥20.2 billion plus interest. Although the Company intends to vigorously defend itself in these lawsuits, there can be no assurance that Hitachi will not be liable for any amount claimed. See “Item 4. Information on the Company — B. Business Overview — Description of Industry Segments — Power & Industrial Systems,” “Item 5. Operating and Financial Review and Prospects — D. Trend Information” and “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

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Risks of natural disasters and similar events

Portions of Hitachi’s facilities, including its research and development facilities, manufacturing facilities and the Company’s headquarters, are located in Japan, where seismic activity is frequent. Large earthquakes or other significant natural disasters could have a negative impact on Hitachi’s operating activities, results of operations and financial condition.

Information security

With the increased importance of information systems to Hitachi’s operating activities, disruptions in such information systems, due to computer viruses and other factors, could have a negative impact on Hitachi’s operating activities, results of operations and financial condition. Hitachi holds personal information, confidential information and information relating to the technology, R&D, production, marketing and business operations of Hitachi and its customers and clients in various forms such as information systems, digital storage media or papers. Although Hitachi seeks to protect the confidentiality of such information, any leakage of such information could have a negative impact on Hitachi’s operating activities, results of operations, financial condition, reputation and credibility.

Governmental regulations

Hitachi’s business activities are subject to various governmental regulations in countries where it operates, which include investment approvals, export regulations, tariffs, antitrust, anti-bribery, intellectual property, consumer and business taxation, foreign trade and exchange controls, and environmental and recycling requirements. Significant changes in such regulations may limit Hitachi’s business activities or increase operating costs. In addition, the enforcement of such regulations, including the imposition of fines or surcharges for violation of such regulations, may adversely affect Hitachi’s results of operations, financial conditions, cash flows, reputation and credibility. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings” for additional information.

Retirement benefits

Hitachi has a significant amount of employee retirement benefit costs which are derived from actuarial valuations based on a number of assumptions. Inherent in these valuations are key assumptions used in estimating pension costs including mortality, withdrawal, retirement, changes in compensation, discount rate and expected return on plan assets. Hitachi is required to make judgments regarding the key assumptions by taking into account various factors including personnel demographics, market conditions and expected trends in interest rates. Although management believes that its key assumptions are reasonable in light of the various underlying factors, there can be no assurance that the key assumptions will correspond to actual results. If the Company’s key assumptions differ from actual results, the consequent deviation of actual pension costs from estimated costs may have a material adverse effect on Hitachi’s financial condition and results of operations. A decrease in the discount rate results in an increase in actuarial pension benefit obligations. Increases and decreases in the pension benefit obligations affect the amount of the actuarial gain or loss which is amortized into income over the service lives of employees. In addition, the Company may change these key assumptions, such as the discount rate or the expected return on plan assets. Changes in key assumptions may also have a material adverse effect on Hitachi’s financial condition and results of operations.

Risks Related to Hitachi’s American Depositary Shares

Unit shares

The Japanese Companies Act allows companies to establish a “unit” of shares for the purpose of exercising voting rights at the general meetings of shareholders. Under the articles of incorporation of the Company, one unit of the Company’s shares is comprised of 1,000 shares, equivalent to 100 American Depositary Shares (“ADSs”). Each unit of the Company’s shares has one vote. A holder who owns shares or ADSs in other than multiples of 1,000 or 100, respectively, will own less than a whole unit (i.e., for the portion constituting fewer than 1,000 shares, or fewer than 100 ADSs). The articles of incorporation of the Company, in accordance with the Japanese Companies Act, imposes significant restrictions on the rights of holders of shares constituting less than a whole unit, which include restrictions on the right to vote, to attend a shareholders meeting and to bring derivative actions. In addition, less than whole unit shares cannot be traded on Japanese stock markets. Under the unit share system, holders of the Company’s shares constituting less than one unit have the right to require the Company to purchase their shares and the right to require the Company to sell them additional shares to create a whole unit of 1,000 shares. However, holders of the Company’s ADSs are unable to withdraw underlying shares representing less than one unit and, as a practical matter, are unable to require the Company to purchase those underlying shares. The unit share system, however, does not affect the transferability of ADSs, which may be transferred in lots of any number of whole ADSs.

7

Foreign exchange fluctuations

Market prices for the ADSs may fall if the value of the yen declines against the dollar. In addition, the amount of cash dividends or other cash payments made to holders of ADSs will decline if the value of the yen declines against the dollar.

Rights of ADS holders

The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining the Company’s accounting books and records and exercising appraisal rights are available only to shareholders of record. Because the depositary, through its custodian agents, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders and will pay dividends and distributions collected from the Company as and to the extent provided in the deposit agreement. However, ADS holders will not be able to bring derivative actions, examine the Company’s accounting books and records, or exercise appraisal rights through the depositary.

The Company is incorporated in Japan with limited liability. A significant portion of the assets of the Company is located outside the United States. As a result, it may be more difficult for investors to enforce against the Company judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States or judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal securities laws of the United States.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

The Company was founded in 1910 as a small electric repair shop and was incorporated as Hitachi, Ltd. (Kabushiki Kaisha Hitachi Seisakusho), a joint stock corporation, in 1920 under the laws of Japan. Its registered office is located at 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8280, Japan. The telephone number of the Company’s principal executive office is +81-3-3258-1111.

Over the years, Hitachi has broadened the horizon of its research as well as its business activities to develop a highly diversified product mix ranging from electricity generation systems to consumer products and electronic devices. Hitachi has grown into one of Japan’s largest diversified manufacturers of electronic and electrical products. With its diverse product lines, Hitachi maintains a significant presence in each of the major markets it serves, which together make Hitachi one of the world’s largest manufacturers of electronic products. With its emphasis on research and development and its ability to combine a wide range of technologies, Hitachi continues to strive to provide the world with products that meet the changing needs of its customers.

In order to establish a stable and profitable business structure, Hitachi is making an effort to realign its business portfolio, which may be implemented by exiting certain businesses that share fewer synergies with targeted businesses or have poor prospects for higher efficiency, by increasing its focus on targeted businesses and by creating new businesses to achieve increased profitability. Hitachi has been allocating its business resources to strong businesses and has also been implementing a variety of projects to enhance efficiency and restructure unprofitable operations, including a project aimed at reducing materials purchasing costs and a project aimed at improving turnover of assets. Hitachi also expects to continue to improve cash-flow management by increasing the efficiency of working capital use, by making selective investments and by further reducing procurement costs.

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Through the implementation of this strategy, Hitachi is striving to enhance its corporate governance structure in order to maximize its medium and long-term corporate value, reorganize its internal control system on a consolidated basis, implement multidisciplinary risk management, promote prompt information sharing systems and optimize share capital relationships among Hitachi group companies.

In November 2006, the Company entered into a letter of intent with General Electric Company, or GE, expressing both party’s intent to create a global alliance for their nuclear businesses to improve and expand their boiling water reactor technology offerings, aiming at synergy in the area of design, manufacture, construction, maintenance and engineering services. Based on this alliance, in June 2007, the Company and GE established companies in the U.S. and Canada. In addition, the Company transferred its nuclear power systems operations to a newly created Japanese company in July 2007 by way of corporate split under the Companies Act and GE invested in the Japanese company. The Company owns 40% of the U.S. and Canadian companies, with GE owning the remaining 60%, and the Company owns 80.01% of the Japanese company, which is a consolidated subsidiary, with GE owning the remaining 19.99%. See “B. Business Overview — Description of Industry Segments — Power & Industrial Systems” and “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Business Reorganization” for more information.

In January 2009, the Company conducted a cash tender offer at ¥780 per share for shares of Hitachi Kokusai Electric Inc. (“Hitachi Kokusai Electric”), an equity method affiliate that manufactures and sells wireless communications systems, broadcasting and video systems and semiconductor manufacturing equipment. Upon the completion of the tender offer in March 2009, Hitachi Kokusai Electric became a consolidated subsidiary of the Company. The Company plans to use Hitachi Kokusai Electric’s expertise in order to strengthen the Company’s businesses, such as its information network business, its transportation systems business, and its urban development systems business. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Business Reorganization” for more information.

In January 2009, the Company conducted a cash tender offer at ¥1,300 per share for shares of Hitachi Koki Co., Ltd. (“Hitachi Koki”), an equity method affiliate that manufactures and sells power tools. Upon the completion of the tender offer in March 2009, Hitachi Koki became a consolidated subsidiary of the Company. The conversion of Hitachi Koki into a consolidated subsidiary is intended to promote business expansion on a global scale and to foster collaboration in such areas as research and development for lithium-ion battery-operated products, a strategic product for Hitachi Koki. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Business Reorganization” for more information.

Hitachi’s capital expenditures for fixed assets on a completion basis were ¥788,466 million, ¥969,087 million and ¥1,048,572 million in fiscal 2008, 2007 and 2006. While Hitachi has maintained a selective attitude toward investment decisions, it has placed an emphasis on capital expenditures for strategically important products. Excluding the purchase of assets to be leased, a significant portion of capital expenditures have been directed toward information-related products and construction machinery and other products in power and industrial systems sector, including large capital investments in manufacturing facilities to maintain or enhance competitiveness in those product sectors. The decrease in fiscal 2008 was primarily due to a decrease in capital expenditures in the HDDs, plasma display panels and operating lease assets in the financial services sector. The decrease in fiscal 2007 was primarily due to a decrease in capital expenditures in the HDDs and operating lease assets in financial services sector. In fiscal 2009, Hitachi expects to decrease its capital expenditures to approximately ¥620.0 billion due primarily to decreases in the areas of automotive products, construction machinery and high functional materials and components. Hitachi expects capital expenditures in fiscal 2009 to be funded primarily through internal sources of financing and to be made primarily in Japan.

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B. Business Overview

Main Categories of Products and Services

Hitachi’s business is highly diversified. Hitachi classifies its operations into seven industry segments based primarily along related assets and operations management lines, as well as on the similarity of products and services by type, use, production method and marketing method, as required by a ministerial ordinance under the Financial Instruments and Exchange Law of Japan. The industry segments and major categories of products and services offered in each segment as of March 31, 2009 are as follows:

• Information & Telecommunication Systems. Systems integration, outsourcing services, software, HDDs, disk array subsystems, servers, mainframes, telecommunications equipment and ATMs;

• Electronic Devices. LCDs, semiconductor manufacturing equipment, test and measurement equipment, medical electronics equipment and semiconductors;

• Power & Industrial Systems. Nuclear power plants, thermal power plants, hydroelectric power plants, industrial machinery and plants, automotive products, construction machinery, elevators, escalators, railway vehicles and power tools;

• Digital Media & Consumer Products. Optical disk drives, plasma TVs, LCD TVs, LCD projectors, mobile phones, room air conditioners, refrigerators, washing machines, information storage media, batteries and air-conditioning equipment for enterprises;

• High Functional Materials & Components. Wires and cables, copper products, semiconductor materials, circuit boards and materials, organic and inorganic chemical products, synthetic resin products, display related materials, specialty steels, magnetic materials and components and high grade casting components;

• Logistics, Services & Others. General trading, logistics and property management; and

• Financial Services. Leasing, loan guarantees and insurance services.

Sales and Distribution

Hitachi distributes its products in Japan primarily through its own sales network. Hitachi also distributes some of its products through independent dealers. In most field sales offices, Hitachi’s sales personnel specialize in the marketing of particular types of products.

International marketing is conducted through overseas sales subsidiaries, joint-venture companies and unaffiliated distributors. Also, certain types of equipment are sold to industrial companies in foreign markets on an original equipment manufacturing, or OEM, basis and marketed under the brand names of such industrial companies.

Overseas revenues amounted to ¥4,138.9 billion in fiscal 2008, accounting for 41% of total revenues. Foreign currency exchange rate fluctuations influence Hitachi’s operating environment. A strong yen reduces the price competitiveness of products exported to foreign markets and diminishes profit by decreasing revenue when foreign currency income from overseas product sales is converted to yen. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results.”

Hitachi’s widespread customer base in domestic and overseas markets encompasses leading industrial companies, financial institutions, utilities, governments and individual customers. No material part of its business is dependent upon one or a few customers.

Segment Information

Hitachi does not present segment information in accordance with the requirements of Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Foreign issuers are presently exempted from these disclosure requirements for filings with the U.S. Securities and Exchange Commission, or the SEC, under the U.S. Securities Exchange Act of 1934, or the Exchange Act. However, Hitachi is required to disclose the segment information presented below in accordance with a ministerial ordinance under the Financial Instruments and Exchange Law of Japan. Hitachi believes that this presentation may be useful in understanding Hitachi’s results of operations.

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Industry Segment

	Year ended March 31,
	2007				2008				2009
	(Millions of yen, except percentage data)
Revenues (note 1)
Information & Telecommunication Systems	2,472,227		21	%	2,761,137		22	%	2,594,450		23	%
Electronic Devices	1,287,492		11		1,293,517		10		1,151,066		10
Power & Industrial Systems	3,022,299		26		3,568,151		28		3,310,544		29
Digital Media & Consumer Products	1,506,073		13		1,504,692		12		1,261,501		11
High Functional Materials & Components	1,794,506		15		1,875,018		15		1,556,886		14
Logistics, Services & Others	1,213,529		10		1,271,465		10		1,089,971		9
Financial Services	500,065		4		445,400		3		412,040		4
Subtotal	11,796,191		100	%	12,719,380		100	%	11,376,458		100	%
Eliminations and Corporate Items	(1,548,288	)			(1,492,645	)			(1,376,089	)
Total	10,247,903				11,226,735				10,000,369
Operating Income (Loss) (note 2)
Information & Telecommunication Systems	60,343		23	%	116,105		30	%	176,629		96	%
Electronic Devices	45,755		18		54,046		14		27,322		15
Power & Industrial Systems	36,391		14		138,455		35		24,245		13
Digital Media & Consumer Products	(58,435	)	(23	)	(109,914	)	(28	)	(105,563	)	(58	)
High Functional Materials & Components	132,399		51		141,007		36		27,777		15
Logistics, Services & Others	20,233		8		27,870		7		23,063		13
Financial Services	23,534		9		25,481		6		10,210		6
Subtotal	260,220		100	%	393,050		100	%	183,683		100	%
Eliminations and Corporate Items	(77,708	)			(47,534	)			(56,537	)
Total	182,512				345,516				127,146
Segment Assets
Information & Telecommunication Systems	1,987,603		17	%	1,906,166		17	%	1,839,101		17	%
Electronic Devices	840,986		7		814,541		7		653,329		6
Power & Industrial Systems	2,728,817		24		3,075,509		27		3,052,176		28
Digital Media & Consumer Products	971,187		9		889,112		8		669,856		6
High Functional Materials & Components	1,503,733		13		1,525,754		13		1,231,562		11
Logistics, Services & Others	1,049,916		9		981,447		8		1,030,098		10
Financial Services	2,442,066		21		2,294,020		20		2,366,909		22
Subtotal	11,524,308		100	%	11,486,549		100	%	10,843,031		100	%
Eliminations and Corporate Items	(880,049	)			(955,702	)			(1,439,322	)
Total	10,644,259				10,530,847				9,403,709
Depreciation & Amortization (note 3)
Information & Telecommunication Systems	183,057		30	%	195,578		29	%	180,010		28	%
Electronic Devices	42,549		7		40,625		6		37,553		6
Power & Industrial Systems	103,176		17		130,658		19		136,443		21
Digital Media & Consumer Products	53,280		9		69,192		10		55,822		9
High Functional Materials & Components	71,119		11		86,947		13		88,282		13
Logistics, Services & Others	30,150		5		31,717		5		33,072		5
Financial Services	131,425		21		125,796		18		118,976		18
Subtotal	614,756		100	%	680,513		100	%	650,158		100	%
Eliminations and Corporate Items	7,242				7,093				6,765
Total	621,998				687,606				656,923

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	Year ended March 31,
	2007				2008				2009
	(Millions of yen, except percentage data)
Tangible & Intangible Asset Increase
Information & Telecommunication Systems	230,193		17	%	152,941		13	%	135,383		14	%
Electronic Devices	37,196		3		30,688		2		35,154		3
Power & Industrial Systems	173,493		13		194,071		16		198,333		20
Digital Media & Consumer Products	87,244		6		95,698		8		46,788		5
High Functional Materials & Components	151,895		11		115,533		10		112,595		11
Logistics, Services & Others	34,937		3		48,256		4		36,508		4
Financial Services	642,016		47		570,316		47		423,217		43
Subtotal	1,356,974		100	%	1,207,503		100	%	987,978		100	%
Eliminations and Corporate Items	(63,557	)			(55,939	)			(23,557	)
Total	1,293,417				1,151,564				964,421

Geographic Segment (note 4)

	Year ended March 31,
	2007				2008				2009
	(Millions of yen, except percentage data)
Revenues (note 1)
Japan
Outside customer sales	7,010,181		57	%	7,436,999		55	%	6,683,143		55	%
Intersegment transactions	1,274,048		11		1,459,260		11		1,302,509		11
Total	8,284,229		68		8,896,269		66		7,985,652		66
Asia
Outside customer sales	1,459,549		12		1,771,600		13		1,542,526		13
Intersegment transactions	561,208		4		637,719		5		591,611		5
Total	2,020,757		16		2,409,319		18		2,134,137		18
North America
Outside customer sales	981,098		8		962,267		7		852,100		7
Intersegment transactions	89,912		1		123,841		1		121,325		1
Total	1,071,010		9		1,086,108		8		973,425		8
Europe
Outside customer sales	645,354		5		826,188		6		738,662		6
Intersegment transactions	37,454		1		60,650		0		51,318		0
Total	682,808		6		886,838		6		789,980		6
Other Areas
Outside customer sales	151,721		1		229,681		2		183,938		2
Intersegment transactions	21,574		0		39,841		0		8,367		0
Total	173,295		1		269,522		2		192,305		2
Subtotal	12,232,099		100	%	13,548,046		100	%	12,075,499		100	%
Eliminations and Corporate Items	(1,984,196	)			(2,321,311	)			(2,075,130	)
Total	10,247,903				11,226,735				10,000,369
Operating Income (Loss) (note 2)
Japan	212,316		80	%	299,632		77	%	74,370		49	%
Asia	(3,664	)	(1	)	33,020		8		76,742		51
North America	25,310		9		23,087		6		7,182		5
Europe	23,312		9		21,575		6		(17,129	)	(11	)
Other Areas	8,647		3		13,394		3		9,434		6
Subtotal	265,921		100	%	390,708		100	%	150,599		100	%
Eliminations and Corporate Items	(83,409	)			(45,192	)			(23,453	)
Total	182,512				345,516				127,146

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	Year ended March 31,
	2007				2008				2009
	(Millions of yen, except percentage data)
Segment Assets
Japan	8,381,453		73	%	8,472,391		73	%	8,011,421		75	%
Asia	1,327,954		12		1,310,922		11		1,158,234		11
North America	668,202		6		674,970		6		555,602		5
Europe	935,087		8		968,552		8		861,242		8
Other Areas	116,157		1		159,048		2		142,738		1
Subtotal	11,428,853		100	%	11,585,883		100	%	10,729,237		100	%
Eliminations and Corporate Items	(784,594	)			(1,055,036	)			(1,325,528	)
Total	10,644,259				10,530,847				9,403,709
Revenues by Market (note 5)
	Year ended March 31,
	2007				2008				2009
	(Millions of yen, except percentage data)
Domestic revenues	6,093,627		59	%	6,484,496		58	%	5,861,448		59	%
Overseas revenues
Asia	1,859,664		18		2,167,171		19		1,911,290		19
North America	1,057,389		10		1,023,713		9		899,550		9
Europe	869,022		9		1,073,877		10		904,425		9
Other Areas	368,201		4		477,478		4		423,656		4
Subtotal	4,154,276		41		4,742,239		42		4,138,921		41
Total	10,247,903		100	%	11,226,735		100	%	10,000,369		100	%

Notes:

1. Revenues by industry and geographic segments include intersegment transactions.

2. In order to be consistent with financial reporting principles and practices generally accepted in Japan, operating income (loss) is presented as total revenues less cost of sales and selling, general and administrative expenses. Under U.S. GAAP, restructuring charges, net gain or loss on sale and disposal of rental assets and other property, and impairment losses for long-lived assets are included as part of operating income (loss). See notes 17, 18 and 19 to Hitachi’s consolidated financial statements.

3. See note 2(i) to Hitachi’s consolidated financial statements for information regarding accounting change.

4. Geographic segments are based on the location of Hitachi’s facilities where products or services are produced.

5. Revenues by market are based on the locations of the customer to whom Hitachi’s products or services are sold.

Description of Industry Segments

Hitachi classifies its operations into seven industry segments based primarily along related assets and operations management lines, as well as on the similarity of products and services by type, use, production method and marketing method.

Information & Telecommunication Systems

In this segment, Hitachi provides products and services, including hardware products, software and services. Customers are business entities in various industries, national and local governments, and, to a lesser extent, individuals. Among the hardware products Hitachi offers, HDDs, disk array subsystems, servers and mainframes are more significant than other products. In order to meet market requirements, these products need to be built to achieve high performance while meeting the cost parameters of customers. Hitachi also develops and offers various software packages designed to enhance the productivity of customers. Systems integration, consulting and outsourcing form the core of the services business in which customized solutions are developed and offered to customers with Hitachi’s hardware and software products, as well as other vendors’ products, to deliver systems that help customers achieve their business objectives. This segment also provides telecommunications and network equipment and systems, which are delivered to customers in the data and telecommunication industries and other business customers.

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The computer industry is extremely competitive. The speed of technology development in both hardware and software is very fast, and a failure to introduce, or a delay in the introduction of, products or services that incorporate the latest technology would materially diminish Hitachi’s market presence. Customers are highly sensitive to the cost effectiveness of their investments in information technology, which leads to intense price competition, particularly in hardware products.

In particular, in the HDDs business, Hitachi is trying to improve the profitability of Hitachi Global Storage Technologies, Inc., a wholly owned subsidiary of the Company. Hitachi expects that the HDDs market will continue to expand but also considers that the HDDs industry is facing rapid technological changes, such as the development of high capacity HDDs and increasing commoditization of old models. To maintain profitability in such an environment, Hitachi believes that it is important to establish efficient development and manufacturing operations. Hitachi has therefore been implementing various business reorganization and other cost reduction measures, such as integration of several development and manufacturing facilities for magnetic heads and circular disks, closure of a manufacturing facility, a reduction in the size of its workforce and a reduction in plant and equipment investment. Hitachi has also made efforts to introduce new products in a timely manner, by, among other things, strengthening management of product development phases. In addition, Hitachi made efforts to strengthen its R&D capability for the purpose of developing and introducing cost competitive products.

In software and services businesses, Hitachi aims to strengthen: (i) outsourcing services such as data center outsourcing services which entails the monitoring, operation and maintenance of information on behalf of clients, as well as strategic outsourcing services which provides comprehensive support for customers’ information systems, including consulting, systems design, construction, operation and maintenance; and (ii) consulting services by bolstering the operational structure principally by increasing the number of consultants. Hitachi also aims to establish an efficient project management system by sales efforts to emphasize profitability and by emphasizing cost management during the design and development process to achieve profitability.

In fiscal 2008, this segment accounted for 23% of total revenues before eliminations and recorded operating income of ¥176.6 billion.

Electronic Devices

The Electronic Devices segment provides LCDs, semiconductor manufacturing equipment, test and measurement equipment and medical electronics equipment. A significant portion of Hitachi’s semiconductor business was transferred to Renesas Technology Corp. (“Renesas”), jointly owned by the Company and Mitsubishi Electric Corporation, and which is accounted for under the equity method by the Company. That portion has not been included in this segment since fiscal 2003.

A significant portion of this segment’s business is conducted by Hitachi High-Technologies Corporation, a publicly-held subsidiary of the Company. Hitachi High-Technologies Corporation has two business aspects: (i) manufacturing and sale of manufacturing equipment of semiconductors, LCDs and HDDs, test and measurement equipment such as clinical analyzers, DNA sequencers and liquid chromatographs and other electronics-related equipment and (ii) sale of electronic components and advanced industrial materials.

The display business is highly competitive and characterized by significant price fluctuations with changes in the supply-demand balance. Due to its unfavorable business environment such as severe price competition, Hitachi exited from the unprofitable large-sized LCDs business conducted by a consolidated subsidiary, Hitachi Displays, Ltd. (“Hitachi Displays”), in the 1st quarter of fiscal 2006. Currently the large-sized LCD business for flat-panel TVs is conducted in an equity method affiliate called IPS Alpha Technology, Ltd. (“IPS Alpha”). Further, in December 2007, the Company entered into a comprehensive alliance with Matsushita Electric Industrial Co., Ltd., currently Panasonic Corporation (“Panasonic”), and Canon, Inc. (“Canon”), which anticipates the transfer of its LCD business to both Panasonic and Canon. Based on the alliance, in February 2008, Hitachi and Panasonic entered into an agreement relating to the future transfer of the large-sized LCD business for flat-panel TVs conducted by IPS Alpha to Panasonic. Further, in February 2008, Hitachi and Canon entered into an agreement relating to the future transfer of the small and medium-sized LCDs business conducted by Hitachi Displays to Canon. Hitachi plans to continue to engage in R&D of LCD panels after the transfer of its LCDs business.

In fiscal 2008, this segment accounted for 10% of total revenues before eliminations and recorded operating income of ¥27.3 billion.

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Power & Industrial Systems

In this segment, Hitachi offers power plants, industrial machinery, automotive products, construction machinery, elevators, escalators, railway vehicles and other products and related services for power utilities and industry.

Power companies are the main customers of the power sector. In this sector, Hitachi must respond to customer demand for low-priced products with high added value. In addition, in recent years Hitachi has given high priority to environmental protection in its product design. Hitachi competes primarily with large corporations on a global market in this sector. Hitachi endeavors to expand its power systems business, particularly its nuclear power generation and highly efficient thermal power generation systems, in the overseas market. Hitachi recognizes that the key to succeeding in this business overseas includes local project management, in consideration of local business customs and labor relations. Since the orders the sector receives are generally for large items with long delivery periods, a portion of the purchase price from those orders is generally paid in advance to finance the production of the items.

