News Releases

TOKYO, JAPAN

Feb 4, 1999 10:00 AM

Hitachi, Ltd. (NYSE:HIT) today announced that it has revised its business forecast for fiscal 1998, ending March 31, 1999, as follows.

* Announced in October 1998.

- Factors relating to the revision of the forecast -
The net sales forecast remains the same as the estimate announced at the time of the release of the interim report last October. However, the ordinary loss is expected to be larger than the previous forecast, owing to currency exchange factors accompanying the appreciation of the yen that started last year and is becoming established.

Hitachi, Ltd. is taking an extraordinary loss of approximately 185,000 million yen for the restructuring mainly of semiconductor operations overseas, and the reorganization of domestic operations. The write down of investments in certain investment securities owing to sharp decreases in the share prices of mainly financial institutions is expected to amount to approximately 23,000 million yen, and the amortization of the prior service cost portion of employees pension fund plans is expected to amount to approximately 32,000 million yen, as described at the time of the interim report in October.

Although the Company will also realize an extraordinary gain of approximately 30,000 million yen resulting from the sale of land, shares of affiliated companies and investment securities, the net extraordinary loss is expected to amount to approximately 210,000 million yen, approximately 50,000 million yen more than the previous forecast in October.

Accounting for income taxes has been applied to the figures in the revised forecast. A resultant increase of approximately 140,000 million yen in the net deferred tax assets and liabilities has been included in the net income (loss) account, so the net loss is expected to amount to approximately 190,000 million yen.

* With respect to domestic companies, for the revised forecast, the balance of deferred taxes as of the end of March 1999 is estimated based upon new tax rates expected to be enacted for fiscal 1999. As a result, compared to the amount of the net loss calculated using the current tax rates, the net loss for the fiscal year ending March 1999 will be approximately 55,000 million yen more.
**Announced in November 1998.

- Factors relating to the revision of the forecast -
Net sales will be slightly lower than the previous forecast. The loss before income taxes will be approximately 60,000 million yen larger than estimated in the previous forecast, owing to currency exchange factors, the restructuring program and others. The revised forecast takes into account the effect of new tax rates that are expected to result in a one-time tax charge of approximately 55,000 million yen, thereby increasing the net loss to approximately 125,000 million yen more than the amount estimated in the previous forecast.

Note: The forecast for the year ending March 31, 1999 is forward-looking information which reflects management's current views with respect to certain future events and financial performance. Actual results may differ materially from this forecast. Further, this forward-looking information is based upon assumptions of future events which may not prove to be accurate. Factors that could cause actual results to differ materially from the forecast include, but are not limited to, rapid technological change, particularly in the Information Systems & Electronics segment; uncertainty as to Hitachi's ability to continue to develop products and to market products that incorporate new technology on a timely and cost-effective basis and achieve market acceptance; fluctuations in product demand and industry capacity, particularly in the Information Systems & Electronics segment and the Consumer Products segment; exchange rates and their fluctuations between the yen and other currencies in which Hitachi makes significant sales or in which Hitachi's assets and liabilities are denominated, particularly between the yen and the U.S. dollar; uncertainty as to Hitachi's access to liquidity or long-term financing, particularly in the context of restrictions or availability of credit prevailing in Japan; uncertainty as to Hitachi's ability to implement measures to reduce the potential negative impact of fluctuations in product demand and/or exchange rates; general economic conditions and the regulatory and trade environment of Hitachi's major markets, particularly the United States, Japan and elsewhere in Asia, including, without limitation, continued stagnation or deterioration of the Japanese or other East Asian economies, or direct or indirect restriction by other nations of imports; uncertainty as to Hitachi's access to, or protection for, certain intellectual property rights, particularly rights to electronics and data processing technologies; Hitachi's dependence on alliances with other corporations in designing or developing certain products; the market prices of equity securities in Japan, declines in which may result in write-downs of equity securities Hitachi holds; and uncertainty as to the results of Hitachi's effort to deal with the Year 2000 problem.