News Releases

06/28/2013

Hitachi to Restructure Power Plant, Transportation System and Industrial Plant Construction Businesses Through Company Split

Tokyo, June 28, 2013 --- Hitachi, Ltd. (TSE: 6501 / “Hitachi”) today announced that it has decided to transfer its construction business for power plant, transportation system and industrial plant and integrate them in Hitachi Plant Engineering & Services, Ltd. (“Hitachi Plant Engineering & Services”), a wholly owned subsidiary on October 1, 2013. The purpose of this restructuring is to strengthen and expand the infrastructure systems business. Hitachi will use a company split to transfer its construction and construction engineering business for power plants, transportation systems and industrial plants as well as design, manufacturing and construction business for dust collection systems to Hitachi Plant Engineering & Services. In conjunction with this restructuring, Hitachi Plant Engineering & Services will be renamed Hitachi Plant Construction, Ltd. (tentative name). Certain disclosures and details have been omitted as this transaction is the company split transferring businesses from Hitachi to its wholly owned subsidiary.

1. Purpose of Company Split

In recent years, investment in social and industrial infrastructure systems has increased on a global scale. At the same time, infrastructure must now be more advanced to both support economic development and the creation of a low-carbon society. In emerging countries in particular, rapid population growth, economic expansion and other developments are driving much higher demand for social infrastructure such as large-scale urban development, energy, transportation and water systems, in addition to industrial infrastructure, including industrial parks and natural resource development.

Hitachi is accelerating global development of its Social Innovation Business to solve issues facing society and customers through innovative solutions combining products, services and highly sophisticated IT. As part of this drive, in April 2013 Hitachi merged wholly owned subsidiary Hitachi Plant Technologies, Ltd., which had globally engaged in various businesses including manufacturing of large pumps, compressors and other components, EPC* for water treatment systems, air conditioning systems, chemical and pharmaceutical plants, and construction of power plants, transportation systems and other large plants.

In order to develop these efforts, by integrating Hitachi’s engineering capabilities including construction design and construction management for large-scale plants and Hitachi Plant Engineering & Services’ construction abilities, it is anticipated to create a business structure with outstanding technical abilities and competitiveness. The integration is expected to strengthen Hitachi’s capabilities for providing solutions for large-scale infrastructure systems, such as power plants, transportation systems and smart cities. It is also aimed at winning more orders in Japan and overseas.

*EPC: Engineering, Procurement and Construction

2. Outline of the Company Split

(1) Company Split Schedule

 

Execution of Company Spilt Agreement

August 2013 (Tentative)

Scheduled Company Spilt Date (Effective Date)

October 1, 2013 (Tentative)

* The company split is deemed to be a simple absorption-type company split at Hitachi, pursuant to Article 784, Paragraph 3 of the Companies Act of Japan, and a short-form absorption-type company split at Hitachi Plant Engineering & Services, pursuant to Article 796, Paragraph 1 of the Companies Act of Japan. Therefore, Hitachi and Hitachi Plant Engineering & Services do not plan to convene shareholders’ meetings to obtain approval for the company split agreement.

(2) Company Spilt Method

This is an absorption-type split in which Hitachi is the transferring company and Hitachi Plant Engineering & Services is the successor company.

(3) Handling of Stock Acquisition Rights and Bonds with Stock Acquisition Rights Accompanying the Company Split

Hitachi has no outstanding stock acquisition rights or bonds with stock acquisition rights.

(4) Capitalization Changes Accompanying the Company Split

The company split will result in no change in capitalization of Hitachi.

(5) Outlook on Performance of Obligations

Obligations of Hitachi Plant Engineering & Services becoming due after the effective date of the company split are anticipated to be duly performed.

(6) Others

Other details on the company split will be announced when they are determined.

3. Profile of the Parties of the Company Split

 

     

.

Transferring Company

Successor Company

Name

Hitachi, Ltd.

Hitachi Plant Engineering & Services, Ltd.