On June 15, 2006, Hamaoka Nuclear Power Station No. 5 of Chubu Electric Power Co., Inc. shut down due to turbine damage. As a precautionary measure, on July 5, 2006, Shika Nuclear Power Station No. 2 of Hokuriku Electric Power Company, which uses the same type of turbines, was shut down for an examination of the turbines and the examination revealed damage to the turbine vanes. The accrued amount of the repair costs was included in Hitachi’s operating results for the fiscal year ended March 31, 2007 and was recorded as part of cost of sales. In September 2008, Chubu Electric Power Co., Inc. filed a lawsuit with the Tokyo District Court against the Company seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Hamaoka Nuclear Power Station in the amount of ¥41.8 billion plus interest. In May 2009, Hokuriku Electric Power Company filed a lawsuit with the Tokyo District Court against the Company seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Shika Nuclear Power Station in the amount of ¥20.2 billion plus interest. The Company intends to vigorously defend itself in these lawsuits. The Company has not accrued for consequential losses related to these lawsuits. However, there can be no assurance that Hitachi will not be liable for any amount claimed. See “Item 5. Operating and Financial Review and Prospects — D. Trend Information.”

The Company plans to strengthen and expand its nuclear power systems business throughout the world, including the U.S., by utilizing the alliance with GE to improve and expand boiling water reactor technology offerings, and to benefit from synergy in the area of design, manufacturing, construction, maintenance and engineering services. Based on the alliance, in June 2007, the Company and GE established companies in the U.S. and Canada. In addition, the Company transferred its nuclear power systems operations to a newly created Japanese company in July 2007 by way of corporate split under the Companies Act and GE invested in the Japanese company. The Company owns 40% of the U.S. and Canadian companies, with GE owning the remaining 60%, and the Company owns 80.01% of the Japanese company, which is a consolidated subsidiary, with GE owning the remaining 19.99%. These companies will construct and maintain nuclear power plants and provide related services. The Company expects that the nuclear power market will expand globally and believes that, by creating synergies with GE, this alliance will enable the Company to expand its nuclear power systems business throughout the world, utilizing GE’s design engineering of an advanced economic and simplified boiling water reactor, and both companies’ accumulated know-how and experience in the sales activities and the construction of nuclear power plants. See “A. History and Development of the Company” and “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Business Reorganization.”

The industrial systems sector covers products used in numerous industries and is strongly influenced by trends in public works spending and private-sector plant and equipment investment. Market demands focus primarily on low price, high added value and the capability of products to be integrated into systems. The number of product types is vast and production is frequently done in small lots or on order. The industry includes many small-to-medium-sized specialty manufacturers and competition for orders is fierce.

In December 2006, the Company acquired a controlling interest in Clarion Co., Ltd. (“Clarion”), a company that manufactures and sells car audio systems, car navigation systems, etc., making it a consolidated subsidiary of the Company, through a tender offer. The Company is working to realize synergies from the transaction through Clarion’s capabilities to develop such products as audio-visual and navigation systems, and through Clarion’s capabilities to market aftermarket services.

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Since the latter half of fiscal 2008, sales of automotive products have been severely adversely affected by the worldwide collapse in demand for automobiles. In response to the difficult conditions in this business, the Company separated its automotive systems business to form a new company in July 2009. Hitachi expects the new company, a wholly-owned subsidiary of the Company, to make faster decisions and operate more efficiently, innovating by combining automotive and electronics technologies. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Fiscal 2008 Compared with Fiscal 2007” for more information.

Hitachi optimizes its response to the needs and priorities of segment customers by strategically combining technologies from Hitachi’s diverse fields of operation, especially from technologies in the information systems and electronics field.

In fiscal 2008, this segment accounted for 29% of total revenues before eliminations and recorded operating income of ¥24.2 billion.

Digital Media & Consumer Products

In this segment, Hitachi manufactures and sells products in two main categories: digital media products and home appliances. The former includes optical disk drives, flat-panel TVs, LCD projectors and mobile phones, while the latter comprises room air conditioners, refrigerators, washing machines and other appliances. All products have a broad range of customers dominated by general consumers.

Home electrical equipment manufacturers are responding to customer demand for low price and high added value by cutting costs and developing differentiated product lines. Success in this segment will also depend considerably on the development of products geared to advances in new multimedia-related markets.

In this segment, Hitachi is facing intense price competition caused by increasing product commoditization both in the digital media products business and home appliances business. Especially in digital media products such as flat-panel TVs, price reductions have been significant because of domestic and overseas competitors and increasing commoditization of old products. In an attempt to improve the profitability of its flat-panel TV business, Hitachi has taken restructuring measures, including streamlining its sales network in both domestic and overseas markets and reducing production and fixed costs. In addition, Hitachi began sourcing glass panel components for flat-panel TVs, which were previously manufactured by Hitachi Plasma Display Limited, from Panasonic. Moreover, the Company separated its digital media products business, mainly consisting of flat-panel TVs and commercial-use LCD projectors, to form a new company in July 2009. Hitachi expects the new company, a wholly-owned subsidiary of the Company, to respond more quickly to market needs through collaborations with the Company’s subsidiary in charge of sales and after-sales services and with other external partners for product development. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Fiscal 2008 Compared with Fiscal 2007” for more information.

In fiscal 2008, this segment accounted for 11% of total revenues before eliminations and recorded an operating loss of ¥105.5 billion.

High Functional Materials & Components

This segment includes fabricated chemical and metal products supplied as parts or materials to downstream manufacturers of mainly electric and electronic products. For example, Hitachi Chemical Co., Ltd. manufactures products based on its resin technology and serves industrial markets including semiconductor, LCD and automobile markets. Hitachi Metals, Ltd. manufactures and sells magnetic and electronic materials and parts. They include specialty steels such as materials for mobile phones and automobile engine parts. Hitachi Cable, Ltd. manufactures and sells electronic materials and components for semiconductors and mobile phones as well as cable and wire products used for the transmission of power and telephone signals.

As more products in this segment become more closely dependent upon and driven by electronics technological capabilities, Hitachi’s strength in electronics technology is expected to provide Hitachi with an advantage in introducing new products. Since the portion of materials and components used for semiconductors, LCDs, mobile phones and other IT-related products has increased in recent years, business results in this segment have been significantly affected by the business climate of the IT industry.

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In April 2004, the magnetic materials business of Hitachi Metals, Ltd. (“Hitachi Metals”), a publicly-held subsidiary of the Company, was combined with Sumitomo Special Metals Co., Ltd. to form a new company, NEOMAX Co., Ltd. (“NEOMAX”). The new company became a consolidated subsidiary of the Company as a result of the transaction. Further, in November 2006, Hitachi Metals conducted a tender offer for shares of NEOMAX, then merged NEOMAX into it in April 2007.

In fiscal 2008, this segment accounted for 14% of total revenues before eliminations and recorded operating income of ¥27.7 billion.

Logistics, Services & Others

This segment includes various businesses not covered by other segments, primarily consisting of sales from general trading, logistics and property management services conducted by consolidated subsidiaries of the Company. Hitachi has set up sales subsidiaries by region and by product. Hitachi also has many subsidiaries that were established to offer various services related to Hitachi’s business operations internally, such as printing and food services.

In fiscal 2008, this segment accounted for 9% of total revenues before eliminations and recorded operating income of ¥23.0 billion.

Financial Services

This segment was originated to extend credit to purchasers of Hitachi products. This segment currently provides leases, loan guarantees and insurance services and conducts business in the area of securitization.

In fiscal 2008, this segment accounted for 4% of total revenues before eliminations and recorded operating income of ¥10.2 billion.

Competition

Hitachi is subject to intense competition in each of its businesses. Among its major competitors are some of the top-ranking industrial companies in Japan, U.S., Europe and Asia. Depending on the nature of the business, the competition is marked by rapid progress in technology or the need to reduce costs to meet customer requirements. In addition, Hitachi is facing more competition against companies that focus exclusively on specific market segments. See “Item 4. Information on the Company — B. Business Overview — Description of Industry Segments” for details of competition in each segment.

Seasonality

Hitachi’s revenues in the Information & Telecommunication Systems segment and the Power & Industrial Systems segment in the fourth quarter ending March 31 tend to be higher than those in other quarters due in part to the purchase customs of governmental agencies in Japan.

Sources of Supply

Hitachi purchases a wide variety of raw materials, parts and components from many suppliers in Japan and abroad. In general, Hitachi is not dependent on any single source of supply for its raw materials, parts and components. In light of the fact that Japan produces very few of the raw materials Hitachi uses in its manufacturing processes, Hitachi monitors the availability of raw materials on a regular basis. There are currently no particular shortages of energy, raw materials, parts or components that are likely to materially affect Hitachi’s business. Prices of certain raw materials, parts and components, such as petroleum products, copper, aluminum and semiconductor memory chips, that Hitachi purchases are volatile. Recent increases in prices of petroleum and other materials, such as copper, steel and synthetic resins, are increasing Hitachi’s production costs, and may adversely affect its results of operations.

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Intellectual Property and Licenses

Hitachi holds numerous intellectual property rights, including patents, trademarks and copyrights. Although Hitachi considers them to be valuable assets and important for its operations, it believes that its business is not materially dependent on any single patent, trademark, copyright or other intellectual property right that it holds.

Hitachi has many license and technical assistance agreements covering a wide variety of products. Some of these agreements grant Hitachi the rights to use certain Japanese and foreign patents or to receive certain technical information. Under certain other agreements, Hitachi has also granted licenses and technical assistance to various companies located in Japan or overseas. Additionally, in certain instances, Hitachi has entered into cross-license agreements with major international electronics and electrical equipment manufacturers. Hitachi believes that it is not materially dependent on any single such license or technical assistance agreement.

Government Regulations

Hitachi’s business activities are subject to various governmental regulations in countries where it operates, which include investment approvals, export regulations, tariffs, antitrust, anti-bribery, intellectual property, consumer and business taxation, exchange controls, and environmental and recycling requirements.

For example, Hitachi is subject to various environmental regulations such as the Air Pollution Control Law of Japan, the Soil Contamination Countermeasures Law of Japan, and the Water Pollution Control Law of Japan, which are administered by the Ministry of the Environment of Japan, and Pollutant Release and Transfer Registers Law of Japan administered by the Ministry of Economy, Trade and Industry of Japan and the Ministry of the Environment of Japan. In order to comply with these laws, Hitachi has implemented various measures such as improving its production facilities, introducing chemical substance risk assessment system, monitoring use and emission of certain chemical substances and cleaning up groundwater and soil as necessary.

Further, Hitachi has also worked to comply with the European Union directive, “the Restriction of the use of certain Hazardous Substances in Electrical and Electronic Equipment” effective since July 1, 2006, which requires the elimination of six chemicals specified in the directive: lead, hexavalent chromium, cadmium, mercury, polybrominated biphenyl and polybrominated diphenyl ether from electrical and electronic products marketed in the European Union member states. Hitachi achieved compliance with this directive in July 2006 and is making continued efforts to comply with it. In addition, Hitachi has worked to comply with the European Union directive, “the Registration, Evaluation, Authorization, and Restrictions of Chemicals,” effective since June 1, 2007, which requires manufacturers, users and importers of a broad range of chemical substances to register chemical substances exported to the European Union member states and to file reports and apply for authorization for the chemicals contained in their products. Hitachi has worked to identify chemical substances contained in its products to be registered by developing its database.

These regulations among others to which Hitachi is subject could become more stringent or additional regulations could be adopted in the future, which could cause Hitachi to incur additional compliance costs or limit its business activities. Further, a failure to comply with these regulations could result in fines or other penalties, which could adversely affect Hitachi’s financial condition, results of operation, cash flows, reputation or credibility.

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C. Organizational Structure

The table below shows major subsidiaries of the Company as of March 31, 2009. Ownership percentage of voting rights indicates voting rights owned by the Company and its subsidiaries.

Name of company	Country of incorporation	Ownership percentage of voting rights
Information & Telecommunication Systems
Hitachi Communication Technologies, Ltd.	Japan	100.0	%
Hitachi Electronics Services Co., Ltd.	Japan	100.0
Hitachi Information & Control Solutions, Ltd.	Japan	100.0
Hitachi Information Systems, Ltd.	Japan	52.0
Hitachi Kokusai Electric Inc.	Japan	52.5
Hitachi-Omron Terminal Solutions, Corp.	Japan	55.0
Hitachi Software Engineering Co., Ltd.	Japan	53.0
Hitachi Systems & Services, Ltd.	Japan	51.2
Hitachi Computer Products (America), Inc.	U.S.A.	100.0
Hitachi Computer Products (Europe) S.A.S.	France	100.0
Hitachi Data Systems Corporation	U.S.A.	100.0
Hitachi Global Storage Technologies Netherlands B.V.	Netherlands	100.0
Hitachi Information & Telecommunication Systems Global Holding Corporation	U.S.A.	100.0
Electronic Devices
Hitachi Displays, Ltd.	Japan	50.2	%
Hitachi High-Technologies Corporation	Japan	51.8
Hitachi Medical Corporation	Japan	63.2
Hitachi Display Device (Suzhou) Co., Ltd.	China	100.0
Power & Industrial Systems
Babcock-Hitachi Kabushiki Kaisha	Japan	100.0	%
Clarion Co., Ltd.	Japan	64.0
Hitachi Building Systems Co., Ltd.	Japan	100.0
Hitachi Construction Machinery Co., Ltd.	Japan	53.1
Hitachi Engineering & Services Co., Ltd.	Japan	100.0
Hitachi-GE Nuclear Energy, Ltd.	Japan	80.0
Hitachi Industrial Equipment Systems Co., Ltd.	Japan	100.0
Hitachi Koki Co., Ltd.	Japan	51.3
Hitachi Mobile Co., Ltd.	Japan	100.0
Hitachi Plant Technologies, Ltd.	Japan	69.8
Hitachi Via Mechanics, Ltd.	Japan	100.0
Hitachi Automotive Products (USA), Inc.	U.S.A.	100.0
Hitachi Elevator (China) Co., Ltd.	China	70.0
Hitachi Power Europe GmbH	Germany	100.0
Digital Media & Consumer Products
Hitachi Appliances, Inc.	Japan	100.0	%
Hitachi Maxell, Ltd.	Japan	53.6
Hitachi Media Electronics Co., Ltd.	Japan	100.0
Hitachi Plasma Display Limited	Japan	100.0
Hitachi Home Electronics (America), Inc.	U.S.A.	100.0
Shanghai Hitachi Household Appliances Co., Ltd.	China	95.0
High Functional Materials & Components
Hitachi Cable, Ltd.	Japan	53.2	%
Hitachi Chemical Co., Ltd.	Japan	51.4
Hitachi Metals, Ltd.	Japan	55.7
Logistics, Services & Others
Chuo Shoji, Ltd.	Japan	100.0	%
Hitachi Life, Ltd.	Japan	100.0
Hitachi Transport System, Ltd.	Japan	59.0
Nikkyo Create, Ltd.	Japan	100.0
Hitachi America, Ltd.	U.S.A.	100.0
Hitachi Asia Ltd.	Singapore	100.0
Hitachi (China), Ltd.	China	100.0
Hitachi Europe Ltd.	U.K.	100.0
Financial Services
Hitachi Capital Corporation	Japan	60.7	%
Hitachi Insurance Services, Ltd.	Japan	100.0

Notes:

1. Hitachi Communication Technologies, Ltd. was merged into the Company on July 1, 2009.

2. Hitachi Mobile Co., Ltd. changed its name to Hitachi Auto Parts & Service Co., Ltd. on April 1, 2009.

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D. Property, Plants and Equipment

Hitachi owns a significant portion of the land, plants, offices and other fixed assets necessary to conduct its business and a significant portion of Hitachi’s land, plants, offices and other fixed assets are located in Japan. Hitachi considers its properties to be well maintained and believes its plant capacity is adequate for its current needs and future plans. Certain of Hitachi’s properties such as land and buildings are subject to mortgages in respect of bonds and loans. The total outstanding balance of the secured loans as of March 31, 2009 was ¥45,081 million.

The following table describes the name of the Company office, division, group, center or subsidiary that is using the property, the location and area of the property, and in the case of plant property, the principal products produced there as of March 31, 2009. Hitachi believes the following offices, divisions, groups, centers and subsidiaries comprise its major lines of business:

Name of user of plants and offices	Location	Land area	Principal products
		(Thousands of square meters)
In Japan
The Company:
Automotive Systems	Ibaraki, etc.	2,614	Automotive products
Information & Telecommunication Systems	Kanagawa, etc.	764	Software, mainframes
Thermal & Hydroelectric Systems Division, etc.	Ibaraki	3,809	Power generating equipment, turbines
Research & Development Group	Tokyo, etc.	832	—
Consumer Business Group	Kanagawa, etc.	992	Digital media related products
Sales Offices	Osaka, etc.	114	—
Urban Planning and Development Systems	Ibaraki	528	Elevators, escalators
Head Office	Tokyo	787	—
Transportation Systems Division	Yamaguchi	698	Railway vehicles
Subsidiaries:
Yasugi Works, Hitachi Metals, Ltd.	Shimane	1,096	Special steels
Tsuchiura Plant, Hitachi Construction Machinery Co., Ltd.	Ibaraki	5,534	Construction machinery
Hitachi Displays, Ltd.	Chiba	457	Liquid crystal displays
Hitaka Works, Hitachi Cable, Ltd.	Ibaraki	962	Wires and cables
Kyoto Works, Hitachi Maxell, Ltd.	Kyoto	302	Magnetic recording media
Hitachinaka-Rinko Works, Hitachi Construction Machinery Co., Ltd.	Ibaraki	181	Construction machinery
Head Office, Hitachi Building Systems Co., Ltd.	Tokyo	165	—
Head Office, Hitachi Software Engineering Co., Ltd.	Tokyo	17	—
Yamasaki Works, Hitachi Chemical Co., Ltd.	Ibaraki	675	Semiconductor related materials
Yamazaki Works, Hitachi Metals, Ltd.	Osaka	193	Magnetic appliances
Outside of Japan
Overseas subsidiaries:
Hitachi Global Storage Technologies Netherlands B.V.	California, U.S.A., etc.	1,851	Hard disk drives
Hitachi Metals America, Ltd.	New York, U.S.A., etc.	2,592	Automotive components

Notes:

1. The Automotive Systems of the Company was separated to form Hitachi Automotive Systems, Ltd. on July 1, 2009.

2. The Consumer Business Group of the Company was separated to form Hitachi Consumer Electronics Co., Ltd. on July 1, 2009.

For information on Hitachi’s plan for capital investment for fiscal 2009, see “A. History and Development of the Company” in this Item.

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ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results

Economic Environment

Hitachi provides highly diversified products and services and conducts business throughout the world. Hitachi’s results of operations therefore are affected by various aspects of the economic environment, particularly capital investment in the private sector and consumer spending in Hitachi’s main market sectors such as Japan, Asia, the U.S. and Europe.

In fiscal 2008, the effects of the deepening global financial crisis, triggered by the collapse of a major investment bank in the U.S. in September 2008, have spread to the real economy, as evidenced by weak consumer spending and reduced capital investment, resulting in rapid economic deterioration in the U.S., Europe and elsewhere. China and other emerging countries also experienced a slowdown in economic growth, affected by the weak U.S. and European economies. The Japanese economy also deteriorated rapidly due to significant reduction in capital investment, stemming from worsening corporate earnings, as well as substantial decrease in demand, including export demand. Japan’s GDP declined by 3.3% in fiscal 2008, while it grew 2.3% in fiscal 2006 and 1.8% in fiscal 2007.

Hitachi conducts business in many foreign countries, and a portion of its assets and liabilities that are denominated in various currencies is exposed to risks from fluctuations in foreign currency exchange rates. In addition, Hitachi exports products and imports components and raw materials in local currencies, principally the U.S. dollar and the euro. Therefore, fluctuations in foreign currency exchange rates may affect Hitachi’s financial results, which are reported in Japanese yen. For example, a large portion of Hitachi’s manufacturing is done domestically, which means that a strong yen reduces Hitachi’s cost competitiveness. The Japanese yen on average weakened against the U.S. dollar during fiscal 2006, while during fiscal 2007 and fiscal 2008, the Japanese yen strengthened. Hitachi employs forward exchange contracts and cross currency swap agreements to reduce the impact of foreign currency exchange rate fluctuations. In addition, to alleviate the adverse effects of foreign currency exchange rate fluctuations, when Hitachi believes it is appropriate, it seeks to manufacture outside Japan and procure materials and parts locally. Hitachi generally seeks to finance foreign currency investments with available foreign currency balances. When foreign currency balances are insufficient, Hitachi may enter into forward exchange contracts to reduce the impact of foreign currency exchange rate fluctuations on such investments. For additional information regarding foreign currency exchange rate fluctuations, see “Item 4. Information on the Company — B. Business Overview — Sales and Distribution.”

Business Strategy

The business circumstances surrounding Hitachi have become increasingly challenging. Some of its businesses are in stagnant industries. In addition, the globalization of markets and the commoditization of electronic products are continuing to intensify price competition in the business sectors in which Hitachi competes.

In order to establish a stable and profitable business structure, Hitachi is working to realign its business portfolio by exiting some businesses that share fewer synergies with targeted businesses or have poor prospects for higher efficiency, by increasing its focus on targeted businesses and by creating new businesses to achieve increased profitability. Hitachi expects to combine its information and telecommunication technologies and its social infrastructure building technologies in order to strengthen existing businesses and develop emerging businesses, such as systems for efficiently managing and supplying energy. Hitachi also aims to expand its environment-related businesses, which are nuclear power generation and highly efficient thermal power generation systems; railway systems, automotive systems and logistics solutions that lower environmental impact; and eco-conscious data centers. Hitachi is allocating its business resources to strong businesses and is also implementing a variety of projects to enhance efficiency and restructure unprofitable operations, including a project aimed at reducing materials purchasing costs and a project aimed at improving turnover of assets. In an effort to improve its profitability, Hitachi aims to reduce fixed costs through reorganization of its operations and production bases and through reduction in the size of its workforce. Hitachi also expects to continue to improve cash-flow management by increasing the efficiency of working capital use, by making selective investments and by further reducing procurement costs.

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Hitachi is entering into alliances with important domestic and overseas business partners in order to improve its profitability and to develop new business areas through exploiting synergies between these partners and Hitachi group companies. In addition, Hitachi aims to strengthen its global business, particularly in the markets with expanding demand for social infrastructure systems such as power generation systems and transportation systems, through initiatives, such as entering into alliances with local business partners, employing staff familiar with local situations, and reinforcing risk management.

Business Reorganization

In October 2006, in order to strengthen Hitachi’s car information systems business, the Company conducted a tender offer for shares of Clarion, a company that manufactures and sells car audio systems and car navigation systems. Clarion became a consolidated subsidiary of the Company in December 2006. The Company is working to realize synergies from the transaction through Clarion’s capabilities to develop such products as audio-visual and navigation systems, and through Clarion’s capabilities to market aftermarket services.

In November 2006, the Company entered into a letter of intent with GE, which expressed the intent of both parties to create a global alliance for their nuclear businesses. This alliance was intended to improve and expand Hitachi’s and GE’s boiling water reactor technology offerings, as well as to achieve synergy in the areas of design, manufacture, construction, maintenance and engineering services. Subsequently, in order to implement the alliance, the Company entered into an agreement with GE in May 2007 to form companies in each of the U.S., Canada and Japan. The U.S. and Canadian companies were established in June 2007. In July 2007, the Company transferred its nuclear power systems operations to a newly created Japanese company, by way of corporate split under the Companies Act of Japan, and GE invested in the Japanese company. Hitachi owns 40% of the U.S. and Canadian companies, with GE owning the remaining 60%, and the Company owns 80.01% of the Japanese company, which is a consolidated subsidiary, with GE owning the remaining 19.99%. Hitachi seeks through these transactions to strengthen its competitiveness in the global market and to increase market share and profitability in the future through synergy with GE. Hitachi plans to strengthen and expand its nuclear power systems business throughout the world, including the U.S., through the alliance with GE. In particular, these plans include jointly designing both an advanced boiling water reactor and a next-generation, economic and simplified boiling water reactor. These plans also include leveraging both companies’ accumulated know-how and experience in the sales activities and the construction of nuclear power plants.

In December 2007, the Company entered into a comprehensive alliance with Panasonic and Canon. Pursuant to this alliance, Hitachi’s large-size LCD business and small- and medium-sized LCD business will be transferred to Panasonic and Canon, respectively. In February 2008, Hitachi and Panasonic entered into an agreement regarding the future transfer of Hitachi’s business, conducted by IPS Alpha, for manufacturing large-sized LCDs for flat-panel TVs to Panasonic. Also in February 2008, Hitachi and Canon entered into an agreement regarding the future transfer of Hitachi Displays’ business for manufacturing small- and medium-sized LCDs to Canon. Hitachi plans to continue research and development of LCD panels after the transfer of its LCD businesses.

In January 2009, the Company conducted a tender offer for shares of Hitachi Kokusai Electric, an equity method affiliate that manufactures and sells wireless communications systems, broadcasting and video systems and semiconductor manufacturing equipment. Hitachi Kokusai Electric then became a consolidated subsidiary of the Company in March 2009. The Company seeks to realize synergies from the transaction through Hitachi Kokusai Electric’s expertise in digital wireless communication technologies, video processing technologies and the broadcasting systems business. The Company plans to use this expertise in order to strengthen its businesses in such areas as information networks, transportation systems, and urban development systems.

In January 2009, the Company conducted a tender offer for shares of Hitachi Koki, an equity method affiliate that manufactures and sells power tools. Hitachi Koki then became a consolidated subsidiary of the Company in March 2009. The conversion of Hitachi Koki into a consolidated subsidiary is intended to expand Hitachi Koki’s business on a global scale and to foster collaboration in such areas as research and development for lithium-ion battery-operated products, a strategic product for Hitachi Koki.

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In response to the harsh business environment, the Company separated its automotive systems business to form a new wholly-owned subsidiary on July 1, 2009 in order to facilitate business restructuring, such as improvement of operating efficiency. See “Fiscal 2008 Compared with Fiscal 2007” in this Item for additional information.

During fiscal 2008, the Company decided to shift from producing glass panel components for plasma TVs at the Company’s subsidiary to procuring such components from Panasonic. In addition, the Company separated its digital media products business, including flat-panel TVs, to form a new wholly-owned subsidiary on July 1, 2009 in order to strengthen the marketing capability of this business. See “Fiscal 2008 Compared with Fiscal 2007” in this Item for additional information.

Hitachi is responding to the challenging economic circumstances by closing or downsizing unprofitable operations where feasible, seeking joint ventures with competitors, reallocating employees from overstaffed businesses to growth businesses, and reorganizing the geographic distribution of its manufacturing facilities. However, Hitachi’s ability to close or sell unprofitable businesses may be limited for reasons such as a lack of demand in the M&A market for poorly performing businesses and the importance of preserving customer goodwill.

Note to Analysis of Revenues and Operating Income (Loss)

The industry segments described below, in the analysis of revenues and operating income (loss) by industry and geographic segment and in the description of restructuring measures by industry segment, are presented in accordance with a ministerial ordinance of the Financial Instruments and Exchange Law of Japan. Pursuant to an SEC exemption presently available to foreign private issuers, Hitachi does not present segment information in accordance with the requirements of SFAS No. 131. However, Hitachi believes that this presentation may be useful in understanding Hitachi’s results of operations. Revenues by segment include intersegment transactions which Hitachi makes adjustments for in calculating total revenues. Operating income (loss) is not presented in the consolidated statement of operations. In order to be consistent with financial reporting principles and practices generally accepted in Japan, operating income (loss) is presented as total revenues less cost of sales and selling, general and administrative expenses. However, under U.S. GAAP, restructuring charges, net gain or loss on sale and disposal of rental assets and other property, and impairment losses for long-lived assets are included as part of operating income (loss). See notes 17, 18 and 19 to Hitachi’s consolidated financial statements.

Fiscal 2008 Compared with Fiscal 2007

Summary

	Fiscal 2007		Fiscal 2008		Percent change
	(Millions of yen, except percentage data)
Total revenues	11,226,735		10,000,369		-11	%
Operating income	345,516		127,146		-63	%
Income (loss) before income taxes and minority interests	324,782		(289,871	)	—	%
Income (loss) before minority interests	52,619		(795,120	)	—	%
Net loss	(58,125	)	(787,337	)	—	%

Hitachi’s total revenues decreased appreciably compared with the preceding fiscal year. Operating income declined significantly due to considerable decreases in revenues in the Power & Industrial Systems segment and the High Functional Materials & Components segment. Hitachi recorded a significant loss before income taxes and minority interests due to the drastic decline in operating income, as well as large losses due to impairment of long-lived assets, posting equity in net loss of affiliated companies, write-downs of securities, foreign exchange losses and restructuring charges. Net loss significantly increased compared with the preceding fiscal year due to the loss before income taxes and minority interests as well as a sizable increase in the valuation allowance for deferred tax assets. See “Analysis of Statement of Operations”, “Operations by Industry Segment” and “Operations by Geographic Segment” below for more detailed discussion.

23

Analysis of Statement of Operations

Hitachi’s total revenues in fiscal 2008 were ¥10,000.3 billion, a decrease of 11% from the preceding fiscal year due to decreases in revenues in all industry segments, but primarily in the Power & Industrial Systems segment, the Digital Media & Consumer Products segment and the High Functional Materials & Components segment. Such revenue decreases were primarily associated with the plunge in demand for automobiles, semiconductors and industrial equipment caused by the worldwide economic deterioration during the second half of fiscal 2008. Overseas revenues declined 13% compared with the preceding fiscal year to ¥4,138.9 billion. This decline, primarily due to a decrease in revenues in automobile-related equipment, materials and components, as well as construction machinery, was caused by the worldwide economic deterioration during the second half of fiscal 2008. The strengthening of the yen also reduced revenues from overseas.

Hitachi’s cost of sales decreased 11%, to ¥7,816.1 billion, in fiscal 2008 compared with the preceding fiscal year. The ratio of cost of sales to total revenues was 78%, which was flat with the preceding fiscal year. The stability of this ratio reflects the results of cost-reduction efforts, which offset the effect of increases in raw material prices.

Selling, general and administrative expenses decreased 2%, to ¥2,057.0 billion, in fiscal 2008 compared with the preceding fiscal year. The ratio of selling, general and administrative expenses to total revenues increased 2% to 21% mainly due to the significant decrease in revenues.

Operating income fell 63%, to ¥127.1 billion, in fiscal 2008 compared with the preceding fiscal year. Although operating income increased in the Information & Telecommunication Systems segment, this positive contribution was overshadowed by the effects of a sharp profit decline in the Power & Industrial Systems segment and the High Functional Materials & Components segment, brought about by the significant decrease in revenues.

In fiscal 2008, Hitachi recorded impairment losses on long-lived assets in the amount of ¥128.4 billion, an increase of ¥40.8 billion from the preceding fiscal year.

The Digital Media & Consumer Products segment recorded an impairment loss of ¥57.9 billion mainly in connection with the impairment of plasma display panel production facilities. The investment in these production facilities is expected to be irrecoverable as a result of the decision to shift from producing glass panel components for plasma TVs at the Company’s subsidiary to procuring such components from outside Hitachi. The decision to make this shift was due to intensified competition, which resulted in falling unit prices of plasma TVs, and due to a lower-than-projected unit sales volume. The impairment loss also includes impairment of the value of patents related to plasma display panel technology. Expected future royalty income from these patents has been revised downward, and a portion of the investment in these patents is expected to be irrecoverable. This segment also recorded impairment losses on production facilities for components of digital media-related products at domestic subsidiaries. This impairment is due to diminished productivity caused by low demand, and a portion of the investment in these production facilities is expected to be irrecoverable. The Power & Industrial Systems segment recorded an impairment loss of ¥32.9 billion, mainly on production facilities for automotive equipment. This impairment was due to decreased profitability in the automotive systems business, caused by a plunge in demand corresponding to sluggish automobile sales worldwide, and a portion of the investment in these production facilities is expected to be irrecoverable. The Information & Telecommunication Systems segment recorded an impairment loss of ¥21.1 billion. The impairment loss includes impairment of production facilities for large-scale integrated circuits. This impairment is due to decreased profitability caused by low demand in the semiconductor-related industry, and a portion of the investment in these production facilities is expected to be irrecoverable. The impairment loss also includes software used in the outsourcing business for domestic local financial institutions due to decreased profitability mainly because of restrained IT investment by the financial institutions. The investment in the software is expected to be irrecoverable. In addition, the impairment loss includes impairment of real estate of a U.S. subsidiary due to a plunge in the estimated sales prices of assets scheduled to be sold due to the deteriorating real estate market. The High Functional Materials & Components segment recorded an impairment loss of ¥12.8 billion mainly in connection with the impairment of production facilities for semiconductor-related and automotive-related products. This impairment is due to decreased profitability in these products caused by a plunge in demand in the automobile and semiconductor industries, and a portion of the investment in these production facilities is expected to be irrecoverable. These losses were determined primarily based on discounted future cash flows.

In fiscal 2008, Hitachi recorded restructuring charges of ¥22.9 billion, an increase of ¥4.8 billion from the preceding fiscal year, consisting primarily of the restructuring charges in the Power & Industrial Systems segment, the High Functional Materials & Components segment and the Digital Media & Consumer Products segment. See “Restructuring” in this Item.

24

Interest income decreased ¥12.3 billion, to ¥19.1 billion, in fiscal 2008 compared with the preceding fiscal year mainly due to declines in interest rates. Dividend income increased ¥2.5 billion, to ¥8.5 billion, in fiscal 2008 compared with the preceding fiscal year. In fiscal 2008, gains on sales of stock by subsidiaries or affiliated companies amounted to ¥0.3 billion, and other income amounted to ¥5.2 billion, consisting mainly of a gain on Hitachi’s sale of its mobile communications equipment sales business.

Interest charges decreased ¥8.6 billion, to ¥33.8 billion, in fiscal 2008 compared with the preceding fiscal year, primarily due to the effect of lower interest rates.

In fiscal 2008, earnings of equity method affiliated companies declined ¥184.7 billion compared with the preceding fiscal year, resulting in a loss of ¥162.2 billion. This decline was mainly due to losses at affiliates engaged in the semiconductor business, which reflected a decrease in semiconductor demand as worldwide sales of automobiles and mobile phones declined due to the economic downturn, as well as losses at affiliates engaged in the large-sized TV LCD business, which reflected a decline in unit prices.

Other deductions increased ¥65.2 billion, to ¥102.9 billion, in fiscal 2008 compared with the preceding fiscal year. Gains on securities declined ¥124.2 billion compared with the preceding fiscal year, resulting in a loss on securities of ¥44.0 billion. The decline was due to market price declines in the worldwide stock markets, mainly in Japan, resulting in write-downs of securities, as well as the absence of the substantial gain on sales of securities which had been recorded during the preceding fiscal year. Foreign exchange loss increased ¥8.8 billion, to ¥37.2 billion, in fiscal 2008 compared with the preceding fiscal year, due primarily to the strengthening of the yen against the U.S. dollar and the euro. Net loss on sale and disposal of rental assets and other property, plant and equipment increased ¥13.0 billion, to ¥21.2 billion, in fiscal 2008 compared with the preceding fiscal year.

As a result of the foregoing, income before income taxes and minority interests decreased ¥614.6 billion, resulting in a loss before income taxes and minority interests of ¥289.8 billion in fiscal 2008 compared with the preceding fiscal year.

Income taxes increased ¥233.0 billion, to ¥505.2 billion, in fiscal 2008 compared with the preceding fiscal year, due primarily to recognition of an additional valuation allowance for deferred tax assets following a reassessment of whether the deferred tax assets could be realized. Hitachi concluded that it was not more likely than not that the deferred tax assets would be realized upon a determination that a significant recovery of Hitachi’s profitability would be unlikely, given the seriousness of the worldwide economic deterioration and the unlikelihood that the operating environment for Hitachi’s major businesses, such as automobile equipment and digital media equipment, would quickly recover, even after fiscal 2008.

As a result, income before minority interests decreased ¥847.7 billion compared with the preceding fiscal year, to a loss of ¥795.1 billion in fiscal 2008.

For minority interests in fiscal 2008, a loss of ¥7.7 billion was recorded compared with profit of ¥110.7 billion for the preceding fiscal year, primarily due to the overall deterioration in business results at the Company’s publicly-held subsidiaries such as Hitachi Cable, Ltd. and Hitachi Maxell, Ltd., both of which recorded a net loss for fiscal 2008.

As a result of the foregoing, net loss increased ¥729.2 billion, to ¥787.3 billion, in fiscal 2008 compared with the preceding fiscal year.

25

Operations by Industry Segment

	Revenues						Operating income (loss)
	Fiscal 2007		Fiscal 2008		Percent change		Fiscal 2007		Fiscal 2008		Percent change
	(Millions of yen, except percentage data)
Information & Telecommunication Systems	2,761,137		2,594,450		-6	%	116,105		176,629		+52	%
Electronic Devices	1,293,517		1,151,066		-11	%	54,046		27,322		-49	%
Power & Industrial Systems	3,568,151		3,310,544		-7	%	138,455		24,245		-82	%
Digital Media & Consumer Products	1,504,692		1,261,501		-16	%	(109,914	)	(105,563	)	—	%
High Functional Materials & Components	1,875,018		1,556,886		-17	%	141,007		27,777		-80	%
Logistics, Services & Others	1,271,465		1,089,971		-14	%	27,870		23,063		-17	%
Financial Services	445,400		412,040		-7	%	25,481		10,210		-60	%
Subtotal	12,719,380		11,376,458		-11	%	393,050		183,683		-53	%
Eliminations and Corporate Items	(1,492,645	)	(1,376,089	)	—	%	(47,534	)	(56,537	)	—	%
Total	11,226,735		10,000,369		-11	%	345,516		127,146		-63	%

Information & Telecommunication Systems

Revenues decreased 6% to ¥2,594.4 billion in fiscal 2008 compared with the preceding fiscal year primarily due to decreases in services business sales and in hardware sales.

Revenues in the services business decreased 2% to ¥1,112.7 billion. Major factors included a halt to the increase in sales of system integration services, with domestic financial institutions mostly having finished their current IT upgrade cycle and the impact of customers’ refraining from IT-related investments during the second half due to the worsening economy. Although HDD shipment volume increased 2% to approximately 91.2 million units, revenues decreased 12% to ¥573.3 billion due primarily to yen appreciation. U.S. dollar-denominated revenues in the HDD business were almost the same year on year. Although the shipment volume of 3.5-inch HDD models for desktop PCs decreased because of sluggish demand, demand for laptop computers progressed favorably during the first half, resulting in an increase in the shipment volume of the mainstay 2.5-inch models.

Operating income increased 52% to ¥176.6 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to an increase in profitability of the services business and a significant improvement in the profitability of the HDD business.

In the services business, operating income increased as a result of efforts to control order receipts that emphasize profitability and to achieve profitability via thorough follow-up and cost management during the design and development processes in system integration. The operating loss for HDDs of ¥34.1 billion in the preceding fiscal year improved to operating income of ¥21.4 billion in fiscal 2008 due to an increase in sales of new high-capacity products with higher profitability and the effects of shortening the time between development and mass production and cost-reduction measures, such as integration of the production facilities and reduction in fixed costs and the purchase costs of raw materials.

Electronic Devices

Revenues decreased 11% to ¥1,151.0 billion in fiscal 2008 compared with the preceding fiscal year.

At Hitachi High-Technologies Corporation, revenues in fiscal 2008 were less than in the preceding fiscal year. In the U.S. and European markets, supported by solid demand for integrated clinical biochemistry and immunochemistry analyzers, products for highly efficient and high-quality tests progressed favorably, resulting in an increase in revenues from clinical analyzers. However, revenues from semiconductor manufacturing equipment and LCD-related manufacturing equipment decreased, as semiconductor manufacturers and LCD manufacturers reduced capital investments due to deterioration in these markets.

Revenues declined in the display business that mainly produces small and medium-sized LCDs. Sales of small and medium-sized LCDs progressed during the first half to meet demand for the use of high-definition LCD panels in devices such as mobile phones and digital still cameras. However, demand for LCDs as a whole plunged in the second half as the economic downturn caused a sudden decrease in consumer demand, and overall sales decreased.

Operating income decreased 49% to ¥27.3 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to a decrease in profit at Hitachi High-Technologies Corporation mainly as a result of the decrease in sales of semiconductor manufacturing equipment.

26

Power & Industrial Systems

Revenues decreased 7% to ¥3,310.5 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to decreases in revenues of the automotive systems business and at Hitachi Construction Machinery Co., Ltd., despite an increase in revenues of the power systems business.

Revenues in the power systems business increased primarily due to posting of sales of nuclear power plants in Japan and coal-fired thermal power plants in Germany and Canada. In the automotive systems business, sales of automotive equipment decreased significantly due to the sharp reduction in demand for automotive equipment as automobile manufacturers drastically decreased production against the backdrop of sluggish global automobile sales, particularly in the second half of fiscal 2008. Revenues of Hitachi Construction Machinery Co., Ltd., declined as a result of decreased worldwide demand, primarily in Europe, the U.S. and Japan, for construction machinery, mainly due to reduced housing investment as credit tightened and reduced capital investments in the private sector.

Operating income decreased 82% to ¥24.2 billion in fiscal 2008 compared with the preceding fiscal year. This decline was primarily attributable to the recording of a loss by the automotive systems business and a considerable profit decline by Hitachi Construction Machinery Co., Ltd. mainly resulted from a significant decrease in sales, despite the improved profitability of the power systems business due to an increase in sales.

As discussed above, the profitability of the automotive systems business worsened due to a significant decline in sales. To cope with the harsh business environment, the Company separated its automotive systems business to form a new company on July 1, 2009. The new company, a wholly-owned subsidiary of the Company, is expected to facilitate business restructuring to improve profitability, with measures such as: faster decision making, improvement of operating efficiency (through reorganization and consolidation of production bases, as well as appropriate reduction in the size of the workforce) and further concentration of management resources on priority businesses such as environmental and safety-conscious systems for installation in automobiles.

Digital Media & Consumer Products

Revenues decreased 16% to ¥1,261.5 billion in fiscal 2008. Revenues of flat-panel TVs declined mainly due to the decreased sales volume of plasma TVs to 650 thousand units in fiscal 2008 compared with 850 thousand units in the preceding fiscal year, owing to the reduction of overseas sales channels for consumers, and price reductions. Sales of digital media-related products for PCs, such as optical disc drives, decreased, affected by the rapid decline in demand for PCs due to the economic downturn since the second half of fiscal 2008. Sales of room air conditioners decreased due to a decrease in sales in Europe and China owing to the adverse effect of the recession, despite an increase in sales in Japan due to favorable sales of high-end models.

The segment posted an operating loss of ¥105.5 billion in fiscal 2008, though the loss improved ¥4.3 billion from the preceding fiscal year. This loss was mainly attributable to the posting of an operating loss in the flat-panel TV business, due to such factors as the continued price reductions in the mainstay market of Japan, the lower-than-projected sales volume of high-end models and the recording of expenses related to the write-off of inventories in connection with restructuring measures in Japan, partially offset by the effects of the reduction of overseas sales channels.

The flat-panel TV business experienced intensified price competition and the growth in demand slowed pace due to the global economic deterioration during fiscal 2008. In such a harsh business environment, Hitachi has sought to improve profitability for flat-panel TVs by switching to external procurement sources for the glass panel components for plasma TVs, by reducing fixed costs through a reduction in the size of the workforce and other production costs, and by reducing domestic and overseas sales channels for consumers. In addition, the Company separated its digital media products business, including flat-panel TVs, to form a new company on July 1, 2009. The new company, a wholly-owned subsidiary of the Company, is expected to strengthen its marketing capability, allowing it to flexibly provide products that meet market needs through collaborations with the Company’s consolidated subsidiary in charge of sales and after-sales services.

27

High Functional Materials & Components

Revenues decreased 17% to ¥1,556.8 billion in fiscal 2008 compared with the preceding fiscal year. This decline was primarily due to decreases in sales of semiconductor-related materials and automotive-related materials and components. These sales decreased following a sharp decline in demand for automobiles and semiconductors as the global recession deepened in the second half of fiscal 2008.

Revenues from Hitachi Chemical Co., Ltd. declined compared with the preceding fiscal year primarily due to a decrease in sales of semiconductor-related materials and automotive-related products. Additionally, sales decreased because the household and environmental equipment business was sold to a third party in January 2008. Revenues from Hitachi Metals, Ltd. declined primarily due to decreases in sales of metallic products and magnetic materials for automobiles and IT-related electronics components. Revenues from Hitachi Cable, Ltd. declined primarily due to decreases in sales of wires and cables, as sale prices followed declining copper prices, and decreases in sales of automotive-related components and compound semiconductors resulting from decreased demand for automobiles and semiconductors. However, these decreases were partially offset by an increase in sales of fiber-optic submarine cables for telecommunication lines due to rising demand for data communication worldwide.

Operating income decreased 80% to ¥27.7 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to significant decreases in sales of automotive-related materials and components and semiconductor-related materials, as well as a valuation loss at Hitachi Cable, Ltd. for inventories owing to a decline in copper prices.

Logistics, Services & Others

Revenues declined 14% to ¥1,089.9 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to decreases at sales subsidiaries overseas. The decrease at sales subsidiaries was due to a decrease in sales of digital media-related products, affected by the decline in demand resulting from the worsened regional economies in Europe and the United States, as well as strengthening of the yen against the euro and the U.S. dollar, though sales of logistics outsourcing services increased due to new projects in domestic markets.

Operating income decreased 17% to ¥23.0 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to profit declines following sales declines at sales subsidiaries overseas.

Financial Services

Revenues decreased 7% to ¥412.0 billion and operating income fell 60% to ¥10.2 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to a decline in the transaction volume in the leasing of industrial equipment, as private-sector capital investments decreased due to the economic downturn, and the recording of a loss in connection with the sale of Hitachi’s gift card business.

Operations by Geographic Segment

	Revenues						Operating income (loss)
	Fiscal 2007		Fiscal 2008		Percent change		Fiscal 2007		Fiscal 2008		Percent change
	(Millions of yen, except percentage data)
Japan	8,896,259		7,985,652		-10	%	299,632		74,370		-75	%
Asia	2,409,319		2,134,137		-11	%	33,020		76,742		+132	%
North America	1,086,108		973,425		-10	%	23,087		7,182		-69	%
Europe	886,838		789,980		-11	%	21,575		(17,129	)	—	%
Other Areas	269,522		192,305		-29	%	13,394		9,434		-30	%
Subtotal	13,548,046		12,075,499		-11	%	390,708		150,599		-61	%
Eliminations and Corporate Items	(2,321,311	)	(2,075,130	)	—	%	(45,192	)	(23,453	)	—	%
Total	11,226,735		10,000,369		-11	%	345,516		127,146		-63	%

28

Japan

Revenues decreased 10% to ¥7,985.6 billion in fiscal 2008 compared with the preceding fiscal year. This decrease was primarily due to decreasing sales of automotive-related equipment, materials and components, construction machinery and products in the IT field, such as semiconductor manufacturing equipment. These sales decreased as a result of the rapid fall in demand for automobiles, semiconductors and industrial machinery and equipment, due to the effect of rapid economic deterioration in the second half of fiscal 2008.

Operating income fell 75% to ¥74.3 billion in fiscal 2008 compared with the preceding fiscal year. This decrease was attributable to significant decreases in sales of automotive-related equipment, materials and components, construction machinery and semiconductor manufacturing equipment.

Asia

Revenues decreased 11% to ¥2,134.1 billion in fiscal 2008 compared with the preceding fiscal year. This decline was primarily due to decreasing sales caused by decreased demand for digital media-related products, such as optical disk drives; construction machinery; and high functional materials and components.

Operating income increased 132% to ¥76.7 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to a considerable improvement in the profitability of HDDs as a favorable result of restructuring measures, partially offset by the decreased profitability of construction machinery as sales decreased.

North America

Revenues decreased 10% to ¥973.4 billion in fiscal 2008 compared with the preceding fiscal year. This decline was primarily attributable to: decreased sales of construction machinery caused by the effect of decreased housing construction in the United States; decreased sales of automotive-related equipment, materials and components caused by decreased production by automobile manufacturers; and decreased sales of flat-panel TVs caused by the reduction of sales channels.

Operating income decreased 69% to ¥7.1 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to decreasing sales of construction machinery and automotive-related equipment, materials and components.

Europe

Revenues decreased 11% to ¥789.9 billion in fiscal 2008 compared with the preceding fiscal year primarily due to decreases in sales of construction machinery and automotive equipment owing to decreased demand resulting from the economic setback, despite an increase in revenues of coal-fired thermal power plant business primarily in Germany.

A profit decline of ¥38.7 billion, compared with the preceding fiscal year, led to an operating loss of ¥17.1 billion. This decline was primarily attributable to decreases in the profitability of construction machinery and automotive equipment caused by a decrease in sales and the recording of additional expense to overcome delayed schedules at coal-fired thermal power plant projects.

Other Areas

Revenues decreased 29% to ¥192.3 billion and operating income decreased 30% to ¥9.4 billion in fiscal 2008 compared with the preceding fiscal year, primarily due to a decrease in sales of mineral mining machinery in Australia and South Africa, as demand decreased for the development of natural resources.

29

Fiscal 2007 Compared with Fiscal 2006

Summary

	Fiscal 2006		Fiscal 2007		Percent change
	(Millions of yen, except percentage data)
Total revenues	10,247,903		11,226,735		+10	%
Operating income	182,512		345,516		+89	%
Income before income taxes and minority interests	202,338		324,782		+61	%
Income before minority interests	39,524		52,619		+33	%
Net loss	(32,799	)	(58,125	)	—	%

Hitachi’s total revenues increased compared to the preceding fiscal year. Operating income significantly improved due to increases in operating income in most industry segments, particularly in the Power & Industrial Systems segment and the Information & Telecommunication Systems segment, partially offset by an increase in an operating loss in the Digital Media & Consumer Products segment. Income before income taxes and minority interests also increased due to an increase in operating income and an increase in net gain on sale of securities, partially offset by an increase in impairment of long-lived assets and an increase in restructuring charges. However, as a result of a significant increase in income taxes due primarily to an increase in the valuation allowance for deferred tax assets and an increase in minority interests due to the overall good performance of publicly-held subsidiaries, net loss increased compared to the preceding fiscal year. See “Analysis of Statement of Operations”, “Operations by Industry Segment” and “Operations by Geographic Segment” below for more detailed discussion.

Analysis of Statement of Operations

Hitachi’s total revenues in fiscal 2007 were ¥11,226.7 billion, an increase of 10% from the preceding fiscal year due to increases in revenues in most industry segments particularly in the Power & Industrial Systems segment and the Information & Telecommunication Systems segment, partially offset by a decrease in revenues of the Financial Services segment. See “Operations by Industry Segment” and “Operations by Geographic Segment” below for more detailed discussion. Overseas revenues increased 14% over the same period, to ¥4,742.2 billion, or 42% of total revenues. This was due primarily to overall revenue increases in Asia, particularly increases in sales of construction machinery and HDDs, and an increase in sales of construction machinery and posting sales of a coal-fired thermal power plant in Europe.

Hitachi’s cost of sales increased 9%, to ¥8,777.6 billion, in fiscal 2007 compared to the preceding fiscal year. The ratio of cost of sales to total revenues decreased 1% in fiscal 2007 compared to the preceding fiscal year, to 78%. This improvement was primarily due to various cost reduction efforts and an improvement in profitability due to an increase in revenues, partially offset by the rise in raw material prices.

Selling, general and administrative expenses increased 6%, to ¥2,103.5 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in sales activities. The ratio of selling, general and administrative expenses to total revenues was 19%, almost the same in fiscal 2007 as in the preceding fiscal year.