Head Office

6-6, Marunouchi 1-Chome,

Chiyoda-ku, Tokyo

1-3, Higashi-Ikebukuro 3-Chome,

Toshima-ku, Tokyo

Representative

Hiroaki Nakanishi,

President

Nobuho Goto,

President

Business

Development, manufacture and sales of products and provision of service across 10 segments:

Information & Telecommunication Systems, Power Systems, Social Infrastructure & Industrial Systems, Electronic Systems & Equipment, Construction Machinery, High Functional Materials & Components, Automotive Systems, Digital Media & Consumer Products, Financial Service, Others

Construction and construction services for power plants and industrial plants

Capital

458,790 million yen

(As of March 31, 2013)

120 million yen

(As of March 31, 2013)

Established

February 1, 1920

April 16, 1964

Number of issued shares

4,833,463,387

(As of March 31, 2013)

120,000

(As of March 31, 2013)

Fiscal year end

March 31

March 31

Major shareholders and shareholding

- The Master Trust Bank of Japan, Ltd. (Trust Account) 6.52%

- Japan Trustee Services Bank, Ltd. (Trust Account) 5.77%

- SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS 2.58%

- Hitachi Employees’ Shareholding Association 2.57%

- State Street Bank and Trust Company 505224 2.18%

(As of March 31, 2013)

Hitachi, Ltd. 100%

Financial conditions and business results for the most recent fiscal year

(Millions of yen unless otherwise specified)

Net assets

3,179,287 (Consolidated)

3,700 (Unconsolidated)

Total assets

9,809,230 (Consolidated)

10,267 (Unconsolidated)

Net assets per share (yen)*1

431.13 (Consolidated)

30,835 (Unconsolidated)

Revenues

9,041,071 (Consolidated)

19,593 (Unconsolidated)

Operation income

422,028 (Consolidated)

630 (Unconsolidated)

Ordinary income*2

344,537 (Consolidated)

641 (Unconsolidated)

Net income*3

175,326 (Consolidated)

290 (Unconsolidated)

Net income per share (yen)*3

37.28 (Consolidated)

2,423.76 (Unconsolidated)

*1 Since Hitachi has been adopting U.S. accounting standards, this figure represents stockholders’ equity per shares.

*2 Since Hitachi has been adopting U.S. accounting standards, this figure represents income before income taxes.

*3 Since Hitachi has been adopting U.S. accounting standards, these figures represent net income attributable to Hitachi, Ltd. stockholders and net income attributable to Hitachi, Ltd. stockholders per share basic, respectively.

4. Overview of the Business to Be Transferred

(1) Business of the Business to Be Transferred

Construction and construction engineering for power plants, transportation systems and industrial plants as well as design, manufacturing and construction for dust collection systems

(2) Others

Other details concerning the business to be transferred will be announced as they are decided.

5. Status of Succeeding Company after Transfers

 

(1) Name

Hitachi Plant Construction, Ltd. (tentative name)

(2) Headquarters

1-3, Higashi-Ikebukuro 3-Chome,Toshima-ku, Tokyo

(3) Representative

Nobuho Goto,

President

(4) Business

Construction, construction engineering and construction services for power plants, transportation systems and industrial plants as well as design, manufacturing and construction for dust collection systems

(5) Capital

(Not yet determined)

(6) Fiscal year end

March 31

6. Status of Hitachi After the Company Split

There will be no change in the company name, head office location, representative’s position or name, business activities, capital or fiscal year of Hitachi due to the company split.

7. Outlook

The company split will have no impact on the consolidated operating results of Hitachi.

(Reference) Consolidated Business Forecasts for the Year Ending March 31, 2014 (announced on May 10, 2013) and Consolidated Operating Results for the Previous Fiscal Year

.

Revenues

Operating Income

Income Before Income Taxes

Net Income Attributable to Hitachi, Ltd. Stockholders

Consolidated Business Forecasts for Fiscal 2013 (Year ending March 31, 2014)

9,200,000

500,000

425,000

210,000

Consolidated Operating Results for Fiscal 2012

(Year ended March 31, 2013)

9,041,071

422,028

344,537

175,326