Operating income, total revenues less cost of sales and selling, general and administrative expenses, increased 89%, to ¥345.5 billion, in fiscal 2007 compared to the preceding fiscal year due to an increase in most industry segments, particularly significant improvement in the Power & Industrial Systems segment and the Information & Telecommunication Systems segment, partially offset by a significant increase in operating loss in the Digital Media & Consumer Products segment. See “Operations by Industry Segment” and “Operations by Geographic Segment” below for more detailed discussion.

In fiscal 2007, Hitachi recorded impairment losses for long-lived assets in the amount of ¥87.5 billion, an increase of ¥77.6 billion from the preceding fiscal year.

30

The Digital Media & Consumer Products segment recorded an impairment loss of ¥68.7 billion. This impairment loss was recognized mainly in connection with an impairment of plasma display panel production facilities due to a decline of their profitability and the amounts invested in such production facilities are expected to be irrecoverable. Such profitability decline resulted from intensified market competition followed by falling unit prices of plasma TVs, a larger decrease in sales volume in units than expected and restructured overseas sales activities as part of a re-evaluation of geographical strategies in response to this decrease in sales. In addition, the impairment loss also includes impairment of the value of patents in connection with plasma display panel technology, for which the future royalty income is expected to decrease more than expected and the amounts invested in such patents are expected to be irrecoverable. The Power & Industrial Systems segment recorded an impairment loss of ¥9.2 billion. This impairment loss was recognized mainly in connection with an impairment of power generation facilities for electrical power sales business due to decline of profitability of such business that resulted from increased fuel prices and the amounts invested in such facilities are expected to be irrecoverable. The High Functional Materials & Components segment recorded an impairment loss of ¥7.1 billion. This impairment loss was recognized mainly in connection with an impairment of the production facilities of chip-on-film products for use in LCD drivers that resulted from falling prices of such products due to oversupply following a decrease in demand for LCD panels and the amounts invested in such facilities are expected to be irrecoverable. These losses were determined based primarily on discounted future cash flows.

In fiscal 2007, Hitachi recorded restructuring charges of ¥18.1 billion, an increase of ¥14.1 billion from the preceding fiscal year, associated primarily with the restructuring measures in the Information & Telecommunication Systems segment, the Digital Media & Consumer Products segment and the Power & Industrial Systems segment. See “Restructuring” in this Item.

Interest income increased ¥5.5 billion, to ¥31.5 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to a rise in the interest rate and an increase in interest income relating to installment sales of construction machinery business.

Dividends income amounted to ¥6.0 billion in fiscal 2007, almost the same as the preceding fiscal year.

Gains on sales of stock by subsidiaries or affiliated companies amounted to ¥3.8 billion in fiscal 2007 due to the merger of Hitachi Metals and NEOMAX. This was a ¥8.1 billion decrease compared to the preceding fiscal year, when a gain of ¥12.0 billion was recorded due primarily to the sale of the Company’s shares in a U.S. consolidated subsidiary engaged in optical components business when the U.S. company listed its shares and resulted in such subsidiary becoming an equity method affiliate.

Other income increased ¥64.7 billion, to ¥123.7 billion, in fiscal 2007, compared to the preceding fiscal year. Net gain on securities increased ¥32.4 billion, to ¥80.1 billion, in fiscal 2007 compared to the preceding fiscal year due to sale of shares of subsidiaries, including sale of a part of shares of Hitachi Displays to Canon in connection with the reorganization of the LCDs business, sale of a part of shares of Hitachi-GE Nuclear Energy, Ltd. to GE in connection with the alliance with GE regarding nuclear power systems business and sale of all shares of Hitachi Semiconductor Singapore Pte. Ltd. Gains on contribution of securities to employee retirement benefit trust amounted to ¥21.0 billion also contributed to the increase; the Company contributed certain shares to such trust in order to improve its pension financing and to increase its utilization of financial assets. Equity in earnings of affiliated companies also increased ¥11.2 billion, to ¥22.5 billion, in fiscal 2007 due to an overall improvement in business results of equity method affiliates.

Interest charges increased ¥4.6 billion, to ¥42.4 billion in fiscal 2007 compared to the preceding fiscal year due primarily to the effect of a rise in the interest rate.

Other deductions increased ¥6.2 billion, to ¥37.7 billion, in fiscal 2007 compared to the preceding fiscal year. Foreign exchange losses increased ¥25.3 billion, to ¥28.4 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to strengthening of the yen against the U.S. dollars. Net loss on sale and disposal of rental assets and other property decreased ¥16.3 billion, to ¥8.2 billion, in fiscal 2007 compared to the preceding fiscal year. While the gross amount of loss on disposal of fixed assets was almost the same as in the preceding fiscal year, a larger amount of gains on sale of idle lands by the Company and certain subsidiaries resulted in a reduction in the net loss.

As a result of the foregoing, income before income taxes and minority interests increased 61%, to ¥324.7 billion, in fiscal 2007 compared to the preceding fiscal year.

31

Income taxes in relation to income before income taxes and minority interests in fiscal 2007 increased ¥109.3 billion, to ¥272.1 billion, in fiscal 2007 compared to the preceding fiscal year, which resulted in the effective tax rate of 84% in fiscal 2007 compared to 80% in the preceding fiscal year. This was due primarily to a ¥62.0 billion increase in the valuation allowance for deferred tax assets of the Company related to Japanese local taxes following re-assessment of the realizability of deferred tax assets in line with lower earnings in the flat-panel TV business. Further, certain overseas subsidiaries were not able to record a deferred tax benefit for their losses.

As a result, income before minority interests increased 33%, to ¥52.6 billion, in fiscal 2007 compared to the preceding fiscal year.

Minority interests increased 53%, to ¥110.7 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to firm business results of publicly-held subsidiaries such as Hitachi Construction Machinery Co., Ltd., publicly-held subsidiaries in the High Functional Materials & Components segment and Hitachi High-Technologies Corporation.

As a result of the foregoing, Hitachi’s net loss increased ¥25.3 billion, to ¥58.1 billion, in fiscal 2007 compared to the preceding fiscal year.

Operations by Industry Segment

	Revenues						Operating income (loss)
	Fiscal 2006		Fiscal 2007		Percent change		Fiscal 2006		Fiscal 2007		Percent change
	(Millions of yen, except percentage data)
Information & Telecommunication Systems	2,472,227		2,761,137		+12	%	60,343		116,105		+92	%
Electronic Devices	1,287,492		1,293,517		+0	%	45,755		54,046		+18	%
Power & Industrial Systems	3,022,299		3,568,151		+18	%	36,391		138,455		+280	%
Digital Media & Consumer Products	1,506,073		1,504,692		-0	%	(58,435	)	(109,914	)	—	%
High Functional Materials & Components	1,794,506		1,875,018		+4	%	132,399		141,007		+7	%
Logistics, Services & Others	1,213,529		1,271,465		+5	%	20,233		27,870		+38	%
Financial Services	500,065		445,400		-11	%	23,534		25,481		+8	%
Subtotal	11,796,191		12,719,380		+8	%	260,220		393,050		+51	%
Eliminations and Corporate Items	(1,548,288	)	(1,492,645	)	—	%	(77,708	)	(47,534	)	—	%
Total	10,247,903		11,226,735		+10	%	182,512		345,516		+89	%

Information & Telecommunication Systems

Revenues increased 12%, to ¥2,761.1 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to increases in sales of services business and HDDs.

Revenues of services business increased by 15%, to ¥1,135.2 billion. This is primarily due to an increase in sales of system integration services as a result of active IT investment by domestic financial institutions. HDD shipment volume increased 28% to 89.5 million units, which resulted in a 15% increase in sales of HDDs compared to the preceding fiscal year, to ¥653.1 billion. A steady increase in demand for lap-top computers resulted in an increase in unit sales of 2.5 inch models, one of the core HDD products. Increasing demand also led to an increase in sales of 3.5 inch desk top models.

Operating income increased 92%, to ¥116.1 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in profit of services business and an improvement in the HDD business.

In the services business, operating income significantly increased as a result of sales efforts to emphasize profitability, of utilizing an automatic application generator tool to increase the quality and productivity of research and development and of emphasizing follow-up and cost management during the design and manufacture process to achieve profitability. Operating losses for HDDs decreased by ¥9.6 billion from ¥43.7 billion in the previous fiscal year to ¥34.1 billion due to stable prices in the latter half of fiscal 2007, an increase in sales of new more profitable products with high added value and a reduction of costs. This cost reduction was achieved by closing a certain production facility, integrating R&D and production facilities of circular disks and magnetic heads, reducing labor costs and reducing purchase costs of raw materials.

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Electronic Devices

Revenues amounted to ¥1,293.5 billion in fiscal 2007, almost the same as in the preceding fiscal year.

In Hitachi High-Technologies Corporation, revenues were almost the same as in the preceding fiscal year. Sales of clinical analyzers increased through intensive sales efforts of new models of integrated clinical chemistry and immunochemistry analyzers due to solid demand in the U.S. and European markets. Sales of semiconductor manufacturing equipment also increased due to solid demand in overseas markets. These increases were offset by a decrease in sales of semiconductor devices, functional components and printer-related components due to a reduction in production volume of certain clients and a decrease in sales of optical components for LCD projectors due to a contraction of the rear projection TV market.

In displays business, revenues were almost the same as in the preceding fiscal year. Revenues of large-sized TV LCDs decreased due to Hitachi’s policy of focusing on small and medium-sized LCDs and exiting from the large-sized TV LCDs business conducted by Hitachi Displays, a subsidiary of the Company. Sales of large-sized LCDs for PCs and sales of projection tubes decreased following downsizing as part of Hitachi’s business strategy. These decreases were offset by an increase in sales of small and medium-sized LCDs for devices like mobile phones and digital still cameras due to increased demand for high grade LCD panels in these products.

Operating income increased 18%, to ¥54.0 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in sales of new models of clinical analyzers in the U.S. and European markets and various cost reduction efforts.

Power & Industrial Systems

Revenues increased 18%, to ¥3,568.1 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to increases in revenues of power systems business, automotive equipment and Hitachi Construction Machinery Co., Ltd.

Revenues in power systems business increased due primarily to sales posted in a nuclear power plant in Japan and a coal-fired thermal power plant in Germany. Sales of automotive equipment increased due primarily to an increase in revenues due to Clarion Co., Ltd. becoming a consolidated subsidiary in December 2006 and a production increase in the domestic automobile manufacturers for exports. Revenues of Hitachi Construction Machinery Co., Ltd. increased due to increased worldwide demand for construction machinery and mineral mining machinery.

In fiscal 2007, Hitachi did not record unexpected costs after recording unexpected costs in fiscal 2006, relating to the accrual of repair costs for broken turbine vanes in Hamaoka Nuclear Power Station No. 5 of Chubu Electric Power Co., Inc. and in Shika Nuclear Power Station No. 2 of Hokuriku Electric Power Company and additional costs to overcome delays in the construction of a thermal power plant in the U.S. As a result, operating income increased 280%, to ¥138.4 billion, in fiscal 2007 compared to the preceding fiscal year.

Digital Media & Consumer Products

Revenues amounted to ¥1,504.6 billion in fiscal 2007, almost the same as the preceding fiscal year. Sales of projection TVs significantly decreased due to downsizing of such business and shifting focus to flat-panel TV business. The sales volume of plasma TVs increased to 850 thousand units in fiscal 2007 compared to 770 thousand units in the preceding fiscal year while revenues decreased due to price reductions mainly in old models. These factors were partially offset by an increase in sales of room air conditioners in Europe, China and India and an increase in sales of air-conditioning equipment for enterprises in Japan, Europe and China.

Operating loss increased ¥51.4 billion, to ¥109.9 billion, in fiscal 2007 from the preceding fiscal year. This increase in loss was due primarily to an increase in loss of plasma TVs, partially offset by an improvement in the profitability of room air conditioners as sales increased.

Operating loss of plasma TVs increased due to decreases in sales prices in Japan, particularly those for older models, and decreases in sales prices in North America due to price competition reflecting consumer preference for low price models. In addition, Hitachi recognized costs related to a sell-off of inventories in connection with the restructuring of sales activities.

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High Functional Materials & Components

Revenues increased 4%, to ¥1,875.0 billion, in fiscal 2007 compared to the preceding fiscal year. Revenues of Hitachi Chemical Co., Ltd. were almost the same as in the preceding fiscal year due primarily to an increase in sales of semiconductor related materials and automotive related components, partially offset by a decrease in sales of household and environmental equipment business due to the sale of such business to a third party in January 2008. Revenues of Hitachi Metals, Ltd. increased due primarily to an increase in sales of automotive- and IT-related electronics and information equipment and high grade casting components. Revenues of Hitachi Cable, Ltd. increased due primarily to an increase in sales of wires and cables as a result of solid demand and increased sales prices owing to a rise in copper prices and an increase in sales of fiber-optic submarine cable due to increased worldwide demand for telecommunication lines.

Operating income increased 7%, to ¥141.0 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to a successful transfer of increased materials costs to sales prices and cost reduction efforts.

Logistics, Services & Others

Revenues increased 5%, to ¥1,271.4 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in sales of logistics outsourcing services due to new projects in domestic and overseas markets. Operating income increased 38%, to ¥27.8 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in logistics outsourcing services as sales increased and an effort to improve transportation efficiency, as well as an improved performance by a sales subsidiary in China.

Financial Services

Revenues decreased 11%, to ¥445.4 billion, while operating income increased 8%, to ¥25.4 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to a selective sales activities aimed at winning profitable orders, mainly in leasing business.

Operations by Geographic Segment

	Revenues						Operating income (loss)
	Fiscal 2006		Fiscal 2007		Percent change		Fiscal 2006		Fiscal 2007		Percent change
	(Millions of yen, except percentage data)
Japan	8,284,229		8,896,259		+7	%	212,316		299,632		+41	%
Asia	2,020,757		2,409,319		+19	%	(3,664	)	33,020		—	%
North America	1,071,010		1,086,108		+1	%	25,310		23,087		-9	%
Europe	682,808		886,838		+30	%	23,312		21,575		-7	%
Other Areas	173,295		269,522		+56	%	8,647		13,394		+55	%
Subtotal	12,232,099		13,548,046		+11	%	265,921		390,708		+47	%
Eliminations and Corporate Items	(1,984,196	)	(2,321,311	)	—	%	(83,409	)	(45,192	)	—	%
Total	10,247,903		11,226,735		+10	%	182,512		345,516		+89	%

Japan

Revenues increased 7%, to ¥8,896.2 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in nuclear power plant sales, Clarion Co., Ltd. becoming a consolidated subsidiary in December 2006 and an increase in sales of construction machinery business.

Operating income increased 41%, to ¥299.6 billion in fiscal 2007 compared to the preceding fiscal year. In fiscal 2007, Hitachi did not record unexpected losses after recording unexpected costs in fiscal 2006, relating to the accrual of repair costs for broken turbine vanes in Hamaoka Nuclear Power Station No. 5 of Chubu Electric Power Co., Inc. and in Shika Nuclear Power Station No. 2 of Hokuriku Electric Power Company and additional costs to overcome delays in the construction of a thermal power plant in the U.S.

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Asia

Revenues increased 19%, to ¥2,409.3 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to overall increases in sales especially in HDDs due to increased demand and in construction machinery due to increased demand in China.

Operating income amounted to ¥33.0 billion, in fiscal 2007 compared to an operating loss of ¥3.6 billion in the preceding fiscal year due to an improvement in profitability of HDDs and a significant increase in sales of construction machinery.

North America

Revenues increased 1%, to ¥1,086.1 billion, in fiscal 2007 compared to the preceding fiscal year due to an increase in sales of HDDs and the sale of a coal-fired thermal power plant in Canada, partially offset by a decrease in digital media related products due to a decline in unit prices of plasma TVs, downsizing of projection TVs and a decline in sales of construction machinery business resulting from a decrease in housing investment in the U.S.

Operating income decreased 9%, to ¥23.0 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to a decrease in profitability of plasma TVs and a decrease in profitability of construction machinery resulting from a decrease in sales.

Europe

Revenues increased 30%, to ¥886.8 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in construction machinery sales due to increased demand and the sale of a coal-fired thermal power plant in Germany.

Operating income decreased 7%, to ¥21.5 billion from the preceding fiscal year. The primary factor of this decrease was a decrease in the profitability of a coal-fired thermal power plant in Germany due to increased labor costs that resulted from an expanding construction market. Costs also increased due to time intensive work that was required to overcome construction schedule delays after an initial principal subcontractor in that project went bankrupt and had to be replaced by a new subcontractor.

Other Areas

Revenues increased 56%, to ¥269.5 billion and operating income increased 55%, to ¥13.3 billion, in fiscal 2007 compared to the preceding fiscal year due primarily to an increase in sales of mineral mining machinery in Australia and South Africa resulting from increased demand for the development of natural resources.

Restructuring

Restructuring charges amounted to ¥3.9 billion in fiscal 2006, ¥18.1 billion in fiscal 2007 and ¥22.9 billion in fiscal 2008. The breakdown is not shown for all industry segments because the amounts charged to some segments are not material.

Fiscal 2008 restructuring

For fiscal 2008, Hitachi recorded restructuring charges of ¥22.9 billion. The restructuring charges included special termination benefits of ¥21.5 billion for 4,964 employees. Payments of ¥22.4 billion were made in fiscal 2008 and special termination benefits of ¥7.5 billion were accrued as of March 31, 2009. The accrued amount is expected to be paid in the fiscal year ending March 31, 2010.

Power & Industrial Systems recorded restructuring charges of ¥7.6 billion, consisting primarily of special termination benefits for employees in the automotive systems business both in Japan and overseas, in order to realign and integrate production bases and to reduce the workforce to address the significant decline in demand for automotive equipment.

High Functional Materials & Components recorded restructuring charges of ¥4.2 billion, consisting primarily of special termination benefits for employees in the metal materials business, in order to reduce fixed costs and improve profitability.

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Digital Media & Consumer Products recorded restructuring charges of ¥3.8 billion, consisting primarily of special termination benefits for employees in the digital media-related product business both in Japan and overseas, including flat-panel TV business, in order to reduce the workforce in response to intensified market competition followed by falling unit prices.

Fiscal 2007 restructuring

For fiscal 2007, Hitachi recorded restructuring charges of ¥18.1 billion. The restructuring charges included special termination benefits of ¥15.6 billion for 7,801 employees. Payments of ¥6.3 billion were made in fiscal 2007 and special termination benefits of ¥8.9 billion were accrued as of March 31, 2008. The accrued amount was paid in the fiscal year ended March 31, 2009.

Information & Telecommunication Systems recorded restructuring charges of ¥7.2 billion, consisting primarily of special termination benefits for employees in the overseas subsidiaries engaging in the HDDs business and storage solutions business due to integration and closures of production facilities.

Digital Media & Consumer Products recorded restructuring charges of ¥4.0 billion, consisting primarily of special termination benefits for employees in the overseas subsidiaries engaging in the flat-panel TV business due to reorganization of sales operations.

Power & Industrial Systems recorded restructuring charges of ¥2.8 billion, consisting primarily of special termination benefits for employees in the social and industrial infrastructure systems business, in order to reduce fixed costs and to improve the profitability of the business.

Fiscal 2006 restructuring

For fiscal 2006, Hitachi recorded restructuring charges of ¥3.9 billion. The restructuring charges included special termination benefits of ¥3.8 billion for 554 employees. Payments of ¥4.9 billion were made in fiscal 2006 and special termination benefits of ¥44 million were accrued as of March 31, 2007. The accrued amount was paid in the fiscal year ended March 31, 2008.

Restructuring charges mainly consist of special termination benefits for the early terminated employees of subsidiaries in High Functional Materials & Components and Information & Telecommunication Systems.

B. Liquidity and Capital Resources

The analysis made in this Item covers the three-year period from fiscal 2006 through fiscal 2008. Management considers maintaining an appropriate level of liquidity and securing adequate funds for current and future business operations to be important financial objectives. Through efficient management of working capital and selective investment in new plant and equipment, Hitachi is working to optimize the efficiency of capital utilization throughout its business operations. Hitachi endeavors to improve Hitachi’s group cash management by centralizing such management among the Company and its overseas financial subsidiaries. Hitachi’s internal sources of funds include cash flows generated by operating activities and cash on hand. Management also considers short-term investments to be an immediately available source of funds. In addition, Hitachi raises funds both from the capital markets and from Japanese and international commercial banks in response to its capital requirements. Management’s policy is to finance capital expenditures primarily by internally generated funds and to a lesser extent by funds raised through the issuance of debt and equity securities in domestic and foreign capital markets.

Hitachi relies for its liquidity principally on cash and other working capital as well as the issue of debentures, medium term notes and commercial paper, bank loans and other uncommitted sources of financing. While Hitachi maintains backup lines of credit to cover maturing commercial paper in the U.S. market, the aggregate amount of credit available under these credit lines is limited. At the end of fiscal 2008, the Company maintained commitment line agreements with a number of domestic banks under which the Company may borrow any amount in order to ensure efficient access to necessary funds. Unused commitment lines for the Company totaled ¥563.0 billion as of March 31, 2009. These commitment line agreements generally provide for a one through three year term, renewable upon mutual agreement between the Company and each of the lending banks. Certain of the Company’s subsidiaries also maintain commitment line arrangements. Unused commitment lines for the Company and its subsidiaries totaled ¥614.8 billion as of March 31, 2009. The committed credit arrangements of the Company and its subsidiaries are, in general, subject to financial and other covenants and conditions prior to and after drawdown and require the borrower to represent, in connection with any borrowing under the agreement, that no material adverse change has occurred since certain dates.

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The Company’s debt ratings (long-term/short-term) as of March 31, 2009 are: A2/P-1 by Moody’s; A-/A-2 by S&P and AA-/a-1+ by R&I. Subsequently, Moody’s downgraded Hitachi’s long-term and short-term credit ratings from A2 to A3 and from P-1 to P-2, respectively, in May 2009. In June 2009, S&P downgraded Hitachi’s long-term credit rating from A- to BBB+, and R&I downgraded Hitachi’s long-term and short-term credit ratings from AA- to A+ and from a-1+ to a-1, respectively. According to their press releases, the downgrades reflected their view that Hitachi’s profitability has decreased, affected by the harsh business environment, and its financial condition has declined, evidenced by an increase in Hitachi’s financial leverage, and that its profitability and financial condition are unlikely to significantly improve soon. With its current ratings, the Company believes that its access to the global capital markets will remain sufficient for its financing needs. However, a downgrade of its debt ratings would likely increase the cost of debt financing by the Company. Hitachi seeks to maintain a stable credit rating in order to ensure financial flexibility for liquidity and capital management, and to continue to maintain access to sufficient funding resources through the capital markets.

Transfers of funds from a subsidiary to a parent company in the form of a cash dividend are restricted under the Companies Act and under regulatory requirements of certain foreign countries in which subsidiaries are located. Although some of the Company’s subsidiaries are subject to such restrictions, Hitachi does not expect such restrictions to have a significant impact on the ability of Hitachi to meet its cash obligations.

Management believes that Hitachi’s sources of liquidity and capital resources, including working capital, are adequate for its present requirements and business operations and will be adequate to satisfy its presently anticipated requirements during at least the next twelve months for working capital, capital expenditures and other corporate needs. Hitachi is seeking to ensure that its level of liquidity and access to capital resources continue to be maintained in order for Hitachi to successfully conduct its future operations in highly competitive markets.

Cash Flows

Summarized cash flows from operating, investing and financing activities for fiscal 2006, 2007 and 2008 are shown below.

	Fiscal 2006		Fiscal 2007		Fiscal 2008
	(Millions of yen)
Net cash provided by operating activities	615,042		791,837		558,947
Net cash used in investing activities	(786,170	)	(637,618	)	(550,008	)
Net cash provided by (used in) financing activities	121,259		(185,556	)	284,388
Effect of exchange rate changes on cash and cash equivalents	9,480		(25,569	)	(46,361	)
Net increase (decrease) in cash and cash equivalents	(40,389	)	(56,906	)	246,966

Net cash provided by operating activities was ¥558.9 billion, ¥791.8 billion and ¥615.0 billion in fiscal 2008, 2007 and 2006, respectively. The decrease in fiscal 2008 was due primarily to the decrease in payables of ¥359.2 billion for fiscal 2008, compared with the increase in payables of ¥42.4 billion in the preceding fiscal year, as Hitachi’s purchasing decreased as a result of lower sales. This decrease was partially offset by a decrease in receivables of ¥342.0 billion, an increase of ¥294.1 billion from the preceding fiscal year, mainly reflecting lower sales. The increase in fiscal 2007 was due primarily to a reduction in the increase in inventories to ¥107.5 billion for fiscal 2007, which was ¥104.4 billion less than the preceding fiscal year due to efforts to improve inventory turnover. This improvement was partially offset by a slightly lower decrease in receivables by ¥4.7 billion from the preceding fiscal year to ¥47.8 billion, and a lower increase in payables of ¥42.4 billion, a decrease of ¥62.5 billion from the previous fiscal year.

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Net cash used in investing activities was ¥550.0 billion, ¥637.6 billion and ¥786.1 billion in fiscal 2008, 2007 and 2006, respectively. The decrease of ¥87.6 billion in fiscal 2008 was due primarily to a decrease of ¥52.2 billion in capital expenditures due to decreasing investments in manufacturing equipment for HDDs and plasma display panels owing to Hitachi’s decision to switch to external procurement sources for the glass panel components as well as selective investments. It was also due to a decrease of ¥197.9 billion in purchases of investments and subsidiaries’ common stock due primarily to the absence of large investments, such as the investment in companies established with GE in North America in the preceding fiscal year, partially offset by a decrease of ¥103.1 billion in proceeds from sale of investments and subsidiaries’ common stock due primarily to absence of large sales, such as sales of shares of Hitachi Displays. The decrease of ¥148.5 billion in fiscal 2007 was due primarily to a decrease of ¥23.4 billion in capital expenditures due to selective investments and a decrease in investments for HDDs manufacturing equipment, a decrease of ¥75.6 billion in purchase of assets to be leased due to selective sales operations in leasing businesses, an increase of ¥91.6 billion in proceeds from sale of investments and subsidiaries’ common stock due primarily to sales of shares of Hitachi Displays, etc., partially offset by an increase of ¥85.0 billion in purchase of investments and subsidiaries’ common stock due primarily to investments to companies established with GE in North America. As of March 31, 2009, Hitachi’s capital commitments for the purchase of property, plant and equipment amounted to ¥55.7 billion, which is expected to be funded primarily through internal sources of financing.

Net cash provided by financing activities was ¥284.3 billion in fiscal 2008, due primarily to an increase in short-term debt, including issuance of the Company’s commercial paper of ¥100.0 billion, to increase the level of cash on hand in response to uncertain credit markets. Net cash used in financing activities was ¥185.5 billion in fiscal 2007. The outflows in fiscal 2007 were primarily due to Hitachi’s efforts to reduce interest-bearing debt, including repayment of commercial paper, partially offset by an increase in proceeds from debentures and long-term borrowings due to issuance of convertible bonds in a subsidiary and an increase in proceeds from a public offering by a subsidiary that raised funds for capital expenditures. Net cash provided by financing activities was ¥121.2 billion in fiscal 2006, due primarily to an increase in the issuance of commercial paper, an increase in financing through straight bonds and borrowings, and a decrease in payments on long-term debt.

In fiscal 2008, the above activities increased cash and cash equivalents by ¥246.9 billion from fiscal 2007. Cash and cash equivalents at the end of fiscal 2008 amounted to ¥807.9 billion, primarily held in Japanese yen, with a substantial portion of the remaining amount held in U.S. dollars.

Short-term investments, the change of which is classified as investing activities, are considered to be an immediately available source of funds. Short-term investments at the end of fiscal 2008 amounted to ¥8.6 billion, a decrease of ¥52.6 billion from the end of fiscal 2007 due primarily to a decrease in available-for-sale securities. As a result of the foregoing, the total of cash and cash equivalents and short-term investments at the end of fiscal 2008 was ¥816.5 billion, an increase of ¥194.3 billion from the end of fiscal 2007.

Assets, Liabilities and Stockholders’ Equity

At the end of fiscal 2008, total assets amounted to ¥9,403.7 billion, a decrease of ¥1,127.1 billion from the end of fiscal 2007, due primarily to a decrease in account payables as a result of lower sales and as a result of efforts to accelerate cash collections from customers in order to improve cash flows, an increase in valuation allowances for deferred tax assets and a decrease in investments in affiliated companies due to the recording of losses by equity-method affiliates. Total amount of cash and cash equivalents and short-term investments at the end of fiscal 2008 amounted to ¥816.5 billion, an increase of ¥194.3 billion from the end of fiscal 2007, due primarily to the increased short-term debt in response to uncertain credit markets.

At the end of fiscal 2008, the total of Hitachi’s short-term debt, current portion of long-term debt and long-term debt amounted to ¥2,820.1 billion, an increase of ¥288.6 billion from the end of fiscal 2007. The increase was due primarily to an increase in short-term debt, including issuance of ¥100.0 billion of the Company’s commercial paper, to increase the level of cash on hand in response to uncertain credit markets. At the end of fiscal 2008, short-term debt, consisting mainly of borrowings from banks and commercial paper, amounted to ¥998.8 billion, an increase of ¥275.8 billion from the end of fiscal 2007. At the end of fiscal 2008, long-term debt (excluding current portion), consisting mainly of debentures, debentures with stock acquisition rights, medium term notes and loans principally from banks and insurance companies, amounted to ¥1,289.6 billion, a decrease of ¥131.9 billion from the end of fiscal 2007, as the Company’s debentures with stock acquisition rights of ¥100.0 billion were classified to current portion. Accordingly, at the end of fiscal 2008, current portion of long-term debt amounted to ¥531.6 billion, an increase of ¥144.7 billion form the end of fiscal 2007. A significant portion of Hitachi’s long-term debt bears a fixed rate of interest. Hitachi’s debt is not significantly affected by seasonal factors. In general, there are no material restrictions on Hitachi’s use of borrowings. For further details including the maturity and interest rates, see note 9 to Hitachi’s consolidated financial statements.

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At the end of fiscal 2008, minority interests amounted to ¥1,129.4 billion, a decrease of ¥13.1 billion from the end of fiscal 2007, due primarily to the worsening business results of publicly-held subsidiaries such as Hitachi Cable, Ltd. and Hitachi Maxell, Ltd., each of which posted a net loss.

At the end of fiscal 2008, stockholders’ equity amounted to ¥1,049.9 billion, a decrease of ¥1,120.6 billion from the end of fiscal 2007. The decrease primarily reflects the recognition of a net loss and an increase in accumulated other comprehensive loss due to an increase in pension liability adjustments and a decrease of net unrealized holding gain on available-for-sale securities owing to a decline in market share prices, and a deterioration in foreign currency translation adjustments caused by the strengthening of the yen. As a result, the ratio of stockholders’ equity to total assets was 11.2%, compared with 20.6% at the end of fiscal 2007. The ratio of the total of short-term debt and long-term debt to the total of stockholders’ equity and minority interests was 1.29, compared with 0.76 at the end of fiscal 2007.

The Company and its subsidiaries assess foreign currency exchange rate risk and interest rate risk by continually monitoring changes in these exposures and by evaluating hedging opportunities. Hitachi uses certain derivative financial instruments in order to reduce such risks. Hitachi generally does not enter into derivative financial instruments for speculation purposes. For additional information on financial instruments and derivative financial instruments, see notes 24, 26 and 27 to Hitachi’s consolidated financial statements.

C. Research and Development, Patents and Licenses, etc.

Viewing research and development, or R&D, activity as a key investment for the future, Hitachi conducts its R&D in a number of areas from materials to production technology. Hitachi focuses on basic R&D with a long-term vision but also strives to achieve more immediate benefits by introducing new products.

Hitachi’s R&D expenditures amounted to ¥412.5 billion in fiscal 2006, ¥428.1 billion in fiscal 2007 and ¥416.5 billion in fiscal 2008. The ratio of R&D expenditures to total revenues was approximately 4% over these three years.

Hitachi recognizes the importance of the Information & Telecommunication Systems segment and the Electronic Devices segment as sources of new technologies that can be applied to other segments. Therefore, Hitachi places emphasis on these segments in allocating R&D resources. In fiscal 2008, total expenditures in the Information & Telecommunication Systems segment and the Electronic Devices segment accounted for 48% of total R&D expenditures.

To achieve higher efficiency, Hitachi has reinforced the link between R&D activities and marketing activities under the control of each business operation while maintaining its focus on long-term research at independent corporate laboratories. Hitachi’s global R&D activities include cooperation with universities and companies in the U.S. and Europe. Hitachi will reinforce R&D in the area of both frontier and platform research. The former aims to cultivate future mainstay businesses, while the latter has a more immediate focus of increasing productivity and quickening the pace of product development throughout Hitachi. Hitachi focuses both on leading-edge R&D for creating its future core businesses and on fundamental technologies for improving productivity and quality and lowering costs.

For information on Hitachi’s patents and licenses, see “Item 4. Information on the Company — B. Business Overview — Intellectual Property and Licenses.”

D. Trend Information

On June 15, 2006, Hamaoka Nuclear Power Station No. 5 of Chubu Electric Power Co., Inc. shut down due to turbine damage. As a precautionary measure, on July 5, 2006, Shika Nuclear Power Station No. 2 of Hokuriku Electric Power Company, which uses the same type of turbines, was shut down for an examination of the turbines and the examination revealed damage to the turbine vanes. The accrued amount of the repair costs was included in Hitachi’s operating results for the fiscal year ended March 31, 2007 and was recorded as part of cost of sales. In September 2008, Chubu Electric Power Co., Inc. filed a lawsuit with the Tokyo District Court against the Company, seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Hamaoka Nuclear Power Station in the amount of ¥41.8 billion plus interest. In May 2009, Hokuriku Electric Power Company filed a lawsuit with the Tokyo District Court against the Company, seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Shika Nuclear Power Station in the amount of ¥20.2 billion plus interest. The Company intends to vigorously defend itself in these lawsuits. The Company has not accrued for consequential losses related to these lawsuits. However, there can be no assurance that Hitachi will not be liable for any amount claimed.

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In January 2009, the Company conducted a tender offer for shares of Hitachi Kokusai Electric and acquired a controlling interest. Subsequently, Hitachi Kokusai Electric became a consolidated subsidiary of the Company in March 2009. As a result, the revenues of Hitachi Kokusai Electric from April 2009 will be included in Hitachi’s consolidated statement of operations for fiscal 2009.

In January 2009, the Company conducted a tender offer for shares of Hitachi Koki and acquired a controlling interest. Subsequently, Hitachi Koki became a consolidated subsidiary of the Company in March 2009. As a result, the revenues of Hitachi Koki from April 2009 will be included in Hitachi’s consolidated statement of operations for fiscal 2009.

Global Economic Recession

The global economic recession, triggered by the collapse of a major U.S. investment bank in September 2008, has included a sudden and substantial decline in sales volumes in the global automotive industry, as well as in the semiconductor, industrial equipment and certain other industries. In conjunction with the instability in financial markets and the economic downturn in the United States and other industrialized nations, as well as the slowing economic growth in China and in emerging economies, the overall business environment going forward is uncertain. These trends may continue and adversely affect Hitachi’s business.

Trends in Operating Results

Hitachi expects that reduced sales volume levels in the automotive, semiconductor, industrial equipment and certain other industries will adversely affect its operating results for fiscal 2009. On a segment-by-segment basis, Hitachi expects the following impact.

• Information & Telecommunication Systems: The Information & Telecommunication Systems segment was less affected by the global economic recession than most other segments in fiscal 2008. However, domestic businesses and financial institutions that purchase computer systems and systems integration services from Hitachi may be affected by the market downturn, and could seek to control costs in part by canceling or deferring investment in information technology systems, with consequent adverse impact on sales of Hitachi’s products and services. In addition, the reduced demand for PCs in both business and consumer use adversely affected Hitachi’s HDD volumes with increasing impact in the latter half of fiscal 2008, and has the potential to continue into fiscal 2009. Industry consolidation may, in the near term, lead to more robust competition from other HDD makers.

• Electronic Devices: Economic and market conditions, particularly reduced sales volume levels in the semiconductor industry, adversely affected results of operations in the Electronic Devices segment in fiscal 2008. The economic and market conditions worsened in the second half of fiscal 2008, and have the potential to continue to adversely affect Hitachi’s results of operations in fiscal 2009. Sales of semiconductor manufacturing equipment offered by the Electronic Devices segment have been adversely affected by reduced capital spending by manufacturers in the semiconductor industry, and such capital spending in fiscal 2009 might be lower levels than in fiscal 2008.

• Power & Industrial Systems: Economic and market conditions, particularly reduced sales volume levels in the automotive products and construction machinery industries, adversely affected results of operations in the Power & Industrial Systems segment in fiscal 2008. The economic and market conditions worsened in the second half of fiscal 2008, and have the potential to continue to adversely affect Hitachi’s results of operations in fiscal 2009. Sales of power plants may be less sensitive to economic cycles than are sales in other business sectors because the business cycles for power plants tend to be longer than such cycles for other products. As such, a reasonably certain amount of sales can be expected for several years once Hitachi receives an order for a power plant from a customer. Sales of automotive equipment, in contrast, have been severely affected by the worldwide collapse in demand for automobiles. Sales of construction machinery have also been severely affected by the worldwide decline in demand for residential and private-sector investment.

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• Digital Media & Consumer Products: Economic and market conditions, particularly decreased sales volume levels for digital media products, adversely affected results of operations in the Digital Media & Consumer Products segment in fiscal 2008. The economic and market conditions worsened in the second half of fiscal 2008, and have the potential to continue to adversely affect Hitachi’s results of operations in fiscal 2009. Sales of digital media products were depressed due to restrained consumer spending in most markets. Although demand for lower-end flat panel TVs was relatively firm, sales of high-end models, which Hitachi focuses on, experienced declines in both volume and price due to restrained consumer spending and product commoditization in fiscal 2008. Sales of optical disk drives were also adversely affected by the worldwide economic downturn in fiscal 2008. These trends have the potential to continue, and may worsen, in fiscal 2009.

• High Functional Materials & Components: Economic and market conditions, particularly decreased sales volume levels in semiconductor-, automotive- and digital media-related products, adversely affected results of operations in the High Functional Materials & Components segment in fiscal 2008. The economic and market conditions worsened in the second half of fiscal 2008, and have the potential to continue to adversely affect Hitachi’s results of operations in fiscal 2009. Sales in this segment, particularly of semiconductor-related materials and automotive-related components, were depressed due to reduced production volume by manufacturers in the semiconductor and automotive industries in fiscal 2008, and such production volume may be lower yet in fiscal 2009. These trends have the potential to continue, and may worsen, in fiscal 2009.

• Logistics, Services & Others: The logistics business in the Logistics, Services & Others segment was less affected by the global economic recession than most other segments in fiscal 2008. However, sales in this segment, particularly in overseas sales subsidiaries, were depressed due to an overall reduced level of sales and economic activity in fiscal 2008. The economic and market conditions worsened in the second half of fiscal 2008, and have the potential to continue to adversely affect Hitachi’s results of operations in fiscal 2009.

• Financial Services: The Financial Services segment was less affected by the global economic recession than most other segments in fiscal 2008. However, revenues in this segment, particularly revenues in the leasing business for industrial equipment, were depressed due to reduced levels of capital spending for these services in fiscal 2008. The economic and market conditions worsened in the second half of fiscal 2008, and have the potential to continue to adversely affect Hitachi’s results of operations in fiscal 2009.

Hitachi plans to address these business challenges, including by:

• reorganizing or exiting unprofitable businesses and reducing labor costs, particularly in the digital media and automotive systems-related businesses;

• controlling costs, such as by reducing procurement costs and enhancing project management;

• promoting shared services over a wide range of areas such as procurement, logistics, document services, cafeteria operations, security, personnel management and financial management; and

• reducing or delaying capital expenditures.

Hitachi will also focus on profitable and emerging business opportunities such as environment-related businesses. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Business Strategy” for more information.

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Trends in Capital Resources and Liquidity

Hitachi’s cash management is conducted centrally. Overall, the current adverse market and economic conditions may limit Hitachi’s access to capital required to operate, maintain and grow its business and its ability to replace, in a timely manner, maturing liabilities. Hitachi needs liquidity to pay operating expenses, interest on its debt and dividends on its capital stock. Without sufficient liquidity, it will be forced to curtail its operations, and its business will suffer. Hitachi currently believes its cash flows from operations, borrowings from banks and other institutional lenders, and funding from the capital markets will provide sufficient funding for its operations and other liquidity needs. However, the global recession is adversely affecting Hitachi’s cash flows from operations and business results, which has had an adverse effect on Hitachi’s credit ratings. Moody’s downgraded Hitachi’s long-term credit rating from A1 to A2 in February 2009, and downgraded Hitachi’s long-term and short-term credit ratings from A2 to A3 and from P-1 to P-2, respectively, in May 2009. In June 2009, S&P downgraded Hitachi’s long-term credit rating from A- to BBB+, and R&I downgraded Hitachi’s long-term and short-term credit ratings from AA- to A+ and from a-1+ to a-1, respectively. These occurrences, in conjunction with the recent credit crunch in the financial markets, may adversely affect Hitachi’s ability to obtain additional financing on favorable terms. Hitachi may need to increase its reliance on external sources of funding. An increased reliance on debt instruments may further adversely affect Hitachi’s credit ratings, which might further affect Hitachi’s ability to successfully obtain additional financing on favorable terms.

Hitachi will likely seek to reduce costs and capital expenditures, which will likely reduce requirements for liquidity in most of its business segments. Further, Hitachi plans to improve cash flows by reducing inventory levels via production level adjustments.

Factors that could cause actual results to differ materially from those expected or implied in any forward-looking statements in this section include, but are not limited to, global economic recession and uncertainty as to Hitachi’s ability to implement measures to respond to such economic environment. In addition, see the “Cautionary Statement” at the beginning of this annual report and “Item 3. Key Information — D. Risk Factors” for other examples of factors that could cause actual results to differ materially from those anticipated.

E. Off-balance Sheet Arrangements

Hitachi’s off-balance sheet arrangements consist primarily of off-balance sheet Special Purpose Entities, or SPEs, used to securitize and sell certain lease, trade and mortgage loan receivables. The purpose of such securitization transactions is to enable Hitachi to access the capital markets for liquidity.

In these securitizations, lease, trade and mortgage loans receivable are sold to the SPEs which are in turn packaged mainly into asset-backed commercial paper by the SPEs for sale to third party investors. In certain securitizations, the SPEs may require Hitachi to retain residual interests subordinated to the investors. In these cases, Hitachi’s contingent liability exposure is limited to the retained subordinated residual interests. In other cases, SPEs and investors have recourse with considerably limited scope.

No officers, directors or employees of Hitachi have any investments in the SPEs. The SPEs meet the accounting criteria for off-balance sheet treatment and are not consolidated under generally accepted accounting principles in the United States.

The amount of off-balance sheet arrangements as of March 31, 2009 is as follows:

	March 31, 2009
	(Millions of yen)
Securitized lease receivables	599,872
Securitized trade receivables	269,685
Securitized mortgage loan receivables	232,553
Total	1,102,110

See notes 2(g) and 6 to Hitachi’s consolidated financial statements.

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F. Tabular Disclosure of Contractual Obligations

The following tables show Hitachi’s contractual obligations and other commercial commitments, including guarantees, as of March 31, 2009.

	Payments due by period
Contractual obligations	Total	Less than 1 year	1-3 years	3-5 years	After 5 years
	(Millions of yen)
Long-term debt obligations	1,787,741	519,086	587,490	363,363	317,802
Capital lease obligations	33,546	12,549	12,863	3,567	4,567
Operating lease obligations	72,446	15,030	19,072	14,089	24,255
Purchase of property, plant and equipment	55,700	55,124	573	3	—
Interest commitments	92,978	21,207	33,960	17,215	20,596
Total	2,042,411	622,996	653,958	398,237	367,220

For obligations related to retirement and severance benefits, see note 10 to Hitachi’s consolidated financial statements.

Other commercial commitments	As of March 31, 2009
	(Millions of yen)
Lines of credit	574,183
Trade notes discounted and endorsed	7,684
Export receivables transferred with recourse	16,000
Guarantees	491,080

See note 16 to Hitachi’s consolidated financial statements.

G. Critical Accounting Policies

The preparation of the consolidated financial statements of Hitachi in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. Management considers the accounting estimates discussed in this section to be critical accounting estimates for two reasons. First, the estimates require Hitachi to make assumptions about matters that are highly uncertain at the time the accounting estimate is made. Second, different estimates that Hitachi reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on the presentation of Hitachi’s financial condition, changes in financial condition or results of operations. Management believes the following represent Hitachi’s critical accounting policies.

Revenue Recognition for Sales under Long-term Construction Arrangements

Hitachi uses the percentage-of-completion method to recognize revenue from sales of tangible products under long-term construction type arrangements, in connection with the construction of nuclear, thermal and hydroelectric power plants. Under the percentage-of-completion method, revenue from a sale is recognized in an amount equal to estimated total revenue from the arrangement multiplied by the percentage that costs incurred to date bear to estimated total costs at completion based upon the most recently available information. The use of the percentage-of-completion method requires Hitachi to make significant assumptions about estimates of total contract costs, remaining costs to completion, total contract revenues, contract risks and other factors. Hitachi continually reviews these estimates and adjusts them as it deems necessary. Any anticipated losses on fixed price contracts are charged to operations when Hitachi is able to estimate such losses. Hitachi makes provisions for contingencies (e.g. performance penalty and benchmarking) in the period in which they become known to Hitachi under the specific terms and conditions of the relevant contract and are estimable by Hitachi.

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Impairment of Long-Lived Assets

Hitachi reviews the carrying value of its long-lived assets held and used whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Such events or changes include, but are not limited to:

• changes in production due to trends of supply and demand in the markets;

• rapid changes in selling prices of products or purchasing prices of materials and components;

• unexpected technological innovation causing obsolescence of present products; and,

• unpredictable changes in business assumptions, which cause revision of business plans that result in changes in the extent or manner in which long-lived assets are used.

Hitachi performs the initial impairment review using estimates of undiscounted future cash flows. If the carrying value of the asset is greater than Hitachi’s estimates of undiscounted cash flows, an impairment charge is recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. In estimating, Hitachi uses available quoted market prices and present value techniques, if appropriate, based on the estimated future cash flow expected to result from the use of the assets and their eventual disposition.

Although management believes that the estimates of future cash flows and fair value are reasonable, changes in estimates resulting in lower future cash flows and fair value due to unforeseen changes in business assumptions could negatively affect the valuations of long-lived assets.

Goodwill and Intangible Assets

Goodwill and other intangible assets with indefinite useful lives are not amortized but are tested for impairment in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” on an annual basis, normally in the fourth quarter after Hitachi’s annual forecasts have been determined, or more frequently if events occur or circumstances change in a manner that would more likely than not reduce the fair value of these assets below their respective carrying values. Such an event might include the current global economic and financial market crisis. An impairment in these assets is recorded if their calculated fair values are less than their carrying amounts.

Hitachi determines the fair value of its reporting units mainly using an income approach (i.e., present value technique). When determining such fair value, Hitachi may, however, also use the fair value of that unit based on a comparison of comparable publicly traded companies or based on that unit’s stand-alone market capitalization. Depending on the complexity, Hitachi consults with external experts when appropriate.

The determination requires estimates based on quoted market prices, prices of comparable businesses, present value or other valuation techniques, or a combination thereof, requiring management to make subjective judgments and assumptions, including assumptions about future operating results for the relevant business unit and discount rates.

In estimating future cash flows, the forecasted operational results are based on currently available assumptions considered by management to be reasonable. However, actual results may differ materially from those projected, including due to:

• economic trends in Japan, North America, Asia and other major markets where Hitachi does business;

• supply in excess of demand leading to a decline in selling prices or production volumes;

• intense price competition or decreases in prices;

• a sharp rise in the purchasing prices of material and components; and

• currency exchange rate fluctuations.

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Hitachi bases its discount rate assumptions for purposes of estimating the fair value of its reporting units on the cost of capital and liabilities. These assumptions are affected by stock market trends and changes in interest rates. Although management believes that the estimates of future cash flows and fair value are reasonable, changes in estimates resulting in lower future cash flows and fair value due to unforeseen changes in the business environment could result in additional goodwill impairment charges.

While Hitachi’s businesses are diverse, the number of reporting units to which goodwill has been allocated is limited. Therefore, a decrease in Hitachi’s market capitalization will not necessarily have a proportional or direct affect on the carrying value of goodwill.

As of March 31, 2009, Hitachi’s carrying amount of goodwill was ¥134.4 billion. The majority of goodwill consists of the Information & Telecommunication Systems segment (¥45.7 billion) and the High Functional Materials & Components segment (¥56.6 billion).

The carrying amount of goodwill of the Information & Telecommunication Systems segment at March 31, 2009 mainly relates to Hitachi’s consulting and HDDs businesses. The consulting business is sensitive to customers’ motivation to invest in information-technology systems affected by macro-economic conditions. Hitachi may be required to record an impairment in goodwill in this segment if the current economic downturn is prolonged beyond current estimates of Hitachi’s management. The HDDs business is sensitive to changes in selling prices and competition among products. Hitachi may be required to record an impairment in goodwill in this segment if decreases in price causes operating results in this business to be lower than management’s estimates or global decrease in demand or arrival of alternative new technology cause sales in this segment to be lower than management estimates.

The carrying amount of goodwill of the High Functional Materials & Components segment at March 31, 2009 mainly relates to Hitachi’s magnet business. The magnet business is sensitive to increases in materials prices and product demand. Hitachi may need to recognize an impairment loss for goodwill in this segment if there is a sustained increase in the prices for these materials or an unforeseen decrease in demand.

In order to evaluate sensitivity of the fair value calculations on the goodwill impairment analysis, Hitachi applied a hypothetical 10% decrease to the fair value of each reporting unit. As of March 31, 2009, such a hypothetical 10% decrease would have resulted in no need to record an impairment in goodwill for any of Hitachi’s reporting units.

Deferred Tax Assets

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that a portion or all of the deferred tax assets will not be realized. The ultimate realization of Hitachi’s deferred tax assets is dependent on whether Hitachi is able to generate sufficient future taxable income in specific tax jurisdictions during the periods in which temporary differences become deductible. Management has scheduled the expected future reversals of the temporary differences and projected future taxable income, including the execution of certain available tax strategies if needed, in making this assessment. Actual results may differ materially from forecasted operating results, which are the basis for projecting future taxable income, and be subject to adjustment because of factors such as economic trends in major markets where Hitachi does business, trends of supply and demand in the markets, prices of products and services, purchasing prices of material and components, currency exchange rate fluctuations and rapid technological innovation. As a result, the difference could negatively affect the amount of deferred tax assets and valuation allowances. The realizability of deferred tax assets is assessed for each taxable unit in each taxable jurisdiction, and the results of the assessment may differ from unit to unit due to different products or jurisdictions even if they operate the same kind of business. Based on these factors, management believes that it is more likely than not that Hitachi will realize the benefits of these temporary differences, net of the existing valuation allowance as of March 31, 2009. However, the amount of deferred tax assets may be different if Hitachi does not realize estimated future taxable income during the carry forward periods as originally expected.

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Retirement Benefits

Hitachi has a significant amount of accrued employee retirement benefit costs which are developed from actuarial valuations. Inherent in these valuations are key assumptions in estimating pension costs including mortality, withdrawal, retirement, changes in compensation, discount rate and expected return on plan assets. Hitachi is required to estimate the key assumptions by taking into account various factors including personnel demographics, current market conditions and expected trends in interest rates. Hitachi determines the discount rate by looking to available information about rates implicit in the return on high-quality fixed-income government and corporate bonds. Accordingly, the discount rate is likely to change from period to period based on these ratings. A decrease in the discount rate results in an increase in actuarial pension benefit obligations. Increases and decreases in the pension benefit obligation affect the amount of the actuarial gain or loss which is amortized into income over the service lives of employees. Changes in the key assumptions may have a material effect on Hitachi’s financial position and results of operations. Management believes that estimation of the key assumptions is reasonable in light of the various underlying factors.

The table below shows the sensitivity to a change in discount rates and the expected rate of return on plan assets to pre-tax income and projected benefit obligation (PBO), holding all other assumptions constant.

	Effect on pre-tax income For the year ended March 31, 2010		Effect on PBO As of March 31, 2009
	(Millions of yen)
Discount rates
0.5% decrease	(8,511	)	157,301
0.5% increase	8,568		(145,965	)
Expected rate of return on plan asset
0.5% decrease	(5,618	)	—
0.5% increase	5,618		—

Allowance for Doubtful Accounts

Hitachi is required to estimate the collectibility of its trade receivables and investments in leases. A considerable amount of judgment is required in assessing the ultimate realization of these receivables, including the current creditworthiness of each customer. Such assessment includes an examination of factors such as business conditions, turnover of receivables and financial positions for significant customers. Significant changes in required reserves have been recorded in recent periods and may occur in the future due to the current market environment. Any deterioration in customers’ credit ratings may adversely affect net income.

Investments in Securities

Hitachi holds various investments in securities and equity-method investments. A decline in fair value of securities and equity-method investments below carrying value that is deemed other than temporary results in a write-down of the carrying value to the fair value as a new cost basis. The amount of the write-down is included in earnings. Fair value is determined based on quoted market prices, projected discounted cash flows or other valuation techniques as appropriate. Management regularly reviews each investment in securities and each equity-method investment for possible impairment based on criteria such as the extent to which the carrying value exceeds fair value, the duration of the fair value deficit below the carrying value and the financial condition of and specific prospects of the issuer. A decline in market prices or a change in the financial condition of an issuer could negatively affect the fair value of an investment in a security.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The Company has adopted the Committee System permitted as a form of corporate organization pursuant to the Companies Act. Each company adopting the Committee System, including the Company, is required to (i) establish within its board of directors nominating, audit and compensation committees, a majority of the members of each of which must be outside directors, and (ii) appoint executive officers responsible for executing the business of such company. The Companies Act defines an outside director as a director who is not and has not been an executive director (a representative director or a director who executes such company’s business), executive officer, manager or any other employee of such company or its subsidiaries. Under the Committee System, a company is not allowed to have corporate auditors but is instead required to delegate auditing function responsibilities to its audit committee. For information regarding the Company’s implementation of the Committee System, see “C. Board Practices” below.

Set forth below are the names of the Company’s directors, or Directors, and executive officers, or Executive Officers, as of July 1, 2009. All Directors were elected at the Company’s general meeting of shareholders held on June 23, 2009 for a term of one year. While the Board Director (Chair), Mr. Tadamichi Sakiyama, does not concurrently serve as an Executive Officer, two Directors, Mr. Takashi Kawamura and Mr. Takashi Miyoshi, do concurrently serve as Executive Officers. Five Directors, Ms. Yoshie Ota, Messrs. Mitsuo Ohashi, Akihiko Nomiyama, Kenji Miyahara and Tohru Motobayashi, are outside Directors who fulfill the qualification requirements as provided for in the Companies Act. The term of office of all Executive Officers except Mr. Makoto Ebata began from April 1, 2009 and will expire on March 31, 2010. Mr. Makoto Ebata took office on July 1, 2009 and the term of office will expire on March 31, 2010.

Directors

Name (Date of birth)	Current position (Principal position outside the Company, if any)	Date	Business experience, including experience in the Company, and functions
Tadamichi Sakiyama
(Jun. 13, 1941)	Board Director (Chair)	6/2009	Board Director (Chair), Hitachi, Ltd.
		6/2006	Director, Hitachi, Ltd.
		4/2006	Director, Hitachi Construction Machinery, Co., Ltd.
		6/2003	Executive Vice President, Executive Officer and Director, Hitachi Construction Machinery, Co., Ltd.
		4/2003	Executive Vice President and Representative Director, Hitachi Construction Machinery, Co., Ltd.
		6/2001	Board Director, Senior Vice President, Hitachi Construction Machinery, Co., Ltd.
		4/1999	General Manager, Internal Auditing Office
		4/1964	Joined Hitachi, Ltd.
Takashi Kawamura
(Dec. 19, 1939)	Director*	6/2009	Chairman, President, Chief Executive Officer and Director, Hitachi, Ltd.
		4/2009	Chairman, President and Chief Executive Officer, Hitachi, Ltd.
		6/2007	Chairman of the Board, Hitachi Maxell, Ltd.
		6/2006	Chairman of the Board, Hitachi Software Engineering Co., Ltd.
		6/2005	Chairman of the Board, Hitachi Plant Engineering & Construction Co., Ltd. (currently Hitachi Plant Technologies, Ltd.)
		6/2003	Chairman of the Board and Representative Executive Officer, Hitachi Software Engineering Co., Ltd.
		4/2003	Director (Retired in June 2007)
		4/1999	Executive Vice President and Representative Director
		6/1997	Executive Managing Director
		6/1995	Director
		6/1992	General Manager, Hitachi Works
		4/1962	Joined Hitachi, Ltd.

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Name (Date of birth)	Current position (Principal position outside the Company, if any)	Date	Business experience, including experience in the Company, and functions
Michiharu Nakamura
(Sep. 9, 1942)	Director	6/2008	Director
		4/2007	Fellow
		4/2004	Executive Vice President and Executive Officer
		6/2003	Senior Vice President and Executive Officer
		4/2001	General Manager, Research & Development Group
		4/1967	Joined Hitachi, Ltd.
Takashi Miyoshi
(Sep. 25, 1947)	Director*	6/2009	Executive Vice President, Executive Officer and Director, Hitachi, Ltd.
		4/2009	Executive Vice President and Executive Officer, Hitachi, Ltd.
		6/2008	President, Chief Executive Officer and Director, Hitachi Systems & Services, Ltd.
		4/2008	Executive Vice President and Executive Officer, Hitachi Systems & Services, Ltd.
		6/2007	Chairman of the Board, Hitachi Global Storage Technologies, Inc.
		4/2007	Director (Retired in June 2007)
		4/2006	Executive Vice President, Executive Officer and Director
		6/2004	Senior Vice President, Executive Officer and Director
		4/2004	Senior Vice President and Executive Officer
		6/2003	Executive Officer
		4/2003	General Manager, Finance
		4/1970	Joined Hitachi, Ltd.
Yoshie Ota
(Sep. 1, 1942)	Director (Advisor, Japan Institute of Workers’ Evolution)	6/2007	Director, Hitachi, Ltd.
		7/2005	Advisor, Japan Institute of Workers’ Evolution (Currently in office)
		7/1998	Chairman, Japan Institute of Workers’ Evolution
		6/1995	Director-General, Women’s Bureau, Ministry of Labour
		7/1994	Director-General, Minister’s Secretariat, Ministry of Labour
		12/1991	Vice Governor of Ishikawa Prefecture
Mitsuo Ohashi
(Jan. 18, 1936)	Director (Chairman of the Board, Showa Denko K.K.)	6/2007	Director, Hitachi, Ltd.
		3/2007	Chairman of the Board, Showa Denko K.K. (Currently in office)
		1/2005	Chairman of the Board and Representative Director, Showa Denko K.K.
		3/1997	President (CEO) and Representative Director, Showa Denko K.K.

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Name (Date of birth)	Current position (Principal position outside the Company, if any)	Date	Business experience, including experience in the Company, and functions
Akihiko Nomiyama
(Jun. 15, 1934)	Director (Special Advisor, NIPPON MINING HOLDINGS, INC.)	6/2007	Director, Hitachi, Ltd.
		6/2006	Special Advisor, NIPPON MINING HOLDINGS, INC. (Currently in office)
		6/2003	Chairman of the Board and Representative Director, NIPPON MINING HOLDINGS, INC.
		9/2002	President and CEO and Representative Director, NIPPON MINING HOLDINGS, INC.
Kenji Miyahara
(Nov. 5, 1935)	Director (Senior Adviser, Sumitomo Corporation)	6/2007	Director, Hitachi, Ltd.
			Senior Adviser, Sumitomo Corporation (Currently in office)
		6/2001	Chairman of the Board and Representative Director, Sumitomo Corporation
		6/1996	President and Chief Executive Officer and Representative Director, Sumitomo Corporation
Tohru Motobayashi
(Jan. 5, 1938)	Director (Attorney at law)	4/2008	Partner, Ihara and Motobayashi (Currently in office)
		6/2006	Director, Hitachi, Ltd.
		4/2002	President of the Japan Federation of Bar Associations (Retired in March 2004)
		7/1971	Partner, Mori Sogo Law Offices
		4/1963	Member of the Tokyo Bar Association
Takeo Ueno
(Feb. 9, 1942)	Director (Senior Adviser, Hitachi Via Mechanics, Ltd.)	6/2007	Director, Hitachi, Ltd.
			Senior Adviser, Hitachi Via Mechanics, Ltd. (Currently in office)
		6/2001	President and Representative Director, Hitachi Via Mechanics, Ltd.
		4/2000	Deputy General Manager, Sales Management Division
		4/1964	Joined Hitachi, Ltd.
Shungo Dazai
(Jan. 20, 1939)	Director (Chairman of the Board, Hitachi Construction Machinery Co., Ltd.)	6/2008	Director, Hitachi, Ltd.
		4/2008	Chairman of the Board, Hitachi Construction Machinery Co., Ltd. (Currently in office)
		4/2006	Chairman of the Board and Representative Executive Officer, Hitachi Construction Machinery Co., Ltd.
		6/2003	President, Chief Executive Officer and Director, Hitachi Construction Machinery Co., Ltd.
		4/2003	President and Chief Executive Officer, Hitachi Construction Machinery Co., Ltd.
Michihiro Honda
(Oct. 13, 1942)	Director (Chairman of the Board, Hitachi Metals, Ltd.)	6/2007	Director, Hitachi, Ltd.
		6/2006	Chairman of the Board, Hitachi Metals, Ltd. (Currently in office)
		6/2003	President, Chief Executive Officer and Director, Hitachi Metals, Ltd.
		6/2000	President and Representative Director, Hitachi Metals, Ltd.

Note: The Directors marked with * concurrently serve as Executive Officers. See “Executive Officers” below.

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The members of each of the Company’s committees are as follows:

• Nominating Committee. Takashi Kawamura (Chair), Yoshie Ota, Mitsuo Ohashi, Tohru Motobayashi;

• Audit Committee. Tadamichi Sakiyama (Chair), Yoshie Ota, Akihiko Nomiyama, Kenji Miyahara, Michiharu Nakamura; and

• Compensation Committee. Takashi Kawamura (Chair), Akihiko Nomiyama, Kenji Miyahara, Tohru Motobayashi.

Executive Officers

Name (Date of birth)	Current position (Responsibility of Executive Officer as authorized by the Board of Directors)	Date	Business experience, including experience in the Company, and functions
Takashi Kawamura
(Dec. 19, 1939)	Representative Executive Officer Chairman, President and Chief Executive Officer (Overall management)	See “Directors” above
Kazuhiro Mori
(Oct. 7, 1946)	Representative Executive Officer Executive Vice President and Executive Officer (Sales operations, Hitachi group global business, corporate export regulation and business incubation)	1/2007	Executive Vice President and Executive Officer
		4/2006	Senior Vice President and Executive Officer
		4/2004	Vice President and Executive Officer
		6/2003	Executive Officer
		2/1999	General Manager, Chubu Area Operation
		4/1969	Joined Hitachi, Ltd.
Hiroaki Nakanishi
(Mar. 14, 1946)	Representative Executive Officer Executive Vice President and Executive Officer (Power systems business, industrial systems business, urban planning and development systems business, automotive systems business, quality assurance and production engineering)	4/2009	Executive Vice President and Executive Officer
		4/2006	Executive Vice President and Executive Officer (Retired in December 2006)
		6/2005	Senior Vice President and Executive Officer Chairman and Chief Executive Officer, Hitachi Global Storage Technologies, Inc.
		4/2004	Senior Vice President and Executive Officer
		6/2003	Vice President and Executive Officer
		4/2003	General Manager, Global Business
		4/1970	Joined Hitachi, Ltd.
Takashi Hatchoji
(Jan. 27, 1947)	Representative Executive Officer Executive Vice President and Executive Officer (Corporate planning, environmental strategies, human capital, legal and corporate communications, corporate brand and corporate auditing)	4/2009	Executive Vice President and Executive Officer, Hitachi, Ltd.
		6/2007	President and Director, Hitachi Research Institute, Ltd.
		4/2006	Executive Vice President and Executive Officer (Retired in March 2007)
		4/2004	Senior Vice President and Executive Officer
		6/2003	Vice President and Executive Officer
		4/2003	General Manager, Legal and Corporate Communications and General Manager, Corporate Auditing
		4/1970	Joined Hitachi, Ltd.

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Name (Date of birth)	Current position (Responsibility of Executive Officer as authorized by the Board of Directors)	Date	Business experience, including experience in the Company, and functions
Takashi Miyoshi
(Sep. 25, 1947)	Representative Executive Officer Executive Vice President and Executive Officer (Management reform, finance, corporate pension system, Hitachi group management, business development and consumer business)	See “Directors” above
Naoya Takahashi
(Oct. 17, 1948)	Representative Executive Officer Executive Vice President and Executive Officer (Information & telecommunication systems business, research & development and information technology)	4/2009	Executive Vice President and Executive Officer
		4/2007	Senior Vice President and Executive Officer
		4/2006	Vice President and Executive Officer
		4/2003	COO, Information & Telecommunication Systems
		4/1973	Joined Hitachi, Ltd.
Junzo Nakajima
(Feb. 8, 1949)	Senior Vice President and Executive Officer (Information & telecommunication systems business)	4/2009	Senior Vice President and Executive Officer
		4/2006	Vice President and Executive Officer
		4/2005	COO, Information & Telecommunication Systems
		5/1972	Joined Hitachi, Ltd.
Koichiro Nishikawa
(Jul. 12, 1947)	Senior Vice President and Executive Officer (Business development)	4/2007	Senior Vice President and Executive Officer
		1/2006	Vice President and Executive Officer
		6/2003	Executive Officer
		4/2003	General Manager, Business Development
		4/1970	Joined Hitachi, Ltd.
Toyoaki Nakamura
(Aug. 3, 1952)	Representative Executive Officer Senior Vice President and Executive Officer (Finance, corporate pension system and Hitachi group management)	6/2009	Senior Vice President and Executive Officer
		6/2007	Senior Vice President, Executive Officer and Director
		4/2007	Senior Vice President and Executive Officer
		1/2006	General Manager, Finance Department I
		4/1975	Joined Hitachi, Ltd.
Taiji Hasegawa
(Feb. 18, 1947)	Representative Executive Officer Senior Vice President and Executive Officer (Procurement, motor power systems and battery systems business)	9/2008	Senior Vice President and Executive Officer, Hitachi, Ltd.
		4/2007	Chairman, Hitachi Automotive Products (USA), Inc.
		4/2006	Senior Vice President and Executive Officer (Retired in March 2007)
		4/2004	Vice President and Executive Officer
		6/2003	Executive Officer
		4/2003	President & CEO, Automotive Systems
		4/1969	Joined Hitachi, Ltd.

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Name (Date of birth)	Current position (Responsibility of Executive Officer as authorized by the Board of Directors)	Date	Business experience, including experience in the Company, and functions
Shozo Saito
(Nov. 5, 1945)	Senior Vice President and Executive Officer (Environmental strategies, quality assurance, production engineering and power systems engineering)	4/2006	Senior Vice President and Executive Officer
		10/2004	Vice President and Executive Officer
		2/2004	Executive Officer
		6/2003	Vice President and Executive Officer
		4/2003	President & CEO, Power & Industrial Systems
		4/1970	Joined Hitachi, Ltd.
Tadahiko Ishigaki
(Jan. 14, 1946)	Senior Vice President and Executive Officer (Hitachi group global business (Americas))	4/2006	Senior Vice President and Executive Officer, Hitachi, Ltd.
		2/2004	President and Representative Director, Hitachi Home & Life Solutions, Inc. (currently Hitachi Appliances, Inc.)
		6/2003	Vice President and Executive Officer (Retired in February 2004)
		4/2003	General Manager, Corporate Marketing
		4/1968	Joined Hitachi, Ltd.
Stephen Gomersall
(Jan. 17, 1948)	Senior Vice President and Executive Officer (Hitachi group global business (Europe))	10/2006	Senior Vice President and Executive Officer, Hitachi, Ltd.
		10/2004	Chief Executive for Europe, Hitachi, Ltd.
		7/1999	British Ambassador to Japan (Retired in July 2004)
		9/1970	Joined U.K. Foreign and Commonwealth Office
Koji Tanaka
(Jan. 22, 1952)	Vice President and Executive Officer (Power systems business)	4/2007	Vice President and Executive Officer
		5/2006	General Manager, Hitachi Works, Power Systems
		4/1974	Joined Hitachi, Ltd.
Akira Maru
(Nov. 8, 1948)	Vice President and Executive Officer (Power systems business (nuclear power systems business promotion))	5/2006	Vice President and Executive Officer
		4/2005	General Manager, Hitachi Works and Executive Vice President, Power Systems
		4/1971	Joined Hitachi, Ltd.
Hitoshi Isa
(Feb. 19, 1950)	Vice President and Executive Officer (Power systems business (thermal power systems business promotion))	4/2008	Vice President and Executive Officer
		1/2007	Executive Vice President, Power Systems
		4/1974	Joined Hitachi, Ltd.
Gaku Suzuki
(May 12, 1947)	Vice President and Executive Officer (Industrial systems business)	8/2005	Vice President and Executive Officer
		4/2004	General Manager, Transportation Systems Division, Industrial Systems
		4/1972	Joined Hitachi, Ltd.
Hideaki Takahashi
(Aug. 20, 1952)	Vice President and Executive Officer (Urban planning and development systems business)	4/2007	Vice President and Executive Officer, Hitachi, Ltd.
		4/2005	President and Representative Director, Hitachi Building Systems Co., Ltd.
		4/1978	Joined Hitachi, Ltd.

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Name (Date of birth)	Current position (Responsibility of Executive Officer as authorized by the Board of Directors)	Date	Business experience, including experience in the Company, and functions
Shinjiro Iwata
(Jun. 6, 1948)	Vice President and Executive Officer (Information & telecommunication systems business (services & global business))	4/2009	Vice President and Executive Officer, Hitachi, Ltd.
		10/2007	Executive Vice President, Hitachi Global Storage Technologies, Inc.
		4/1972	Joined Hitachi, Ltd.
Kaichiro Sakuma
(Jan. 29, 1954)	Vice President and Executive Officer (Information & telecommunication systems business (system solutions business))	4/2009	Vice President and Executive Officer
		4/2008	President & Chief Executive Officer, Hitachi Information & Telecommunication Systems Global Holding Corporation
		4/1979	Joined Hitachi, Ltd.
Masahiro Kitano
(Nov. 23, 1955)	Vice President and Executive Officer (Information & telecommunication systems business (platform systems business))	4/2009	Vice President and Executive Officer
		4/2007	Chief Strategy Officer and General Manager of Strategy Planning & Development Office, Information & Telecommunication Systems
		4/1980	Joined Hitachi, Ltd.
Koushi Nagano
(Mar. 11, 1947)	Vice President and Executive Officer (Sales operations and Hitachi group global business)	4/2008	Vice President and Executive Officer
		6/2005	President, Hitachi (China), Ltd.
		4/1969	Joined Hitachi, Ltd.
Masao Hisada
(Dec. 16, 1948)	Vice President and Executive Officer (Hitachi group global business and corporate export regulation)	4/2007	Vice President and Executive Officer
		4/2006	General Manager, Corporate Procurement Division
		4/1972	Joined Hitachi, Ltd.
Takao Koyama
(Dec. 11, 1948)	Vice President and Executive Officer (Sales operations (Kansai Area))	4/2007	Vice President and Executive Officer
		4/2004	General Manager, Kanto Area Operation
		4/1971	Joined Hitachi, Ltd.
Shigeru Azuhata
(Nov. 21, 1949)	Vice President and Executive Officer (Research & development and environmental strategies)	4/2009	Vice President and Executive Officer
		1/2008	General Manager, Environmental Strategy Office
		4/1975	Joined Hitachi, Ltd.
Kenji Ohno
(Jan. 3, 1951)	Vice President and Executive Officer (Human capital)	4/2007	Vice President and Executive Officer, Hitachi, Ltd.
		6/2005	President and Representative Director, Hitachi Dentetsu Co., Ltd.
		4/1974	Joined Hitachi, Ltd.
Toshiaki Kuzuoka
(Nov. 3, 1954)	Vice President and Executive Officer (Legal and corporate communications, corporate brand and corporate auditing)	4/2007	Vice President and Executive Officer
		4/2001	General Manager, Legal Division
		4/1978	Joined Hitachi, Ltd.

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Name (Date of birth)	Current position (Responsibility of Executive Officer as authorized by the Board of Directors)	Date	Business experience, including experience in the Company, and functions
Makoto Ebata
(Feb. 23, 1947)	Vice President and Executive Officer (Procurement)	7/2009	Vice President and Executive Officer, Hitachi, Ltd.
		4/2008	Deputy Chairman, Hitachi Europe Ltd.
		4/2004	Vice President and Executive Officer (Retired in March 2008)
		6/2003	Executive Officer
		2/2002	General Manager, Group Management Office
		4/1970	Joined Hitachi, Ltd.
Nobuyuki Ohno
(Feb. 24, 1949)	Vice President and Executive Officer (Hitachi group global business (China))	4/2009	Vice President and Executive Officer
		4/2007	Chief Marketing Officer of Information & Telecommunication Systems, Deputy General Manager of Corporate Marketing Group
		4/1971	Joined Hitachi, Ltd.
Osamu Ohno
(Aug. 6, 1948)	Vice President and Executive Officer (Information technology)	4/2009	Vice President and Executive Officer
		4/2005	General Manager, Information Technology Division
		4/1969	Joined Hitachi, Ltd.

There are no family relationships between any Director or Executive Officer and any other Director or Executive Officer of the Company. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or Executive Officer.

B. Compensation

The aggregate amount of compensation, including retirement allowances, by Hitachi during the fiscal year ended March 31, 2009 to all Directors and Executive Officers of the Company who served during that year was ¥2,416 million.

Compensation is commensurate with the ability required of, and the responsibilities to be borne by, the Company’s Directors and Executive Officers, taking into consideration compensation packages at other companies.

Compensation for Directors consists of a monthly salary and a year-end allowance. Monthly salary is decided by making adjustments to basic salary that reflect full-time or part-time status, committee membership and position. Year-end allowance is a pre-determined amount equivalent to about twenty percent of the Director’s annual income based on monthly salary, although this amount may be reduced depending on the Company’s performance. A Director concurrently serving as an Executive Officer is not paid compensation as a Director.

Compensation for Executive Officers consists of a monthly salary and a performance-linked bonus. Monthly salary is decided by adjusting a basic amount set in accordance with the relevant position to reflect the results of an assessment. The performance-linked bonus is payable in an amount of up to approximately thirty percent of the Executive Officer’s annual income, adjusted based on the Company and individual performance.

It was decided at the Compensation Committee meetings held on December 18, 2007 and March 26, 2008 that the compensation structure for Directors and Executive Officers will be re-examined starting with the compensation for fiscal 2008 and that the retirement allowance system be abolished in the future. Retirement allowance is an amount payable to Directors and Executive Officers on retirement. It was previously determined according to a formula by the position held at retirement, the monthly salary of previous positions held and total years of service in such positions, and such formula could either be increased by up to thirty percent for distinguished service, or depending on the circumstances, be reduced. In the interim, the payment of retirement allowance to Directors and Executive Officers due to the abolition of the retirement allowance system will be in an amount determined by the Compensation Committee at the time of the retirement of a relevant Director or Executive Officer.

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At the June 2005 ordinary general meeting of shareholders, the shareholders of the Company approved a stock option plan. Pursuant to such approval, the Board of Directors set and approved the details of the plan under which rights to subscribe for 1,201,000 shares of common stock of the Company were granted to a total of 73 persons, including Directors, Executive Officers, corporate officers and fellows of the Company. The exercise price of the rights is ¥719 per share and the rights are exercisable from July 29, 2006 through July 28, 2009. See note 29 to Hitachi’s consolidated financial statements.

The significant terms of the Company’s stock option plans are as follows:

• A person granted stock acquisition rights may exercise his/her rights during the six months after his/her retirement from his/her position of Director, Executive Officer or as an employee.

• A person immediately loses his/her granted stock acquisition rights if:

- he/she is imprisoned under Japanese law;

- he/she dies;

- he/she becomes a director, an executive officer, an auditor, an employee, a temporary employee, an advisor or takes similar position at another company against the Company’s will;

- any other factors which deemed to be inappropriate to have the person exercise his/her stock acquisition rights have occurred; or

- he/she notifies the Company by way of a written notice to waive his/her granted stock acquisition rights.

• A person granted stock acquisition rights may not transfer his/her rights or offer them as collateral.

• In the event the Company becomes a wholly owned subsidiary of another company by way of share-for-share exchange or share-transfer under the Companies Act, the Company shall assign the obligation relating to the stock acquisition rights to the parent company; provided, however, only if such assignment of the obligation relating to the stock acquisition rights is approved by the general meeting of shareholders relating to the approval of such share-for-share exchange or share-transfer.

At a meeting of the Compensation Committee of the Company held on March 30, 2006, it was determined that additional stock options would not be granted for the time being.

C. Board Practices

The Company adopts the Committee System permitted as a form of corporate organization pursuant to the Companies Act. Each company adopting the Committee System, including the Company, is required to (i) establish within its board of directors nominating, audit and compensation committees, a majority of the members of each of which must be outside directors, and (ii) appoint executive officers responsible for executing the business of such company. The Companies Act defines an outside director as a director who is not and has not been an executive director (a representative director or a director who executes such company’s business), executive officer, manager or any other employee of such company or its subsidiaries. Under the Committee System, a company is not allowed to have corporate auditors, but is instead required to delegate auditing function responsibilities to its audit committee. Through the adoption of the Committee System and the resulting separation of business execution and supervision thereof, the Company hopes to improve the efficiency of its management and foster a thorough and transparent management system.

The Company’s articles of incorporation provide for a Board of Directors of not more than 20 members. All Directors are elected at a general meeting of shareholders and the current Directors were elected at the Company’s June 23, 2009 general meeting of shareholders. The Company’s articles of incorporation provide that, by resolution of the Board of Directors, a Director who convenes and presides over meetings of the Board of Directors shall be selected. The Directors are reelected each year, and not on a staggered basis. The term of office of Directors expires at the close of the ordinary general meeting of shareholders for the last business year that will end within one year after their election. A Director may serve any number of consecutive terms. The term of office of the Directors currently in office will expire at the close of the ordinary general meeting of shareholders to be held within three months from March 31, 2010.

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Under the Committee System, the Board of Directors focuses on the functions of decision-making with respect to fundamental management policies and certain important matters prescribed by law, as well as supervision of execution by the Directors and Executive Officers of their respective duties. The Board of Directors has, by resolution, delegated to the Executive Officers most of its authority to make decisions with regard to the Company’s business affairs.

The Nominating Committee is authorized to determine the particulars of proposals concerning the election and dismissal of Directors to be submitted to a general meeting of shareholders. As stated above, a majority of the members of the Nominating Committee must be outside Directors.

The Compensation Committee is authorized to establish a policy on the determination of the particulars of compensation for each Director and Executive Officer and to determine the particulars of compensation for each Director and Executive Officer in accordance with such policy. As stated above, a majority of the members of the Compensation Committee must be outside Directors.

The Audit Committee is authorized to audit the execution by the Directors and Executive Officers of their respective duties, to prepare its audit report and determine the particulars of proposals concerning the election, dismissal and non-retention of the Company’s independent auditor to be submitted to the general meeting of shareholders. The Audit Committee has the statutory duty to examine the financial statements and business reports prepared by Executive Officers designated by the Board of Directors and to prepare its audit report. Pursuant to the Board of Directors regulations of the Company, the Audit Committee has the authority to pre-approve non-audit services provided by an independent auditor. As stated above, a majority of the members of the Audit Committee must be outside Directors. In addition, a member of the Audit Committee may not concurrently be an Executive Officer or a Director who is engaged in the business affairs of the Company or its subsidiaries, or an accounting advisor (kaikei san-yo), a manager (shihai nin), or any other employee of the Company’s subsidiaries.

For a list of the members of each committee, see “A. Directors and Senior Management” above.

The Company’s articles of incorporation provide for a maximum of 40 Executive Officers. All Executive Officers are appointed by the Board of Directors. Pursuant to the Company’s articles of incorporation, the term of office of Executive Officers expires on the last day of the business year that ends within one year from their election. An Executive Officer may serve any number of consecutive terms. The term of office of the Executive Officers currently in office will expire on March 31, 2010.

Under the Committee System, Executive Officers have the power to make decisions on matters delegated to them by the Board of Directors. An Executive Officer executes the business affairs of the Company within the scope of assignment determined by the Board of Directors. From among the Executive Officers, the Board of Directors must appoint one or more representative Executive Officers. Each of the representative Executive Officers has the statutory authority to represent the Company generally in the conduct of its affairs. Pursuant to the Company’s articles of incorporation, the Board of Directors must appoint a President who must also be a representative Executive Officer.

No Directors have service contracts with Hitachi providing for benefits upon termination of employment.

Pursuant to the Companies Act and the Company’s articles of incorporation, the Company may, by resolution of the Board of Directors, exempt any Director and Executive Officer from liabilities to the Company arising in respect of his/her failure to execute duties to the extent provided in laws or regulations. In addition, the Company has entered into an agreement with each outside Director to limit such Director’s liabilities to the Company arising in connection with a failure by such Director to execute his/her duties to the Company. The maximum aggregate amount of liability coverage under these agreements is in accordance with the Companies Act.

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D. Employees

The following tables show the number of full-time employees of Hitachi by industry and geographic segments as of March 31, 2007, 2008 and 2009.

Industry segment

	As of March 31,
	2007	2008	2009
	(Number of employees)
Information & Telecommunication Systems	98,257	99,964	107,545
Electronic Devices	28,859	27,349	27,816
Power & Industrial Systems	96,893	96,867	104,931
Digital Media & Consumer Products	36,249	35,752	34,928
High Functional Materials & Components	53,464	50,934	49,408
Logistics, Services & Others	29,258	29,851	29,943
Financial Services	3,914	3,941	4,044
Corporate	3,102	3,152	3,181
Total	349,996	347,810	361,796

Geographic segment

	As of March 31,
	2007	2008	2009
	(Number of employees)
Japan	227,800	226,828	234,519
Asia	93,827	90,687	96,713
North America	15,537	15,293	14,487
Europe	6,322	8,777	10,611
Other Areas	6,510	6,225	5,466
Total	349,996	347,810	361,796

In addition to the above, the average number of temporary employees for the fiscal year ended March 31, 2009 was 42,097.

The activities of the Hitachi Workers Union and those unions representing the employees of certain domestic subsidiaries are organized under the Federation of Hitachi Group Workers Unions. Each company in the Hitachi group has a collective bargaining agreement with its workers union. Under the agreements, all employees of the Company and its domestic subsidiaries that have labor unions, except management and a limited number of other employees, must become union members. The collective bargaining agreements are customarily for two-year terms and the present provisions, other than those relating to wages, extend to March 31, 2010. Hitachi considers its relations with the labor unions to be excellent and there have been no significant strikes or labor disputes in recent years.

E. Share Ownership

The following table shows the number of shares of common stock of the Company owned by the Directors and Executive Officers as of July 1, 2009. The total number of the shares held by them is 0.03% of total shares issued.

Name	Position	Share ownership
		(Number of shares)
Tadamichi Sakiyama	Board Director (Chair)	29,000
Takashi Kawamura	Chairman, President, Chief Executive Officer and Director	69,000
Michiharu Nakamura	Director	74,000
Takashi Miyoshi	Executive Vice President, Executive Officer and Director	44,000
Yoshie Ota	Director	8,000
Mitsuo Ohashi	Director	10,000
Akihiko Nomiyama	Director	4,000
Kenji Miyahara	Director	4,000
Tohru Motobayashi	Director	26,750
Takeo Ueno	Director	41,000
Shungo Dazai	Director	14,150
Michihiro Honda	Director	16,000

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Name	Position	Share ownership
		(Number of shares)
Kazuhiro Mori	Executive Vice President and Executive Officer	34,000
Hiroaki Nakanishi	Executive Vice President and Executive Officer	36,000
Takashi Hatchoji	Executive Vice President and Executive Officer	60,000
Naoya Takahashi	Executive Vice President and Executive Officer	36,000
Junzo Nakajima	Senior Vice President and Executive Officer	27,050
Koichiro Nishikawa	Senior Vice President and Executive Officer	56,150
Toyoaki Nakamura	Senior Vice President and Executive Officer	19,000
Taiji Hasegawa	Senior Vice President and Executive Officer	25,000
Shozo Saito	Senior Vice President and Executive Officer	45,050
Tadahiko Ishigaki	Senior Vice President and Executive Officer	44,250
Stephen Gomersall	Senior Vice President and Executive Officer	2,000
Koji Tanaka	Vice President and Executive Officer	25,000
Akira Maru	Vice President and Executive Officer	12,000
Hitoshi Isa	Vice President and Executive Officer	34,000
Gaku Suzuki	Vice President and Executive Officer	21,000
Hideaki Takahashi	Vice President and Executive Officer	13,000
Shinjiro Iwata	Vice President and Executive Officer	21,000
Kaichiro Sakuma	Vice President and Executive Officer	21,000
Masahiro Kitano	Vice President and Executive Officer	13,050
Koushi Nagano	Vice President and Executive Officer	20,000
Masao Hisada	Vice President and Executive Officer	23,000
Takao Koyama	Vice President and Executive Officer	23,000
Shigeru Azuhata	Vice President and Executive Officer	30,000
Kenji Ohno	Vice President and Executive Officer	16,000
Toshiaki Kuzuoka	Vice President and Executive Officer	73,000
Makoto Ebata	Vice President and Executive Officer	34,000
Nobuyuki Ohno	Vice President and Executive Officer	33,000
Osamu Ohno	Vice President and Executive Officer	29,000
Total		1,165,450

The aggregate number of shares that may be subscribed for under rights granted to the Directors and Executive Officers, listed above, pursuant to stock option plans approved in June 2005 was 192,000 shares as of July 1, 2009 and constituted 0.01% of total shares issued. For additional information on the Company’s stock option plan, see “B. Compensation” of this Item.

No Director or Executive Officer has different voting rights from any other shareholder of the Company’s common stock.

Hitachi Employees’ Shareholding Association owned approximately 109,029 thousand shares as of March 31, 2009, which amounted to 3.2% of total shares issued. The association consists of employees of the Company and certain of its subsidiaries. Membership in the association is voluntary.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table provides information concerning shareholders holding more than five percent of the outstanding common stock of the Company as of March 31, 2009 based on the Company’s share register. It is not necessarily the case that a shareholder recorded on the share register beneficially owns shares of common stock of the Company.

Title of class	Name	Share ownership	Percentage of total shares issued
		(Thousand shares)
Common stock	The Master Trust Bank of Japan, Ltd. (Trust Account)	209,378	6.2	%
Common stock	NATS CUMCO (note)	188,562	5.6	%
Common stock	Japan Trustee Services Bank, Ltd. (Trust Account 4G)	181,679	5.4	%

Note: NATS CUMCO is the nominee name for the American Depositary Receipt (“ADR”) depositary.

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Schedule 13G

In February 2009, the Company received from Brandes Investment Partners, L.P. a notice included on Schedule 13G filed on February 12, 2009 pursuant to Rule 13d-1(b) under the Securities Exchange Act of 1934 (the “Act”). The notice indicated that neither Brandes Investment Partners, L.P. nor any of its affiliates owned shares for its own account and that the shares were held solely for investment purposes in the ordinary course of business and not with the purpose or effect of changing or influencing control. However, by virtue of Rule 13d-3 under the Act, Brandes Investment Partners, L.P. may be deemed to “beneficially own” 2,523,820 ADSs and 67,949,856 ordinary shares as of December 31, 2008, representing 2.8% of the Company’s total issued shares at that time.

In February 2009, the Company received from Dodge & Cox a notice included on Schedule 13G filed on February 11, 2009 pursuant to Rule 13d-1(b) under the Act. The notice indicated that Dodge & Cox did not own shares for its own account and that the shares were held solely for investment purposes in the ordinary course of business and not with the purpose or effect of changing or influencing control. However, by virtue of Rule 13d-3 under the Act, Dodge & Cox may be deemed to “beneficially own” 12,557,154 ADSs as of December 31, 2008, representing 3.7% of the Company’s total issued shares at that time.

Report of Substantial Shareholdings under the Financial Instruments and Exchange Law of Japan

The following statements refer to reports of substantial shareholdings under the Financial Instruments and Exchange Law of Japan which the Company received. These filings represent reports on beneficial ownership of more than 5% of total issued voting shares under the Financial Instruments and Exchange Law of Japan (See “Item 10. Additional Information — B. Memorandum and Articles of Association — Reporting of Substantial Shareholdings”). The following statements only include reports from beneficial owners whom the Company recognizes to hold or have held previously more than 5% of total issued voting shares of the Company.

In July 2008, the Company received a copy of a filing made to the Kanto Local Finance Bureau dated July 22, 2008 indicating that Brandes Investment Partners, L.P. owns 138,844,378 shares, representing 4.1% of the Company’s total issued shares as of July 15, 2008, and that Brandes Investment Partners, L.P. did not own shares for its own account and that the shares were held solely for investment purposes in the ordinary course of business and not with the purpose or effect of changing or influencing control. The Company has not received any revision or update to the copy of the filing made to the Kanto Local Finance Bureau.

In May 2009, the Company received a copy of a filing made to the Kanto Local Finance Bureau dated May 21, 2009 indicating that Dodge & Cox owns 148,580,900 shares, representing 4.4% of the Company’s total issued shares as of May 15, 2009, and that Dodge & Cox did not own shares for its own account and that the shares were held solely for investment purposes in the ordinary course of business and not with the purpose or effect of changing or influencing control. The Company has not received any revision or update to the copy of the filing made to the Kanto Local Finance Bureau.

In October 2008, the Company received a copy of a filing made to the Kanto Local Finance Bureau dated October 20, 2008 indicating Mitsubishi UFJ Financial Group, Inc. owns 169,748,898 shares, representing 5.0% of the Company’s total issued shares as of October 13, 2008, and that the shares were held solely for investment purposes in the ordinary course of business and not with the purpose or effect of changing or influencing control. The Company has not received any revision or update to the copy of the filing made to the Kanto Local Finance Bureau.

Major shareholders of the Company do not have different voting rights from any other shareholder of the Company’s common stock.

As of March 31, 2009, approximately 20.0% of the Company’s common stock was owned by 211 U.S. shareholders of record, in the aggregate, including the depositary’s nominee as one shareholder of record.

The Company is not directly or indirectly owned or controlled by any other corporation, by any foreign country or by any other natural or legal person severally or jointly. To the knowledge of the Company, there are no arrangements, the operation of which may at a subsequent date result in a change in control of the Company.

59

B. Related Party Transactions

To the knowledge of the Company, as of March 31, 2009, no person was the beneficial owner of more than 10% of any class of the Company’s shares which might give that person significant influence over the Company. In addition, the Company is not directly or indirectly owned or controlled by, or under common control with, any enterprise.

Hitachi may enter into transactions with shareholders or potential large investors in the ordinary course of its business. Hitachi may also enter into transactions in the ordinary course of its business with certain companies over which Hitachi or its key management personnel may have a significant influence. Hitachi believes it conducts its business with these companies in the normal course and on terms equivalent to those that would exist if they did not have equity holdings in Hitachi, or if Hitachi or its key management personnel did not have significant influence over them, as the case may be. None of these transactions is or was material to Hitachi or, to its knowledge, to the other party.

In fiscal 2008, the Company and certain subsidiaries had business transactions with Mitaka Communication Systems Co., Ltd., of which a close relative of Mr. Mitsuo Yamaguchi, who was an executive officer of the Company and retired on March 31, 2009, directly owns the majority of the voting rights. The Company and its subsidiaries purchased products from Mitaka Communication Systems Co., Ltd. in the aggregate amount of ¥92 million in fiscal 2008 and there was ¥35 million on accounts payable as of March 31, 2009. The Company and its subsidiaries purchased the products in the ordinary course of its business and under the same terms as ordinary transactions. These transactions were not material to Hitachi, but may have been material to Mitaka Communication Systems Co., Ltd.

There are no outstanding loans (including guarantees of any kind) made by the Company or any of its subsidiaries to or for the benefit of Directors or Executive Officers of the Company except home loans extended to certain Executive Officers, including a newly appointed Executive Officer, by a subsidiary of the Company engaged in the business of financial services. The aggregate outstanding balance of such loans to the Executive Officers as of May 31, 2009 was ¥90 million, and the largest aggregate outstanding balance during the period from April 1, 2008 through May 31, 2009 was ¥92 million. Hitachi believes these loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

Consolidated Financial Statements

See “Item 17. Financial Statements.”

Legal Proceedings

The Company, certain of its subsidiaries and its equity method affiliates are subject to a number of legal proceedings relating to alleged antitrust violations as follows.

In January 2007, the European Commission ordered the Company, Hitachi Europe Ltd. (“Hitachi Europe”), the Company’s wholly owned subsidiary, and Japan AE Power Systems Corporation (“AE Power”), an equity method affiliate of the Company which was demerged and succeeded to the gas insulated switchgear (“GIS”) operations of the Company, to pay a fine for infringement of EC antitrust rules regarding alleged antitrust violations relating to GIS equipment used at substations. In April 2007, the Company lodged an appeal with the Court of First Instance of the European Communities asking the court to annul the decision of the European Commission. The determination has not been rendered at present, but the Company accrued for the fine based on past judgments in the year ended March 31, 2007.

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In October 2006, Renesas Technology America, Inc. (“Renesas America”), a subsidiary of Renesas Technology Corp. (“Renesas”), an equity method affiliate of the Company which was demerged and succeeded to the semiconductor operations of the Company centered in system large scale integrations, and Hitachi America, Ltd. (“Hitachi America”), the Company’s wholly owned subsidiary, received a grand jury subpoena in connection with the investigation conducted by the Antitrust Division of the U.S. Department of Justice in respect of alleged antitrust violations relating to static random access memories. In December 2008, the Antitrust Division informed Hitachi America and Renesas America that the antitrust investigation would be terminated.

In December 2006, the Company and Hitachi Europe received requests for information from the European Commission in respect of alleged antitrust violations relating to LCDs.

Also in December 2006, Hitachi Displays, Ltd. (“Hitachi Displays”), the Company’s subsidiary which was demerged and succeeded to the LCDs operations of the Company, received a grand jury subpoena in connection with the investigation conducted by the Antitrust Division of the U.S. Department of Justice in respect of alleged antitrust violations relating to LCDs. In May 2009, Hitachi Displays pled guilty to one count of price fixing under the Sherman Act, for which it paid a fine of $31 million in June 2009.

In addition, in December 2006, Hitachi Displays and IPS Alpha Technology, Ltd., an equity method affiliate of the Company which is engaged in the large-sized LCDs business, received requests for information from the Fair Trade Commission of Japan in respect of alleged antitrust violations relating to LCDs. Subsequently, the Fair Trade Commission of Japan issued a cease and desist order to Hitachi Displays in December 2008, but did not impose a fine.

In June 2007, the Company received requests for information from the European Commission in respect of alleged antitrust violations relating to dynamic random access memories.

In September 2007, Hitachi America and Renesas America received a grand jury subpoena in connection with an investigation conducted by the Antitrust Division of the U.S. Department of Justice in respect of alleged antitrust violations relating to flash memories.

In November 2007, Hitachi Electronic Devices (USA), Inc., a subsidiary of Hitachi Displays, received a grand jury subpoena in connection with the investigation conducted by the Antitrust Division of the U.S. Department of Justice in respect of alleged antitrust violations relating to cathode ray tubes (“CRTs”). In addition, in November 2007, Hitachi Asia Ltd., a wholly owned subsidiary of the Company, and Hitachi Europe received requests for information from the European Commission in respect of alleged antitrust violations relating to CRTs. Further, in November 2007, Hitachi Canada Ltd., a subsidiary of the Company, received requests for information from the Canadian Competition Bureau in respect of alleged antitrust violations relating to CRTs.

In December 2008, the Company received requests for information from the European Commission in respect of alleged antitrust violations relating to electrical transformers.

Although the Company and the other named parties do not concede the alleged antitrust violations except as otherwise stated, the Company and the other named parties have cooperated with the above investigations. Depending upon the outcome of these investigations, fines or surcharge payments, the amount of which is uncertain, may be imposed on the named parties, including the Company. In addition, subsequent to these actions by the competent authorities, a number of class action lawsuits have been filed in the U.S. and Canada against the Company, certain of its subsidiaries and its equity method affiliates which are engaged in or had been engaged in semiconductors business, LCD business and CRT business. These complaints allege violations of various jurisdictions’ antitrust, consumer protection and/or unfair competition laws and seek treble monetary damages, restitution, costs, interest and attorneys’ fees for unspecified amounts. Depending upon the outcome of such legal proceedings, they may, either singly or in the aggregate, result in a material adverse effect on Hitachi’s business, results of operations, cash flows, financial condition, reputation or credibility. Currently, the Company is unable to estimate the adverse effects, if any, that may result from these proceedings. Accordingly, no accrual for potential loss has been made.

In September 2008, Chubu Electric Power Co., Inc. filed a lawsuit with the Tokyo District Court against the Company seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Hamaoka Nuclear Power Station in the amount of ¥41.8 billion plus interest. In May 2009, Hokuriku Electric Power Company filed a lawsuit with the Tokyo District Court against the Company seeking compensation for the breakdown of the turbine vanes in the nuclear reactors at Shika Nuclear Power Station in the amount of ¥20.2 billion plus interest. The Company intends to vigorously defend itself in these lawsuits. See “Item 4. Information on the Company — B. Business Overview — Description of Industry Segments — Power & Industrial Systems” and “Item 5. Operating and Financial Review and Prospects — D. Trend Information” for additional information.

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In addition to the above, the Company, certain of its subsidiaries and its equity method affiliates are subject to several other legal and arbitration proceedings and claims which have arisen in the ordinary course of business and have not been finally adjudicated. However, based upon the information currently available to Hitachi, management of the Company does not expect the outcomes of these legal and arbitration proceedings and claims to have a material effect on Hitachi’s financial condition, results of operations or cash flows.

Dividend Policy

The Company views enhancement of the long-term and overall interests of shareholders as an important management objective. The industrial sector encompassing energy, information systems, social infrastructure and other primary businesses of the Company is undergoing rapid technological innovation and changes in market structure. This makes vigorous upfront investment in R&D and plant and equipment essential for securing and maintaining market competitiveness and improving profitability. Dividends are therefore decided based on medium-to-long term business plans while ensuring the availability of internal funds for reinvestment and the stable growth of dividends, with appropriate consideration of a range of factors, including the Company’s financial condition, results of operations and dividend payout ratio.

The Company believes that the repurchase of its shares should be undertaken, when necessary, as part of its policy on distribution to shareholders to complement the dividend payout. In addition, the Company will repurchase its own shares on an ongoing basis in order to flexibly implement a capital strategy, including business restructuring, to maximize shareholder value so far as consistent with the dividend policy. Such action will be taken by the Company after considering its future capital requirement under its business plans, market conditions and other relevant factors.

The Company declared a dividend of ¥3 per share in fiscal 2008.

B. Significant Changes

None.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

The primary market for the Company’s common stock is the Tokyo Stock Exchange, or the TSE. The common stock is traded on the First Section of the TSE and is also listed on four other Japanese stock exchanges: Osaka, Nagoya, Fukuoka and Sapporo. In the United States, the Company’s ADSs are listed and traded on the New York Stock Exchange, or the NYSE, in the form of Certificated ADSs (ADRs) or Uncertificated ADSs. There may from time to time be a differential between the common stock’s price on exchanges in Japan and the market price of the ADSs in the United States.

ADRs are issuable pursuant to the Second Amended and Restated Deposit Agreement dated as of December 14, 2007, or the Deposit Agreement, by and among the Company, Citibank, N.A. as depositary, or the Depositary, and the holders and beneficial owners of ADSs. Each ADS or ADR represents ten shares of common stock of the Company deposited under the Deposit Agreement with Mizuho Corporate Bank, Ltd., Tokyo, as agents of the depositary, or any successor or successors to such agent or agents.

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The following table sets forth for the periods indicated the reported high and low sales prices of the Company’s common stock on the TSE and the reported high and low sales prices of the Company’s ADSs on the NYSE.

	TSE price per share of common stock		NYSE price per ADS
	(Yen)		(U.S. Dollars)
	High	Low	High	Low
Fiscal year ended March 31,
2005	850	627	81.350	57.450
2006	874	604	75.400	57.400
2007	936	644	79.760	55.740
2008	947	569	79.200	58.990
2009	843	230	77.330	23.840
Fiscal year ended March 31, 2008
1st quarter	947	837	79.200	70.160
2nd quarter	917	675	76.130	59.000
3rd quarter	852	705	75.120	62.860
4th quarter	836	569	76.800	58.990
Fiscal year ended March 31, 2009
1st quarter	807	581	74.920	59.550
2nd quarter	843	690	77.330	63.410
3rd quarter	733	334	69.270	36.790
4th quarter	407	230	42.670	23.840
Fiscal year ended March 31, 2010
1st quarter	404	264	40.790	27.370
January 2009	407	290	42.670	30.000
February 2009	290	230	31.450	24.140
March 2009	302	233	29.870	23.840
April 2009	346	264	35.620	27.370
May 2009	404	305	40.790	31.730
June 2009	334	297	34.410	30.640

Notes:

1. Prices per share of common stock are as reported by the TSE.

2. Prices per ADS are based upon one ADS representing ten shares of common stock and are as reported by the NYSE via the NYSEnet system.

B. Plan of Distribution

Not applicable.

C. Markets

See “A. Offer and Listing Details” in this Item.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

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ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Organization

The Company was incorporated in Japan under the former Commercial Code of Japan and is existing under the Companies Act. It is registered in the commercial register (shogyo tokibo) maintained by the Tokyo Legal Affairs Bureau of the Ministry of Justice.

Objects and Purposes

Article 2 of the articles of incorporation of the Company provides that its purpose is to carry on the following businesses: manufacture and sale of electrical machinery and appliances; manufacture and sale of industrial machinery and appliances; manufacture and sale of rolling stock; manufacture and sale of telecommunication and electronic machinery and appliances; manufacture and sale of lighting and household machinery and appliances; manufacture and sale of optical and medical machinery and instruments; manufacture and sale of measuring and other general machinery and appliances; manufacture and sale of materials related to the products mentioned in any of the foregoing items; preparation and sale of software; preparation and sale of images, software and data related to multimedia; leasing and maintenance services of the products mentioned in any of the foregoing items; supply of electricity; telecommunication, information processing and information supply services, as well as broadcasting; undertaking of commercial transactions and payment transactions by utilizing the Internet; provision of results of research and development related to biotechnology; consulting on any of the foregoing items; licensing of industrial property rights and know-how; undertaking of engineering related to any of the foregoing items; design, supervision and undertaking of construction work; money lending, factoring, debt guarantee and investment advisory business; home health care service business, home health care support business and the operation of health care and nursing facilities under the Health Care Insurance Law; any and all businesses related to the foregoing items.

Directors

Under the Committee System, the Board of Directors focuses on the functions of decision-making with respect to fundamental management policies and certain important matters prescribed by law, as well as supervision of execution by the Directors and Executive Officers of their respective duties. The Board of Directors may, by resolution, delegate to the Executive Officers its authority to make decisions with regard to the Company’s business affairs.

Under the Companies Act, the adoption of a resolution of the Board of Directors requires a majority vote of the Directors present who must in turn constitute a majority of the Directors who are entitled to vote for the resolution. Any Director who has a conflict of interest or a vested interest with respect to any given resolution cannot participate in voting for the resolution. Under the Companies Act and the articles of incorporation of the Company, the Board of Directors can dispense with holding a board meeting to approve a proposed resolution if all the Directors who are entitled to vote on it consent in writing to dispose with the meeting and to approve the proposed resolution. Under the Companies Act, each Director must refrain from engaging in any business competing with the Company unless approved by the Board of Directors.

The Companies Act provides that, under the Committee System, the Compensation Committee established within the Board of Directors determines matters relating to compensation for each Director and Executive Officer. A member of a Committee, including the Compensation Committee, cannot participate in voting for any resolution in which such member has a special interest. Therefore, a member of the Compensation Committee cannot participate in voting for any resolution relating to his/her own compensation.

There is no mandatory retirement age for the Directors required by the Companies Act or the Company’s articles of incorporation. No shares are required for a Director’s qualification under the Companies Act or the Company’s articles of incorporation.

As a company that has adopted the Committee System, the Company has delegated to Executive Officers, by resolution of the Board of Directors, powers regarding the incurrence by the Company of a significant amount of debt.

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Common Stock

Distribution of surplus

Under the Company’s articles of incorporation, distribution of surplus through dividend payment, if any, will be made to shareholders of record as of March 31 and September 30 of each year and as of another record date for the purpose of distributing surplus. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Dividend Policy” for additional information.

Under the Company’s articles of incorporation, the Company is not obligated to make distribution of surplus left unclaimed for a period of three years after the date on which it first became payable.

Voting rights

A shareholder is generally entitled to one vote per one unit of shares, as described in this paragraph and under “Unit share system” below. In general, under the Companies Act, a resolution can be adopted at a general meeting of shareholders by a majority of the number of voting rights represented and entitled to vote at the meeting. The Companies Act and the Company’s articles of incorporation require the election of Directors annually, and a quorum of not less than one-third of the total number of voting rights of all the shareholders who are entitled to vote. The Company’s shareholders are not entitled to cumulative voting in the election of Directors and the board is not staggered. A corporate shareholder (including a shareholder in the form of a partnership) whose voting rights are in turn more than one-quarter directly or indirectly owned by the Company does not have voting rights. The Company does not have voting rights with respect to its own shares. Shareholders may cast their votes in writing and may also exercise their voting rights through proxies, provided that those proxies are also shareholders who have voting rights. Shareholders may also cast their votes by electronic means in accordance with the Company’s regulations on handling shares, etc.

The Companies Act and the Company’s articles of incorporation provide that a quorum of not less than one-third of the voting rights of the shareholders who are entitled to vote must be present at a shareholders’ meeting to approve any material corporate actions such as: a reduction of the stated capital (with certain exceptions); amendment of the articles of incorporation; establishment of a 100% parent-subsidiary relationship by way of share exchange or share transfer; a dissolution, merger or consolidation; a company split; the transfer of the whole or an important part of the business; the taking over of the whole of the business of any other corporation; entering into an agreement for the leasing of entire business, entrustment of the management of the entire business or sharing the entire profit and loss with third parties; and any issuance of new shares at a “specially favorable” price (or any issuance of rights to subscribe for or acquire shares, or stock acquisition rights, with “specially favorable” conditions or of bonds or debentures with stock acquisition rights with “specially favorable” conditions) to persons other than shareholders. At least two-thirds of the voting rights represented at the meeting must approve these actions.

Issue of additional shares and pre-emptive rights

Holders of the Company’s shares of common stock have no pre-emptive rights under its articles of incorporation. Authorized but unissued shares may be issued at such times and upon such terms as Executive Officers determine, subject to the limitations as to the issuance of new shares at a “specially favorable” price mentioned above. Executive Officers may determine that shareholders be given subscription rights to new shares, in which case they must be given on uniform terms to all shareholders as of a record date of which not less than two weeks’ prior public notice must be given. Each of the shareholders to whom such subscription rights are given must also be given at least two weeks’ prior notice of the date on which such rights expire.

Rights to subscribe for shares of common stock given to the shareholders are not transferable unless otherwise provided by the Company.

Pursuant to the Companies Act, the Company may issue stock acquisition rights. Except where the issuance of stock acquisition rights would be on “specially favorable” terms, Executive Officers may determine the issuance of stock acquisition rights other than those for stock option purposes, which in contrast, must be approved by the Compensation Committee within the Board of Directors. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as prescribed in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, the Company will be obliged to issue the relevant number of new shares, or alternatively, to transfer the necessary number of existing shares held by it.

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Liquidation rights

In the event of a liquidation of the Company, the assets remaining after payment of all debts and liquidation expenses and taxes will be distributed among the holders of shares of common stock in proportion to the respective numbers of shares of common stock held by each of them.

Stock splits and allotment of shares without consideration

The Company, by determination of an authorized Executive Officer, may at any time split shares of common stock in issue or allot shares of common stock to its shareholders without consideration.

When Executive Officers determine to effect a stock split, the Company may amend its articles of incorporation without shareholder approval to increase the number of authorized shares in proportion to the stock split if the Company has only one class of outstanding shares; however, in case of share allotment without consideration, such an amendment of its articles of incorporation is not permitted without shareholder approval.

Before a stock split and an allotment of shares without consideration, the Company must give public notice of the stock split or the allotment of shares without consideration specifying the record date and the effective date for the stock split or the allotment of shares without consideration, not less than two weeks prior to the record date.

Promptly after the allotment of shares without consideration takes effect, the Company must send notice to each shareholder specifying the number of shares to which each such shareholder is entitled.

Unit share system

Pursuant to the Companies Act, the Company has designated 1,000 shares as one unit of shares in the articles of incorporation. Under the unit share system, a shareholder is generally entitled to one voting right for each unit of shares. Since transfers of less than one unit of the underlying shares of common stock are normally prohibited under the unit share system, under the Deposit Agreement currently in force, the right of ADS holders to surrender their ADSs and withdraw the underlying shares of common stock may only be exercised as to whole units of common stock.

Although the number of shares which constitute one unit is stipulated in the articles of incorporation, an authorized Executive Officer has the power to amend the articles of incorporation to reduce the number of shares which constitute one unit or abolish the unit share system. Pursuant to the Companies Act, the number of shares constituting one unit, however, may not exceed 1,000.

A holder of shares representing less than one unit may at any time require the Company to purchase his/her shares. These shares will be purchased at (a) the closing price of the shares reported by the TSE on the day when the request to purchase is received by the administrator of shareholders’ register or (b) if no sale takes place on the TSE on that day, the price at which sale of shares is effected on such stock exchange immediately thereafter. However, because holders of ADSs representing less than one unit are not able to withdraw the underlying shares from deposit, these holders will not be able to exercise this right as a practical matter.

The Company’s articles of incorporation also provide that a holder of shares representing less than one unit may require the Company to sell any fractional shares it may have to such holder so that the holder can raise his/her fractional ownership up to a whole unit. These shares will be sold at (a) the closing price of the shares reported by the TSE on the day when the request to sell is received by the administrator of shareholders’ register or (b) if no sale takes place on the TSE on that day, the closing price at which sale of shares is effected on such stock exchange immediately preceding that day. However, because holders of ADSs representing less than one unit are not able to withdraw the underlying shares from deposit, these holders will not be able to exercise this right as a practical matter.

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Repurchase by the Company of its shares

The Company may repurchase shares of its common stock (i) by way of purchase on any Japanese stock exchange on which shares are listed or by way of tender offer (in either case pursuant to a resolution of a general meeting of shareholders), (ii) by way of purchase from a specific shareholder other than the Company’s subsidiaries (pursuant to a special resolution of a general meeting of shareholders), or (iii) by way of purchase from the Company’s subsidiary (pursuant to a resolution of the Board of Directors). In the case of (ii) above, any other shareholder may make a request to the Company, five days prior to the relevant general meeting of shareholders, to include such shareholder as a seller in the proposed purchase.

The authorization to purchase shares of its common stock pursuant to (i) above may also be granted by a resolution of the Board of Directors pursuant to the articles of incorporation of the Company.

Any such repurchase of shares of its common stock must satisfy certain requirements, including that, in the case of a repurchase described in (i) and (ii) above, the total amount of the purchase price may not exceed the distributable amount as of the date of repurchase available for distribution of surplus. The Company may hold the shares acquired in compliance with the provisions of the Companies Act, and the Company may generally dispose of or cancel such shares in accordance with the Companies Act.

General Meeting of Shareholders

The Company normally holds its ordinary general meeting of shareholders within three months following the date of the end of the fiscal year in Tokyo. In addition, the Company may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks’ advance notice. Under the Companies Act, notice of any shareholders’ meeting must be mailed to each shareholder having voting rights or, in the case of a non-resident shareholder, to his resident proxy or mailing address in Japan in accordance with the Company’s regulations on handling shares, etc., at least two weeks prior to the date of the meeting. Under the Companies Act, such notice may be given to shareholders by electronic means, with the consent by the relevant shareholders.

Generally, those shareholders of the Company registered as having rights on the register of shareholders as of the end of a given fiscal year are permitted to exercise their rights at the ordinary general meeting of shareholders concerning that fiscal year and those shareholders of the Company registered as having voting rights on the register of shareholders as of a record date properly fixed by the Company are permitted to exercise their rights at the extraordinary general meeting of shareholders.

Abolition of share certificates

The Law Concerning Central Clearing of Bonds, Shares Certificates and Other Securities of Japan (Law No. 75 of 2001, as amended) (the “Book Entry Law”), enacted in 2004, came into force on January 5, 2009 (the “Enforcement Date”). From the Enforcement Date, all Japanese companies whose shares are listed on a stock exchange in Japan, including the Company, can no longer issue share certificates. On the Enforcement Date, all share certificates issued by Japanese listed companies as of that date, including the shares of the Company, were abolished and the shares were converted to a paperless or uncertificated form.

Under a new paperless book-entry transfer system, shares held by a shareholder are electronically recorded in an account of that shareholder opened with a Book Entry Organization (furikae kikan) or an Account Management Institution (koza-kanri-kikan). Currently, Japan Securities Depository Center, Inc. (“JASDEC”) is designated as a Book Entry Organization. An Account Management Institution is a financial institution such as a bank or a securities firm operating under the Book Entry Law. The new paperless book-entry transfer system is operated by JASDEC. All the share certificates of Japanese listed companies have been voided, ceased to have any effect and cannot be traded. All shareholders who own shares must maintain a trading account to hold their shares. Any transfer of shares must be effected, not by the physical delivery of share certificates as previously mandated by law, but by electronically recording the transfer of the shares from the transferor’s account to the transferee’s account. The rights regarding voting, dividends and other shareholders rights enjoyed by a shareholder are not affected by the adoption of the paperless book-entry transfer system.

On the Enforcement Date, this new paperless book-entry transfer system replaced the depository, custody and book-entry transfer system previously operated by JASDEC.

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Reporting of Substantial Shareholdings

The Financial Instruments and Exchange Law of Japan, as amended, requires any person who has become, beneficially and solely or jointly, a holder of more than 5% of the total issued voting shares of capital stock of a company listed on any Japanese stock exchange or whose shares are traded on the over-the-counter market in Japan to file with the director general of the relevant financial bureau of Japan within five business days a report concerning such share holdings. A similar report must also be made in respect of any subsequent change of one percentage point or more in any such holding. For this purpose, shares issuable to such person upon exercise of any rights to subscribe for or acquire shares are taken into account in determining both the number of shares held by such holder and the issuer’s total issued share capital. Copies of each such report must also be furnished to the issuer of such shares and all Japanese stock exchanges on which the shares are listed or (in the case of shares traded over-the-counter) the Japan Securities Dealers Association.

There is no provision in the Company’s articles of incorporation that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company.

C. Material Contracts

None.

D. Exchange Controls

The Foreign Exchange and Foreign Trade Law of Japan, as amended, and the cabinet orders and ministerial ordinances thereunder (the “Foreign Exchange Law”) govern certain matters relating to the issuance of equity-related securities by the Company and the acquisition and holding of shares of common stock or ADSs representing such shares by “exchange non-residents” and by “foreign investors” as hereinafter defined. The Foreign Exchange Law currently in effect does not affect the right of an exchange non-resident to purchase or sell an ADS outside Japan.

“Exchange non-residents” are defined under the Foreign Exchange Law as individuals who are not resident in Japan and corporations whose principal offices are located outside Japan. Generally branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents, but branches and other offices located within Japan of non-resident corporations are regarded as residents of Japan. “Foreign investors” are defined to be (i) individuals not resident in Japan, (ii) corporations which are organized under the laws of foreign countries or whose principal offices are located outside Japan and (iii) corporations of which (a) 50% or more of the shares are held by (i) and/or (ii) above, (b) a majority of officers consists of non-resident individuals or (c) a majority of the officers having the power of representation consists of non-resident individuals.

Dividends and Proceeds of Sales

Under the Foreign Exchange Law, dividends paid on, and the proceeds of sales in Japan of, shares of common stock held by exchange non-residents in general may be converted into any foreign currency and repatriated abroad.

Acquisition of Shares

Under the Foreign Exchange Law, acquisition of shares of a Japanese company listed on any Japanese stock exchange or traded on the over-the-counter market in Japan (“listed shares”) by an exchange non-resident from a resident of Japan is generally not subject to a prior filing requirement.

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In case a foreign investor acquires listed shares (whether from a resident of Japan or an exchange non-resident, from another foreign investor or from or through a designated securities company) and as a result of such acquisition the number of shares held directly or indirectly by such foreign investor (including shares held by persons who agree to act in concert with such foreign investor in connection with the exercise of shareholders’ rights) would become 10% or more of the total outstanding shares of the company, such acquisition constitutes a direct inward investment and the foreign investor is required to make a subsequent report on such acquisition to the Minister of Finance and other Ministers having jurisdiction over the business of the subject company, or the Competent Ministers. In certain exceptional cases, a prior filing is required and the Competent Ministers may recommend the modification or abandonment of the proposed acquisition and, if the foreign investor does not accept the recommendation, order its modification or prohibition. More specifically, such prior filing requirement is triggered if, among other things, the company, its subsidiary or any person over which the company has the power to determine such person’s finance and business policies, is engaged in the manufacture of products related to arms, airplanes, nuclear power or space development, including the manufacturing of general purpose devices capable of being diverted for military use. Due to the nature of Hitachi’s business, including its nuclear power system business that involves the manufacture of products related to nuclear power development and other businesses, this prior filing requirement is likely to apply to the acquisition of Hitachi shares.

The deposit of shares of common stock by an exchange non-resident of Japan, the issuance of ADSs in exchange therefor and the withdrawal of the underlying shares of common stock by an exchange non-resident upon surrender of ADSs are not subject to any requirements under the Foreign Exchange Law, except where as a result of such deposit or withdrawal the aggregate number of shares of common stock held by the depositary (or its nominee) or the holder surrendering ADSs, as the case may be, would be 10% or more of the total outstanding shares of common stock, in which event a subsequent reporting may be required as described above.

E. Taxation

Japanese Taxation

The discussion of Japanese taxation set forth below is intended only as a summary and does not purport to be a complete analysis or discussion of all the potential Japanese tax consequences that may be relevant to the ownership of the Company’s shares or ADSs by a person who is not a resident of Japan.

A non-resident of Japan or a non-Japanese corporation is generally subject to a Japanese withholding tax on cash dividends. Stock splits and allotment of shares without consideration, in general, are not subject to Japanese withholding tax since they are characterized merely as an increase in the number of shares (as opposed to an increase in the value of the shares) from a Japanese tax perspective.

In the absence of any applicable treaty or agreement reducing the maximum rate of withholding tax, the standard rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-residents of Japan or non-Japanese corporations is generally 20%. However, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of common stock of the Company) to shareholders who are non-Japanese corporations or Japanese non-resident individuals, except for any individual shareholder who holds 5% or more of the outstanding total of the shares issued by the relevant Japanese corporation, the aforementioned standard 20% withholding tax rate is reduced to (i) 7% for dividends due and payable on or before December 31, 2011 and (ii) 15% for dividends due and payable on or after January 1, 2012.

Pursuant to the Convention Between the Government of the United States of America and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, or the Treaty, (i) the withholding tax rate on dividends is generally 10% for portfolio investors (i.e. investors with the shareholding ratio of less than 10%) who are qualified U.S. residents eligible to enjoy treaty benefits and (ii) the dividends are exempt from Japanese taxation by way of withholding or otherwise for pension funds which are qualified U.S. residents eligible to enjoy treaty benefits, unless the dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds. For Japanese tax purposes, a treaty rate generally supersedes the tax rate under domestic tax law. However, due to the so-called “preservation doctrine” under the Treaty, and/or due to the Special Measurement Law for the Income Tax Law, Corporation Tax Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the tax rate under domestic tax law is lower than the treaty rate (which is currently the case with respect to the treaty), the domestic tax rate applies (which, as discussed above, is currently 7% with respect to dividends paid on the Company’s shares) or ADSs.

The amount of withholding tax imposed on dividends payable to the holders of the Company’s shares or ADSs who reside in a country other than the United States is dependent upon the provisions of such treaties or agreements as may exist between such country and Japan.

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Gains derived from the sale outside Japan of shares of common stock or ADSs representing shares of common stock in Japanese corporations by a non-resident of Japan or a non-Japanese corporation, or from the sale of the shares within Japan by a non-resident of Japan as an occasional transaction or by a non-Japanese corporation not having a permanent establishment in Japan, are in general not subject to Japanese income or corporation taxes. Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired shares of common stock or ADSs as a distributee, legatee or donee.

United States Taxation

The following is a discussion of material U.S. federal income tax consequences of owning and disposing of the Company’s shares of common stock or ADSs by U.S. holders (as defined below). The discussion applies only if a U.S. holder holds shares of common stock or ADSs as capital assets for U.S. federal income tax purposes and it does not describe all of the tax consequences that may be relevant to holders subject to special rules, such as:

• certain financial institutions;

• insurance companies;

• dealers and traders in securities or foreign currencies;

• persons holding shares of common stock or ADSs as part of a hedge, straddle, conversion or other integrated transaction;

• persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

• partnerships or other entities classified as partnerships for U.S. federal income tax purposes;

• persons liable for the alternative minimum tax;

• tax-exempt organizations;

• persons holding shares of common stock or ADSs that own or are deemed to own ten percent or more of the Company’s voting stock; or

• persons who acquired shares of common stock or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation.

This discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations and the Treaty, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. It is also based in part on representations by the Depositary and assumes that each obligation under the Deposit Agreement and any related agreement will be performed in accordance with its terms. U.S. holders should consult their own tax advisors concerning the U.S. federal, state, local and foreign tax consequences of owning and disposing of shares of common stock or ADSs in their particular circumstances.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Partnerships holding shares or ADSs and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of the shares or ADSs.

A “U.S. holder” is a beneficial owner of shares of common stock or ADSs that is, for U.S. federal income tax purposes, (i) a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source and that, in each case, is eligible for benefits under the Treaty.

In general, a U.S. owner of ADSs will be treated as the owner of the underlying shares of common stock represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. holder exchanges ADSs for the underlying shares of common stock represented by those ADSs.

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The U.S. Treasury has expressed concerns that parties to whom American depositary shares are released prior to delivery of shares to the Depositary (“pre-release”), or intermediaries in the chain of ownership between holders and the issuer of the security underlying the American depositary shares, may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of American depositary shares. Such actions would also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received by certain noncorporate U.S. holders. Accordingly, the analysis of the creditability of Japanese taxes and the availability of the reduced tax rate for dividends received by certain noncorporate U.S. holders, each described below, could be affected by actions taken by parties to whom ADSs are pre-released.

This discussion assumes that the Company is not, and will not become, a passive foreign investment company (as discussed below).

Taxation of distributions

Distributions paid on shares of common stock or ADSs, other than certain pro rata distributions of common stock, will be treated as dividends to the extent paid out of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. holders as dividends. The amount of a dividend will include any amounts withheld by the Company or its paying agent in respect of Japanese taxes. The amount of the dividend will be treated as foreign source dividend income to a U.S. holder and will not be eligible for the dividends received deduction generally allowed to U.S. corporations under the Code. Subject to applicable limitations and the discussion above regarding concerns expressed by the U.S. Treasury, dividends paid to certain noncorporate U.S. holders in taxable years beginning before January 1, 2011 will be taxable at a maximum rate of 15%. Noncorporate U.S. holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at this favorable rate.

Dividends paid in yen will be included in a U.S. holder’s income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date the dividends are received by such U.S. holder in the case of a U.S. holder of shares of common stock or by the Depositary in the case of a U.S. holder of ADSs, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of its receipt.

Japanese income taxes withheld from cash dividends on shares of common stock or ADSs at a rate not in excess of the applicable rate under the Treaty will be creditable against a U.S. holder’s U.S. federal income tax liability, subject to applicable restrictions and limitations that may vary depending upon such holder’s circumstances and the discussion above regarding concerns expressed by the U.S. Treasury. Instead of claiming a credit, a U.S. holder may elect to deduct such otherwise creditable Japanese taxes in computing such holder’s taxable income, subject to generally applicable limitations under U.S. law. U.S. holders should consult their own tax advisors regarding the availability of foreign tax credits in their particular circumstances.

Sale or other disposition of shares or ADSs

For U.S. federal income tax purposes, gain or loss a U.S. holder realizes on the sale or other disposition of shares of common stock or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the holder held the shares of common stock or ADSs for more than one year. The amount of the U.S. holder’s gain or loss will be equal to the difference between the holder’s tax basis in the shares of common stock or ADSs disposed of and the amount realized on the sale or other disposition, determined in U.S. dollars. Such gain or loss will generally be U.S. source gain or loss for foreign tax credit purposes.

Passive foreign investment company rules

The Company does not believe that it was a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes for its tax year ending March 31, 2009. However, since PFIC status depends upon the composition of the Company’s income and assets and the market value of its assets from time to time, there can be no assurance that the Company will not be considered a PFIC for any taxable year. If the Company were treated as a PFIC for any taxable year during which a U.S. holder held a share of common stock or an ADS, certain adverse tax consequences could apply to such holder.

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Information reporting and backup withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting and to backup withholding unless (i) the holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the holder provides a correct taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred.

The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against its U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

The documents filed by the Company with the SEC can be inspected at its public reference room located at 100 F Street, N.E., Washington D.C. 20549. The documents filed via the Electronic Data Gathering, Analysis, and Retrieval system can be also available for inspection on the SEC’s website (http://www.sec.gov).

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Primary Market Risk Exposure

Hitachi is exposed to market risks from changes in foreign currency exchange rates, interest rates and market prices for equity securities. Hitachi seeks to manage these market risks by using derivative financial instruments. Hitachi does not employ derivative financial instruments for speculation purpose.

Hitachi is exposed to credit-related risks arising from the potential non-performance by counterparties to derivative and other financial instruments Hitachi uses to hedge its market risks. Most of the counterparties are internationally recognized financial institutions and contracts are diversified among a number of major financial institutions.

Equity Price Risk

Hitachi holds marketable securities which are subject to price risks arising from changes in market prices for such securities. Hitachi considers marketable securities classified as short-term investments to be highly liquid and present a relatively low equity price risk. Hitachi holds marketable securities classified as investments and advances as long-term investments.

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The tables below provide information about the contractual maturities of available-for-sale securities and held-to-maturity securities and fair values of these market risk sensitive securities as of March 31, 2009 and 2008, regardless of the consolidated balance sheet classification as follows.

	Carrying amount as of March 31, 2009
	Contractual maturity date
	Due within one year	Due after one year through five years	Due after five years	Total	Fair value
	(Millions of yen)
Available-for-sale securities
Equity securities				120,434	120,434
Debt securities	8,177	10,424	18,363	36,964	36,964
Other securities	301	4,634	4,760	9,695	9,695
Held-to-maturity securities	82	5	199	286	286
	Carrying amount as of March 31, 2008
	Contractual maturity date
	Due within one year	Due after one year through five years	Due after five years	Total	Fair value
	(Millions of yen)
Available-for-sale securities
Equity securities				179,883	179,883
Debt securities	44,719	15,877	26,193	86,789	86,789
Other securities	11,280	37,225	10,090	58,595	58,595
Held-to-maturity securities	259	31	199	489	489

Foreign Currency Exchange Rate Risk and Interest Rate Risk

Hitachi has assets and liabilities which are exposed to foreign currency exchange rate risks and interest rate risks. Hitachi enters into forward exchange contracts, cross currency swap agreements and interest rate swaps for the purpose of hedging these risk exposures.

Foreign currency exchange rate risk

Hitachi mainly uses forward exchange contracts to manage foreign currency exchange exposures, primarily in the exchange of U.S. dollars and Euros into Japanese yen. These contracts, which typically mature within one year, are used primarily to hedge foreign currency denominated future net cash flows from trade receivables and payables recognized, and from forecasted transactions. In accordance with its internal policy, Hitachi measures by currency each month the amount and due date of future net cash flows. In accordance with the policy, a portion of net cash flows measured is covered using forward exchange contracts.

Hitachi enters into cross currency swap agreements to manage currency exchange rate risk relating to long-term debt denominated in foreign currencies. These cross currency swap agreements typically have maturities that mirror the underlying debt, which allows Hitachi to predict cash flows from such long-term debt. Hitachi believes these derivative financial instruments can be highly effective in hedging foreign currency denominated long-term debt against changes in foreign exchange rates.

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The tables below provide information on Hitachi’s financial instruments that are sensitive to foreign currency exchange rates, including primary forward exchange contracts to sell U.S. dollars and Euros as of March 31, 2009 and 2008. The tables present the contract amounts in Japanese yen equivalents and weighted average contractual exchange rates by expected maturity dates. Cross currency swap agreements and the corresponding foreign currency denominated debt instruments are not included in the table below because all of Hitachi’s foreign currency exposure in its cash flows are eliminated.

Forward exchange contracts as of March 31, 2009
Expected maturity date
2010	2011	Total	&